Quarterly Report • Nov 13, 2018
Quarterly Report
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Interim Financial Report of the Jenoptik Group (unaudited)
January to September 2018
| in million euros | Jan – Sept. 2018 | Jan – Sept. 2017 | Change in % | July – Sept. 2018 | July – Sept. 2017 | Change in % |
|---|---|---|---|---|---|---|
| Revenue | 593.4 | 526.8 | 12.6 | 208.7 | 178.4 | 17.0 |
| Optics & Life Science | 211.2 | 191.3 | 10.4 | 71.7 | 66.4 | 8.0 |
| Mobility | 223.4 | 180.6 | 23.7 | 84.9 | 62.8 | 35.1 |
| Defense & Civil Systems | 160.9 | 155.1 | 3.8 | 52.7 | 49.7 | 6.1 |
| Other¹ | –2.1 | –0.2 | –0.6 | –0.5 | ||
| EBITDA | 89.0 | 73.1 | 21.7 | 32.8 | 30.3 | 8.1 |
| Optics & Life Science | 51.1 | 43.0 | 18.9 | 18.7 | 16.5 | 13.2 |
| Mobility | 25.4 | 15.1 | 68.4 | 9.3 | 8.8 | 5.5 |
| Defense & Civil Systems | 18.6 | 15.8 | 17.3 | 6.9 | 4.5 | 53.3 |
| Other¹ | – 6.0 | –0.7 | –2.1 | 0.5 | ||
| EBITDA margin | 15.0% | 13.9% | 15.7% | 17.0% | ||
| Optics & Life Science | 24.2% | 22.5% | 26.0% | 24.8% | ||
| Mobility | 11.4% | 8.3% | 10.9% | 14.0% | ||
| Defense & Civil Systems | 11.6% | 10.2% | 13.1% | 9.1% | ||
| EBIT | 66.7 | 52.2 | 27.8 | 23.9 | 22.9 | 4.4 |
| Optics & Life Science | 45.5 | 36.9 | 23.3 | 16.8 | 14.6 | 15.6 |
| Mobility | 16.9 | 8.6 | 96.9 | 5.1 | 6.2 | –18.2 |
| Defense & Civil Systems | 15.4 | 12.3 | 24.9 | 5.9 | 3.3 | 77.0 |
| Other¹ | –11.1 | –5.6 | –3.8 | –1.1 | ||
| EBIT margin | 11.2% | 9.9% | 11.5% | 12.9% | ||
| Earnings after tax | 53.7 | 44.3 | 21.4 | 20.4 | 21.6 | –5.5 |
| Earnings per share in euros | 0.94 | 0.77 | 22.1 | 0.36 | 0.38 | –5.0 |
| Free cash flow | 57.2 | 32.2 | 77.5 | 28.4 | 10.0 | 184.2 |
| Order intake | 588.4 | 576.2 | 2.1 | 191.2 | 170.9 | 11.9 |
| Optics & Life Science | 233.4 | 222.8 | 4.8 | 75.9 | 73.7 | 3.0 |
| Mobility | 212.3 | 200.7 | 5.7 | 72.1 | 56.4 | 27.9 |
| Defense & Civil Systems | 144.0 | 154.4 | –6.7 | 43.6 | 42.6 | 2.5 |
| Other¹ | –1.3 | –1.7 | – 0.3 | –1.7 |
| Sept. 30, 2018 | Dec. 31, 2017 | Sept. 30, 2017 | |
|---|---|---|---|
| Order backlog (in million euros) | 480.9 | 453.5 | 453.0 |
| Optics & Life Science | 127.6 | 109.1 | 105.8 |
| Mobility | 176.2 | 144.7 | 135.3 |
| Defense & Civil Systems | 179.1 | 202.6 | 214.9 |
| Other¹ | –2.0 | –2.9 | –3.0 |
| Frame contracts (in million euros) | 78.0 | 87.6 | 132.0 |
| Employees (incl. trainees) | 3,984 | 3,680 | 3,646 |
| Optics & Life Science | 1,214 | 1,149 | 1,127 |
| Mobility | 1,500 | 1,326 | 1,299 |
| Defense & Civil Systems | 914 | 897 | 904 |
| Other¹ | 356 | 308 | 316 |
¹ Other includes holding, shared service center, real estate and consolidation.
Please note that there may be rounding differences as compared to the mathematically exact amounts (monetary units, percentages) in this report.
• Good demand and acquisitions supported growth – group revenue up sharply, by 12.6 percent to 593.4 million euros (prior year: 526.8 million euros), with all segments contributing to good business performance.
See Earnings Position – Page 7
• Profi t up at faster rate than revenue – despite adverse effects in connection with company acquisitions, EBITDA increased to 89.0 million euros (prior year: 73.1 million euros) and EBIT grew by 27.8 percent to 66.7 million euros (prior year: 52.2 million euros). The EBIT margin improved to 11.2 percent (prior year: 9.9 percent).
See Earnings Position – Page 8
• Order intake up – in the fi rst nine months, Jenoptik received new orders worth 588.4 million euros (prior year: 576.2 million euros). In the third quarter, the order intake grew by 11.9 percent. The bookto-bill ratio was 0.99 (prior year: 1.09). At 480.9 million euros, the order backlog reached a new record fi gure.
See Earnings Position – Page 8
Optics & Life Science: positive business performance continued – revenue, EBIT and order intake were markedly up.
Mobility: acquisitions and scheduled deliveries in the fi eld of traffi c safety technology contributed to sharp rise in revenue and earnings.
Defense & Civil Systems: earnings up at faster rate than revenue, but order intake below high prioryear fi gure.
See Segment Report – from Page 12 on
• Revenue forecast of the Group is raised to a range of 820 to 830 million euros. Margin targets un changed despite acquisition-related expenses. EBITDA margin is due to come in at around 15 percent; EBIT margin at approximately 11 percent.
See Forecast Report – Page 19
Jenoptik is a global photonics group and a supplier of high-quality and innovative capital goods. The Group is thus primarily a technology partner to industrial companies. In the Mobility and Defense & Civil Systems segments, we are also a supplier to the public sector, in part indirectly through system integrators.
Jenoptik provides the majority of its products and services to the photonics market. Our key markets primarily include the semiconductor equipment industry, the medical technology, automotive, mechanical engineering, traffi c, aviation, and security and defense technology industries.
The Jenoptik Group operates in three segments:
The Executive Board of JENOPTIK AG presented its "Strategy 2022" in February 2018. In future, Jenoptik will intensify its concentration on photonic technologies for high-growth markets. Activities will be combined based on similar business models and common understanding of markets and customers. The aim is to transform Jenoptik into a global, streamlined photonics company over the next few years. The greater concentration on the core competencies will also help to optimize the use of existing capacities and thus a more effi cient allocation of resources.
The new strategy under the motto "More Light" is based on three building blocks: "More Focus", "More Innovation", and "More International". By 2022, we want to increase our R+D output, including developments on behalf of customers, to around 10 percent of revenue. International diversity will characterize Jenoptik more strongly than ever before. That means international teams bringing together diverse cultural backgrounds, and more local decision-making. In this context, the Executive Board expanded the Executive Management Committee to include international managers in spring. At least one division will have its headquarters abroad by 2022.
To implement our "Strategy 2022", we
As part of the new strategy, the Executive Board has set out the following priorities for the current 2018 fi scal year:
In June, Jenoptik approved the new organizational structure for Asia, which will help to simplify complex corporate structures and clearly defi ne responsibilities. Cooperation within Asia, with the divisions and the central functions will become faster and easier.
In the future, the Group will market its range of mechatronic products and services for the aviation, security, defense, and rail markets under the VINCORION brand, which was launched in September.
For more information on the strategic alignment of the Jenoptik Group, we refer to the 2017 Annual Report and the details given in the "Targets and Strategies" chapter from page 70 on, as well as on the Jenoptik website.
In July 2018, Jenoptik acquired the Canadian company Prodomax Automation Ltd., the largest acquisition in the more recent history of the Group. With the purchase Jenoptik secures further potential for growth in the fi eld of advanced manufacturing. The acquisitions of OTTO Vision Technology GmbH and OVITEC GmbH in August serve to boost Jenoptik's metrology business.
More information on these acquisitions can be found in the Segment Report, on page 14, and in the Notes, on page 29.
The mood on the international capital markets remained positive in the fi rst six months of 2018, but an uncertain outlook caused it to deteriorate in the course of the third quarter. Germany's benchmark index, the Dax, ended September 2018 at 12,247 points, equating to a fall of around 5 percent over the January to September 2018 reporting period. On September 28, 2018, the TecDax was at 2,813 points, a rise of approximately 10 percent.
In the fi rst nine months, the Jenoptik share saw volatile, albeit broadly positive, performance. Following initial fl uctuation, its price rose toward the mid-year point, reaching its highest level of 39.48 euros on June 13. The share price then lost ground and moved sideways. On the last trading day in September 2018, the Jenoptik share was at 31.74 euros, an increase of 14.2 percent since the beginning of the year. Over the 9-month period, the total shareholder return was 15.3 percent (prior year: 13.0 percent). By the close of trading on October 31, 2018 the share price had fallen to 26.64 euros in line with a generally poor overall market situation. As of the end of October, Jenoptik's market capitalization was 1,524.8 million euros.
In addition to those voting rights announcements which we published in the fi rst half of the year, we received two more in October: Capital Research and Management Company inform ed us that it holds 1,720,171 Jenoptik shares, equating to a holding of 3.01 percent. SMALLCAP World Fund informed us that it holds 3.34 percent of the shares or 1,910,288 shares.
At the Annual General Meeting on June 5, 2018, the shareholders agreed to a 20 percent higher dividend of 0.30 euros per share (prior year: 0.25 euros). On the basis of the total dividend in the sum of 17.2 million euros, the payout ratio to the shareholders came to 23.7 percent based on earnings attributable to shareholders achieved in 2017 (prior year: 25.0 percent).
A total of eleven research companies and banks currently report regularly on Jenoptik. At the time this report was prepared, four analysts recommended buying the stock, six advised investors to hold, and one recommended selling. At the end of October, the average price target across all recommendations was 31.82 euros.
In September 2018, Deutsche Börse introduced changes to its index methodology, to the effect that listed companies that, for example, are included in the TecDax, can also be listed on a further index such as the Dax, MDax, or SDax. As a technology stock, Jenoptik remains in the TecDax and, following the rule changes, is also listed on the SDax.
In its 20th year as a publicly traded company, the Jenoptik Group changed its share capital from bearer to registered shares on a 1:1 basis. This class of shares has been traded under a new international securities identifi cation number (ISIN) DE000A2NB601 since September 3. More information on the change can be found on our website at www.jenoptik.com/ investors/registered-shares.
Jenoptik was awarded a silver medal for its capital market communication in the TecDax index at the annual "Investors' Darling" competition, which is run jointly by HHL Leipzig Graduate School of Management and the business journal "manager magazin". The company's explanation of its strategy, the quality of its digital IR activities, and its above-average share price performance were the key factors contributing to its strong ranking. As a result, Jenoptik moved up from fi fth place last year to second in the TecDax index in 2018.
| 1/1 to 30/9/2018 |
1/1 to 30/9/2017 |
|
|---|---|---|
| Closing share price (Xetra) on 30/9/ in euros |
32.04 | 28.04 |
| Highest share price (Xetra) in euros | 39.48 | 28.04 |
| Lowest share price (Xetra) in euros | 26.44 | 16.11 |
| Market capitalization (Xetra) on 30/9/ in million euros |
1,833.9 | 1,605.0 |
| Average daily trading volume in shares¹ | 171,529 | 163,856 |
| 1/1 to 30/9/2018 |
1/1 to 30/9/2017 |
|
|---|---|---|
| Earnings attributable to shareholders in thousand euros |
54,067 | 44,285 |
| Weighted average number of outstanding shares |
57,238,115 | 57,238,115 |
| Earnings per share in euros | 0.94 | 0.77 |
Earnings per share are the earnings attributable to shareholders divided by the weighted average number of shares outstanding.
¹ Source: Deutsche Börse
Increasing protectionism and trade barriers, geopolitical uncertainties in countries such as Turkey, Argentina, and Saudi Arabia, and the possibly forthcoming Brexit all infl uenced the global economy in the fi rst nine months of 2018.
