The Consolidated Financial Statements include technotrans AG and its 18 subsidiaries, over which it exercises control. Control is routinely deemed to exist where a majority of voting rights is held. technotrans AG directly or indirectly holds a majority of voting rights in 17 subsidiaries. The group does not hold a majority of voting rights in SHT Immobilienbesitz GmbH & Co. Vermietungs KG, which exclusively holds and manages the factory premises in Bad Doberan that are let out to KLH Kältetechnik GmbH. However, based on the terms of the lease agreement the group essentially receives the entire income from this activity. The Board of Management consequently comes to the conclusion that SHT Immobilienbesitz GmbH & Co. Vermietungs KG is a subsidiary and is therefore to be included in consolidation.
At the meeting of shareholders on September 8, 2015 the liquidation of ISD Institut für Sprache und Dokumentation GmbH, Regensdorf (Switzerland) was resolved and applied for. The company still in liquidation was deconsolidated at the reporting date of December 31, 2015. Deconsolidation led to a loss of € 11 thousand, which is reported under other operating expenses.
For all companies included in the Consolidated Financial Statements, with the exception of technotrans india pvt ltd (March 31), the balance sheet date is December 31.
|Company||Domicile||Interest||Equity1||Revenue 1||Profit after tax1|
|in %||€ '000||€ '000||€ '000|
|gds Sprachenwelt GmbH||D||Hünfeld||100%||340||2,016||179|
|technotrans graphics ltd.||GB||Colchester||100%||852||3,653||167|
|technotrans france s.a.r.l. (Saint-Maximin und Madrid)||F||Saint-Maximin||100%||1,477||5,405||223|
|technotrans italia s.r.l.||I||Legnano||100%||647||2,752||96|
|technotrans scandinavia AB||S||Åkersberga||100%||3||0||0|
|technotrans america inc.||USA||Mt. Prospect||100%||5,511||10,969||1,208|
|technotrans américa latina ltda.||BR||Sao Paulo||100%||-1,461||707||-61|
|technotrans Asia Pacific limited, (Hong Kong und Tokyo)||CHN||Hongkong||100%||-1,886||1,491||7|
|technotrans printing equipment (Beijing) co. Ltd.||CHN||Peking||100%||-234||1,809||4|
|technotrans technologies pte. ltd., (Singapore und Melbourne)||SGP||Singapur||100%||663||2,203||55|
|technotrans middle east FZ-LLC||VAE||Dubai||100%||541||1,347||75|
|technotrans india pvt ltd||IN||Chennai||100%||14||389||26|
|KLH Kältetechnik GmbH||D||Bad Doberan||65%||778||15,963||211|
|KLH Cooling International Pte. Ltd.||SGP||Singapur||65%||696||3,494||29|
|Taicang KLH Cooling Systems Co. Ltd.||CHN||Taicang||65%||534||4,597||111|
|SHT Immobilienbesitz GmbH & Co. Vermietungs KG||D||Mainz||94%2)||-4||0||0|
|1 Equity, revenue and profit after tax have been taken from the IFRS packages of each subsidiary (prior to consolidation). 2 Limited partnership interest held by KLH Kältetechnik GmbH. 3 The domestic subsidiary has met the necessary conditions for taking advantage of the exemption provisions pursuant to Section 264 (3) of German Commercial Code and uses the option not to prepare and disclose the documentation pertaining to its annual financial statements.|
The Consolidated Financial Statements are based on the group companies’ annual financial statements and interim financial statements (Commercial Balance Sheet II based on IFRS) prepared in accordance with standard recognition and measurement principles at December 31, 2015.
Capital consolidation for the subsidiaries is performed according to the purchase method pursuant to IFRS 3. The costs of acquisition of the business combination in each case correspond to the cash components paid and the liabilities arising and acquired at the time of acquisition. These costs of acquisition are distributed between the identifiable assets, liabilities and contingent liabilities of the acquiree by their recognition at the respective fair values at the time of acquisition. The positive differences remaining after purchase price allocation are recognised as goodwill. The non-controlling interests were measured at acquisition cost (partial goodwill method). Changes in the group’s interest in a subsidiary that do not lead to a loss of control are reported as equity transactions. Goodwill is recognised as an asset and subjected to an impairment test annually. The costs associated with the business combination are recognised as an expense when they arise.
