1998 Annual Report - KU Leuven · Ontex Annual Report 1998 Company Profile Company profile The...
Transcript of 1998 Annual Report - KU Leuven · Ontex Annual Report 1998 Company Profile Company profile The...
1998 Annual Report
EN-Ontex BW 01-50 16-06-1999 15:44 Pagina 1
On 7 May 1999 the Banking and Finance Commission gave its approval, in the con-
text of Section II of the Royal Decree no. 185 of 9 July 1935, for this annual report to
be used as reference material for any public call for savings made by Ontex, until
the publication of its following annual report, by means of the separate provision of
information procedure. Under this procedure the annual report must be accompa-
nied by a transaction memorandum in order to form a prospectus within the mean-
ing of Article 29 of Royal Decree no. 185 of 9 July 1935.
This prospectus must be presented to the Banking and Finance Commission for
approval under the terms of article 29ter, § 1, 1, of Royal Decree no. 185 of 9 July
1935.
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Key figures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Group profile . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Mission Statement and Strategy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Foreword . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Statement to Shareholders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Events in 1999 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
Ontex N.V. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
Corporate Governance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
Capital . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
Organisational Diagram . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
Locations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
Products and Activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
Feminine hygiene. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
Baby diapers. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
Incontinence products . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
Medical products. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
Directors’ Report . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
Consolidated annual accounts. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
Unconsolidated annual accounts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 71
Group addresses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 80
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Annual Report 1998
Table of contents
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Ontex Annual Report 1998 Key F igures
Key figures of the Ontex group
4
1998 1998 1997
in EURO millions in BEF millions in BEF millions
Turnover 277.1 11,178.6 10,674.0
Operating profit 10.6 426.0 484.5
Operating profit as a % of turnover 3.81% 3.81% 4.54%
Financial earnings -5.7 -228.6 -261.0
Current result after taxes 3.8 155.5 129.3
Current cash flow after taxes (1) 22.6 911.1 833
Group profit 0.7 27.1 85.5
Shareholders’ equity 59.2 2,389.6 1,028.3
Minority interests -0.6 -22.2 -21.2
Permanent resources (2) 70.1 2,826.1 1,464.7
Long-term financial debt 36.8 1,485.3 1,703.5
Net financial debt (3) 37.8 1,525.9 1,933.1
Balance sheet total 195.9 7,904.6 6,964.4
Working capital (4) 18.5 747.2 -175.2
Cash flow after taxes (5) 20.3 818.7 803.8
Investments 29.3 1,183.6 908.1
Average no. of employees 1743 1743 1533
Ratios
Operating Cash Flow 29.3 1,181.6 1,187.6
Liquidity (6) 1.26 1.26 1.00
Solvency (shareholders’ equity/balance sheet total) 30.23% 30.23% 14.77%
Net financial debt/shareholder’s equity 0.64 0.64 1.88
Profit/shareholder’s equity (7) 1.13% 1.13% 8.32%
Profit/resources used (8) 9.79% 9.79% 14.26%
Net profit margin (9) 0.28% 0.28% 0.72%
(1) Current profit after taxes + depreciation of intangible and tangible fixed assets and other amounts written off +
provisions for liabilities and charges + amounts written of stocks, contracts in progress and trade debtors
(2) Shareholders’ equity + minority interests + provisions and deferred taxes
(3) Long and short-term financial debt - cash deposits - cash at bank and in hand
(4) Current assets (amounts receivable after one year excluded) - amounts payable within one year - deferred income and
accrued charges
(5) Consolidated profit for the year + depreciation of intangible and tangible fixed assets and other amounts written off +
provisions for liabilities and charges + amounts written off stocks, contracts in progress and trade debtors
(6) (Stocks + amounts receivable within one year + investments + cash at bank and in hand) / amounts payable within
one year
(7) Profit of the group / equity
(8) Operating profit / (equity + minority interests + provisions and deferred taxes + net financial debts)
(9) Consolidated net profit for the year / turnover
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Ontex Annual Report 1998 Key F igures
5
1998 1997
Operating profit 55.3 69.9
Profit per share 3.5 12.3
Cash flow per share 106.3 116.0
Net assets per share 310.3 148.4
Number of Ontex N.V. shares (1) 7,700,000 6,930,000
Dividend PM
(1) On 10 December 1998 the Ontex share was split 63:1. In order to permit a meaningful comparison, this split has been
carried back to 1997.
History of Price (in Euro) and credit volume
volume (left axis) lowest closing price 11/12/98 (53,3 Euro)
price (right axis) highest closing price 24/02/99 (109 Euro)
Shares Closing Price (Euro) Market Cap. (Euro)
30/12/98 (2) 7.700.000 68,29 525.868.929
30/04/99 7.700.000 87 669.900.000
(2) closed at 31/12/98
Financial Diary
1998 General Meeting. . . . . . . . . . . . . . . . . . . . . . . . 25 May 1999 at 14.00
1999 General Meeting. . . . . . . . . . . . . . . . . . . . . . . . 30 May 2000 at 14.00
Announcement of 1999 half-yearly results . . . . . . . . . . mid-September 1999
Announcement of 1999 annual results . . . . . . . . . . . . mid-March 2000
1998 Annual Report . . . . . . . . . . . . . . . . . . . . . . . . . early May 1999
Data per share (in BEF)
30
40
50
60
70
80
90
100
110
0
100,000
200,000
300,000
400,000
500,000
11/12/1998 30/04/1999
12/98 01/99 02/99 03/99 04/99
1
2
1
2
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Ontex Annual Report 1998 Company Pro f i le
Company profile
The Ontex group is a rapidly growing industrial concern that specialises in hygienic disposables. In Europe,
Ontex leads the market in the development, production and sale of disposable personal hygiene products
sold under private labels.
These products fall into three major groups: baby products (diapers), feminine hygiene (sanitary towels,
tampons and panty liners) and incontinence products.
Ontex has experienced exponential growth since it was first set up in 1979. Since 1990 the Group has
taken over 10 enterprises, all of which have been successfully integrated into the company. Its strongest
year was undoubtedly 1997, when it took major strategic steps that almost doubled Group turnover within
one year. In the same year internal growth was 20%, showing that the Group’s growth stems from both
natural internal growth and major acquisitions.
Ontex has positioned itself in the most rapidly growing segments in its market.
The private label segment of the market for baby products and feminine hygiene is continuing to grow in
Europe, to the detriment of branded products, whilst in Eastern Europe the market is expected to expand
rapidly with the increasing use of hygienic disposables.
In Western Europe, the market for incontinence products is growing rapidly as the population ages and as
taboos surrounding incontinence reduce.
The niche market in which Ontex operates can be described as a defensive sector, which is largely insen-
sitive to economic cycles. The group’s activities in this market are widely spread, both geographically in the
different countries of Europe, and in terms of product range. Activities are directed partly at the consumer
market (diapers, feminine hygiene), and partly at the institutional market (incontinence).
Ontex operates in a sector in which product quality is a critical success factor. Here the group’s production
methods and certified quality systems represent a major advantage.
The group’s know-how in developing and optimising the production lines is unique. This is strengthened by
its ‘state-of-the-art’ production equipment. Producing these sensitive and sophisticated products at high
speed calls for a considerable degree of technological skill and experience. These skills are constantly
being improved through continuous investment in people and machines, enabling the group to adapt its
products rapidly to market needs.
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The Ontex Mission Statement
Our mission is to provide consumers with alternative products,
of equal or better quality, at competitive prices,
in the market for hygienic disposables.
The strategy of the Ontex group
The Ontex group strives continuously and consistently for long-term profitability and growth.
The group seeks to achieve this by:
• being daily mindful of the fact that consumers are the reason for our existence and that we must fulfil
their needs as well as possible;
• implementing a solid policy of investment in research and development;
• continuing to invest in the most innovative machines and continuously modernising existing plant and
machinery;
• investing in better performing and uniform management information systems;
• seeking balanced turnover between the various product groups;
• following an in-depth commercial strategy so as to extend the range of goods sold to existing customers;
• concentrating on further exploiting Southern and Central European markets;
• as in the past, focusing not only on internal growth, but also on attractive acquisitions whenever these
fit into or usefully complement the group’s product range.
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Ontex Annual Report 1998 Miss ion Statement and St rategy
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Ontex Annual Report 1998 Foreword
Foreword
11 December 1998 stands out in Ontex’s history as the date on which the group’s share was introduced
onto the Brussels Stock Exchange. Being a listed company allows us to tap the public capital market when-
ever a good opportunity presents itself in the rapidly growing market for private label hygienic disposables.
This operation secures the group’s further growth and expansion and is vital to Ontex’s customer-centred
business strategy.
Like other sectors, the hygienic disposables market features a high degree of internationalisation. Our cus-
tomers are organising their businesses increasingly on a pan-European level. We have already begun adapt-
ing our structure to allow us to offer them the same quality support in other countries. This has required
us to significantly increase our production capacity, and to redistribute our production lines geographically
in order to guarantee rapid and efficient deliveries.
As the European market leader in private label hygienic disposables our task is also to offer products that
are of equal value to brand products. This requires us to be able to react very rapidly to market trends.
Anticipating changes requires us regularly to convert our production lines to ‘modern’ products.
In this context 1998 was a year of internal consolidation and streamlining. In just twelve months the group
has digested no less than three major acquisitions and two major cooperation agreements. This has
involved the relocation, conversion or start-up of 17 production lines. This structural change-around has
not, however, prevented us from showing a profit of BEF 27.1 million.
As planned, we will be continuing in 1999 to start up no less than 13 new product lines in the various prod-
uct groups.
The resulting scale advantages offer a genuine leverage effect for production, as intense product speciali-
sation and shorter adjustment times allow product lines to be used to higher capacity levels.
1999 has got off to a very good start. The first foray of the year has been the acquisition of French com-
petitor Hygiène Diffusion. In this case the integration process will require a minimum of effort, given the
especially efficient organisation that this company already boasts. It is obviously our intention to make opti-
mal use of all possible synergies. This takeover sets us two years ahead of our original business planning
schedule, based solely on internal growth.
When it comes to growth and expansion, we have already taken many initiatives, and many more remain.
But the quality of our products is and remains a key item. In order to be able to guarantee equal quality in
all our facilities, the whole group has been switched to ISO 9002 standards. In 1998 the last two non-cer-
tificated production facilities obtained ISO 9002 certification. During 1999 all facilities will be standardised
to the same certificate.
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Ontex Annual Report 1998 Foreword
Alongside production and quality, service is also a major pillar in our strategy of providing a customer-direct-
ed approach. Our expertise in hygienic disposals allows us to offer customers solid support in introducing
new products and entering new markets. Customers are happy to avail of this opportunity, in particular
when introducing new products in Central and Eastern Europe. In addition to the commercial support we
provide in this way, our logistic support is also highly valued. In this context, work began in 1998 on an EDI
project.
In order to standardise and optimise our service package across all our facilities, we have taken the deci-
sion to implement the SAP R3 software package. Our intention is to realise phase 1 of this project during
the second half of 1999.
It is becoming obvious that this project serves not only our customers. In every department of Ontex this
integrated package will undoubtedly have an as yet unknown leverage effect.
1999 promises once again to be an eventful year, in which we shall be resolutely taking a number of steps
towards achieving our plans for the future.
In our view it is precisely the combination of being a flexibly-run family business with having a stock mar-
ket listing that guarantees the future success of the Ontex group.
Finally, we would like to thank all Ontex employees for their very great commitment and motivation, and in
their name we are proud to present the results for 1998.
Buggenhout, 3 May 1999
Paul Van Malderen Bart Van Malderen
Chairman of the Board Managing Director
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Ontex Annual Report 1998 Statement to Shareho lders
10
The Netherlands 3.1 %
France 16.6 %
Spain 5.4 %
Scandinavia 1.6 %
Eastern-Europe 5.4 %
Other 1.4 %
Austria 2.3 %
Italy 2.4 %Belgium 9.4 %
Germany 48.3 %
UK 4.1 %
10.4
10.6
10.8
11.0
11.2
11.4
10.673
11.178
Statement to Shareholders
Ladies and Gentlemen,
1998 was a key year for the structure of the Group. Following on the various acquisitions made the year
before, we organised the Group’s production resources to optimise the synergy effects. This cost money
and also led to lower levels of capacity utilisation. This policy will bear fruit in coming years.
Turnover (billion BEF)
Geographically, turnover for 1998 can be broken down as follows
Geographic breakdown of turnover 1998
As expected, relative turnover in the different geographical markets areas remained relatively stable com-
pared with 1997. The German market became even more important, with its share rising by 1.2% to 48.3%.
1997 1998
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Ontex Annual Report 1998 Statement to Shareho lders
11
Development of profitability
Gross Margin, EBIT and Operating Cash Flow
(in BEF millions) 1994 1995 1996 1997 1998
consortium consortium consortium consolidation consolidation
Gross margin 1,495.2 1,637.6 2,499.2 4,442.5 4,736.5
Other operating income and fixed
assets – own production 116.8 112.5 120.2 199.3 200.4
Services and other goods 472.1 476.5 777.2 1,516.7 1,653.3
Remuneration, social security
and pensions 646.8 755.7 915.4 1,806.5 1,961.8
Depreciation, amounts written off
and provisions 332.9 364.0 386.5 703.2 755.6
Other operating charges 26.5 14.7 30.9 131.0 140.4
EBIT 133.6 139.2 509.4 484.5 426.0
Non-cash operating costs 332.9 364.0 386.5 703.2 755.6
Operating cash flow 466.5 503.2 895.9 1,187.7 1,181.6
Gross margin
In 1998 the gross margin represented 42.4% of turnover, as against 45.7% in 1994. This development is
due, among other things to:
• the change in the product mix brought about by the major takeovers. This had the effect of reducing the
relative weight within turnover of the highest-margin products.
• the change in the consolidation perimeter brought about by the switch, in 1997, from a consortium con-
solidation to a consolidation based on Ontex N.V. As a result, the gross margins of Ontex N.V.’s sister
companies (primarily Féminil S.A. and Ontex France S.A.R.L.) are not included in the 1997 consolida-
tion.
The largest raw materials items are absorbent materials (in particular fluff pulp and chemical products
(SAP)) and packaging.