In the third quarter of 2018, annualized gross domestic product (GDP) in the US rose 3.5 percent on the prior quarter, according to the Department of Commerce, following a plus of 4.2 percent in the second quarter. Consumer and government spending were the drivers of growth, while exports fell in the third quarter.
China's GDP grew 6.5 percent on the prior-year period in the third quarter of 2018, according to the Chinese National Bureau of Statistics in Beijing, thus falling short of expectations. Industrial production was also lower than forecast.
Following a low-key start to the year, the German economy began to pick up in the second quarter of 2018. According to the German Federal Statistical Offi ce, GDP grew 0.5 percent despite the trade confl ict with the US, primarily on the back of a domestic economy strengthened by robust consumer and government spending. In the view of leading economists, how ever, companies have already held back on investment decisions, notwithstanding high levels of capacity utilization. Production was scaled down through the end of August. In recent months, the ifo Business Climate Index also pointed to a light cooling-off in the country's business climate.
Based on revenues of 16 international companies, Spectaris calculates the World Market Index for Optical Technologies to determine the current state of business development in the photonics industry. In the second quarter of 2018, the index reached its second-highest level of 174.3 points and the highest level ever for a second quarter. Compared to the fi rst half-year of 2017, revenue of the companies analyzed grew 9.4 percent in the fi rst six months of 2018.
The global semiconductor industry has seen a strong demand compared with the prior year. According to the Semiconductor Industry Association (SIA) global revenue in the 3rd quarter 2018 came to 122.7 billion US dollars, 4.1 percent more than in the prior quarter and 13.8 percent than in the same period
in the prior year. Although growth slowed down a bit, both the September and the third quarter 2018 were the strongest in terms of revenue in this industry.
Due to continuing good demand for lithography systems for chip manufacturing, the major players in the semiconductor equipment industry also achieved very good earnings in the third quarter of 2018. To date, however, the Semiconductor Equipment and Materials International (SEMI) trade association has only published revenue fi gures in the industry for the second quarter: at 16.7 billion US dollars, revenue was just 1 per cent below the record fi gure in the prior quarter.
According to information published by the German Mechanical Engineering Industry Association (VDMA), new orders grew 6 percent on the prior-year period in the fi rst nine months of 2018, in the third quarter only by 3 percent. In the fi rst seven months, the industry saw production grow 2.9 percent, while the order intake increased by 7 percent. Despite this, trade confl icts and protectionist trends, especially in the US and China, are already making themselves felt.
According to the German Association of the Automotive Industry (VDA), the international automobile markets saw sustained growth in the number of new car registrations in the fi rst nine months of 2018. Particularly in the third quarter, car manufacturers and suppliers in Europe reported signifi cant burdens on their balance sheets and operating businesses, in part due to the effects of the diesel scandal, retrofi t and warranty claims, and the trade confl ict between the US and China. This resulted in several profi t warnings for the current year. Almost the entire industry criticized the introduction of the new fuel consumption and emissions test, known as WLTP, which were offi cially agreed in summer 2017. Approvals under the new standard have slowed, producing increased competitive pressure in the industry and causing some manufacturers to scale back production. Due to high levels of nitrogen oxide pollution, several German cities have introduced driving bans. According to the German government, there are 14 particularly polluted cities that required action to be taken.
No important new reports were published for other sectors relevant to Jenoptik. We therefore refer to pages 83ff. of the 2017 Annual Report and to the interim reports for 2018 published to date.
The tables in the Management Report, which show a breakdown of the key indicators by segment, include the holding company, the Shared Service Center, centrally administered real estate, and consolidation effects under "Other".
Jenoptik completed two acquisitions, with implications for the Group's earnings, fi nancial, and asset positions, in the third quarter of 2018. More detailed information on them in the Segment Report on page 14 and in the Notes, from page 29 on.
Jenoptik signifi cantly boosted its revenue, by 12.6 percent to 593.4 million euros (prior year: 526.8 million euros), in the fi rst nine months of 2018, with growth seen in all three segments. Organic growth came to 8.5 percent. This increase was due to good demand for optical systems in the semiconductor equipment industry, as well as for systems from the Healthcare & Industry area. The Traffi c Safety area also contributed signifi cantly to this growth. In addition, the acquisitions in the automotive area, in particular that of Prodomax Automation Ltd., made a strong contribution to revenue of 21.8 million euros.
In the fi rst nine months of 2018, Jenoptik generated growth both in Germany and abroad. Revenue in Germany increased sharply by 19.4 percent to 180.1 million euros (prior year: 150.9 million euros), in particular due to deliveries of toll monitoring systems in the Mobility segment. In Europe, the Americas, and the Middle East/Africa region, revenue also saw growth. A strong revenue increase of 12.0 percent was achieved in Europe. At 217.9 million euros, revenue in the growth regions of the Americas and Asia/Pacifi c was up on the prior year (prior year: 201.1 million euros). It was down in percentage terms, however, accounting for 36.7 percent of group revenue (prior year: 38.2 percent). Revenue in the Asia/Pacifi c region
saw a project-related decline over the reporting period, but grew signifi cantly by 24.7 percent in the Americas, in part due to the acquisition. Overall, the share of revenue generated abroad fell to 69.6 percent (prior year: 71.3 per cent). A summary of revenue distribution by region can be found on page 25.
The cost of sales increased by 14.3 percent and thus at a slightly higher rate than revenue, to 383.8 million euros (prior year: 335.7 million euros), in part due to the acquisitions. The gross margin of 35.3 percent (prior year: 36.3 percent) was consequently marginally down on the prior-year level.
A step-up in group research and development activities (R+D) led to an increase in the R+D expenses to 34.7 million euros in the period covered by the report (prior year: 32.8 million euros). The development costs on behalf of customers included in the cost of sales came to 15.2 million euros (prior year: 14.2 million euros). At 51.3 million euros, the R+D output was higher than in the prior year (prior year: 47.8 million euros) and equated to 8.6 percent of group revenue (prior year: 9.1 percent). The indicator includes R+D expenses, development costs on behalf of customers, and capitalized development costs that are included in assets.
Primarily due to the expansion of international activi ties, the selling expenses increased to 64.3 million euros in the fi rst nine months of 2018 (prior year: 60.1 million euros). At 10.8 percent, the selling expenses ratio was, however, slightly down on the prior-year level of 11.4 percent. Administrative expenses fell to 39.7 million euros in the period covered by the report (prior year: 42.1 million euros). In the prior year, they had included expenses in connection with a change on the Executive Board. The administrative expenses ratio accordingly fell to 6.7 percent (prior year: 8.0 percent).
| 1/1 to | 1/1 to | ||
|---|---|---|---|
| in million euros | 30/9/2018 | 30/9/2017 | Change in % |
| Group | 593.4 | 526.8 | 12.6 |
| Optics & Life Science | 211.2 | 191.3 | 10.4 |
| Mobility | 223.4 | 180.6 | 23.7 |
| Defense & Civil Systems | 160.9 | 155.1 | 3.8 |
| Other | –2.1 | –0.2 | |
| in million euros | 1/1 to 30/9/2018 |
1/1 to 30/9/2017 |
Change in % |
|---|---|---|---|
| R+D output | 51.3 | 47.8 | 7.4 |
| R+D expenses | 34.7 | 32.8 | 5.7 |
| Capitalized development costs | 1.4 | 0.7 | 89.0 |
| Developments on behalf of customers |
15.2 | 14.2 | 7.2 |
In the fi rst nine months of 2018, other operating income and expenses were at the same level as in the prior year. Of particular note here are the positive currency effects worth a total of 0.1 million euros (prior year: minus 4.0 million euros), offset by expenses for process optimization and costs relating to the acquisitions. The account balance from both items came to minus 4.1 million euros (prior year: minus 3.9 million euros).
Revenue growth and a relatively low increase in functional costs resulted in a strong improvement in EBIT, which at 66.7 million euros exceeded the prior-year fi gure by 27.8 percent (prior year: 52.2 million euros). All the segments contributed to this positive development with signifi cantly improved earnings. EBIT of the acquired companies came to a total of minus 0.2 million euros. This amount includes the fi nancial impacts arising from the purchase price allocation, which according to provisional fi gures amounted to minus 6.3 million euros. The costs for the purchases came to 1.8 million euros. The EBIT margin of the Group increased to 11.2 percent (prior year: 9.9 percent).
In the fi rst nine months of 2018, and for the reasons mentioned above, the EBITDA (earnings before interest, taxes and depreciation and amortization, incl. impairment losses and reversals) increased by 21.7 percent to 89.0 million euros (prior year: 73.1 million euros). The EBITDA margin improved to 15.0 percent (prior year: 13.9 percent). Included in the EBITDA are impacts of minus 4.8 million euros for the purchase price allocation, according to provisional calculations, and 1.8 million euros of acquisition costs.
Over the reporting period, the fi nancial result came to minus 2.0 million euros (prior year: 2.3 million euros). The prior-year
fi gure included one-time income of 5.6 million euros from the disposal of non-operating fi nancial investments. At 64.7 million euros, the Group thus achieved signifi cantly improved earnings before tax (EBT) compared to the prior year (prior year: 54.5 million euros). Income tax expenses came to 11.0 million euros (prior year: 10.2 million euros), equating to a cash effective tax rate of 14.5 percent (prior year: 17.7 percent). This decrease is partly due to tax reforms in the US. Group earnings after tax (EAT) rose by 21.4 percent to 53.7 million euros (prior year: 44.3 million euros). Group earnings per share (EPS) increased to 0.94 euros (prior year: 0.77 euros).
Compared to the prior year, the Jenoptik Group's order intake saw a rise to 588.4 million euros by the end of September 2018 (prior year: 576.2 million euros), with increases seen in the Optics & Life Science and Mobility segments. The book-tobill ratio came to 0.99 (prior year: 1.09), i.e. the order intake was slightly below revenue in the fi rst nine months of 2018.
The order backlog reached a new record value of 480.9 million euros, exceeding the fi gure at year-end 2017 (31/12/2017: 453.5 million euros). Of this order backlog, 48.1 percent (prior year: 57.8 percent) is due to be converted to revenue in the present fi scal year and help to support scheduled growth.
As of September 30, 2018, there were also frame contracts worth 78.0 million euros (31/12/2017: 87.6 million euros). Frame contracts are contracts or framework agreements where the exact sum and time of occurrence cannot yet be specifi ed precisely.
The number of Jenoptik employees increased to 3,984 in the fi rst nine months of 2018 (31/12/2017: 3,680 employees). The
| in million euros | 1/1 to 30/9/2018 |
1/1 to 30/9/2017 |
Change in % |
|---|---|---|---|
| Group | 66.7 | 52.2 | 27.8 |
| Optics & Life Science | 45.5 | 36.9 | 23.3 |
| Mobility | 16.9 | 8.6 | 96.9 |
| Defense & Civil Systems | 15.4 | 12.3 | 24.9 |
| Other | –11.1 | –5.6 | |
| in million euros | 1/1 to 30/9/2018 |
1/1 to 30/9/2017 |
Change in % |
|---|---|---|---|
| Group | 89.0 | 73.1 | 21.7 |
| Optics & Life Science | 51.1 | 43.0 | 18.9 |
| Mobility | 25.4 | 15.1 | 68.4 |
| Defense & Civil Systems | 18.6 | 15.8 | 17.3 |
| Other | –6.0 | –0.7 |
fi gure rose abroad, in part due to the acquisition in Canada. At the end of September 2018, 962 people were employed at the foreign locations (31/12/2017: 802 employees).
Jenoptik had a total of 118 trainees as of September 30, 2018 (31/12/2017: trainees 109 trainees). In Germany, the Group had 129 agency employees (31/12/2017: 114 agency employees).
Detailed information on the development of the segments can be found in the Segment Report from page 12 on.
At the end of the fi rst nine months of 2018, the debt-to-equity ratio, that of borrowings to equity, rose to 0.70 from 0.68 at the end of 2017, thus remaining at a good level. The rise was due to borrowings increasing at a higher rate than equity.
Despite the payments made for the two acquisitions and the higher dividend, net debt as of September 30, 2018 was just 16.6 million euros (31/12/2017: minus 69.0 million euros).
