Annual Report • Mar 17, 2016
Annual Report
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Annual report 2015
Consolidated net income in million Euro and net income margin
| in million Euro unless otherwise indicated | 2011 | 2012 | 2013 | 2014 | 2015 |
|---|---|---|---|---|---|
| Sales | 194.3 | 180.1 | 189.1 | 209.5 | 219.6 |
| Sales growth | 5.2% | –7.3% | 5.0% | 10.8% | 4.8% |
| Gross profit | 89.6 | 76.1 | 79.2 | 91.4 | 91.6 |
| Gross margin | 46.1% | 42.2% | 41.9% | 43.6% | 41.7% |
| Research and development expenses | 32.5 | 35.0 | 34.4 | 36.1 | 37.1 |
| Research and development expenses in % of sales | 16.7% | 19.4% | 18.2% | 17.2% | 16.9% |
| EBIT | 26.6 | 11.5 | 12.7 | 22.6 | 24.5 |
| EBIT in % of sales | 13.7% | 6.4% | 6.7% | 10.8% | 11.2% |
| Earnings before taxes | 25.8 | 9.7 | 12.5 | 23.1 | 24.1 |
| Earnings before taxes in % of sales | 13.3% | 5.4% | 6.6% | 11.0% | 11.0% |
| Consolidated net income attributable to owners of the parent | 18.9 | 8.1 | 9.4 | 18.3 | 16.2 |
| Net income margin | 9.7% | 4.5% | 5.0% | 8.7% | 7.4% |
| Basic earnings per share (in Euro) | 0.98 | 0.42 | 0.49 | 0.94 | 0.82 |
| Total assets | 269.9 | 272.4 | 270.9 | 295.4 | 306.9 |
| Shareholders' equity | 188.0 | 189.6 | 192.7 | 206.9 | 219.4 |
| Equity ratio | 69.6% | 69.6% | 71.1% | 70.0% | 71.5% |
| Financial liabilities | 40.7 | 42.9 | 37.8 | 37.4 | 36.8 |
| Cash, cash equivalents and marketable securities | 76.5 | 82.2 | 77.1 | 84.4 | 90.5 |
| Net cash | 35.7 | 39.3 | 39.3 | 47.0 | 53.7 |
| Cash flow from operating activities | 33.2 | 25.2 | 21.4 | 40.0 | 50.3 |
| Capital expenditures for intangible assets and property, plant and equipment | 19.4 | 17.9 | 15.6 | 30.5 | 24.71 |
| Capital expenditures in % of sales | 10.0% | 9.9% | 8.2% | 14.6% | 11.3%1 |
| Cash flow from investing activities | –28.7 | –25.6 | –36.4 | –32.0 | –24.6 |
| Adjusted free cash flow2 | 10.7 | 7.3 | 7.6 | 9.5 | 25.61 |
| Dividend per share (in Euro) | 0.25 | 0.25 | 0.25 | 0.33 | 0.333 |
| Employees on annual average | 988 | 1,034 | 1,053 | 1,104 | 1,117 |
Adjusted for the repurchase of land and building from prematurely terminated lease agreements in the amount of approx. 14 million Euro
Cash flow from operating activities less capital expenditures for intangible assets and property,
plant and equipment, less payments for investments, plus disposal of investments
Proposal to the Annual General Meeting in May 2016
| Management Board | 14 |
|---|---|
| Supervisory Board | 22 |
| Corporate governance | 26 |
| Sustainability | 32 |
| The Elmos share | 34 |
| Significant events 2015 | 38 |
| Basic information on the Group | 42 |
|---|---|
| Business report | 50 |
| Subsequent events | 61 |
| Opportunities and risks | 62 |
| Outlook | 70 |
| Legal information | 73 |
| Financial statements | 76 |
|---|---|
| Notes to financial statements | 80 |
| Auditor's report | 130 |
| Responsibility statement | 131 |
| Glossary | 132 |
|---|---|
| Informative material/Financial calendar 2016 | 136 |
| Contact/Imprint | 137 |
Beep, beep, beep – today a new car almost always parks with that characteristic sound. Elmos has already supplied more than 500,000,000 ICs for ultrasonic parking assist systems and thus has certainly made parking easier for you, too. Think of Elmos whenever you park your car without having to crane your neck.
Stop-and-go traffic is quite the norm in the cities and on many highways today. Our distance control systems detect the space between your car and the one ahead of you and make your vehicle stop and start moving automatically. And if you lose your nerve in the next traffic jam, rest assured that our chips will always keep their cool.
The hand approaches the screen and new menu options are popping up just like that, a phone call is taken with a hand swipe, and even at home the lights are switched on contact-free. Sounds like science fiction? Our gesture detection systems are integrated in millions of cars already and inspire drivers every day.
Fuel consumption is significantly determined by aerodynamics. This is how the Elmos semiconductor's intelligent electronics reduces consumption: The grille shutters remain closed after starting the engine until the engine needs cooling, thus improving the air drag effect. Nice side effect: Your car heats up faster in the winter – this also saves fuel and CO2.
The fan behind the grille is bursting with strength – after all its job is to cool down all that horsepower even at full throttle. But when your car stops at a red light and the start-stop system is activated, everything is supposed to be quiet and energy saving. Even the radiator fan. Thanks to our IC the radiator fan will always turn just as the situation at hand requires.
The water pump sees to it that the combustion engine does not overheat and always delivers top performance. Elmos semiconductors control the water pump exactly as needed. Thus the pump pushes the exact required amount of water through the pipe. This saves energy and therefore reduces fuel consumption.
As soon as you step into your car you should feel comfortable. The next generation of cars will welcome you with ambient lighting and shine in your favorite color while you're driving. Our semiconductors help the carmakers integrate LEDs and make the diodes keep shining evenly as your car is getting older.
Headlights and taillights give the car a face. That's why the design of headlights and taillights has become a crucial part of automotive design philosophy. With our components for LED car light control, this claim to successful design can be turned into a competitive edge. New functionality and new design solutions will make your next car safer, more elegant, and give new expression to the cars' face.
The airbag is a system everybody has and hopefully will never need. But if you do, you can rely on our semiconductors to trigger the airbag at exactly the right moment. Our customers have trusted our ICs for about 20 years now. And we don't only protect the passengers but, with an IC in a special external airbag, pedestrians as well.
Dortmund, March 2016: Reports of success from distribution, development and production coincided with negative economic news from China and other parts of the world: The year 2015 had its ups and downs. We talked about the past fiscal year, new products, and his outlook for 2016 with the CEO.
First of all I think of all our newly acquired customer orders. In this respect the year 2015 showed itself at its best near the finish line: A year-end rally helped us exceed our already ambitious acquisition targets. Just as satisfying is the fact that we won more than 20 new customers globally. We will not forget, though, that the real work has just begun. We have to master all project steps successfully and to transfer the projects to series production on schedule. As is customary in our industry, the successful acquisition will not have an immediate effect in numbers. It will take two to five years for its positive effects to show.
Our semiconductors for the control and voltage supply of LEDs are very well received by our customers. Headlights and taillights as well a car's interior lighting will change completely in the future. Exterior lighting can be upgraded by new LED design and corresponding control with additional functionalities. Dynamic light and color effects will find entry in the interior, pointing the driver optically to events or dangerous situations for instance. The first cars equipped with a preliminary stage of this technology are just leaving the assembly lines. Yet our chips for LEDs aren't only used in vehicles
Dr. Anton Mindl has been heading the Company for ten years now. In a career that already spans close to 30 years, the physicist with a doctor's degree has worked for several suppliers to the auto industry. He is excited about gesture control in his own car, and he is also an enthusiastic biker.
but also in future motorbikes for example. Thus we cover the complete range of technological and pricing requirements. The market is very promising, this is about large numbers of units.
We also have interesting products for motor and sensor applications in the pipeline. Our ICs will control air ventilation in industrial applications and see to it that the car engine is cooled efficiently and in a resourcefriendly way. And we also keep winning new customers for our existing applications due to our know-how, our ultrasonic readout ICs being a case in point. We combine many years of experience with a thorough and deep understanding of the system. This results in products that give our customers a competitive edge. As is also the case with gesture control in cars, first introduced to the market by us a few years ago. Our next product generation is already on their marks and set to conquer further platforms one by one.
Our three business lines Sensors, Motor Control, and Embedded Solutions provide the right structures to identify trends in the market, define and develop the right products, and offer perfect support in their implementation. The system know-how we have acquired is appreciated by our customers. In this Annual Report we present each of the three business lines with a small selection of key products.
…determined by a challenging political and global economic framework, high exchange rate volatility, but a still satisfying outcome for sales and earnings in the end.
At the beginning of 2015 we anticipated a higher sales growth but due to uncertainty in the markets, particularly in China, our customers had fewer products delivered to them than we had expected. On the cost side, the weak euro also "dragged us down". But the adjusted free cash flow "made good" with us. We managed to more than double it compared to the previous year with 25.6 million Euro in 2015. This is an indication of the cash strength inherent in our business model.
Even though the Chinese auto market turned out the weakest growth for three years in 2015 as reported by the Chinese Association of Automobile Manufacturers, we achieved disproportionate growth there. Altogether we generated about 68.9 million Euro or 31.4% of sales with customers in Asia in 2015. The region's share in sales has thus climbed by another 12.9 million Euro or 4.7% points compared to 2014. This roughly equals 23% growth over the previous year and was highly disproportionate. There has always been turbulence in the markets but for the medium and long term we keep regarding China and the whole Asian market as positive for Elmos.
In 2015 we successfully completed an in-house megaproject: Production has mastered the conversion to 8-inch wafers, capacity has been increased, and throughput times have been reduced. Of course we keep working on our competitiveness in 2016: not only
Euro adjusted free cash flow
4.8%
sales growth
31% of sales is generated in Asia More than
0.33 Dividend proposal
Euro
16 million Over
Euro consolidated net income
throughout our own business units but also side by side with our partners who have become increasingly important in the course of our fab lite strategy. The successes achieved over the past year have altogether confirmed my conviction that we can achieve a gross margin of about 50% and an EBIT margin of about 15% in the medium term based on our structure.
The megatrends such as driver assistance up to autonomous driving, less emission, and electromobility are all growth drivers for Elmos. We also expect large potential from an increased need for safety and the corresponding passive, active and predicative systems. All megatrends have measuring, control and regulating functions in common. But communication between the individual systems is a key task for automotive electronics today and tomorrow. And that is exactly where the strengths of Elmos chips and sensors are.
From a global economic perspective, we will take many of the 2015 topics with us to the new fiscal year. The economy, particularly in China but also in the U.S.A., the political developments in the Middle East and in Russia, and the volatile stock markets will keep having an effect on the world economy and thus on the consumers' spending behavior in 2016. According to forecasts of market research institutes, 2016 will become rather difficult for the global car market. The German Association of the Automotive Industry (VDA; German: Verband der Automobilindustrie) expects very little growth of only 2% in worldwide car registrations.
In 2016 sales will be affected by the already mentioned slow growth in new car registrations and the Company's earnings will be affected by the strong U.S. dollar. Elmos therefore anticipates a sales increase between 2% and 6% for 2016 over the previous year. The EBIT margin is expected to come to roughly 10%. The capex ratio is scheduled to amount to less than 12% of sales. We are thus scaling the capex ratio target down compared to the targets of the past few years. Elmos will also generate a positive adjusted free cash flow once more. We raised the dividend in 2015 by roughly one third to 0.33 Euro and we want to propose the same dividend amount to the Annual General Meeting in May 2016 and have our investors participate in the Company's success again.
A summary might read like this: The environment continues to be challenging, the Asian markets are losing momentum, and many crises are unsolved. Why does Elmos still manage to have an optimistic outlook? There is a simple answer to this: A major Elmos strength is its team performance. The very best plans and strategies will not help if you can't rely on your team. Staff and management work for solutions, with a vision and with expert know-how. I am proud of the performance of our employees and on behalf of the Supervisory Board and the Management Board, I would like to thank them for their great work in all divisions. This is also the reason why I am optimistic in my outlook for the future despite the insecure global economic situation: Elmos has the capability of achieving structural improvements even in challenging times.
Dr. Anton Mindl CEO – Chief Executive Officer
—
Graduate physicist Born 1957 Management Board member since 2005 Appointed until 2020
Strategy, quality, executives, corporate governance, micromechanics
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Dr. Arne Schneider CFO – Chief Financial Officer
—
Graduate economist Born 1976 Management Board member since 2014 Appointed until 2017
Finance, management accounting, compliance, investor relations, human resources, purchasing, information technology
—
Reinhard Senf CPO – Chief Production Officer
—
Graduate engineer Born 1951 Management Board member since 2001 Appointed until 2016
Production, foundry, assembly, logistics, product engineering
—
Dr. Peter Geiselhart CSO – Chief Sales Officer
—
Graduate physicist Born 1957 Management Board member since 2012 Appointed until 2018
Sales, development, business lines, technology
—
—21—
Prof. Dr. Günter Zimmer
the Supervisory Board diligently attended to its duties and responsibilities imposed by law and the Articles of Incorporation in fiscal year 2015. The Board advised the Management Board in running the Company and supervised management activity. In oral and written reports, the Supervisory Board was supplied extensively and timely with comprehensive information on the Company's situation by the Management Board. The Supervisory Board was directly involved in all decisions of substantial importance. The Management Board consulted the Supervisory Board on the Company's strategic orientation and analyzed any divergences from the business plan individually. The Management Board's reports on all business transactions of relevance to the Company were examined and discussed at length in the Supervisory Board meetings. Insofar as stipulated by law or the Articles of Incorporation, the Supervisory Board gave its opinion on the Management Board's reports and resolutions following diligent examination and exhaustive discussion. Outside the framework of Supervisory Board meetings, the chairman and other members of the Supervisory Board were also informed about material business transactions by the CEO. Conflicting interests of Management Board or Supervisory Board members subject to mandatory disclosure to the Supervisory Board or rather the General Meeting did not occur.
There were four meetings altogether in fiscal year 2015, namely on March 4, 2015, May 8, 2015, September 2, 2015, and December 18, 2015. In a meeting held on March 2, 2016, the Supervisory Board concerned itself primarily with the 2015 financial statements and consolidated financial statements; the auditor was present for a part of this session. During the sessions, the Supervisory Board informed itself in detail about the current developments of the fiscal year ended December 31, 2015, the Company's situation, and recent business policy decisions on the basis of written and oral reports given by the Management Board. Based on these comprehensive explanations, the Supervisory Board passed the required resolutions. If necessary, resolutions were jointly passed by Supervisory Board and Management Board. The Supervisory Board regularly discussed the current performance of the Company with respect to sales, earnings and liquidity in its sessions as well as future prospects. In the individual meetings, the situation and structure of the subsidiaries as well as the Group's strategic development beyond the year under review were dealt with in detail. The budget for the next fiscal year and planned capital expenditures were discussed in depth.
Key issues of the Supervisory Board meetings were the present state of new design wins from customers and the updated sales planning for the next five years. In addition to that, the Supervisory Board concerned itself with current and potential cooperation or acquisition projects. The subject of further debate were the implications of the performance of the U.S. dollar against the euro and the corresponding effects on business processes. Staff development in the Company was discussed as well. According to the "Act on the Equal Participation of Women and Men in Leadership Positions in the Private Sector and the Public Sector", which came into force recently, the Supervisory Board determined quotas for the memberships of Supervisory Board and Management Board. The corporate governance report provides further information on those quotas. Moreover, the extension of the contract of employment with Reinhard Senf, member of the Management Board for production, was resolved until the end of the year 2016 and his succession was debated.
As in the previous fiscal years, the Supervisory Board informed itself with the risk management system and its focal issues. The Management Board also reported to the Supervisory Board on the present state of the compliance program and presented measures already taken as well as planned further measures for the future. The Supervisory Board dealt with the recommendations and suggestions of the German Corporate Governance Code in depth and prepared the declaration of compliance together with the Management Board. Furthermore, the Supervisory Board discussed the agenda of the upcoming Annual General Meeting to be held on May 11, 2016 in Dortmund and, in this context, the candidates for the elections to the Supervisory Board in May 2016. The Supervisory Board also debated the appointment of the auditor and supervised auditor independence. Moreover, the Supervisory Board examined the efficiency of its own work and evaluated it.
In fiscal year 2015 all meetings of the Supervisory Board were attended by all of its members.
The Supervisory Board does not set up committees.
Consulting the certified accountants of Warth & Klein Grant Thornton AG, Wirtschaftsprüfungsgesellschaft, Düsseldorf, the Supervisory Board concerned itself in its meeting of March 2, 2016 with the audit of the separate financial statements and consolidated financial statements for the fiscal year ended December 31, 2015. According to the resolution of the Annual General Meeting of May 8, 2015 and the ensuing commission given by the Supervisory Board to the auditor, the separate financial statements prepared in accordance with HGB provisions (Commercial Code) for the fiscal year ended December 31, 2015 and the management report of Elmos Semiconductor AG which is combined with the group management report were audited by Warth & Klein Grant Thornton AG, Wirtschaftsprüfungsgesellschaft, Düsseldorf. The auditor issued an unqualified audit opinion. The consolidated financial statements of Elmos Semiconductor AG were prepared in accordance with the International Financial Reporting Standards (IFRS) as applicable in the EU and completed with the statements required under Section 315 a (1) HGB. The consolidated financial statements according to IFRS and the joint management report also received an unqualified audit opinion. The financial statement documents, the Annual Report and the audit reports were submitted to all Supervisory Board members in due time. In the Supervisory Board meeting held on March 2, 2016, the statements and reports were also explained orally by the Management Board. The certified accountants also reported on the results of their audit in this session. After its own examination of the financial statements of Elmos Semiconductor AG, the consolidated financial statements and the joint management report as well as the Management Board's proposal for the appropriation of profits, the Supervisory Board approved the auditor's findings based on the audit and approved the financial statements of Elmos Semiconductor AG and the consolidated financial statements of the Elmos Group. The financial statements are thus adopted.
Supervisory Board and Management Board propose to the Annual General Meeting the resolution to pay a dividend of 0.33 Euro per share for fiscal year 2015 out of the retained earnings of 76.9 million Euro (according to HGB) and to carry forward the remaining amount to new accounts.
Management Board and Supervisory Board work closely together for the Company's benefit and are committed to the sustained increase of shareholder value. The Supervisory Board informs itself regularly about the new standards of corporate governance. In September 2015, Management Board and Supervisory Board jointly released an updated declaration pursuant to Section 161 AktG (Stock Corporation Act) on compliance with the recommendations of the German Corporate Governance Code in the version of May 5, 2015. It can be found in this Annual Report on page 27. This declaration of compliance and all previous ones have been made permanently available to the shareholders on the Company's website. The joint corporate governance report prepared by Management Board and Supervisory Board is also part of this Annual Report, starting on page 26.
There were no changes on the Supervisory Board in fiscal year 2015. The next elections of shareholder representatives to the Supervisory Board will be held at the Annual General Meeting on May 11, 2016. Elections of the employee representatives will be held prior to the Annual General Meeting.
There were no changes on the Management Board either in fiscal year 2015.
More information about the members of the Management Board can be found on page 21 of this Annual Report. Information on the members of the Supervisory Board is listed on the right.
The Supervisory Board thanks all employees and all members of the Management Board for their work and their contribution to the success achieved in fiscal year 2015.
Dortmund, March 2, 2016
On behalf of the Supervisory Board Prof. Dr. Günter Zimmer Chairman of the Supervisory Board
Prof. Dr. Günter Zimmer, chairman Graduate physicist | Duisburg
Dr. Burkhard Dreher, vice chairman Graduate economist | Dortmund
Dr. Klaus Egger Graduate engineer | Steyr-Gleink, Austria
Thomas Lehner1 Graduate engineer | Dortmund
Sven-Olaf Schellenberg1 Graduate physicist | Dortmund
Dr. Klaus Weyer Graduate physicist | Penzberg 1 Employee representative
and statement on corporate governance
In the following chapter, the Management Board – also on behalf of the Supervisory Board – reports on corporate governance at Elmos Semiconductor AG pursuant to No. 3.10 of the German Corporate Governance Code. This chapter also includes the statement on corporate governance in accordance with Section 289a HGB (Commercial Code) and the remuneration report.
For the Management Board and the Supervisory Board of Elmos Semiconductor AG, corporate governance means the implementation of responsible and sustainable business management with the necessary transparency across all areas of the Group. Management Board and Supervisory Board have again concerned themselves intensively in fiscal year 2015 with the provisions of the German Corporate Governance Code. In doing so, the amendments to the Code released in May 2015 by the Government Commission were considered. In September 2015, Supervisory Board and Management Board jointly released the declaration of compliance in accordance with Section 161 AktG once again. Apart from the reported deviations, all recommendations of the German Corporate Governance Code are complied with. All previously released declarations of compliance have been made permanently available on the Elmos website.
One of the essential tasks of the Management Board is the control and monitoring of compliance in the Group. Compliance stands for the observance of applicable law as well as of all rules and guidelines that exist within the Company. The compliance program at Elmos provides the organizational foundations for this. Its purpose is to strengthen the reputation of Elmos as a reliable business partner in a sustainable manner, prevent risks, and thus contribute to the Company's overall success.
The essential compliance principles applied by Elmos have been put down in a code of conduct. This code includes guidance on the interaction with business partners and colleagues, dealing with information and data, and avoiding conflicting interests, and it also addresses the issues of workplace safety and environmental protection. The Elmos Code of Conduct is binding for all employees of Elmos Semiconductor AG. Each new employee receives a copy with his employment contract and undergoes an introductory course addressing the most important
topics. The Code of Conduct is permanently available on the Company's website. Aside from our general Elmos Code of Conduct there is also a version for our business partners in which we inform them about the Elmos guidelines.
Elmos has a compliance team that routinely evaluates the compliance system, launches and implements new measures, and initiates random testing in individual areas. Among other efforts in the year under review, in-house guidelines for various business areas were revised and advanced. The Company's intranet gives employees the opportunity to access the most important compliance guidelines, e.g. the IT security guidelines, purchasing guidelines, or the Company's compliance organization chart. The Compliance Officer is the person to address in all matters of compliance in addition to the respective superior. The Compliance Officer is in charge of the investigation of compliance cases and gives quarterly reports to the Management Board on compliance cases, requests, and new measures in order to enable the Management Board to assess the effectiveness of the compliance system. The Supervisory Board is informed annually about the compliance system and all measures of relevance.
Employees and other persons with access to insider information find entry in an insider list and are informed about the applicable statutory provisions. They are regularly referred to trade restrictions due to their insider status.
Management Board and Supervisory Board of Elmos Semiconductor AG declare in accordance with Section 161 AktG (Stock Corporation Act):
Elmos Semiconductor AG will comply with the recommendations of the "Government Commission German Corporate Governance Code" (in short: GCGC) in the latest version of May 5, 2015 (released in the official section of the Federal Gazette on June 12, 2015) as of now with the following exceptions:
remuneration to a severance payment which is lower than the agreed-upon contract duration as not appropriate in the interests of the Management Board members' commitment to the Company.
services, in particular consultation and mediation services, is also not disclosed individually (GCGC No. 5.4.6 sentence 6). In order to assure equal treatment in the disclosure of the remuneration of Management Board and Supervisory Board, the Supervisory Board's remuneration is not disclosed in a more extensive individualized form.
-> The Supervisory Board does not discuss each half-year or quarterly financial report prior to the respective report's publication for the purpose of expeditious reporting (GCGC No. 7.1.2 sentence 2).
The recommendations of the GCGC in the version of May 13, 2013 and announced by the Federal Ministry of Justice in the official section of the Federal Gazette on June 10, 2013 have been complied with since the release of the declaration of compliance in September 2014, subject to the exceptions listed in the declaration of compliance of September 2014 as mentioned under I."
On behalf of the Supervisory Board
Prof. Dr. Günter Zimmer Chairman of the Supervisory Board
On behalf of the Management Board
Dr. Anton Mindl CEO
Management Board and Supervisory Board share the commitment to responsible corporate governance. Their highest goal is to safeguard the Company's existence and to increase the shareholder value. The Management Board has four members. The individual members of the Management Board are responsible for their respective key areas (overview on page 21); together they assume responsibility for the entire management in accordance with the applicable law, the Articles of Incorporation, the Board's rules of procedure, and the resolutions of the General Meeting of shareholders. The Management Board represents the Company to the outside world. The Board is responsible for the management of the Group, the definition and monitoring of the Group's strategic orientation and corporate targets, and the Group's financing. The Management Board usually meets in full session once a week. The Management Board gives regular, extensive and timely reports to the Supervisory Board on all developments and events of relevance to the Company.
The Supervisory Board supervises the Management Board, appoints its members, and advises them with respect to the Company's management. Upon the nomination of candidates for the Management Board, the Supervisory Board examines the eligibility of women and men equally. Finding the right person for the position according to his or her qualification for the benefit of the Company remains the top priority.
Management Board and Supervisory Board work together closely based on mutual trust. The Management Board always involves the Supervisory Board in essential decisions. The rules of procedure of the two Boards define this cooperation, among other issues. A detailed summary of the Supervisory Board's work can be found in the Supervisory Board Report starting on page 22. The chairman gives a report to the shareholders on the Supervisory Board's work over the past fiscal year at each Annual General Meeting.
The Supervisory Board of Elmos Semiconductor AG has six members, elected for five years in accordance with the Articles of Incorporation. Pursuant to the provisions of the German One-Third Participation Act (Drittelbeteiligungsgesetz), the Supervisory Board consists of four shareholder representatives and two employee representatives. The representatives of the shareholders are elected by the General Meeting of shareholders, the employee representatives are elected by the staff. The most recent elections were held in 2011 so that the acting Supervisory Board is elected until the 2016 Annual General Meeting. The Supervisory Board does not set up committees.
In its meetings held on September 2, 2015 and March 2, 2016, the Supervisory Board has renewed the goals and principles established with respect to the Board's composition. Among them are international experience, technical and entrepreneurial expertise, strategic vision, knowledge of the Company, industry specific know-how, and experience with accounting and internal control processes. Diversity and the avoidance of conflicting interests are other goals. The Supervisory Board has also defined an age limit for the Board's members at the time of election. Of the four shareholder representatives on the Supervisory Board, at least one member shall be independent within the meaning of No. 5.4.2 of the German Corporate Governance Code. The target with respect to the adequate participation of women has been redefined within the framework of the implementation of the "Act on the Equal Participation of Women and Men in Leadership Positions in the Private Sector and the Public Sector" (see below).
The goals and principles are fully realized with the present composition of the Supervisory Board of Elmos Semiconductor AG and will also be considered for future nominations. The election proposals made by the Supervisory Board for the election of Supervisory Board members will primarily remain oriented toward the Company's benefit while considering all abovementioned goals.
The composition of the Supervisory Board is listed on page 24 of this Annual Report.
In accordance with the "Act on the Equal Participation of Women and Men in Leadership Positions in the Private Sector and the Public Sector", Elmos has defined quotas for the respective underrepresented sex for Management Board and Supervisory Board by the Supervisory Board and for the first and second senior executive levels by the Management Board.
Both on the Supervisory Board and the Management Board of Elmos Semiconductor AG, there are no women at present. At the next senior executive level, the share of women is 4%, at the second-next senior executive level, it comes to 5%. All data refer to the employees of Elmos Semiconductor AG in Germany.
Due to the short time span for the implementation of targets until June 30, 2017 and also due to the decidedly technical orientation with a typically low participation of women, maintaining the status quo was determined as the target for all groups of people. In selecting suitable
Source: Federal Statistical Office and Competence Center Technology – Diversity – Equal Chances The data on 1975 and 1985 refer to the former federal territory prior to the German reunification.
candidates, Supervisory Board and Management Board will assess the suitability of female and male applicants equally. However, for the individual choice the candidate's suitability for the job will remain the deciding criterion for the benefit of the Company. Elmos thus keeps within the framework of statutory provisions.
Due to the decidedly technical orientation of the Company, most executives at Elmos have completed studies of corresponding subjects. Women have been and still are noticeably underrepresented in such study paths.
Based on the average age, the Elmos share of women in executive positions reflects the level of the corresponding graduating class. If women are increasingly schooled in technical professions, the share of women among the staff will probably rise as a whole and thus correspondingly in executive positions as well.
Shareholders make use of their rights at the Annual General Meeting. Prior to the meeting, they receive the agenda, information regarding participation, and upon request the Annual Report.
All the relevant documents relating to the upcoming and past Annual General Meetings as well as further information on participation in and voting at the General Meeting are available on our website – also in English – and can be requested in print from the Company.
Shareholders who cannot attend the General Meeting in person have the option to assign their voting rights to proxies nominated by Elmos. The proxy can be contacted throughout the entire length of the General Meeting. Furthermore, the Annual General Meeting is webcast in its entirety on our website. After the General Meeting, shareholder presence and voting results will be announced on the Internet. The next Annual General Meeting will be held on May 11, 2016 in Dortmund.
Dates of importance to the shareholders are compiled annually in a financial calendar which is published on the Internet and in the Annual Report. All quarterly and annual financial reports are available on the website. The CEO and the CFO regularly provide information on the current position of the Company to analysts and investors within the framework of roadshows and conferences. The investor relations team of Elmos Semiconductor AG is also available for any questions the shareholders may have.
Efficient risk management contributes to the success of sound corporate governance. Risk management of this grade does its part in detecting risks at an early stage, assessing them, and initiating adequate countermeasures. All company divisions are involved in the risk management system implemented at Elmos. Parameters for risk assessment are the probability of occurrence and the estimated amount of loss. This risk assessment is regularly updated, even at short notice if necessary. We give account of the principles of the risk management system as well as of current corporate risks in the joint management report under "Opportunities and risks", starting on page 62.
Before submitting the proposal for the appointment of the auditor, the Supervisory Board once again obtained a declaration from the auditor on relationships between the auditor, its boards, and its audit manager with the Company or the Company's Board members for fiscal year 2015. This declaration furnished no doubts about auditor independence. Compliant with No. 7.2.3 of the German Corporate Governance Code, the Supervisory Board arranged for the auditor to give account without delay of any material findings and incidents to occur during the performance of the audit. The Supervisory Board also determined that the auditor inform the Supervisory Board or make note in the audit report if the auditor establishes differences from the declaration of compliance as issued by the Management Board and the Supervisory Board. No inconsistencies of this kind were established.
Elmos has issued stock option plans for employees, executives and Management Board members. The stock price is a central criterion for our shareholders to determine the return on an investment in the Company. The link to the stock price is therefore the beneficiaries' incentive within the scope of the stock option plan. The plans are explained in detail in the notes to the consolidated financial statements; therefore please refer to note 23 for further information.
The Supervisory Board decides and routinely reviews the remuneration system and the essential contract terms and conditions for the Management Board members. Total Management Board remuneration comprises a fixed monthly salary, a management bonus and stockbased payment as well as fringe benefits and pension benefits. The Company does not provide an individualized disclosure of the remuneration with respect to privacy protection. Management Board and Supervisory Board agree that such a disclosure would not contribute to greater transparency in the form of additional information relevant to the capital market. By resolution of the Annual General Meeting of May 13, 2014, the Company is exempt from its legal obligation for individualized disclosure of Management Board remuneration for the period of five years.
Management Board remuneration comprises fixed components and variable incentive components. In fiscal year 2015, the members of the Management Board received a total fixed remuneration of 1,515 thousand Euro (2014: 1,512 thousand Euro) and variable remuneration of 997 thousand Euro (2014: 775 thousand Euro). The variable incentive components are linked to the Group's current earnings before taxes on the one hand and to personal, individualized targets, agreed on annually with the Supervisory Board, on the other hand.
Within the framework of a share matching plan, no stock claims were issued to the members of the Management Board in fiscal year 2015 (2014: 3,488 stock claims, time value: 86 thousand Euro). There are indirect pension commitments of a pension fund to members of the Management Board of Elmos. The pension fund has taken out corresponding reinsurance policies for the completely congruent coverage of its plan contributions. In 2015 payments for these reinsurance policies amounted to 454 thousand Euro (2014: 451 thousand Euro), included in the fixed components of the remuneration.
Remuneration of former Management Board members or their surviving dependents amounted to 224 thousand Euro in fiscal year 2015 (2014: 167 thousand Euro). In addition, insurance premiums of 111 thousand Euro were paid for this group of beneficiaries (2014: 111 thousand Euro). Facing these amounts are reimbursements from reinsurance policies in the amount of 119 thousand Euro (2014: 123 thousand Euro). Pension provisions for former Management Board members or their surviving dependents came to 1,543 thousand Euro as of December 31, 2015 (2014: 1,610 thousand Euro). After setting off pension provisions against the time value of pension plan reinsurance, 67 thousand Euro (2014: 192 thousand Euro) remain as part of the pension provisions altogether recognized for the Group.
Apart from pension commitments and compensation agreements in case of a change of control or as a consequence of a non-competition clause, no additional benefits have been promised to any Management Board member in case of the termination of occupation. Nor did any member of the Management Board receive benefits or corresponding commitments from third parties with regard to his position on the Management Board in the past fiscal year.
The Supervisory Board's remuneration is defined by Section 9 of the Articles of Incorporation. The Supervisory Board members receive fixed and incentive payments in addition to the reimbursement of their expenses. The incentive remuneration is linked to the dividend and thus oriented toward the Company's long-term and sustained success. 25% of the fixed remuneration and 50% of the variable remuneration are paid in shares of the Company. A holding period of three calendar years as of the shares' respective grant date applies to shares received as remuneration. The Supervisory Board members are not granted Elmos stock options for their positions on the Board.
Compliant with the recommendation of the German Corporate Governance Code for Supervisory Board remuneration in consideration of chairmanship and vice chairmanship, the chairman receives twice the amount of the regular fixed and variable payments and the vice chairman receives one and a half times of said amount. The Supervisory Board members' remuneration is disclosed in summarized form, yet not individualized. This also applies for payments made to Supervisory Board members for individually performed services, particularly consulting and mediation services.