Other operating income
The other income items alongside turnover are ‘fixed assets – own production’ and ‘other operating
income’. ‘Fixed assets – own production’ consists of the capitalised start-up costs for new machines, pri-
marily in 1994 and 1995, when a significant technical revolution took place, and, in 1997, due to the
changes within the Wirths group. ‘Other operating income’ contains, apart from a whole series of small
items, primarily government subsidies for employment costs (Maribel, Youth Employment Plan, etc.).
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Services and other goods
In the ‘services and other goods’ heading, transport costs are far and away the largest factor, represent-
ing around 4% of annual turnover. Otherwise the heading consists primarily of energy costs, machinery
maintenance and sales costs.
Evolution of operating charges (million BEF)
Services and other goods
Remuneration, social security and pensions
Depreciation, amounts written off
Other charges
Operating income (EBIT) and operating cash flow
The major expansion of the Group is most visible in the increase of turnover and operating cash flow. Owing
among other things to the group’s aggressive depreciation policy, this has until now been less visible in
operating income.
Evolution of operating result and operating cash flow (million BEF)
Operating result
Operating cash flow
As a private family group, Ontex has, in its rapid development, concentrated on its expansion and on devel-
oping the cash flows necessary for financing its continuous expansion.
12
Ontex Annual Report 1998 Statement to Shareho lders
1994 1995 1996 1997 1998
1994 1995 1996 1997 1998
2000
1600
1200
800
400
0
1200
1000
800
600
400
200
0
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Ontex Annual Report 1998 Statement to Shareho lders
13
Maximising net group earnings in the short term has therefore been less of an objective per se, and this
figure has been influenced by an aggressive depreciation policy, as well as the extraordinary charges linked
to the rapid expansion. The coordination centre that has now been set up, enables us to optimise cash
pooling at the group level.
Evolution net profit and net cash flow (million BEF)
Net profit
Net cash flow
Investments
Regular investments are essential in order to maintain the productivity, quality and flexibility of the indus-
trial equipment. In addition to its production lines, the Group also needs large industrial areas where pro-
duction sites can be built or extended.
Industrial investments during the past 3 years (at the consolidated level) break down as follows:
Division of Investments (million BEF)
Land and Buildings
Plant and Machinery
Furniture and vehicles
Other
900
800
700
600
500
400
300
200
100
0
900
800
700
600
500
400
300
200
100
0
1994 1995 1996 1997 1998
1996 1997 1998
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Ontex Annual Report 1998 Statement to Shareho lders
Production capacity has increased more than five-fold since the early 1990s, and today Ontex is equipped
with state-of-the-art machinery. In 1997 the new plant in Turnov was opened, and just one year later dou-
bled in size. In 1998 the surface area of the production facility at Horst was tripled. The Grosspostwitz site
has been totally renovated since being taken over.
The fall in investments in plant and machinery to BEF 441.8 million is explained by the fact that a large
percentage of the new installations and machinery were still under construction at the end of 1998. These
are including under ‘other’ in an amount of BEF 305.9 million. In this way total investments in 1998 amount
to BEF 1,167.6 million.
Capacity increases automatically impact the Group’s profit margins through the positive scale effects. Each
time the Group commissions more production lines, this reduces the number of times the machines have
to be adjusted and makes the machinery more productive. The Group is looking to sharply increase its total
capacity in order to meet rapidly growing demand from its clients and to be in a position to supply new mar-
kets.
During the next 5 years the Group is expecting to invest between BEF 650 million and BEF 1 billion every
year. This budget breaks down as follows:
• 70% for investments in machines (including automation of various production functions):
• 15% for investments in buildings
• 15% for investments in other equipment (including IT and telecommunications).
These investments will be financed out of operating cash flow, the capital increase, investment loans and
leasing arrangements.
Capital increase
On 11 December 1998, capital was increased by BEF 148.9 million to BEF 1,359 million through the issue
of 770,000 new shares. Since that date the company’s shares have been listed on the Brussels Stock
Exchange (First Market). The introduction price was BEF 1,670 per share.
Personnel
During 1998 the Group employed an average of 1,743 people. This number has risen sharply since 1990,
reflecting the Group’s rapid expansion both in Belgium and abroad.
Evolution of number of personnel of the Group on 31.12
14
218399
509 580
705 757
918
1,533
1,743
1990 1991 1992 1993 1994 1995 1996 1997 1998
2,000
1,600
1,200
800
400
0
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Around 56% of all employees are employed by the Group’s foreign subsidiaries, most of them in Germany,
the Czech Republic and Spain. By country, the numbers are as follows:
Evolutie van het aantal personeelsleden van de Groep op 31.12
Belgium
Germany
Czech Republic
Spain
France
Other
1743 Total
In total, 79% of employees are hourly-paid workers and 21% are salaried employees and management.
Working relations are good. The Group has not experienced any conflict or strike since it was set up.
Quality
Ontex attaches great importance to the quality of its
products. For this, the production process needs to be
perfectly controlled.
All of Ontex’s hygiene products are produced according
to the principles specified in the Group’s quality guaran-
tee system. Quality management and improvement is an
ongoing task at Ontex.
Ontex’s quality guarantee represents a synthesis of the
latest industrial technology standards, including:
• The HACCP system: initially intended and developed for the food industry, this system is designed to
protect products in an appropriate fashion against all kinds of negative incidents of a physical, chemi-
cal and micro-biological kind.
• The GMP (‘Good Manufacturing Practice’ system): developed in the pharmaceutical industry, this system
ensures safety and quality right along the production chain. In practice, temperature, flow pressure and
biological air purity are controlled on a constant basis in the production areas.
• All Ontex products meet European Union Directive 93/42/EEC in terms of quality, safety and reliability.
• Certain products are also certified as FDA compliant by the US government
• All the Group’s production sites are certified to ISO 9001, ISO 9002 and EN46002 standards. The
Group’s production sites undergo regular checks.
Ontex products are regularly awarded ‘Best Buy’ recommendations in consumer magazines (like Test
Aankoop) both at home and abroad.
15
Ontex Annual Report 1998 Statement to Shareho lders
760115
67
109
196 496
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Attention to ecological aspects
Particular attention is paid to the environment and to energy consumption during the production process.
Ontex has developed a patented system for recovering production waste and transforming it into com-
bustible briquettes that are used to heat the production plants. Ontex I in Buggenhout, the Group’s largest
facility, operates such a system. This original technology saves money and enables the Group to limit the
amount of waste it produces.
For certain institutional customers (hospitals, old people’s homes, etc.) Ontex offers the possibility of tak-
ing back the product packaging.
It is also examining the possible return of used products. This additional service would represent complete
service to customers and present a big commercial advantage. In 1996, Ontex won an industrial environ-
mental prize for this waste recovery system.(1)
According to Ontex Management, the issue of waste pollution will become more important in the future,
and those market players which are prepared for and have specialised in this area will enjoy a significant
marketing advantage.
Research and Development
The Group’s R&D units consists of some 10 professionals in various units at the Buggenhout headquar-
ters and in Germany. Every year this cell is allocated a budget of around BEF 20 million. R&D expenses are
charged to income in the year in which they are incurred.
Innovations frequently concern relatively small product adaptations, which are the outcome of long test and
development procedures, and which can play a major role in product differentiation. These developments
are frequently patented.
In recent years, Ontex has carried out various innovations in its range, including:
• using a mixture of synthetic fibres and pulp fibre (in place of pulp fibre alone) as the basic material for
diapers. This increases absorption and the dry feel effect of this product;
• diapers with elastic tapes, which makes movement easier for toddlers;
16
Ontex Annual Report 1998 Statement to Shareho lders
(1) Competition organized jointly by the Federation of Belgian Enterprises, the Flemish Economic Confederation, the Union of Walloon
Enterprises and the Federation of Brussels Enterprises.
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• an original packaging method for individually packed panty liners, which represents a significant saving
in materials and waste;
• the development of an original system (‘Ontex Fragrance System’) which simultaneously neutralises
odour development, keeps the pH value of the skin constant, and has a high absorption capacity;
• production of 8-groove tampons, which considerably improves their absorption capacity;
• developing an exclusive combined structure for the upper layer of sanitary towels.
In recent years, the technology content of hygienic articles has risen to such extent that the know-how
forms an ever higher access barrier to market newcomers.
Patents
It is Ontex policy, where possible, to seek patent protection for the product innovations that it develops.
Ontex’s major competitors also seek to protect their innovations as far as possible, in many cases down
to details and variants of individual products. It can happen that Ontex comes into collision with these
patents, in which case it will always try to settle any disputes by mutual agreement.
17
Ontex Annual Report 1998 Statement to Shareho lders
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Ontex Annual Report 1998 Events in 1999
18
Events in 1999
On 23 March 1999 Ontex reached an agreement in principle with the shareholders of the French group
Hygiène Diffusion to acquire 100% of this company. Hygiène Diffusion’s main shareholder is the venture
capital company Electra Fleming, operating on behalf of its client Electra Investment Trust (London Stock
Exchange). Hygiène Diffusion is one of Europe’s leading producers of incontinence products, and in 1998
achieved a turnover of BEF 3.6 billion. Ontex will continue Hygiène Diffusion’s successful strategy.
This strategic takeover further strengthens Ontex’s position on the European market for incontinence prod-
ucts and extends its expansion in the southern part of Europe. It fits fully with the growth strategy
announced when Ontex was introduced to the stock market in December 1998, viz. further international
expansion, focus on incontinence and additional acquisitions.
The major takeover will probably give rise to a capital increase at Ontex in order to finance it.
The due diligence has been positively finalised and acquisition price is around FRF 440 million.
The Hygiène Diffusion group has two production units. The headquarters and one production facility are sit-
uated at Montpellier in southern France, with a second production facility at Arras in northern France. The
group has 13 production lines, 11 of them manufacturing incontinence products and 2 baby diapers. An
additional line for incontinence products has been constructed and start-up commenced in April.
Hygiène Diffusion produces 3 internationally known brands of incontinence products (ID Slip, Anaform and
Protea). The group has three sales offices outside France in Osnabrück (Germany), Barcelona (Spain) and
Chester (UK). It also has exclusive sales agreement with a network of 200 Baby Cash shops in France.
At the end of 1998 Hygiène diffusion had around 300 employees.
Hygiène Diffusion – key figures in 1998
Provisional figures (BEF millions) in % of Turnover
Turnover 3,580 100%
Depreciation 169 4.7%
Operating profit 596 16.6%
Operating cash flow 765 21.3%
EN-Ontex BW 01-50 16-06-1999 15:44 Pagina 18
19
Ontex Annual Report 1998 Events in 1999
34%31%
33%2%
Takeover brings clear benefits for Ontex
Strategic balancing of turnover between Ontex’s different product categories
Following the takeover of Hygiène Diffusion the Ontex group’s turnover will be very evenly spread between
its various products. The expected distribution of turnover is shown in the pie diagram below:
Potential turnover 1998 by product group including HD
Incontinence products
Baby products
Medical products
Feminine hygiene
Capacity expansion in markets offering growth potential
The market for incontinence products is the fastest growing part of the disposables market in which Ontex
is active.
With the takeover of Hygiène Diffusion, Ontex’s share of the European market for incontinence products
rises to around 13%.
Further streamlining of production
The newly-acquired group slots in perfectly into Ontex’s organisation. No additional reorganisation of facil-
ities will be needed in order to integrate Hygiène Diffusion into the group. On top of this, Hygiène Diffusion’s
free production capacity can be used in the short term within the Ontex group.
The additional takeover and the structure of Hygiène Diffusion’s production fit perfectly into Ontex’s phi-
losophy of evolving towards a one-plant-one-product concept.
EN-Ontex BW 01-50 16-06-1999 15:44 Pagina 19
Ontex Annual Report 1998 Ontex NV
20
General information
Name
Ontex
Registered office
Genthof 5, 9255 Buggenhout
Commercial register
Dendermonde no 33.815
Constitution and duration
The company was constituted on 2 June 1979 for an unlimited period of time.
Legal form (from Article 1 of the Articles of Association)
The company is a public company limited by shares (naamloze vennootschap). It is a commercial company
and has the capacity of a company making a public call for savings.
Company purpose (Article 3 of the Articles of Association)
The purpose of the company is:
The manufacturing, purchase and sale, both wholesale and retail, the importing and exporting, working and
finishing and representation of all hygienic articles, equipment, rubber, plastic, paper and metal articles,
all types of bandaging and cotton wadding products, medical instruments and cosmetic articles, and the
undertaking of all related transactions, as well as the manufacturing, purchase and sale, importing and
exporting, working and finishing and representation of both sterile and non-sterile medical equipment.
It will implement this goal for its own account or for that of third parties, in the manner that it considers
best appropriate.
In order to achieve this purpose, it may undertake all industrial, commercial, financial, securities and prop-
erty transactions, including inter alia, the purchase, sale, leasing in and out, building or exchange of all
moveable and immovable property, acquiring acquisitions in companies and undertaking mergers with com-
panies, in short, everything which may attain its goal or to promote or facilitate the achievement thereof.
EN-Ontex BW 01-50 16-06-1999 15:44 Pagina 20
Corporate Governance
Composition of the Board of Directors
The Board of Directors of Ontex N.V. is composed as follows:
Gustaaf Paul VAN MALDEREN Chairman of the Board
Bart VAN MALDEREN Managing Director
Celina Jeanine VAN DEN BOSSCHE Director
Griet VAN MALDEREN Director
There are no age limits on directorships at Ontex N.V.
Remuneration paid to the Board of Directors amounted in 1998 to BEF 25,566,484.
Directors’ mandates expire at the General Meeting in 2003.
Functioning of the Board of Directors
Given the family character of the Board of Directors, a high degree of informal contact exists between board
members in discussing various items within the enterprise.
The Board approves the strategy – proposed by senior management – and the major investments, super-
vises day-to-day management and prepares the annual accounts. Its tasks also include monitoring the activ-
ities of the various companies. No committees have as yet been set up by the Board of Directors, given
the excellent cooperation between the various senior managers. Committees will be set up at such time as
this can benefit the management of the company. There is no intention as yet to include outside directors
in the Board of Directors. The strong family character of the board provides a fast and flexible decision-mak-
ing process, which is vital in order to continue Ontex’s present dynamic growth.
Day-to-day management
The day-to-day management of the company lies in the hands of Managing Director Bart Van Malderen.