In the fi rst nine months of 2018, the Group invested 26.8 million euros in property, plant, and equipment and intangible assets; as previously announced, this was more than in the prior-year period (prior year 24.0 million euros). For the year as a whole, too, Jenoptik expects a higher level of capital expenditure than in 2017. At 22.5 million euros, the largest share of capital expenditure was on property, plant, and equipment (prior year: 21.8 million euros), primarily to put in place the conditions for further growth, for new customer orders, and for new technical equipment and the expansion of production
capacities. Mainly due to higher license fees and capitalized development expenses, capital expenditure for intangible assets exceeded the prior-year level, coming to 4.4 million euros (prior year: 2.2 million euros). Scheduled depreciation and amortization came to 21.1 million euros (prior year: 20.9 million euros).
Cash fl ows from operating activities increased to 72.8 million euros (prior year: 50.2 million euros) as of September 30, 2018, chiefl y due to improved earnings before tax. The main negative factor affecting the operating cash fl ows was the increase in working capital, as more prepayments were made due to the larger volume of business.
At the end of September 2018, cash fl ows from investing activities came to minus 82.4 million euros (prior year: minus 46.8 million euros), which in the reporting period were primarily infl uenced by the acquisition of consolidated entities. Apart from capital expenditure, other key items were proceeds from and capital expenditure for fi nancial assets within the framework of short-term disposition.
Due to signifi cantly improved cash fl ows from operating activities, the free cash fl ow increased to 57.2 million euros in the period covered by the report (prior year: 32.2 million euros). This improvement was possible despite the revenue-related rise in expenditure for working capital and higher capital expenditure than in the prior year. The free cash fl ow is calculated on the basis of the cash fl ows from operating activities (before interest and taxes) less the infl ows and outfl ows of funds for intangible assets and property, plant, and equipment.
| 1/1 to 30/9/2018 |
1/1 to 30/9/2017 |
Change in % |
|---|---|---|
| 588.4 | 576.2 | 2.1 |
| 30/9/2018 | 31/12/2017 | Change in % |
| 480.9 | 453.5 | 6.0 |
| 78.0 | 87.6 | –11.0 |
| 30/9/2018 | 31/12/2017 | Change in % |
|---|---|---|
| 3,984 | 3,680 | 8.3 |
| 1,214 | 1,149 | 5.7 |
| 1,500 | 1,326 | 13.1 |
| 914 | 897 | 1.9 |
| 356 | 308 | 15.6 |
Primarily due to repayments ofe bonds and loans, cash fl ows from fi nancing activities fell to minus 46.3 million euros (prior year: minus 12.3 million euros). This item includes, in particular, payments for loans in connection with the company acquisitions. It was also infl uenced by the dividend payment of 17.2 million euros (prior year: 14.3 million euros).
As of September 30, 2018, the Jenoptik Group's total assets, at 959.7 million euros, were higher than the 2017 year-end fi gure due to the acquisitions, the application of IFRS 15, and measures to achieve the scheduled growth targets (31/12/2017: 889.1 million euros).
The increase in non-current assets to 485.8 million euros (31/12/2017: 376.2 million euros) was chiefl y due to higher intangible assets. The latter primarily rose as a range of intangible assets such as customer bases and order backlogs were identifi ed and goodwill was recognized during the purchase price allocation in connection with the acquisition of shares in Prodomax Automation Ltd., and in the Otto Group. Property, plant, and equipment also increased, in part due to capital expenditure and the acquisitions. Financial investments grew following the equity valuation of a stake in an enterprise.
Current assets fell by 39.0 million euros to 473.9 million euros (31/12/2017: 512.9 million euros). The acquisitions made in the reporting period were paid for entirely using cash, producing a fall in the cash and cash equivalents item to 76.5 million euros (31/12/2017: 132.3 million euros). Current fi nancial investments reduced due to the repayment of cash investments. Due to the fi rst-time application of IFRS 15, the item "Contract assets" was posted for the fi rst time with a value of 27.4 million euros. Primarily as a result of this new item, current trade receivables fell to 121.5 million euros (31/12/2017: 136.0 million euros). Inventories rose to 196.9 million euros (31/12/2017: 168.6 million euros), as the increase due to operating activities (39.4 million euros) more than compensated for the effect of fi rst-time application of IFRS 15 (minus 11.1 million euros).
Chiefl y due to higher operating receivables (trade receivables and contract assets) and inventories, the working capital increased to 239.9 million euros as of September 30, 2018 (31/12/2017: 214.8 million euros; 30/09/2017: 225.3 million euros). The working capital ratio, that of working capital to revenue based on the last twelve months, accordingly increased to 29.5 percent compared to year-end 2017 (31/12/2017: 28.7 percent), but remained below the value in the prior-year period (30/09/2017: 31.3 percent).
The substantial increase in earnings after tax posted at the end of the reporting period, minus the dividend payment, primarily resulted in equity growing to 565.3 million euros (31/12/2017: 529.9 million euros). In light of the balance sheet extension the equity ratio, at 58.9 percent, was slightly down on the fi gure at year-end 2017 (31/12/2017: 59.6 percent).
As a result of a sharp rise in deferred tax liabilities in connection with the acquisition of Prodomax and an increase in both non-current fi nancial debt (new fi nance leasing agreements) and other non-current fi nancial liabilities (variable purchase price components resulting from the acquisition of Otto Group), non-current liabilities rose to 176.6 million euros (31/12/2017: 162.1 million euros). Non-current liabilities primarily include debenture loans placed in 2015, currently totaling 103 million euros and with original terms of fi ve and seven years.
Current liabilities increased from year-end 2017 to 217.8 million euros (31/12/2017: 197.1 million euros). The "Contract liabilities" item was posted for the fi rst time in connection with the application of IFRS 15. Other current non-fi nancial liabilities primarily fell due to the reclassifi cation of on-account payments to contract liabilities. This was countered by the rise in liabilities to employees, e.g. for vacation entitlements. Other current provisions also increased, chiefl y due to the additions to personnel provisions for the 2018 fi scal year.
The fi rst nine months of 2018 saw the following signifi cant purchases or sales of companies:
In July, Jenoptik acquired a 100 percent stake in Prodomax Automation Ltd., Barrie (Ontario), Canada, through its US company JENOPTIK North America Inc.
On August 31, 2018, Jenoptik acquired a 100 percent stake in OTTO Vision Technology GmbH and OVITEC GmbH (Otto Group).
More information on the acquisitions can be found in the Segment Report, on page 14, and in the Notes, from page 29 on.
There were no changes to assets and liabilities not included in the balance sheet; for more information on this, we refer to the details on page 96 of the 2017 Annual Report and the details on contingent liabilities on page 184.
In the fi rst nine months of 2018, the Optics & Life Science segment posted a strong increase in revenue of 10.4 percent to 211.2 million euros (prior year: 191.3 million euros). As in the prior quarters, this development was driven by a continuation of good business with solutions for the semiconductor equipment industry. Sales in the Healthcare & Industry unit also saw very positive development. Overall, the segment's share of group revenue was 35.6 percent (prior year: 36.3 percent). Revenue rose the sharpest in Europe (excluding Germany), to 81.2 million euros (prior year: 71.6 million euros), and other than in Asia/Pacifi c, it also increased in all other regions.
Income from operations (EBIT) improved signifi cantly, in particular due to a positive product mix and good utilization, by 23.3 percent to 45.5 million euros (prior year: 36.9 million euros). Over the fi rst nine months, the segment thus increased its EBIT margin to 21.6 percent, an improvement on the prior year (prior year: 19.3 percent). Income from operations before depreciation and amortization (EBITDA) also increased strongly on the prior year, by 18.9 per cent to 51.1 million euros (prior year: 43.0 million euros).
As of September 30, 2018, the order intake rose by 4.8 per cent to 233.4 million euros due to growth in the fi eld of optical systems (prior year: 222.8 million euros). Set against revenue, this resulted in a book-to-bill ratio of 1.11 (prior year: 1.16).
With a value of 127.6 million euros, the segment's order backlog at the end of September 2018 was above the value on December 31, 2017 (31/12/2017: 109.1 million euros). There were also frame contracts worth 13.3 million euros (31/12/2017: 11.1 million euros).
Due to a signifi cant rise in capital expenditure and growthbased increases in working capital, the free cash fl ow (before interest and taxes) of 16.4 million euros was down on the prior-year level (prior year: 24.3 million euros), despite good business performance. The main focus of investment was in production facilities, thereby expanding production capacity. Jenoptik is upgrading and expanding its production facilities in Berlin, for example, helping to lastingly secure the company's competitiveness in its core photonics business. For the manufacture of high-power laser diodes at Berlin's Adlershof Technology Park, it is accelerating order handling thanks to new machines and thus ensuring preparedness to meet sustained high demand for semiconductor lasers.
To better meet the growing demands of our international customers, Jenoptik inaugurated a new site in Fremont, located in California's Silicon Valley, at the beginning of the 2018 fi scal year, thereby putting it in the direct presence of its customers on the west coast of the US. Jenoptik can thus address the region's particular needs, especially in the areas of application engineering and product development, and further accelerate its own growth, particularly in the US.
| in million euros | 30/9/2018 | 30/9/2017 | Change in % |
|---|---|---|---|
| Revenue | 211.2 | 191.3 | 10.4 |
| EBITDA | 51.1 | 43.0 | 18.9 |
| EBITDA margin in % | 24.2 | 22.5 | |
| EBIT | 45.5 | 36.9 | 23.3 |
| EBIT margin in % | 21.6 | 19.3 | |
| Capital expenditure | 11.7 | 3.6 | 225.3 |
| Free cash flow | 16.4 | 24.3 | –32.5 |
| Order intake | 233.4 | 222.8 | 4.8 |
| Order backlog¹ | 127.6 | 109.1 | 16.9 |
| Frame contracts¹ | 13.3 | 11.1 | 19.1 |
| Employees¹ | 1,214 | 1,149 | 5.7 |
1 Prior year´s figures refer to December 31, 2017
At its location in Jupiter, US, Jenoptik is expanding its production capacities for optical systems.
In the fi rst nine months of 2018, revenue in the Mobility segment grew by 23.7 percent on the prior-year period, to 223.4 million euros (prior year: 180.6 million euros). Organic growth was 11.6 percent. Both areas, systems and machines for the automotive industry and traffi c safety technology, saw successful growth, the latter in particular due to deliveries of toll monitoring systems. The acquisitions of Prodomax Automation Ltd. and the Otto Group also contributed 21.8 million euros to revenue growth. On a regional level, revenue particularly grew in Germany as a result of the toll project. Growth in the Americas was primarily the result of the acquisition in Canada. Refl ecting project volumes, revenue in Asia saw a slight decline. The segment's share of group revenue increased to 37.6 percent (prior year: 34.3 percent).
On the basis of a good revenue performance, the segment, as expected, again posted a signifi cantly improved quality of earnings in the fi rst nine months, with income from operations (EBIT) of 16.9 million euros (prior year: 8.6 million euros). These earnings include fi nancial impacts in connection with the aforementioned acquisitions. EBIT of the new acquisitions came to minus 0.2 million euros. This takes into account impacts arising from the purchase price allocation, which according to provisional fi gures amount to minus 6.3 million euros. The costs for the acquisitions came to 1.8 million euros. The prior-year EBIT of the Group had included one-time costs
| in million euros | 30/9/2018 | 30/9/2017 | Change in % |
|---|---|---|---|
| Revenue | 223.4 | 180.6 | 23.7 |
| EBITDA | 25.4 | 15.1 | 68.4 |
| EBITDA margin in % | 11.4 | 8.3 | |
| EBIT | 16.9 | 8.6 | 96.9 |
| EBIT margin in % | 7.6 | 4.8 | |
| Capital expenditure | 6.0 | 14.4 | –58.3 |
| Free cash flow | 28.0 | 0.3 | |
| Order intake | 212.3 | 200.7 | 5.7 |
| Order backlog¹ | 176.2 | 144.7 | 21.8 |
| Frame contracts¹ | 21.5 | 30.1 | –28.8 |
| Employees¹ | 1,500 | 1,326 | 13.1 |
1 Prior year´s figures refer to December 31, 2017
for the project to supply toll monitoring systems. The EBIT margin improved to 7.6 percent (prior year: 4.8 percent). Income from operations before depreciation and amortization (EBITDA) also increased signifi cantly, by 68.4 percent to 25.4 million euros (prior year: 15.1 million euros). The EBITDA margin was 11.4 percent, compared to 8.3 percent in the prior year. Included in the EBITDA are effects arising from the purchase price allocation, according to provi sional calculations of minus 4.8 million euros, and acquisition costs of 1.8 million euros.