The fixed remuneration paid to members of the Supervisory Board in fiscal year 2015 amounted to the total of 84 thousand Euro (2014: 82 thousand Euro). This amount includes expenses and disbursements. Payments of variable remuneration amounted to 218 thousand Euro (2014: 158 thousand Euro). The Company paid 0 thousand Euro (2014: 22 thousand Euro) to members of the Supervisory Board for consulting and other services rendered.
Persons who hold executive positions with an issuer of stock and persons closely related to such a person are obligated by law to disclose the purchase and sale of such stock in accordance with Section 15a WpHG (Securities Trading Act). All such directors' dealings are announced immediately upon notification Europe-wide and made public on the Company's website. For detailed information about directors' dealings, please refer to the notes to the consolidated financial statements (note 38) in this Annual Report.
The disclosures of the Company's stock and stock options held by members of Management Board and Supervisory Board are explained in detail in the notes to the consolidated financial statements; please refer to note 35 for this information. In accordance with No. 6.3 GCGC, the members of the Supervisory Board had combined direct or indirect holdings of approx. 34.5% and the members of the Management Board had combined direct or indirect holdings of 1.2% of the stock issued by the Company (as of December 31, 2015).
Sustainability is part of our corporate strategy. We perceive added value in a comprehensive way and orient the success of our business activities not only toward financial key figures but we also want to connect that success to social acceptance.
Environmental protection is one of our guiding corporate principles. Acting responsibly today means securing the future. The following principles determine our conduct:
-> Continuous improvement: The goal of the eco protection management system is a systematic and continuous improvement of our Company's environmental protection performance.
Elmos is certified in accordance with the high eco protection standards of DIN 14001 and the energy management certificate ISO 50001. One example of the accord between cost savings and environmental protection is the combined heat and power plant at the Dortmund location. Elmos generates a considerable amount of the required electric power by itself with its own power plant, in operation since 2012.
In 2015 the cooling units in production were optimized, among other measures, and conventional pumps were replaced by high-efficiency pumps. One reason for this was to reach the targets defined by the Federal Ministry for Economic Affairs and Energy (reduction of primary energy consumption by 20% until 2020). Power consumption of numerous plants has been improved as well.
In 2015 Elmos released statements on its policies with respect to conflict minerals, the EU chemicals regulation REACH (Registration, Evaluation, Authorization and Restriction of Chemicals) and EU regulation RoHS (Restriction of Hazardous Substances). These statements as well as other details of our environmental activities can be found on our website (www.elmos.com/english/ about-us/responsibility).
For Elmos as a technology company, the employees' knowhow is a particularly crucial factor. Their motivation, expert knowledge and flexibility are the prerequisite to the Company's long-term success. Especially with regard to the development of new products and processes, the employees are the deciding criterion for innovation and growth.
The principles of proper conduct towards and among employees are defined in our code of conduct. The code addresses issues such as values, law-abiding behavior, conflicting interests, dealing with information, data and the Company's assets, etc. The code of conduct is binding for all employees and represents a part of our corporate culture.
In order to ensure the continuous professional development of the employees, Elmos offers specific topical training courses. Over the past year, selected training courses for certain employee groups were also conducted in the form of efficient online training.
In-house health management is an essential social standard implemented by Elmos Semiconductor AG. Elmos wants to provide more than just a workplace and the Company is aware of its social responsibility for its employees. Health management at Elmos rests on four pillars: general health programs, executive coaching, special offers for employees doing shift work, and talks with employees returning from sick leave. The health team provides for certain medical examinations, screenings, and influenza vaccination during working hours. In 2015 Elmos also offered courses for nicotine withdrawal. Moreover, the health team organizes the participation in running events and training. Elmos employees once again took part successfully in several business run events and in a dragon boat race on Dortmund's Lake Phoenix in 2015. Another Elmos soccer cup was held as well.
Among other benefits that go beyond the usual are the in-house cafeteria, our own parking garage, and our in-house gym, providing massages and various training programs.
At its locations in Germany's most-populated federal state North Rhine-Westphalia (NRW), Elmos is able to recruit from a large number of well-trained young engineers as there are more than 50 universities and colleges in the vicinity. Elmos has maintained close cooperation with some of them ever since the Company's foundation and holds a unique position as the region's only semiconductor manufacturer. Elmos is also active in recruitment events in the region, such as "einstieg" for high school students or "konaktiva" for college students, and on the Internet of course (job search engines, Xing, our own website) in order to find suitable applicants for openings. We cooperate with high schools and local institutions of education and hold informative events for college students.
Furthermore, Elmos awarded graduates of electrical engineering of the Technical University of Dortmund for their excellent degrees for the third time at the end of 2015. This way Elmos seeks to increase its popularity among college students and to present itself early on as an attractive employer.
The total number of employees in the Group has gone slightly down by 0.6% to 1,109 in 2015 (December 31, 2014: 1,116). This also applies for the number of employees at NRW locations, reaching the number of 845 as of December 31, 2015 (December 31, 2014: 853). On annual average, the number of employees of the Elmos Group rose to 1,117 (2014: 1,104). The average age of the staff was unchanged at 41 years in 2015 (2014: 41 years).
Elmos offers professional training in many technical and commercial professions with an emphasis on schooling microtechnologists. At the end of 2015, 53 trainees (2014: 42) were employed in Dortmund.
Elmos honors its social commitment with donations, sponsoring, and other ways of support. Elmos particularly wants to promote projects that raise the interest in technical professions among young people. Apart from that, Elmos also wants to emphasize its local social commitment. Some of the donations went to a shelter for street kids in Dortmund and the "Kinderwünsche" (children's wishes) campaign devoted primarily to children in need.
sector, performed even better. TecDAX, DAXsector Technology, Technology All Share, and DAXsubsector Semiconductors all recorded gains between 30% and 37% in 2015. DAXsector All Technology and DAXsector Automobile increased by 15.5% and 7.1% respectively.
| Period ended December 31, 2015 | Since 01/01/2014 |
Since 01/01/2015 |
|---|---|---|
| Elmos (Xetra) | 49.5% | –1.2% |
| Industry indices | ||
| TecDAX | 56.9% | 33.5% |
| DAXsector Technology1 | 57.3% | 36.2% |
| DAXsector All Technology1 | 32.4% | 15.5% |
| Technology All Share1 | 51.0% | 31.1% |
| DAXsubsectorSemiconductors1 | 63.7% | 36.5% |
| DAXsector Automobile | 14.5% | 7.1% |
| General market indices | ||
| DAX | 12.5% | 9.6% |
| Prime All Share1 | 15.8% | 12.8% |
| CDAX1 | 14.8% | 11.3% |
1 Elmos is part of this index.
The international stock markets eventually showed a positive development at high volatility in the year 2015. Especially the low interest rate policy and the expansive monetary policy were in support of the markets, troubled by various geopolitical hot spots, the debt debate about Greece, economic difficulties in China, and the oil price drop. Still the DAX, moving within a vast fluctuation range, managed to record a positive performance (+9.6%) and exceeded the record high of 12,000 points in April 2015.
The more diversified indices underwent a similar development in the course of the year. Prime All Share and CDAX gained 12.8% and 11.3% respectively. The industry indices of relevance to Elmos, especially in the technology
The Elmos share continued its positive performance of the previous year during the first six months and reached its 10-year high on June 4, 2015 at 19.99 Euro (+23.4% compared to the beginning of the year). In the second half of the year, the share shed its gains again, in line with the developments in the global stock markets, particularly because of the economic slowdown in China and automotive stocks under pressure. Contrary to the named indices, the share recovered only near the end of the year. At year-end the share closed at 16.00 Euro, slightly below the prior-year closing price (16.20 Euro) with a 1.2% loss.
The stock registered its 52-week low of 12.00 Euro on November 13. The average daily trading volume of the Elmos share came to 22.9 thousand shares in the year under review (Xetra and Frankfurt/Main; 2014: 32.6 thousand shares). The trading volume was stronger during the first six months than in the second half of the year once again. High-frequency trading and off-market trading (OTC market) continue to gain in importance for the Elmos share, too. Those trading volumes cannot be completely recorded and are therefore not included in the indicated amounts. All stock prices refer to Xetra closing prices.
| 2011 | 2012 | 2013 | 2014 | 2015 | |
|---|---|---|---|---|---|
| Number of outstanding shares | |||||
| at year-end | 19,414,205 | 19,615,705 | 19,674,585 | 19,859,749 | 19,941,864 |
| Free float | 44.0% | 43.2% | 42.7% | 49.1% | 49.6% |
| 11.98 Euro | 9.54 Euro | 10.83 Euro | 16.25 Euro | 19.99 Euro | |
| 52-week high (Xetra) | (April 6) | (February 9) | (November 28) | (December 22) | (June 4) |
| 6.03 Euro | 5.86 Euro | 7.17 Euro | 10.65 Euro | 12.00 Euro | |
| 52-week low (Xetra) | (October 4) | (August 8) | (January 3) | (January 2) | (November 13) |
| Year-end (Xetra) | 7.96 Euro | 7.15 Euro | 10.70 Euro | 16.20 Euro | 16.00 Euro |
| Annual performance | −15.4% | −10.2% | 49.7% | 51.4% | −1.2% |
| Market capitalization at year-end | 154.5 million Euro | 140.3 million Euro | 210.5 million Euro | 321.7 million Euro | 319.1 million Euro |
| Market value to book value1 at year-end |
0.8 | 0.7 | 1.1 | 1.6 | 1.5 |
| Shares traded on daily average (Xetra and Frankfurt floor) |
46.5 thousand | 23.8 thousand | 21.6 thousand | 32.6 thousand | 22.9 thousand |
| Earnings per share | 0.98 Euro | 0.42 Euro | 0.49 Euro | 0.94 Euro | 0.82 Euro |
| Distribution total | 4.8 million Euro | 4.8 million Euro | 4.8 million Euro | 6.5 million Euro | 6.5 million Euro2 |
| Dividend per share | 0.25 Euro | 0.25 Euro | 0.25 Euro | 0.33 Euro | 0.33 Euro2 |
| Dividend yield | 3.4%3 | 2.9%3 | 1.7%3 | 1.8%3 | 2.0%4 |
Shareholders' equity
Proposal to the Annual General Meeting in May 2016 Based on the stock price on the day of the Annual General Meeting 4 Based on the stock price of December 31, 2015
| ISIN / WKN | DE0005677108 / 567710 | ||
|---|---|---|---|
| Stock symbol / Reuters | ELG / ELGG | ||
| Industry | Chip manufacturer / Semiconductor | ||
| Type of shares | No-par ordinary bearer shares | ||
| Transparency level | Prime Standard | ||
| Market segment | Xetra Frankfurt 2 – Regulated Market | ||
| IPO | October 11, 1999 | ||
| Designated sponsor | M.M. Warburg & Co. | ||
| Index inclusion | CDAX, DAX International Mid 100, DAXPLUS FAMILY, DAXsector All Technology, DAXsector Technology, DAXsubsector All Semiconductors, DAXsubsector Semiconductors, Prime All Share, Technology All Share |
The market capitalization of Elmos amounted to 319.1
SHAREHOLDER STRUCTURE DECEMBER 31, 2015
20.10%
million Euro at the end of the year, based on 19.9 million issued shares (December 31, 2014: 321.7 million Euro based on 19.9 million shares).
The share capital of Elmos Semiconductor AG is divided into 19,941,864 no-par value shares with a proportionate amount of 1.00 Euro of the share capital allotted to each share.
The number of treasury shares was reduced to 214,587 shares by the end of the year, equivalent to 1.08% of the share capital, by partially servicing stock options with treasury shares among other reasons (December 31, 2014: 280,825 shares or 1.41%).
In the year 2015 stock options from the tranches issued in 2009, 2010 and 2011 were exercised. This led to an increase in share capital by 82,115 Euro in the year 2015 (2014: 185,164 Euro). As the 2009 tranche expired in 2015, no stock options can be exercised from this tranche anymore in the future. 70,867 stock options from the 2010 tranche can still be exercised until 2017 and 177,902 stock options from the 2011 tranche can be exercised until 2018. Moreover, the exercise timeframe for another tranche of stock options (the 2012 tranche) will open in the year 2016. No further tranches of stock options are issued at present.
All voting rights announcements, disclosures of the total number of voting rights, and directors' dealings notifications were made public Europe-wide according to statutory regulations and are also available at www.elmos.com.
In 2015 Elmos continued to inform investors about the current situation and the corporate strategy within the framework of roadshows and conferences in Germany and several other European countries as well as company visits on location. We noticed yet another significant demand for meetings with new investors in the year 2015. We also cultivated our existing contacts. In addition to that, we informed analysts and investors by conducting conference calls after the announcement of results and, upon request, individual shareholders as well. Thus we enable our shareholders and other interested capital market participants to realistically assess our business situation and, in particular, to consider our prospects.
Elmos pursues the goal of informing comprehensively and quickly about economic developments and to be conveniently accessible – for private and institutional investors and for analysts alike. Aiming for both comprehensive and timely information provided equally to all target groups, we have compiled a large body of corporate information on our website. Interested investors may inform themselves in detail about the Company and its products and technologies at www. elmos.com on the Internet. Apart from information about corporate governance, the "Investor & Press relations" section also offers financial reports, a financial calendar, the Company's Articles of Incorporation, information on the Annual General Meeting, press releases, directors' dealings, and the recordings of our conference calls on the occasion of quarterly and annual financial statements. Elmos is also happy to send out information such as annual or quarterly financial reports by mail or e-mail. We maintain an e-mail distribution list to inform interested investors routinely about corporate news, and we are also active in social networks (Twitter, YouTube, Xing, and SlideShare).
As a condition for the payment of a dividend, Elmos has defined a sustained positive performance of earnings and cash flows. Based on the positive business performance, Management Board and Supervisory Board propose to the Annual General Meeting in May 2016 to pay a dividend of 0.33 Euro per share for fiscal year 2015, a constant dividend compared to the previous year, out of the 2015 retained earnings of 76.9 million Euro reported in the HGB financial statements of Elmos. The total dividend distribution would thus amount to 6.5 million Euro based on 19,727,277 shares entitled to dividend as of December 31, 2015.
At the 16th Annual General Meeting held on May 8, 2015 in Dortmund, 12,966,167 Euro or 65.3% of the share capital were represented. All agenda items were adopted with a large majority of the votes. At the 2015 Annual General Meeting much use was made once again of the possibility to entrust one's voting rights to the proxy nominated by the Company. Shareholders who could not attend in person were able to watch the webcast of the General Meeting on the Internet again last year, either live or as a recording later. The upcoming Annual General Meeting on May 11, 2016 will again provide shareholders and potential investors with the option to use the Internet webcast. In addition to that, shareholders can exercise their voting rights either directly, by use of a proxy of their choice, or by use of a Company-nominated proxy according to their instructions.
The number of analysts covering the Elmos stock remained constant at ten in 2015. The analysts belong to the following institutes:
-> Hauck & Aufhäuser
Elmos Semiconductor AG | Investor Relations Heinrich-Hertz-Straße 1, 44227 Dortmund, Germany Phone + 49 (0) 231-75 49-287 Fax + 49 (0) 231-75 49-111 [email protected] www.elmos.com
The Consumer Electronic Show (CES) in Las Vegas (U.S.A.) presented the trends set by the electronics industry at the beginning of the year. Major carmakers displayed, among other things, different kinds of gesture control in vehicles. With several million supplied components, Elmos is global market leader in this field. The Elmos chip, making first functions possible – namely approaching and swiping – is currently being used in series production of cars of the major auto manufacturers.
Right at the beginning of the year, Elmos was present at two of the globally regarded trade shows: Electronica China in Shanghai and Embedded World in Nuremberg were the industry's stomping grounds. Among other solutions, Elmos introduced LED voltage supply components, sensor readout ICs, and pressure sensors.
The 2015 Dortmund Business Award went to Elmos. The jury hat praised above all things the variety of ideas Elmos shows in all matters, spanning product innovations and performance as a training center and semiconductor manufacturing site. Even though Elmos has long had an international orientation with locations in the U.S.A., Asia and Africa, the Company is well aware of its local roots.
Our subsidiary SMI (Silicon Microstructures, Inc.) introduced a new pressure sensor in April. The extremely small sensor has a size of merely 220x75µm and is thus suited for use in sophisticated medical catheter applications. Possible fields of use include: bladder catheter, intracranial pressure measuring, various visceral cavity and back pressure measuring, and cardiac monitors for veterinarians.
In May Elmos presented a motor controller for brushless DC (BLDC) motors. The chip can be operated at up to 72V supply voltage. Potential applications are BLDC motors in high-performance fans and utilization in the automotive 48V power supply system and in industrial applications between 24V and 72V.
At the 16th Annual General Meeting, shareholders approved the proposal of a dividend increase to 0.33 Euro per share with a large majority of the votes. Over the past years the dividend had been 0.25 Euro per share. By the dividend increase, the Company wants to have the shareholders participate in the Company's sustained positive performance, CEO Mindl explained in his speech to the shareholders in attendance. Apart from the dividend increase, all other items on the agenda were also adopted with a large majority of the votes cast.
Elmos employees were quite athletic again in 2015. They crossed the finish lines at several business run events at new personal records. But even beyond the asphalt personal bests were delivered: At the dragon boat race in Dortmund, employees made the water of our serene Lake Phoenix splash once again.
A new Elmos component facilitates the simple and variable setup of an RGB-LED system connected to the automotive network. The component can trigger up to six RGB-LEDs and is therefore suited in the car for both classical interior lighting and innovative ambient lighting with dynamic light effects.
The KNX network is the leading technology in home automation. For this network Elmos has introduced a new transceiver family. It can be adapted easily and precisely to a KNX system for controlling simple or complex applications depending on the IC. Via KNX the control of lighting, blinds, and heat as well as multimedia, security, and door communication systems can be combined into a thread and coordinated – for comfortable living and working.
An IC for an optoelectronic smoke detector facilitates highest safety in large buildings. The smoke detectors allow networking via a wired bus interface. The new Elmos circuit minimizes the complexity of smoke detector systems because just a few external components are needed. The component also requires only low average power consumption of less than 90µA.
After the trade show appearances in Germany and China had been a great success, Elmos also presented at Electronica India in New Delhi. The focus is on LED and motor control as well as IC solutions for smoke detectors and PIR sensors. With over 700 exhibitors and represented businesses, this is the largest trade show in the region.
Elmos has presented new sensor-signal processors (SSPs). The ICs are suited for use in virtually all automotive pressure sensor applications. Based on a special technology, pressure, torque, or similar physical quantities can be measured. The ICs are distinguished by simple calibration, extensive options for configuration, and high robustness to overvoltage.
Following its triumphs in the field of personal computers, the USB interface has conquered the car now. Almost every new car offers the option to charge your smartphone via USB or listen to music saved on your USB flash drive. When it comes to cars, safety comes first: The onboard power supply system must not be interfered with by different devices connected to the USB slot. Therefore the Elmos IC for USB voltage supply pays attention among other things to short-circuit protection for the USB interface, overvoltage and undervoltage monitoring of the USB supply, overtemperature protection, signals for error conditions, alerts, and many specific protective settings more.
Environmental protection is an integral part of the Company. In October Elmos released statements on its policy with respect to conflict minerals, the EU chemicals regulation REACH (Registration, Evaluation, Authorization, and Restriction of Chemicals), and the EU regulation RoHS (Restriction of Hazardous Substances). With these statements we present our high in-house eco protection standards to the outside world.
Elmos is a specialist for reliable IC solutions for BLDC and stepper motors in the car. The Elmos chip regulates the radiator grille's stepper motor in such a way for instance that the car's aerodynamics is optimized and fuel consumption is thus reduced. Elmos shows this and more applications in a video released in October. You find the video clip on the Elmos YouTube channel https://youtu.be/tJvcYTkFMtc.
At the end of the year SMI introduced the new MEMS pressure sensor SM9543. The sensor has been specially designed for medical and industrial applications in the ultralow pressure range and features highest precision, stability, and reliability. Possible applications include air conditioning systems, respirators, and spirometers.
Play it safe: Elmos has been certified for its functional safety processes in accordance with ISO 26262. The audit confirmed the most extensive functional safety implementation worldwide in semiconductor development and manufacturing processes. The development methodology is outstanding: Beginning at the very first step, ICs are designed strictly in accordance with functional safety requirements. The ISO standard applies to all safetyrelevant systems that contain one or more electrical and/or electronic functions for the series production of vehicles. The ISO standard is targeted at avoiding unjustifiable risks.
In this combined management report we analyze the course of business in the year under report and the situation of the Elmos Group and Elmos Semiconductor AG. Based on a description of the basics of our business and its general conditions as well as our strategy, we present our financial control system and explain assets and liabilities and our profit and financial position in detail. We discuss the material opportunities and risks and finally provide an outlook on the expected development. The information about Elmos Semiconductor AG is included in the business report in a separate section providing disclosures according to HGB.
Elmos Semiconductor AG was founded in the year 1984 in Dortmund where the Company has its headquarters. At about 90%, the majority of sales is generated with semiconductors. The smaller share in sales is generated with micro-electro-mechanical systems (MEMS).
The core competence of Elmos is the development, manufacturing and distribution of mixed-signal semiconductors. Elmos considers itself a system solutions specialist. This means that we improve the customer's entire electronic system. The use of Elmos semiconductors can reduce system complexity, resulting in advantages for the customer with respect to production, costs, or reliability, among other aspects.
MEMS complete the product portfolio. At Elmos they come primarily in the form of high-precision pressure sensors embedded in silicon, developed, manufactured and distributed by the subsidiary Silicon Microstructures Inc. (SMI) in Milpitas/U.S.A.
Elmos products are used in different industry sectors. Elmos generated about 85% of sales with electronics for the auto industry in 2015 (2014: about 85%). The share of the business with industrial and consumer goods as well as medical technology in consolidated sales amounted to about 15% in 2015 (2014: about 15%).
For electronics in the automobile, Elmos supplies a broad range of sensor readout ICs and sensor elements (e.g. ultrasonic parking assist ICs and pressure sensors), motor control components (e.g. water pump and fan control systems), and embedded solutions (e.g. network components and LED voltage supply systems). The components analyze data and convert those analog data into digital ones, among other things, so that the data can be exactly analyzed and gathered.
The share of electronics in the automobile is constantly increasing. Megatrends such as driver assistance up to autonomous driving, combined with many add-on systems for active and passive safety, less emissions up to electromobility, and efficiency improvements, with LEDs for the interior and exterior for instance, and the networking of all those systems with each other represent growth drivers for Elmos. Due to ever higher demands, quantum leaps are expected for the next years in these areas as in others.
Elmos has a leading position as semiconductor manufacturer in the market for automotive electronics, the Company's chips are used by virtually all carmakers worldwide. Among the immediate competitors in certain sub-segments are ams, Infineon Technologies, Melexis, NXP Semiconductors, ON Semiconductor, and STMicroelectronics.
For industrial and consumer goods and medical technology, Elmos supplies products e.g. for applications in household appliances, photo cameras, installation and facility technology, respirators, and machine control systems. Many of the competencies achieved in automotive applications can be transferred to industrial and consumer goods products in similar form. However, partly different general conditions and life cycles apply for these sectors.
The organization of Elmos is oriented toward the target markets, the customers' needs for innovation, quality, flexibility and delivery reliability as well as internal requirements. Elmos has its headquarters in Dortmund. Various branches, subsidiaries and partner companies at several locations essentially in Europe, the U.S.A. and Asia provide sales and application support as well as product development. The main production site for semiconductors is in Dortmund, the main MEMS production site is located in Milpitas/California, U.S.A.
The companies Elmos Central IT Services GmbH and Elmos Facility Management GmbH were merged into Elmos Semiconductor AG in January 2015. The reason for this was a streamlining of administrative activity.
Pretoria, South Africa: Micro Systems on Silicon (MOS) Limited | Development, sales
Elmos benefits from the global megatrends such as driver assistance up to autonomous driving, combined with many add-on systems for active and passive safety, less emissions up to electromobility, and efficiency improvements, with LEDs for the interior and exterior for instance, and the networking of all those systems with each other. These megatrends influence the ongoing electrification of vehicles, everyday objects, and industrial plants. The share of semiconductors in these areas has been growing continuously for years. Developments beyond the realm of the auto industry, such as industry 4.0 or home automation, give further stimulation to our growth. It is our goal to grow faster than the market. Apart from our domestic market Europe, we keep seeking to generate growth in Asia and the U.S.A. increasingly as well. Thus we create a solid basis for the future.
In many markets we have taken leading positions with our products. Elmos wants to maintain this success and expand it wherever possible. Our three product lines Sensors, Motor Control, and Embedded Solutions develop innovative products in response to market needs. Our subsidiary SMI supplies competitive solutions with integrated microsystems
or microchips based on MEMS. With these innovative solutions – be it specially tailored customer solutions or application specific standard components – Elmos wants to be successful also by close cooperation with the customers. Roughly 35% of sales are currently achieved with application specific components (ASSPs) already (2014: about 25%). A majority of the products in development targets the growth field of ASSPs. We focus on our strengths and will keep convincing customers in application fields with specialized and in part protected solutions. The development of new products is based on our significant research and development efforts.
In our in-house production facilities we work daily at increasing efficiency by optimization in all areas and steps of the manufacturing process. In our in-house manufacturing we benefit from our specialized mixed-signal portfolio and our knowhow. Apart from our own manufacture, we cooperate for a part of our value added chain with foundries, depending on requirements and volumes, and thus push our fab lite strategy. With this network we can respond more flexibly and offer an even broader portfolio to the customers. We will continue and expand the cooperation with partners over the next years. In addition to the technological advantages, we thus avoid costly investments in our in-house manufacturing for potentially short-lived volume peaks.
Elmos operates from a solid financial basis. We want to protect this financial strength and flexibility Elmos has with continued profitable growth. The goal is to achieve a sustained positive (adjusted) free cash flow with solid business results and reasonable capital expenditures. The management's focus is also on the continued participation of the shareholders in the Company's success by the distribution of an adequate dividend.
Highly motivated employees are of particular importance to the successful development of our business. Elmos relies on a corporate culture geared to performance and development, combined with strong social responsibility. We promote personal and cultural diversity in the Company. We also place special emphasis on an appealing work environment, flexible working conditions, and good opportunities for further training. We offer attractive prospects and want to keep winning talented young professionals for our Company's successful and sustained development. We expect impeccable behavior from our employees in interaction with the Company, their colleagues, and third parties.
The Elmos control system is based on four essential elements:
Each indicator is considered and analyzed both individually and in connection to the other ones. As a growth-oriented company, Elmos attaches great importance to the profitable growth of sales. Sales are positively affected by the following factors among others: success with new customers and new products, expansion to new regions, and the consistent advancement of marketable products in respect of their competitiveness. Semiconductor manufacturing comes at a high fixed cost burden. Therefore sales as an essential lever for determining capacity utilization become especially important. All activities toward sales increase are also judged by their potential to increase earnings in the long term.
As the result before interest and income tax, the EBIT (Earnings Before Interest and Taxes) reflects the quality of earnings of the business segments. This is one central control factor at Group level as well as for both segments. Each operational decision or performance is measured for the short and long term at how sustainable its contribution to earnings is. Within the framework of the annual budgeting process, targets are defined for this indicator of the Company's success.
Clear budget definitions build the frame for the level of capital expenditures; the specific demand is derived from medium-term sales planning and the resulting demands on manufacturing capacity as well as economic considerations. Within the framework of annual budget meetings, the responsible executives bring the budgeted level of capital expenditures and individual projects in line with Group-wide financial planning. Extrabudgetary capital expenditures are made only after an additional detailed check is conducted.
For increasing shareholder value, the Group focuses on generating a positive (adjusted) free cash flow. A sustained positive free cash flow safeguards the Group's financial strength. The essential starting points for improving the free cash flow are the positive performances of sales and earnings at relatively moderate capital expenditures. The adjusted free cash flow is cash flow from operating activities less capital expenditures for intangible assets and property, plant and equipment, less payments for investments, plus disposal of investments.
Identical control factors are applied for the two reporting segments (Semiconductor and MEMS).
| million Euro | 2014 | 2015 | Change |
|---|---|---|---|
| Sales | 209.5 | 219.6 | 4.8% |
| EBIT | 22.6 | 24.5 | 8.7% |
| EBIT margin (in percent) | 10.8% | 11.2% | |
| Capital expenditures | 30.5 | 24.71 | −18.9% |
| in percent of sales | 14.6% | 11.3% | |
| Free cash flow (adjusted)2 | 9.5 | 25.61 | >100% |
1 Adjusted for the repurchase of land and building from a prematurely terminated lease contract in the amount of approx. 14 million Euro
2 Cash flow from operating activities less capital expenditures for intangible assets and property, plant and equipment, less payments for investments, plus disposal of investments
Depending on the indicator, the Management Board is informed at least on a monthly basis in detail about the performance of business operations in the form of standardized reports. This reporting system is enhanced by ad hoc analyses in writing or oral reports if necessary. The actual data generated by the Group-wide reporting system are compared with the budget data each month. Deviations from the budget figures are analyzed, annotated, and adequate countermeasures are defined. Developments with a material impact on the Group's earnings are reported to the Management Board without delay. Special emphasis is also placed on the analysis of leading indicators that are capable of providing an indication of the future business development. In this context, the analysis focuses on the development of orders, the order backlog, stock and consignment stock in-house and/or at customers, and production effectiveness and efficiency. Furthermore, in regular intervals a comparative analysis addresses the development of relevant market data and the performance of competitors.
Group budgeting is prepared annually within the scope of the Group-wide budgeting process in consideration of the current business situation. Based on central targets defined by the Management Board, the individual divisions and subsidiaries prepare detailed planning for the business fields they are responsible for. Derived from that, the management with support from the specialist departments determines the budgets for sales, EBIT, capital expenditures, and the (adjusted) free cash flow. Medium-term product planning and the corresponding capacity and production planning are also considered for the preparation of the annual Group budgeting.
The annual budget is revised in regular intervals in view of the actual business performance and updated sales and cost projections as well as apparent opportunities and risks within the scope of forecasts in order to determine the expected Group result for the fiscal year. On this basis, the expected cash flow development for the fiscal year is updated as well. Thus financial risks can be identified at an early stage and measures can be taken if necessary. In addition to that, the analysis of foreign currency sales and cost is one of the tools for the potential launch of currency hedging measures.
The development activity of Elmos centers on the marketoriented expansion of the product portfolio along the three product lines Sensors, Motor Control, and Embedded Solutions. The majority of the product development cost Elmos incurs is pre-financed by the Company and must be amortized through the current series production business. This applies in particular to the development of application specific standard products (ASSPs), a mainstay of development for a few years now and representing an ever larger share in total sales of Elmos.
Product developments are strictly aligned with market needs. Elmos prioritizes different product ideas and takes into account volumes, information on the competition, and technical feasibility, among other factors. Only those projects are realized that meet the Company's targets for market expectations, margin potential, and strategic orientation. The outcome of these product developments is a number of new semiconductors and sensors. Among the innovations Elmos presented in 2015 are the following:
-> Elmos introduced a component for optoelectronic smoke detectors with wired bus interface with the E520.30. The IC facilitates programmable smoke detector platforms.
In 2015 research and development expenses amounted to 37.1 million Euro or 16.9% of sales (2014: 36.1 million Euro or 17.2% of sales).
Elmos operates semiconductor manufacturing sites in Germany using various CMOS technologies. The Dortmund manufacturing site was converted successively from 6-inch to 8-inch wafers over the past years. At the end of the first quarter of 2015 the final 6-inch wafer charge was completed. Remaining machines have since then been either converted to the larger 8-inch wafer diameter or otherwise utilized depending on demand and feasibility.
In addition to that, MEMS pressure sensors are manufactured predominantly in 6-inch production in-house at subsidiary SMI in Milpitas/California, U.S.A.
In-house capacity is completed by cooperation agreements with contract manufacturers (foundries). These foundries make additional capacity available, thus enabling Elmos to respond flexibly even to heavily fluctuating demand, both with respect to delivery capability and the capital expenditures required. In 2015 Elmos continued to obtain processed wafers from foundries with a global reputation. The percentage share of acquired wafers went down to roughly 12% in 2015 compared to the previous year (2014: roughly 15%) despite increased sales as larger in-house capacity was available due to the finalized conversion from 6-inch to 8-inch wafers. That share will probably increase in the medium run in line with the fab lite strategy.
Apart from wafer production, the Dortmund location also accommodates the test area where wafers and packaged components are subjected to electric testing.
Within the framework of continuous improvement processes, Elmos puts its first-time-right and zero-error strategy consistently into practice. Elmos thus achieves an outstanding quality level with its products as well as in its business, manufacturing and service processes. Due to anticipatory quality planning and monitoring of customer requirements even in the development stages, quality is produced with full competitiveness and a minimum number of rejects. The final test also contributes to the outstanding quality level.
Routine inspections of the processes and tools put to use, the closest possible attention to the series products from acquisition and development to manufacturing and delivery, constant analyses, and cutting-edge statistical processes make this high quality level possible. By means of a sophisticated traceability system, Elmos is able to detect the reasons for the slightest deviations from the desired state early on and to minimize their effects in an effective and sustained manner and to provide efficient customer support. In-house and external laboratories analyze and scrutinize not only potential defect mechanisms in semiconductor manufacturing but sensor
according to AEC-Q100
Standardized qualification of automotive products
Functional safety according to ISO 26262
Quality management system of the automotive industry according to ISO 16949
Environmental management system according to ISO 14001
Avoidance of hazardous substances according to RoHS
and packaging specific features as well, thus closing the loop system for the continuous improvement of the Elmos manufacturing processes.