The Senior management monitors the activities of the various subsidiaries.
At the operational level, the directors of the subsidiaries enjoy a considerable degree of autonomy. On the
other hand they are required to provide prompt, extensive reporting, and are subject to independent con-
trol by the Senior management.
Ontex Senior management
Gustaaf Paul VAN MALDEREN (58) Managing Director
Bart VAN MALDEREN (31) Managing Director
Jeanine VAN DEN BOSSCHE (55) Personnel Director
Hilde DE SUTTER (32) Purchasing Director
Frans OBUS (55) Technical Services Director
Werner VAN INGELGEM (28) Technical Services Director
Luc DE VARÉ (56) Production Director
Kurt DE VARÉ (29) Production Director
Filip STEVENS (32) Sales Director
André DE SCHRIJVER (60) Financial Director
Geert ASSELMAN (37) Financial Director
21
Ontex Annual Report 1998 Corporate Governance
EN-Ontex BW 01-50 16-06-1999 15:44 Pagina 21
22
Ontex Annual Report 1998 Corporate Governance
Ontex foreign senior management
Griet VAN MALDEREN Managing Director, France
Jürgen WIRTHS Managing Director, Germany – nappies
Rudolf POLLACK Managing Director, Germany – tampons
Miguel Angel GONZALES Managing Director, Spain
Jan VAN GEET Managing Director, Czech Republic
Dividend policy
Ontex is a growth company with a policy of internal and external expansion, both at home and abroad. Given
the major efforts made in 1998 and the substantial investments planned for 1999, the Board of Directors
has decided not to declare a dividend on the freshly-listed capital.
From 1999 onwards, Ontex will apply a cautious dividend policy, as already explained in the prospectus
published at the time of the stock market introduction.
EN-Ontex BW 01-50 16-06-1999 15:44 Pagina 22
Ontex Annual Report 1998 Capi ta l
23
Capital
Issued capital (Article 5 of the Articles of Association)
The capital of the company amounts to one billion, three hundred and ninety-five million, nine hundred thou-
sand francs, and is fully subscribed and paid in.
It is divided into seven million seven hundred thousand shares, each of which represents one/seven mil-
lion seven hundred thousandth share of the capital.
Capital increases starting from foundation
Deed Transaction Capital (BEF) Shares
2 June 1979 Cash payment 250,000 250
23 December 1983 Incorporation of available reserves + 29,500,000 29,500
Cash payment + 30,250,000 30,250
6 May 1991 Contribution in kind + 38,900,000 38,900
29 December 1994 Cash payment + 11,100,000 11,100
SUBTOTAL 110,000,000 110,000
19 November 1998 Share split 63: 1 - x 63
Capital increase + 1,285,900,00 + 770,000
Total 1,395,900,000 7,700,000
Authorised Capital (Article 8 of the Articles of Association)
The Board of Directors is authorised to raise capital by a maximum amount equal to the company capital
after the capital increase resolved by the extraordinary general meeting of 19 November 1998, in one or
more instalments, in a manner and under the conditions set by the Board, within five years of the date of
publication in the Belgian Official Gazette of the authorisation given by the general meeting.
This amount, on top of the above-mentioned capital, represents the authorised capital. This amount may
not be higher than the amount of the company capital. The increase in capital decided under this authori-
sation can take the form of cash or non-cash contribution, or the incorporation of reserves, including issue
premiums, revaluation gains, or retained earnings, with or without the issue of new shares. This authori-
sation may be renewed one or more times, each time for a maximum period of five years.
However; this authorisation is not granted for capital increases which take place primarily through a non-
cash contribution which can be implemented exclusively by a shareholder owning securities in the compa-
ny to which more than 10% of the voting rights are attached.
Where a capital increase is coupled with an issue premium, the Board of Directors is entitled to determine
that the issue premium will be booked to the non-available ‘issue premium’ account, which, to the same
extent as the capital of the company, will form the guarantee for third parties, and which can be appropri-
ated, except where converted into capital by the Board of Directors, only under the conditions set by the
Companies Act for changes to the articles of association.
The Board of Directors may limit or suspend the preferential right in the interest of the company with due
respect for the legal provisions. It may also do this in favour of one or more specified persons, other than
members of the company’s personnel or its subsidiaries, subject to the fulfilment of Article 34bis, § 4bis
of the Companies’ Act.
In the event of a limitation or suspension of the preferential rights, the Board of Directors is entitled in the
case referred to in the above-paragraph, to determine that, upon the issue of new shares, priority be given
EN-Ontex BW 01-50 16-06-1999 15:44 Pagina 23
Ontex Annual Report 1998 Capi ta l
24
to previous shareholders, with a subscription period of 10 days.
The Board of Directors may issue convertible bonds and warrants within the limits of the authorised capi-
tal, subject to the fulfilment of Articles 101ter and 101quater of the Companies Act. Among other things it
can issue shares and warrants in favour of members of personnel and, where possible, self-employed work-
ers of the company and its subsidiaries under a warrant plan. The Board of Directors will be able to freely
determine the conditions for participation in the warrant plan and the arrangements of the plan itself
(including the arrangements of the exercise of any warrants to be issued), providing that the legal require-
ments applying to the same and the limits contained in the present authorisation are adhered to. A copy
of the report of the Board of Directors, giving a detailed justification for this decision, will be sent to the
Banking and Finance Commission, fifteen days before the calling of the meeting of the Board of Directors
to decide on the issue of the convertible bonds or warrants.
The Board of Directors is also expressly authorised, within the meaning of article 33 bis §4. 2 of the
Companies Act, during a period of three years as from the extraordinary general meeting of 19 November
1998, to proceed to increase the capital within the framework of the authorised capital, as mentioned,
regardless of its receiving any communication from the Banking and Finance Commission that it has been
informed of a public take-over bid on the securities of the company, as described in Article 33, bis, § 3 of
the Companies Act.
The Board of Directors is also authorised, with a view to the coordination of the Articles of Association, to
adapt the text of the Articles of Association accordingly as soon as the authorised capital is converted whol-
ly or in part to issued capital.
In so far as the authorised capital is not issued within the period established above, the text of this arti-
cle is null and void.
Nature of the Shares
The shares are bearer shares.
The Board of Directors will convert the bearer shares into registered shares at the request of the share-
holder.
All shares are indivisible vis-à-vis the company. Each share entitles its holder to one vote.
Requirement to give notice with respect to the shares
The giving of notice provided for in the law of 2 March 1989 concerning the publication of significant par-
ticipating interests in stock market listed companies and regulating public takeover bids and in the royal
implementing decrees, is also mandatory on reaching the threshold of three percent.
EN-Ontex BW 01-50 16-06-1999 15:44 Pagina 24
Ontex Annual Report 1998 Capi ta l
25
Shareholding as at 31/12/1998
Number of shares %
Vadebo N.V. 2,763,621 35.9%
VM Invest N.V. 699,300 9.1%
Van Malderen family 3,082,079 40.0%
General public 1,155,000 15.0%
Total 7,700,000 100%
The Van Malderen family consists, apart from Mr Paul Van Malderen, the founder of Ontex N.V., of his wife
and their two children.
Vadebo N.V. is a holding company held by Mr and Mrs Paul Van Malderen, which, apart from a 35.9% par-
ticipation in Ontex N.V., holds investments in immovable property (including a building leased to Ontema
N.V., a subsidiary of the Group).
VM Invest N.V. is a company that is also controlled by Mr and Mrs Van Malderen together with their chil-
dren. Apart from a 9.1% participating interest in Ontex N.V., the company is active in real estate.
EN-Ontex BW 01-50 16-06-1999 15:44 Pagina 25
Ontex Annual Report 1998 Organ isat iona l d iagram
Organisational diagram
Group Ontex N.V. 31 december 1998
Note: precentages are rounded of participations that belong completely to the group.
26
Ontex Hygieneprodukte
GmbH
sales
Moltex BabyHygiene
GmbH & Co. KG
sales
J.Wirths & Co
Scan Products
machine
Seconds Windelshop
GmbH sales
J. Wirths Hygiene GmbH
(incl. Inkotec GmbH)
production
Wirths France Sarl
sales (in liquidation)
Ontex Hygiëneartikel
GmbH (incl. HH Diessen)
production
Moltex Baby-Hygiene
Beteiligungs GmbH
100%
75%
98%
98%
99.8%
100%
75%
EN-Ontex BW 01-50 16-06-1999 15:44 Pagina 26
Ontex Annual Report 1998 Organ isat iona l d iagram
27
Ontex NV
production
Eutima NV
holding
Ontex
Coordination Center NV
Meriana NV
sales
Ontex BV
production
Helen Harper BV
sales
Ontex Italy
sales
Ontex Rumania
sales
Ontex Hongary
sales
Féminil SA
production
Ontex Sarl
sales
Ontex Ltd
production
Helen Harper Ltd
sales
Ontex CZ
production
Ontex Peninsular SA
production
Ontex Poland
sales
Ontema NV
constructionsite
Ontex International
Sarl financing
100%
100%
100%
100%
90%
100%
100%
100%
100%
100%
100%
50% 50%
100%
100%
100%
99.9%
100%
99.7%
EN-Ontex BW 01-50 16-06-1999 15:44 Pagina 27
28
Ontex Annual Report 1998 Locat ions
•Eeklo
• Buggenhout
•
Arras • Paris
•
Montpellier Brescia
•
•
La Ciotat•Segovia
•
Barcelona
•Diessen
•Mayen
• Horst
• Dortmund
••
••
Budapest
•
• Corby•
Chester
EN-Ontex BW 01-50 16-06-1999 15:44 Pagina 28
29
Ontex Annual Report 1998 Locat ions
Belgium:
Ontex België
France:
Ontex France
Hygiène Diffusion
Italy:
Ontex Italy
Austria:
Ontex Austria
The Netherlands:
Ontex Nederland
United Kingdom:
Ontex UK
Hygiène Diffusion
Germany:
Ontex Deutschland
Ontex Wirths
Hygiène Diffusion
Poland:
Ontex Polska
Tsjech Republic:
Ontex CZ
Rumania:
Ontex Rumania
Spain:
Ontex Peninsular
Hygiène Diffusion
Hungary:
Ontex Hungary
Grosspostwitz
Turnov
Wien
•
Bucharest
Pabianice
• production site
• sales office
• production site/sales office
EN-Ontex BW 01-50 16-06-1999 15:44 Pagina 29
30
Ontex Annual Report 1998 Products and Act iv i t ies
3%18%
41%38%
41%
17.3%
38.7%
3% 3%
18%
38%
41%
2%
33%
34%
31%
28%
13.3%
5.7%
53%
1996 1997 1998 1999 Outlook
Products and Activities
Ontex is the European market leader for private label disposable personal hygiene products. The Group
develops, produces and sells a broad range of products in this sector, which can be split up into four cat-
egories:
• Feminine hygiene products (sanitary towels, panty liners and tampons)
• Diapers and various care products for babies and infants
• Incontinence products for adults
• Medical products (dressings, bandages, sterile sets, etc.)
In total, the group sells over 10,000 references in these four segments.
The turnover of finished goods by product group was as follows in 1998:
Turnover by Product Group
Feminine Hygiene
Baby Diapers
Incontinence Products
Medical Products
The history of turnover is shown in the next graph:
Turnover History by product group
Feminine Hygiene
Baby Diapers
Incontinence Products
Medical Products
100
90
80
70
60
50
40
30
20
10
0
EN-Ontex BW 01-50 16-06-1999 15:44 Pagina 30
31
Ontex Annual Report 1998 Products and act iv i t ies
22.3
25.3
35
41
6.4 5.65.94
1998 2003
50
40
30
20
10
0
The outlook for 1999 shows turnover perfectly balanced among the three major product groups. This shift
is mainly due to the acquisition of the French company ‘Hygiène Diffusion’ in the first quarter of 1999.
HD is specialised in the production of incontinence products which means an increase in the Ontex’ share
of the incontinence market. Since HD currently has excess capacity, this gives Ontex the opportunity to fur-
ther increase HD’s market share in the incontinence market.
As shown below, sales in incontinence products are estimated to increase by 6.8% per year in Europe.
Perspectives for consumption in Europa in Bio units*
% increase per year
Baby Diapers 2.5%
Sanitary Napkins and Panty Liners 1.7%
Tampons (1) 3.2%
Incontinence products 6.8%
The acquisition of HD fits perfectly with Ontex’s core business, and offers significant growth potential.
(1) Figures are for Western Europe Source: John R. Starr, Inc. Estimates Oct 1998
EN-Ontex BW 01-50 16-06-1999 15:44 Pagina 31
EN-Ontex BW 01-50 16-06-1999 15:44 Pagina 32
33
Ontex Annual Report 1998 Femin ine Hyg iene
Feminine Hygiene
Description of the product range
Ontex offers a new generation of feminine hygiene products. Towels, tampons and panty liners are designed
down to the smallest detail in order to meet women’s need for security, discretion and optimal comfort.
Ontex offers a complete range of classic, thin and ultra thin towels in different sizes and shapes. The
anatomically shaped towels are designed to perfectly fit the body contours whereas the towels with wings
offer ideal side protection.
Ontex was the first private label manufacturer in Europe to produce ultra thin towels and pantyliners with a
one-piece pouch (no separate release tape), which today represent the most user-friendly towels in the fem-
inine hygiene market. The extensive towel range is now completed by the introduction of the new ultra thin
night towel. Our pantyliners are available in various designs, embossings and scents.
Ontex has also the widest choice of tampons on the market in Europe. Tampons are manufactured with and
without applicators. Wadding can be 100% cotton or the more economical rayon-cotton mix. Unlike many of
our competitors, Ontex can produce tampons with 8 ‘real’ channels which expand widthways to fit the
female body better than tampons with 4 channels and 4 grooves, and are therefore less likely to leak. Ontex
has recently developed a new applicator crown which facilitates a smoother insertion. Finally, the group
offers a full line of ecological feminine hygiene.
Activities
R&D
In the continuous process of product enhancements and innovations, Ontex has made some excellent
improvements:
• The test phase of the ‘compact fluff’ absorption core is almost successfully completed. This will open
a new window of opportunities. The new core has technical qualities that outclass airlaid and offers a
more cost-effective production process.