All intra-group receivables and liabilities, revenues, expenses and income as well as balances from intra-group supplies are eliminated on consolidation. Where necessary, deferred taxes are recognised for consolidation processes affecting income.
With the exception of certain financial instruments that are reported at fair value, the Consolidated Financial Statements are prepared based on historical cost.
The preparation of the Consolidated Financial Statements in accordance with IFRS requires the Board of Management to make estimates and assumptions which exercise influence on the amounts reported and the disclosures made on them in the Notes. Key exercises of judgment outside the context of estimates concern the definition of the cash-generating units, the consolidation of companies in which no majority of voting rights is held, and the measurement method for the non-controlling interests.
All estimates and assumptions are made to the best of our knowledge, in the interests of providing a true and fair view of the net worth, financial position and financial performance of the group. Such estimates and assumption-based policies involve uncertainty and may change in the course of time. The actual results may deviate from these assessments. Responsibility for regularly monitoring all key fair value measurements, including the Level 3 fair values, rests with Group Controlling. Changes are reported to the Finance Director. Regular reviews of the key non-observable input factors and of fair value adjustments are carried out.
The assessments and underlying assumptions are examined on a regular basis. If a reassessment results in a difference, that difference is reported in the accounting period in which the reassessment was made if it relates to that period only. It is recorded in the accounting period in which the reassessment was made, as well as in subsequent periods if it also influences the subsequent periods.
Assessments made by the Board of Management that are subject to a significant degree of uncertainty and bring with them the risk of significant adjustments in future financial years concern the following matters in particular:
Goodwill is reported in the Consolidated Balance Sheet as a result of acquisitions. Upon the initial consolidation of an acquisition, all identifiable assets, liabilities and potential liabilities are stated at their fair value at the date of acquisition. Assets such as land, buildings, and plant and equipment are normally measured on the basis of independent appraisals, while the fair value of an intangible asset is determined internally according to its nature and the complexity of its measurement, applying an appropriate measurement technique. The assumptions made here are regularly subject to forecasting uncertainty. KLH Kältetechnik GmbH, KLH Cooling International Pte. Ltd. and Taicang KLH Cooling Systems Co. Ltd. were acquired in the 2013 financial year. The balance remaining after purchase price allocation was reported as goodwill. There is in addition goodwill as a result of the interest acquired in Termotek GmbH in 2011 and the acquisition of gds Sprachenwelt GmbH in 2012. Goodwill is tested for impairment once a year or whenever any basis for impairment is identified. With regard to “key exercises of judgment in the context of financial reporting for 2015”, see Note 2 “Goodwill” and Note 3 “Intangible Assets”.
At each balance sheet date the Board of Management is to assess whether there is any indication that the carrying amount of an item of property, plant and equipment or an intangible asset might be impaired. In that case, the recoverable amount of the asset in question is estimated. The recoverable amount corresponds to the higher of the fair value less the costs of disposal, or the value in use. In order to determine the value in use, the discounted future cash flows of the asset in question need to be determined. This estimate involves key assumptions about the underlying economic situation and future cash flows. Changes to these assumptions or circumstances could result in additional reductions for impairment in the future, or in reversals. With regard to “key exercises of judgment in the context of financial reporting for 2015”, see Note 1 “Property, Plant and Equipment”.
The determination of all provisions, and in particular of provisions for warranties, inherently involves estimates. With regard to “key exercises of judgment in the context of financial reporting for 2015”, see Note 15 “Provisions”.
Because the group has operations and generates income in many different countries, it is subject to widely varying tax laws in a large number of tax regimes. Although the management believes it has made a reasonable estimate of fiscal imponderables, there can be no assurance that the outcome of such fiscal imponderables will correspond to the original estimate. Any differences could have an impact on the tax liabilities and the deferred taxes. At every balance sheet date, the Board of Management assesses whether the realisability of future tax benefits is sufficiently probable for the reporting of deferred tax assets. This requires the management among other things to assess the tax benefits that arise from the available tax planning strategies and future taxable income. The deferred tax assets reported could decrease if the estimates of planned taxable income are reduced or if changes to current tax laws restrict the realisability of future tax benefits.
