Annual Report 2014

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).

Business and Economic Environment

technotrans AG is the parent company of the technotrans Group. technotrans AG 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. technotrans AG directly and indirectly holds 19 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

Condensed profit and loss account of technotrans AG

in € '000   2014   2013
Revenue   61,197   56,464
Inventory change   149   -362
Other own work capitalized   10   0
Other operating income   3,205   4,359
Cost of materials   27,086   25,779
Personal expenses   22,120   20,979
Depreciation and Amortisation   1,406   1,544
Other operating expenses   10,445   10,253
Net finance costs   2,699   914
Profit of common business operation   6,203   2,820
Taxes   1,865   290
Annual net profit   4,338   2,530
Profit carried forward   2,086   1,855
Transfer to retained earnings   1,800   1,000
Net profit   4,624   3,385

The overall expectations of the Board of Management on the company’s business performance in the 2014 financial year were met. technotrans AG 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 significantly. Revenue in the printing press industry, too, made positive progress thanks to a year-on-year increase in market shares. Service business remained stable.

Compared with the previous year (€ 56.5 million), revenue rose by 8.4 percent to € 61.2 million. Earnings before interest and taxes (EBIT) reached € 3.4 million (previous year: € 1.8 million), which corresponds to an EBIT margin of 5.6 percent. The revenue target from the start of the financial year of € 60 million, plus/minus 5 percent, and the earnings target for operating profit of a 3.5 to 5.5 percent EBIT margin were achieved overall.

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

in € '000   2014   2013
Net profit for the period   4,338   2,530
Income Statement        
Income from write-ups of financial assets   126   1,872
Income from investments   968   1,250
Income from profit transfer agreement   1,877   0
Interest and similar income   71   15
Income from loans held as financial assets   225   186
Interest and similar expenses   396   583
Write-downs of financial assets and marketable securities   172   1,827
Income tax expense   1,802   228
Earnings before interest and taxes (EBIT)   3,441   1,844

While revenue in the Services segment again remained stable compared with the previous year at € 20.0 million (€ 19.8 million), the Technology segment achieved a substantial year-on-year increase in revenue of 12.4 percent to € 41.2 million (previous year: € 36.6 million).

The cost of purchased materials for technotrans AG was up 5 percent on the previous year at € 27.1 million. This meant the cost of purchased materials ratio improved from 46.0 percent to 44.2 percent.

Personnel expenses the 2014 financial year came to € 22.1 million, an increase of € 1.1 million (5.4 percent) on the previous year (€ 21.0 million). The stronger revenue growth meant the personnel expenses ratio improved slightly from 37.2 percent to 36.1 percent. The more intensive use of resources from key know-how carriers for the development of the new markets still weighs on the company’s current profit performance.

Other operating income fell by € 1.2 million, from € 4.4 million in the previous year to € 3.2 million. Of this total, € 1.6 million (previous year: € 1.7 million) represented intercompany charges. The foreign exchange gains came to around € 0.6 million (previous year: € 0.5 million) and income unrelated to the accounting period totalled € 0.3 million (previous year: € 0.8 million). The latter stem mainly from the reversal of provisions and from cash received on impaired receivables.

The other operating expenses amounted to € 10.4 million, compared with € 10.3 million in the previous year. The amount also includes compensation payments for the settlement of intercompany transfer prices to subsidiaries amounting to € 0.8 million (previous year: € 0.9 million). Sales commissions edged up to € 0.8 million (previous year: € 0.6 million), while travel expenses remained almost unchanged from 2013 at € 0.7 million. An unchanged amount of € 0.8 million (previous year: € 0.8 million) was spent on warranties (including the allocation to the provision for guarantees).

Depreciation and amortisation for the financial year totalled € 1.4 million (previous year: € 1.5 million). Depreciation and amortisation consequently again easily exceeded investment in property, plant and equipment and intangible assets amounting to € 0.6 million (previous year: € 0.9 million).

technotrans AG posted a financial result of € 2.7 million (previous year: € 0.9 million). This figure includes on the one hand an investment result of € 1.0 million (previous year: € 1.25 million) and on the other hand the first income from profit transfer agreements (€ 1.9 million) from Termotek GmbH and gds GmbH. The interest result improved from € -0.6 million to € -0.3 million.