The order intake in the Mobility segment came to 212.3 million euros (prior year: 200.7 million euros). Business with the automotive industry was further expanded. The order intake also includes the orders acquired from Prodomax and Otto Group since the acquisition date, in total worth 5.9 million euros. In the fi rst nine months of 2018, the book-to-bill ratio reached a fi gure of 0.95 (prior year: 1.11).
The segment's order backlog was worth 176.2 million euros at the end of September (31/12/2017: 144.7 million euros). Of this fi gure, the order backlog pertaining to the acquired companies was worth 32.3 million euros. There were also frame contracts worth 21.5 million euros (31/12/2017: 30.1 million euros).
Following extensive investments in the prior year, e.g. in internally manufactured equipment for a Canadian traffi c safety project and the technology campus at the Rochester Hills US location, the segment had reduced its expenditure to just 6.0 million euros as at September 30, 2018 (prior year: 14.4 million euros).
Lower capital expenditure and higher earnings were key reasons for the signifi cant improvement in the free cash fl ow (before interest and taxes) to 28.0 million euros (prior year: 0.3 million euros).
Jenoptik continues to invest in expanding and upgrading its own development and production facilities. Cutting-edge development, production, and offi ce spaces for the Industrial Metrology unit are being built at the Villingen-Schwenningen site at a cost of around 13 million euros. Construction will commence in the spring of 2019, with operations scheduled to start at the new site one year later.
The acquisitions of three companies were successfully concluded in the third quarter.
With the signing the agreement on July 10, 2018 and on the closing date of July 23, 2018, Jenoptik acquired a 100 percent stake in Prodomax Automation Ltd., Barrie (Ontario), Canada, through its US company JENOPTIK Automotive North America Inc.
Prodomax specializes in process automation for the automotive industry. The acquisition allows the Group to boost its position as a turnkey provider of automated production solutions, Jenoptik has embarked on with the acquisition of Five Lakes Automation in 2017. The combination of automation solutions and laser processing machines gives the Jenoptik Group an opportunity to tap into further potential for growth in the fi eld of advanced manufacturing.
Jenoptik acquired a 100 percent stake in the sister companies OTTO Vision Technology GmbH and OVITEC GmbH.
Both companies specialize in optical inspection systems for quality assurance and process optimization, as well as in complex imaging systems for applications in the fi eld of parts dimensioning, surface inspection, and position detection. The takeover will enable the Jenoptik Group to strengthen its range of products and services for innovative metrology solutions in the Mobility Segment and further expand its market position as a systems supplier for production metrology as well as industrial image processing applications.
In the fi rst nine months of 2018, the Defense & Civil Systems segment generated revenue of 160.9 million euros (prior year: 155.1 million euros), with increases seen in Europe and the Americas. In Germany, however, revenue of 66.2 million euros was slightly down due to project-related factors (prior year: 68.0 million euros). The segment's share of group revenue fell to 27.1 percent (prior year: 29.4 percent).
Although revenue increased only marginally on the prior year, income from operations (EBIT) grew signifi cantly to 15.4 mil lion euros (prior year: 12.3 million euros), in part due to a changed product mix, lower currency losses, and lower selling expenses thanks to cost savings. Over the reporting period, the EBIT margin rose accordingly to 9.6 percent (prior year: 7.9 percent), reaching even 11.1 percent in the third quarter. In the fi rst nine months of 2018, the segment generated income from operations before depreciation and amortization (EBITDA) of 18.6 million euros (prior year: 15.8 million euros). The margin here also improved, from 10.2 percent in the prior year to a current 11.6 percent.
An order intake worth 144.0 million euros in the current reporting period was 6.7 percent down on the prior year (prior year: 154.4 million euros). Particularly in the fi rst quarter of 2017, Jenoptik had received several major orders for energy and sensor systems, both for defense pur poses and civilian applications. An improvement in the order intake compared to prior quarters is expected in the fourth quarter of 2018. The book-to-bill ratio fell to 0.89, compared with 1.00 in the prior year.
On the basis of a lower order intake than in the prior year, the segment's order backlog also fell, by 23.5 million euros to 179.1 million euros in absolute terms (31/12/2017: 202.6 million euros). There were also frame contracts worth 43.3 million euros (31/12/2017: 46.3 million euros).
The free cash fl ow (before interest and taxes) amounted to 26.5 million euros. It was considerably stronger than in the prior year (prior year: 17.6 million euros), in part due to improved earnings and changes in working capital, e.g. due to early in coming payments arising from receivables.
The new brand of the mechatronics business was presented in September: in the future, the Group will market its range of mechatronic solutions for the aviation, security, defense, and rail markets under the "VINCORION" brand.
| in million euros | 30/9/2018 | 30/9/2017 | Change in % |
|---|---|---|---|
| Revenue | 160.9 | 155.1 | 3.8 |
| EBITDA | 18.6 | 15.8 | 17.3 |
| EBITDA margin in % | 11.6 | 10.2 | |
| EBIT | 15.4 | 12.3 | 24.9 |
| EBIT margin in % | 9.6 | 7.9 | |
| Capital expenditure | 3.7 | 3.0 | 24.1 |
| Free cash flow | 26.5 | 17.6 | 50.5 |
| Order intake | 144.0 | 154.4 | –6.7 |
| Order backlog¹ | 179.1 | 202.6 | –11.6 |
| Frame contracts¹ | 43.3 | 46.3 | –6.6 |
| Employees¹ | 914 | 897 | 1.9 |
Prior year´s figures refer to December 31, 2017
At the time this report was prepared, there were no events after the balance sheet date of September 30, 2018 that were of signifi cance to the Group or had a signifi cant infl uence on Jenoptik's earnings, fi nancial or asset positions.
Within the framework of the reporting on the Opportunity and Risk Report, we refer to the details on pages 108ff. of the 2017 Annual Report published at the end of March 2018. There have been no major changes in the opportunities and risks described in the report during the course of the fi rst nine months of 2018. All the same, we continue to analyze the potential effects of the trade policies enacted by the present US administration and the impacts of a possible Brexit.
The International Monetary Fund (IMF) downgraded its growth forecasts in October 2018, and is now anticipating the global economy to grow 3.7 percent in the current year (prior forecast: 3.9 percent). Chief worries include trade confl icts, in particular between the US and China, growing political uncertainty, for example relating to a possible Brexit, and increasing diffi culties in newly industrialized and emerging economies, not least due to stricter fi nancing options and higher oil prices.
The US intends to sign a new trade agreement with Canada and Mexico in November, thereby replacing NAFTA and averting trade tariffs.
Following slower economic growth than expected in China recently, infrastructure projects are being introduced to boost momentum; monetary and budgetary policy is also being relaxed, but may result in high levels of debt and further fi nancial risks. According to economists, the trade confl ict with the US is expected to be felt more strongly from the fourth quarter on, as the US applied special tariffs to around half of all Chinese goods imports in September 2018. These tariffs are due to rise from 10 to 25 percent in 2019.
Due to a weaker foreign trade environment, the German government reduced its 2018 growth forecast from 2.3 to 1.8 percent. For 2019, it is also expecting gross domestic product (GDP) to grow 1.8 percent instead of the prior 2.1 per-
| in percent / in percentage points | 2018 | Change to forecast of July 2018 |
2019 |
|---|---|---|---|
| World | 3.7 | –0.2 | 3.7 |
| USA | 2.9 | 0.0 | 2.5 |
| Euro zone | 2.0 | –0.2 | 1.9 |
| Germany | 1.9 | –0.3 | 1.9 |
| China | 6.6 | 0.0 | 6.2 |
| Emerging economies | 4.7 | –0.2 | 4.7 |
Source: International Monetary Fund, October 2018
cent. The leading research institutions have also reduced their joint forecast. With regard to foreign trade, the Federal Association of Wholesale and Foreign Trade (BGA) downgraded its annual forecast in October 2018 and is now expecting exports to increase just 3.5 percent on the prior year and thus 1.5 percentage points less than previously.
At the time this report was prepared, the economic outlook caused by a possible Brexit was still uncertain, particularly in the event that Great Britain leaves the single market and the customs union with no transition agreement in place.
The major semiconductor equipment manufacturers are expecting 2018 to be a record year and are also confi dent about 2019. This was confi rmed by the SEMI trade association, which updated its revenue forecast in mid-2018. It sees revenues for semiconductor equipment growing 10.8 percent on the prior year in 2018, to 62.7 billion US dollars. A further record year is expected in 2019, with revenue increasing 7.7 percent to 67.6 billion US dollars. Companies are benefi ting from increasing demand for smaller "logic chips" or the "7-nanometer generation". These chips are required for data processing in premium electronic devices. Beyond this, many customers are said to be planning to upgrade their systems or maximize capacities.
In view of a good order situation and a high order backlog, the German Mechanical Engineering Industry Association (VDMA) is also expecting production to grow in 2019. However, this growth is not due to exceed 2 percent on 2018, which the association attributes to the high prior-year level, a cyclical slowdown typical for the industry, dampening effects arising from tariffs, and growing uncertainty regarding political risks. For the current year, the VDMA assumes that forecast production growth of 5 percent can only still be achieved with diffi culty.
The good growth seen to date in the German machine tool industry was confi rmed by the VDW industry association in its forecast for the current year, which sees production increasing 7 percent on the prior year. Risks include the possible Brexit, growing unrest in Turkey, trade confl icts, and the threat of sanctions.
These are the same risks that are affecting the automotive industry. Major German automakers are warning that they may lose their leading international position, pointing to the trade confl ict and the American threat of import tariffs for vehicles manufactured in Germany, political instability around the globe, and new, stringent technology and environmental regulations. The EU nations, for example, plan to tighten carbon dioxide emissions limits for new cars. The compromise, which is not yet fi nalized, involves reducing limit values by 35 percent between 2020 and 2030 and increasing the number of electric and hybrid vehicles in the EU; according to the EU Parliament, the latter is due to be achieved by means of a quota system under which, by 2030, manufacturers will be obliged to ensure that 35 percent of the cars they sell have low emissions. The European Automobile Manufacturers' Association (ACEA) criticized these targets, claiming they will force manufacturers into a "dramatic transformation in record time" and endanger jobs. It adds that the conditions do not exist to enable electromobility on this scale.
In the fi eld of traffi c safety, the start of the pilot project to introduce section control in Germany, under which a Jenoptik system will be installed in Lower Saxony, is still delayed. The Physikalisch-Technische Bundesanstalt is unable to say when the technology will be fi nally approved and certifi ed.
In the global rail industry, established structures are being shaken by the planned merger of Siemens and French manufacturer Alstom that aims to counter the competition in the industry, primarily from China.
According to reports issued by Airbus and Boeing, the major aircraft manufacturers increased their long-term forecasts for the aviation industry in summer 2018. As stated in its "Global Market Forecast", Airbus anticipates that the airlines will buy a total of around 37,400 new passenger jets and cargo planes worth 5.8 trillion US dollars by 2037. Boeing forecasts a demand for 42,730 aircrafts worth 6.3 trillion US dollars.
In Germany, spending on security and defense technology is due to rise sharply under plans revealed by the German Ministry of Defense – from almost 43 billion euros in 2019 to 60 billion euros by 2023. This will probably correspond to about 1.5 per cent of GDP. Quoting sources within the coalition government, Handelsblatt reports that equipment and personnel in the German armed forces are due to be upgraded every four years through 2031. This investment aims to meet NATO requirements that stipulate greater expenditure on national and alliance defense. The German government also intends to freeze arms exports to Saudi Arabia until the investigation into the death of a Saudi journalist in early October has been completed. Deliveries that have already been approved may also be stopped.
No new major forecasts have been issued for the other sectors. We therefore refer to pages 119ff. of the 2017 Annual Report and to the interim reports for 2018 published to date.
The Jenoptik Group will continue to pursue its objective of ensuring lasting profi table growth. This will be supported by an expansion of the international business, the resultant econo mies of scale, higher margins from an optimized product mix, increasing service business, and improved cost discipline. Jenoptik successfully completed two acquisitions in the third quarter of 2018.