• In close cooperation with suppliers, a new superabsorbent powder is utilised that increases the absorp-
tion capacity of the products.
• For sanitary napkins and panty liners a new multipattern 3D upper layer is being introduced on all prod-
ucts which offers a better acquisition and transfer time and a lower rewet.
• Ontex has also upgraded the Vania product range to the latest standards in feminine hygiene products.
• The digital tampon has been significantly improved to ensure our product remains top quality. The struc-
ture of the head and the accompanying applicator has been enhanced for an easier and softer insertion.
Investments
Ontex has made considerable new investments in this segment:
panty liners 5 production lines
sanitary napkins 6 production lines
tampons 5 production lines
EN-Ontex BW 01-50 16-06-1999 15:44 Pagina 33
34
Ontex Annual Report 1998 Femin ine Hyg iene
4.37
4.59
126.3
129.6
1997 1998 1997 1998
130
129
128
127
126
125
124
11%14%
75%
Potential Production Capacity in mio pieces/year
1997 1998 % increase
Panty Shields 1,333 2,010 51%
Sanitary Napkins 3,300 4,105 24%
Tampons 300 416 38%
Ontex has substantially expanded its production capacity in order to ensure its further growth in the com-
ing years.
Sales
Feminine hygiene represents the largest part of Ontex’ turnover. Sales have grown 4.9% to BEF 4.59 bil-
lion.
Ontex Growth: 4.9% (Bio BEF) European Market Growth: 2.6% (Bio BEF) (1)
What explains the upward momentum for feminine hygiene sales?
One answer can be found in the more sophisticated strategies, including category management, now being
applied by Ontex to private label merchandising and to marketing efforts at the retail level. Ontex is work-
ing more closely with retailers as true partners, taking measure of the performance of their private label
products within single categories. Part of the increase also comes from new exclusive manufacturing agree-
ments which Ontex has concluded with major players in the market, both in Eastern and Western Europe.
Turnover 1998 by product category in the Feminine Hygiene Segment
Panty Liners
Tampons
Sanitary Towels
(1) Source: John R. Starr, Inc. Estimates Oct 1998
4.6
4.5
4.4
4.3
4.2
EN-Ontex BW 01-50 16-06-1999 15:44 Pagina 34
35
Ontex Annual Report 1998 Femin ine Hyg iene
12.3
22.7
17.7
23.3
1998 2003
Future Developments
Consumption in the Western European market is estimated at a total of 22.7 billion pads in 1998 and is
forecast to grow relatively slowly (less than 1% annually). Ontex seeks to further expand its position in
Western Europe and pursue growth in Central and Eastern Europe where consumption is growing at 7.5%
annually and penetration is still under 30%.
Perspectives Feminine Hygiene Pad consumption Europe (Bio units Sanitary Napkins & Panty Liners) (1)
% increase per year
Western Europe 0.5%
Central & Eastern Europe 7.5%
West European consumption of tampons was approximately 5.9 billion units in 1998 and is projected to
grow by 1.7% annually to 6.4 billion units in 2003.
The investments it has made give Ontex a substantial potential to enlarge its European market.
(1) Source: John R. Starr, Inc. Estimates Oct 1998
30
20
10
0
EN-Ontex BW 01-50 16-06-1999 15:44 Pagina 35
EN-Ontex BW 01-50 16-06-1999 15:44 Pagina 36
37
Ontex Annual Report 1998 Baby D iapers
4.14
4.24
214.2
217.4
Baby Diapers
Description of the product range
The success of Ontex’ line of baby diapers is mainly due to its readiness to listen and the attention it pays
to mothers who always want the best for their baby. A policy of ongoing market research, linked to its drive
to innovate, allows the group to take advantage of latest market trends.
Ontex has introduced a complete new line of baby diapers, incorporating the most recent technological inno-
vations, resulting in an even better quality.
Ontex offers a new generation of unisex baby diapers with an exclusive registered O.D.S. Tri-Active System®
for optimal odour control, faster absorption and better skin protection. 33% of mothers consider moisture
to be responsible for their babies’ skin problems.
A special acquisition layer applied in the production of Ontex diapers provides a softer feeling and permits
a faster liquid distribution and low rewet.
Diapers are available with a polyethylene or a textile backsheet. Soft breathable sides offer more comfort
and better protection. An elastic system facilitates reclosure of the diaper. In addition to conventional prod-
ucts, Ontex also offers a special size diaper for premature babies.
Activities
R&D
Although the perception of market growth is negative in Western
Europe, Ontex believes strongly it has to continue improving its
products to address changing customer demands.
The test phase of ultra diapers, based on airlaid, is almost com-
pleted and these can now go into production. This product will ben-
efit from its smaller size, more flexible shape and better absorp-
tion capacities than traditional diapers.
As in the feminine products segment, the compact fluff absorption
core is being extensively tested for use in baby diapers.
Sales
Turnover of baby diapers has risen by 2.7% to BEF 4.24 billion.
Ontex growth: 2.7% (Bio BEF) European Market growth: 1.5% (Bio BEF) (1)
(1) Source: John R. Starr, Inc. Estimates Oct 1998
4.25
4.2
4.15
4.1
4.05
218
217
216
215
214
213
2121997 1998 1997 1998
EN-Ontex BW 01-50 16-06-1999 15:44 Pagina 37
38
Ontex Annual Report 1998 Baby D iapers
12.3
22.7
17.7
23.3
30
20
10
01998 2003 1998 2003
During the past year, Ontex expanded its diaper business, acquiring business from competitive manufac-
turers. In the recent past, when a private label buyer dealt with Ontex, the focus often was strictly on price
as well as on bargaining for the best promotional support. Ontex now focuses on the product category,
which includes improving sales of the retailer’s brand. The retailer’s cost for the product still matters, but
the Ontex perspective takes in the whole picture: product movement, market trends, package effective-
ness, product quality and refinements, retail price, plus profits.
Future Developments
The fully developed market of Western Europe was about 94% penetrated in 1997. Reduced birth rate
trends and the already high penetration level of this market are the key considerations resulting in nega-
tive or low growth projection from 1998 through 2003. The Eastern European market, in contrast, is expect-
ed to continue to experience volume growth in the 11 to 12% range per year from 1998 through 2003. The
low level of current market penetration (19%) combined with rapid economic growth are the factors driving
Ontex’s further expansion in this region.
The chart below shows that Europe consumed 22.3 billion units in 1998.
Perspectives Disposable Diaper consumption Europe (Bio units of diapers) (1)
% increase per year
Western Europe -0.8%
Central & Eastern Europe 12%
The company is focusing on product enhancements and innovations. In Eastern Europe, branded products
promotional support will be set up through the mass media. Private label will be supported through the
group’s specialised customer service.
(1) Source: John R. Starr, Inc. Estimates Oct 1998
EN-Ontex BW 01-50 16-06-1999 15:44 Pagina 38
39
Ontex Annual Report 1998 Baby D iapers
EN-Ontex BW 01-50 16-06-1999 15:44 Pagina 39
EN-Ontex BW 01-50 16-06-1999 15:44 Pagina 40
41
Ontex Annual Report 1998 Incont inence Products
Incontinence Products
Description of the product range
Since 1995, adult incontinence sales have shown a natural growth of 7.5% per year in Western Europe. For
2000, the sales forecast is 4 billion pads with a market potential of 18 billion pads.
Ontex offers a complete range of incontinence products from light to medium and heavy incontinence.
Underpads and drawsheets for bed protection are also available.
In recent ratings by major health test magazines, Ontex’ products were nominated ‘Best Buy’ and scored
the highest for efficiency and absorption capacity which are the key elements for incontinence products.
Our pads for light incontinence (stress and urge incontinence) have special features to offer a perfect fit,
give high comfort and guarantee a high leakage protection. They are drum formed with a highloft layer which
possesses high absorption qualities, guarantees a fast dispersal of fluids and ensures low rewet.
Ontex produces pads for medium and heavy incontinence (two-piece system and all-in-one) with upstanding
cuffs to guarantee high leakage protection, a frontal tape to facilitate reclosure, and elastic waste bands
which offer a high level of moving comfort. Its double drum with acquisition layer makes the pad very soft,
ensures a very good and fast distribution, and a low rewet.
Ontex is conducting various hypoallergenic tests for the assessment of human skin compatibility in hospi-
tals on a continuous basis.
Activities
R&D
Ontex has extended the Euron® range with the ‘Night Pad’. This pad has an adjusted fluff core that permits
greater absorption, making this product an excellent choice as a sleep-through system and for specific
patients’ needs.
The introduction of a synthetic acquisition and transfer layer on the latest pads has proved a big success.
This layer ensures a quick acquisition and transfer of fluids, even after several voidings.
Due to excellent testing results and in response to general customer demand, all pads are now fitted with
this sophisticated layer.
In addition to the acquisition and transfer layer and based on the results of human skin compatibility tests,
all pads are hypoallergenic, thereby minimising the risk of skin irritation and redness.
Investments
A further breakdown of the barriers surrounding incontinence is leading to a strong growth of the light incon-
tinence segment. Ontex has acquired an excellent positioning of its products towards this segment. In order
to obtain bigger market shares, Ontex has made considerable investments in light incontinence as well as
in the other product categories.
The new production lines were all fully operational at the end of the year and will permit a quick response
to these growing markets in coming years.
EN-Ontex BW 01-50 16-06-1999 15:44 Pagina 41
42
Ontex Annual Report 1998 Incont inence Products
1.85
2.01
68,0
73,5
Potential Production Capacity in mio pieces/year
1997 1998 % increase
Incontinence products 241 314 30%
Sales
Turnover of incontinence products increased by 8.8% in 1998 to BEF 2.01 billion. This means Ontex is not
only following the natural growth of the market, but is also gaining market share from its competitors.
Ontex growth: 8.8% (Bio BEF) European Market growth: 6.7% (1) (Bio BEF)
One very important factor in achieving this is the company’s service package to the customer which
includes:
• an extensive product range that can meet the demand of
each type of incontinence.
• product assessment and support provided by Ontex prod-
uct specialists.(e.g.: Demonstration of techniques by
Ontex-nurses; see picture);
• Euron® follow-up (cost monitoring per patient) during
product consumption.
As a result of this customer focus, the turnover growth is not only the result of purchases by new cus-
tomers, but of existing customers developing their relations with Ontex into a long-term partnership.
Incontinence products are sold through multiple channels. The institutional market (hospitals, homes for
the elderly), home care and pharmacy are supplied with the Euron® brand. Retail is supplied with inconti-
nence products from the Helen Harper brand®. Of course, private label products are also delivered for
these customers.
Turnover 1998 by product category in the incontinence segment
Bed protection
All-in-one
Two-piece system
Light Incontinence
1997 1998 1997 1998
2.1
2
1.9
1.8
1.7
75
70
65
10%12%
23% 55%
(1) Bron: John R. Starr, Inc. Estimates Oct 1998
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43
Ontex Annual Report 1998 Incont inence Products
Future Developments
As incontinence becomes more accepted, people become aware of the solutions for their specific prob-
lems. The explosive growth of light incontinence products is one example of this phenomenon. Another indi-
cation is the growing demand of retail channels to develop private label assortments.
These changes are expressed in the growth perspectives for Europe over the next five years. For Western
Europe the growth rate remains quite stable, but for Eastern Europe it has increased by over 4% to 22.2%
per year.
Perspectives Incontinence consumption Europe (Bio units of diapers & pads) (1)
% increase per year
Western Europe 6%
Central & Eastern Europe 22.2%
Taking into account that current penetration is believed to be low in Europe – in Western Europe 21%, and
in Central & Eastern Europe 1.0% – Ontex has defined the incontinence segment as an area of high poten-
tial for the group, and further investments in this sector will continue.
Besides the two conventional incontinence systems (all-in-one and two-piece), Ontex is developing new
incontinence concepts which will address future customer needs.
(1) Source: John R. Starr, Inc. Estimates Oct 1998
0.2
3.9
0.5
5.26
4
2
0
1998 2003
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45
Ontex Annual Report 1998 Medica l Products
Medical Products
Description of the product range
The medical line comprises an extensive range of products under the Euron® brand. Ontex always takes a
customer-oriented approach; besides a standard line of dressing sets, it offers products which are tailored
to individual nursing techniques.
Ontex uses extensive production resources for the production and packaging of absorbent and gynaeco-
logical dressings and dressing sets. All products are produced under strict GMP (Good Manufacturing
Practice) guidelines, with the production facilities continuously inspected for temperature, pressure-flow
and bacteriological air purity.
Ontex’s sterilisation unit ensures that all products are delivered sterile in a hard or soft blister pack, sin-
gle or double wrapped. During the sterilisation process, various parameters such as temperature, pressure
and humidity are continuously registered and verified. Sterilisation indicators are examined in our labora-
tories under strict guidelines.
All articles, both raw materials and products, meet the directives of the European Pharmacopoeia. A mono-
graph is produced for each product. These monographs are used by our quality service to control produc-
tion. In this way, Ontex works only with products of the highest quality.
Activities
In response to customer demand Ontex has started to equip several products of the Euron® brand with bar-
codes. This will not only benefit customers’ internal logistics, but will enable Ontex to further automate its
own goods handling process.
Sales
Medical turnover rose by 4.6% to BEF 335 million in 1998.
Since this market is highly penetrated, growth is due mainly to market share gained from competitors.
Medical products (in Bio BEF)
Future Developments
In the continuous process of addressing customers’ needs, Ontex is developing production techniques
which will enable custom made dressing sets to be delivered as private label.
0.32
0.34
0.34
0.32
0.3
1997 1998
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46
Ontex Annual Report 1998 Repor t o f the Board o f D i r ectors
Report of the Board of Directors to the General Meeting
Dear Shareholder,
The Board of Directors is pleased to be able to present to you the consolidated annual accounts of the
Ontex N.V. group for the year ending on 31 December 1998.
Whilst 1997 was marked by major acquisitions and cooperation agreements, 1998 was a key year for the
group’s financial structure. Since 11 December 1998, the share Ontex has been listed on the first market
of the Brussels stock exchange.
This stock market introduction crowns the efforts made during the past years, and at the same times gives
the group the financial room it needs in order to continue its strategy of:
– carrying out replacement and expansion investments to enable the product range to follow market devel-
opments, and for Ontex to profile itself as a trend-setter;
– making further acquisitions in order to strengthen its position as a European producer.