The application of a specific IFRS is indicated in the notes to the individual items of the financial statements. The following methods of recognition and measurement were fundamentally applied:
Property, plant and equipment are reported at historical cost less depreciation and accumulated impairment losses. Retrospective costs of acquisition are capitalised where they increase the value of the property, plant and equipment. In the case of self-constructed assets, the cost of conversion is calculated on the basis of prime costs as well as the systematically allocable fixed and variable production overheads, including depreciation. Regular maintenance and repair costs are recorded as an expense after they have occurred.
Apart from land, items of property, plant and equipment are depreciated according to the straight-line method, on the basis of their useful life. The useful life and method of depreciation are reassessed annually. Components of property, plant and equipment with a significant purchase value in relation to the total value are depreciated separately as appropriate. Upon sale or retirement, the costs and the corresponding accumulated depreciation for the assets are derecognised from the Balance Sheet; any gains or losses arising are recognised in the Income Statement.
|Buildings||25 to 50 years|
|Land improvements, fixtures and fittings||10 to 15 years|
|Tools, plant and equipment||3 to 10 years|
|Hardware, vehicle fleet||3 to 5 years|
Where there is a basis for impairment, property, plant and equipment are examined for impairment pursuant to IAS 36. Insofar as necessary, the carrying amount for property, plant and equipment is adjusted to the recoverable amount. If the circumstances which led to this measure subsequently cease to apply, this impairment is reversed at most by the net carrying amount that would have applied if no such reductions for impairment had been made.
The reported goodwill constitutes the difference between the purchase price and the fair value of the net assets acquired through business combinations. Pursuant to IAS 36, goodwill is to be tested for impairment once a year or if any basis for a reduction for impairment is established. For the impairment test, from the acquisition date any goodwill acquired through a business combination is allocated to the group’s cash-generating units which benefit from the synergy effects from the business combination. Insofar as necessary, the carrying amount is reduced to the "recoverable amount". Pursuant to IAS 36.124, such impairment is not reversed where the circumstances which led to it subsequently cease to apply.
Intangible assets, namely concessions, industrial and similar values acquired for consideration, and the customer base are carried at cost. They are amortised by the straight-line method, according to their useful life. The residual value, useful life and method of depreciation are reassessed annually.
Self-constructed intangible assets are recognised at cost. Development expenditure on the fundamental reengineering of a product is capitalised if the product is technically and economically realisable, the development is saleable, the expenditure can reliably be measured and the group possesses adequate resources to complete the development project. Pursuant to IAS 38.65 ff, it comprises the directly allocable prime costs as well as the production overheads that can be allocated directly to the creation, manufacture and preparation of the asset, where they arise between the start of the development phase and its conclusion. The conditions for capitalisation as laid down in IAS 38.21, 38.22 and 38.57 are met. Amortisation of development expenditure recognised as an intangible asset commences as soon as the asset is available for use. This usually coincides with the start of its commercial use.
All self-constructed intangible assets acquired for consideration have a finite useful life. The notes on property, plant and equipment apply analogously to any necessary impairment of intangible assets to the “recoverable amount”.
The taxes for the period comprise current and deferred taxes. Taxes are recognised in the Income Statement unless they refer to items that are recognised directly within equity or the other result. In such cases, the corresponding taxes are likewise recognised within equity or the other result. In accordance with IAS 12, deferred taxes are accounted for using the balance sheet liability method in respect of temporary differences between the carrying amounts in the Commercial Balance Sheet and the Tax Balance Sheet (liability method) and in respect of tax loss carryforwards for creditable tax. Deferred tax assets for temporary differences as well as tax loss carryforwards are only reported to the extent that it is probable that sufficient taxable income will be available in the future to make use of these. The deferred taxes are measured using the locally applicable tax rates that apply or have been announced at the balance sheet date.
Deferred tax assets and liabilities are also recognised on temporary differences arising from business combinations, except for temporary differences on goodwill where the latter are fiscally disregarded. Deferred tax assets and liabilities are offset if a right to perform offsetting exists and the items relate to income taxes levied by the same taxation authorities and for the same company.