The Elmos quality management system is audited annually at the certified locations for compliance with the requirements of DIN ISO 9001 and ISO/TS 16949 in monitoring or repeat audits by our certifier.
At the end of October Elmos was also certified for its functional safety processes in accordance with ISO 26262. The audit confirmed the most extensive functional safety implementation worldwide in semiconductor development and manufacturing processes. The development methodology is particularly outstanding: Elmos puts to use an optimal functional safety process to ICs based on methods for system development. The systematic derivation of requirements to chip architectures to be developed is embedded in the design process. Beginning at the very first step, ICs are designed strictly in accordance with functional safety requirements.
In the year 2015, new car registrations in the globally most important regions (China, U.S.A., and Western Europe) scored good growth rates even though increases were lower compared to the past few years for instance in China. Other regions such as Japan, Russia, and Brazil reported partly dramatically declining numbers, according to the German Association of the Automotive Industry (VDA; German: Verband der Automobilindustrie).
In Western Europe, new registrations reached the highest level in five years with a gain of 9.3% to 13.7 million car registrations. Even though the trend is positive, the volume still falls significantly below the 2007 record number of 14.4 million new automobiles. The most relevant European markets registered most different growth rates in 2015: Spain +20.9%, Italy +15.8%, France +6.8%, Great Britain +6.3%, and Germany +5.6%, the European association ACEA (French: Association des Constructeurs Européens d'Automobiles) has announced.
The U.S. market showed an ambivalent picture in 2015: While light trucks gained 13% to 9.9 million units, the passenger car segment went down 2% to 7.5 million new registrations. The total market for light vehicles (light trucks and passenger cars) still set a new record of 17.4 million vehicles, equivalent to a 6% gain.
Passenger car sales in China gained 9% in the full year 2015 to some 20 million new vehicles, according to the VDA. The tax relief for passenger cars with small cubic capacity engines in force since October 2015 has had a positive effect. However, growth has slowed down considerably compared to 2014. In 2014 the increase in new vehicles was close to 13%.
In Japan the market volume was reduced by 10% to 4.2 million new cars. In Brazil (–26% to 2.5 million new cars) and Russia (–36% to 1.6 million new cars), the respective decline was even more dramatic.
| Change 2014/15 | |
|---|---|
| Western Europe1 | +9% |
| Germany2 | +6% |
| China2 | +9% |
| U.S.A.2 | +6% |
| Change 2014/15 | |
|---|---|
| General semiconductor market (worldwide)3 | –1.9% |
| Automotive semiconductor market (worldwide)4 | 0% |
1 Source: ACEA
Source: VDA 3 Source: Gartner Source: IHS
The global semiconductor market lost 1.9% to 333.7 billion U.S. dollar in 2015, according to the market research institute Gartner, citing as reasons for this decrease a weaker demand for electronic devices, the strong U.S. dollar, and increased inventories. While optoelectronic components, non-optical sensors, analog semiconductors, and ASICs recorded growth, sales with all other components, e.g. memory or logic semiconductors, went down.
The global market for automotive semiconductors was subject to highly intense competition in the year 2015 and could not escape the negative trend in the general semiconductor market. According to data supplied by market researcher IHS (Information Handling Services), the sector stagnated. Sales with semiconductors for cars amounted to 29 billion U.S. dollar in the year 2014; expectations for 2015 come to the same amount, according to an IHS forecast of December 2015.
| Forecast February 2015 |
Forecast May 2015 |
Forecast October 2015 |
Actuals | ||
|---|---|---|---|---|---|
| Sales growth 2015 (vs. 2014) |
Mid single-digit percentage range |
Sales growth of 5% - 9% |
Sales growth of about 4% |
4.8% | |
| EBIT margin (in % of sales) |
Slightly better than 2014 (10.8%) |
Slightly better than 2014 (10.8%) |
At prior-year level (10.8%) |
11.2% | |
| Capital expenditures1 (in % of sales) |
Less than 15% of sales |
Less than 15% of sales |
Less than 15% of sales |
11.3% | |
| Adjusted free cash flow1, 2 |
Positive | Positive | Positive | 25.6 million Euro | |
| Assumed exchange rate |
1.20 USD/EUR | 1.10 USD/EUR | 1.10 USD/EUR | 1.11 USD/EUR3 | |
The consolidated financial statements of Elmos Semiconductor AG for fiscal year 2015 have been prepared in accordance with the International Financial Reporting Standards (IFRS) as applicable in the EU.
| in million Euro or % unless indicated otherwise |
2014 | 2015 | Change |
|---|---|---|---|
| Sales | 209.5 | 219.6 | 4.8% |
| Gross profit | 91.4 | 91.6 | 0.2% |
| in % | 43.6% | 41.7% | |
| Research and | |||
| development expenses | 36.1 | 37.1 | 2.7% |
| in % | 17.2% | 16.9% | |
| Distribution expenses | 19.0 | 19.0 | 0.1% |
| in % | 9.1% | 8.7% | |
| Administrative expenses | 16.9 | 17.4 | 2.9% |
| in % | 8.1% | 7.9% | |
| Operating income before other | |||
| operating expenses/income | 19.4 | 18.1 | –6.8% |
| in % | 9.3% | 8.2% | |
| EBIT | 22.6 | 24.5 | 8.7% |
| in % | 10.8% | 11.2% | |
| Earnings before taxes | 23.1 | 24.1 | 4.5% |
| in % | 11.0% | 11.0% | |
| Consolidated net income attributable to owners of the |
|||
| parent | 18.3 | 16.2 | –11.4% |
| in % | 8.7% | 7.4% | |
| Earnings per share (basic) in Euro |
0.94 | 0.82 | |
| Dividend per share in Euro | 0.33 | 0.331 | |
Proposal to the Annual General Meeting in May 2016
—51—
1 Not including one-off effect from repurchase of land and building from prematurely terminated lease contracts in the amount of approx. 14 million Euro
2 Cash flow from operating activities less capital expenditures for intangible assets and property, plant and equipment, less payments for investments, plus disposal of investments 3 Average exchange rate 2015
With a sales growth of 4.8% in 2015, an EBIT margin of 11.2%, capital expenditures amounting to 11.3% of sales, and an adjusted free cash flow of 25.6 million Euro (capital expenditures and cash flow without one-off effect from prematurely terminated lease contracts), Elmos achieved all the targets defined in its updated October 2015 forecast in 2015.
Sales were up 4.8% to 219.6 million Euro in the year under review 2015 (2014: 209.5 million Euro). Total sales were spread over the four quarters more or less evenly. This development is due to the fact that the first quarter was favored by closing date effects and the second half of the year was affected by the developments in China and a resulting more cautious order behavior. Considered on the whole, Elmos benefits from new product ramp-ups and a deeper penetration with existing products.
The Asia/Pacific region is increasingly gaining in relevance to Elmos. Despite the ailing economy in China, this region's contribution was increased once again in the year 2015, coming now to 68.9 million Euro or 31.4% of total sales (2014: 55.9 million Euro or 26.7%). With a growth rate of 23.1% or an increase in sales by 12.9 million Euro, Asia/Pacific compensates for the development in other regions. U.S. sales went up from 22.0 million Euro to 23.4 million Euro due to the strength of the U.S. dollar. Business with European customers went slightly down in the year under report, achieving sales of 116.9 million Euro (2014: 119.0 million Euro). However, Europe remains the region of the highest relevance to Elmos with a share in total sales of 53.2% in 2015 (2014: 56.8%).
Elmos supplies a large number of customers. Among them are suppliers to the auto industry and also industrial customers and manufacturers of medical technology and consumer goods. In 2015 two of our customers accounted for more than 10% of sales each. Sales generated with the largest customers are usually attributable to different products at different stages in their respective life cycles. Further diversification took place with respect to customers as well as to products. The top ten customers thus amounted only to about 64% of sales in 2015 (2014: 68%). The combined share of the ten bestselling products went down as well, coming now to about 41% (2014: 44%).
Orders received and order situation typically reflect the current business performance, giving account of the year's sales performance. To determine the book-tobill, the orders received for the next three months are compared with sales of the past three months. At the end of the year 2015 the book-to-bill ratio was slightly above one.
Order backlog is usually entered upon receiving the customer's order. It is influenced by different factors such as demand, order behavior, production lead time, etc. Order backlog may vary between the time of placing the order and delivery due to changes in customer demand, market conditions, or closing date effects such as changes in consignment stock withdrawals. As soon as production is started, an order usually cannot be canceled anymore. However, there is no guaranty for order backlog to turn automatically into sales.
The competition for new projects continued to be intense as it has been over the past years. The year 2015 was a very successful one for design wins, in respect of the number and volume of acquired new projects, and took up speed especially by the end of the year. As in the past few years the number of ASSPs clearly dominated design wins, proof of the fact that Elmos solutions are attractive in the marketplace. The number of about 20 partners won as new customers in 2015 is pleasant as well. The design wins cover a broad range of application fields addressed by Elmos with its three business lines (Sensors, Motor Control, and Embedded Solutions).
The cost of sales was 128.0 million Euro in the year under report (2014: 118.1 million Euro), a slightly disproportionate increase compared to sales. This was due especially to the fact that the U.S. dollar was stronger than the year before, affecting the cost of sales in particular. The gross margin went down accordingly in 2015 and came to 41.7% as compared to 43.6% in 2014. In absolute terms the gross profit remained close to constant at 91.6 million Euro (2014: 91.4 million Euro).
Research and development expenses climbed slightly in fiscal year 2015 by 2.7% to 37.1 million Euro (2014: 36.1 million Euro). In the year under review technology licenses were acquired, partly due to the more pronounced implementation of the fab lite strategy, affecting R&D expenses. There were no material structural changes relating to R&D expenses in the year under report. As a result of increased sales, R&D expenses dropped slightly, however, from 17.2% of sales in 2014 to 16.9% in 2015.
Distribution expenses were kept constant at 19.0 million Euro (2014: 19.0 million Euro). Thus the ratio to sales fell once more from 9.1% of sales in 2014 to 8.7% in 2015. The increase of general administrative expenses was disproportionately low compared to sales, coming to 17.4 million Euro or 7.9% of sales (2014: 16.9 million Euro or 8.1%). On the whole, operating expenses continued to go down compared to 2014 from 34.4% to 33.5% of sales.
Owing to the strained gross profit by the strong U.S. dollar, the operating income before other operating expenses/income was on a slight decline – despite higher sales and the disproportionately low increase in operating expenses –, amounting to 18.1 million Euro in 2015 as compared to 19.4 million Euro in the previous year. The operating income margin thus came to 8.2% of sales (2014: 9.3%).
Earnings before interest and taxes (EBIT) were increased, however, amounting to 24.5 million Euro or 11.2% of sales (2014: 22.6 million Euro or 10.8%). This pleasant performance was supported by exchange rate gains and other operating income. In 2015 exchange rate gains in the amount of 2.3 million Euro (2014: 2.4 million Euro) were realized, based in part on U.S. dollar hedges. The other operating income came to 4.2 million Euro in 2015 (2014: 0.7 million Euro) and particularly includes one-off effects from the termination of lease contracts and prior-period income/expenses from renegotiations with suppliers and partners.
In contrast to the previous year, net finance expense in the amount of 0.4 million Euro was incurred in 2015 (2014: net finance income of 0.5 million Euro). This is due to lower interest income from investments based on the deterioration of market interest rates and higher other finance expenses in connection with the sale or devaluation of securities, among other factors. After taxes and non-controlling interests, Elmos achieved a consolidated net income attributable to owners of the parent in the amount of 16.2 million Euro in the reporting period (2014: 18.3 million Euro). In comparing these numbers, it has to be taken into account that the prioryear consolidated net income was positively influenced by one-off tax effects. The tax rate of 2014 came only to 18.9% as compared to 31.0% in 2015. The consolidated net income equals basic earnings per share (EPS) of 0.82 Euro in 2015 (2014: 0.94 Euro).
The net income of Elmos according to HGB1 (Commercial Code) is 7.7 million Euro in 2015. The profit carried forward from the year 2014 comes to 69.2 million Euro after dividend distribution. As condition for the payment of a dividend, the Company determined in the past years that the performance of earnings and the development of cash flows must both be sustainably positive. Management Board and Supervisory Board propose to the Annual
1 The financial statements of Elmos have received the auditor's unqualified audit opinion. They will be released in the Federal Gazette, filed with the commercial register, can be requested as a special print publication, and are available on the Company's website.
General Meeting of May 11, 2016 to distribute a dividend of 0.33 Euro per share out of the retained earnings in the amount of 76.9 million Euro. This equals a total dividend distribution of 6.5 million Euro, based on 19,727,277 shares entitled to dividend as of December 31, 2015.
| in million Euro or % |
Segment | 2014 | 2015 | Change |
|---|---|---|---|---|
| Sales | ||||
| Semiconductor | 190.9 | 196.6 | 3.0% | |
| Micromechanics | 18.6 | 23.0 | 23.6% | |
| EBIT (segment earnings) | ||||
| Semiconductor | 19.7 | 21.5 | 9.3% | |
| Micromechanics | 2.9 | 3.0 | 4.1% | |
| EBIT margin | ||||
| Semiconductor | 10.3% | 10.9% | ||
| Micromechanics | 15.7% | 13.2% | ||
With a sales increase of 3.0%, the Semiconductor segment's performance was slightly below the Group's total sales. Segment sales reached 196.6 million Euro in the year under report after 190.9 million Euro in the previous year. Semiconductor sales are generated primarily with automotive customers and were thus affected by the more cautious order behavior of our automotive customers over the second half-year.
The EBIT margin of the Semiconductor segment increased slightly by 0.6 percentage points to 10.9% yet turned out below the Group's total EBIT margin.
The Micromechanics segment comprises the activities of subsidiary SMI. Customers in the Micromechanics segment belong for the most part to the automotive, industrial, consumer goods, and medical sectors.
Sales were increased in 2015 by 23.6% to 23.0 million Euro (2014: 18.6 million Euro). This growth is largely influenced by the strong U.S. dollar as SMI generates U.S. dollar sales almost exclusively. The growth rate is 3.2% on U.S. dollar basis. The EBIT rose from 2.9 million Euro to 3.0 million Euro, at 4.1% a disproportionately low increase compared to sales, however, so that the EBIT margin came to 13.2% in 2015 as compared to 15.7% in 2014. An increasing pricing pressure, due in part to standardization, and a consolidating marketplace were noticeable in the MEMS market.
| in million Euro or % |
2014 | 2015 | Change |
|---|---|---|---|
| Consolidated net income | 18.7 | 16.7 | –11.1% |
| Depreciation and amortization |
25.6 | 28.8 | 12.3% |
| Change in net working capital1 |
–8.6 | –2.1 | –75.7% |
| Other items | 4.2 | 7.0 | 67.2% |
| Cash flow from operating activities |
40.0 | 50.3 | 25.9% |
| Capital expenditures for intangible assets and property, plant and equipment2 |
–30.5 | –24.7 | –18.9% |
| in % of sales | –14.6% | –11.3% | |
| Repurchase of land and building from prematurely terminated lease contracts |
0.0 | –14.0 | n/a |
| in % of sales | 0.0% | –6.4% | |
| Payments for (–)/Disposal of securities |
–2.7 | 10.3 | n/a |
| Other items | 1.1 | 3.8 | >100% |
| Cash flow from investing activities |
–32.0 | –24.6 | –23.1% |
| Cash flow from financing activities |
–4.6 | –9.3 | >100% |
| Change in liquid assets | 3.3 | 16.4 | >100% |
| Adjusted free cash flow2, 3 | 9.5 | 25.6 | >100% |
1 Net working capital in the narrow sense (trade receivables, inventories, trade payables)
Adjusted for the repurchase of land and building from prematurely terminated lease contracts in the amount of approx. 14 million Euro
Cash flow from operating activities less capital expenditures for intangible assets and property, plant and equipment, less payments for investments, plus disposal of investments
The cash flow from operating activities was increased again over the previous year to 50.3 million Euro in the year 2015 in comparison with 40.0 million Euro in 2014. Lower additions to inventories in the year under review are a main reason for this (4.0 million Euro in 2015 vs. 12.7 million Euro in 2014). In addition to that, the decrease in other assets (3.0 million Euro), caused essentially by diminished current financial assets and lower sales tax assets, made a major contribution to the improvement of the operating cash flow compared to the increase of the previous year (–1.7 million Euro).
The cash-effective capital expenditures for intangibles and property, plant and equipment, adjusted for the oneoff effect of approx. 14 million Euro from the repurchase of land and building from prematurely terminated lease contracts, amounted to 24.7 million Euro or 11.3% of sales in the year 2015 (2014: 30.5 million Euro or 14.6%). Thus capital expenditures have been reduced after the completed conversion of production from 6-inch to 8-inch wafers. A material part of capex was utilized for the expansion of testing capacity.
The largest portion of the reporting period's capital expenditures in the amount of 23.6 million Euro (2014: 29.5 million Euro) was accounted for by the Semiconductor segment; 1.1 million Euro was invested in the Micromechanics segment (2014: 1.0 million Euro).
The cash flow from investing activities amounted to –24.6 million Euro in 2015 after –32.0 million Euro in 2014. It has to be taken into account here that securities in the net amount of 10.3 million Euro were sold in the year under review (2014: payments for securities in the net amount of 2.7 million Euro), reported in the cash flow from investing activities. Apart from that, 3.0 million Euro more were collected from the disposal of non-current assets than the year before.
The adjusted free cash flow was thus increased again in 2015 and came to 25.6 million Euro after 9.5 million Euro in the previous year.
The cash flow from financing activities came to –9.3 million Euro for this fiscal year (2014: –4.6 million Euro) and was determined, apart from the higher dividend payment of 6.5 million Euro compared to the previous year (2014: 4.8 million Euro), by payments to non-controlling shareholders in the amount of 3.4 million Euro, essentially for the increase of the interest in MAZ Brandenburg from 50% to 80% in fiscal year 2014.
In addition to cash and cash equivalents totaling 50.0 million Euro, the Company holds long-term and shortterm securities in the amount of 40.5 million Euro (December 31, 2014: 32.5 million Euro and 51.9 million Euro respectively). Cash and cash equivalents plus marketable securities thus amounted to altogether 90.5 million Euro as of December 31, 2015, thus exceeding the value of the prior-year reporting date in spite of continued sizable capital expenditures, the higher dividend payment, and the premature repurchase of land and building from leases (December 31, 2014: 84.4 million Euro).
In addition to financing through equity, Elmos also draws on traditional long-term credit facilities in part (36.6 million Euro as of December 31, 2015), maturing essentially in fiscal years 2017 and 2018. Effective interest rates of the long-term loans range between 1.75% and 4.90%. In addition to that, as of December 31, 2015 the Company had various short-term lines of credit at its disposal in the total amount of 16.5 million Euro. As of December 31, 2015 the Company provided these credit facilities in the amount of 0.7 million Euro as security.
It is the primary objective of the Elmos Group's capital management to assure that an adequate credit rating, liquidity provision at any time and at high financial flexibility, as well as a solid capital structure are maintained in support of the Company's business operations for the long term and for the protection of the interests of shareholders, employees, and other stakeholders. Elmos thus stands for the strategy of a continuous, sustained increase in shareholder value.
The Management Board actively controls the capital structure of the Elmos Group and makes adjustments in consideration of the economic framework and the risks carried by the corresponding assets. The Group monitors its capital based on net debt or net cash in absolute terms and on the equity ratio. Net cash includes cash and cash equivalents as well as securities less current and noncurrent financial liabilities. The equity ratio puts equity in proportion to total assets.
In addition to conventional loans, the Company also finances its capital expenditures in part through lease contracts and service agreements. The respective relation of advantages to risks is balanced, and the arrangements are customary in the market. The resulting repayment obligations are entered in "Other financial obligations". They came to 53.3 million Euro as of December 31, 2015 (December 31, 2014: 68.9 million Euro). The decrease in such obligations in the year under report is determined essentially by the repurchase of real property used by Elmos at the Dortmund location from prematurely terminated lease contracts. Thus the trend of declining other financial obligations over the past years is actively continued. It is the Company's goal to continue this reduction in the medium term.
| in million Euro unless otherwise indicated |
12/31/2014 | 12/31/2015 | Change |
|---|---|---|---|
| Intangible assets | 21.4 | 20.8 | –2.9% |
| Property, plant and equipment |
82.4 | 91.0 | 10.4% |
| Other non-current assets | 6.6 | 5.7 | –13.9% |
| Securities | |||
| (short-term and long-term) | 51.9 | 40.5 | –21.8% |
| Inventories | 53.2 | 57.2 | 7.4% |
| Trade receivables | 35.0 | 32.8 | –6.3% |
| Cash and cash equivalents | 32.5 | 50.0 | 53.8% |
| Other current assets | 12.3 | 8.9 | –27.9% |
| Total assets | 295.4 | 306.9 | 3.9% |
| Equity | 206.9 | 219.4 | 6.0% |
| Financial liabilities (current and non-current) |
37.4 | 36.8 | –1.6% |
| Other non-current liabilities | 7.4 | 4.6 | –36.9% |
| Trade payables | 21.9 | 21.8 | –0.2% |
| Other current liabilities | 21.9 | 24.2 | 10.7% |
| Total equity and liabilities | 295.4 | 306.9 | 3.9% |
Total assets went up to 306.9 million Euro (December 31, 2014: 295.4 million Euro), essentially because of capital expenditures made in 2015, the repurchase of land and building, the increase in inventories, and the higher amount of cash and cash equivalents. This reflects on assets in the increase in property, plant and equipment by 8.6 million Euro, the increase in inventories by 4.0 million Euro, and the changes in cash and cash equivalents plus securities in the amount of 6.1 million Euro. The obvious change in equity and liabilities is the increase in equity (+12.5 million Euro) due to the consolidated net income.
SELECTED KEY FINANCIAL FIGURES/RATIOS
| Calculation | Unit | 2014 | 2015 | |
|---|---|---|---|---|
| million | ||||
| Net working capital of sales |
Trade receivables + inventories – trade payables | Euro % |
66.4 31.7% |
68.2 31.0% |
| Inventory turnover | Cost of sales/inventories | x | 2.2x | 2.2x |
| Receivables turnover | Sales/trade receivables | x | 6.0x | 6.7x |
| Payables turnover | Cost of sales/trade payables | x | 5.4x | 5.9x |
| Cash conversion cycle | Inventory days + debtor days – creditor days | days | 158 | 155 |
| Return on invested capital (RoIC) | EBIT/(intangible assets + property, plant and equipment + net working capital) | % | 13.3% | 13.6% |
| million | ||||
| Net cash | Cash and cash equivalents + securities – financial liabilities | Euro | 47.0 | 53.7 |
| Equity ratio | Equity/total assets | % | 70.0% | 71.5% |
Net working capital was kept close to constant yearon-year with 68.2 million Euro as of December 31, 2015 (December 31, 2014: 66.4 million Euro). The increase in inventories (+4.0 million Euro) was compensated in part by the decrease in trade receivables (–2.2 million Euro). The inventory turnover remained constant at 2.2x due to the relatively parallel development of the cost of sales and inventories (2014: 2.2x). The decline in trade receivables in combination with higher sales resulted in an improved receivables turnover of 6.7x in 2015 (2014: 6.0x). Trade payables remained more or less unchanged from the previous year at 21.8 million Euro as of December 31, 2015 (December 31, 2014: 21.9 million Euro). Thus the payables turnover was up slightly due to the increased cost of sales and came to 5.9x in 2015 after 5.4x in 2014. The cash conversion cycle, however, declined from 158 days to 155 days.
For calculating the return on invested capital used for business operations, Elmos introduces the return ratio RoIC (Return on Invested Capital) with its 2015 reporting. This key ratio is defined as earnings before interest and taxes (EBIT) divided by invested capital which equals the total of intangible assets, property, plant and equipment, and net working capital.
Thus a connection is created between profitability and the invested capital used for business operations. The RoIC therefore also serves as an indicator of added value.
The RoIC for fiscal years 2014 and 2015 is determined as follows:
| million Euro | 2014 | 2015 |
|---|---|---|
| Earnings before interest and taxes (EBIT) | 22.6 | 24.5 |
| 12/31/2014 12/31/2015 | ||
| Intangible assets | 21.4 | 20.8 |
| Property, plant and equipment | 82.4 | 91.0 |
| Inventories | 53.2 | 57.2 |
| Trade receivables | 35.0 | 32.8 |
| Less | ||
| Trade payables | –21.9 | –21.8 |
| Invested capital | 170.3 | 180.0 |
| RoIC (/) | 13.3% | 13.6% |
The RoIC increased from 13.3% in 2014 to 13.6% in 2015. In spite of considerable capital expenditures, particularly for the premature repurchase of land and building from lease contracts, the increase in return was achieved by an increased EBIT and an improved receivables management.
Net cash increased year-on-year to 53.7 million Euro as of December 31, 2015 (December 31, 2014: 47.0 million Euro). The equity ratio reached 71.5% as of December 31, 2015, slightly increased over the prior year ratio (December 31, 2014: 70.0%).
Despite the challenging environment during the past year, Elmos managed to extend its financial strength further in 2015 owing to the solid corporate structure. The adjusted free cash flow was clearly positive once more, thus making it possible to further strengthening the net cash position and thus consolidating the solid financial position despite sizable capital expenditures and the higher dividend payment. The equity ratio was also increased over the previous year once again. Based on structural changes, Elmos has further expanded and optimized the product portfolio of the business lines. The Company continued to invest in new products and their development as well. Thus existing customer relationships were intensified and new customers were won.
All this together with the solid financial basis strengthen the competitive position and provide a good foundation for the Company's future development.
Elmos Semiconductor AG is the parent company of the Elmos Group. The Management Board of Elmos Semiconductor AG is responsible for managing the Company and the Group. Elmos Semiconductor AG is a semiconductor manufacturer of chips for Sensors, Motor Control, and Embedded Solutions primarily for the automotive industry. Elmos Semiconductor AG is also influenced by its directly and indirectly held subsidiaries and investments. Apart from responsibility for business operations, the Group's parent is also responsible for the Group's strategic orientation and thus determines the corporate strategy within the framework of higher-level group functions, represented by the members of the Management Board.
Unlike the consolidated financial statements, Elmos Semiconductor AG does not prepare its separate financial statements according to International Financial Reporting Standards (IFRS) but pursuant to the provisions of the German Commercial Code (HGB). The complete financial statements are released separately. The financial statements have received the auditor's unqualified audit opinion. They are released in the Federal Gazette, filed with the register of companies, they can be requested in print and are available on the Company's website.
The business performance and economic situation of Elmos Semiconductor AG essentially determine the business performance and success of the Group. We give detailed account of this in the chapters "Basic information on the Group" and "Business report".
The expectations for Elmos Semiconductor AG reflect in the outlook for the Group due to the Company's ties with the Group companies and its relevance for the Group. The expected performance of Elmos Semiconductor AG in fiscal year 2016 also depends essentially on the performance of the Group and its situation with respect to opportunities and risks. This is the subject of the report on "Opportunities and risks" and the Group's "Outlook". Insofar the statements made therein on the Group's expected performance and its risk position also apply to the expected performance and risk position of Elmos Semiconductor AG. The description of the internal control system concerning Elmos Semiconductor AG pursuant to Section 289 (5) HGB follows in the chapter "Opportunities and Risks ".
As the Group's parent, Elmos Semiconductor AG receives income especially from its subsidiaries. The income from investments is composed of transfers of profit or loss from domestic subsidiaries and distributions from foreign subsidiaries. Accordingly the business performance expected for the Group in 2016 can be assumed to influence the business result of Elmos Semiconductor AG as well. On the whole we expect 2016 retained earnings of Elmos Semiconductor AG in an amount which makes it possible to have our shareholders participate adequately in the performance of the Group's earnings.
| in million Euro unless otherwise indicated |
2014 | 2015 | Change |
|---|---|---|---|
| Sales | 188.5 192.4 | 2.0% | |
| Material costs | 72.6 | 74.1 | 2.0% |
| Personnel expense | 53.0 | 57.6 | 8.8% |
| Amortization of intangible assets and depreciation of property, plant and equipment |
19.4 | 22.0 | 13.7% |
| Other operating expenses | 55.5 | 44.5 | –19.8% |
| Operating income | 9.2 | 13.1 | 42.1% |
| Income from investments and financial result |
9.4 | 0.0 | –100% |
| Earnings from ordinary business operations |
18.6 | 13.1 | –29.8% |
| Net income | 14.7 | 7.7 | –47.7% |
Sales increased in the year 2015 by 2.0% from 188.5 million Euro to 192.4 million Euro. A majority of the sales growth is accounted for by the Asia/Pacific region.
The increase in material costs of 2.0% to 74.1 million Euro was proportionate to sales (2014: 72.6 million Euro). The personnel expense increased disproportionately to sales and amounted to 57.6 million Euro in 2015 (2014: 53.0 million Euro). Amortization of intangible assets and depreciation of property, plant and equipment were up considerably by 13.7% to 22.0 million Euro. This increase is accounted for by higher capital expenditures and the increase in depreciation of new machines and spare parts, among other reasons. Other operating expenses of 44.5 million Euro turned out much lower in 2015 than in the previous year (2014: 55.5 million Euro). This is due on the one hand to the elimination of expenses for services due to the merger of subsidiaries (Elmos Central IT Services GmbH and Elmos Facility Management GmbH) and on the other hand to the reduction of lease expenses due to the repurchase of the administration building.
Thus the 2015 operating income of 13.1 million Euro or rather a margin of 6.8% was improved considerably over the previous year (2014: 9.2 million Euro or rather 4.9%).
Income from investments and financial result dropped from 9.4 million Euro in 2014 to 0.0 million Euro in 2015. It has to be taken in consideration here that in 2014 one-off income from the discontinuation of a profit participation transaction with a Dutch subsidiary was collected.
Due to the above-mentioned positive one-off effect in 2014, earnings from ordinary business operations went down from 18.6 million Euro in the previous year to 13.1 million Euro in 2015. The margin of earnings from ordinary business operations performed accordingly and came to 6.8% in 2015 as compared to 9.9% in 2014. This effect as well as the lower tax rate of the previous year also reflects in the reduced net income of 7.7 million Euro for the year under report (2014: 14.7 million Euro).
| in million Euro unless otherwise indicated |
2014 | 2015 | Change |
|---|---|---|---|
| Net income | 14.7 | 7.7 | –47.7% |
| Depreciation and amortization | 19.4 | 22.0 | 13.8% |
| Changes in provisions, other non-cash income, income/loss from disposal of investments and write-down on financial |
|||
| investments | 8.8 | 6.9 | –21.3% |
| Increase (–)/Decrease (+) in inventories, trade receivables and other assets |
8.9 | 49.6 | >100% |
| Increase (+)/Decrease (–) in trade payables and other liabilities |
–3.7 | –28.9 | >100% |
| Cash flow from operating activities | 48.1 | 57.3 | 19.1% |
| Cash flow from investing activities | –30.9 | –37.5 | 21.4% |
| Cash flow from financing activities | –3.2 | –5.4 | 70.7% |
| Changes in cash and cash equivalents | 14.0 | 14.4 | 2.6% |
| Cash and cash equivalents at beginning | |||
| of period | 22.6 | 36.6 | 62.2% |
| Cash and cash equivalents at end of period |
36.6 | 51.0 | 39.3% |
The cash flow from operating activities was higher than in the year 2014 and came to 57.3 million Euro (2014: 48.1 million Euro). This is largely accounted for by the decrease in receivables and other assets (41.9 million Euro) in the past fiscal year. There also was a higher amount of depreciation (+2.7 million Euro) due to the number of new machines initially operated in the course of the conversion of production. These effects more than compensated for the decrease in net income (7.0 million Euro).
The cash flow from investing activities was –37.5 million Euro in 2015 (2014: –30.9 million Euro). This increase is especially due to the repurchase of land and building from prematurely terminated lease contracts.
The cash flow from financing activities in the amount of –5.4 million Euro in the year 2015 (2014: –3.2 million Euro) materially reflects the payment of the dividend (–6.5 million Euro) and the opposing effect of the capital increase (+0.9 million Euro) as well as the issue of treasury shares (+0.6 million Euro) for servicing stock options.
In addition to liquid assets in the amount of 41.6 million Euro, the Company holds 40.0 million Euro in long-term and short-term securities (December 31, 2014: 26.6 million Euro and 50.8 million Euro respectively). Cash and cash equivalents plus marketable securities came to a total of 81.5 million Euro as of December 31, 2015 and were thus above the amount of the prior-year closing date (December 31, 2014: 77.5 million Euro) in spite of the land and building repurchase and the increased dividend distribution.
| CONDENSED STATEMENT OF FINANCIAL POSITION | |||
|---|---|---|---|
| in million Euro unless otherwise indicated |
2014 | 2015 | Change |
| Fixed assets | 143.3 | 145.7 | 1.7% |
| Inventories | 46.5 | 48.9 | 5.1% |
| Receivables and other assets | 77.2 | 35.3 | –54.3% |
| Marketable securities | 0.2 | 9.6 | –5.9% |
| Cash in hand, cash in banks | 26.6 | 41.6 | 56.2% |
| Other assets | 1.4 | 1.0 | –28.7% |
| Total assets | 305.2 | 282.0 | –7.6% |
| Equity | 183.4 | 186.1 | 1.5% |
| Provisions | 16.5 | 23.2 | 41.0% |
| Liabilities | 105.4 | 72.7 | –31.0% |
| Total equity and liabilities | 305.2 | 282.0 | –7.6% |
Total assets went down compared to December 31, 2014 by 7.6% to 282.0 million Euro as of December 31, 2015 (December 31, 2014: 305.2 million Euro). As for assets, this is accounted for essentially by a decrease in receivables and other assets in the year 2015 by 41.9 million Euro, compensated for in part by the increase in liquid assets in the amount of 15.0 million Euro. As for equity and liabilities, the decrease in liabilities by 32.6 million Euro due to repaid loans is the main reason for the lower total. This partly balances the increase in provisions by 6.7 million Euro. The decrease in receivables and liabilities is connected to the Group internal offsetting of receivables and liabilities.