Major events in 1998
Organisation of operating resources
Following the various acquisitions carried out in 1997, in 1998 we organised the Group’s production
resources so as to optimise the synergy effects. This meant additional costs and a lower degree of capac-
ity usage in 1998.
Organisation of the participating interests held within the Group
In order to rationalise and optimise the shareholder structure, it was decided in 1998 to take over the Van
Malderen family’s shareholdings in Féminil SA and in Ontex France Sarl. The Ontex group now owns 99.97%
of both companies.
At the same time Ontex N.V. took over the remaining 5% of the shares in Ontex Coordination Center N.V.
from Vadebo N.V.
Building extension
Our production facility in the Czech Republic has been extended by around 11,000 m2, to allow us to keep
up with market developments.
Stock market introduction
Since 11 December 1998, the share Ontex NV has been listed on the first market of the Brussels Stock
Exchange. Until now the share price has reflected the dynamism of the group.
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47
Ontex Annual Report 1998 Repor t o f the Board o f D i rectors
Notes to the consolidated annual accounts for the year ending 31 December 1998
The consolidated figures of the Ontex N.V. group are drawn up on a calendar year basis, seeing that most
constituent companies close their books on 31 December of each year.
The full consolidation method is used.
In 1998 Féminil SA and Ontex France Sarl were included in the consolidation of the Ontex N.V. group for
the first time. This has not led to any major change in the structure of the balance sheet and income state-
ment as at 31 December 1998.
The valuation rules have been adapted, so that as from 1998 the cost of producing clichés (printing for-
mats for packaging) is also included under tangible fixed assets. These costs are depreciated over a peri-
od of three years. The book value of these costs capitalised in 1998 amounts to BEF 33,540,520.
The consolidated cash flow before taxes is follows:
1998 1997
consolidated profit before tax 113,088,755 209,603,157
depreciation on assets 771,607,451 674,572,506
depreciation on consolidated consolidation differences 44,127,187 29,972,980
Extraordinary depreciation on tangible fixedassets (write-back/addition) -12,261,315 -6,726,824
Total 916,562,078 907,421,819
or, expressed as a percentage of turnover 8,2% 8,5%
Consolidated balance sheet
Consolidation differences
Positive consolidation differences at 31 December 1998 amount to BEF 324,039,251 (acquisition value).
These consist primarily of consolidation differences from the acquisition of the Wirths Group and Ontex
Peninsular SA. New consolidation differences booked in 1998 relate mainly to Ontex France Sarl, Ontex CZ
sro and the Wirths group.
Depreciation of BEF 44,127,187 was taken on the positive consolidation differences in 1998, based on a
depreciation percentage of 10% a year. If necessary, additional depreciation is taken in an amount of 100%.
The negative consolidation differences amount to BEF 147,127,177. These relate primarily to the partici-
pating interests that existed at 1 January 1998 in Ontex Hygieneartikel GmbH and Eutima NV, and to the
acquisition in 1998 of 99.97% of the shares of Féminil SA.
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48
Ontex Annual Report 1998 Repor t o f the Board o f D i r ectors
Tangible fixed assets
The following amounts were invested in 1998:
Land and buildings 258,263,568
Plant, machinery and equipment 441,788,656
Furniture and vehicles 72,473,562
Leasing and similar rights 76,301,750
Other tangible fixed assets 12,884,971
Assets under construction and advance payments 305,876,600
1,167,589,107
The most significant investments are:
Land and buildings (including assets under construction and advance payments)
Purchases in Belgium are mainly of warehouse space, whilst in the Czech Republic the group has invested
in a major extension of the existing plant. This new space was already taken into use in 1998.
In the Netherlands work began in 1998 on a major extension of the property. This work was at an advanced
stage at 31 December 1998.
Plant, machinery and equipment
(incl. leasing, assets under construction and advance payments)
These relate primarily to extension investments and to the upgrading of machinery at Ontex NV, Ontex
Hygieneartikel GmbH, Ontex CZ sro, Ontex Peninsular SA and the Wirths group.
New production lines have been introduced at Ontex N.V. and at Ontex Hygieneartikel GmbH. These already
came into use in 1998:
Ontex N.V.
Commissioning of two new product lines for sanitary towels and underpads. 6 production lines are includ-
ed in assets under construction.
Ontex Hygieneartikel GmbH
Purchase of 4 new tampon machines. One tampon machine, recorded in 1997 under advance payments,
went into operation in 1998.
Ontex Peninsular SA
A major advance payment has been recorded in a new production line for panty liners. This machine will be
delivered in May 1999.
Stocks
Stocks amounted to BEF 1,781,979,139 at the end of 1998.
Amounts receivable within one year
Trade receivables amounted to BEF 1,998,501,334 as at 31/12/98.
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49
Ontex Annual Report 1998 Repor t o f the Board o f D i rectors
Capital and issue premiums
Capital and issue premiums are BEF 1,574,900,000. This amount represents the capital and the issue
premiums of Ontex N.V., which have been increased by the capital increase of BEF 1,285,900,000 on 10
December 1998.
Investment grants
Investment grants refer primarily to amounts accorded to Ontex Hygieneartikel GmbH and Ontex Peninsular
SA.
Deferred and latent taxation
Earnings were positively impacted by the harmonisation of the depreciation rules at the individual compa-
nies with those used in the consolidation. Latent taxation of BEF 30,680,000 was expressed on this pos-
itive effect. The total amount of deferred taxation recorded as a result of the recasting of the valuation rules
is BEF 276,975,676.
Consolidated annual accounts
The turnover of the Ontex N.V. group rose in 1998 by BEF 504,599,350.
The small extent of this rise is explained by the relocation and conversion of various machines, also the
fact that certain new machines were delivered behind schedule.
The consolidated annual accounts of the ‘Ontex N.V.’ group are drawn up using the valuation rules applied
by Ontex N.V. Persons reading the consolidated annual accounts of the Ontex N.V. group should bear in
mind that these are more a reflection of fiscal policy than of economic reality. The group always makes opti-
mal use of existing fiscal opportunities to depreciate plant and machinery over relatively short periods, giv-
ing rise to ‘hidden reserves’ under tangible fixed assets.
All new plant and machinery is written off over 5 years on a straight-line basis. This compares with an aver-
age real life of at least 8 years. If a machine is rebuilt at a certain time, its life is even longer. Buildings
are written off on a straight-line basis over 20 years. Here too we can talk about undervalued assets in the
balance sheet.
The Directors of the Ontex N.V. group,
Buggenhout, 30 March 1999
Paul VAN MALDEREN Bart VAN MALDEREN
Chairman of the Board Managing Director
J. VAN DEN BOSSCHE Griet VAN MALDEREN
Director Director
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51
Ontex Annual Report 1998 Conso l idated annua l accounts
ONTEX CONSOLIDATION
Consolidated table of sources and uses of funds for the year ending 31 December 1998
Sources in BEF
From activities:
Consolidated profit 31,259,119
Non-cash costs
- Latent taxation 23,114,727
- Depreciation 803,473,323
Reduction/increase in untaxed reserves 7,124,580
Investment subsidies granted 31,755,393
896,727,142
From financial activities
Reduction in amounts receivable after one year 77,326,339
Capital increase (and issue premium) 1,285,900,000
Other 5,597,353
1,368,823,692
Total sources 2,265,550,834
Uses
Consolidation goodwill from the recording of acqui-
sitions and/or changes in the consolidation perimeter 19,273,446
Investments in tangible and intangible fixed assets,
less Net book value of assets disposed of 1,099,854,995
Repayment of amounts payable after one year 218,131,838
Other uses 5,922,741
Total uses 1,343,183,020
Increase (decrease) in working capital 922,367,814
Working capital at start of period (1) -175,188,192
Working capital at end of period (1) 747,179,622
(1) Provisions + amounts payable within one year + deferred and accrued items - current assets
The most important feature here is the BEF 922.4 million rise in working capital brought about by the ca-
pital increase.
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Ontex Annual Report 1998 Conso l idated annua l accounts
52
BALANCE SHEET
ASSETS (in BEF) 1998 1997
fixed assets 3,381,598,134 3,061,093,705
II Intangible fixed assets 79,066,612 113,435,532
III Consolidation differences (positive) 246,953,497 266,947,612
IV Tangible fixed assets 3,055,578,025 2,680,700,246
A. Land and buildings 1,426,702,548 1,277,279,596
B. Plant, machinery and equipment 813,664,336 717,950,394
C. Furniture and vehicles 110,817,708 99,967,131
D. Leasing and similar rights 386,431,275 479,505,667
E. Other intangible fixed assets 11,573,427 168,368
F. Assets under construction and advance payments 306,388,731 105,829,090
V Financial fixed assets 0 10,315
B Other participating interests 0 10,315
1. Participating interests, stocks
and shares 10,315
current assets 4,522,979,677 3,903,349,201
VI Amounts receivable after one year 3,118,377 80,444,716
B. Other receivables 3,118,377 80,444,716
VII Stocks and contracts in progress 1,781,979,139 1,493,728,717
A. Stocks 1,781,979,139 1,493,728,717
1. Raw materials and consumables 894,798,979 789,804,759
2. Work in progress 61,068,165 65,212,214
3. Finished goods 543,129,079 420,230,856
4. Goods purchased for resale 241,321,174 159,015,631
6. Advance payments 41,661,742 59,465,257
VIII Amounts receivable within one year 2,286,411,838 2,119,505,670
A. Trade receivables 1,998,501,334 1,782,553,056
B. Other receivables 287,910,504 336,952,614
IX Current investments 102,319,378 0
B. Other investments 102,319,378
X Cash at bank and in hand 322,297,664 160,055,055
XI Deferred charges and accrued income 26,853,281 49,615,043
TOTAL ASSETS 7,904,577,811 6,964,442,906
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LIABILITIES (in BEF) 1998 1997
shareholders’ equity 2,389,602,769 1,028,306,798
I Capital 1,395,900,000 148,900,400
A. Issued capital 1,395,900,000 463,546,138
B. Uncalled capital (-) (314,645,738)
II Issue premiums 179,000,000 140,100,00
III Revaluation surpluses 127,500,000 142,500,000
IV Consolidated reserves
(amount carried forward) 419,625,729 382,280,619
V Consolidation differences (negative) 147,127,177 131,413,612
VI Translation differences (+)(-) 60,862 (5,521,441)
VII Investment grants 120,389,001 88,633,608
minority interests (22,218,115) (21,195,171)
VIII Minority interests (22,218,115) (21,195,171)
provisions, deferred and latent taxation 458,700,206 457,595,852
IX A. Provisions for liabilities and charges 179,507,077 201,807,438
1. Pensions and similar obligations 88,232,220 81,013,949
2. Taxes 0 4,640,616
3. Major repairs and maintenance work 8,934,864 13,489,674
4. Other liabilities and charges 82,339,993 102,663,199
B. Deferrred and latent taxation 279,193,129 255,788,414
debts 5,078,492,951 5,499,735,427
X Amounts payable after one year 1,485,318,350 1,703,450,188
A. Financial debts 1,460,210,792 1,643,399,250
3. Leasing and similar debts 287,190,828 350,098,297
4. Credit institutions 1,173,019,964 1,293,300,953
B. Trade debts 24,972,041 50,963,300
2. Bills payable 24,972,041 50,963,300
D. Other amounts payable 135,517 9,087,638
XI Amounts payable after one year 3,557,054,250 3,779,574,207
A. Current portion of amounts
payable after one year 516,125,680 499,563,051
B. Financial debts 522,574,985 1,062,646,467
1. Credit institutions 522,574,985 1,062,646,467
C. Trade debts 2,022,070,116 1,833,694,362
1. Suppliers 1,860,135,392 1,639,713,602
2. Bills payable 161,934,724 193,980,760
D. Advances received on
contracts in progress 664,704 11,199,238
E. Taxes, remuneration and social security 417,756,512 330,647,482
1. Taxes 186,638,125 112,411,642
2. Remuneration and social security 231,118,387 218,235,840
F. Other amounts payable 77,862,253 41,823,607
XII Deferred income and accrued charges 36,120,351 16,711,032
TOTAL LIABILITIES 7,904,577,811 6,964,442,906
53
Ontex Annual Report 1998 Conso l idated annua l accounts
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Ontex Annual Report 1998 Conso l idated annua l accounts
54
INCOME STATEMENT (in BEF)
1998 1997
I Operating income 11,468,492,824 10,843,979,116
A. Turnover 11,178,598,649 10,673,999,299
B. Changes in stocks, work in progress,
finished products and contracts in progress
(increase +, decrease -) 89,399,647 (29,362,604)
C. Fixed assets - own production 47,622,767 27,030,258
D. Other operating income 152,871,761 172,312,163
II Operating charges (11,042,485,047) (10,359,507,232)
A. Raw materials, consumables, and
goods purchased for resale 6,531,530,831 6,202,127,587
1 Purchases 6,531,530,831 6,497,733,862
2 Changes in stocks
(increase -, decrease +) (295,606,275)
B. Services and other goods 1,653,278,834 1,516,697,383
C. Remuneration, social security
and pensions (note, page 65, VII, B.1) 1,961,757,771 1,806,458,751
D. Depreciation and amounts written off
formation expenses and tangible
and intangible fixed assets 771,607,451 674,572,506
E. Amounts written off stocks, orders in
progress and trade receivables
(incr. -, decrease +) 10,171,075 32,446,923
F. Provisions for liabilities and charges
(incr. +, applications and write-backs -) (26,239,365) (3,776,475)
G. Other operating charges 140,378,450 130,980,557
III Operating profit 426,007,777 484,471,884
IV Financial income 149,775,537 78,153,162
A. Income from financial fixed assets 1,803,458 4,259,605
B. Income from current assets 19,037,515 23,788,206
C. Other financial income 128,934,564 50,105,351
V Financial charges (-) (378,346,805) (339,181,329)
A. Interest and other debt charges 206,350,997 170,154,222
B. Depreciation of positive
consolidation differences 44,127,187 29,972,980
D. Other financial charges 127,868,621 139,054,127
VI Profit from normal operations before tax 197,436,509 223,443,717
EN-Ontex BW 51-60 16-06-1999 12:59 Pagina 54
1998 1997
VII Extraordinary income 51,579,516 45,860,244
A. Write-back of depreciation and
amounts written off tangible and
intangible fixed assets 12,467,012 6,726,824
B. Write-back of depreciation on
consolidation differences 637,284
E. Gains on the disposal of fixed assets 9,137,435
F Other extraordinary income
(note, page 66, VII, C) 39,112,504 29,358,701
VIII Extraordinary charges (-) (135,927,270) (59,700,804)
A. Extraordinary charges and amounts written off
tangilbe and intangible fixed assets 205,697 0
B. Write-back of depreciation on
consolidation differences
C. Amounts written off financial fixed assets 21 755,404
D. Provisions for extraordinary
liabilities and charges 0
E. Losses on the disposal of fixed assets 18,733,719
F. Other extraordinary charges (note, page 66, VII, C) 135,721,552 34,583,142
G. Extraordinary charges capitliased as
restructuring costs (-) 5,628,539
IX Profit before taxes 113,088,755 209,603,157
X A. Withdrawals from deferred and
latent taxation (+) 34,365,273 4,535,393
B. Transfers to deferred and
matent taxation (-) (57,480,000) (116,000,000)
XI Income taxes (-)(+) (58,714,909) (20,828,579)
A. Taxes (note, page 66, VII, D) (-) (63,749,887) (20,916,479)
B. Regularisation of taxes and write-back of
provisions for taxes 5,034,978 87,900
XII Profit for the year 31,259,119 77,309,971
XIV Consolidated profit (-)(+) 31,259,119 77,309,971
A. Minority interest (4,138,513) 8,237,064
B. Group’s share 27,120,606 85,547,035
55
Ontex Annual Report 1998 Conso l idated annua l accounts
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Ontex Annual Report 1998 Conso l idated annua l accounts
56
STATUTORY AUDITOR’S REPORT
Report of the statutory auditor to the general meeting of shareholders
of Ontex N.V., with its registered office at Genthof 5, 9255 Buggenhout,
on the consolidated annual accounts of Ontex N.V.
for the year ending on 31 December 1998.