The inventories recognised are always measured at cost of acquisition or cost of conversion, using the weighted average cost method, or at the net realisable value if lower. In accordance with IAS 2, cost of conversion includes the direct costs of material and direct costs of labour, as well as allocable fixed and variable production overheads arising in the manufacturing process, by way of target costing.
The net realisable value is the anticipated sales proceeds less the estimated costs of completion and the costs necessary to make the sale. If the reasons which have led to downward valuation cease to apply, a reversal is made.
Trade receivables and other current receivables are fundamentally reported at amortised cost, using the effective interest rate method. Reductions for impairment that are applied in the form of individual and group portfolio-based valuation allowances take adequate account of the credit risk. Objective failures result in the derecognition of the receivable in question. Non-current, non-interest-bearing receivables are discounted.
Cash and cash equivalents are reported at face value and converted into euros at the closing rates. They comprise cash on hand and demand deposits, as well as financial assets that can be converted into cash at any time.
Issued capital (no par value shares) is reported at the nominal amount.
If the company acquires treasury shares, these are offset against equity. The purchase and sale, issuance and retirement of treasury shares are not recognised within income, but as an addition to or disposal from equity. Differences between the cost of the issued shares and their fair value upon their sale or issuance are offset against retained earnings.
Liabilities are fundamentally recognised at amortised cost. Liabilities in foreign currency are translated in accordance with IAS 21.21 and 23 (a). With the exception of the conditional purchase price payments from corporate transactions, financial liabilities are not measured at fair value through profit and loss. When initially recognised, they are measured at fair value including the transaction costs and subsequently at amortised cost, using the effective interest method. Conditional purchase price payments are measured at fair value. Changes in the fair value are recognised through profit and loss.
Provisions are created to cover obligations to third parties if obligations existing at the reporting date are likely to result in a future outflow of resources and the latter amount can reliably be estimated. They are measured at the likely amount at which settlement will take place. Long-term provisions are discounted.
Provisions for warranties are created at the time of sale of the goods in question. Their level is based on past developments in warranties and on a consideration of all possible future warranty claims, weighted according to probability.
Provisions for pensions and provisions for similar obligations are measured according to the projected unit credit method.
Derivative financial instruments are recognised at market value. At technotrans, derivative financial instruments were used exclusively for hedging interest rate risks at December 31, 2015. Where they qualify as cash flow hedges, the correspondingly effective adjustments to the market price are recognised within equity, with no effect on income. Financial instruments are reported if technotrans is a party to the contractual provisions of the financial instrument. Financial assets are reported at the settlement date except in the case of derivative financial instruments, which are reported at the trade date.
Revenues from the sale of goods are recognised in accordance with IAS 18.14 as soon as the significant risks and rewards associated with ownership of the products sold have been transferred to the buyer. Revenues from services are recognised as soon as the service has been performed. Revenue is reported less reductions in proceeds such as bonuses, rebates and trade discounts.
Financial income and charges are reported on an accrual basis in line with the effective interest method. Borrowing costs that are directly attributable to the acquisition, construction or manufacture of a qualifying asset are capitalised as part of the cost of that asset pursuant to IAS 23. No financing costs were capitalised in the 2015 financial year.
Currency translation: The financial statements of all foreign group companies prepared in foreign currency are translated according to the concept of the functional currency (IAS 21). The local currency of the country in which they are based is fundamentally recognised as the functional currency of the companies included in the Consolidated Financial Statements. In a departure from this principle, the euro is considered to be the functional currency of the subsidiary technotrans technologies pte ltd., Singapore, as its primary economic environment (revenues and expenses) is determined predominantly by the euro. The US dollar is moreover considered to be the functional currency of KLH Cooling International Pte. Ltd., Singapore, because its invoices are determined predominantly by the US dollar.
Business transactions conducted by a group company in a currency other than its functional currency are translated into and reported in the functional currency for the first time at the spot exchange rate on date of the business transaction. At each subsequent balance sheet date, monetary items (cash, receivables and liabilities) that were originally in a currency other than the functional currency are translated at the closing rate; the resulting exchange rate differences are recognised in the Income Statement. Non-monetary items are translated at the historical rate.
The assets and liabilities of foreign subsidiaries are translated at the mean rate at the balance sheet date (closing rate), and included in the Consolidated Financial Statements. Expenses and income are translated at the current rate, approximating to the mean rate for the year; the resulting differences are netted against equity, with no effect on income. Exchange differences compared with prior-year translation are likewise netted within equity, with no effect on income.