The legal basis for a distribution is represented by the retained earnings of Elmos Semiconductor AG determined in accordance with financial accounting provisions under commercial law. The financial statements report retained earnings of 76.9 million Euro. Management Board and Supervisory Board propose to the Annual General Meeting of May 11, 2016 to use the retained earnings of fiscal year 2015 for the distribution of a dividend of 0.33 Euro per no-par share entitled to dividend and to carry forward the remaining amount to new accounts.
In January 2016 Elmos Semiconductor AG acquired shares in a company concerned with sensor technology. The company will be included in the consolidated financial statements of Elmos as an associated company starting in fiscal year 2016.
There have been no other reportable events or transactions of special significance after the end of the fiscal year.
Opportunities are identified and analyzed in the Group. We constantly monitor our markets and are thus able to detect market opportunities that become available. We are also in continuous dialogue with customers in order to identify trends and developments early on.
Just like risk management, the management of opportunities is aimed at increasing the shareholder value systematically and continuously. A quantification of opportunities is not possible as they are usually affected by external general conditions and influencing factors as well as complex interrelations which are controllable by Elmos only to a limited extent.
The economic framework influences our assets and liabilities, financial position, and profitability. Our outlook for 2016 and our medium-term prospects are based on the expectation that the future general economic conditions will correspond to our presentation in the outlook report that is part of this joint management report.
Macroeconomic opportunities open up for Elmos because we operate in growth markets. Most notable among those is the Asian market that has shown a sustained positive development for us. We want to participate in growth and increase our market shares. At the same time we assert our position as a market leader for automotive semiconductors in certain applications in the established markets. Moreover, we consider the U.S.A. a market of disproportionate opportunity for us because of the low degree of penetration at present.
Industry specific opportunities become available to us as a consequence of the following megatrends: driver assistance up to autonomous driving, combined with many add-on systems for active and passive safety, less emissions up to electromobility, and efficiency improvements, e.g. with the interior and exterior use of LEDs, as well as networking these systems. To our industrial customers we also want to offer solutions that will help them assume market leading positions.
Business strategy opportunities open up for Elmos due to innovation leadership. In the segment of sensors, we offer innovative or advanced high-quality products in the technology fields of ultrasonics, sensor analysis, pressure sensorics, and optical sensors/HALIOS®. With new and efficient systems for electric motor control (stepper, DC and BLDC motors) we can generate further opportunities in the markets and with customers. With new products we seek to continuously increase the efficiency of the systems we bring to market in the field of embedded solutions (interface products and LED voltage supply components, among others).
In addition to our core business of customer specific semiconductors for the automotive industry, the ongoing implementation of our strategy provides opportunities to the Company. These exist in the increased development, production and sale of application specific semiconductors (ASSPs). Furthermore, we put a lot of effort and commitment into seizing these opportunities by consistently investing in research and development. If our research and development makes better progress than currently expected, this might have the effect that more new and improved products will be brought to market, that they are better received than expected, or that new products will be available sooner than scheduled.
Elmos also sees an opportunity in the expansion of its product portfolio. This can take place by the convenient enhancement through acquisitions of third-party entities or technologies and thus open up new markets as well.
Our employees are the core of the Company. We are able to generate sustained growth and safeguard our Company's profitability only with motivated and committed colleagues. With various efforts we aim at increasing our employees' performance, their know-how, and not least their commitment to the Company.
Elmos markets its products and services according to the respective application, region, and industry. Within the regions we focus our sales capacities on the markets that show the largest business and sales potential. We invest in the development of our sales division and application support close to the customer in order to distribute our solutions effectively and to intensify our customer relationships.
We also seize our opportunities beyond the scope mentioned above: We are working tirelessly at the optimization of our processes in development, production, technology, quality, administration, and logistics. We invest throughout the Group in measures for efficiency increase and in projects for environmentally friendly power generation. In addition to that, we provide a considerable part of our energy demand by ourselves.
The Elmos management is confident that the Group's profitability presents a solid foundation for our future business performance and provides the necessary resources in order to pursue and seize the opportunities that become available to the Group.
If we make better progress with these measures and methods than expected at present, this might have a positive effect on our financial, profit and economic position and make us exceed our forecast and our mediumterm prospects. Particularly the macroeconomic, industry specific and business strategy opportunities have considerable potential to make a positive contribution to the financial, profit and economic position.
The following explanations also include information in accordance with Sections 289 (5) and 315 (2) no. 5 HGB (Commercial Code) as well as the explanatory report on the key features of the accounting-related internal control and risk management system.
Elmos comprises the measures for risk management as well as early risk detection in the Company in an integrated risk management system. This system focuses on safeguarding the Company's continued existence and increasing the shareholder value systematically and continuously. The management system complies with the legal stipulations for an anticipatory risk detection system and the principles defined by the German Corporate Governance Code.
Based on the internal control and risk management system, risks and opportunities are routinely identified and their effects on the Company's targets are analyzed. The Group deliberately assumes certain risks in areas of its competence if adequate yields can be expected at the same time. Beyond that, major risks are avoided if possible. It is altogether assured that the Group analyzes and assesses any known risks taken and, insofar as possible, develops adequate countermeasures.
Binding standards and rules have been defined for risk identification and risk management. Speculative transactions or other actions of a speculative nature are generally prohibited. The observance of these principles is monitored regularly. The respective operating superiors are directly responsible for the early detection and control of risks. The next levels of seniority see to the management of risks. The Management Board assumes overall responsibility for the internal control and risk management system in the Group. In a wellestablished process, the divisions report on the current state of material risks through risk inventory with defined gradual thresholds. Risks are valuated and classified according to the probability of occurrence and the estimated amount of loss. Depending on estimated probability of occurrence and probable amount of loss in consideration of our business as well as our financial, profit and economic position, we classify risks according to the matrix presented on the next page and accordingly assess them as "very low", "low", "low to medium", "medium", "medium to high", "high", or "very high".
very low low to medium medium medium to high high very high low
Individual risks are aggregated in risk groups. Risk assessment is reported for these risk groups; it represents the overall assessment of the evaluation of the large number of individual risks included in each of the risk groups. The respective risk group contains individual risks with higher or lower estimated amounts of loss and/or higher or lower probability of occurrence than reflected in the overall assessment reported for the risk group. That being said, none of the risk groups contain any individual risk attributable to the category "very high", i.e. a risk that carries a potential loss amount of "more than 25 million Euro" and a probability of occurrence of "at least once within two years".
Measures for risk reduction are listed for each identified risk and they are regularly discussed with the responsible executives in consideration of early warning indicators. Data relating to material risks for the Group are systematically processed in a transparent manner and presented to the Management Board and the Supervisory Board of Elmos. Ad hoc risks and damages are communicated immediately and outside the usual reporting channels in case of urgency. The continuous refinement of instruments and methods for risk detection and risk management is an ongoing process which is regularly reviewed for necessary enhancement and sources of error. The risk management system fulfills the requirements of Section 91 (2) AktG (Stock Corporation Act) and has been scrutinized by the auditing firm for compliance with the regulations of the Stock Corporation Act and found qualified for detecting developments that could jeopardize the Company's continued existence at an early stage.
The internal control system consists of a number of structures and processes for risk control with the aim of identifying risks as well as containing known risks and reflecting them in the consolidated financial statements. It contains the principles, processes and measures introduced by management, oriented toward the organizational implementation of the management's decisions for safeguarding the efficiency and economy of business activity, the reliability and the truth and fairness of internal and external accounting, and compliance with the applicable legal stipulations. Structures and processes are adapted to recent internal and external developments at regular intervals.
With respect to the financial accounting process of the consolidated companies and the Group, structures and processes have been implemented for safeguarding the truth and fairness of the consolidated financial statements. The Management Board assumes overall responsibility for the internal control and risk management system including its focus on financial accounting. All the companies and the Group's divisions included in the consolidated financial statements are involved through the strictly defined organization of seniority levels and reporting.
The principles, the organizational structure, workflow management, and the processes of the internal control and risk management system with respect to financial accounting are regulated throughout the Group by specific guidelines and operating procedures that are adapted to internal and external developments whenever necessary. Key features of the internal control and risk management system with respect to financial accounting are (i) the identification of material areas of risk and monitored domains of relevance to financial accounting in the Group, (ii) examinations for monitoring the financial accounting process and its results, (iii) preventive control measures in finance and accounting and those areas where material information for the preparation of consolidated financial statements is generated, including defined authorization processes in relevant areas, and (iv) measures for the proper EDP-supported processing of items and data relating to the Group's financial accounting.
Essential elements of risk management and control in financial accounting are the unambiguous assignment of responsibility and examinations during the preparation of financial statements, transparent provisions by way of guidelines for accounting and the preparation of financial statements, appropriate regulations for access to EDP systems relevant to financial statements, and the unambiguous definition of responsibilities for the involvement of external experts. The four-eye principle and the separation of functions are also important control principles in the financial accounting process.
Summarizing the above information, it can be stated that the risk management and internal control system introduced by the Management Board of Elmos, particularly with respect to the financial accounting process, has proven efficient. Further information on the risk management system can be found in the notes to the consolidated financial statements
The willingness of our customers to use our products depends on the current economic, financial and political general conditions. Events such as a global economic crisis, political changes, fluctuations in national currencies, a potential breakup of the euro area, a recession in Europe or other parts of the world, a significant slowdown of growth in Asia (particularly in China), and an increase in sovereign debt could have a negative effect on the ability and willingness of our customers to use our products. Such events could weaken the demand for automobiles and thus for our semiconductors as well.
Social and political instability, for instance caused by acts of terror, war, or international conflicts, or by pandemics, natural disasters, or long-lasting strikes, could have negative effects on the respective national economy or even beyond that scope and therefore on our business, too.
The core business of Elmos is linked directly to the automotive industry's demand or rather its suppliers' demand for semiconductors. The majority of sales was generated with chips for automotive electronics in the past fiscal year 2015. On the one hand this demand depends on the number of cars produced, on the other hand it is governed by the lasting trend towards more electronics in the automobile. A collapse in car production and sales figures also represents a risk for Elmos as semiconductor supplier. The demand for semiconductors and sensors made by Elmos is also affected by the delivery capability of other suppliers as systems and cars can be manufactured only if all suppliers are capable of delivery.
The customer structure of Elmos indicates a certain degree of dependence on a few major suppliers to the automotive industry. However, it has to be taken into account that one customer usually purchases several products with different life cycles, often to be used for different car models, brands, and markets. By the increased commitment of Elmos to application specific standard products (ASSPs) over the past few years, this kind of customer dependence is reduced as such products can be marketed to several customers. On the other hand, the risk of replaceability increases as the competition may offer comparable products.
A large number of competitors in the semiconductor market for automotive applications offer products similar to the ones Elmos supplies, based on a similar technological foundation. Elmos also competes with large manufacturers for high-volume contracts and is thus exposed to corresponding pricing pressure.
The Company's highly development-intensive business activity leads to a clearly pronounced and very specific engineering know-how but not necessarily to patents. The consequence for Elmos, as for any other technology company, is an increased dependence on individual employees.
An important aspect of success in the market is the quality and availability of employees. There is the risk that qualified employees might leave the Company and no adequate replacements can be found in good time. There is also the risk that the Company might not be able to recruit qualified employees if new demand arises. This could affect the Company's development in a negative way. Elmos has therefore intensified its commitment to find suitable applicants for staff openings in the course of the past few years. Elmos is present at recruiting events, active on the Internet, cooperates with local high schools and other institutions of education, provides informative events and scholarships for college students, and offers professional training in many technical and commercial professions.
The market for Elmos products is characterized by the constant advancement and improvement of products. Therefore the success of Elmos is closely related to the ability to judge market trends and technological development correctly in order to develop innovative and complex products or successors of existing products efficiently, to introduce them to the market on time, and to see to it that these products are chosen by the customers. There is also the risk that products or entire application fields relevant to the sales of Elmos are replaced by new technologies either completely or partly so that Elmos cannot offer any competitive products in such fields anymore.
One-off development costs incurred for the customer specific development of products are usually paid for only in part by the customers. Those development costs not covered in advance must be amortized through the later volumes in series production. There is the risk that not amortized expenses for product developments that do not result in a supplier relationship will remain with the Company. Particularly with high-volume projects for which a greater number of suppliers are in competition, the customer is usually not willing to pay for development costs in advance but expects the supplier to pre-finance these expenses instead.
For product developments initiated by Elmos, e.g. all ASSPs, there are no binding customer orders so that Elmos bears the development costs. However, Elmos works together with a lead customer if possible in the development of ASSP components as well in order to increase the chances of success in the market.
The future success of Elmos also depends on the ability to develop or apply new development and production technologies. Elmos develops analog and digital semiconductor structures and functions for its self-developed modular high-voltage CMOS process technology and also develops products applying processes provided by foundries.
If Elmos ceases to be capable of developing, manufacturing and selling new products and product upgrades in the future, significant effects on the financial, profit and economic position will likely be the result.
The maximum default risk associated with the use of financial instruments in the Elmos Group is limited to the book values of the financial assets.
The allocation of financial resources to the subsidiary companies and investments results in an increased obligation to detect and, if necessary, to minimize potential risks by means of adequate controlling instruments and continuous target/actual analyses at the earliest possible stages. The implemented risk management and internal control system is constantly being expanded and improved for this purpose. In addition to that, the subsidiaries and investments are subject to routine reviews.
Due to the international scope of business activity and the Group's global structure, Elmos is exposed to risks and opportunities from fluctuating exchange rates. These result from operating receivables and payables, expected future cash flows from sales and costs in foreign currencies, capital expenditures, and financial transactions. For Elmos, opportunities and risks primarily result from price movements of the U.S. dollar. For controlling and containing the above-mentioned risks, Elmos applies different derivatives. Elmos also pursues the goal for the medium term to achieve a natural hedge, i.e. a balance between the inflow and outflow of foreign currency payments.
The raw materials Elmos needs for manufacturing are available worldwide from different suppliers in part, yet controlled by monopolists in some cases. With regard to assembly, a certain dependence on individual Far Eastern partners is typical of the trade. Elmos has spread this risk by cooperating with several partners. The same applies for cooperation with foundries. Due to past supply bottlenecks, also typical for the industry, the commitment to regional risk distribution was intensified and the number of potential partners was increased accordingly. There is a tendency among the machine suppliers towards an oligopoly, limiting the negotiating power of Elmos.
The products manufactured by Elmos are integrated as components into complex electronic systems. Defects or malfunctions of the semiconductors made by Elmos or of the electronic systems into which they are integrated can be directly or indirectly damaging to the property, health, or lives of third parties. In most cases Elmos cannot completely exclude its liability to customers or third parties in its sales contracts.
Elmos consistently follows a zero-error strategy and constantly invests in the detection and avoidance of sources of error and defects. In order to minimize potential sources of error with respect to safety-relevant components for vehicles, Elmos has introduced a development process in accordance with ISO 26262 (functional safety), which has also been audited already. The semiconductor chips are tested extensively in production as well, usually in view of automotive applications, with regard to quality and functionality. Even though the Company applies elaborate test procedures before commencing delivery of its products, product defects might still show only on the occasion of installation or the end consumer's use of the product. If such product defects materialize, expensive and time-consuming product modifications might ensue and further liability claims might be raised.
At present there are no legal disputes whose outcome might have a material effect on the financial, profit and economic position. However, it cannot be ruled out that it might come to such litigations in the future. Legal disputes might arise from business operations or in matters of property rights or trademarks. Depending on risk assessment, adequate provisions are made for legal risks in the statement of financial position as a preventive measure; recognition and measurement find entry in the consolidated financial statements in accordance with IAS 37. As the results of lawsuits cannot be predicted, expenses may incur that might have a material effect on our business and might exceed the respective provisions made.
For Elmos as for other globally operating companies, the reliability and safety of the information technology (IT) applied are of great importance. This applies increasingly to the utilization of IT systems in support of operational processes as well as to the support of internal and external communication. Despite all technical precaution, any serious failure of these systems can lead to data loss and/ or the disturbance of production or the interference with operational processes.
According to the assessment of Elmos, the risk of the destruction of production facilities by fire or other disasters is a material operational risk capable of significantly damaging the development of the Group and jeopardizing the Company's continued existence, in addition to the operational risks already described and explained. Even though the risk of business interruption by such events is adequately covered by insurance, a significant threat of losing key customers remains in such a case. This risk cannot be insured against.
Business interruption could also occur as a result of power outage. The production facilities are prepared for short-term power failures as far as possible. The risk of business interruption is reduced by the fact that Elmos manufactures semiconductors at various locations. Furthermore, Elmos obtains processed wafers from foundries.
The usual insurable risks such as fire, water, storm, theft, third-party liability, and costs of a possible recall action are adequately covered by insurance. However, it cannot be ruled out that the costs of a potential recall might exceed the maximum amount covered. Further typically insurable risks capable of significantly damaging the development of the Group or jeopardizing its continued existence are not discernable at present.
Elmos consolidates and aggregates all risks reported by the various Company divisions and functions in accordance with the Group-wide control and risk management system. Risks are analyzed by applying state-of-the-art analysis technology; however, individual risks might cause considerable damage in extreme cases. Such a scenario is neither foreseeable nor can it be ruled out. Apart from that it must be noted that the occurrence of an individual risk might have material negative effects on the Company's financial, profit and economic position even without escalating to extremes.
The above-mentioned risks are assessed by management for potential amounts of loss and probability of occurrence according to the respective risk category as stated. It must be stated that some categories contain risks that pose potential threats to the Company's continued existence; however, those risks usually carry a relatively low probability of occurrence. As a consequence, no individual risks are currently assessed as belonging to the categories for both the highest amount of loss and the highest probability of occurrence (i.e. no risk assessment as "very high").
The International Monetary Fund (IMF) sees the world economy exposed to great challenges in 2016. Therefore the IMF has reduced its 2016 forecast to 3.4% growth (as of January 2016). This is 0.2% points less than still assumed in October 2015. Expectations for growth seem to be sagging, according to the IMF's chief economist. Currently the IMF sees the largest risks for growth in the economic development of China, the tightening monetary policy in the U.S.A. combined with a strong U.S. dollar, and in a possible escalation of the existing geopolitical tensions.
Especially the slowdown in China's economic growth strongly affects prospects. The IMF assumes dropping growth rates for the Chinese economy from 7.4% in 2014 and 6.9% in 2015 to 6.3% in 2016.
Both IMF and the Bundesbank anticipate a positive development for Germany. The Fund expects 1.7% growth in Germany. This indicates a slightly faster growth compared to the previous forecast. The Bundesbank predicts similar growth at an increased economic output of 1.8% compared to the previous year and also additional potential: In the course of the year 2016 the German economy might pick up even more speed, according to the Bundesbank in December 2015.
| Performance of gross domestic product1 | 2016 forecast |
|---|---|
| Worldwide | +3.4% |
| Europe | +1.7% |
| Germany | +1.7% |
| China | +6.3% |
| U.S.A. | +2.6% |
| Development of new car registrations | |
| Worldwide2 | +2% |
| Europe3 | +2% |
| Germany2 China4 |
0% +5.4% |
| Performance of automotive semiconductor market5 | ø2016-2021 |
|---|---|
| Worldwide (average in the period from 2016 to 2021) | +4.5% |
| 1 Source: IWF | |
| 2 Source: VDA |
|
| 3 Source: ACEA | |
Source: IHS 5 Source: ZVEI
For the global automotive market in 2016, the German Association of the Automotive Industry (VDA; German: Verband der Automobilindustrie) anticipates little growth of 2% to 78.1 million new registrations. The fight against terror, the economic risks in emerging countries such as Russia and Brazil, and the political tensions in the Middle East darken the moods of the carmakers, according to the VDA.
No growth is predicted for the car market in Germany in 2016. Both Central Association of the German Automobile Industry as well as VDA anticipate 3.2 million new car registrations for 2016 (2015: 3.2 million new registrations). For Europe, European manufacturers' association ACEA (French: Association des Constructeurs Européens d'Automobiles) expects an increase in new registrations by 2% to roughly 14 million vehicles. As reasons for this little growth, the association cites e.g. the weak economic activity in the region and concerns for security. Especially in the major Western European markets such as Spain, Great Britain, France, and Italy, growth is supposed to slow down.
The market research company IHS (Information Handling Services) anticipates a 5.4% gain in new registrations for China. This forecast falls significantly short of the increase achieved in 2015 at about 9%.
Due to the high level of new registrations in the U.S.A. of some 17.4 million light vehicles in 2015, the VDA assumes a saturated market for 2016 and expects a low increase by 1% to 17.5 million new vehicles.
The uncertainty with respect to the global semiconductor market in 2016 is high. This reflects in the margin of available forecasts. According to the market research company IHS Technology, the market is supposed to shrink by 0.4%. The German Electrical and Electronic Manufacturers' Association (ZVEI; German: Zentralverband Elektrotechnik- und Elektronikindustrie), however, assumes an increase in the worldwide semiconductor market of roughly 2%. With respect to the product categories, some memory types are expected to record losses of more than 9%, according to IHS; microprocessors are supposed to register a sales loss in excess of 5% in 2016 compared to 2015. The market researchers anticipate a positive trend for optical components (+3.8%), analog ICs (+3.4%), and sensors (+2.8%).
For the worldwide automotive semiconductor market, the ZVEI expects an average annual growth of roughly 4.5% for the next five years. Today innovation in carmaking usually is not based on automobile technology anymore but driven to 80% by microelectronics and software, according to the ZVEI.
The market researchers of IHS expect the market for automotive MEMS to increase at an average annual growth rate of 3.4% over the period from 2014 to 2021, according to a survey of June 2015.
We want to achieve profitable growth throughout our entire product portfolio. As in the previous years, the emphasis is placed on the long-term increase in sales, EBIT, and (adjusted) free cash flow. Customer relationships of many years solidly based on trust provide the foundation of our business performance. Partnerships with new customers are intended to open additional opportunities.
We will continue our strategy for long-term profitable growth in 2016:
-> We want our employees to develop themselves professionally and personally and to have input in a corporate culture oriented towards performance and development. We also want to recruit new young professionals so that we will remain capable of applying our know-how in all areas and enhancing it.
Based on currently available information, the Management Board presents the following outlook for the full year 2016. The forecasts for the automotive market in Germany and Europe as a whole are modest: No or little growth is expected. And only little growth or rather a considerable slowdown in growth is predicted for other important regional markets such as the U.S.A. or China.
Even though we regard the medium and long-term growth prospects for automotive electronics as positive and market dynamics still as high, the year 2016 is dominated by difficult signals. The Asian markets, particularly China, the political developments in the Middle East, and the exchange rates and the responses of the central banks remain determining factors. These prospects influence our sales forecast for 2016.
Based on internal and external assessments of the market, Elmos expects the following results for sales and EBIT margin.
Elmos expects an increase in sales in 2016 of 2% to 6% compared to 2015. We also assume we will be able to further expand the strength of business operations. However, heavier burdens by the currently stronger U.S. dollar than in the previous year will have a negative effect on our earnings. In addition to that, the volume increase necessary for realizing efficiency gains will be relatively low in 2016. We therefore anticipate an EBIT margin of roughly 10% for 2016.
The two segments Semiconductor and Micromechanics will make contributions to the increase in sales and EBIT in a similar way.
Due to the focus on the increasing implementation of the fab lite strategy over the past few years, a significant expansion of in-house frontend capacity is not on the agenda for the time being. This will lead to lower capital expenditures in this area than in previous years so that capital expenditures for intangible assets and property, plant and equipment are expected to come to no more than 12% of sales in 2016, as compared to the previous target of up to 15% of sales. Capital expenditures will concern both segments.
We expect Elmos to generate a positive adjusted free cash flow in 2016 once again.
Free liquidity is scheduled to be utilized in part for the payment of a dividend. Supervisory Board and Management Board will propose to the Annual General Meeting in May 2016 the payment of a dividend, constant in comparison with the previous year, in the amount of 0.33 Euro per share.
| 2016 sales growth (vs. 2015) | 2% to 6% |
|---|---|
| EBIT margin (in % of sales) | Roughly 10% |
| Capital expenditures (in % of sales) | < 12% |
| Adjusted free cash flow | Positive |
Under the condition of an essentially unchanged general economic framework, it is expected that Elmos will show modest growth in the automotive semiconductor market in 2016. Electrification will continue in this market even if it stagnates. A positive development for Elmos is based on the success of our current and future customers as well as on our ability to sell our products to them. The international competition among suppliers to the auto industry is subject to ever increasing intensification. Effects from resulting market shifts or portfolio changes at our customers can hardly be predicted.
Our forecasts consider all events with a potential material effect on the business performance of the Elmos Group known at the time of the preparation of this report. The outlook is based among other factors on the assumptions for the economic development as described as well as the remarks included in the report on opportunities and risks. Expectations can be affected by market turbulence. The forecast is based on an exchange rate of 1.10 USD/EUR.
In this chapter, information required by takeover law as stipulated under Sections 289 (4), 315 (4) HGB (Commercial Code) is disclosed as of December 31, 2015 (also representing the explanatory report in accordance with Section 176 (1) sentence 1 AktG (Stock Corporation Act)).
As of December 31, 2015 the subscribed capital (share capital) of Elmos amounted to 19,941,864 Euro and was comprised of 19,941,864 no-par value bearer shares with a theoretical share in the share capital of 1 Euro each. Each share carries the same rights and grants one vote in the General Meeting. As of December 31, 2015 the Company held 214,587 treasury shares included in the abovementioned total number of issued shares. Treasury shares held by the Company on the day of the Annual General Meeting (AGM) are neither entitled to vote nor entitled to dividend.
We are not aware of any contractual limitations with regard to voting rights or the transfer of shares.
The following shareholdings are on record as of December 31, 2015:
| Entity's registered office/country | Euro/Shares | % |
|---|---|---|
| Weyer Beteiligungsgesellschaft mbH | ||
| Schwerte/Germany | 3,626,584 | 18.19 |
| Jumakos Beteiligungsgesellschaft mbH Dortmund/Germany |
2,983,600 | 14.96 |
| ZOE-VVG GmbH | ||
| Duisburg/Germany | 2,306,833 | 11.57 |
| Treasury shares | 214,587 | 1.08 |
| Shareholders <10% interest | 10,810,260 | 54.21 |
| 19,941,864 | 100.00 | |
More information on shareholder structure can be found in this Annual Report in the chapter "The Elmos share" starting on page 34.
Employees who hold shares in Elmos Semiconductor AG exercise their control rights just like other shareholders directly in accordance with legal stipulations and the Articles of Incorporation.
We refer to the respective legal stipulations for the appointment and dismissal of management board members (Sections 84, 85 AktG) and for amendments to the articles of incorporation (Sections 133, 179 AktG). The Company's Articles of Incorporation do not provide for supplementary provisions.
The Management Board is authorized to increase the Company's share capital up to and including May 16, 2016, subject to the Supervisory Board's consent, by up to 9,707,100 Euro, once or more than once, through the issue of new no-par value bearer shares against contributions in cash or in kind (authorized capital 2011/I). If the capital is increased against contributions in cash, subscription rights shall be granted to the shareholders. The shares may be taken over by banks under the obligation to offer them to the shareholders for subscription. However, the Management Board is authorized to exclude the shareholders' subscription rights, subject to the Supervisory Board's approval. The total of the shares issued according to this authorization against contributions in cash or in kind under exclusion of the shareholders' subscription rights must not exceed a proportionate amount of the share capital of 4,853,551 Euro. The Management Board is further authorized to determine all other rights attached to the shares as well as the particulars of the issue, subject to the Supervisory Board's consent.
The share capital is conditionally increased by up to 33,720 Euro (conditional capital 2009). The conditional capital increase serves the redemption of stock options issued to employees, executives and Management Board members of the Company as well as to employees and executives of affiliated companies up to and including May 5, 2014 on the basis of the authorization given by the AGM of May 6, 2009 (stock option plan 2009). The conditional capital increase is realized only insofar as options are issued within the scope of the Company's stock option plan 2009 in observance of the resolution of the AGM of May 6, 2009 and as these options are exercised by their owners within the exercise period insofar as no cash compensation is granted or treasury shares are utilized for payment. The new shares are entitled to dividend from the beginning of the fiscal year in which they come into being by the exercise of options.
The share capital is conditionally increased by up to 665,198 Euro (conditional capital 2010/I). The conditional capital increase serves the redemption of stock options issued to employees, executives and Management Board members of the Company as well as to employees and executives of affiliated companies up to and including May 3, 2015 on the basis of the authorization given by the AGM of May 4, 2010 (stock option plan 2010). The conditional capital increase is realized only insofar as options are issued within the scope of the Company's stock option plan 2010 in observance of the resolution of the AGM of May 4, 2010 and as these options are exercised by their owners within the exercise period insofar as no cash compensation is granted or treasury shares are utilized for payment. The new shares are entitled to dividend from the beginning of the fiscal year in which they come into being by the exercise of options.
The share capital is conditionally increased by up to 1,200,000 Euro (conditional capital 2015/I). The conditional capital increase serves the redemption of stock options issued to employees, executives and Management Board members of the Company as well as to employees and executives of affiliated companies up to and including May 7, 2020 on the basis of the authorization given by the AGM of May 8, 2015 (stock option plan 2015). The conditional capital increase is realized only insofar as options are issued within the scope of the Company's stock option plan 2015 in observance of the resolution of the AGM of May 8, 2015 and as these options are exercised by their owners within the exercise period insofar as no cash compensation is granted or treasury shares are utilized for payment. The new shares are entitled to dividend from the beginning of the fiscal year in which they come into being by the exercise of options. Deviating from this, the Management Board or, insofar as members of the Management Board are concerned, the Supervisory Board may determine that the new shares are entitled to dividend from the beginning of the fiscal year for which no resolution by the AGM on the appropriation of retained earnings has been adopted yet at the time of exercising stock options.
Further information can be found under notes 22 and 23.
The share capital is conditionally increased by up to 7,800,000 Euro (conditional capital 2015/II). The conditional capital increase is carried out only to the extent that the holders or creditors of convertible bonds or subscription warrants from option bonds, issued by Elmos or one of the Company's group companies within the meaning of Section 18 AktG until May 7, 2020 on the basis of the Management Board's authorization by the AGM of May 8, 2015 under agenda item 7, make use of their conversion or option privileges or fulfill their conversion obligations, or shares are supplied under tender rights unless other forms of performance are utilized for servicing. The new shares are issued at the conversion or option prices to be determined respectively in the terms and conditions of the convertible bonds or option bonds in accordance with the above-mentioned authorization resolution. The new shares are entitled to dividend from the beginning of the fiscal year in which they come into being by the exercise of conversion or option privileges or the fulfillment of conversion obligations. Deviating from this, the Management Board may determine that the new shares are entitled to dividend from the beginning of the fiscal year for which no resolution by the AGM on the appropriation of retained earnings has been adopted yet at the time of exercising conversion or option privileges or fulfilling conversion obligations, subject to the Supervisory Board's consent. The Management Board is authorized to determine the further particulars of the implementation of the conditional capital increase, subject to the Supervisory Board's consent.
More information can be found under note 22.
The Management Board is authorized by the AGM's resolution of May 8, 2015 to purchase the Company's shares up to and including May 7, 2020, subject to the Supervisory Board's consent. This authorization is limited to the purchase of shares in the total volume of up to 10% of the current share capital. The authorization may be exercised entirely or in several parts, once or more than once, and for one or more than one purpose within the scope of the aforementioned limitation. The purchase may be made at the stock exchange or through a public purchase bid tendered to all shareholders of the Company, or through purchasing from individual shareholders based on individual agreements, yet not from Weyer Beteiligungsgesellschaft mbH, ZOE-VVG GmbH, Jumakos Beteiligungsgesellschaft mbH, or other reportable entities or persons in accordance with Section 15a WpHG (Securities Trading Act). The authorization contains differentiating requirements for the separate purchase types, particularly with respect to the admissible purchase price.
| Authorized capital |
Conditional capital |
Repurchase of the Company's shares |
|---|---|---|
| 2011/I: 9,707,100 Euro up to and including May 16, 2016 |
2009: 33,720 Euro stock option plan 2009 up to and including May 5, 2014 |
up to 10% of the share capital up to and including May 7, 2020 |
| 2010/I: 665,198 Euro stock option plan 2010 up to and including May 3, 2015 |
||
| 2015/I: 1,200,000 Euro stock option plan 2015 up to and including May 7, 2020 |
||
| 2015/II: 7,800,000 Euro Option bonds or convertible bonds Up to and including May 7, 2020 |
There are no material agreements on the condition of a change of control as a result of a takeover bid.
Compensation agreements in case of a takeover bid In case of a change of control, the members of the Management Board are entitled to terminate their respective employment contracts within three months from the occurrence of a change of control with six-month notice to the end of the month and to resign from their duties as of the termination of their employment contracts. In case of the exercise of this right of termination, each Management Board member is entitled to compensation in the amount of the remuneration for two to three years, limited by the amount of the remuneration to be paid for the remaining term of the respective employment contract. Applicable is the remuneration amount paid during the last fiscal year prior to the occurrence of the change of control. The Company is also committed to compensation payments for the post-termination effects of non-competition clauses. In some cases provisions also govern the exercise of options and retirement provision in case of a change of control.
Total remuneration of the members of Management Board and Supervisory Board comprises a number of remuneration components. The details are explained in the remuneration report included in the corporate governance report, starting on page 26 of this Annual Report. The remuneration report, audited by the auditor, is part of the joint management report.