As required by law and the articles of association, we are pleased to report to you on
the execution of the auditing mission entrusted to us.
We have audited the consolidated annual accounts, drawn up under the responsibility
of the company’s board of directors, for the financial year ending on 31 December
1998, showing a balance sheet total of BEF 7,904,577,811, and with an income
statement closing with a profit for the financial year of BEF 31,259,119.
For a number of enterprises included in the consolidated annual accounts, we have
based our work on the activities of our auditors colleagues.
We have also audited the annual report.
Statement without reserve in respect of the consolidated annual accounts
Our audit was undertaken in accordance with the standards of the Belgian Institute of
Company Auditors. These professional standards require our audit to be organised
and carried out in such a way as to acquire a reasonable degree of certainty that the
consolidated balance sheet and income statement do not contain any materially sig-
nificant inaccuracies, having regard to Belgian legal and regulatory provisions.
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Ontex Annual Report 1998 Conso l idated annua l accounts
57
In accordance with these standards we have taken into account the administrative and
bookkeeping organisation of the group, as well as the internal control procedures. We
have received the clarifications and information we required for our audit. Using ran-
dom samples we have examined the justification of the amounts given in the consoli-
dated balance sheet and income statement. We have assessed the valuation rules,
the principles of consolidation and the significant accounting estimates which the
enterprise has made and the presentation of the consolidated annual accounts as a
whole. We believe that our efforts and those of our auditor colleagues, who have audit-
ed the accounts of the subsidiaries, form a reasonable basis for the expression of our
opinion.
Based on our audit and the reports of our auditor colleagues, we are of the opinion
that the consolidated balance annual accounts for the year ending on 31 December
1998 give a true and fair view of the net financial assets, the financial situation and
the earnings of the consolidated whole, in accordance with the relevant Belgian legal
and regulatory provisions, and that appropriate justification is given in the notes t the
accounts.
The consolidated annual report contains the information required by law and concords
with the consolidated annual accounts.
Dendermonde, 31 March 1999
Cvba Van Geet, Derick & C°, Company auditors
The liable partner, Mr Hugo Van Geet
Kerkstraat 2-4
9200 Dendermonde
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Ontex Annual Report 1998 Conso l idated annua l accounts
58
Summary of the valuation rules
Criteria for inclusion in the Ontex N.V. group consolidation
Companies of which the group owns directly or indirectly at least 50% are fully consolidated in the group’s
consolidated annual accounts. This means that the assets, liabilities and the earnings of the group are
expressed in full. A distinction is, however, made, though only within shareholders’ equity, between major-
ity and minority shareholders. All significant intra-group transactions have been eliminated.
Special valuation rules
Formation expenses
Formation expenses and the costs of capital increases are charged to income in the financial year in which
they are incurred.
Tangible and intangible fixed assets
a) Valuation at gross value
Tangible fixed assets are valued at acquisition cost and are recorded in the balance sheet at that amount
after deduction of depreciation and reductions in value.
The acquisition cost is the acquisition price, or, where applicable, the production cost. The acquisition price
includes ancillary costs.
The production cost includes both the raw materials/consumables and the production costs.
b) Depreciation
Tangible fixed assets having a limited useful life are written off in such a way that their cost is spread over
the likely period of usefulness or service.
Assets that have been withdrawn from service or no longer contribute on a permanent basis to the activi-
ties of the company are specially written down in order to bring their accounting value into line with their
likely probable realisation value.
Intangible fixed assets are depreciated as follows:
R&D costs 20% straight line
33% straight line
licences and patents 20% straight line
goodwill 20% straight line
EN-Ontex BW 51-60 16-06-1999 12:59 Pagina 58
Ontex Annual Report 1998 Conso l idated annua l accounts
59
Tangible fixed assets are depreciated as follows:
land and buildings 5% straight line
10% straight line
additional building-related costs 100% in year of acquisition
plant, machinery and equipment 20% straight line
33% straight line (second hand)
furniture and vehicles 20% straight line
33% straight line (second hand)
leasing and similar rights 20% straight line
other fixed assets depending on the type
assets under construction/advance payments (not applicable)
Assets are written off for a full year in the year of acquisition. Revaluation gains are depreciated at the
same rate as the asset to which they refer.
Financial fixed assets
Participating interests, shares and fixed-income securities are recorded at acquisition cost.
Amounts receivable are recorded at nominal value.
A reduction in value is applied in the event of permanent reduction or loss of value.
Stocks
Raw materials and consumables are valued at acquisition cost, using the FIFO method.
Work in progress and finished goods are valued at production cost, including indirect production costs.
Reductions in value are applied where stocks become old, outdated or are for sale as sales or imperfect
goods. Where the market price is lower, a reduction in value is applied.
Amounts receivable within one year
Amounts receivable are recorded at their nominal value.
Reductions in value are applied whenever uncertainty exists as to the payment of all or part of the receiv-
able at due date. Receivables are also written down whenever their realisation value at the balance sheet
closing date is lower than their book value.
Cash at bank and in hand
Cash at bank and in hand is valued at nominal value.
Translation differences
The earnings of consolidated foreign enterprises, expressed in foreign currencies, are converted into
Belgian francs at the average rate for the financial year.
The balance sheets of these consolidated enterprises, expressed in foreign currencies, are converted into
Belgian francs at the final exchange rate of the last working day of the financial year as published in the
Financieel Economische Tijd.
EN-Ontex BW 51-60 16-06-1999 12:59 Pagina 59
The equity components of these enterprises are converted at the historical exchange rate. The difference
between this historical exchange rate and the closing rate on the balance sheet closing date leads to con-
version differences which are included directly in shareholders’ equity under ‘translation differences’.
Consolidation differences
Where new participating interests are acquired, the difference between the acquisition cost and the corre-
sponding portion of the shareholders’ equity of the consolidated subsidiaries, after application of any cap-
ital gains and losses to other asset and liability items, is included in the consolidated balance sheet. Where
the difference is negative, it is recorded under the liabilities item ‘consolidation differences’. Where the dif-
ference is positive, it is included under ‘consolidation differences’ on the assets side of the balance sheet.
It should be noted that consolidation differences realised before 1994 are depreciated over 5 years and
those realised after 1994 over 10 years.
Provisions for liabilities and charges
The management body determines, cautiously and in good faith, what provisions must be set up to cover
pending disputes, charges and liabilities.
Deferred taxation
A provision for latent taxation is set up for each temporary difference between the economic (consolidated)
earnings and the tax earnings, in so far as it is established that these temporary differences will reverse
in the near future, and will affect the tax charges.
Amounts payable before and after one year
Amounts payable are recorded in the balance sheet at their nominal value.
Translation rules for assets and liabilities denominated in foreign currencies
Amounts receivable and payable in foreign currencies are translated at the mid-rate on the balance sheet
closing date, with only negative translation results, globalized per currency, taken into the income state-
ment.
Deferred and accrued accounts
These are booked at acquisition cost and recorded in the balance sheet in respect of the amounts that run
over into the following financial year(s).
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Ontex Annual Report 1998 Conso l idated annua l accounts
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I SCHEDULE OF FORMATION EXPENSES Amount
At previous year-end 0
Changes during the year
New costs during the year 294,346
Depreciation (-) (294,346)
At year-end 0
II SCHEDULE OF INTANGIBLE FIXED ASSETS Research and Patents,
a) ACQUISITION VALUE development licences etc.
At previous year-end 89,143,989 145,603,164
Changes during the year
– Acquisitions, including fixed assets -
own production 312,262 5,152,667
– Transfers and withdrawals from service (-) (7,097,650)
– Transfers between accounts (+) (-) 8,250,960 (23,391,826)
– Translation differences (+) (-) (9,205) (47,268)
– Other changes 410,701
At year-end 97,698,006 120,629,788
c) DEPRECIATION AND AMOUNTS WRITTEN OFF
At previous year end 64,904,511 56,407,113
Changes during the year
– Recorded and written back
via the income statement (+) (-) 24,619,632 21,930,482
– Cancelled or transferred between items (+) (-) 4,125,480 (24,434,881)
– Translation differences (+) (-) (7,722) (27,674)
– Other changes 161,634
At year-end 93,641,901 54,036,674
d) NET BOOK VALUE AT YEAR-END 4,056,105 66,593,114
a) ACQUISITION VALUE Goodwill
At previous year-end 20,518,339
Changes during the year
– Acqusitions, including fixed assets - own production 10,521,741
– Transfers between items (+) (-) 15,965,608
– Translation differences (+) (-) (1,471)
At year-end 47,004,217
c) DEPRECIATION AND AMOUNTS WRITTEN OFF
At previous year-end 20,518,336
Changes during the year
– Recorded or written back via the income statement (+) (-) 2,104,392
– Cancelled or transferred between items (+) (-) 15,965,566
– Translation differences (+) (-) (1,470)
At year-end 38,586,824
d) NET BOOK VALUE AT YEAR-END 8,417,393
61
Ontex Annual Report 1998 Conso l idated annua l accounts
Information (in BEF)
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Ontex Annual Report 1998 Conso l idated annua l accounts
62
III SCHEDULE OF TANGILBE FIXED ASSETS
Land and Plant, machinery Furniture and
buildings and equipment vehicles
a) ACQUISITION VALUE
At previous year-end 1,655,567,451 4,577,342,577 419,720,810 8
Changes during the year
– Acqusitions,including fixed
assets - own production 258,263,568 441,788,656 72,473,562
– Transfers between items 46,869,425 83,762,118 729,734 (
– Transfers and withdrawals from service (83,749,801) (123,050,735) (56,000,480)
– Translation differences 5,718,023 (1,062,425) (855,566)
– Other changes 6,373,277 92,063,921 5,439,783
At year-end 1,889,041,943 5,070,844,112 441,507,843 8
b) CAPITAL GAINS
At previous year-end 142,500,000
Changes during the year
– Transfers between items 11,497,938 (
– Translation differences (564,093)
At year-end 153,433,845
c) DEPRECIATION AND AMOUNTS WRITTEN OFF (-)
At previous year-end 520,787,855 3,859,392,183 319,753,679 3
Changes during the year
– Recorded or written back via the income statement (-) 95,372,153 388,137,901 49,894,671 1
– Acquired from third parties
– Cancelled or transferred between items (-) (1,117,148) (70,116,601) (41,762,527) (
– Translation differences (278,643) (1,135,130) (506,901)
– Other changes 1,009,023 80,901,423 3,311,213
At year-end 615,773,240 4,257,179,776 330,690,135 4
d) NET BOOK VALUE AT YEAR-END 1,426,702,548 813,664,336 110,817,708 3
of which
– Plant, machinery and equipment 3
– Furniture and vehicles
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Ontex Annual Report 1998 Conso l idated annua l accounts
63
Furniture and Leasing and Other tangible Assets under constr.
vehicles similar rights fixed assets and advance payments
419,720,810 834,924,544 3,621,271 111,958,676
72,473,562 76,301,750 12,884,971 305,876,600
729,734 (40,486,239) (91,699,778)
(56,000,480) (710,000) (20,667,502)
(855,566) (803,246) 84,224 598,291
5,439,783 16,450,162 4,881,334 322,444
441,507,843 885,676,971 21,471,800 306,388,731
11,706,366
(11,497,938)
(208,428)
319,753,679 367,125,243 3,452,903 6,129,586
49,894,671 180,579,820 2,542,325 (6,129,586)
(41,762,527) (48,119,443)
(506,901) (339,924) 87,500
3,311,213 3,815,645
330,690,135 499,245,696 9,898,373 0
110,817,708 386,431,275 11,573,427 306,388,731
385,303,914
1,127,361
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IV SCHEDULE OF CONSOLIDATED RESERVES Amount
Consolidated reserves at previous year-end (+) (-) 382,280,619
Changes during the year
– Group’s share in the consolidated earnings (+) (-) 27,120,606
– Other changes
(split out significant amounts not
allocated to the group’s share in
the consolidated earnings)
Withdrawal from untaxed reserves (5,644,042)
Transfer to revaluation gains 15,000,000
Increase in untaxed reserves 12,768,622
Pre-acquisitionprofit (5,379,482)
Other (6,520,594)
Consolidated reserves at year-end (+) (-) 419,625,729
V SCHEDULE OF CONSOLIDATION DIFFERENCES AFTER APPLICATION
OF THE EQUITY METHOD OF CONSOLIDATION MUTATIEMETHODE
Positive Negative
differences differences
1 Consolidation differences
– Net book value at previous year-end 266,947,612 131,413,612
– Changes during the year
– following an increase in the participation percentage 6,161,054 15,713,565
– depreciation (44,127,187)
– other changes 17,972,018
– Net book value at year-end 246,953,497 147,127,177
VI SCHEDULE OF AMOUNTS PAYABLE
A Breakdown of amongs payable with an Amounts payable with a remaining life of
original life of more than one year, up to more than more than
according to their remaining life 1 year 1 year 5 years
and up to
5 years
Financial debts 490,426,298 1,217,905,408 242,161,449
3. Leasing and similar debts 157,785,309 287,190,828
4. Credit institutions 332,640,989 930,714,580 242,161,449
Trade debts 25,699,382 24,972,041 0
2. Bills payable 25,699,382 24,972,041
Other amounts payable 279,452
TOTAL 516,125,680 1,243,156,901 242,161,449
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B Amounts paybale (or parts thereof) guaranteed by real security Amounts
given or irrevocably promised on the assets of the enterprises guaranteed
included in the consolidation (1) by real
security
Financial debts 1,909,629,389
3. Leasing and similar debts 443,708,805
4. Credit institutions (portion released after balance sheet date, see page 70) 1,465,920,584
Trade debts 50,671,423
2. Bills payable 50,671,423
Taxes, remuneration and social security 3,965,693
1. Taxes 3,965,693
TOTAL 1,964,266,505(1) Preferential debt is not included under guaranteed
debts, except where the seller has a prior right.