Prodomax Automation Ltd., in particular, has already made a good contribution to growth this year. Further acquisitions will be very closely scrutinized. A good asset position and a viable fi nancing structure give Jenoptik suffi cient room for maneuver to fi nance both organic and inorganic growth.
The acquisition of Prodomax and the application of the groupwide applicable international accounting standards IFRS for that company resulted in a higher level of revenue than originally anticipated. The Executive Board therefore now assumes group revenue for 2018 to come in at between 820 and 830 million euros (prior fi gure: 805 to 820 million euros). Despite the signifi cant adverse impacts arising from the purchase price allocation in connection with the acquisitions, which were already taken into account or are expected in the fourth quarter, the Executive Board expects the margins for fi scal year 2018 to reach the values raised in summer, i.e. an EBITDA margin of around 15 percent and an EBIT margin of approximately 11 percent.
We refer to the 2017 Annual Report, from page 121 on, for details of the outlook for other key indicators for the development of business and the development of the segments in the 2018 fi scal year.
All statements on the future development of the business situation have been made on the basis of current information available at the time the report was prepared. They are given on the assumption that the economic situation develops in line with the economic and sector forecasts stated in this report, in the reports on the fi rst quarter and the fi rst half-year of 2018, and in the 2017 Annual Report from page 119 on.
| 1/1 to 30/9/2018 | 1/1 to 30/9/2017 | 1/7 to 30/9/2018 | 1/7 to 30/9/2017 |
|---|---|---|---|
| 593,359 | 526,826 | 208,678 | 178,432 |
| 383,791 | 335,668 | 134,391 | 110,172 |
| 209,568 | 191,158 | 74,287 | 68,261 |
| 34,700 | 32,840 | 11,785 | 10,714 |
| 64,257 | 60,087 | 21,832 | 68,261 20,445 |
| 39,727 | 42,145 | 12,380 | 13,124 |
| 12,567 | 12,283 | 3,292 | 4,115 |
| 16,712 | 16,146 | 7,632 | 5,153 |
| 66,739 | 52,223 | 23,949 | 22,939 |
| 77 | 5,412 | -2 | 5,358 |
| 2,471 | 1,029 | 587 | 22,939 239 |
| 4,589 | 4,147 | 1,074 | 1,195 |
| -2,041 | 2,294 | -488 | 4,402 |
| 64,698 | 54,517 | 23,460 | 27,341 |
| -10,951 | -10,246 | -3,068 | 4,402 -5,752 |
| 53,747 | 44,271 | 20,393 | 27,341 21,589 |
| -320 | -14 | -94 | 18 |
| 54,067 | 44,285 | 20,487 | 21,589 21,571 |
| 0.94 | 0.77 | 0.36 | 0.38 |
| 209,568 66,739 -2,041 64,698 53,747 |
191,158 52,223 2,294 54,517 44,271 |
74,287 23,949 -488 23,460 20,393 |
| Earnings after tax in thousand euros |
53,747 1/1 to 30/9/2018 |
44,271 1/1 to 30/9/2017 |
20,393 1/7 to 30/9/2018 |
21,589 1/7 to 30/9/2017 |
|---|---|---|---|---|
| Earnings after tax | 53,747 | 44,271 | 20,393 | 21,589 |
| Items that will never be reclassified to profit or loss | -11 | 199 | 55 | -36 |
| Actuarial gains/losses arising from the valuation of pensions and similar obligations |
-11 | 199 | 55 | -36 |
| Items that are or may be reclassified to profit or loss | -78 | -3,818 | 1,396 | -5,161 |
| Available-for-sale financial assets | 0 | 133 | 0 | -5,763 |
| Cash flow hedges | -4,233 | 4,114 | -421 | 770 |
| Foreign currency exchange differences | 3,467 | -6,851 | 2,258 | -1,880 |
| Total other comprehensive income Deferred taxes |
-90 688 |
-3,619 -1,213 |
1,450 -441 |
-5,197 1,713 |
| Total comprehensive income Total other comprehensive income |
53,658 -90 |
40,652 -3,619 |
21,843 1,450 |
16,392 -5,197 |
| Total comprehensive income | 53,658 | 40,652 | 21,843 | 16,392 |
| Thereof attributable to: | ||||
| Non-controlling interests | -325 | 4 | -86 | 5 |
| Shareholders | 53,982 | 40,649 | 21,929 | 16,387 |
| Assets in thousand euros | 30/9/2018 | 31/12/2017 | Change | 30/9/2017 |
|---|---|---|---|---|
| Non-current assets | 485,804 | 376,225 | 109,580 | 365,054 |
| Intangible assets | 213,971 | 120,931 | 93,041 | 120,207 |
| Property, plants and equipment | 176,757 | 164,730 | 12,027 | 159,190 |
| Investment property | 4,280 | 4,350 | -70 | 4,374 |
| Financial investments | 7,127 | 4,408 | 2,718 | 3,932 |
| Non-current trade receivables | 0 | 0 | 0 | 1,037 |
| Other non-current financial assets | 2,334 | 2,319 | 15 | 3,648 |
| Other non-current non-financial assets | 695 | 586 | 109 | 645 |
| Deferred tax assets | 80,640 | 78,900 | 1,740 | 72,021 |
| Current assets | 473,882 | 512,901 | -39,019 | 487,625 |
| Inventories | 196,924 | 168,625 | 28,300 | 189,612 |
| Current trade receivables | 121,528 | 136,017 | -14,488 | 127,990 |
| Contract assets | 27,426 | 0 | 27,426 | 0 |
| Other current financial assets | 1,395 | 5,307 | -3,912 | 18,466 |
| Other current non-financial assets | 10,284 | 6,067 | 4,217 | 7,113 |
| Current financial investments | 39,840 | 64,577 | -24,737 | 62,162 |
| Cash and cash equivalents | 76,484 | 132,310 | -55,825 | 82,282 |
| Total assets | 959,687 | 889,126 | 70,561 | 852,679 |
| Equity and liabilities in thousand euros | 30/9/2018 | 31/12/2017 | Change | 30/9/2017 |
|---|---|---|---|---|
| Equity | 565,305 | 529,932 | 35,373 | 501,777 |
| Share capital | 148,819 | 148,819 | 0 | 148,819 |
| Capital reserve | 194,286 | 194,286 | 0 | 194,286 |
| Other reserves | 222,402 | 186,704 | 35,698 | 158,999 |
| Non-controlling interests | -202 | 123 | -325 | -327 |
| Non-current liabilities | 176,575 | 162,105 | 14,470 | 172,265 |
| Pension provisions | 36,365 | 37,066 | -701 | 36,369 |
| Other non-current provisions | 16,801 | 15,909 | 893 | 13,194 |
| Non-current financial debt | 112,320 | 108,573 | 3,747 | 119,803 |
| Other non-current financial liabilities | 2,244 | 420 | 1,823 | 2,623 |
| Deferred tax liabilities | 8,846 | 137 | 8,709 | 275 |
| Current liabilties | 217,806 | 197,089 | 20,717 | 178,637 |
| Tax provisions | 8,247 | 8,938 | -690 | 7,847 |
| Other current provisions | 54,804 | 51,250 | 3,555 | 43,696 |
| Current financial debt | 20,558 | 19,337 | 1,221 | 7,772 |
| Current trade payables | 63,374 | 61,657 | 1,717 | 54,967 |
| Other current financial liabilities | 7,665 | 8,654 | -989 | 7,015 |
| Contract liabilities | 42,560 | 0 | 42,560 | 0 |
| Other current non-financial liabilities | 20,596 | 47,253 | -26,657 | 57,340 |
| Total equity and liabilities | 959,687 | 889,126 | 70,561 | 852,679 |
| in thousand euros | Share capital | Capital reserve | Retained earnings | Available-for-sale financial assets |
Cash flow hedges | |
|---|---|---|---|---|---|---|
| Balance at 1/1/2017 | 148,819 | 194,286 | 155,016 | 515 | -1,577 | |
| Net profit for the period | 44,285 | |||||
| Other earnings after tax | 133 | 2,901 | ||||
| Total comprehensive income | 44,285 | 133 | 2,901 | |||
| Dividends | -14,310 | |||||
| Other adjustments | -944 | |||||
| Balance at 30/9/2017 | 148,819 | 194,286 | 184,047 | 648 | 1,324 | |
| Balance at 1/1/2018 | 148,819 | 194,286 | 212,022 | 213 | 1,554 | |
| Changes in accounting policies | -4,158 | |||||
| Balance at 1/1/2018¹ | 148,819 | 194,286 | 207,864 | 213 | 1,554 | |
| Net profit for the period | 54,067 | |||||
| Other earnings after tax | -3,002 | |||||
| Total comprehensive income | 54,067 | -3,002 | ||||
| Dividends | -17,171 | |||||
| Other adjustments | 3,047 | |||||
| Balance at 30/9/2018 | 148,819 | 194,286 | 247,806 | 213 | -1,448 |
¹ Adjusted due to initial application of IFRS 9 and IFRS 15
| in thousand euros | Total | Non-controlling interests |
Equity attributable to shareholders of JENOPTIK AG |
Actuarial effects | Cumulative exchange differences |
|
|---|---|---|---|---|---|---|
| Balance at 1/1/2017 | 476,379 | -331 | 476,710 | -28,457 | 8,108 | |
| Net profit for the period | 44,271 | -14 | 44,285 | |||
| Other earnings after tax | -3,618 | 18 | -3,636 | 365 | -7,035 | |
| Total comprehensive income | 40,653 | 4 | 40,649 | 365 | -7,035 | |
| Dividends | -14,310 | -14,310 | ||||
| Other adjustments | -944 | -944 | ||||
| Balance at 30/9/2017 | 501,777 | -327 | 502,104 | -28,092 | 1,073 | |
| Balance at 1/1/2018 | 529,932 | 123 | 529,809 | -27,382 | 297 | |
| Changes in accounting policies | -4,159 | -1 | -4,158 | |||
| Balance at 1/1/2018¹ | 525,773 | 122 | 525,651 | -27,382 | 297 | |
| Net profit for the period | 53,747 | -320 | 54,067 | |||
| Other earnings after tax | -90 | -5 | -85 | -94 | 3,011 | |
| Total comprehensive income | 53,658 | -325 | 53,982 | -94 | 3,011 | |
| Dividends | -17,171 | -17,171 | ||||
| Other adjustments | 3,047 | 3,047 | ||||
| Balance at 30/9/2018 | 565,305 | -203 | 565,508 | -27,476 | 3,308 | |
| in thousand euros | 1/1 to 30/9/2018 | 1/1 to 30/9/2017 | 1/7 to 30/9/2018 | 1/7 to 30/9/2017 |
|---|---|---|---|---|
| Earnings before tax | 64,698 | 54,517 | 23,460 | 27,341 |
| Financial income and financial expenses | 2,118 | 3,118 | 487 | 956 |
| Depreciation and amortization | 21,138 | 20,936 | 7,616 | 7,404 |
| Impairment losses and reversals of impairment losses | 1,160 | 180 | 1,195 | 26 |
| Profit/loss from asset disposals | 139 | -5,617 | 73 | -5,403 |
| Other non-cash income/expenses | -715 | 1,003 | 636 | 277 |
| Operating profit before adjusting working capital and further items of the statement of financial position |
88,538 | 74,137 | 33,467 | 30,601 |
| Change in provisions | 2,335 | -3,187 | 3,322 | 3,324 |
| Change in working capital | -6,719 | -15,401 | 8,283 | -12,601 |
| Change in other assets and liabilities | -736 | -316 | -4,401 | -5,765 |
| Cash flows from operating activities before income tax payments | 83,418 | 55,233 | 40,671 | 15,559 |
| Income tax payments | -10,576 | -4,992 | -4,382 | -1,393 |
| Cash flows from operating activities | 72,841 | 50,242 | 36,289 | 14,166 |
| Proceeds from sale of intangible assets | 0 | 10 | 0 | 0 |
| Capital expenditure for intangible assets | -4,351 | -2,202 | -1,425 | -807 |
| Proceeds from sale of property, plant and equipment | 570 | 982 | 367 | 494 |
| Capital expenditure for property, plant and equipment | -22,476 | -21,812 | -11,244 | -5,266 |
| Proceeds from sale of financial investments | 205 | 1,510 | 0 | 540 |
| Capital expenditure for financial investments | 0 | -263 | 0 | -88 |
| Acquisition of consolidated entitites | -80,986 | -13,916 | -80,981 | -8,827 |
| Proceeds from sale of investment companies | 281 | 0 | 0 | 0 |
| Proceeds from sale of financial assets within the framework of short-term disposition |
34,108 | 22,736 | 5,000 | 14,736 |
| Capital expenditure for financial assets within the framework of short-term disposition |
-10,000 | -34,196 | 0 | -13,992 |
| Interest received | 260 | 355 | 75 | 57 |
| Cash flows from investing activities | -82,389 | -46,795 | -88,207 | -13,153 |
| Dividends paid | -17,171 | -14,310 | 0 | 0 |
| Proceeds from issuing bonds and loans | 2,651 | 4,617 | 167 | 749 |
| Repayments of bonds and loans | -27,386 | -934 | -24,924 | -433 |
| Payments for finance leases | -496 | -86 | -244 | -41 |
| Change in group financing | -1,567 | 639 | -682 | 956 |
| Interest paid | -2,377 | -2,257 | -482 | -392 |