The statement on corporate governance pursuant to Section 289a HGB is part of the joint management report and can be found in the chapter "Corporate Governance" on page 27.
| Assets | Notes | 12/31/2015 thousand Euro |
12/31/2014 thousand Euro |
|---|---|---|---|
| Non-current assets | |||
| Intangible assets | 13 | 20,822 | 21,439 |
| Property, plant and equipment | 14 | 90,991 | 82,429 |
| Securities | 15 | 30,944 | 41,632 |
| Investments | 15 | 20 | 20 |
| Other financial assets | 20 | 3,627 | 4,147 |
| Deferred tax assets | 16 | 2,068 | 2,468 |
| Total non-current assets | 148,472 | 152,136 | |
| Current assets | |||
| Inventories | 17 | 57,168 | 53,217 |
| Trade receivables | 18 | 32,811 | 35,022 |
| Securities | 15 | 9,584 | 10,226 |
| Other financial assets | 20 | 1,796 | 3,640 |
| Other receivables | 20 | 6,875 | 8,078 |
| Income tax assets | 20 | 86 | 562 |
| Cash and cash equivalents | 19 | 50,000 | 32,520 |
| 158,320 | 143,265 | ||
| Non-current assets available for sale | 21 | 93 | 0 |
| Total current assets | 158,413 | 143,265 | |
| Total assets | 306,886 | 295,400 |
| Equity and liabilities | Notes | 12/31/2015 thousand Euro |
12/31/2014 thousand Euro |
|---|---|---|---|
| Equity | |||
| Equity attributable to owners of the parent | |||
| Share capital | 22 | 19,942 | 19,860 |
| Treasury shares | 22 | –215 | –281 |
| Additional paid-in capital | 22 | 90,956 | 89,657 |
| Surplus reserve | 102 | 102 | |
| Other equity components | 22 | –1,032 | –2,366 |
| Retained earnings | 108,778 | 99,083 | |
| 218,531 | 206,055 | ||
| Non-controlling interests | 860 | 844 | |
| Total equity | 219,391 | 206,898 | |
| Liabilities | |||
| Non-current liabilities | |||
| Provisions for pensions | 24 | 496 | 599 |
| Financial liabilities | 25 | 36,639 | 37,076 |
| Other liabilities | 26 | 2,458 | 3,878 |
| Deferred tax liabilities | 16 | 1,684 | 2,874 |
| Total non-current liabilities | 41,277 | 44,427 | |
| Current liabilities | |||
| Provisions | 24 | 14,705 | 12,811 |
| Income tax liabilities | 26 | 6,889 | 2,565 |
| Financial liabilities | 25 | 185 | 333 |
| Trade payables | 27 | 21,810 | 21,856 |
| Other liabilities | 26 | 2,629 | 6,509 |
| Total current liabilities | 46,217 | 44,075 | |
| Total liabilities | 87,495 | 88,502 | |
| Total equity and liabilities | 306,886 | 295,400 | |
| for the year ended December 31 | Notes | 2015 | 2014 |
|---|---|---|---|
| thousand Euro | thousand Euro | ||
| Sales | 5 | 219,626 | 209,517 |
| Cost of sales | 6 | –128,021 | –118,075 |
| Gross profit | 91,605 | 91,442 | |
| Research and development expenses | 6 | –37,075 | –36,101 |
| Distribution expenses | 6 | –19,030 | –19,009 |
| Administrative expenses | 6 | –17,414 | –16,921 |
| Operating income before other operating expenses (–)/income | 18,085 | 19,412 | |
| Foreign exchange gains/losses (–) | 9 | 2,293 | 2,433 |
| Other operating income | 10 | 5,973 | 3,066 |
| Other operating expenses | 10 | –1,820 | –2,333 |
| Earnings before interest and taxes (EBIT) | 24,532 | 22,577 | |
| Finance income | 8 | 2,279 | 2,315 |
| Finance costs | 8 | –2,682 | –1,796 |
| Earnings before taxes | 24,129 | 23,097 | |
| Income tax | |||
| Current income tax | 11 | –8,306 | –4,410 |
| Deferred tax | 11 | 837 | 45 |
| –7,469 | –4,365 | ||
| Consolidated net income | 16,660 | 18,732 | |
| Consolidated net income attributable to | |||
| Owners of the parent | 16,180 | 18,268 | |
| Non-controlling interests | 480 | 463 | |
| 16,660 | 18,732 | ||
| Earnings per share | Euro | Euro | |
| Basic earnings per share | 12 | 0.82 | 0.94 |
| Fully diluted earnings per share | 12 | 0.81 | 0.92 |
| for the year ended December 31 | Notes | 2015 thousand Euro |
2014 thousand Euro |
|---|---|---|---|
| Consolidated net income | 16,660 | 18,732 | |
| Other comprehensive income | |||
| Items to be reclassified to the income statement in later periods including respective tax effects |
|||
| Foreign currency adjustments without deferred tax effect | 313 | 347 | |
| Foreign currency adjustments with deferred tax effect | 1,563 | 1,728 | |
| Deferred tax (on foreign currency adjustments with deferred tax effect) |
22 | –397 | –436 |
| Value differences in hedges | 22 | 463 | 83 |
| Deferred tax (on value differences in hedges) | 22 | –152 | –27 |
| Changes in market value of available-for-sale financial assets | 22 | –806 | 17 |
| Deferred tax (on changes in market value of available-for-sale financial assets) |
22 | 264 | –6 |
| Items not to be reclassified to the income statement in later periods including respective tax effects |
|||
| Actuarial gains/losses (–) from pension plans | 22 | 35 | –316 |
| Deferred tax on actuarial gains/losses (–) from pension plans | 22 | –6 | 159 |
| Other comprehensive income after taxes | 1,277 | 1,548 | |
| Total comprehensive income after taxes | 17,937 | 20,280 | |
| Total comprehensive income attributable to | |||
| Owners of the parent | 17,513 | 19,822 | |
| Non-controlling interests | 424 | 458 | |
| 17,937 | 20,280 |
| for the year ended December 31 | Notes | 2015 thousand Euro |
2014 thousand Euro |
|---|---|---|---|
| Cash flow from operating activities | |||
| Consolidated net income | 16,660 | 18,732 | |
| Depreciation and amortization | 7 | 28,775 | 25,623 |
| Gains (–)/Losses from disposal of assets | –464 | 1,869 | |
| Financial result | 8 | 403 | –519 |
| Other non-cash income (–)/expense | –1,748 | –623 | |
| Current income tax | 11 | 8,306 | 4,410 |
| Expenses for stock options/stock awards/share matching | 253 | 340 | |
| Changes in pension provisions | 24 | –68 | –209 |
| Changes in net working capital: | |||
| Trade receivables | 18 | 2,211 | 3,882 |
| Inventories | 17 | –3,951 | –12,737 |
| Other assets | 20 | 3,047 | –1,655 |
| Trade payables | 27 | –340 | 294 |
| Other provisions and other liabilities | 921 | 4,361 | |
| Income tax payments | –3,506 | –4,280 | |
| Interest paid | 8 | –2,223 | –1,796 |
| Interest received | 8 | 2,050 | 2,272 |
| Cash flow from operating activities | 50,327 | 39,964 |
| for the year ended December 31 | Notes | 2015 | 2014 |
|---|---|---|---|
| thousand Euro | thousand Euro | ||
| Cash flow from investing activities | |||
| Capital expenditures for intangible assets | 13 | –4,858 | –1,853 |
| Capital expenditures for property, plant and equipment | 14 | –33,8481 | –28,659 |
| Disposal of non-current assets held for trading | 21 | 0 | 2 |
| Payments-in from acquisition of shares in subsidiaries | 33 | 0 | 547 |
| Disposal of non-current assets | 4,128 | 1,145 | |
| Disposal of securities/Payments for (–) securities | 15 | 10,297 | –2,651 |
| Payments for other non-current financial assets | 20 | –343 | –551 |
| Cash flow from investing activities | –24,624 | –32,020 | |
| Cash flow from financing activities | |||
| Repayment (–) of non-current liabilities | –437 | –415 | |
| Repayment (–)/Borrowing of current liabilities to banks | –148 | 29 | |
| Share-based payment/Issue of treasury shares | 587 | 336 | |
| Capital increase from conditional capital | 22 | 627 | 1,082 |
| Dividend distribution | –6,475 | –4,844 | |
| Distribution/Other Payments to non-controlling | |||
| shareholders | –3,408 | –667 | |
| Other changes | –29 | –142 | |
| Cash flow from financing activities | –9,283 | –4,621 | |
| Increase in cash and cash equivalents | 16,420 | 3,323 | |
| Effects of exchange rate changes on cash and cash | |||
| equivalents | 1,060 | 1,247 | |
| Cash and cash equivalents at beginning of reporting period | 19 | 32,520 | 27,949 |
| Cash and cash equivalents at end of reporting period | 19 | 50,000 | 32,520 |
Includes capital expenditures from the repurchase of land and building from prematurely terminated lease contracts in the amount of approx. 14 million Euro
| Equity attributable to owners of the parent | Non controlling interests |
Group | ||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Other equity components | ||||||||||||||
| Notes | Shares | Share capital |
Treasury shares |
Additional paid-in capital |
Surplus reserve |
Provisions for available-for-sale financial assets |
Hedges | Foreign currency translation |
Unrealized actuarial gains/ losses |
Retained earnings |
Total | Total | Total | |
| thousand | thousand Euro |
thousand Euro |
thousand Euro |
thousand Euro |
thousand Euro |
thousand Euro |
thousand Euro |
thousand Euro |
thousand Euro |
thousand Euro |
thousand Euro |
thousand Euro |
||
| January 1, 2014 | 19,675 | 19,675 | –328 | 88,161 | 102 | 78 | –1,119 | –2,191 | –688 | 86,868 | 190,559 | 2,127 | 192,686 | |
| Consolidated net income | 18,268 | 18,268 | 463 | 18,732 | ||||||||||
| Other comprehensive income for the period | 22 | 11 | 56 | 1,644 | –157 | 1,554 | –5 | 1,548 | ||||||
| Total comprehensive income | 11 | 56 | 1,644 | –157 | 18,268 | 19,822 | 458 | 20,280 | ||||||
| Share-based payment/Issue of treasury shares | 22 | 47 | 289 | 336 | 336 | |||||||||
| Capital increase from conditional capital | 22 | 185 | 185 | 897 | 1,082 | 1,082 | ||||||||
| Transaction costs | 22 | –30 | –30 | –30 | ||||||||||
| Adjustment to put option of non-controlling shareholders | 392 | 392 | 392 | |||||||||||
| Increase of majority interest | –1,415 | –1,415 | –1,585 | –3,000 | ||||||||||
| Changes in basis of consolidation | 0 | 483 | 483 | |||||||||||
| Dividend distribution | –4,844 | –4,844 | –4,844 | |||||||||||
| Distribution to non-controlling shareholders | 0 | –667 | –667 | |||||||||||
| Expenses for stock options/stock awards/share matching | 340 | 340 | 340 | |||||||||||
| Other changes | –187 | –187 | 28 | –160 | ||||||||||
| December 31, 2014 | 19,860 | 19,860 | –281 | 89,657 | 102 | 89 | –1,063 | –547 | –845 | 99,083 | 206,055 | 844 | 206,898 | |
| January 1, 2015 | 19,860 | 19,860 | –281 | 89,657 | 102 | 89 | –1,063 | –547 | –845 | 99,083 | 206,055 | 844 | 206,898 | |
| Consolidated net income | 16,180 | 16,180 | 480 | 16,660 | ||||||||||
| Other comprehensive income for the period | 22 | –541 | 311 | 1,535 | 29 | 1,334 | –56 | 1,277 | ||||||
| Total comprehensive income | –541 | 311 | 1,535 | 29 | 16,180 | 17,513 | 424 | 17,937 | ||||||
| Share-based payment/Issue of treasury shares | 22 | 66 | 521 | 587 | 587 | |||||||||
| Capital increase from conditional capital | 22 | 82 | 82 | 545 | 627 | 627 | ||||||||
| Transaction costs | 22 | –19 | –19 | –19 | ||||||||||
| Dividend distribution | –6,475 | –6,475 | –6,475 | |||||||||||
| Distribution to non-controlling shareholders | 0 | –408 | –408 | |||||||||||
| Expenses for stock options/share matching | 253 | 253 | 253 | |||||||||||
| Other changes | –9 | –9 | –9 | |||||||||||
| December 31, 2015 | 19,942 | 19,942 | –215 | 90,956 | 102 | –452 | –752 | 988 | –816 | 108,778 | 218,531 | 860 | 219,391 |
Elmos Semiconductor AG ("the Group", "the Company", or "Elmos") has its registered office in Dortmund (Germany) and is entered in the register of companies kept at the District Court (Amtsgericht) Dortmund, section B, under no. 13698. The Articles of Incorporation are in effect in the version of March 26, 1999, last amended by resolution of the Annual General Meeting of May 8, 2015 and edited by resolution of the Supervisory Board of December 18, 2015.
The Company's business is the development, manufacture and distribution of microelectronic components and system parts (application specific integrated circuits or, in short: ASICs, and application specific standard products or, in short: ASSPs) and technological devices with similar functions. The Company may conduct all transactions suitable for serving the object of the business directly or indirectly. The Company is authorized to establish branches, acquire or lease businesses of the same or a similar kind or invest in them, and conduct all business transactions that are beneficial to the Articles of Association. The Company is authorized to conduct business in Germany as well as abroad.
In addition to its domestic branches, the Company maintains sales companies and locations in Europe, Asia, South Africa and the U.S.A. and cooperates with other German and international companies in the development and manufacture of semiconductor chips.
The Company is a listed stock corporation and its shares are traded in the Prime Standard in Frankfurt/Main.
The address of the Company's registered office is: 44227 Dortmund/Germany, Heinrich-Hertz-Straße 1.
The consolidated financial statements have been prepared in Euro. Values stated in "thousand Euro" have been rounded up or down to thousand Euro according to financial rounding.
The consolidated financial statements of Elmos have been prepared in accordance with the International Financial Reporting Standards (IFRS) as applicable in the European Union (EU) and the supplementary applicable regulations of German commercial law as stipulated by Section 315a (1) HGB (Commercial Code). All of the IFRS released by the International Accounting Standards Board (IASB) in effect at the time of the preparation of the consolidated financial statements and applied by Elmos were endorsed by the European Commission for adoption in the EU.
The consolidated statement of financial position, the consolidated income statement, and the consolidated statement of comprehensive income have been prepared according to IAS 1 "Presentation of Financial Statements". Individual items have been summarized for improved clarity; those items are explained in the notes.
The consolidated financial statements have been released for publication by the Management Board in March 2016.
The most important forward-looking assumptions as well as other material sources of estimate uncertainty identified as of the end of the reporting period on the basis of which there is a considerable risk that a material adjustment of the book values of assets and liabilities will become necessary within the next fiscal year are explained in the following. Beyond the scope of the areas described below, assumptions and estimates are also necessary for valuation allowances for bad debt as well as for contingent liabilities and other provisions. In accordance with IAS 8 – Accounting Policies, Changes in Accounting Estimates and Errors, changes in estimates are recognized in profit or loss as of the date on which new information becomes available. Changes in estimates did not result in material consequences in the reporting period nor are such effects expected for future reporting periods.
The Group reviews goodwill for impairment at least once a year. This requires an estimate of the values in use of the cash-generating units goodwill is allocated to. For an assessment of the value in use, the Company's management has to estimate the respective cash-generating unit's probable future cash flows and also choose an adequate discount rate in order to determine the net present value of these cash flows.
With respect to the assumptions on the basis of which the value in use is determined, uncertainties of estimates especially relate to gross margins and discount rates. Gross margins have been estimated on the basis of historical values of past years in consideration of expected changes in demand and increases in efficiency. Discount rates reflect current market assessments and have been estimated on the basis of customary weighted average cost of capital.
More details can be found under notes 3 and 13.
Deferred tax assets are recognized for all unutilized tax loss carry-forward to the extent it appears probable that taxable income will be available so that loss carry-forward can in fact be utilized. For the determination of the amount of deferred tax assets, a material discretionary decision made by the Company's management is required, based on the expected time of occurrence and the amount of taxable future income as well as future tax planning strategies. More details can be found under note 16.
Expenses for defined benefit pension plans are determined according to actuarial calculations. The actuarial evaluation is made on the basis of assumptions with regard to discount rates, expected returns on pension plan assets, future raises of wages and salaries, mortality, and increased future retirement pensions. Due to the long-term orientation of those plans, such estimates are subject to material uncertainty. More details can be found under note 24.
Development expenses are capitalized in accordance with the accounting policies and valuation methods described under note 3 at the best possible estimates. More details can be found under note 13.
The accounting policies applied generally correspond to the policies applied in the previous year. Exceptions were the following standards subject to first-time mandatory application for fiscal year 2015.
With IFRIC 21 – Levies, the IASB issued an interpretation of IAS 37 – Provisions, Contingent Liabilities and Contingent Assets in May 2013. This interpretation governs the accounting treatment of public levies that are not income taxes in accordance with IAS 12 and particularly clarifies the circumstances under which an obligation to pay such levies must be recognized as a liability. The interpretation is subject to application for fiscal years beginning on or after June 17, 2014. This new interpretation had no effect on the Group's financial reporting.
The Improvements to IFRS 2011-2013 represent a collection of amendments released in December 2013, carrying amendments to several IFRS. It contains the following individual amendments:
-> IFRS 1: Clarification that a first-time IFRS adopter may choose to apply new, non-mandatory IFRS if early adoption is permitted;
This collection of amendments is subject to mandatory application for fiscal years beginning on or after July 1, 2014; early adoption is permitted. First-time application of this collection of amendments had no effect on the consolidated financial statements..
The IASB has released the following standards and interpretations which have already been incorporated into EU law within the framework of the comitology procedure but were not subject to mandatory application in fiscal year 2015 yet. The Group does not apply these standards and interpretations in advance.
In November 2013 the IASB released narrow-scope amendments to IAS 19 Employee Benefits: Employee Contributions. The amendments are applicable to the recognition of contributions made by employees or third parties to defined benefit pension plans. It is permitted to recognize employee or third-party contributions as a reduction of current service cost in the period in which the corresponding service was provided if contributions are independent of the number of years of service. The amendments to IAS 19 are subject to application for fiscal years beginning on or after February 1, 2015; early adoption is permitted. These amendments will have no effect on the consolidated financial statements.
The Improvements to IFRS 2010-2012 represent a collection of amendments released in December 2013, carrying amendments to several IFRS. It contains the following individual amendments:
-> IAS 24: Treatment of cases where key management functions are assumed by legal entities.
This collection of amendments is subject to mandatory application for fiscal years beginning on or after February 1, 2015; early adoption is permitted. Apart from partially expanded disclosures in the notes, the Group does not expect material effects on the consolidated financial statements from first-time application of this collection of amendments at present.
In December 2014 the IASB released amendments to IAS 1 aimed at eliminating obstacles perceived by reporting entities with respect to the exercise of judgments regarding the presentation of financial statements. These amendments to IAS 1 contain the following changes or clarifications:
IAS 1.114. The IASB has also eliminated provisions and examples with respect to identifying the significant accounting policies and valuation methods regarded as potentially not that helpful.
The amendments are subject to mandatory application for fiscal years beginning on or after January 1, 2016; early adoption is permitted. The Group management does not expect the amendments to have a material effect on the presentation of consolidated financial statements.
In May 2014 the IASB released amendments to IAS 16 – Property, Plant and Equipment and IAS 38 – Intangible Assets. With these amendments the IASB makes further guidance available for determining acceptable methods of depreciation and amortization. Accordingly sales-based methods of depreciation and amortization are not appropriate for property, plant and equipment and appropriate only in certain exceptional cases for intangible assets. The amendments are subject to mandatory application for fiscal years beginning on or after January 1, 2016; early adoption is permitted. As the Group does not apply any sales-based methods of depreciation and amortization, the Group management does not expect the application of the amended standards to have any effects.
In June 2014 the IASB released amendments to IAS 16 – Property, Plant and Equipment and IAS 41 – Agriculture: Bearer Plants. With these amendments bearer plants used only for the production of agricultural products have been included in the scope of IAS 16 so that they have to be accounted for like items of property, plant and equipment. In order to exclude bearer plants from the scope of IAS 41 and include them in the scope of IAS 16, thus enabling entities to account for them at amortized cost or according to the revaluation model, the definition of a bearer plant is included in both standards. The amendments are subject to mandatory application for fiscal years beginning on or after January 1, 2016; early adoption is permitted. As the Group's business model is not based on bearer plants, the amendments are not expected to have any effect on the consolidated financial statements.
Amendment to IAS 27 – Separate Financial Statements: Equity Method in Separate Financial Statements In August 2014 the IASB released amendments to IAS 27 – Separate Financial Statements. With these amendments the equity method is permitted again as an option for the accounting treatment of investments in subsidiaries, joint ventures and associated companies in the investor's separate financial statements. The amendments are subject to mandatory application for fiscal years beginning on or after January 1, 2016; early adoption is permitted. As the option for accounting treatment concerns separate financial statements, the amendments will have no effect on the consolidated financial statements.
Amendments to IFRS 11 – Joint Arrangements: Accounting for Acquisitions of Interests in Joint Operations In May 2014 the IASB released amendments to IFRS 11 – Joint Arrangements. They clarify that the initial acquisition as well as the subsequent acquisition of interests in joint operations that constitute a business have to be accounted for in application of the provisions for the accounting treatment of business combinations under IFRS 3 unless these provisions contradict the provisions under IFRS 11. The disclosure requirements under IFRS 3 must be fulfilled as well. The amendments are subject to mandatory application for fiscal years beginning on or after January 1, 2016; early adoption is permitted. As such acquisitions have not been made, the Group management currently assumes that the application of the amended standard will have no effect.
The annual Improvements to IFRS 2012-2014 represent the collection of amendments released in September 2014, carrying amendments to four standards:
-> IFRS 7: Inclusion of additional guidance to clarify whether a servicing contract is a continuing involvement in a transferred asset; clarification of the applicability of the amendments to IFRS 7 on offsetting disclosures to condensed interim financial statements.
-> IAS 19: Clarification that high-quality corporate bonds used for determining the discount rate for post-employment benefits should be denominated in the same currency as the benefits to be paid so that the depth of the market for high-quality corporate bonds should be assessed at currency level.
The amendments are subject to mandatory application for fiscal years beginning on or after January 1, 2016, providing for prospective or retrospective application depending on the respective amendment; early adoption is permitted. Group management currently assumes that the application of this collection of amendments will have no effect.
The IASB has released the following standards and interpretations that were not subject to mandatory application in fiscal year 2015 yet. These standards and interpretations have so far not been endorsed by the EU and are therefore not adopted by the Group.
Within the context of its disclosure initiative, the IASB released amendments to IAS 7 – Statement of Cash Flows. The heart of these amendments represents provisions for additional disclosures in the notes aimed at enabling the reader of financial statements to evaluate changes in liabilities from the reporting entity's financing activities. The amendments are subject to mandatory firsttime application for fiscal years beginning on or after January 1, 2017; early adoption is permitted. Upon first-time application no comparative information on previous reporting periods has to be provided. EU endorsement is still pending. Except for extended disclosures in the notes, the Group management does not expect any effect on the consolidated financial statements.
In January 2016 the IASB released amendments to IAS 12 – Income Taxes. The amendment contains clarifications for the accounting treatment of deferred tax assets for unrealized losses on debt instruments. Accordingly unrealized losses on debt instruments measured at fair value yet whose tax base is acquisition cost generally result in deductible temporary differences. This applies regardless of whether the holder of the instrument expects to realize the asset's book value by holding until maturity and collecting all contractual payments or if he intends to sell it in the meantime. The book value of an asset does not represent the upper limit for the estimate of probable future taxable profit. Tax deductions from the reversal of deductible temporary differences must be excluded in the estimate of probable future taxable profit. An entity must not only assess a deferred tax asset by itself but also in combination with other deferred tax assets. If the respective applicable tax law restricts the utilization of tax losses, the reporting entity has to assess a deferred tax asset in combination with other deferred tax assets of the same (admissible) type. The amendments are subject to mandatory first-time application for fiscal years beginning on or after January 1, 2017. EU endorsement is still pending. The Group management cannot conclusively assess at present what effects the first-time application of this amended standard will have provided it will be endorsed by the EU as released.
Amendments to IAS 28 – Investments in Associates and Joint Ventures and IFRS 10 – Consolidated Financial Statements: Sale or Contribution of Assets between an Investor and its Associate or Joint Venture In September 2014 the IASB released amendments to IFRS 10 Consolidated Financial Statements and IAS 28 Investments in Associates and Joint Ventures. The amendments address a known inconsistency between the two standards in the accounting treatment of a sale of an investor's assets or rather the contribution to the investor's associate or joint venture. Insofar the transaction involves a business within the meaning of IFRS 3, the investor has to account for the full gain or loss; if the transaction involves only the sale of assets that do not constitute a business, only part of the gain or loss has to be accounted for. Determination of the date of initial mandatory application of these amendments has been suspended indefinitely by the IASB. Endorsement of the amendments by the EU is still pending. The Group management cannot assess conclusively yet which effects the first-time application of the amended standards might have provided they will be endorsed by the EU as released.
IFRS 9 Financial Instruments contains requirements for measurement, recognition and derecognition as well as for the accounting treatment of hedges. The IASB released the final version of the standard within the framework of the completion of the various stages of its elaborate project on financial instruments on July 24, 2014. Thus the accounting treatment of financial instruments previously governed by IAS 39 Financial Instruments: Recognition and Measurement can now be superseded entirely by accounting treatment according to IFRS 9. This new release of IFRS 9 supersedes all previous versions. The key requirements of the finalized IFRS 9 can be summarized as follows:
-> Subsequent measurement of financial assets is now aligned with three categories, providing different principles of valuation and different recognition of changes in value. The categorization depends on the contractual cash flows of the instrument as well as on the business model according to which the instrument is held. The categories are therefore mandatory as a general rule. However, a few options are available to reporting entities beyond that.
-> Existing provisions for financial liabilities have for the most part been adopted by IFRS 9, however. The only material new provision concerns financial liabilities under the fair value option. For those liabilities, fluctuations in fair value due to changes in their own contingency risk have to be recognized in other comprehensive income.
The final IFRS 9 standard is subject to mandatory application for fiscal years beginning on or after January 1, 2018; early adoption is permitted. Endorsement of the amendments by the EU is still pending. The Group assumes that future application of IFRS 9 might affect the reporting of the Group's financial assets and financial liabilities. However, a reliable assessment of the effects of the application of IFRS 9 can only be made once a detailed analysis has been conducted, scheduled for 2016 at present.
In January 2014 the IASB released the new standard IFRS 14 – Regulatory Deferral Accounts. This standard aims at allowing entities that are first-time IFRS adopters and have so far recognized regulatory deferral accounts according to their previous financial reporting provisions to continue to do so after adopting IFRS. As the Group is not a first-time IFRS adopter, this standard (not yet endorsed by the EU) has no relevance to the Group.
In May 2014 the IASB released the new standard IFRS 15 – Revenue from Contracts with Customers. The new standard for the recognition of revenue aims at harmonizing the large number of provisions previously contained in various standards and interpretations. At the same time consistent basic principles are determined, applicable for all industries and all kinds of sales transactions. The questions to what amount and at what time or over what time period revenue has to be recognized are to be answered with the help of a 5-stage model. Apart from that, the standard includes a number of other provisions on questions of detail as well as an extension of the disclosures required in the notes. Due to the amendment to IFRS 15 released in September 2015, the initial date of mandatory first-time application has been postponed from January 1, 2017 to fiscal years beginning on or after January 1, 2018. Generally adoption has to take place retrospectively; however, various options for simplification are granted; early adoption continues to be permitted. Endorsement of the standard including its amendment by the EU is still pending. In fiscal year 2016 the Group management will specifically assess the potential effects of the first-time application of IFRS 15 on the consolidated financial statements and determine the date of first-time application as well as the interim method provided the standard will be endorsed by the EU as released. Extended disclosures in the notes are to be expected in any case.
In January 2016 the IASB released the new standard IFRS 16 – Leases. IFRS 16 defines principles for the recognition, measurement, disclosure, and the notes relating to leases with the purpose of assuring that lessee and lessor make relevant information available with respect to the effects of leases. At the same time, the previous accounting model according to IAS 17 with a distinction between operating and finance leases is abandoned in favor of a uniform accounting model for leases committed to the control concept. The new standard provides for a single accounting model for the lessee. This model leads to the lessee entering all assets and liabilities from leases in the statement of financial position provided the lease term exceeds 12 months and the asset is not immaterial (right to choose). The lessor will maintain the distinction between finance and operating leases for the purpose of accounting. IFRS 16 – Leases is subject to mandatory first-time application for fiscal years beginning on or after January 1, 2019; early adoption is generally permitted if IFRS 15 – Revenue from Contracts with Customers is also completely applied (early). The lessee has to either apply IFRS 16 completely and retrospectively include previous reporting periods or recognize the cumulative effect of adjustment as of first-time application as an entry in equity as of the beginning of the fiscal year of first-time application. EU endorsement of this standard is still pending. The Group management is currently assessing what effects the first-time application of IFRS 16 will have on the consolidated financial statements and it will determine both the date of first-time application and the interim method provided the standard will be endorsed by the EU as released.
In the collection of amendments on the new consolidation exception for investment entities now released, the following clarifications have been framed:
-> Required disclosures: An investment entity that measures all its subsidiaries at fair value has to provide the disclosures with respect to investment entities as stipulated by IFRS 12.
The amendments are subject to mandatory application for fiscal years beginning on or after January 1, 2016; early adoption is permitted. Endorsement of the amendments by the EU is still pending. Provided the amendments will be endorsed by the EU as released, the Group management currently assumes that their application will have no effect.
In addition to Elmos Semiconductor AG, the consolidated financial statements prepared for fiscal year 2015 include all entities whose voting rights Elmos has the direct or indirect majority of, or based on other rights in cases of control over the entity as defined by IFRS 10 Consolidated Financial Statements. Capital consolidation is based on the purchase method. The investments' acquisition values are set off against the proportionate balance of assets and liabilities acquired at their respective time values. As of the acquisition date, identifiable assets and liabilities are fully accounted for at their respective fair values. The balance of a remaining asset difference is stated as goodwill.
The separate financial statements of the entities included in the Elmos consolidated financial statements are stated in correspondence to the reporting date of the consolidated financial statements.
All material receivables and liabilities as well as transactions between the consolidated entities have been eliminated in the consolidated financial statements.
A list of the subsidiaries included in the consolidated financial statements can be found under note 33.
The functional currency of Elmos Semiconductor AG and its European subsidiaries is the Euro. The consolidated financial statements have been prepared in Euro.
Assets and liabilities denominated in foreign currencies are generally translated at the closing exchange rate as of the reporting date.
With regard to subsidiaries whose functional currency is the national currency of the respective country in which the subsidiary keeps its registered office, assets and liabilities stated in foreign currency in the statements of financial position of the economically independent international subsidiaries are translated into Euro at the closing exchange rates as of the respective reporting dates. Income and expense items are translated at average exchange rates over the underlying period. Differences resulting from the valuation of equity at historical rates and closing rates as of the end of the reporting period are recognized outside profit or loss as changes in equity under "Other equity components".
The Company occasionally enters into forward exchange contracts and option transactions to hedge foreign currency transactions for periods consistent with committed exposures. These hedging activities reduce the impact of foreign exchange rate fluctuations on the Company's profitability. The Company is not involved in speculative transactions. For the realized and unrealized exchange rate gains and losses from currency hedges during fiscal year 2015, please refer to note 30.
The cash flow statement shows how cash and cash equivalents have changed in the course of the fiscal year by inflows and outflows of funds. The effects of acquisitions and divestitures as well as other changes of the basis of consolidation have been considered. In accordance with IAS 7, the statement distinguishes between cash flows from operating activities, investing activities, and financing activities. Finance expenses and finance income recognized in the consolidated income statement essentially correspond to the amounts paid.
The Company generates sales by selling ASICs, ASSPs and micromechanical sensor elements, as well as by their development. Sales are stated net of sales tax and after deduction of any discounts given.
Sales are realized either at the time products are shipped to the customer or at the time the risk of loss passes to the customer. Within the framework of consignment warehousing agreements, sales are realized either at the time of acceptance by the customer or at the time the consignment warehouse is stocked up, depending on the time of the passing of risk. Sales from development activities are realized upon reaching predefined milestones depending on the degree of the project's completion.
Goodwill from business acquisitions is not amortized but reviewed for recoverability at least once a year. In addition to that, an impairment test is made if special events or market developments indicate that the fair value of a reporting unit might have fallen below its book value. As of the acquisition date, the acquired goodwill is allocated to the cash-generating unit (CGU) expected to benefit from the business combination's synergy effects.
Impairment is identified by determining the recoverable amount of the CGU the goodwill is allocated to. If the recoverable amount of the CGU is below its book value, the impairment of goodwill needs to be recognized. The recoverable amount is the higher of the two amounts of fair value less cost to sell and value in use.
All goodwill is allocated to the respective CGUs. For that purpose, each subsidiary usually represents one CGU.
The determination of the CGU's recoverable amount is based on the value in use. For each CGU, future cash flows are determined on the basis of detailed long-term planning which involves a period of five years. Based on an assumed perpetuity growth rate of 0.5%, the net present value of these future cash flows is then calculated by way of discounting.
In accordance with IAS 38, intangible assets originating from development are capitalized only if, among other criteria, it is a) sufficiently probable that the Company will receive the asset's future economic benefit and b) if the asset's cost can be valuated reliably. These criteria apply to capitalized development projects in connection with the development of ASICs. Such projects are capitalized even if they are not yet connected to customer orders (ASSPs). Their recoverability is reviewed annually by the Company. Depreciation is begun with after the development stage is completed or at the start of pilot series production.