Retention of ownership is equivaleted to a real guarantee.
VII OPERATING EARNINGS
A2 Global group turnover in Belgium (see page 70) 1998 1997
650,873,324 1,322,494,214
B Average number of persons employed and breakdown 1998 1997
of personnel costs
1 At fully-consolidated enterprises
Average number of persons employed 1,743 1,533
a) Houlry-paid workers 1,394 1,215
b) Salaried staff 343 312
c) Management personnel 6 6
Costs for the year 1,961,757,771 1,806,458,751
a) Remuneration and direct social benefits 1,404,011,864 1,306,506,856
b) Employers’ social security contributions 440,933,682 438,358,488
c) Employers’ premiums for extra-legal
insurance 11,171,851 9,053,556
d) Other pension costs 104,332,393 50,354,550
e) Pensions 1,307,981 2,185,301
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C Extraordinary earnings 1998 1997
1 Breakdown of other extraordinary income, where this
item includes major amounts 39,112,504 29,358,701
– Other 28,429,231 10,986,221
– Write-back of reductions in value on receivables 18,372,480
– Compensation from suppliers 10,683,273
2 Breakdown of other extraordinary charges, where this
item includes significant amounts 135,721,552 34,583,142
– Demolition costs of buildings 17,783,060
– Other 26,821,946 16,800,082
– Disputes with customers 10,324,887
– Costs of stock market introduction 74,878,663
– Reductions in value on receivables 23,696,056
D Income taxes 1998 1997
1 The differences between the taxes imputed to the
consolidated income statement for the present and
previous years and the taxes that are payable or have
been paid in respect of these financial years, in so
far as this difference is significant with respect to
taxes to be paid in the future. 276,975,676 230,970,972
2 The impact of extraordinary earnings on income
tax for the year
– Positive (+) / negative (-) on the provision set up
for latent taxation in an amount of (27,500,000) 2,500,000
VIII RIGHTS AND COMMITMENTS NOT REFLECTED IN THE BALANCE SHEET 1998
A 1 Guarantees given or irrevocably promised by enterprises
included in the consolidation 2,117,774,744
2 Security given or irrevocably promised by enterprises included
in the consolidation and secured by their own assets, for the
debts and commitments of companies included in the consolidation
(released part, see page 70) 2,968,964,421
4 a) Significant commitments to pruchase fixed assets
– Machines 541,000,000
C Significant pending disputes and other significant commitments not mentioned above.
A dispute with the tax authorities is pending in respect of one of the enterprises included in the con-
solidation. The necessary objections have been filed. The disputed tax assessments are included
in the assets and liabilities of the consolidated annual accounts, in an amount of BEF 33,517,153.
Recourse exists against the former owners of the consolidated enterprise in question in the event
of a negative outcome, but with the enterprise required to pay the first BEF 10 million. The final out-
come of this tax dispute has to be waited for.
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EN-Ontex BW 61-70 16-06-1999 13:00 Pagina 66
D Retirement obligations towards employees or managers (see page 70).
IX RELATIONS WITH AFFILIATED ENTERPRISES AND WITH ENTERPRISES
LINKED BY PARTICIPATING INTERESTS THAT ARE NOT INCLUDED
IN THE CONSOLIDATION Affiliated enterprises
1998 1997
1 Financial fixed assets 10,315
participating interests and shares 10,315
2 Receivables 41
up to one year 41
3 Cash investment 42
shares 21
receivables 21
X FINANCIAL RELATIONS WITH THE DIRECTORS OR OWNER-MANAGERS
OF THE CONSOLIDATING COMPANY 1998
A Remuneration charged to the financial year in respect of their
activities in the consolidating enterprise, its subsidiaries and affiliated
companies, including retirment pensions granted, both directly and
via management company 25,566,484
B Advances and credits granted by the consolidating enterprise,
a subsidiary or an affiliated enterprise to the directors or
owner-managers 1,175,498
XI SUBSIDIARIES
A Fully consolidated subsidiaries Portion of
capital*
Meriana NV - Industriepark Genthof 5 - 9255 Buggenhout - BE 423.730.741 100%
Ontex Coordination Center NV - Industriepark Genthof 5 - 9255 Buggenhout -
BE 460.560.453 100%
Eutima NV - Korte Moeie 53 - 9900 Eeklo - BE 415.412.891 100%
Helen Harper Ltd - Macadam Road 97 - Earlstrees Industrial State -
Corby Northants NN1 2JN - England 100%
Ontex UK Ltd - Macadam Road 97 - Earlstrees Industrial State -
Corby Northants NN1 2JN - England 100%
Ontex BV - Postbus 6155 - Energiestraat 14 - 5961 PT Horst - Netherlands 100%
Helen Harper BV - Postbus 6155 - Energiestraat 14 - 5961 PT Horst - Netherlands 100%
Ontex Hygiëneartikel Deutschland GmbH - Fabrikstraße 30 -
8603 Großpostwitz - Germany 99.72%
Ontex Italia Srl - Via Delle Grazie 6 - 25122 Brescia - Italy 100%
Ontex Hygieneprodukte GmbH - Grenzgasse 40 - 2340 Mödling - Austria 100%
Ontex CZ Sro - Vesecko - 511 01 Turnov - Czech Republic 100%
Ontema NV - Industriepark Genthof 12 - 9255 Buggenhout - BE 453.081.852 100%
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Ontex Romania SRL - 5, Str. Caderea Bastilieri, et. 1, ap. 10,
sector 1 - Bucharest - Romania 100%
Ontex Polska sp. z.o.o. - ul. Karniszewicka 78 - 95 200 Pabianice - Poland 100%
Ontex Magyarorszag (Ungarn) Kft - Zsolna U. 5 - 1125 Budapest - Hungary 100%
Ontex Peninsular SA - Poligono Industrial Hontoria - Parcela 13 - 40195 Segovia - Spain 90%
Wirths Group - Industriegebiet Ost - Robert Bosch Strasse - 56727 Mayen - Germany 75%
Ontex International SARL - 11, Boulevard Prince Henri - L 1724 - Luxembourg 100%
Féminil SA - Athélia II - 13600 La Ciotat - France 99.97%
Ontex Sarl - 103 Rue de la Pompe - 75116 Paris - France 99.97%
Group Wirths as a subconsilidation
The subsidiaries of Wirths are subconsilidated in Wirths group according to the full method, applying the
Ontex valuation rules.
A. Subsidiaries fully consolidated in the subconsolidation of Wirths group: Portion of
capital*
J. Wirths Hygiene GmbH - Industriegebiet Ost - Robert Bosch Strasse -
56727 Mayen - Germany 99.8%
Moltex Baby-Hygiene Beteiligungs GmbH - Industriegebiet Ost -
Robert Bosch Strasse - 56727 Mayen - Germany 100%
Moltex Baby-Hygiene GmbH & Co KG - Industriegebiet Ost - Robert Bosch Strasse -
56727 Mayen - Germany 100%
J. Wirths & Co. Scan-Products Maschinenbau und Produktionsgesellschaft GmbH -
Industriegebiet Ost - Robert Bosch Strasse - 56727 Mayen - Germany 98%
Seconds Windelshop GmbH - 56727 St. Johann - Germany 98%
B. Subsidiaries excluded from Wirths subconsilidation Portion of
capital*
Wirths France SARL - bd Haussmann 138 - 75008 Paris - France 100%
This enterprise, that is part of the Wirths group, is not included in the
consolidation because it is in liquidation as at 31/12/98.
* of these subsidiaries, which is held by the consolidated enterprise and by persons
in the own name, but on behalf of these enterprises.
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Information that permits a meaningful comparison with the consolidated annual accounts for the previous
year, where the composition of the consolidated whole has undergone major changes in the course of the finan-
cial year.
(pursuant to article 18 of the RD of 6 March 1990)
The following enterprises are included in the consolidation as at 31/12/98, which in 1997 were not yet part
of the NV Ontex group:
– Féminil SA
– Ontex France Sarl
The inclusion of these enterprises in the consolidation of the NV Ontex group has not significantly altered the
structure of the balance shhet or the income statement.
In order to permit a comparison with 1997, the share of the two companies in the key consolidated balance
sheet and income statement figures is given below.
Description share of the two companies
in the consolidation
as at 31/12/98
Positive consolidation differences 3,714,654
Tangible fixed assets 36,204,478
Provisions, deferred and latent taxation 12,945,119
Amounts payable within one year 149,552,302
Positive effect on shareholders’ eauity as at 31/12/98 17,543,696
Income statement
– Net effect on operating income 366,874,156
– Effect on total consolidated earnings of the two above-mentioned
companies 4,905,368
– Depreciation on consolidation differences charges to income, as a result
of the inclusion of these enterprises in the consolidation perimeter (371,465)
– Effect on total consolidated reserves of the inclusion of these enterprises 4,533,903
– Minority interests in the 1998 income of these companies (1,799)
– Group’s share in the 1998 income of these companies 4,532,104
Changes in the framework of art. 20 of the RD of 6 March 1990
Given the evolution of technical circumstances, it has been decided to include the costs of the production of
clichés as tangible fixed assets as from 1998, and to depreciate these over 3 years.
The amounts are as follows:
– Clichés recorded as tangible fixed assets in the NV Ontex group 49,599,794
– Depreciation recorded (16,059,274)
– Book value at 31/12/98 33,540,520
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Ontex Annual Report 1998 Conso l idated annua l accounts
OTHER INFORMATION
EN-Ontex BW 61-70 16-06-1999 13:00 Pagina 69
Supplementary information
page 65, VI, B,4.
With the release of the real security the amount of guaranteed debt falls by BEF 411,033,344.
page 65, VII, A.2.
Global turnover of the group in Belgium has decreased in 1998 compared to 1997, due to a product range
turnover in 1997 of an acquired company that is not distributed anymore in 1998 by the Ontex group.It con-
cerns products that are sold in Belgium under a ‘brand name’ that aren’t property of Ontex.
page 66, VIII, A,2.
Following the balance sheet date, the real security given by NV Ontex to banks on its assets in respect of
its debts and those of Ontex Coordination Center NV were released, in an amount of BEF 751,150,000.
page 67, VIII, D.
In certain enterprises, a group insurance exists for employees, the annual costs of which are included in
the income statement.
Private pension agreements have also been concluded which provide for the payment of a supplementary
pension, payable at pension date, in a total amount of BEF 10,000,000.
In the 31/12/98 annual accounts, a pension provision has been set up, whereby the total cost is spread
over the remaining years until pension date.
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The unconsolidated annual accounts of the parent company Ontex N.V. are given below in abbreviated form.
The unconsolidated annual report and annual accounts of Ontex N.V. and the Statutory Auditor’s report
have been filed with the National Bank of Belgium, in conformity with art. 80 of the Companies’ Act.
These reports are available, on request, from:
Ontex N.V.
Genthof, 5
9255 Buggenhout
The Statutory Auditor has given a positive opinion, without reservations, on the unconsolidated annual
accounts of Ontex N.V.
Figures for 1997 apply to the period 01/01/1996 until 30/09/1997 (21 months).
Figures for 1998 apply to the period 01/10/1997 until 31/12/1998 (15 months).