The income taxes for the 2014 financial year totalled € 1.8 million (previous year: € 0.2 million). This item is made up substantially of the reduced deferred tax assets on loss carryforwards for previous years (€ 1.3 million) and current income tax of € 0.5 million.

A net profit for the year of € 4.3 million is reported for 2014 (previous year: € 2.5 million).

Net Worth and Financial Position

Condensed balance sheet of technotrans AG

in € '000   31/12/2014   31/12/2013
ASSETS        
Fixed assets   27,707   29,753
Inventories   8,536   8,471
Receivables and other assets   12,060   8,652
Cash and cash equivalents   11,352   10,242
Current assets   31,948   27,365
Deferred items   238   184
Deferred tax assets   530   1,816
  60,423   59,118
EQUITY AND LIABILITIES      
Issued capital   6,516   6,493
Capital reserve   13,128   13,128
Retained earnings   17,630   15,640
Net profit   4,624   3,385
Equity   41,898   38,646
Provisions   5,223   4,130
Liabilities   13,299   16,338
Deferred items   3   4
  60,423   59,118

The balance sheet total of technotrans AG grew slightly compared with December 31, 2013 from € 59.1 million to € 60.4 million.

Fixed assets came to € 27.7 million (previous year: € 29.8 million) at the balance sheet date. Property, plant and equipment and intangible assets showed a year-on-year decrease of € 0.8 million to € 11.9 million. Within financial assets, loans to affiliated companies fell by € 1.0 million.

Inventories of € 8.5 million (previous year: € 8.5 million) were unchanged from the previous year.

Receivables and other assets grew by € 3.4 million compared with the position at December 31, 2013 to € 12.0 million. This increase was driven mainly by the high revenue volume at the end of the financial year. Cash climbed from € 10.2 million to € 11.4 million at the balance sheet date.

Equity increased to € 41.9 million, up from € 38.6 million at the end of the previous year. The increase is mainly attributable to the net profit for 2014, of which € 1.8 million was allocated to the retained earnings in agreement with Section 58 (2) of the German Stock Corporation Act. The equity ratio climbed from 65.4 percent to 69.3 percent.

Liabilities and provisions at the balance sheet date now amounted to only € 18.5 million (previous year: € 20.5 million). The change results mainly from a reduction in financial liabilities of € -2.4 million and in liabilities to affiliated companies (€ -0.4 million) and other liabilities (€ -0.5 million). Provisions grew by € 1.1 million compared with the position at December 31, 2013 to € 5.2 million. This was mainly attributable to the increase in the provisions for personnel costs.

The cash flow from operating activities (net cash) for the 2014 financial year reached € 4.7 million (previous year: € 1.7 million). The change in working capital and in cash-effective interest and taxes produces a negative overall contribution of € 2.8 million. This cash outflow was prompted mainly by the buildup of receivables at the reporting date, combined with a renewed scaling-back of liabilities.

Alongside the cash payments for investments in fixed assets and in loans to affiliated companies amounting to € 2.5 million, cash receipts from the scaling-back of loans by subsidiaries and in connection with a capital reduction at affiliated companies produced a balanced overall cash flow from investing activities (previous year: € 2.8 million cash outflow).

The cash flow from financing activities in the period under review reveals a cash outflow of € 3.7 million (previous year: cash inflow of € 2.0 million). This comprises € 2.4 million for the repayment of loans and € 1.3 million for the distribution of the dividend to the shareholders of technotrans AG.

Employees

At December 31, 2014 technotrans AG had 404 employees, four more than at the end of 2013 (400). At the end of 2014, this total comprised 317 employees belonging to the Technology segment (previous year: 319) and 87 employees belonging to the Services segment (previous year: 81).

Opportunities and Risks

The business performance of technotrans AG is essentially subject to the same opportunities and risks as that of the technotrans Group. These 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.