Development expenses are capitalized after technological feasibility or realizability is provided and (pilot) series production (so-called PPAP status) is launched.
Cost is amortized as of the start of production on a straight-line basis over the estimated useful life of three to seven years.
Expenses for the in-house development of design and process technology are capitalized if all conditions in accordance with IAS 38 are met. Expenses are amortized under the straight-line method over the shortest respective period of the estimated useful life of the technology, the patent protection term or the term of the contract, yet over a maximum period of 20 years.
Acquired intangible assets are recognized at cost and amortized over their estimated useful lives of 3 to 20 years under the straight-line method.
Amortization is entered in the consolidated income statement (cf. note 7).
Items of property, plant and equipment are basically capitalized at acquisition or production cost.
Property, plant and equipment are depreciated over their estimated useful lives using the straightline method as follows:
| Buildings | 25 to 50 years |
|---|---|
| Building improvements | 8 to 10 years |
| Technical equipment and machinery/Factory and office equipment | 5 to 12 years |
If the book value exceeds the expected recoverable amount, impairment loss is recognized for this asset in accordance with IAS 36.
Upon the sale or disposal of property, plant and equipment, corresponding acquisition cost and corresponding accumulated depreciation are eliminated from the accounts. Gains or losses from the disposal of property, plant and equipment are stated as other operating income or expenses. Costs for maintenance and repair are recorded in the consolidated income statement as expense.
In application of IAS 17, leased property attributable to the Company as its economic proprietor is capitalized and depreciated over its estimated useful life (so-called finance lease). Accordingly, liabilities originating from the lease contract are recognized as liabilities and reduced by the discharge portion of lease payments.
Other lease agreements the Company has entered into are considered operating leases. Lease payments made are recognized in the consolidated income statement using the straight-line method over the contract terms.
Investments represent interests in entities over which Elmos has neither control nor significant influence. Investments for which there is a quoted market price are classified as "available for sale" and measured at that price. Investments for which there is no active market are classified as "available for sale" and measured at amortized cost. Insofar as there is no active market for those entities, it is assumed that the book value equals the market value.
According to IAS 39, a financial instrument is a contract that leads to the origination of a financial asset for one entity and to the origination of a financial liability or an equity instrument for another entity at the same time.
Financial instruments are recognized according to IAS 39.14 as of the time the Company becomes the financial instrument's contracting party. Regular purchase and sale transactions are entered as of settlement date. Financial instruments are classified in accordance with IAS 39 into the following categories:
The financial instruments accounted for include liquid assets, securities, trade receivables, trade payables, forward loans including corresponding interest swap transactions (cash flow hedges), forward exchange contracts, and other outside financing.
Financial assets with determined or determinable payments and fixed terms which the Company is willing and able to hold to final maturity are classified as held-to-maturity financial assets, with the exception of loans and receivables granted by the Company. Financial assets acquired primarily to gain profits from short-term price fluctuations are classified as financial assets held for trading. All other financial assets except for loans and receivables granted by the Company are classified as available-for-sale financial assets.
Held-to-maturity financial assets are accounted for under non-current assets unless they mature within twelve months of the reporting date. Financial assets held for trading are regarded as current assets. Available-for-sale financial assets are regarded as non-current or current assets, depending on their remaining term to maturity. If they are intended to be sold within twelve months of the reporting date, they are categorized as current assets.
Upon their first-time recognition, financial assets are measured at fair value corresponding to the time value attributable to the consideration received. With respect to financial assets classified at fair value outside profit or loss, transaction costs directly attributable to the asset's acquisition are also taken into account. Subsequent measurement of financial assets depends on their classification:
Available-for-sale financial assets and financial assets held for trading are subsequently measured at fair value without deduction of any transaction costs incurred and under disclosure of their listed market prices as of the reporting date.
Gains and losses from the measurement of available-for-sale financial assets at fair value are recognized directly under other equity components until the financial asset is sold, collected, or otherwise disposed of, or until the financial asset's impairment is determined so that the accumulated gains or losses previously recognized in equity are included in income/loss for the period at that point in time.
Changes in fair value of financial assets held for trading are recognized in the financial result insofar as there is a direct connection to the Company's financing or its financial investments. Heldto-maturity financial assets are measured at amortized cost using the effective interest method.
Financial liabilities generally constitute a claim for return in cash or in the shape of another financial asset. This category particularly includes trade payables, financial liabilities, and other liabilities.
After their first-time recognition, financial liabilities are measured at amortized cost using the effective interest method. Financial liabilities measured at fair value through profit or loss include financial liabilities held for trading. Derivatives are classified as held for trading unless they are designated as hedging instruments and are effective as such. Gains or losses from financial liabilities held for trading or from liabilities for which the fair value option has been exercised are recognized in profit or loss.
Upon their first-time recognition, financial instruments are classified either as assets, liabilities or equity, depending on the contractual agreement's economic matter.
Interest, dividends, gains and losses in connection with financial instruments classified as financial liabilities are recognized as expenses or income in the consolidated income statement for the period in which they incur. Dividend payments to owners of financial instruments classified as equity are deducted directly from equity.
The Company has so far made no use of the option to designate financial assets and financial liabilities as financial assets and liabilities at fair value through profit or loss upon their first-time recognition.
Upon their first-time recognition, put options written on non-controlling interests are recorded as financial liabilities at the cash value of their repurchase amounts in accordance with IAS 32.23. Such financial liabilities are measured in accordance with IAS 39, and any changes resulting from subsequent measurement are recognized in profit or loss.
Financial guarantee contracts issued by the Group are contracts that commit to payments in compensation of a loss incurred by the guarantee holder because a specific debtor has not fulfilled his payment obligations on the due date according to the terms and conditions of a debt instrument. Upon first-time recognition, financial guarantee contracts are recognized as liabilities at fair value less transaction costs directly linked to the contract's issuance. Subsequently the liability is measured at the best possible estimate of expenses required for the fulfillment of the obligation as of the reporting date or the higher stated amount less accumulated amortization.
Elmos uses derivative financial instruments for hedging interest rate risks. On concluding hedges, certain derivatives are assigned to certain hedged items. The conditions stipulated by IAS 39 for the qualification of transactions as hedges are met at all times.
Insofar as derivative financial instruments utilized are effective hedges within the framework of a hedging relationship in accordance with IAS 39 (cash flow hedges), changes in fair value do not have an effect on the income for the period during the term of the derivative. Changes in fair value are recognized in equity outside profit or loss. The amortized value in equity is considered in income for the period as profit or loss upon maturity of the hedged cash flow.
The fair value generally corresponds to the market or stock market price. If there is no active market, the fair value is determined on the basis of established valuation models.
The hedging strategy pursued by the Elmos Group is to exclusively enter into effective derivatives for hedging interest rate risks. The conditions defined by IAS 39 as required for the accounting treatment as hedging transactions were met upon conclusion of the hedging instruments as well as at the reporting date.
Elmos also makes use of derivative financial instruments such as foreign exchange option transactions and forward exchange transactions in order to hedge against currency risk.
According to IAS 39, such derivative financial instruments are to be assigned to the category "at fair value through profit or loss" and to be accounted for at fair value, regardless of the purpose or intention for which they have been concluded. Changes in fair value of derivative financial instruments are recognized in profit or loss.
Inventories are measured at acquisition or production cost or at the lower net recoverable value as of the reporting date. In addition to directly attributable cost, production cost also includes manufacturing cost and overhead as well as depreciation. Overhead costs are recognized as fixed amounts on the basis of the production facilities' usual utilization. Costs of unused production capacity (idle capacity costs) are disclosed in the consolidated income statement under cost of sales. Inventory allowances are made insofar as acquisition or production cost exceeds the expected recoverable net sales proceeds.
Trade receivables as well as other receivables are generally recognized at face value in consideration of adequate allowances.
The valuation allowance for bad debt comprises to a considerable degree estimates and assessments of individual receivables based on the respective customer's creditworthiness, current economic developments, and the analysis of historical bad debt loss on portfolio basis.
Liquid assets comprise cash on hand, checks, and cash in banks.
An asset is to be classified as available for sale if the corresponding book value is realized primarily by a sale transaction and not by the asset's continued use.
Provisions are made for legal or factual obligations with historical origins if it is probable that the sufficiently reliable fulfillment of the obligation will lead to an outflow of the Group's resources and if a reliable estimate of the amount of the obligation can be made.
Recurring net pension expenses according to IAS 19 are made up of different components, reflecting different aspects of the Company's financial agreements as well as the expense for the benefits received by the employees. These components are determined by using the actuarial cost method on the basis of actuarial assumptions as stated under note 24.
Adequate provisions for warranty are made in individual cases upon risk assessment with respect to sales-oriented and legal consequences.
Current tax assets and tax liabilities for the current period and previous periods are measured at the amounts expected for tax refunds to be collected from the tax authorities or tax payments to be made to the tax authorities. The calculation of these amounts is based on the tax rates and tax laws in effect as of the reporting date in those countries where the Group has operations and generates taxable income.
Deferred taxes are determined under the liability method. Deferred income taxes reflect the net tax expense/income of temporary differences between the carrying amounts of assets and liabilities in the statement of financial position and their respective tax values. The calculation of deferred tax assets and liabilities is carried out on the basis of the tax rates expected as applicable for the period in which an asset is realized or a debt is repaid. The measurement of deferred tax assets and liabilities considers the tax effects resulting from the way an entity expects to realize its assets' carrying amounts or repay its debts as of the reporting date.
Deferred tax assets and liabilities are recognized regardless of the point in time at which the temporary accounting differences are expected to reverse. Deferred tax assets and liabilities are not discounted and they are included in the statement of financial position as non-current assets or non-current liabilities.
A deferred tax asset is recognized for all deductible temporary differences to the extent it is probable that taxable income will be available against which the temporary difference can be offset. As of each reporting date, the Company assesses deferred tax assets not accounted for anew. The Company recognizes a deferred tax asset previously unaccounted for to the extent it has become probable that future taxable income will allow the deferred tax asset's realization.
In the opposite case, the deferred tax asset's book value is reduced to the extent it appears no longer probable that there will be sufficient taxable income in order to make use of the benefit of the deferred tax asset – either in its entirety or in part.
Current taxes and deferred taxes are charged or credited directly to equity if the tax relates to items credited or charged directly to equity in the same period or in another period.
No deferred tax liabilities incur to the extent that non-distributed profits of foreign investments are to remain invested in that entity for an incalculable period of time. Deferred tax liabilities are recognized for all taxable temporary differences insofar as the deferred tax liability does not result from goodwill which does not allow for amortization for tax purposes.
Deferred tax assets also include tax relief claims resulting from the expected utilization of loss carry-forwards and tax credits in the following years insofar as their realization appears assured with sufficient reliability.
Deferred tax is determined on the basis of the tax rates in effect at or expected for the time of realization according to the respective countries' current legal situation.
Income, expenses and assets are recognized net of sales tax. Exceptions are the following cases:
The sales tax amount to be refunded by or paid to the tax authorities is recognized in the statement of financial position under receivables or liabilities respectively.
Subsidies or government grants are accounted for if it is sufficiently assured that the grants are given and that the Company fulfills the corresponding conditions. Grants linked to expenses are recognized on schedule as income over the period that is required to offset them against the corresponding expenses they are meant to compensate. Grants for an asset are recognized in the statement of financial position as reduction of acquisition cost. More details can be found under note 31.
Borrowing costs directly attributable to an asset's acquisition, construction, or manufacture and for which a considerable period of time is required to put it into the intended state for use or sale are capitalized as part of the respective asset's acquisition or production cost with respect to all qualified assets the construction or manufacture of which has been started on or after January 1, 2009. All other borrowing costs are stated as expense in the period in which they incur. Borrowing costs are interest expense and other costs an entity incurs in connection with borrowing outside capital. The Group continues to recognize borrowing costs connected to projects started before January 1, 2009 as expenses.
The segments correspond to the Elmos Group's internal organizational and reporting structure. The definition of segments considers the Group's different products and services. The accounting principles applied for the separate segments correspond to those applied by the Group.
The Company divides its activities into two segments:
The Semiconductor business is conducted through the various national subsidiaries and branches in Germany, the Netherlands, South Africa, Asia, and the U.S.A. Sales in this segment are generated primarily with automotive electronics. Elmos is also active in the sector of industrial and consumer goods, supplying semiconductors e.g. for applications in household appliances, installation and building technology, and machine control systems.
Sales in the Micromechanics segment are generated by the subsidiary SMI in the U.S.A. The product portfolio contains micro-electro-mechanical systems (MEMS) which are for the most part siliconbased high-precision pressure sensors.
Business operations are organized and managed separately from each other with respect to the type of products, with each segment representing one strategic business unit that provides different products and supplies different markets. Inter-segment sales are based on cost-plus pricing or on settlement prices that correspond to prices paid in transactions with third parties.
The following tables provide information on expenses, income and earnings and certain information on assets and liabilities of the Group's business segments for the fiscal years ended December 31, 2015 and December 31, 2014.
| Fiscal year ended December 31, 2015 | Semiconductor thousand Euro |
Micromechanics thousand Euro |
Consolidation thousand Euro |
Group thousand Euro |
|---|---|---|---|---|
| Sales | ||||
| Third-party sales | 196,649 | 22,977 | 0 | 219,626 |
| Inter-segment sales | 367 | 1,369 | –1,7361 | 0 |
| Total sales | 197,016 | 24,346 | –1,736 | 219,626 |
| Earnings | ||||
| Depreciation | 27,552 | 1,223 | 0 | 28,775 |
| Other material non-cash expenses | –283 | –163 | 0 | –446 |
| Other material non-cash income | 1,577 | 0 | 0 | 1,577 |
| Segment income | 21,493 | 3,039 | 0 | 24,532 |
| Finance income | 2,279 | |||
| Finance expenses | –2,682 | |||
| Earnings before taxes | 24,129 | |||
| Income tax | –6,830 | –639 | –7,469 | |
| Consolidated net income including non-controlling interests |
16,660 | |||
| Assets and liabilities | ||||
| Segment assets | 233,575 | 21,137 | 52,1542 | 306,866 |
| Investments | 20 | 0 | 0 | 20 |
| Total assets | 306,886 | |||
| Segment liabilities/Total liabilities | 39,471 | 2,627 | 45,3973 | 87,495 |
| Other segment information | ||||
| Additions to intangible assets and property, plant and equipment |
38,844 | 1,093 | 0 | 39,937 |
Other non-cash expenses comprise among other items expenses from stock option and share matching plans and losses from the disposal of non-current assets. Other non-cash income includes profits from the disposal of non-current assets and income from the reversal of an item of deferred income.
Finance income in the amount of 2,279 thousand Euro almost exclusively contains interest income of 2,030 thousand Euro relating entirely to the Semiconductor segment. Finance expenses of 2,682 thousand Euro essentially represent interest expense (2,224 thousand Euro) relating also entirely to the Semiconductor segment (please also refer to note 8).
Sales from inter-segment transactions are eliminated for consolidation purposes.
2 Non-attributable assets as of December 31, 2015 include cash and cash equivalents (50,000 thousand Euro), income tax assets (86 thousand Euro), and deferred taxes (2,068 thousand Euro), as these assets are managed at group level.
Non-attributable liabilities as of December 31, 2015 include current financial liabilities (185 thousand Euro), non-current financial liabilities
(36,639 thousand Euro), current tax liabilities (6,889 thousand Euro), and deferred tax (1,684 thousand Euro), as these liabilities are managed at group level.
| Fiscal year ended December 31, 2014 | Semiconductor | Micromechanics | Consolidation | Group |
|---|---|---|---|---|
| thousand Euro | thousand Euro | thousand Euro | thousand Euro | |
| Sales | ||||
| Third-party sales | 190,923 | 18,594 | 0 | 209,517 |
| Inter-segment sales | 667 | 1,727 | –2,3941 | 0 |
| Total sales | 191,590 | 20,321 | –2,394 | 209,517 |
| Earnings | ||||
| Depreciation | 24,789 | 834 | 0 | 25,623 |
| Other material non-cash expenses | –2,209 | –127 | 0 | –2,336 |
| Other material non-cash income | 710 | 0 | 0 | 710 |
| Segment income | 19,659 | 2,918 | 0 | 22,577 |
| Finance income | 2,315 | |||
| Finance expenses | –1,796 | |||
| Earnings before taxes | 23,097 | |||
| Income tax | –3,853 | –512 | –4,365 | |
| Consolidated net income including | ||||
| non-controlling interests | 18,732 | |||
| Assets and liabilities | ||||
| Segment assets | 241,553 | 18,277 | 35,5502 | 295,380 |
| Investments | 20 | 0 | 0 | 20 |
| Total assets | 295,400 | |||
| Segment liabilities/Total liabilities | 43,424 | 2,230 | 42,8483 | 88,502 |
| Other segment information | ||||
| Additions to intangible assets and | ||||
| property, plant and equipment | 31,302 | 972 | 0 | 32,274 |
Sales from inter-segment transactions are eliminated for consolidation purposes.
Non-attributable assets as of December 31, 2014 include cash and cash equivalents (35,520 thousand Euro), income tax assets (562 thousand Euro), and deferred taxes (2,468 thousand Euro), as these assets are managed at group level.
3 Non-attributable liabilities as of December 31, 2014 include current financial liabilities (333 thousand Euro), non-current financial liabilities
(37,076 thousand Euro), current tax liabilities (2,565 thousand Euro), and deferred tax (2,874 thousand Euro), as these liabilities are managed at group level.
Other non-cash expenses comprise among other items expenses from stock option/stock award/ share matching plans and accounting losses from the derecognition of intangible assets. Other non-cash income includes income connected to the first-time consolidation of DMOS Dresden MOS Design GmbH, Dresden, and income from the reversal of an item of deferred income.
Finance income in the amount of 2,315 thousand Euro almost exclusively contains interest income of 2,1654 thousand Euro relating entirely to the Semiconductor segment. Finance expenses of 1,796 thousand Euro exclusively include interest expense relating entirely to the Semiconductor segment (please also refer to note 8).
Adjustment from the previous year
The geographic segment "Other EU countries" basically includes all member states of the European Union as of the respective reporting date with the exception of Germany. Those European countries that are currently not members of the European Union are included in the segment "Other countries". Third-party sales are broken down according to the customers' delivery location.
| Third-party sales | 2015 | 2014 |
|---|---|---|
| thousand Euro | thousand Euro | |
| Germany | 71,166 | 70,423 |
| Other EU countries | 45,732 | 48,621 |
| U.S.A. | 23,378 | 21,975 |
| Asia/Pacific | 68,853 | 55,914 |
| Other countries | 10,496 | 12,584 |
| Consolidated sales | 219,626 | 209,517 |
| Geographic breakdown of non-current assets | 12/31/2015 thousand Euro |
12/31/2014 thousand Euro |
|---|---|---|
| Germany | 136,387 | 136,444 |
| Other EU countries | 804 | 3,846 |
| U.S.A. | 5,499 | 5,113 |
| Other countries | 87 | 118 |
| Non-current assets | 142,777 | 145,521 |
Sales generated with the top two customers who account for more than 10% of sales each amount to 36.2 million Euro and 25.9 million Euro respectively and result from sales in the Semiconductor segment (2014: top two customers with sales of 41.2 million Euro, 21.9 million Euro respectively).
The Company generates sales from selling semiconductors and micromechanical sensor elements as well as from developing them.
Sales of the Group and its segments can be broken down as follows:
| 2015 thousand Euro |
2014 thousand Euro |
|
|---|---|---|
| Semiconductor | 196,649 | 190,923 |
| Micromechanics | 22,977 | 18,594 |
| Group | 219,626 | 209,517 |
Sales increased by 4.8% to 219,626 thousand Euro. An increase in sales is recorded in both of the Group's segments. While sales in the Semiconductor segment gained 3.0% to 196,649 thousand Euro, sales in the Micromechanics segment climbed 23.6% to 22,977 thousand Euro.
The cost of sales contains costs of performances rendered toward the generation of sales. In addition to direct material costs, direct labor costs and special direct costs, the cost of sales also includes manufacturing and material overhead as well as lease expenses and depreciation. Furthermore, the cost of sales contains changes in work in process and finished goods inventories and shows the following development:
| 2015 thousand Euro |
2014 thousand Euro |
|
|---|---|---|
| Material costs | –51,882 | –50,166 |
| Personnel expense | –33,709 | –33,223 |
| Other overhead | –44,286 | –46,630 |
| Changes in inventories | 1,856 | 11,944 |
| –128,021 | –118,075 |
The cost of sales was up 8.4% from 118,075 thousand Euro in 2014 to 128,021 thousand Euro in the year under review. Due to the higher demand compared to the previous year and the resulting increased production output, an increase in material costs by the amount of 1,716 thousand Euro was recorded. Other overhead (–2,344 thousand Euro) went down despite higher depreciation compared to fiscal year 2014. The main reason for this are one-off effects due to the termination of lease agreements (cf. note 14) and renegotiations with suppliers and partners. Adjusted for the effects of changes in inventories, the resulting cost of sales is almost unchanged.
Substantial expenses regularly incur with regard to research and development projects carried out in anticipation of future sales. Research expenses are recognized in profit or loss according to the amount of work invested. Development expenses are capitalized depending on the project and then amortized or – insofar as capitalization requirements are not met – recognized in profit or loss. In fiscal year 2015, R&D expenses of 37,075 thousand Euro (2014: 36,101 thousand Euro) were charged to expenses.
Distribution expenses in the amount of 19,030 thousand Euro (2014: 19,009 thousand Euro) essentially include expenses for staff, leases, travel, commission, and depreciation.
Administrative expenses of 17,414 thousand Euro (2014: 16,921 thousand Euro) include personnel expense for the administrative staff and proportionate personnel expense for the Management Board members. Other material items are expenses for leases and amortization as well as legal and consulting fees.
Within the scope of the presentation of the statement of comprehensive income in accordance with the cost of sales method, expenses are allocated with regard to functional areas. Cost of sales, distribution expenses, administrative expenses, and research and development expenses contained the following cost types as indicated below:
Material costs amounted to 57,988 thousand Euro in the year under review and are up 4.0% from the previous year (2014: 55,747 thousand Euro). They include expenses for raw materials, supplies, consumables, and for services claimed.
Personnel expense climbed 4.2% from 76,103 thousand Euro in fiscal year 2014 to 79,266 thousand Euro in fiscal year 2015. Over the same reporting period, the number of employees – based on an average employment ratio – went up from 1,104 in fiscal year 2014 to 1,117 in fiscal year 2015 (+1.2%). Further staff information can be found under note 40.
The itemization of depreciation and amortization can be drawn from the development of the Group's non-current assets (please refer to notes 13 and 14).
Depreciation and amortization came to 28,775 thousand Euro in the year under report (2014: 25,623 thousand Euro), equivalent to an increase of 12.3%. This increase is due primarily to the capital expenditures made in fiscal year 2015 and the termination of the lease agreements with Exedra.
Due to the application of the cost of sales method, depreciation of property, plant and equipment and amortization of other intangible assets are allocated to the items cost of sales, research and development expenses, distribution expenses, and administrative expenses in the statement of comprehensive income.
Finance income and finance expenses can be broken down as follows for fiscal years 2015 and 2014:
| 2015 thousand Euro |
2014 thousand Euro |
|
|---|---|---|
| Interest income | 2,030 | 2,165 |
| Other finance income | 249 | 150 |
| Finance income | 2,279 | 2,315 |
| 2015 | 2014 | |
| thousand Euro | thousand Euro | |
| Interest expense | –2,224 | –1,796 |
| Other finance expenses | –458 | 0 |
| Finance expenses | –2,682 | –1,796 |
Finance income and finance expenses reported in the consolidated income statement essentially correspond to the amounts paid.
The total amounts of interest income and interest expenses for financial assets and financial liabilities measured at fair value outside profit or loss are as follows:
| 2015 thousand Euro |
2014 thousand Euro |
|
|---|---|---|
| Interest income | 2,030 | 2,1421 |
| Interest expense | –2,204 | –1,783 |
| Interest result | –174 | 3591 |
Prior-year amount adjusted
Gains from exchange rate changes recognized in profit or loss amount to 2,293 thousand Euro in fiscal year 2015 (2014: 2,433 thousand Euro). Gains result essentially from price gains realized in forward exchange contracts and option transactions made by the Company (please refer to note 30).
Exchange rate changes attributable to the owners of the parent and recognized outside profit or loss amount to 988 thousand Euro in fiscal year 2015 (2014: –547 thousand Euro), considering corresponding deferred tax. Further information on changes in foreign currency exchange rates recognized outside profit or loss can be found under note 22.
Other operating income in the amount of 5,973 thousand Euro (2014: 3,066 thousand Euro) include among other items income from the reversal of provisions in the amount of 1,053 thousand Euro (2014: 463 thousand Euro), insurance settlements in the amount of 411 thousand Euro (2014: 100 thousand Euro), rental income in the amount of 418 thousand Euro (2014: 355 thousand Euro), income from the derecognition of deferred income connected to the termination of the lease agreements with Exedra in the amount of 1,113 thousand Euro (2014: 202 thousand Euro), income from the sale of non-current assets in the amount of 464 thousand Euro (2014: 0 thousand Euro), other prior-period income in the amount of 1,716 thousand Euro (2014: 620 thousand Euro), and various individual items.
Other operating expenses in the amount of 1,820 thousand Euro (2014: 2,333 thousand Euro) include among other items real-estate charges in the amount of 338 thousand Euro (2014: 283 thousand Euro), write-down on a part of a building in the amount of 416 thousand Euro (2014: 390 thousand Euro) allocated to the Semiconductor segment, other prior-period expenses in the amount of 265 thousand Euro (2014: 144 thousand Euro), accounting loss from the disposal of non-current assets in the amount of 30 thousand Euro (2014: 146 thousand Euro), and various individual items.
Taxes on income either paid or owed as well as corresponding deferred taxes are reported as income tax.
| 2015 | 2014 | |
|---|---|---|
| thousand Euro | thousand Euro | |
| Current income tax | ||
| Germany | –5,705 | –3,903 |
| Outside Germany | –2,601 | –507 |
| –8,306 | –4,410 | |
| thereof taxes from previous years | –400 | 151 |
| Deferred tax | ||
| Germany | 1,065 | 208 |
| Outside Germany | –228 | –163 |
| 837 | 45 | |
| thereof taxes from previous years | 229 | 236 |
| Total | –7,469 | –4,365 |
Deferred tax has been calculated under the so-called liability method pursuant to IAS 12. For Germany, the combined income tax rate of 32.805% (2014: 32.805%) has been applied. The Company's combined income tax rate includes the trade tax collection rate of 485% (2014: 485%), the corporate tax rate of 15.0% (2014: 15.0%), and the solidarity surcharge of 5.5% (2014: 5.5%). With respect to the international subsidiaries, respective country-specific tax rates have been applied for the calculation of deferred tax.
Deferred taxes are determined for the temporary differences between the book values of assets and liabilities in the consolidated financial statements and the tax statements in the separate financial statements. The deferral of taxes shows tax assets and tax liabilities that result from the approximation of book value differences over time. Material components of the Company's deferred tax assets and deferred tax liabilities are described under note 16.
The differences between the anticipated tax amount in application of the statutory tax rate on the consolidated net income and the Company's effective income tax are as follows:
| 2015 | 2014 | |
|---|---|---|
| % | % | |
| Statutory tax rate | 32.81 | 32.81 |
| Foreign tax rate differential | –3.23 | –0.49 |
| Expenses disallowable against tax | 0.62 | 0.84 |
| Trade tax additions/cuts | 1.13 | 1.02 |
| Taxes from previous years | 0.71 | –1.67 |
| Tax-free income | –2.13 | –12.17 |
| Others | 1.05 | –1.44 |
| Effective tax rate | 30.96 | 18.90 |
Basic earnings per ordinary share are calculated on the basis of the weighted average number of ordinary shares outstanding in the respective fiscal year. Diluted earnings per ordinary share are calculated on the basis of the weighted average number of ordinary shares outstanding plus all stock options with dilutive potential according to the so-called treasury stock method.
Basic earnings and diluted earnings per ordinary share have been determined as follows:
| 2015 | 2014 | |
|---|---|---|
| Weighted average number of ordinary shares outstanding | 19,653,847 | 19,454,715 |
| Stock options with dilutive potential | 334,364 | 369,689 |
| Weighted average number of ordinary shares outstanding, including | ||
| dilutive effect | 19,988,210 | 19,824,404 |
| in Euro | 2015 | 2014 |
|---|---|---|
| Consolidated net income attributable to owners of the parent | 16,179,631 | 18,268,231 |
| Basic earnings per share | 0.82 | 0.94 |
| Fully diluted earnings per share | 0.81 | 0.92 |
The weighted average number of shares in 2015 and 2014 includes the weighted average effect of changes from transactions with treasury shares, the weighted average effect of the exercise of stock options from the 2009, 2010 and 2011 tranches in the course of the year 2015, and the weighted average effect of the exercise of stock options from the 2009 and 2010 tranches in the course of the year 2014.
All outstanding stock options originating from the 2010, 2011 and 2012 tranches (for 2015) or rather from the 2009, 2010, 2011 and 2012 tranches (for 2014) have been included in the calculation of diluted earnings per share. Further information on stock option plans can be found under note 23.
In the period between the reporting date and the preparation of the consolidated financial statements, Elmos Semiconductor AG carried out no further share buyback transactions.
| in thousand Euro | Goodwill Development Software and Payments on projects licenses and similar account and rights projects under and assets development |
Total | |||||
|---|---|---|---|---|---|---|---|
| Acquisition and production cost |
In-house effort |
Purchase | In-house effort |
Purchase | |||
| December 31, 2013 | 3,623 | 22,309 | 6,322 | 47,712 | 793 | 55 | 80,814 |
| Foreign currency adjustments | 25 | 0 | 0 | 351 | 0 | 0 | 376 |
| Additions | 0 | 533 | 663 | 684 | 92 | 24 | 1,996 |
| Additions to basis of consolidation |
0 | 0 | 0 | 466 | 0 | 0 | 466 |
| Transfers | 0 | 99 | 580 | 73 | –689 | –38 | 25 |
| Disposals | 0 | –99 | 0 | –7,862 | –12 | 0 | –7,973 |
| December 31, 2014 | 3,648 | 22,842 | 7,565 | 41,424 | 184 | 41 | 75,705 |
| Foreign currency adjustments | 23 | 0 | 0 | 136 | 0 | 0 | 159 |
| Additions | 0 | 1,572 | 0 | 2,439 | 248 | 626 | 4,885 |
| Transfers | 0 | 124 | 0 | 10 | –124 | 0 | 10 |
| Disposals | 0 | –27 | –3 | –3,990 | 0 | 0 | –4,020 |
| December 31, 2015 | 3,671 | 24,511 | 7,562 | 40,019 | 308 | 667 | 76,739 |
| Depreciation and amortization | |||||||
| December 31, 2013 | 0 | 17,497 | 3,365 | 33,288 | 0 | 0 | 54,150 |
| Foreign currency adjustments | 0 | 0 | 0 | 295 | 0 | 0 | 295 |
| Additions | 0 | 1,684 | 819 | 2,487 | 0 | 0 | 4,990 |
| Additions to basis of consolidation |
0 | 0 | 0 | 461 | 0 | 0 | 461 |
| Disposals | 0 | –99 | 0 | –5,530 | 0 | 0 | –5,629 |
| December 31, 2014 | 0 | 19,082 | 4,184 | 31,001 | 0 | 0 54,266 | |
| Foreign currency adjustments | 0 | 0 | 0 | 85 | 0 | 0 | 85 |
| Additions | 0 | 1,859 | 882 | 2,829 | 0 | 0 | 5,570 |
| Disposals | 0 | –11 | –3 | –3,990 | 0 | 0 –4,004 | |
| December 31, 2015 | 0 | 20,930 | 5,063 | 29,925 | 0 | 0 | 55,917 |
| Book value December 31, 2015 | 3,671 | 3,581 | 2,499 | 10,095 | 308 | 667 | 20,822 |
| Book value December 31, 2014 | 3,648 | 3,760 | 3,381 | 10,424 | 184 | 41 | 21,439 |
Goodwill shows the following development:
| 12/31/2015 thousand Euro |
12/31/2014 thousand Euro |
|
|---|---|---|
| Elmos N.A. | ||
| Acquisition cost | 555 | 555 |
| Foreign currency adjustments | 45 | 22 |
| Book value | 600 | 577 |
| Elmos Semiconductor AG (formerly Elmos France S.A.S.) | 1,615 | 1,615 |
| Elmos Services B.V. | 206 | 206 |
| MAZ Mikroelektronik-Anwendungszentrum GmbH im Land | ||
| Brandenburg | 1,250 | 1,250 |
| 3,671 | 3,648 |
In accordance with IFRS 3. B63(a) read in conjunction with IAS 38 and IAS 36, goodwill is not amortized but reviewed for impairment at least once every year. Measurement is made on the basis of cash generating units, corresponding here with the legal entities the respective goodwill is attributed to. The subsidiary Elmos France S.A.S., Levallois Perret/France left the Elmos Group's basis of consolidation effective March 30, 2012. Elmos Semiconductor AG, Dortmund, is the legal successor with respect to the subsidiary's assets and liabilities accounted for. The goodwill attributed to the former subsidiary is reported at the level of Elmos Semiconductor AG as of the date of the transaction.
For the purpose of the impairment tests to be conducted annually in accordance with IAS 36, the Group determines the recoverable amount on the basis of value in use. Forecasts are based on free cash flows. They in turn are based on detailed planning adopted by the management and consider the Company's own empirical data as well as external general economic data. The forecasts are based both on historical values and the general market performance expected for the future. Determining the value in use implies estimation uncertainty with respect to individual sales and cost planning as approved by management.