Exchange rate differences from the net investment in a foreign business (group company) are reported within equity with no effect on income; they are only recognised in the Income Statement upon disposal of the net investment.
The following rates were applied in currency translation:
|Mean rates for the
at balance sheet date
The Consolidated Financial Statements of technotrans AG at December 31, 2015 include all standards and interpretations adopted by the European Union, the application of which is mandatory from January 1, 2015.
The following standards were to be applied for the first time:
|Standard/Interpretation||Applicable from (financial year starting on or after…)||Content||Effect on Consolidated Financial Statements|
|IFRIC 21: Levies||June 17, 2014||The interpretation covers accounting for obligations to pay a levy that come under the scope of IAS 37. It also concerns accounting for obligations to pay a levy at a fixed time and of a fixed amount.||No significant|
|Imporvements to IFRS (2011 to 2013)||January 1, 2015||In the context of the annual improvement project, amendments were made to four standards (IAS 40, IFRS 1, IFRS 3, IFRS 13).||No significant|
During the 2015 financial year the International Accounting Standards Board (IASB) and the International Financial Reporting Interpretations Committee (IFRIC) published further standards and interpretations as well as amendments to existing standards, the application of which was not yet mandatory in the 2015 financial year. The technotrans Group does not plan the early adoption of the following new or amended standards and interpretations, the adoption of which is only mandatory in later financial years.
|Standard/ Interpretation||Applicable from
(financial year starting on or after…)
|Content||Anticipated effects on Consolidated Financial Statements|
|Amendment to IAS 19: Defined Benefit Plans: Employee Contributions||February 1, 2015||The amendments clarify accounting for the contributions of employees or third parties under defined benefit plans by the reporting enterprise.||No significant|
|Improvements to IFRS (2010 to 2012)||February 1, 2015||In the context of the annual improvement project, amendments were made to seven standards (IFRS 2, IFRS 3, IFRS 8, IFRS 13, IAS 16, IAS 24, IAS 38).||No significant|
|Amendment to IFRS 11: Accounting for Acquisitions of Interests in Joint Operations||January 1, 2016||The amendment regulates the accounting for an acquisition of interests in a joint operation that constitutes a business within the meaning of IFRS 3.||None|
|Amendment to IAS 1: Notes||January 1, 2016||The amendments in IAS 1 concern various reporting issues for the Notes.||With the introduction of this amendment to the standard, technotrans may possibly dispense with notes that are of no material importance.|
|Amendment to IAS 16 and IAS 38: Clarification of Acceptable Methods of Depreciation and Amortisation||January 1, 2016||The amendments contain guidelines on how to determine an acceptable method of depreciation and amortisation.||No significant|
|Amendment to IAS 16 and IAS 41: Agriculture: Bearer Plants||January 1, 2016||The amendments regulate the future accounting for bearer plants.||None|
|Amendment to IAS 27: Equity Method in Separate Financial Statements||January 1, 2016||With the amendment, the equity method is permitted as an accounting option for shares in subsidiaries, joint ventures and associates in separate financial statements of an investor.||None|
|Improvements to IFRS (2012 to 2014)||January 1, 2016||In the context of the annual improvement project, amendments were made to four standards (IFRS 5, IFRS 7, IAS 19, IAS 34).||No significant|
In addition, the IASB published standards and interpretations that have not yet been adopted by the European Union. Of these, the following standards are of relevance for the group. The effects on the Consolidated Financial Statements are currently being examined.
|Standard/Interpretation||Applicable from (financial year starting on or after …)||Content||Anticipated effects on Consolidated Financial Statements|
|January 1, 2018||IFRS 9 replaces the existing guidelines in IAS 39 Financial Instruments: Recognition and Measurement||Currently under examination|
Revenue from Contracts with Customers
|January 1, 2018||IFRS 15 Revenue from Contracts with Customers specifies a comprehensive framework for determining whether, in what amount and at what time revenue is reported. It replaces existing guidelines on the reporting of revenue, including IAS 18 Revenue, IAS 11 Construction Contracts and IFRIC 13 Customer Loyalty Programmes.||Currently under examination|