facturing. One of the strategic reasons for acquiring Aqua was to add the manufacture of automatic pool cleaners to Fluidra’s value chain. The consolidated Gross Margin has thus been increased, whilst reducing the company’s de- pendency on an external supplier of a technology that is key to the sales of a product with high added value. On the other hand, the absolute value of the organic growth of the EBITDA fell slightly to 64.1%. This slight fall in EBITDA is the combined effect of two factors:
a) Firstly, a loss in the Gross Margin over sales of 0.5% due to the above average increase in sales of the Fluid Han- dling and Irrigation business units, which have a higher proportion of products manufactured by third parties and, therefore, a lower consolidated profit margin. The increased costs of raw materials also had a negative effect that we were unable to fully transfer to our custo- mers.
b) Secondly, there was a slight percentage increase in net operating expenses (staff expenditure plus other opera- ting expenses net of earnings for rendering services and work carried out on fixed assets, and before variations due to trade provisions, which are in line with the profit and loss account and the Opex before impairments and amortisations) as a result of the sharp increase in Sales in the first six months of the year and despite the restraints on increased spending in the third and fourth quarters of the year (+0.7% and +2.4%, respectively).
If the increases in net operating expenses are examined in absolute values, of the overall amount of 20.3 million eu- ros, 12.9 million correspond to the contribution of Aqua, 2.4 million to variables associated with sales and a reduc- tion of 1 million euros due to the production costs of these sales. Therefore, if these effects are not taken into account, there was an increase of 5.9 million euros, which is up 2.7% on the previous year. This increase is mainly due to the ex- pansion in emerging markets (Asia, Pacific and Australia) and to the support given to the diversification of irrigation and fluid handling products.
The financial loss rose from -4.9 million euros in 2010 to -13.2 million euros as a result of the increased debt fo- llowing the purchase of the Aqua group (2.4 million euros), the negative impact of exchange rate differences (3.5 mi- llion euros) and the increase in the average cost of finan- cial debt (4.5% vs. 3.3%), which was in part offset by the reduction in the average financial debt for the period, if the acquisition of Aqua is not counted.
The performance of Net Profit attributed to the parent company shows a slight decrease of 0.9 million euros, of which Aqua amortisation’s a positive contribution of 0.9 million euros.
Performance of divisions The performance of sales and profits of the divisions ba- sically show the same trends discussed above, both by
geographical area and with regard to the company’s ge- neral EBITDA performance. It should be highlighted that the commercial divisions do not include direct sales in key accounts; this turnover is included in the Industry Division. Likewise, the revenue brought in by Aqua as a manufactu- rer is included in the Industrial Division.
Sales in the SWE (South-West Europe) Division almost flatli- ned, as the Spanish market, whose performance was poor, carries a great deal of weight in this Division. Despite this, EBITDA increased by 4.8% as a result of the restraints on structural costs.
The Industry Division, which covers all of the Group’s pro- duction activities, grew by 8.7%. This was higher than the consolidated sales as a result of the acquisition of Aqua. In addition, the EBITDA margin of this Division increased both due to the actions implemented through the lean management programme in production plants and to the earnings made by Aqua.
The NEEMEA (North-Eastern Europe, the Middle East and Africa) Division had a spectacular increase in profits due fundamentally to the increase in sales. The 8.5% increase in sales and the restraints on structural costs (increase of 1.8%) helped to attain an EBITDA over sales of 15.2%.
In the case of the AAP (America, Asia and the Pacific) Divi- sion, profits dropped due to an increase in structural costs to cover its future growth despite an increase in sales of 10.8%. In the previous year, the EBITDA increased by 48.5% due to the reduction in fixed expenditure.
Performance of the financial structure Fluidra’s net equity totalled 326.4 million euros as at 31 December 2011. This amount corresponds to 42% of the Group’s total assets, thus making its leverage ratio 2.38. This falls within the Group’s policy of keeping it to between 2 and 2.5, and is at the same level as the previous year despi- te the acquisition of Aqua.
The Net Financial Debt increased by 26.6 million euros, which takes in both the new debt from the Aqua group (9.4 million euros) and the payments already made in the acquisition of Aqua (31.9 million euros). This level of Net Debt is 2.48 times the EBITDA, slightly above that of the previous year (2.27 times) due to the acquisition of Aqua, although within the range of between 2 and 2.5 set by the Group.
Fluidra’s dividend policy is to maintain a constant dividend as a share of the profits generated by the companies that make up the Group. In view of the profits obtained in 2011, Fluidra’s Board of Directors decided to table a motion befo- re the AGM to distribute dividends worth 8,000,000 euros. In 2011, the total financial expenses incurred amounted to 15.7 million euros, which implies an increase of 59% in comparison with the previous year, due to the increase in
17 (
ECONOMIC SCENARIO
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