| Cash flows from financing activities | -46,346 | -12,331 | -26,164 | 839 |
| Change in cash and cash equivalents | -55,894 | -8,884 | -78,082 | 1,852 |
| Effects of movements in exchange rates on cash held | 174 | -883 | 76 | -331 |
| Changes in cash and cash equivalents due to valuation adjustments | -333 | 0 | 224 | 0 |
| Changes in cash and cash equivalents due to first-time consolidation | 227 | 89 | 0 | 0 |
| Cash and cash equivalents at the beginning of the period | 132,310 | 91,961 | 154,266 | 80,761 |
| Cash and cash equivalents at the end of the period | 76,484 | 82,282 | 76,484 | 82,282 |
January 1 to September 30, 2018
| in thousand euros | Optics & Life Science |
Mobility | Defense & Civil Systems |
Other | Consolidation | Group |
|---|---|---|---|---|---|---|
| Revenue | 211,188 | 223,372 | 160,942 | 34,550 | -36,692 | 593,359 |
| (191,322) | (180,612) | (155,072) | (28,012) | (-28,193) | (526,826) | |
| thereof intragroup revenue | 3,708 | 44 | 329 | 32,611 | -36,692 | 0 |
| (2,976) | (13) | (111) | (25,093) | (-28,193) | (0) | |
| thereof external revenue | 207,481 | 223,328 | 160,612 | 1,939 | 0 | 593,359 |
| (188,346) | (180,598) | (154,962) | (2,920) | (0) | (526,826) | |
| Germany | 40,946 | 72,412 | 66,155 | 634 | 0 | 180,148 |
| (37,199) | (42,944) | (67,977) | (2,819) | (0) | (150,939) | |
| Europe | 81,229 | 47,471 | 41,499 | 0 | 0 | 170,199 |
| (71,643) | (47,707) | (32,604) | (0) | (0) | (151,954) | |
| Americas | 41,725 | 64,403 | 43,576 | 7 | 0 | 149,711 |
| (34,281) | (47,733) | (37,996) | (2) | (0) | (120,012) | |
| Middle East / Africa | 10,462 | 7,527 | 7,083 | 0 | 0 | 25,071 |
| (8,971) | (4,854) | (9,037) | (0) | (0) | (22,861) | |
| Asia / Pacific | 33,118 | 31,515 | 2,299 | 1,298 | 0 | 68,230 |
| (36,252) | (37,361) | (7,349) | (99) | (0) | (81,060) | |
| EBITDA | 51,071 | 25,380 | 18,589 | -5,991 | -12 | 89,037 |
| (42,964) | (15,070) | (15,843) | (-747) | (2) | (73,133) | |
| EBIT | 45,525 | 16,913 | 15,381 | -11,075 | -7 | 66,739 |
| (36,932) | (8,588) | (12,311) | (-5,616) | (8) | (52,223) | |
| Research and development expenses | 12,364 | 12,334 | 10,133 | 108 | -240 | 34,700 |
| (10,565) | (12,460) | (9,271) | (571) | (-26) | (32,840) | |
| Free cash flow (before interest and income taxes) | 16,379 | 28,025 | 26,516 | -13,132 | -627 | 57,160 |
| (24,267) | (285) | (17,621) | (-9,912) | (-50) | (32,212) | |
| Working capital1 | 83,731 | 75,772 | 84,115 | -3,636 | -38 | 239,945 |
| (55,808) | (68,915) | (96,179) | (-6,035) | (-98) | (214,769) | |
| Order intake | 233,427 | 212,252 | 144,042 | 34,713 | -36,030 | 588,405 |
| (222,769) | (200,730) | (154,358) | (27,914) | (-29,571) | (576,200) | |
| Frame contracts1 | 13,251 | 21,455 | 43,288 | 0 | 0 | 77,995 |
| (11,128) | (30,150) | (46,334) | (0) | (0) | (87,612) | |
| Total assets1 | 239,149 | 371,393 | 182,495 | 762,984 | -596,334 | 959,687 |
| (181,248) | (241,019) | (179,056) | (779,719) | (-491,916) | (889,126) | |
| Total liabilities1 | 67,365 | 254,434 | 121,436 | 185,591 | -234,445 | 394,381 |
| (53,913) | (183,062) | (125,838) | (174,647) | (-178,265) | (359,194) | |
| Additions to intangible assets and property, plant | 11,721 | 6,018 | 3,684 | 3,912 | 0 | 25,336 |
| and equipment | (3,603) | (14,432) | (2,967) | (2,127) | (0) | (23,128) |
| Scheduled depreciation and amortization | 5,581 | 7,271 | 3,208 | 5,084 | -6 | 21,138 |
| (6,058) | (6,482) | (3,533) | (4,869) | (-6) | (20,936) | |
| Number of employees on average (without | 1,151 | 1,324 | 855 | 332 | 0 | 3,661 |
| trainees) | (1,091) | (1,248) | (837) | (307) | (0) | (3,482) |
EBITDA = Earnings before interest, taxes, depreciation and amortization
EBIT = Earnings before interest and taxes
Prior year figures are in parentheses.
1 Prior year figures refer to December 31, 2017
The parent company of Jenoptik Group is JENOPTIK AG, headquartered in Jena, with its legal seat registered in the Jena Commercial Register under the number HRB 200146. JENOPTIK AG is a stock corporation listed on the German Stock Exchange in Frankfurt and, among others, included in the TecDax and SDax indices.
The accounting policies applied in preparing the 2017 consolidated fi nancial statements were also applied in preparing the interim consolidated fi nancial statements as at September 30, 2018, which were prepared on the basis of the International Accounting Standard (IAS) 34 "Interim Financial Reporting", with the exemption of the standards applied for the fi rst time in fi scal year 2018. The 2017 consolidated fi nancial statements were prepared in accordance with the International Financial Reporting Standards (IFRS) as adopted by the European Union. These policies were published and individually described in detail in the Notes to the 2017 Annual Report. The Annual Report is available on the website under www.jenoptik.com using the path Investors/Reports and Presentations.
The interim consolidated fi nancial statements were prepared in euros, the currency used in the Group, and fi gures are shown in thousand euros, if not otherwise stated. It is to be noted that there may be rounding differences as compared to the mathematically exact values (monetary units, percentages, etc.).
Management considers the interim consolidated fi nancial statements to include all standard adjustments to be made on an ongoing basis to present a true and fair view of the Group's business performance in the period under review.
The following IFRS have been applied for the fi rst time in 2018:
IFRS 9 "Financial Instruments". This standard replaces all earlier versions of IAS 39 for the classifi cation and valuation of fi nancial assets and liabilities as well as for the accounting treatment for hedging instruments. This new version of the standard contains revised guidelines for the classifi cation and valuation of fi nancial instruments. These include a new model
for anticipated credit defaults for calculating the impairment loss to fi nancial assets as well as the new general accounting regulations for hedging transactions. This standard also adopts the IAS 39 guidelines for the recognition and derecognition of fi nancial instruments. IFRS 9 is to be adopted in fi scal years beginning on or after January 1, 2018. With the exception of the accounting for hedging transactions, the standard is to be applied retrospectively but there is no requirement for the disclosure of comparison information. Apart from a few exceptions, the regulations for the accounting treatment of hedging transactions must be applied in general prospectively.
Overall, the following impacts were identifi ed on Jenoptik's balance sheet, income statement and equity:
a) Classifi cation and valuation: The Group essentially exercised the case-by-case option of applying a valuation at fair values outside of profi t or loss for equity instruments which were valued as available-for-sale assets. Henceforth all changes in fair value are to be recognized directly in other comprehensive income without any effect on profi t or loss and without any later possibility of reclassifi cations through profi t or loss. With regard to assets valued at amortized procurement costs, there was no material change under IFRS 9 as well. Loans and trade receivables are held in order to collect the contractual cash fl ows which exclusively represent redemption of and interest payments on the outstanding nominal amounts. Jenoptik analyzed the contractual cash fl ows and came to the conclusion that the cash fl ow requirement is being met and no reclassifi cation is necessary.
b) Impairment losses: On short-term cash deposits and bank deposits, a provision for risks amounting to 0.6 million euros was recognized for the fi rst time at the date of initial application. Furthermore the Group applies for all trade receivables the simplifi ed approach to determine the Expected-Credit-Loss over the entire term.
c) Accounting for hedging transactions: The Group has determined that all hedging transactions previously designated as effective hedging relationships also meet the criteria provided for under IFRS 9 for hedge accounting. Since IFRS 9 does not provide for any change in the general principles for the accounting of effective hedging relationships, there were no material changes with regard to the accounting of hedging relationships in the consolidated fi nancial statements.
Changes in the classifi cation and measurement of fi nancial assets led to the following effects as at the date of fi rst-time application:
| in thousand euros | Valuation category according to IAS 38 1) |
Carrying amounts according to IAS 39 as at 31/12/2017 |
Revaluation according to the application of the expected-loss model |
Carrying amounts according to IFRS 9 as at 1/1/2018 |
Valuation category according to IFRS 9 1) |
|---|---|---|---|---|---|
| Financial investments | |||||
| Cash deposits | LAR | 64,169 | -214 | 63,955 | AC |
| Shares in unconsolidated associates and investments | AFS | 2,812 | 2,812 | FVTOCI | |
| Available-for-sale financial assets | AFS | 867 | 867 | AC | |
| Loans granted | LAR | 730 | 730 | AC | |
| Financial assets held to maturity | HTM | 408 | 408 | AC | |
| Trade receivables | LAR | 136,017 | 136,017 | AC | |
| Other financial assets | |||||
| Receivables from lease agreements | - | 340 | 340 | - | |
| Derivatives with hedging relations | - | 2,962 | 2,962 | - | |
| Derivatives without hedging relations | FVTPL | 2,003 | 2,003 | FVTPL | |
| Miscellaneous financial assets | LAR | 2,322 | 2,322 | AC | |
| Cash and cash equivalents | LAR | 132,310 | -368 | 131,942 | AC |
1) LAR = Loans and receivables AFS = Available for sale HTM = Held to maturity AC = Amortised costs FVTPL = Fair value through Profit & Loss FVTOCI = Fair value through other comprehensive income
There were no effects on fi nancial liabilities at the date of fi rsttime application.
The Group recorded the transition effects as at January 1, 2018 on a cumulative basis in equity. Taking into account an increase of deferred tax assets amounting to 173 thousand euros the other reserves decreased by 409 thousand euros.
The application of IFRS 9 cumulatively had only an insignifi cant impact on the fi nancial statements as at September 30, 2018. There were also no signifi cant impacts on the cash fl ow statement.
IFRS 15 "Revenue from Contracts with Customers". IFRS 15 introduces a fi ve-stage model for accounting for revenue from contracts with customers. Under IFRS 15, revenue is recorded in the amount of the consideration in return which an entity
can expect for the transfer of goods or services to a customer (the transaction price). The new standard replaces all existing guidelines for recording revenues such as IAS 18 Revenue, IAS 11 Construction Contracts and IFRIC 13 Customer Loyalty Programs. For fi scal years commencing on or after January 1, 2018, the regulation stipulates either the full retrospective application or a modifi ed retrospective application.