Material parameters are established in the context of bottom-up planning by the subsidiaries and business divisions. Methodically, the detailed planning phase comprises a five-year planning period from 2016 to 2020. For the value added from 2021 it is enhanced by the perpetual annuity which is based on an annual growth rate of 0.5%.
Gross margins – Gross margins are generally determined on the basis of the average values generated in the previous fiscal years before the beginning of the planning period. These margins are increased in the individual case by the expected efficiency increases in the course of the detailed planning period. For the individual cash generating units, gross margins with different bandwidths are taken as a basis. The budgeted annual performance of the gross margins was established individually for each cash generating unit, ranging from decreasing gross margins to mid single-digit percentage growth rates in the detailed planning period.
Development of prices for raw materials – Raw material price developments of the past are regarded as indicative of future price developments. Forecast data are used only if they are accessible to the public.
Assumptions on market shares – These assumptions are relevant insofar as the Company's management assesses – as in establishing assumptions on growth rates – how the positions of the individual entities might change in relation to their competitors during the budgeting period. Management anticipates steady market shares in probably growing markets.
Discount rates – The pre-tax interest rates applied were determined under the capital asset pricing model (CAPM) and come to 15.69% for Elmos N.A., 14.69% for Elmos Semiconductor AG, 11.76% for Elmos Services B.V., and 12.18% for MAZ Mikroelektronik-Anwendungszentrum GmbH im Land Brandenburg before deduction of respective growth rates. These interest rates correspond to the weighted average cost of capital. The cost of equity is based on a risk-free interest rate (1.5% or 3.25% for Elmos N.A.) plus an average market risk premium (6.25%), multiplied by an entity specific equity beta based on a so-called levered beta of 1.18. All values stated are derived from market data.
In 2015 impairment tests were conducted that did not result in impairment. It was established that the recoverable amounts of the respective units exceeded the respective book values.
Elmos has conducted sensitivity analyses, examining the effects of the simultaneous reduction of the budgeted earnings before interest and taxes (EBIT) in all planning periods beginning in 2016 by 10% compared to the adopted corporate budgets, a weighted average cost of capital increased by another 1.0 percentage point, and a reduction of the growth rate for perpetual annuity to 0.0% with respect to the recoverability of goodwill in the business divisions. The sensitivity analyses have shown that from today's viewpoint there would be no need for impairment of the goodwill of any of the entities even under these changed assumptions.
In 2015 expenses linked to product developments were capitalized as development projects and projects under development in the amount of 1,750 thousand Euro (2014: 624 thousand Euro). Depreciation of capitalized developments amounted to 1,859 thousand Euro in 2015 (2014: 1,684 thousand Euro). The book value of capitalized development efforts (including projects under development) is 3,762 thousand Euro as of December 31, 2015 (2014: 3,886 thousand Euro).
Amounts reported under "development projects" exclusively relate to the Company's in-house developments.
In 2015 as in the year before, no expenses for process technology were capitalized. Amortization came to 1,513 thousand Euro in 2015 (2014: 1,299 thousand Euro). As of December 31, 2015, the book values for process technology capitalized as non-current assets added up to 5,747 thousand Euro; they amounted to 7,260 thousand Euro as of December 31, 2014.
Costs linked to research and development projects are charged to expenses to the extent in which they incur and included in research and development expenses, provided they do not meet the criteria for capitalization under IAS 38.57. Research and development expenses of 5,273 thousand Euro were reimbursed by customers in 2015 (2014: 4,008 thousand Euro) and reported under consolidated sales.
| in thousand Euro | Land | Buildings and building improvements |
Technical equipment and machinery/ Factory and office equipment |
Payments on account and construction in process |
Total |
|---|---|---|---|---|---|
| Acquisition and production cost |
|||||
| December 31, 2013 | 1,699 | 34,889 | 184,620 | 3,939 | 225,147 |
| Foreign currency adjustments | 0 | 298 | 1,385 | 115 | 1,798 |
| Additions | 498 | 3,883 | 24,631 | 1,266 | 30,278 |
| Additions to basis of consolidation |
146 | 0 | 2,666 | 80 | 2,892 |
| Transfers | 0 | 391 | 3,594 | –4,011 | –25 |
| Disposals | 0 | –107 | –12,973 | –11 | –13,091 |
| December 31, 2014 | 2,343 | 39,354 | 203,924 | 1,377 | 246,998 |
| Foreign currency adjustments | 0 | 286 | 979 | 36 | 1,301 |
| Additions | 4,185 | 10,962 | 17,121 | 2,784 | 35,052 |
| Transfers | –146 | 395 | 788 | –1,047 | –10 |
| Disposals | –1,012 | –5,700 | –15,925 | 0 | –22,637 |
| December 31, 2015 | 5,370 | 45,297 | 206,887 | 3,150 | 260,704 |
| Depreciation and amortization | |||||
| December 31, 2013 | 0 | 18,090 | 134,669 | 0 | 152,759 |
| Foreign currency adjustments | 0 | 162 | 1,218 | 0 | 1,380 |
| Additions | 7 | 2,232 | 18,395 | 0 | 20,634 |
| Additions to basis of consolidation |
56 | 0 | 1,707 | 0 | 1,763 |
| Disposals | 0 | –31 | –11,935 | 0 | –11,967 |
| December 31, 2014 | 63 | 20,452 | 144,054 | 0 | 164,569 |
| Foreign currency adjustments | 0 | 165 | 670 | 0 | 835 |
| Additions | 0 | 2,576 | 20,630 | 0 | 23,206 |
| Transfers | –63 | 63 | 0 | 0 | 0 |
| Disposals | 0 | –4,125 | –14,772 | 0 | –18,897 |
| December 31, 2015 | 0 | 19,131 | 150,582 | 0 | 169,713 |
| Book value December 31, 2015 | 5,370 | 26,166 | 56,305 | 3,150 | 90,991 |
| Book value December 31, 2014 | 2,280 | 18,902 | 59,870 | 1,377 | 82,429 |
Additions to "Technical equipment and machinery/Factory and office equipment" include purchase transactions for fiscal year 2015 (2014) in the amount of 1,696 thousand Euro (December 31, 2014: Euro 1,429 thousand Euro) where the corresponding cash outflows only take place in 2016 (2015).
No borrowing costs were capitalized in fiscal year 2015 or the previous year.
On December 11, 2007 the Company entered into a supplementary agreement to an existing finance lease agreement with Exedra, to the effect that the original agreement was restructured into an operating lease agreement in compliance with the accounting principles according to IAS/ IFRS and extended to a building erected on the lessor's property in the amount of 4,816 thousand Euro. The leased assets to be subsumed under the existing contract were previously classified as finance lease and were recognized accordingly under non-current assets. By the adjustment of the contract modalities, the contract was converted to operating lease in fiscal year 2007; thus the corresponding lease liabilities (December 28, 2007: 16,175 thousand Euro) as well as the leased assets were no longer accounted for. The profit resulting from this transaction was collected in the amount of 4,756 thousand Euro in 2007 (reported under other operating income) and recognized as deferred income under other liabilities in the amount of 2,530 thousand Euro. This item was amortized over the remaining term of 12.5 years until 2020. Within the framework of the negotiated lease contract, the Company was committed to total lease payments of 23,050 thousand Euro (including contribution to administrative expenses) until 2020. According to the contractual arrangements, additional payments were owed for tenant loans in the amount of 7,330 thousand Euro until the end of the lease term. In August 2015 Elmos and the lessor prematurely terminated the existing lease agreement amicably and Elmos bought back the leased assets. The Group's property, plant and equipment include additions in the amount of about 14 million Euro (not including real estate transfer tax) for the land and buildings concerned. The accrued tenant loan was offset against the corresponding expenditures and the profit from the previous transaction reported as deferred income under other liabilities was capitalized in profit or loss (cf. note 10).
Furthermore, on December 30, 2008 the Company entered into a supplementary agreement to an existing finance lease agreement with Epigone, to the effect that the original agreement was restructured into an operating lease agreement in compliance with the accounting principles according to IAS/IFRS. The leased assets to be subsumed under the existing contract were previously classified as finance lease and were recognized accordingly under non-current assets. By the adjustment of the contract modalities, the contract was converted to operating lease in fiscal year 2008; thus the corresponding lease liabilities (December 30, 2008: 10,862 thousand Euro) as well as the leased assets were no longer accounted for. The profit resulting from this transaction was collected in the amount of 2,565 thousand Euro in 2008 (reported under other operating income). In August 2015 Elmos entered into a supplementary agreement to the existing lease agreement with the lessor under which future lease and tenant loan payments were reduced. Starting in 2016, the Company is committed to total lease payments of 4,988 thousand Euro (including contribution to administrative expenses) and total payments for tenant loans in the amount of 2,340 thousand Euro until 2021.
The Group did not generate material income from subletting in fiscal year 2015 (2014). Future minimum payments from non-cancelable subletting agreements are immaterial as well. Please refer to note 32 for further information.
In fiscal years 2010 through 2015, the Company purchased securities (bonds) from different banks. Insofar as the bonds' remaining terms to maturity are more than one year, they have been allocated to non-current assets (30,944 thousand Euro; 2014: 41,632 thousand Euro). Bonds that mature within one year have been allocated to current assets (9,584 thousand Euro; 2014: 10,226 thousand Euro).
Investments in subsidiaries considered of minor significance from the Group's perspective are accounted for in accordance with IAS 39. The Company holds shares in the following other entities:
| 12/31/2015 thousand Euro |
12/31/2014 thousand Euro |
|
|---|---|---|
| Epigone | 1 | 1 |
| Elmos USA Inc. | 19 | 19 |
| 20 | 20 |
Elmos holds 6% of the shares as of December 31, 2015, unchanged from the previous year.
This entity is a holding company for the U.S. subsidiaries of the Elmos Group. Elmos continues to hold 100% of the shares as of December 31, 2015. The entity does not conduct independent business operations.
| Entity | Currency | Total assets | Total liabilities | Earnings | Net income for the period |
|---|---|---|---|---|---|
| thousand | thousand | thousand | thousand | ||
| Epigone1 | EUR | 9,266 | 9,266 | 643 | –7 |
| Elmos USA Inc.2 | USD | – | – | – | – |
1 Presented figures are based on preliminary unaudited financial statements as of December 31, 2015. No financial statements of this entity are available at present.
| 12/31/2015 thousand Euro |
12/31/2014 thousand Euro |
|
|---|---|---|
| Deferred tax assets | ||
| Intangible assets | 25 | 95 |
| Property, plant and equipment | 553 | 600 |
| Securities | 221 | 0 |
| Other financial assets | 0 | 120 |
| Provisions for pensions | 478 | 493 |
| Other provisions | 478 | 529 |
| Payments on account/Accrued income | 0 | 365 |
| Other liabilities | 367 | 519 |
| Loss carry-forward | 584 | 1,411 |
| Tax credits | 1,507 | 1,135 |
| Others | 137 | 172 |
| Subtotal | 4,350 | 5,439 |
| Balance | –2,282 | –2,971 |
| 2,068 | 2,468 | |
| Deferred tax liabilities | ||
| Intangible assets | –1,822 | –2,662 |
| Property, plant and equipment | –1,706 | –2,274 |
| Securities | –49 | –770 |
| Other financial liabilities | –165 | 0 |
| Others | –224 | –139 |
| Subtotal | –3,966 | –5,845 |
| Balance | 2,282 | 2,971 |
| –1,684 | –2,874 | |
| Net deferred tax | 384 | –406 |
The balances stated above were determined in accordance with IAS 12.74 a) and b), i. e. deferred tax assets and deferred tax liabilities were netted against each other insofar as assets and liabilities related to the same tax authority and the taxable entity was entitled to offset current tax assets against tax liabilities.
Deferred tax assets also include tax effects from changes in equity outside profit or loss. The increase in the net amount of deferred tax coming to 790 thousand Euro comprises deferred tax in the consolidated income statement of 837 thousand Euro (income), other changes outside profit or loss in the amount of 279 thousand Euro (decrease in equity), and foreign currency adjustments in the amount of 232 thousand Euro (income). Other changes outside profit or loss essentially result from deferred tax effects within other comprehensive income as reported in the consolidated statement of comprehensive income and explained under note 22.
The capitalization of deferred tax assets on taxable loss carry-forward was made on the basis of the involved entities' medium-term business planning.
As of December 31, 2015 there was no loss carry-forward for domestic entities (2014: 32 thousand Euro in deferred tax assets on loss carry-forward in the amount of 99 thousand Euro (corporate tax) or rather 99 thousand Euro (trade tax)).
For foreign entities, deferred tax assets were recognized in the amount of 584 thousand Euro (2014: 1,379 thousand Euro) on taxable loss carry-forward and in the amount of 1,507 thousand Euro (2014: 1,135 thousand Euro) on tax credits.
Inventories can be broken down as follows:
| 12/31/2015 thousand Euro |
12/31/2014 thousand Euro |
|
|---|---|---|
| Raw materials | 5,494 | 4,069 |
| Work in process | 41,190 | 38,463 |
| Finished goods | 10,472 | 10,685 |
| Payments on account | 12 | 0 |
| 57,168 | 53,217 |
Impairment of inventories recognized as expense amounts to 523 thousand Euro (2014: 342 thousand Euro). This expense is disclosed under the item cost of sales. It comprises inventories whose future sale is improbable. These assets are attributable to the Micromechanics segment.
Trade receivables can be broken down as follows:
| 12/31/2015 thousand Euro |
12/31/2014 thousand Euro |
|
|---|---|---|
| Trade receivables | 32,834 | 35,151 |
| Valuation allowances | –23 | –129 |
| 32,811 | 35,022 |
The Elmos Group constantly assesses its customers' creditworthiness and usually requests no collateral. The Elmos Group has made valuation allowances for potential bad debt. Such bad debt loss incurred corresponded to the Management Board's estimates and assumptions and remains within customary limits.
The following table presents the changes in valuation allowances made for current and noncurrent receivables:
| 2015 thousand Euro |
2014 thousand Euro |
|
|---|---|---|
| Valuation allowances as of January 1 | 129 | 141 |
| Additions in the reporting period (valuation allowance expense) | 0 | 185 |
| Consumption | –185 | –130 |
| Reversals (appreciation in value of initially written-off receivables) | 0 | 0 |
| Currency translation effects | 79 | –67 |
| Valuation allowances as of December 31 | 23 | 129 |
The impairment of trade receivables is entered for the most part in allowance accounts. The decision whether to recognize a contingency risk through an allowance account or a direct writedown on the receivable depends on the assessment of the probability of debt loss. If receivables are considered unrecoverable, the corresponding impaired asset is derecognized.
The following table provides information on the credit risk carried by financial assets.
| Neither impaired nor overdue as of the reporting date |
Not impaired as of the reporting date and overdue in the following time bands | |||||||
|---|---|---|---|---|---|---|---|---|
| thousand Euro | Book value | Less than 30 days |
Between 30 and 60 days |
Between 61 and 90 days |
Between 91 and 180 days |
Between 181 and 360 days |
More than 360 days |
|
| Trade receivables | 12/31/2015 | 29,471 | 2,161 | 243 | 513 | 16 | 17 | 123 |
| Other financial assets | 12/31/2015 | 5,423 | 0 | 0 | 0 | 0 | 0 | 0 |
| Trade receivables1 | 12/31/2014 | 30,323 | 3,741 | 437 | 46 | 132 | 315 | 7 |
| Other financial assets | 12/31/2014 | 7,787 | 0 | 0 | 0 | 0 | 0 | 0 |
1 Prior-year amounts have been adjusted
The Company treats all highly liquid investments with a maturity of three months or less as of the date of acquisition as cash equivalents.
For the purpose of the preparation of consolidated financial statements, cash and cash equivalents include cash on hand and cash in banks.
Other non-current financial assets can be broken down as follows:
| 12/31/2015 thousand Euro |
12/31/2014 thousand Euro |
|
|---|---|---|
| Loan receivable from third parties | 680 | 800 |
| Receivables from joint ventures | 1,585 | 1,314 |
| Tenant loans | 1,048 | 1,751 |
| Receivable – sale of TetraSun investment | 313 | 282 |
| 3,627 | 4,147 | |
Other current financial assets can be broken down as follows:
| 12/31/2015 thousand Euro |
12/31/2014 thousand Euro |
|
|---|---|---|
| Loan receivable from third parties | 120 | 120 |
| Forward exchange contracts/Currency option transactions | 453 | 2,191 |
| Receivable – sale of TetraSun investment | 0 | 156 |
| Other financial assets | 1,223 | 1,173 |
| 1,796 | 3,640 |
Other receivables can be broken down as follows:
| 12/31/2015 thousand Euro |
12/31/2014 thousand Euro |
|
|---|---|---|
| Other tax assets | 4,403 | 5,830 |
| Accrued income | 1,546 | 1,544 |
| Other current receivables | 926 | 704 |
| 6,875 | 8,078 |
Income tax assets amount to 86 thousand Euro (December 31, 2014: 562 thousand Euro).
Non-current assets held for sale in the amount of 93 thousand Euro (December 31, 2014: 0 thousand Euro) comprise various production machines probably to be sold in fiscal year 2016.
These assets are entirely attributable to the Semiconductor segment.
The share capital of 19,942 thousand Euro entered in the statement of financial position as of December 31, 2015 (December 31, 2014: 19,860 thousand Euro) and consisting of 19,941,864 (December 31, 2014: 19,859,749) no-par value bearer shares is fully paid up. It was increased from the previous year by 82 thousand Euro due to exercised stock options.
As of December 31, 2015 the Company holds 214,587 (December 31, 2014: 280,825) of the Company's no-par shares, adding up to a theoretical share in the share capital of 215 thousand Euro (December 31, 2014: 281 thousand Euro).
Additional paid-in capital can be broken down as follows:
| 12/31/2015 thousand Euro |
12/31/2014 thousand Euro |
|
|---|---|---|
| Premiums | 85,052 | 84,005 |
| Stock options/Stock awards/Share matching | 5,905 | 5,652 |
| 90,956 | 89,657 |
Additional paid-in capital essentially includes premiums from capital increases and the issue of shares of Elmos Semiconductor AG. In 2015 this item was increased by altogether 545 thousand Euro due to the exercise of stock options from stock option plans. Additional paid-in capital was also increased by 521 thousand Euro due to share-based payments and the issue of treasury shares. Within this framework 66,238 treasury shares were assigned in 2015. Premiums were reduced by 19 thousand Euro on account of transaction costs.
The share made up of stock options, stock awards, and share matching increased by the amount of the 2015 expense from the issue of stock options (190 thousand Euro) and the share matching plan (63 thousand Euro, cf. note 23).
Other equity components can be broken down as follows:
| 12/31/2015 thousand Euro |
12/31/2014 thousand Euro |
|
|---|---|---|
| Foreign currency adjustments | 1,265 | –667 |
| Deferred tax (on foreign currency adjustments) | –277 | 120 |
| Hedges | –1,119 | –1,582 |
| Deferred tax (on hedges) | 367 | 519 |
| Changes in market value of available-for-sale financial assets | 673 | 133 |
| Deferred tax (on changes in market value of available-for-sale financial | ||
| assets) | 221 | –44 |
| Actuarial gains/losses | –1,275 | –1,310 |
| Deferred tax (on actuarial gains/losses) | 459 | 465 |
| Other equity components | –1,032 | –2,366 |
Reserves for foreign currency differences include differences from the currency translation of the financial statements of foreign subsidiaries. They also facilitate the recognition of translation differences relating to a net investment in a foreign business operation.
Hedging reserves represent the recognition of the market value of hedges outside profit or loss as of the reporting date (cf. notes 28 and 29). Changes in hedging reserves in 2014 and 2015 solely result from changes in the market value of hedges.
Reserves for available-for-sale financial assets are made in order to recognize changes in the fair value of selected financial instruments (cf. notes 29 and 30).
Reserves for actuarial gains/losses are made in order to reflect the gains or losses resulting from changes in actuarial assumptions for the determination of the cash value of the defined benefit obligation and/or the fair value of the plan assets.
The development of changes in equity outside profit or loss that are attributable to the owners of the parent is shown in the following table for the years 2014 and 2015:
| thousand Euro | |
|---|---|
| Balance as of 01/01/2014 | –3,920 |
| Exchange rate changes | 2,081 |
| Changes in deferred tax on exchange rate differences | –437 |
| Changes in hedges | 83 |
| Changes in deferred tax on hedges | –27 |
| Changes in available-for-sale financial assets | 17 |
| Changes in deferred tax on available-for-sale financial assets | –6 |
| Changes in actuarial gains/losses | –316 |
| Changes in deferred tax on actuarial gains/losses | 159 |
| Balance as of 12/31/2014 | –2,366 |
| Exchange rate changes | 1,932 |
| Changes in deferred tax on exchange rate differences | –397 |
| Changes in hedges | 463 |
| Changes in deferred tax on hedges | –152 |
| Changes in available-for-sale financial assets | –806 |
| Changes in deferred tax on available-for-sale financial assets | 264 |
| Changes in actuarial gains/losses | 35 |
| Changes in deferred tax on actuarial gains/losses | –6 |
| Balance as of 12/31/2015 | –1,032 |
In fiscal year 2015 the Company sold or devalued bonds. For these bonds adjustments in equity have been made outside profit or loss until the respective date of purchase or devaluation. Pursuant to IAS 1.92 these amounts recognized outside profit or loss have to be reported as reclassification adjustment ("recycling") as of the date of realization. The following table contains the effects of the sale transactions or devaluation on the consolidated income statement and the consolidated statement of comprehensive income in fiscal year 2015:
| before "recycling" (thousand Euro) |
"Recycling" (thousand Euro) |
After "recycling" (thousand Euro) |
|
|---|---|---|---|
| Consolidated net income with respect to the sold/devalued bonds in the consolidated income statement for fiscal year 2015 |
–119 | –273 | –392 |
| Other comprehensive income with respect to the sold/devalued bonds in the consolidated statement of comprehensive income for fiscal year 2015 |
0 | 273 | 273 |
| Total comprehensive income with respect to the sold/devalued bonds in fiscal year 2015 |
–119 | 0 | –119 |
Altogether 273 thousand Euro were reclassified from "Other comprehensive income" to the consolidated income statement in 2015 through profit or loss.
Ownership of the Company is as follows as of December 31, 2015:
| thousand Euro | % | |
|---|---|---|
| Weyer Beteiligungsgesellschaft mbH, Schwerte | 3,627 | 18.19 |
| Jumakos Beteiligungsgesellschaft mbH, Dortmund | 2,984 | 14.96 |
| ZOE-VVG GmbH, Duisburg | 2,307 | 11.57 |
| Treasury shares | 215 | 1.08 |
| Shareholders <10% shares | 10,810 | 54.21 |
| 19,942 | 100.00 |
The Management Board is authorized to increase the Company's share capital up to and including May 16, 2016, subject to the Supervisory Board's consent, once or more than once by up to 9,707 thousand Euro through the issue of new no-par value bearer shares against contributions in cash or in kind (authorized capital 2011/I).
The share capital is conditionally increased by up to 34 thousand Euro (conditional capital 2009). The conditional capital increase serves the redemption of stock options issued to employees, executives and Management Board members of the Company as well as to employees and executives of affiliated companies up to and including May 5, 2014 on the basis of the authorization given by the Annual General Meeting of May 6, 2009 (stock option plan 2009). Stock option plan 2009 expired in 2015 and no more new stock options can be issued from conditional capital 2009. For this reason Supervisory Board and Management Board will propose the cancelation of conditional capital 2009 to the 2016 Annual General Meeting.
The share capital is conditionally increased by up to 665 thousand Euro (conditional capital 2010/I). The conditional capital increase serves the redemption of stock options issued to employees, executives and Management Board members of the Company as well as to employees and executives of affiliated companies up to and including May 3, 2015 on the basis of the authorization given by the Annual General Meeting of May 4, 2010 (stock option plan 2010).
The share capital is conditionally increased by up to 1,200 thousand Euro (conditional capital 2015/I). The conditional capital increase serves the redemption of stock options issued to employees, executives and Management Board members of the Company as well as to employees and executives of affiliated companies up to and including May 7, 2020 on the basis of the authorization given by the Annual General Meeting of May 8, 2015 (stock option plan 2015). No stock options have so far been issued under this plan.
The share capital is conditionally increased by up to 7,800 thousand Euro (conditional capital 2015/II). The conditional capital increase is carried out by the issue of up to 7,800,000 no-par bearer shares only to the extent that the holders or creditors of convertible bonds or subscription warrants from option bonds, issued on the basis of the authorization of the Management Board of Elmos Semiconductor Aktiengesellschaft or one of the Company's group companies within the meaning of Section 18 AktG until May 7, 2020, make use of their conversion privileges or option rights or fulfill their conversion obligations, or shares are supplied under tender rights unless other forms of performance are utilized for servicing.
The Management Board is authorized by the Annual General Board's resolution of May 8, 2015 to purchase the Company's shares up to and including May 7, 2020, subject to the Supervisory Board's consent. This authorization is limited to the purchase of shares in the total volume of up to 10% of the current share capital. The authorization may be exercised entirely or in several parts, once or more than once, and for one or more than one purpose within the scope of the aforementioned limitation.
There are stock options in accordance with Section 192 (2) no. 3 AktG from stock option plans for employees, executives and Management Board members on the purchase of 621,398 shares. Each stock option entitles to the acquisition of one no-par value share with a theoretical share in the share capital of 1.00 Euro each.
In accordance with the German Stock Corporation Act, the dividend eligible for distribution is determined on the basis of the retained earnings Elmos Semiconductor AG reports in its annual financial statements (separate financial statements) prepared in accordance with the provisions of the German Commercial Code (HGB). In fiscal year 2015 Elmos Semiconductor AG distributed a dividend of 0.33 Euro per share out of the retained earnings of fiscal year 2014.
Elmos has issued stock option plans for employees, executives and Management Board members aimed at safeguarding the Company's success by enabling this circle of people to acquire the Company's shares. Within the framework of these plans, the Company is authorized to grant initially 495,000 new no-par shares (conditional capital 2009, meanwhile reduced to 33,720 shares by the exercise of stock options) and 1,250,000 new no-par shares (conditional capital 2010/I, meanwhile reduced to 665,198 shares by the exercise of stock options). Furthermore, the Company is authorized to grant 1,200,000 new no-par shares (conditional capital 2015/I) out of which no stock options have been granted as of now.
As of December 31, 2015 altogether 621,398 stock options are outstanding. These are accounted for by the various tranches as follows:
| 2009 | 2010 | 2011 | 2012 | Total | |
|---|---|---|---|---|---|
| tranche | tranche | tranche | tranche | ||
| Year of resolution | 2009 | 2010 | 2011 | 2012 | |
| Year of issue | 2009 | 2010 | 2011 | 2012 | |
| Exercise price in Euro | 3.68 | 7.49 | 8.027 | 7.42 | |
| Average share price of exercised options in Euro |
17.80 | 18.12 | 14.19 | n/a | |
| Blocking period ex issue (years) | 3 | 4 | 4 | 4 | |
| Exercise period after blocking period (years) |
3 | 3 | 3 | 3 | |
| Options outstanding as of 12/31/2014 (number) |
38,940 | 123,744 | 233,505 | 384,844 | 781,033 |
| Granted 2015 (number) | 0 | 0 | 0 | 0 | 0 |
| Exercised 2015 (number) | 26,790 | 50,357 | 48,523 | 0 | 125,670 |
| Forfeited 2015 (number) | 12,150 | 2,520 | 7,080 | 12,215 | 33,965 |
| Options outstanding as of 12/31/2015 (number) |
0 | 70,867 | 177,902 | 372,629 | 621,398 |
| Options exercisable as of 12/31/2015 (number) |
0 | 70,867 | 177,902 | 0 | 248,769 |
The 2009 tranche, based on the authorization given by the Annual General Meeting (AGM) of May 6, 2009 on the implementation of a stock option plan for the Company's employees, executives and Management Board members as well as employees and executives of affiliated companies, was issued in the year 2009 with an exercise price of 150% of the average amount of the closing prices of the share of Elmos Semiconductor AG on the Xetra trading platform over the last ten trading days prior to the resolution. The 2010, 2011 and 2012 tranches, based on the authorization given by the AGM of May 4, 2010 on the implementation of a stock option plan for the Company's employees, executives and Management Board members as well as employees and executives of affiliated companies, were issued respectively in the years 2010, 2011 and 2012 with an exercise price of 120% of the average amount of the closing prices of the share of Elmos Semiconductor AG on the Xetra trading platform over the last ten trading days prior to the resolution.
Options can be exercised only if the closing price of the Company's stock equals or exceeds the exercise price. Options can be exercised against payment of the exercise price. The pecuniary benefit the beneficiaries can achieve by exercising their options is limited to four times the exercise price. The blocking period is three years for the 2009 tranche and four years for the 2010, 2011 and 2012 tranches from the respective issue date. The other particulars of the granting and exercise of stock options can be derived from the specifications provided by the resolutions passed by the AGM of May 6, 2009 for the 2009 tranche and by the AGM of May 4, 2010 for the 2010, 2011 and 2012 tranches. With respect to these four tranches, the Company is authorized to offer compensation in cash instead of supplying shares to the beneficiaries.
In 2012 for the first time 201,500 stock options were exercised and in 2013 another 113,570 stock options, both from the 2009 tranche. In the year 2014, 100,320 stock options were exercised from the 2009 tranche and 105,044 stock options from the 2010 tranche. In the year 2015, 26,790 stock options were exercised from the 2009 tranche, 50,357 stock options from the 2010 tranche, and 48,523 stock options from the 2011 tranche.
The stock options' average fair value was 0.70 Euro for the 2009 tranche, 2.24 Euro for the 2010 tranche, 1.75 Euro for the 2011 tranche, and 1.42 Euro for the 2012 tranche. The fair value at grant date was determined under the Black-Scholes method for option pricing based on the following assumptions:
| 2009 tranche 2010 tranche 2011 tranche 2012 tranche | ||||
|---|---|---|---|---|
| Dividend yield | 0.0% | 0.0% | 3.0% | 3.0% |
| Expected volatility | 75.00% | 62.50% | 52.25% | 47.50% |
| Risk-free interest rate as of grant date | 1.79% | 1.67% | 1.69% | 0.31% |
| Expected term | 3 years | 4 years | 4 years | 4 years |
In fiscal year 2015 the Company incurred expenses of 190 thousand Euro (2014: 277 thousand Euro) for its stock option plans 2011 and 2012 (2014: for stock option plans 2010, 2011, and 2012).
In 2014 Elmos issued a share matching plan; eligible are members of the Management Board, selected other executives, and selected managing directors of affiliates who receive a written invitation to participate by Elmos. The share matching plan 2014 has a term until granting the final matching shares in the year 2018. The condition for participation is the beneficiaries' investment in Elmos stock from personal funds. For three Elmos shares acquired as a personal investment, over the next four years the participants generally receive one Elmos stock award each. Elmos assumes the obligation to pay taxes and other levies linked to the granting of matching shares. The right to matching shares exists only insofar as the beneficiary has not sold any of the shares acquired as a personal investment (including all matching shares received in the meantime) within the term of the plan. The participant has no rights to further matching shares if the employment relationship with Elmos ends by termination either by Elmos or by the employee. In fiscal year 2015 the Group incurred expenses in the amount of 109 thousand Euro (2014: 153 thousand Euro) for the share matching plan. Basis for the determination of fair value is the stock market price at the time the transaction is granted. Expected dividends have additionally been considered for the determination of fair value.
The development of net liabilities accounted for is as follows:
| 12/31/2015 thousand Euro |
12/31/2014 thousand Euro |
|
|---|---|---|
| Cash value of obligations | 3,175 | 3,215 |
| Time value of pension plan reinsurance | –2,679 | –2,616 |
| Liabilities recognized in the statement of financial position | 496 | 599 |
The Company has pension plans for (former) members of the Management Board of Elmos Semiconductor AG and members of the management of subsidiaries. According to the pension plans, benefits depend on the remuneration paid during the period of occupation.
The Company has taken out pension plan reinsurance policies, the claims of which have been assigned to the beneficiaries.
During the terms of the pensions, these are adjusted by 1.5% per annum. The expected pay increases are determined at 0.0%. Evaluation is carried out in accordance with IAS 19. The interest rate was 1.95% per annum as of December 31, 2015 (December 31, 2014: 1.9% p. a.). For actuarial assumptions with respect to mortality and disability risk, the Heubeck mortality tables 2005 G have been applied.
Pension plan expenses are allocated to the personnel expenses of the different business units and can be broken down as follows:
| 2015 | 2014 | |
|---|---|---|
| thousand Euro | thousand Euro | |
| Service cost | 0 | 0 |
| Interest | 61 | 126 |
| Pension expense (net) | 61 | 126 |
Changes in the cash value of defined benefit obligations and the fair value of reinsurance policies are as follows:
| 2015 thousand Euro |
2014 thousand Euro |
|
|---|---|---|
| Pension commitments as of 01/01 | 3,215 | 4,141 |
| Pension expense | 61 | 126 |
| Benefits paid to pensioners | –79 | –154 |
| Benefits paid on settlement | 0 | –1,123 |
| Gains on settlement | 0 | –281 |
| Actuarial gains (–)/losses | –22 | 506 |
| Pension commitments as of 12/31 | 3,175 | 3,215 |
| 2015 thousand Euro |
2014 thousand Euro |
|
|---|---|---|
| Fair value of reinsurance policies as of 1/1 | 2,616 | 3,648 |
| Income from plan assets | 50 | 114 |
| Employer's contributions | 90 | 87 |
| Benefits from reinsurance policies | –79 | –79 |
| Benefits based on settlement | 0 | –1,123 |
| Actuarial gains/losses (–) | 2 | –31 |
| Fair value of reinsurance policies as of 12/31 | 2,679 | 2,616 |
In fiscal year 2014 the pension plan for a former member of the Management Board of Elmos Semiconductor AG was adjusted. Due to the changed conditions, the pension agreement with the beneficiary is no longer considered a direct defined benefit commitment with benefits to be paid by Elmos Semiconductor AG but rather an indirect pension commitment for which no provisions must be made due to the scope of the commitment and completely congruent coverage by reinsurance policies. The cash value of the defined benefit obligation has been reduced by the amount of 1,404 thousand Euro within the framework of this adjustment. At the same time the fair value of reinsurance policies had to be adjusted in the amount of 1,123 thousand Euro so that the Company collected net income in the amount of 281 thousand Euro in the previous year.
