Annual Report 2015

Annual Financial Statements of technotrans AG (Condensed Version to German Commercial Code)

The annual financial statements of technotrans AG are prepared according to the German Commercial Code (HGB) and published in the Federal Official Gazette, unlike the Consolidated Financial Statements, which follow the International Financial Reporting Standards (IFRS, as adopted in the EU).

Business and Economic Environment

technotrans AG is the parent company of the technotrans Group. It is a technology company with core activities in the fields of cooling/temperature control, filtering/separating, and spraying/pumping of liquids. technotrans AG is moreover strongly influenced by its directly and indirectly held subsidiaries and participating interests. It directly and indirectly holds 18 companies and also encompasses the central functions of the group. The economic environment for technotrans AG is essentially the same as that for the technotrans Group. The management approach for the group parent follows the same principles as for the group.

Financial Performance

The expectations of the Board of Management on the company’s business performance in the 2015 financial year were met overall. technotrans AG again handled the financial year successfully under its own momentum, in a moderate economic environment. Revenue contributions especially in the new application areas outside the printing industry were increased further. Revenue from the printing press industry, too, made positive progress thanks to a year-on-year increase in market shares. Service business, having merely remained steady in the previous year, grew by more than six percent in revenue terms in the period under review. This revenue growth was driven mainly by parts business and installation business.

Condensed profit and loss account of technotrans AG

€ '000 2015 2014
Revenue 65,862 61,197
Inventory change 769 149
Other own work capitalized 2 10
Other operating income 4,277 3,205
Cost of material 29,934 27,086
Personnel expenses 23,371 22,120
Depreciation and Amortisation 1,434 1,406
Other operating expenses 12,087 10,445
Net finance costs 4,766 2,699
Profit of common business operation 8,850 6,203
Taxes 2,484 1,865
Annual net profit 6,366 4,338
Profit carried forward 2,474 2,086
Transfer to retained earnings 3,000 1,800
Net profit 5,840 4,624

Revenue overall rose by 7.6 percent compared with the previous year to € 65.9 million (€ 61.2 million). Earnings before the financial result and income taxes (EBIT) amounted to € 4.0 million (previous year: € 3.4 million). This represents an EBIT margin of 6.1 percent. For the 2015 financial year, the Board of Management had defined revenue and earnings targets for technotrans AG involving slight revenue growth in the order of two to three percent and an EBIT margin of six percent.

Reconciliation of net income to earnings before interest and taxes (EBIT)

€ '000 2015 2014
Net profit for the period Income Statement 6,366 4,338
Income from write-ups of financial assets 3,000 126
Income from investments 1,794 968
Income from profit transfer agreement 2,323 1,877
Interest and similar income 25 71
Income from bans held as financial assets 202 225
Interest and similar expenses 305 396
Write-downs of financial assets and marketable securities 2,273 172
Income tax expense 2,420 1,802
Earnings before interest and taxes (EBIT) 4,020 3,441

The revenue share for the Technology segment rose by € 3.4 million (+ 8.4 percent) to € 44.6 million compared with the previous year (€ 41.2 million). Revenue for the Services segment, too, went up € 1.3 million (+6.5 percent) to € 21.3 million.

The cost of purchased materials for technotrans AG rose by 10.5 percent compared with the previous year to € 29.9 million. This meant the cost of purchased materials ratio (in relation to aggregate operating performance) deteriorated from 44.2 percent to 44.9 percent.

Personnel expenses for the 2015 financial year rose by 1.3 percent overall to € 23.4 million (previous year: € 22.1 million). The increase of 5.7 percent is attributable on the one hand to the buildup of employees and personnel capacity in the revenue-dependent areas, and on the other hand to implementation of the planned pay increase for 2015 averaging three percent. The personnel expenses ratio improved slightly from 36.1 percent to 35.1 percent. A large number of project kick-offs in the new markets necessitated an increased use of resources.

Other operating income rose by € 1.1 million, from € 3.2 million in the previous year to € 4.3 million. Of this total, € 2.3 million (previous year: € 1.6 million) was attributable to intercompany charges and compensatory payments by subsidiaries to adjust for transfer prices. The foreign exchange gains came to around € 0.6 million (previous year: € 0.6 million) and income unrelated to the accounting period totalled € 0.5 million (previous year: € 0.3 million). The latter stems mainly from the reversal of provisions and from cash received on impaired receivables.

The other operating expenses amounted to € 12.1 million, compared with € 10.4 million in the previous year. The € 1.7 million increase was driven mainly by transactions involving the subsidiaries. The amount includes compensation payments for the settlement of intercompany transfer prices to subsidiaries and impairment of receivables in respect of affiliated companies totalling € 1.7 million (previous year: € 0.8 million). In addition, sales commissions rose to € 1.0 million (previous year: € 0.8 million), of which € 0.9 million was paid to own subsidiaries. Travel expenses remained almost unchanged from 2014 at € 0.8 million. While € 0.6 million more was spent on the use of temporary personnel than in the previous year (previous year: € 0.3 million), expenditure on warranties (including the allocation to the provision for guarantees) was more than halved to € 0.3 million (previous year: € 0.8 million).