Customers". The clarifi cations explain implementation issues which were addressed by the Joint Transition Group for Revenue Recognition. These questions relate to the identifi cation of performance obligations, the application guidelines for principal-agent relationships and licenses for intellectual property, as well as the transitional provisions. In addition, the aim of the amendments is to ensure a more consistent approach in the implementation of IFRS 15 and to reduce the costs and
complexity associated with its application. The changes came into effect on January 1, 2018 and mainly affect the following topics at Jenoptik:
a) Customer-specifi c development projects, followed by volume production: In the past, revenues were recognized after delivery of the product, unless IAS 11 applied (successive contracts to supply). The Group concludes that development services under IFRS 15 are recognized as separate performance obligation over the period of development as revenue and no longer through volume production, which tends to result in revenues being recognized earlier. According to knowledge so far, in the fi scal year 2018, the changes will lead to a reduction in revenue ranging between approx. 1.5 million euros and 2.5 million euros and a reduction in cost of sales of between approx. 4.5 million euros and 5.5 million euros with the effects not being recognized continuosly.
b) Customer-specifi c volume production: Up to and including the fi scal year 2017, revenue was recognized with the transfer of risk after delivery or acceptance by the customer. Under IFRS 15, Jenoptik concludes that these contracts are to be accounted for in accordance with the requirements of IFRS 15.35 (c) in the specifi c period, leading to revenue being recognized earlier. An impact on the level of revenue in fi scal year 2018 will depend on the continuity of this business, although this is not anticipated based on the current revenue forecast.
In addition, the application of IFRS 15 leads in individual cases to a change in revenue recognition for customer contracts previously recognized as construction contracts in accordance with IAS 11, which are now recognized on a given date. This will not result in any signifi cant increase in revenues or costs of sales in the 2018 fi scal year. Through the acquisition of Prodomax in the third quarter of 2018, the volume of business transactions recognized over time under IAS 11 in accordance with the POC method but which under IFRS 15 must be recognized on a given date has increased considerably. A hypothetical comparison with the accounting standards applicable in 2017 results in higher revenues amounting to the low doubledigit million amount for the 2018 fi scal year, as substantial performance obligations were satisfi ed in the period between the acquisition and September 30, 2018.
The Group recognized the transition effects as of January 1, 2018 cumulatively in equity for all customer orders not yet completed at that date (modifi ed retrospective method). In total, the following changes in balance sheet items resulted from the fi rst-time application of IFRS 15:
| in thousand euros | 1/1/2018 |
|---|---|
| Non-current assets | 1,584 |
| Deferred tax assets | 1,584 |
| Current assets | -4,399 |
| Inventories | -11,087 |
| Current trade receivables | -14,859 |
| Contract assets | 21,548 |
| Total assets | -2,815 |
| Equity | -3,750 |
| Other reserves | -3,749 |
| Non-controlling interests | -1 |
| Current liabilities | 935 |
| Other current provisions | 145 |
| Contract liabilities | 28,960 |
| Other current non-financial liabilities | -28,169 |
| Total equity and liabilities | -2,815 |
The items of the consolidated fi nancial statements for the fi rst nine months of 2018 were infl uenced by the application of IFRS 15 compared to the accounting and valuation methods applied in the 2017 fi scal year as shown in the following tables:
| in thousand euros | 30/9/2018 |
|---|---|
| Non-current assets | -996 |
| Deferred tax assets | -996 |
| Current assets | 12,259 |
| Inventories | -5,023 |
| Current trade receivables | -10,144 |
| Contract assets | 27,426 |
| Total assets | 11,263 |
| Equity | 3,595 |
| Other reserves | 3,595 |
| Current liabilities | 7,668 |
| Contract liabilities | 42,561 |
| Other current non-financial liabilities | -34,893 |
| Total equity and liabilities | 11,263 |
| Consolidated Financial Statements | ||
|---|---|---|
| Notes |
| in thousand euros | 1/1 to 30/9/2018 |
|---|---|
| Revenue | 26,292 |
| Cost of sales | 16,367 |
| Gross profit | 9,925 |
| EBIT | 9,925 |
| Earnings before tax | 9,925 |
| Income taxes | -2,580 |
| Earnings after tax | 7,345 |
| Results from non-controlling interests | 1 |
| Earnings attributable to shareholders | 7,344 |
| Earnings per share in euros (diluted=undiluted) | 0.00 |
owner of the production and administration building used by JENOPTIK Polymer Systems GmbH at the Triptis site. The fi xed cash purchase price was 5 thousand euros. Since the acquired company has no business operations, this does not represent a business combination as defi ned in IFRS 3 but rather an acquisition of the individual assets and liabilities of the company. There were the following additions to assets and liabilities at the time of initial consolidation:
| in thousand euros | Additions |
|---|---|
| Non-current assets | 3,452 |
| Current assets | 36 |
| Non-current liabilities | 3,000 |
| Current liabilities | 482 |
There were no signifi cant impacts on the cash fl ow statement.
Furthermore, the initial application of IFRS 15 results in the need for Jenoptik to disclose more information in the Notes concerning the nature, amount and timing of the revenue and cash fl ows arising from contracts with customers as defi ned in IFRS 15.
The consolidated fi nancial statements of JENOPTIK AG contain 40 fully consolidated subsidiaries (31/12/2017: 35). Thereof 16 (31/12/2017: 12) have their legal seat in Germany and 24 (31/12/2017: 23) abroad. The companies to be consolidated within the Jenoptik Group still include one joint operation.
As of January 1, 2018 RADARLUX Radar Systems GmbH, Leverkusen, Germany (hereinafter referred to as Radarlux) was included in the Consolidated Financial Statements for the fi rst time. This did not have any signifi cant effects on the Group.
Also as of January 1, 2018 TELSTAR-HOMMEL CORPORATION, Ltd. of Pyeongtaek, Korea, was included in the Consolidated Financial Statements as an associated company using the at-equity method. The difference between the proportionate net assets to which Jenoptik is entitled and the carrying amount of the shareholding at the time of the initial at-equity consolidation was offset outside of profi t or loss in the amount of 3,614 thousand euros against the retained earnings. Jenoptik's shares in current earnings after tax (EAT) and other comprehensive income are not shown separately in the Statement of Total Comprehensive Income on grounds of materiality.
In addition, under an agreement dated February 13, 2018, JENOPTIK Optical Systems GmbH, Jena, Germany, acquired 94 percent of the limited partnership interest in ASAM Grundstücksverwaltungsgesellschaft mbH & Co. Vermietungs KG, Mainz, Germany (hereinafter: ASAM). The company is the
The group income statement and the consolidated statement of cash fl ows were not materially affected.
On signing the agreement on July 10, 2018 and on fulfi llment of the condition precedent on July 23, 2018, Jenoptik acquired a 100 percent stake in Prodomax Automation Ltd., Barrie (Ontario), Canada, through its US company JENOPTIK North America Inc. The entity acquired is specialized in process automation for the automotive industry. With the acquisition Jenoptik strengthens its position as a full-service turnkey provider of complex automated manufacturing solutions the company has embarked on with the acquisition of Five Lakes Automation in 2017.
The information below is based on provisional fi gures. The provisional nature concerns determination of the acquired net assets, valuation of the intangible assets identifi ed in the process of purchase price allocation, and determination of the purchase price with a view to fi nalizing the completion accounts. The fi rst-time consolidation will be fi nalized by the end of the valuation period.
The purchase price comprises a fi xed cash component in the amount of 120,197 thousand Canadian dollars (78,125 thousand euros). In turn, we acquired the following identifi ed net assets at the point of fi rst-time consolidation:
| in thousand euros | Additions |
|---|---|
| Non-current assets | 39,821 |
| Current assets | 40,390 |
| Non-current liabilities | 26,259 |
| Current liabilities | 29,003 |
The acquired assets include receivables with a gross value of 12,815 thousand euros, corresponding to the fair value. There is no expectation that the acquired receivables will be unrecover able. Also included in the acquired assets are cash and cash equivalents amounting to 3,156 thousand euros and bank loans assumed by Jenoptik amounting to 22,786 thousand euros.
In connection with the acquisition of shares in Prodomax Automation Ltd., the main items identifi ed as intangible assets were a customer base, order backlog, trademark and favorable contracts, in addition to the remeasurement of work in progress. The intangible assets are depreciated over periods of between six months and ten years. Goodwill in the sum of 53,176 thousand euros was also recorded for the acquisition of skilled personnel and synergies arising from the combination of automation solutions and laser processing machines, an expansion of the customer base as well as the development of new markets. The goodwill is to be allocated to the "Automotive" group of cash-generating units and is not tax-deductible.
No contingent liabilities were recognized in the acquisition.
Costs of 1,728 thousand euros for the acquisition of Prodomax Automation Ltd. arose until September 30, 2018 and were shown in other operating expenses.
On signing the agreement on August 31, 2018, Jenoptik acquired a 100 percent stake in OTTO Vision Technology GmbH, Jena, and its sister company OVITEC GmbH, Jena (hereafter "Otto Group") through its company JENOPTIK Industrial Metrology Germany GmbH. The Otto Group specializes in optical testing systems for product inspection and process optimization, as well as in complex imaging systems for applications in the fi eld of parts measurement, surface testing, and position detection. The acquisition will enable the Jenoptik Group to strengthen its range of services for innovative metrology solutions in the Mobility Segment and further expand its market position as a systems supplier for production metrology and industrial imaging applications.
The information below is based on provisional fi gures. The provisional nature concerns determination of the acquired net assets, valuation of the intangible assets identifi ed in the process of purchase price allocation, and determination of the purchase price with a view to fi nalizing the completion accounts. The fi rst-time consolidation will be fi nalized by the end of the valuation period.
The preliminary purchase price of 7,629 thousand euros comprises a fi xed cash component (6,395 thousand euros) and a contingent component (1,234 thousand euros), which is based on the attainment of agreed earnings fi gures for 2018
and 2019 and recognized at fair value. In return, we acquired the following net assets at the date of the initial consolidation:
| in thousand euros | Additions |
|---|---|
| Non-current assets | 1,844 |
| Current assets | 4,542 |
| Non-current liabilities | 555 |
| Current liabilities | 1,907 |
The acquired assets include receivables with a gross value of 1,447 thousand euros, corresponding to the fair value. There is no expectation that the acquired receivables will be unrecoverable. Also included in the acquired assets are cash and cash equivalents amounting to 1,701 thousand euros.
In connection with the acquisition of shares in Otto Group, a customer base, order backlog, and internally produced software were identifi ed as intangible assets as part of the purchase price allocation, which also involved the remeasurement of work in progress and fi nished goods. The intangible assets are depreciated over periods of between six months and fi ve years. Goodwill in the sum of 3,704 thousand euros was also recorded for the acquisition of the skilled personnel as well as for synergy effects arising from the expansion of the range of services in the fi eld of 2D and 3D metrology, from the enlarged customer base, and from the opening up of new markets. The goodwill is to be allocated to the "Automotive" group of cash-generating units and is not tax-deductible.
No contingent liabilities were recognized in the acquisition.
Costs of 38 thousand euros for the acquisition of Otto Group arose until September 30, 2018 and were shown in other operating expenses.
In connection with the acquisition of shares in Otto Group, an agreement under which JENOPTIK Industrial Metrology Germany GmbH also acquires its business premises was signed. According to this agreement, the transfer of ownership comes into force after September 30, 2018.
The quarterly fi nancial statements include revenue in the sum of 21,460 thousand euros and earnings after tax (EAT) of minus 891 thousand euros arising from the inclusion of Prodomax. The consolidated fi nancial statements include revenue in the sum of 365 thousand euros and earnings after tax (EAT) of minus 90 thousand euros arising from the inclusion of Otto Group. The reasons for the two negative earnings after tax (EAT) items particularly include expenses incurred in the
scheduled amortization of the intangible assets identifi ed during the purchase price allocation and higher cost of sales from the consumption of remeasured inventory.
On the premise that all corporate acquisitions had already taken place as of January 1, 2018, the Jenoptik Group would show revenue of 623,672 thousand euros and consolidated earnings after tax of 52,760 thousand euros. In order to determine this information, it was assumed that the fair values and useful lives as of January 1, 2018 of the intangible assets identifi ed in the context of the purchase price allocation are identical to those at the initial consolidation date. These proforma fi gures were produced solely for comparison purposes. They do not provide a reliable indication either of the operating results that would actually have been achieved if the acquisition had been made at the beginning of the period or of future results.