71
Ontex Annual Report 1998 Unconso l idated annua l accounts
Unconsolidated annual accounts
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Ontex Annual Report 1998 Unconso l idated annua l accounts
72
Balance sheet
Assets 1998 1998 1997
in Euro In BEF In BEF
15 months 15 months 21 months
Fixed assets 90,377,170.7 3,645,806,028 1,385,085,756
II Intangible fixed assets 2,282,035.9 92,057,099 1,870,392
III Tangible fixed assets 19,322,129.3 779,452,762 823,799,687
IV Financial fixed assets 68,773,005.6 2,774,296,167 559,415,677
Current assets 28,994,421.8 1,169,632,076 2,401,658,693
V Amounts receivable after one year 9,709.2 391,667 80,000,000
VI Stocks and contracts
in progress 23,591,572.2 951,681,664 781,182,394
VII Amounts receivable within
one year 4,648,079.3 187,503,054 1,429,623,888
VIII Current investments
IX Cash at bank and in hand 349,971.3 14,117,806 85,076,709
X Deferred charges and accrued income 395,089.8 15,937,885 25,775,702
Total assets 119,371,592.5 4,815,438,104 3,786,744,449
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Ontex Annual Report 1998 Unconso l idated annua l accounts
73
Liabilities 1998 1998 1997
in Euro In BEF In BEF
15 months 15 months 21 months
Shareholders’ equity 45,238.074.8 1,824,899,415 544,992,559
I Capital 34,603,457.1 1,395,900,000 110,000,000
II Issue premiums 4,437,294.1 179,000,000 179,000,000
IV Reserves 3,360,275.2 135,553,164 142,498,234
V Accumulated profits 2,825,844.8 113,994,297 112,076,438
VI Investment grants 11,203.6 451,954 1,417,887
VII Provisions and deferred
taxes 1,258,683.9 50,775,184 63,832,454
Amounts payable 72,874,833.7 2,939,763,505 3,177,919,436
VIII Amounts payable after one year 19,820,744.4 799,566,849 1,069,201,925
IX Amounts payable within one year 52,348,630.9 2,111,738,535 2,085,237,724
X Deferred income and accrued
charges 705.5 28,458,121 23,479,787
Total liabilities 119,371,592.5 4,815,438,104 3,786,744,449
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Ontex Annual Report 1998 Unconso l idated annua l accounts
74
Income statement
1998 1998 1997
in Euro In BEF In BEF
15 months 15 months 21 months
I Operating income 219,361,057.5 8,849,003,122 8,526,032,975
II Operating charges (214,109,307.2) (8,637,148,040) (8,338,567,094)
III Operating profit 5,251,750.3 211,855,082 187,465,881
IV Financial income 2,011,484.8 81,143,096 53,025,968
V Financial charges (5,437,893.4) (219,364,076) (235,160,740)
VI Profit from normal operations
before taxes 1,825,341.7 73,634,102 5,331,109
VII Extraordinary income 213,446.7 8,610,418 187,837,446
VIII Extraordinary charges (2,304,513.2) (92,963,834) (128,175,885)
IX Profit for the year before
taxes (265,724.9) (10,719,314) 64,992,670
IXbis Withdrawal from deferred
taxes 15.,309.0 617,565 1,997,456
X Income taxes 125,794.5 5,074,538 (8,575,856)
XI Profit for the year (124,621.3) (5,027,211) 58,414,270
XII Withdrawal from untaxed
reserves 174,890.6 7,055,070 9,877,088
XIII Profit for the year available
for appropriation 50,269.3 2,027,859 68,291,358
EN-Ontex BW 71-80 16-06-1999 13:00 Pagina 74
Information
Balance sheet
Fixed assets
The book value of the fixed assets has risen by BEF 2,260.7 million. This increase breaks down into:
intangible fixed assets BEF 90.2 million
tangible fixed assets BEF (44.3) million
financial fixed assets BEF 2,214.9 million
BEF 2,260.7 million
Investments out during the year in intangible and tangible fixed assets are:
in BEF thousands
investment divestment net investment
R & D costs 8,621 - 8,621
Licences and patents 116,312 12,791 103,521
Goodwill 10,522 - 10,522
Total intangible fixed assets 135,455 12,791 122,664
Land and buildings 39,476 - 39,476
Plant, machinery and equipment 292,779 112,743 180,036
Furniture and vehicles 31,093 11,864 19,229
Leasing and similar rights 102,148 31,228 70,920
Other fixed assets 11,407 - 11,407
Assets under construction and advance
payments 156,393 10,614 145,779
Total tangible fixed assets 633,296 166,449 466,847
Under financial fixed assets, participations in affiliated enterprises have risen by BEF 2,212.8 million and
other financial fixed assets (cash guarantees) by BEF 2.1 million.
Participations in affiliated enterprises are as follows at 31 December 1998:
Meriana NV 0.2% participation 0.1 million
Ontex Coordination Center NV 99.99% participation 2,306.9 million
Eutima NV 99.99% participation 462.9 million
Féminil 0.007% participation (1 BEF)
Ontema NV 0.01% participation 0.001 million
2,769.9 million
Current assets
By way of introduction:
a) Under an agreement dated 17 April 1998 between Ontex NV and Ontex Coordination Center NV, Ontex
NV transferred its trade receivables outstanding on its clients at 31 March 1998 to Ontex Coordination
Center, pursuant to articles 1689 et seq. of the Civil Code.
The transfer price was BEF 1,375,546,887.
The transfer price was booked to the current accounts that both parties maintain with each other.
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Since 1 April 1998 Ontex NV continues to invoice its customers as before. Each invoice mentions that
Ontex Coordination Center is charged with the collection and supervision of the invoice. The invoice is
payable to one of the Ontex NV accounts mentioned on the invoice, which are all automatically levelled
to Ontex Coordination Center.
The collection takes place under the provisions of the factoring contract dd. 1 April 1998 between the
above-named parties.
b) An agreement of 28.9.97 between Ontex NV and the members of the Ontex group establishes that Ontex
Coordination Center will act as group financier.
Further discussion of the current assets:
The BEF 80 million long-term receivable on Vadebo has been settled.
Stocks and contracts in progress amount to BEF 951.7 million, up BEF 170.5 million or 21.8%.
The rise in turnover justifies this higher level of stocks.
Trade receivables within one year continue to relate primarily to suppliers with debit balances, invoices to
be drawn up, bills to be collected and credit notes to be received.
The other receivables break down into:
VAT receivable 55.1 million
Disputed corporation tax assessment 4.0 million
Current accounts, Ontex group 23.0 million
Glue claim 31.0 million
Employment premium 3.1 million
Eutima investment grant 3.8 million
Recoverable costs 5.0 million
Other 0.9 million
125.9 million
The amount mentioned under ‘glue claim’ in fact corresponds with the agreement reached between the par-
ties. The amount was paid after the end of the financial year.
Shareholders’ equity
Capital has risen from BEF 110 million to BEF 1,395.9 million.The issue premiums have remained
unchanged.Reserves have fallen by BEF 6.9 million. On the one hand the legal reserve has risen by 0.1 mil-
lion, on the other hand the untaxed reserve has fallen by BEF 7.0 million.
The amount withdrawn from the untaxed reserve is taken into profit for the year based on the amount of
depreciation taken on investments that is intended for reinvestment.
No tax provision has been set up in respect of future profits due to the depreciation of reinvested assets,
because the untaxed reserve arose prior to 31 December 1991. The capital gains to which deferred taxa-
tion is applicable are included in the notes to the annual accounts under latent taxation payable, vol. 17,
code 9144.
The book value of investment grants amounted to BEF 0.5 million at 31/12/98 as against BEF 1.4 million
the year before. In other words, BEF 0.9 million of these investment grants have been repaid.
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Provisions and deferred taxation
Provisions at 31.12.98
Pensions – early retirement pensions BEF 1.2 million
Major maintenance and repairs BEF 4.1 million
Claims and guarantee obligations BEF 45.1 million
BEF 50.5 million
Deferred taxation at 31.12.98
On Eutima capital premium BEF. 0.3 million
Total provisions and deferred taxation BEF 50.8 million
Amounts payable after one year
Financial debts, trade debts and other amounts payable after one year have together fallen by BEF 269.6
million, as follows:
Leasing debts BEF 93.9 million
Credit institutions BEF 116.9 million
Bills payable BEF 52.8 million
Other amounts payable BEF 6.2 million
BEF 269.6 million
Amounts payable within one year
Amounts payable within one year amounted at year-end to BEF 2,111.7 million.
Compared with the previous year there is a shift from financial debts to other amounts payable. This is due
to the role of the Ontex Coordination Center.
It is important to note that the total amount of financial debts and other amounts payable at the end of
this year has fallen by BEF 275.8 million compared with the situation at the end of 1997. The contribution
of Ontex-Eeklo has led to a rise in trade debts and in tax, remuneration and social security payable.
Ontex Coordination Center’s share in other amounts payable amounts to BEF 256.1 million.
Income statement
Operating income
Operating income BEF 8,849.0 million
Operating costs BEF 8,637.1 million
Operating profit BEF 211.9 million
Cost of materials represented 64.60% of turnover as against 63.84% in 1997. Operating costs amounted
to 97.61% of operating income as against 97.80% in 1997.
Financial income and charges
The financial charges amount to BEF 219.4 million, financial income to BEF 81.1 million.
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Profit from normal operations before tax
Profit amounts to BEF 73.6 million compared with BEF 5.3 million in 1997.
Extraordinary income and charges
Extraordinary income amounted to BEF 8.6 million.
Extraordinary charges were BEF 93.0 million.
The largest extraordinary charge was the BEF 74.9 million cost of the stock market introduction.
Income taxes
The prepayment of BEF 5 million has been paid back by the tax administration.
A tax regularisation and a write-back of provision for taxes are recorded in the income statement in an
amount of BEF 5.1 million.
Profit of the year available for appropriation
The profit available for appropriation amounts to BEF 2.03 million.
Developments after the close of the financial year
Acquisition of Hygiène Diffusion
On 23 March 1999 Ontex reached an agreement in principle with the shareholders of the French group
Hygiène Diffusion to acquire 100% of the shares of Hygiène Diffusion.
Hygiène Diffusion is one of Europe’s leading producers of incontinence products.
The strategic takeover further strengthens Ontex’s position on the European market for incontinence prod-
ucts and strengthens its expansion in the southern part of Europe.
This major takeover will probably lead to a capital increase at Ontex in order to finance it.
At the time of writing of the annual report the acquisition price was still subject to the due diligence, but
will be around FRF 440 million.
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Ontex Annual Report 1998 Unconso l idated annua l accounts
79
Research and development costs
Given the activities of the company, no major expenditure has been undertaken on research and develop-
ment.
Outlook
The outlook for the future is good. Raw materials prices appear set to remain fairly stable.
Ontex’s stock exchange listing provides it with the resources to make the necessary investments, and the
acquisition of Hygiène Diffusion will strengthen Ontex’s position in incontinence products.
Prospects of continuing low interest rates are also an important factor.
Article 64ter of the Companies Act
As required by Article 64ter of the Companies Act the Board of Directors reports that additional remuner-
ation in an amount of BEF 5,553;951 has been paid to the statutory auditor’s office for activities relating
to tax accounting and legal matters. BEF 3,018,000 was paid for activities relating to the stock market
introduction.
Proposal for decisions to be taken by the general meeting of shareholders on Tuesday
25 may 1999
The Board of Directors proposes to the meeting:
1. that the annual accounts for the year ending 31 December 1998 be approved
2. that the profit of the year available for appropriation, in an amount of BEF 2,027,859, be applied as follows:
to the legal reserve BEF 110,000
to the profit carried over from the previous financial year BEF 1,917,859
The total profit to be carried forward to the next financial year is BEF 113,994,297
3. to grant discharge to the present directors as well as to the directors NV Vadebo and NV VM Invest that
resigned during the financial year;
4. to grant discharge to the present statutory auditor, CVBA Van Geet, Derick & C°, Kerkstraat 2-4, 9200
Dendermonde, represented by its liable partner, Mr Hugo Van Geet, as well as the liable partner,
Mr Marc Wauters, who resigned during the year.
Buggenhout, 23 April 1999
The Board of Directors
P. Van Malderen J. Van den Bossche
B. Van Malderen G. Van Malderen
EN-Ontex BW 71-80 16-06-1999 13:00 Pagina 79
Ontex NV
Genthof 5
B-9255 Buggenhout
Bus: 00-32/52.399.499
Bus Fax: 00-32/52.330.784
E-mail: [email protected]
Ontex Eutima
Korte Moeie 53
B-9900 Eeklo
Bus: 09/376.77.11
Bus Fax: 09/378.13.33
Ontex SARL
rue de la Pompe 103
F-75016 Paris
Bus: 00-33/1.53.65.12.00
Bus Fax: 00-33/1.53.65.12.01
Ontex-Féminil SA
Athélia II
F-13600 La Ciotat Cedex
Bus: 00-33/44.28.38.120
Bus Fax: 00-33/44.20.80.414
Ontex BV
Energiestraat 14
NL-5961 PT HORST
NEDERLAND
Bus: 00-31/77.39.77.100
Bus Fax: 00-31/77.39.86.245
Ontex Peninsular S.A.
Polig. Industrial, Hontoria
Parcela 13
E-40195 Segovia
Bus: 00-34/921.42.63.11
Bus Fax: 00-34/921.44.34.01
Ontex Wirths GmbH
Industriegebiet Ost 1
Robert-Bosch-Strasse
D-56727 Mayen
Bus: 00-49/26.51.40.40
Bus Fax: 00-
49/26.51.40.41.34
Ontex Hygieneartikel GmbH
Fabrikstrasse 30
D-02692 Grosspostwitz
Bus: 00-49/35.93.85.820
Bus Fax: 00-
49/35.93.85.82.10
Ontex GmbH
Egerstrasse 9
D-86911 Diessen
Bus: 00-49/88.07.40.21
Bus Fax: 00-49/88.07.60.87
Ontex Hygieneprodukte Gmbh
Schönbrunnergraben 96
A-1180 Wien
Bus: 00-43/14.79.53.64
Bus Fax: 00-43/14.70.03.95
Ontex CZ r.s.o.
Vesecko
CZ-51101 Turnov
Bus: 00-420/43.62.32.30
Bus Fax: 00-420/43.62.33.20
Ontex Polska sp. z.o.o.
ul. Karniszewicka 78
PL-95-200 Pabianice
Bus: 00-48/422.15.59.18
Bus Fax: 00-48/422.15.59.18
Ontex Italia SRL
Via delle Grazie 6
I-25122 Brescia (BS)
Bus: 00-39/030.24.00.676
Bus Fax: 00-39/030.37.51.577
Ontex UK Ltd.
Earlstrees Industrial Estate
97 Macadam Road
Corby, Northants
NN17 4JN
United Kingdom
Bus: 00-44/15.36.26.97.44
Bus Fax: 00-
44/15.36.40.01.34
Ontex Hungary Kft.
H-1125 Budapest
Zsolna U.5
Bus: 00-36/1.385.13.12
Bus Fax: 00-36/1.385.13.12
Ontex Rumania S.R.L.
5 Str. Caderea Bastiliei, et. 1,
ap. 10
RO-Bucharest, sector 1
Bucharest
Romania
Bus: 00-40/12.11.79.50
Bus Fax: 00-40/13.11.16.57
80
Ontex Annual Report 1998
Group addresses
Contact person for investor relations
Mr. Bart Van Malderen, Managing Director
Ontex N.V., Genthof 5, 9255 Buggenhout
tel. (32) (0)52/399 499, fax (32) (0)52/33 07 84
VAT BE 419.457.296, Trade Register. DENDERMONDE 33.815
The annual report of Ontex N.V. is published in Dutch and in English.
Copies can be obtained from the company’s registered office.
EN-Ontex BW 71-80 16-06-1999 13:00 Pagina 80