Depreciation and amortisation for the financial year totalled € 1.4 million (previous year: € 1.4 million). 2015 consequently again saw depreciation and amortisation exceed investment in property, plant and equipment and intangible assets amounting to € 1.0 million (previous year: € 0.6 million).

technotrans AG posted a financial result of € 4.8 million (previous year: € 2.7 million). This includes on the one hand income from investments amounting to € 4.1 million (previous year: € 2.8 million), which comprises € 1.8 million in dividend payments by subsidiaries as well as € 2.3 million in profit transfers from Termotek GmbH and gds GmbH on the basis of the existing profit and loss transfer agreements (PLTAs). On the other hand write-ups within investment assets yielded income of € 3.0 million. Write-downs on financial assets – relating both to shares and to loans extended to affiliated companies – totalled € 2.3 million in the year under review (previous year: € 0.2 million). The interest result was on a par with the previous year at € -0.3 million.

The income taxes for the 2015 financial year totalled € 2.4 million (previous year: € 1.8 million). This figure comprised € 2.0 million in current income tax and a deferred tax expense of € 0.4 million resulting from the change in deferred tax assets and liabilities.

Net income for the year of € 6.4 million is reported for the 2015 financial year (previous year: € 4.3 million).

Net Worth and Financial Position

ASSETS
€ '000 31/12/2015 31/12/2014
Fixed assets 27,933 27,707
Inventories 9,778 8,536
Receivables and other assets 13,286 12,060
Cash and cash equivalents 11,341 11,352
Current assets 34,405 31,948
Deferred items 352 238
Deferred tax assets 106 530
Total assets 62,796 60,423
 
EQUITY AND LIABILITIES
€ '000 31/12/2015 31/12/2014
Issued capital 6,531 6,516
Capital reserve 13,128 13,128
Retained earnings 20,862 17,630
Accumulated profit 5,840 4,624
Equity 46,361 41,898
Provisions 5,034 5,223
Liabilities 11,401 13,299
Deferred items 0 3
Total equity and liabilities 62,796 60,423

The balance sheet total of technotrans AG grew slightly compared with December 31, 2014 from € 60.4 million to € 62.8 million.

Fixed assets came to € 27.9 million (previous year: € 27.7 million) at the balance sheet date. Property, plant and equipment and intangible assets showed a year-on-year decrease of € 0.4 million to € 11.5 million. Within investment assets, reversals of impairment led to an increase of shares in affiliated companies totalling € 2.3 million overall. In addition, loans to affiliated companies fell by € 1.7 million in the same period, mainly as a result of write-downs.

Inventories of € 9.8 million (previous year: € 8.5 million) were up 14.6 percent on the previous year’s level. The increase is mainly attributable to the high business volume at the end of the financial year.

Receivables and other assets climbed by € 1.3 million to € 13.3 million compared to the position at December 31, 2014, with receivables from affiliated companies accounting for € 8.3 million of this figure. Cash remained stable at the balance sheet date at € 11.3 million.

Equity increased to € 46.4 million, up from € 41.9 million at the end of the previous year. The increase is mainly attributable to the net income for 2015, of which € 3.0 million was allocated to the retained earnings in agreement with Section 58 (2) of the German Stock Corporation Act. The equity ratio climbed from 69.3 percent to 73.8 percent.

Liabilities and provisions at the balance sheet date amounted to € 16.4 million (previous year: € 18.5 million). The change results mainly from a € 2.4 million reduction in financial liabilities and a buildup in liabilities to affiliated companies in the amount of € 0.4 million. Provisions grew by € 0.2 million to € 5.0 million compared with the position at December 31, 2014.

The cash flow from operating activities (net cash) for the 2015 financial year reached € 3.3 million (previous year: € 3.8 million). The change in working capital resulted in payments totalling € 2.3 million. € 2.0 million of this cash outflow was prompted by a rise in the net receivables and liabilities in respect of affiliated companies at the reporting date – predominantly from the profit transfers by Termotek GmbH and gds GmbH. In addition, inventories were € 1.2 million higher than in the previous year as a result of business expansion. On the other hand the change in trade receivables and and payables in the period under review produced a positive effect of € 1.0 million.

The moderate level of investment activity in fixed assets and the loans to affiliated companies resulted in payments amounting to € -1.3 million in the year under review (previous year: € -2.5 million). Cash receipts from the scaling-back of loans by subsidiaries and from interest and dividend payments received totalled € 2.9 million (previous year: € 3.7 million). Overall, the cash inflows and outflows produced a positive cash flow from investing activities of € 1.6 million (previous year: € 1.3 million).

The cash flow from financing activities in the period under review reveals a cash outflow of € 4.9 million (previous year: € 4.1 million).
This comprises € 2.4 million for the repayment of loans, € 0.3 million in interest payments and € 2.2 million for the distribution of the dividend to the shareholders of technotrans AG.

Employees

At December 31, 2015 technotrans AG had 436 employees, 32 more than at the end of 2014 (previous year: 404). At the end of 2015, this total comprised 341 employees belonging to the Technology segment (previous year: 317) and 95 employees belonging to the Services segment (previous year: 87).

Opportunities and Risks

The business performance of technotrans AG is essentially subject to the same opportunities and risks as that of the technotrans Group.
Merely in the two risk categories “General and Industry-Specific Risks” and “Corporate Strategy Risks” does technotrans AG assess the risks to be somewhat higher than for the group in view of its low target earnings.

If the expected economic or industry-specific developments or expectations for newly developed products should prove to be inaccurate, the revenue and therefore also the earnings target could be missed. We currently assess this risk as moderate.

The opportunities and risks are explained in the Risks Report of the Combined Management Report.

Outlook

In view of technotrans AG’s ties with the group companies as well as its importance within the group, we refer to our comments in the Report on Expected Developments, which in particular reflect our expectations for the parent company.