With the signing the agreement on July 27, 2017 and on fulfi llment of the conditions precedent on August 21, 2017, Jenoptik acquired a 100 percent stake in Five Lakes Automation LLC, Novi (MI), USA through its US company JENOPTIK Automotive North America LLC.
Its inclusion in the 2017 consolidated fi nancial statements in accordance with IFRS 3 was based on provisional fi gures. The provisional nature concerned determination of the acquired net assets and measurement of the intangible assets identifi ed in the process of purchase price allocation. The fi gures were fi nalized by the end of the measurement period and resulted in a change of 1,177 thousand euros to the intangible assets identifi ed during the purchase price allocation. Through September 30, 2018, the development of goodwill arising from this acquisition is as follows:
| in thousand euros | Total |
|---|---|
| Goodwill as of 1/1/2018 | 5,700 |
| Change in goodwill after finalizing first-time consolidation |
1,177 |
| Foreign currency exchange effects | 203 |
| Goodwill as of 30/9/2018 | 7,079 |
No companies were sold.
The JENOPTIK AG Annual General Meeting agreed on June 5, 2018, a dividend payment of 0.30 euros per share. The payment of the dividend led to a reduction of 17,171 thousand euros in cash fl ows from fi nancing activities.
Beyond this and the aforementioned acquisitions, transactions with a signifi cant infl uence on the interim consolidated fi nancial statements of Jenoptik in the third quarter or cumulative up to September 30, 2018 did not occur.
Revenue. A breakdown of revenues from contracts with customers by segments and geographical regions is set out in the segment reporting on page 25. Most of the revenues were recognized on a given date. In addition to services, including customer-specifi c development projects, in particular in the Optics & Life Science and Defense & Civil Systems segments, revenues recognized in a given period also include revenues from customer-specifi c volume production.
| in thousand euros | 30/9/2018 | 31/12/2017 |
|---|---|---|
| Land and buildings | 96,063 | 92,105 |
| Technical equipment and machinery | 41,162 | 39,905 |
| Other equipment, operating and office equipment |
21,702 | 23,034 |
| Payments on-account and assets under construction |
17,831 | 9,686 |
| Total | 176,757 | 164,730 |
| Inventories | ||
|---|---|---|
| in thousand euros | 30/9/2018 | 31/12/2017 |
| Raw materials, consumables and supplies | 73,937 | 67,406 |
| Unfinished goods and work in progress | 100,833 | 80,706 |
| Finished goods and merchandise | 19,602 | 18,244 |
| Payments on-account | 2,552 | 2,269 |
| Total | 196,924 | 168,625 |
| Total | 121,528 | 136,017 |
|---|---|---|
| Trade receivables from investment companies |
116 | 86 |
| Trade receivables from unconsolidated accociates and joint operations |
540 | 94 |
| Receivables from construction contracts | 0 | 14,859 |
| Trade receivables from third parties | 120,872 | 120,978 |
| in thousand euros | 30/9/2018 | 31/12/2017 |
| Total | 112,320 | 108,573 |
|---|---|---|
| Non-current liabilities from finance leases | 3,607 | 690 |
| Non-current liabilities to banks | 108,713 | 107,883 |
| in thousand euros | 30/9/2018 | 31/12/2017 |
| in thousand euros | 30/9/2018 | 31/12/2017 |
|---|---|---|
| Liabilities to banks | 19,944 | 19,157 |
| Liabilities from finance leases | 614 | 180 |
| Total | 20,558 | 19,337 |
| Current trade payables | ||
|---|---|---|
| in thousand euros | 30/9/2018 | 31/12/2017 |
| Trade payables towards third parties | 63,250 | 61,523 |
| Trade payables towards unconsolidated associates and joint operations |
116 | 116 |
| Trade payables towards investment companies |
9 | 18 |
| Total | 63,374 | 61,657 |
| in thousand euros | 30/9/2018 | 31/12/2017 |
|---|---|---|
| Liabilities from advance payments received | 0 | 28,169 |
| Liabilities to employees | 11,824 | 8,287 |
| Liabilities from other taxes | 2,860 | 5,387 |
| Accruals | 3,366 | 2,816 |
| Miscellaneous current non-financial liabilities |
2,547 | 2,594 |
| Total | 20,596 | 47,253 |
The carrying amounts listed below for available-for-sale fi nancial assets, shares in unconsolidated associates and investment companies, cash and cash equivalents, contingent liabilities and derivatives with and without hedging relations correspond to their fair value. The carrying amounts of the remaining items represent an appropriate approximation of their fair value. In the following presentation the non-current and current portion of each item of the statement of fi nancial position was aggregated.
| in thousand euros | Valuation category according to IFRS 9 1) |
Carrying amounts 30/9/2018 |
Carrying amounts 31/12/2017 |
|---|---|---|---|
| Financial investments | |||
| Cash deposits | AC | 39,840 | 64,169 |
| Shares in unconsolidated associates and investments |
FVTOCI | 1,590 | 2,812 |
| Investments accounted for using the equity method |
- | 5,527 | 0 |
| Available-for-sale financial assets |
AC | 0 | 867 |
| Loans granted | AC | 10 | 730 |
| Financial assets held to maturity |
AC | 0 | 408 |
| Trade receivables | AC | 121,528 | 136,017 |
| Other financial assets | |||
| Receivables from lease agreements |
- | 0 | 340 |
| Derivatives with hedging relations |
- | 939 | 2,962 |
| Derivatives without hedging relations |
FVTPL | 1,985 | 2,003 |
| Miscellaneous financial assets | AC | 806 | 2,322 |
| Cash and cash equivalents | AC | 76,484 | 132,310 |
1) AC = Amortised costs
FVTPL = Fair value through Profit & Loss
FVTOCI = Fair value through other comprehensive income
| in thousand euros | Valuation category according to IFRS 9 1) |
Carrying amounts 30/9/2018 |
Carrying amounts 31/12/2017 |
|---|---|---|---|
| Financial debt | |||
| Liabilities to banks | AC | 128,657 | 127,040 |
| Liabilities from finance leases | - | 4,221 | 871 |
| Trade payables | AC | 63,374 | 61,657 |
| Other financial liabilities | |||
| Contingent liabilities | FVTPL | 2,293 | 3,128 |
| Derivatives with hedging relations |
- | 2,768 | 486 |
| Derivatives without hedging relations |
FVTPL | 138 | 194 |
| Miscellaneous financial liabilities |
AC | 4,711 | 5,266 |
1) AC = Amortised costs
FVTPL = Fair value through Profit & Loss
As part of capital management, new cash investments are regularly made and payments are collected on scheduled due dates. In the course of these transactions, cash deposits decreased in value by a total of 19,440 thousand euros over the reporting period.
The classifi cation of fair values is shown in the following overview of fi nancial assets and liabilities measured at fair value:
| in thousand euros | Carrying amounts 30/9/2018 |
Level 1 | Level 2 | Level 3 |
|---|---|---|---|---|
| Shares in unconsolidated | 1,590 | 0 | 0 | 1,590 |
| associates and investments | (0) | (0) | (0) | (0) |
| Available-for-sale financial | 0 | 0 | 0 | 0 |
| assets | (867) | (0) | (0) | (867) |
| Derivatives with hedging | 939 | 0 | 939 | 0 |
| relations (assets) | (2,962) | (0) | (2,962) | (0) |
| Derivatives without | 1,985 | 0 | 1,985 | 0 |
| hedging relations (assets) | (2,003) | (0) | (2,003) | (0) |
| Contingent liabilities | 2,293 | 0 | 0 | 2,293 |
| (3,128) | (0) | (0) | (3,128) | |
| Derivatives with hedging | 2,768 | 0 | 2,768 | 0 |
| relations (liabilities) | (486) | (0) | (486) | (0) |
| Derivatives without | 138 | 0 | 138 | 0 |
| hedging relations (liabilities) | (194) | (0) | (194) | (0) |
Prior year figures are in parentheses
Fair values which are available as quoted market prices at all times, are allocated to level 1. Fair values determined on the basis of direct or indirect observable parameters, are allocated to level 2. Level 3 is based on measurement parameters that are not based upon observable market data.
The fair values of shares in non-consolidated affi liated companies and participations are determined on the basis of discounted cash fl ows (level 3).
The fair values of all derivatives are determined using the generally recognized measurement method. In this context, the future cash fl ows determined via the agreed forward rate or interest rate are discounted using current market data. The market data used in this context is taken from leading fi nancial information systems, such as, for example, Reuters. If an interpolation of market data is applied, this is done on a straightline basis.
The fair value of contingent liabilities was measured by taking the expected and discounted payment outfl ows at the reporting date into consideration. As part of the acquisition of the Vysionics Group in 2014 the agreed put option for acquiring the remaining non-controlling interests were recorded with the fair value of the estimated exercise price amounting to 627 thousand euros. In connection with the acquisition of Five Lakes Automation LLC in 2017 contingent liabilities were agreed with the sellers and accounted for at the fair value of 432 thousand euros. The disposal amounting to 2,165 thousand euros concerns the payment of the fi rst tranche of the mentioned liability. The addition is the result of the contingent components of the purchase price agreed within the framework of the acquisition of Otto Group that were recognized as a liability at the fair value in the sum of 1,234 thousand euros. Payment of these variable purchase price components is due in 2020. On grounds of materiality, the fi gure was not discounted.
The development of fi nancial assets and liabilities measured at fair value through profi t and loss and allocated to level 3 is shown in the following chart:
| in thousand euros | Shares in unconsoli dated associates and investments |
Available-for sale financial assets |
Contingent liabilities |
|---|---|---|---|
| Balance at 1/1/2018 | 0 | 867 | 3,128 |
| Change in valuation category according to IFRS 9 |
2,812 | -867 | 0 |
| Additions | 0 | 0 | 1,234 |
| Disposals | 0 | 0 | -2,165 |
| Change of the consolidation status |
-1,225 | 0 | 0 |
| Currency effect | 3 | 0 | 95 |
| Balance at 30/9/2018 | 1,590 | 0 | 2,293 |
For the period under review no material business transactions were performed with related parties.
The current statement given by the Executive Board and Supervisory Board pursuant to § 161 of the German Stock Corporation Act [Aktiengesetz (AktG)] regarding the German Corporate Governance Code has been made permanently available to shareholders on the Jenoptik website www.jenoptik.com using the path Investors/Corporate Governance. Furthermore, the statement can also be viewed on site at JENOPTIK AG.
JENOPTIK AG and its group entities are involved in several court or arbitration proceedings. Provisions for litigation risks, respectively litigation expenses, were set up in the appropriate amounts in order to meet any possible fi nancial burdens resulting from any court decisions or arbitration proceedings. In case of a material impact on the economic situation of the Group these litigations are described in the Annual Report 2017. As at September 30, 2018 no further litigations arose that based on current assessment could have a material effect on the fi nancial position of the Group.
There were no events after the balance sheet date of September 30, 2018 that were of signifi cance to the Group or had a signifi cant infl uence on Jenoptik's earnings, fi nancial or asset positions at the time this report was prepared.
To the best of our knowledge, we assure that the interim consolidated fi nancial statements prepared in accordance with the applicable principles for the interim fi nancial reporting give a true and fair view of the net assets, fi nancial position and result of operations of the Group and that the interim group management report presents a fair view of the performance of the business including the operating result and the position of the Group, together with a description of the signifi cant opportunities and risks associated with the anticipated development of the Group.
Jena, November 8, 2018
Dr. Stefan Traeger Hans-Dieter Schumacher President & CEO Chief Financial Offi cer
Contact
Investor Relations
for the fi scal year 2018
Phone +49 3641 65-2291 E-mail [email protected]
Phone +49 3641 65-2255 E-mail [email protected]
www.jenoptik.com www.twitter.com/Jenoptik_Group
You may fi nd a digital version of this Interim Report on our internet http://www.jenoptik.com.
Our app "Publications" provides an optimized view of the report on mobile devices with iOS and Android operating systems.
This is a translation of the original German-language Interim Report. JENOPTIK AG shall not assume any liability for the correctness of this translation. In case of differences of opinion the German text shall prevail.
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