Income from pension plan reinsurance amounts to 63 thousand Euro (2014: 48 thousand Euro) including payments made in the event of death. Premiums of 88 thousand Euro were paid (2014: 88 thousand Euro). Contribution payments in the amount of 88 thousand Euro are expected for 2016 as well.
There are also indirect pension commitments to (former) Management Board members of Elmos Semiconductor AG through a pension fund. For completely congruent coverage of their obligations, the pension fund has taken out corresponding reinsurance policies for the exact agreed contribution amount. In 2015 contributions to these pension plans amounted to 478 thousand Euro (2014: 475 thousand Euro).
The employer's social security contributions made for employees amounted to 4,510 thousand Euro in 2015 (2014: 4,405 thousand Euro). The contributions to employees' direct insurance came to 11 thousand Euro in 2015 (2014: 8 thousand Euro).
| 2015 thousand Euro |
2014 thousand Euro |
2013 thousand Euro |
2012 thousand Euro |
2011 thousand Euro |
|
|---|---|---|---|---|---|
| Pension commitment | 3,175 | 3,215 | 4,140 | 3,963 | 3,160 |
| Fair value of pension plan reinsurance | –2,679 | –2,616 | –3,648 | –3,207 | –2,972 |
| Underfunding (–) | –496 | –599 | –492 | –756 | –188 |
| Adjustments to plan liabilities based on experience |
1 | 153 | –24 | –114 | –8 |
| Adjustments to plan assets | |||||
| based on experience | 0 | 0 | 0 | 0 | 0 |
One of the essential valuation parameters is the discount rate applied. It is congruent to term and currency in accordance with IAS 19.83 and must be chosen in consideration of the interest rates of high-quality corporate bonds. A change of 1% point in the assumption of the interest rate would have had the following effect in the year under review:
| Increase by 1% point | Decrease by 1% point | |
|---|---|---|
| Effect on defined benefit obligations (thousand Euro) | –420 | 529 |
Based on the sensitivity analyses carried out, there would be no material effect on pension expense. For materiality considerations, sensitivity analyses are not carried out for other parameters.
| thousand Euro |
|
|---|---|
| 2016 | 80 |
| 2017 | 80 |
| 2018 | 142 |
| 2019 | 143 |
| 2020 | 144 |
The weighted average term of the pension benefit commitments is 16.7 years.
| 01/01/2015 thousand Euro |
Consumption thousand Euro |
Reversal thousand Euro |
Addition thousand Euro |
12/31/2015 thousand Euro |
|
|---|---|---|---|---|---|
| Vacation bonus | 828 | 537 | 8 | 810 | 1,093 |
| Bonus provisions | 1,115 | 1,115 | 0 | 1,110 | 1,110 |
| Employer's liability insurance association | 457 | 415 | 42 | 479 | 479 |
| Warranty | 3,100 | 4 | 1,646 | 3,513 | 4,963 |
| Licenses | 234 | 169 | 0 | 205 | 270 |
| Other provisions for employee benefits | 4,296 | 3,799 | 228 | 3,108 | 3,377 |
| Other provisions | 2,780 | 719 | 662 | 2,013 | 3,412 |
| 12,811 | 6,758 | 2,586 | 11,238 | 14,705 |
The warranty provision is made only on the basis of known individual risks according to risk assessment made as of the reporting date. This concerns individual warranty claims for which there is uncertainty regarding their utilization as of the reporting date. Provision for licenses includes payment commitments to in-house and external inventors. This provision is calculated on the basis of existing payment agreements. Other provisions for employee benefits essentially include bonus payment commitments, settlement payments, overtime, awards, and partial retirement. Other provisions comprise different identifiable individual risks and contingent obligations.
Current provisions will probably be drawn on in the course of the next fiscal year.
Non-current financial liabilities can be broken down as follows as of December 31, 2015:
| 12/31/2015 thousand Euro |
12/31/2014 thousand Euro |
|
|---|---|---|
| Loans | 36,639 | 37,076 |
The effective interest rates of non-current loans are between 1.75% and 4.90%.
As of December 31, 2015 the Company had various short-term lines of credit at its disposal in the total amount of 16,510 thousand Euro. As of December 31, 2015 the Company provided these credit facilities as security in the amount of 686 thousand Euro (2014: 617 thousand Euro). Current financial liabilities (December 31, 2015: 185 thousand Euro; December 31, 2014: 333 thousand Euro) represent the current portion of financial liabilities reported as non-current as well as other current liabilities to banks.
The following table lists all contractually defined incoming payments (indicated as negative values in the following table) from borrowing as well as payouts (indicated as positive values in the following table) for redemption, repayment and interest on financial liabilities accounted for as of December 31, 2015 and December 31, 2014. Payments are stated at undiscounted cash flows including interest payments for the next fiscal years. Also included are all cash flows from derivative financial instruments at positive and negative fair value.
| From 2021 | |||
|---|---|---|---|
| thousand | |||
| Euro | Euro | Euro | Euro |
| 1,562 | 26,480 | 11,008 | 0 |
| 21,810 | 0 | 0 | 0 |
| 301 | 0 | 2,000 | 0 |
| 592 | 519 | 0 | 0 |
| 2016 thousand |
2017 thousand |
2018-2020 thousand |
| 2015 thousand Euro |
2016 thousand Euro |
2017-2019 thousand Euro |
From 2020 thousand Euro |
|---|---|---|---|
| 1,707 | 1,695 | 37,764 | 0 |
| 21,856 | 0 | 0 | 0 |
| 3,705 | 0 | 2,000 | 0 |
| 555 | 555 | 487 | 0 |
The presentation of the liquidity analysis is based on the following assumptions: With respect to financial instruments at variable interest rates, the statement of future interest payments is based on current fixing as of the reporting date. Foreign currency amounts have been translated at the current reporting date's exchange rate; the resulting amount has been used for the determination of future payments.
Other liabilities include as of the reporting date:
| 12/31/2015 thousand Euro |
12/31/2014 thousand Euro |
|
|---|---|---|
| Other current liabilities | 2,629 | 6,509 |
| Other non-current liabilities | 2,458 | 3,878 |
| 5,087 | 10,387 |
Other current liabilities include among other items liabilities relating to wage income tax, social security contributions yet to be made, payments received on account of orders, and the current portion of hedged derivatives. The decrease from the previous year is essentially based on the 2015 settlement of payment obligations to non-controlling shareholders outstanding as of the prior-year reporting date (3,000 thousand Euro).
Other non-current liabilities essentially include the put option for non-controlling shareholders (2,000 thousand Euro; December 31, 2014: 2,000 thousand Euro; cf. note 29), recognized outside profit or loss. In view of the increase of the investment in MAZ Mikroelektronik-Anwendungszentrum GmbH im Land Brandenburg, Berlin, from 50% to 80% of the shares, reorganizing the existing call and put options became necessary. As a consequence the put option, treated as a deferred item in the amount of 2,392 thousand Euro in fiscal year 2013, was dissolved outside profit or loss in 2014 and the fair value of the put option on the remaining 20% interest was treated as a deferred item outside profit or loss based on the adjusted agreement. In combination with this put option Elmos Semiconductor AG simultaneously concluded a new call option. The identity of the vesting conditions of both options results in the immediate transfer of the economic property of the optioned shares (please also refer to note 33). From an economic perspective this meant an acquisition of 100% of the shares with the recognition of a purchase price liability (in this case in the amount of 2,000 thousand Euro). In addition to that, other non-current liabilities include the non-current portion of hedged derivatives (459 thousand Euro; December 31, 2014: 967 thousand Euro). Hedged derivatives are presented under note 29. The decrease in other non-current liabilities is based primarily on the reversal of the deferred income item (please also refer to note 14) in connection with the termination of an existing lease agreement, reported at 911 thousand Euro (non-current portion of the 1,113 thousand Euro cited under note 10) as of December 31, 2014.
Income tax liabilities amount to 6,889 thousand Euro (December 31, 2014: 2,565 thousand Euro) and include liabilities of the domestic and international subsidiaries originating in part from previous years.
Trade payables primarily concern the purchasing of materials and the claiming of services for maintaining business operations. Trade payables fully mature within one year.
The Company monitors the development of liabilities at fixed and variable interest rates and of current and non-current liabilities. In this context, business and other finance risks are reviewed. In 2010 the Company entered into two variable-interest rate loan agreements (forward loans) to safeguard financing through fiscal year 2017 within the framework of a comprehensive and longterm financing strategy oriented toward solidity. These transactions are accompanied by the respective agreement of a forward interest rate swap in form of a payer swap that corresponds with the respective underlying transaction in terms of volume, term, currency, and reference interest rate, i.e. economically the variable interest rate of the forward loan is converted into a fixed interest rate. The agreed forward loan agreements in the amounts of 15 million Euro (term: August 1, 2013 to September 30, 2017) and 2.5 million Euro (term: November 20, 2012 to November 20, 2017) form a hedging relationship with the respective forward interest rate swap in accordance with IAS 39, with the forward loan being declared as hedged item and the respective corresponding forward interest rate swap being declared as hedge. The reverse cash flows of forward loans and corresponding forward interest rate swaps are expected to balance each other completely over the respective terms. Due to the correspondence of the material parameters and terms and conditions of hedged item and hedge, the hedge is generally suited to provide effective protection for the hedged item. The hedge as forward interest rate swap is suited to adequately cover the risk of interest rate changes which affects the performance of the hedged item. The effectiveness of the hedging connection is regarded as "highly effective" for the beginning, the future, and the term of the hedging relationship. As the material terms and conditions and the parameters of hedged item and hedge match (critical term match) and as the transaction as a whole can also be referred to as a perfect micro hedge, the conditions for an assessment as "highly effective" are entirely given. The assessment of effectiveness based on a comparison of the critical terms will be conducted as of the following reporting dates as well. A review conducted as of December 31, 2015 did result in no changes to the assessment as "highly effective".
The interest rate swap is recognized at its fair value (market value including accrued interest) in the statement of financial position (cf. note 29). The cash flow hedging reserve or the cash flow hedge market value corresponds to the fair value. Changes in the fair value of the hedge are adjusted outside profit or loss if changes in the hedged item are outside profit or loss or not yet to be accounted for. The equity item is reversed if the hedged item must be recognized in profit or loss. Deferred tax outside profit or loss is considered for the market value of the cash flow hedge recognized in the statement of financial position.
—116—
Within the framework of the comprehensive approach described above, the Company also concluded two fixed-interest rate forward loans in 2010 with terms until 2017 (face value 7.5 million Euro) and 2018 (face value 10 million Euro) for which there are no corresponding hedges. The loan with a term until November 20, 2017 (7.5 million Euro) represents follow-up financing of a loan expired as of November 20, 2012 (10 million Euro). The loan with a term until June 30, 2018 (10 million Euro) represents follow-up financing of a loan expired as of June 30, 2013. Both loans have been reported under the Group's financial liabilities since the beginning of their respective terms.
The measurement of the interest rate swaps follows corresponding evaluation procedures or is based on evaluations provided by the banks involved. The market value of interest rate swaps accounted for is determined by applying the interest rates and credit ratings of the contracting parties as of the reporting date on the basis of a discounted cash flow model.
The Company has concluded several currency-related hedges. Those are forward exchange rate contracts for the currency U.S. dollar; corresponding income or expenses have been stated under the item "Exchange rate gains/losses" (cf. note 29). The market value of forward exchange rate contracts is measured in application of the exchange rates as of the reporting date based on market assessments of the banks involved.
Moreover, the Company concluded structured term deposit transactions in 2015, providing for repayment of the investment amount in a foreign currency (essentially U.S. dollar) if a predefined EUR/foreign currency reference exchange rate is exceeded upon the date of maturity of the transaction (cf. note 29 for further information).
With respect to the classification of financial instruments, the Company follows the measurement categories defined by IAS 39 as the spreading of risks within these measurement categories is similar.
The book values of financial instruments such as trade receivables and trade payables essentially correspond to the market value due to the short-term maturities of these financial instruments.
The book values of short-term and long-term securities classified as "available for sale correspond to the market value. Measurement was made on the basis of market values provided by the involved banks as of the reporting date. Securities classified as "loans and receivables" were measured at amortized cost.
The (forward) interest rate swaps reported under the item hedged derivatives (cf. note 28) were recognized at (negative) market value under other financial liabilities outside profit or loss according to their respective maturities. The determination of the market values as of December 31, 2015 was based on a discounted cash flow (DCF) model in consideration of current interest yield curves as of the reporting date.
The market value of forward exchange contracts/currency option transactions (cf. note 30) was determined on the basis of the currency exchange rates provided by the involved banks as of the reporting date.
The market value of liabilities to banks was established on the basis of market prices determined for the same or comparable issues and of the interest rates currently offered to the Company.
With respect to other financial liabilities accounted for at fair value, the market value of the put option for non-controlling shareholders was determined on the basis of a DCF model according to the terms and conditions of the contract agreed on with the shareholder (please also refer to note 26).
The following tables indicate book values and fair values of each category of financial assets and liabilities.
| Measurement according to IAS 39 | Measurement according to IAS 39 | ||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| thousand Euro | Cat. Book value 12/31/2015 |
Amortized cost |
Acquisition cost |
At market value through profit or loss |
At market value outside profit or loss |
Fair value 12/31/2015 |
Book value 12/31/2014 |
Amortized cost |
Acquisition cost |
At market value through profit or loss |
At market value outside profit or loss |
Fair value 12/31/2014 |
|
| Financial assets | |||||||||||||
| Investments | AfS | 20 | 0 | 20 | 0 | 0 | 20 | 20 | 0 | 20 | 0 | 0 | 20 |
| Securities (long-term) | LaR | 1,000 | 1,000 | 0 | 0 | 0 | 1,000 | 0 | 0 | 0 | 0 | 0 | 0 |
| Securities (long-term) | AfS | 29,944 | 0 | 0 | 0 | 29,944 | 29,944 | 41,632 | 0 | 0 | 0 | 41,632 | 41,632 |
| Securities (short-term) | LaR | 0 | 0 | 0 | 0 | 0 | 0 | 4,000 | 4,000 | 0 | 0 | 0 | 4,000 |
| Securities (short-term) | AfS | 9,584 | 0 | 0 | 0 | 9,584 | 9,584 | 6,226 | 0 | 0 | 0 | 6,226 | 6,226 |
| Trade receivables | LaR | 32,811 | 32,811 | 0 | 0 | 0 | 32,811 | 35,022 | 35,022 | 0 | 0 | 0 | 35,022 |
| Cash and cash equivalents | LaR | 50,000 | 50,000 | 0 | 0 | 0 | 50,000 | 32,520 | 32,520 | 0 | 0 | 0 | 32,520 |
| Other financial assets | |||||||||||||
| Other receivables and assets | LaR | 1,646 | 1,646 | 0 | 0 | 0 | 1,646 | 1,709 | 1,709 | 0 | 0 | 0 | 1,709 |
| Other loans | LaR | 3,314 | 3,314 | 0 | 0 | 0 | 3,314 | 3,865 | 3,865 | 0 | 0 | 0 | 3,865 |
| Forward exchange contracts/Currency option transactions | HfT | 453 | 0 | 0 | 453 | 0 | 453 | 2,190 | 0 | 0 | 2,190 | 0 | 2,190 |
| Call options | HfT | 3 | 0 | 0 | 3 | 0 | 3 | 0 | 0 | 0 | 0 | 0 | 0 |
| Embedded derivatives | HfT | 7 | 0 | 0 | 7 | 0 | 7 | 23 | 0 | 0 | 23 | 0 | 23 |
| Total financial assets | 128,782 | 88,771 | 20 | 463 | 39,528 | 128,782 | 127,207 | 77,116 | 20 | 2,213 | 47,858 | 127,207 | |
| Financial liabilities | |||||||||||||
| Trade payables | OL-AC | 21,810 | 21,810 | 0 | 0 | 0 | 21,810 | 21,856 | 21,856 | 0 | 0 | 0 | 21,856 |
| Liabilities to banks | OL-AC | 36,824 | 36,824 | 0 | 0 | 0 | 37,852 | 37,409 | 37,409 | 0 | 0 | 0 | 38,737 |
| Other financial liabilities | |||||||||||||
| Miscellaneous financial liabilities | OL-AC | 301 | 301 | 0 | 0 | 0 | 301 | 3,705 | 3,705 | 0 | 0 | 0 | 3,705 |
| Forward exchange contracts/Currency option transactions | HfT | 107 | 0 | 0 | 107 | 0 | 107 | 0 | 0 | 0 | 0 | 0 | 0 |
| Embedded derivatives | HfT | 4 | 0 | 0 | 4 | 0 | 4 | 0 | 0 | 0 | 0 | 0 | 0 |
| Put option | OL-FV | 2,000 | 0 | 0 | 2,000 | 0 | 2,000 | 2,000 | 0 | 0 | 2,000 | 0 | 2,000 |
| Hedged derivatives (short-term) | OL-FV | 661 | 0 | 0 | 0 | 661 | 661 | 616 | 0 | 0 | 0 | 616 | 616 |
| Hedged derivatives (long-term) | OL-FV | 459 | 0 | 0 | 0 | 459 | 459 | 967 | 0 | 0 | 0 | 967 | 967 |
| Total financial liabilities | 62,166 | 58,935 | 0 | 2,111 | 1,120 | 63,194 | 66,553 | 62,970 | 0 | 2,000 | 1,583 | 67,881 | |
| Aggregated by measurement category | |||||||||||||
| Loans and receivables (LaR) | 88,771 | 88,771 | 0 | 0 | 0 | 88,771 | 77,116 | 77,116 | 0 | 0 | 0 | 77,116 | |
| Available for sale (AfS) | 39,548 | 0 | 20 | 0 | 39,528 | 39,548 | 47,878 | 0 | 20 | 0 | 47,858 | 47,878 | |
| Financial assets held for trading (HfT) | 463 | 0 | 0 | 463 | 0 | 463 | 2,213 | 0 | 0 | 2,213 | 0 | 2,213 | |
| Financial liabilities held for trading (HfT) | 111 | 0 | 0 | 111 | 0 | 111 | 0 | 0 | 0 | 0 | 0 | 0 | |
| Financial liabilities accounted for at amortized cost (OL-AC) | 58,935 | 58,935 | 0 | 0 | 0 | 59,963 | 62,970 | 62,970 | 0 | 0 | 0 | 64,298 | |
| Financial liabilities accounted for at fair value (OL-FV) | 3,120 | 0 | 0 | 2,000 | 1,120 | 3,120 | 3,583 | 0 | 0 | 2,000 | 1,583 | 3,583 |
The Group applies the following hierarchy for the determination and statement of the fair values of financial instruments according to the respective valuation methods:
| Level 1 thousand Euro |
Level 2 thousand Euro |
Level 3 thousand Euro |
|
|---|---|---|---|
| Securities | |||
| January 1, 2014 | 42,691 | 0 | 0 |
| Addition securities (long-term) | 5,350 | 0 | 0 |
| Disposal securities (long-term) | 0 | 0 | 0 |
| Market valuation securities (long-term) | 189 | 0 | 0 |
| Addition securities (short-term) | 0 | 0 | 0 |
| Disposal securities (short-term) | –200 | 0 | 0 |
| Market valuation securities (short-term) | –172 | 0 | 0 |
| December 31, 2014 | 47,858 | 0 | 0 |
| Addition securities (long-term) | 3,971 | 0 | 0 |
| Disposal securities (long-term) | –4,787 | 0 | 0 |
| Transfer securities (long-term) | –9,996 | 0 | 0 |
| Market valuation securities (long-term) | –876 | 0 | 0 |
| Addition securities (short-term) | 255 | 0 | 0 |
| Disposal securities (short-term) | –6,652 | 0 | 0 |
| Transfer securities (short-term) | 9,996 | 0 | 0 |
| Market valuation securities (short-term) | –241 | 0 | 0 |
| December 31, 2015 | 39,528 | 0 | 0 |
| Level 1 | Level 2 | Level 3 | |
|---|---|---|---|
| thousand Euro | thousand Euro | thousand Euro | |
| Investments | |||
| January 1, 2014 | 0 | 0 | 470 |
| Disposal DMOS investment | 0 | 0 | –450 |
| December 31, 2014 | 0 | 0 | 20 |
| December 31, 2015 | 0 | 0 | 20 |
| Hedged derivatives | |||
| January 1, 2014 | 0 | –1,665 | 0 |
| Correction of measurement of hedged derivatives outside | |||
| profit or loss (short-term and long-term) | 0 | 83 | 0 |
| December 31, 2014 | 0 | –1,583 | 0 |
| Correction of measurement of hedged derivatives outside | |||
| profit or loss (short-term and long-term) | 0 | 463 | 0 |
| December 31, 2015 | 0 | –1,120 | 0 |
| Forward exchange contracts/Currency option transactions | |||
| January 1, 2014 | 0 | 0 | 0 |
| Addition forward exchange contracts/currency option transactions |
0 | 2,190 | 0 |
| December 31, 2014 | 0 | 2,190 | 0 |
| Addition forward exchange contracts/currency option | |||
| transactions | 0 | 346 | 0 |
| Disposal forward exchange contracts/currency option | |||
| transactions | 0 | –2,190 | 0 |
| December 31, 2015 | 0 | 346 | 0 |
| Call options | |||
| January 1, 2014 | 0 | 0 | 48 |
| Derecognition call option | 0 | 0 | –48 |
| December 31, 2014 | 0 | 0 | 0 |
| Addition call option | 0 | 0 | 3 |
| December 31, 2015 | 0 | 0 | 3 |
| Level 1 thousand Euro |
Level 2 thousand Euro |
Level 3 thousand Euro |
|
|---|---|---|---|
| Put option | |||
| January 1, 2014 | 0 | 0 | –2,392 |
| Derecognition put option | 0 | 0 | 2,392 |
| Addition put option | 0 | 0 | –2,000 |
| December 31, 2014 | 0 | 0 | –2,000 |
| December 31, 2015 | 0 | 0 | –2,000 |
| Embedded derivatives | |||
| January 1, 2014 | 0 | 0 | 0 |
| Addition embedded derivatives | 0 | 23 | 0 |
| December 31, 2014 | 0 | 23 | 0 |
| Addition embedded derivatives | 0 | 3 | 0 |
| Market valuation embedded derivatives | 0 | –23 | 0 |
| December 31, 2015 | 0 | 3 | 0 |
The securities reported under hierarchy level 1 are bonds classified by Elmos as available for sale. Plausible alternative assumptions would not result in material changes of the reported fair value.
The hedged derivatives allocated to hierarchy level 2 comprise the Company's interest rate swaps explained under note 28. The effects of a changed market interest rate level on fair value are discussed under note 30 in the context of the explanation of the interest rate risk. The Company's forward exchange contracts/currency option transactions are also presented under this hierarchy level (cf. note 28). The effects of a changed exchange rate on fair value are discussed under note 30 in the context of the explanation of exchange rate risk.
The available-for-sale financial assets reported under hierarchy level 3 are investments in various entities, among other items. For considerations of materiality, the book values are assumed to essentially correspond to the market values. The call and put options agreed on with a non-controlling shareholder are measured annually at fair value under the DCF method and in consideration of the contract terms and conditions. In the course of the measurement process, the required publicly accessible market data are collected, and non-observable input parameters are reviewed on the basis of available recent in-house information and updated if necessary. Material changes to input parameters and their effects on book values are routinely reported to management. In the second quarter of 2015 Elmos Semiconductor AG entered into a cooperation agreement with a foreign development company. Part of this agreement is an option on the purchase of shares in this company. The purchase price for this call option corresponds to the fair value as of the reporting date.
For changes in the accounting treatment of the call and put options reported under hierarchy level 3 please refer to note 26. The put option agreed on with a non-controlling shareholder was measured at the cash value of the repurchase amount in fiscal year 2015 in application of the DCF method. Taken into consideration were the planning period from 2017 to 2020 defined in the put option agreement as well as a discount rate of 0.00% (2014: 0.00%). With respect to both call option and put option, plausible alternative assumptions would not lead to material changes in the fair values as stated.
The following table shows the net gains or losses from financial instruments recognized in the consolidated income statement.
| Gains (+)/Losses (−) | 2015 thousand Euro |
2014 thousand Euro |
|---|---|---|
| LaR (loans and receivables) | 80 | –14 |
| AfS (available for sale) | –311 | 0 |
| OL-AC (other liabilities-acquisition cost) | –135 | –455 |
| OL-FV (other liabilities-fair value) | 0 | 0 |
| HfT (held for trading) | 2,431 | 2,742 |
In fiscal year 2015 Elmos realized exchange rate gains in the amount of 2,328 thousand Euro and incurred exchange rate losses in the amount of 223 thousand Euro from currency-related hedges (2014: exchange rate gains of 580 thousand Euro and exchange rate losses of 52 thousand Euro), reported in the consolidated income statement under the item "Exchange rate gains/losses". The forward contracts that reach beyond the reporting date December 31, 2015 result in a positive market value of 453 thousand Euro (2014: 2,190 thousand Euro) and a negative market value of 107 thousand Euro (2014: 0 thousand Euro), reported in the consolidated income statement under the item "Exchange rate gains/losses".
Moreover, the Company concluded structured term deposit transactions in 2015. The effects on the financial position as of December 31, 2015 are limited to the collected interest income (2014: collected interest income and exchange rate gains generated in the amount of 0 thousand Euro and exchange rate losses incurred at 66 thousand Euro).
In the category "available for sale", securities were written down through profit or loss as the market value of these financial assets is below their book value and there are objective indications of impairment within the meaning of IAS 39.59 (f). The corresponding expense of 311 thousand Euro was determined according to the listed stock market price of these securities and reported in the consolidated income statement under the item finance expense.
Elmos recognizes valuation allowances for trade receivables classifiable as "loans and receivables" under other operating expenses. Gains from foreign currency translation of financial assets classifiable as "loans and receivables" primarily result from trade receivables. Net gains and losses essentially comprise valuation allowances, currency translation effects, and debt loss.
Expenses or income classifiable as "OL-AC" result from exchange rate differences of trade payables.
Interest relating to financial instruments is stated in interest income (cf. note 8).
Elmos Semiconductor AG comprises the various risk managing measures within the Company in a uniform and consistent risk management system. This system provides for regular interviews and the routine identification and assessment of new and known risks by the respective responsible executives and employees and defines a closed-loop reporting system.
In addition to that, the Elmos Group's business units give reports on the development of finance and operations on a monthly basis. By these measures, Management Board and Supervisory Board are informed about the risk situation regularly and in good time and are thus enabled to decide on appropriate measures for risk minimization and risk prevention.
The risk management system fulfills the requirements of Section 91 (2) AktG and has been reviewed by the auditing firm for its compliance with the provisions of the Stock Corporation Act (AktG) and found suitable for detecting developments that could jeopardize the Company's continued existence at an early stage. The risk management system will be expanded continuously and advanced in response to changing basic conditions in the future.
With respect to its assets, liabilities, planned transactions and firm commitments, Elmos is particularly exposed to credit risks, liquidity risks, and risks from changes in exchange rates and interest rates as well as other price risks. The financial risk management aims at detecting and assessing these market risks early on in a continuous process and in close cooperation with the Group's operating business units, and at limiting them if necessary through adequate measures. A case in point, interest and exchange rate risks are controlled and contained by utilizing suitable derivatives. In doing so, Elmos enters into forward exchange contracts and currency option transactions to hedge foreign currency transactions for periods consistent with committed exposures. These derivative transactions for currency hedging minimize the impact of exchange rate fluctuations on the Company's profitability. Elmos exclusively uses these hedging instruments for non-speculative, risk containing purposes in connection with the hedged items.
The basic principles of financial policy and risk strategy and the derived guidance are discussed regularly by Management Board and Supervisory Board. The implementation of the strategy and the operation of financial and risk management are the obligation of the Management Board and the responsible employees.
In fiscal year 2015 a review of the system for compliance with the requirements resulting from Section 20 (1) WpHG (German Securities Trading Act) was conducted ("EMIR"), leading to no objections.
Liquid assets are essentially cash and cash equivalents. With respect to the investment of liquid assets, the Group is potentially exposed to losses due to credit risk if banks or issuers do not fulfill their obligations. Elmos controls the resulting risk position by a diversification of products and contracting parties.
For the purpose of a portfolio approach, investments of liquid assets are usually short-term to medium-term in consideration of high flexibility and diversification with respect to banks and issuers, among other factors. A substantial part of the portfolio is placed with banks with high credit ratings under deposit protection (e.g. overnight deposits and fixed deposits, structured time deposits). In addition to that, liquid assets are invested in listed bonds (corporate bonds, structured bonds with credit rating components) and to a lesser extent, in pursuit of an investment mix, in borrower's notes ("Schuldscheinanlagen"). The emphasis of issuer's ratings continues to be placed on investment grade ratings.
Trade receivables primarily originate from sales generated with microelectronic components, sensors, system parts, and development services. Customers are for the most part automotive suppliers and to a lesser extent companies in the industrial sector, consumer goods industry, medical technology industry, and other sectors. Accounts receivable are continuously monitored in the individual segments; contingency risks are met with specific allowances for bad debt. The terms of payment reflect the historical development of the respective customer-supplier relationship; observation of the terms is monitored continuously. With respect to new customers, creditworthiness information is gathered in advance and credit limits are determined if necessary. Business transactions with major customers are subject to special contingency risk supervision. Elmos pursues a stringent credit policy altogether. The maximum contingency risk is reflected by the book values of the financial assets reported in the statement of financial position.
Against the backdrop of continued global uncertainties, outstanding receivables are monitored and reminded with scrutiny as part of a continuous operational process.
The liquidity risk of Elmos addresses the contingency that the Company might not be able to fulfill its financial obligations, e.g. the payment of finance debt, the payment of trade payables, and the payment obligations arising from lease agreements, at maturity. A liquidity reserve in the form of cash and cash equivalents, investments of high fungibility and convertibility into cash, and sufficiently available free lines of credit is provided so that this risk will not materialize and the liquidity and financial flexibility of Elmos are assured at any time. In addition to that, the Group's liquidity is constantly monitored within the framework of short-term and long-term liquidity planning. Apart from their respective internal financing power, liquidity of the domestic and international subsidiaries is provided through the Group's lines of credit and loans as well as by banks. The cash flows from financial liabilities are presented under note 25. Further information about safeguarding medium-term financing can be found under note 28.
Due to its international business activity, Elmos is exposed to market price risks as a result of changes in exchange rates, interest rates, and prices for raw materials (e.g. gold). There are also market price risks within the scope of guaranteeing electric power and natural gas supplies for the medium term. These market price risks could have a negative effect on the Group's financial, profit and economic situation.
Business operations as well as financial results and cash flows are partly exposed to risks from exchange rate fluctuations due to the Company's international orientation. These fluctuations occur principally between the euro and the U.S. dollar (USD).
Exchange rate risks result from operating activities (sales, purchasing) and investments. Due to increased purchasing of services in U.S. dollar, especially assembly and foundry services from Southeast Asia typically billed in U.S. dollar in the global market, the Group's currency exposure has expanded. Generally Elmos still aims for natural hedging, i.e. a balance of U.S. dollar cash inflow and outflow, and takes measures throughout the Group for containing the exposure. If the Group management considers it necessary, the excess volume not covered by natural hedging is controlled actively by concluding derivative financial instruments for currency hedging, among other measures. Foreign currency risks that do not affect the Group's cash flows (i.e. risks resulting from the translation of foreign subsidiaries' assets and liabilities into the Group's reporting currency) are generally not hedged.
Elmos was exposed to currency risks as of the reporting date. In fiscal year 2015, Elmos realized exchange rate gains in the amount of 2,328 thousand Euro (2014: 580 thousand Euro) and incurred exchange rate losses in the amount of 223 thousand Euro (2014: 52 thousand Euro) from U.S. dollar currency hedges. In addition to that, from the measurement of U.S. dollar hedges still open by the reporting date, Elmos recorded income of 453 thousand Euro (2014: 2,190 thousand Euro) and expenses of 107 thousand Euro (2014: 0 thousand Euro) in the consolidated income statement. Furthermore, exchange rate gains in the amount of 0 thousand Euro (2014: 0 thousand Euro) and exchange rate losses in the amount of 0 thousand Euro (2014: 66 thousand Euro) resulted in 2015 from structured term deposits where the repayment of the investment amount in foreign currency (essentially U.S. dollar) is called for insofar as a previously fixed reference exchange rate between EUR and the foreign currency is exceeded as of the due date of the transaction. These investments thus resulted solely in interest advantages.
Had the euro been revalued (devalued) against the U.S. dollar by 10% as of December 31, 2015 with respect to the monetary financial instruments, the income (before taxes) would have been 1,138 thousand Euro lower (1,361 thousand Euro higher) (2014: 1,998 thousand Euro lower (2,424 thousand Euro higher)). The Group's equity effect would have been the same amount via the result effect in consideration of income tax incurred.
The risk of interest rate changes of Elmos as of the reporting date results from the forward interest rate swaps concluded in fiscal year 2010 with respect to the correspondingly concluded forward loans (cf. note 28), among other factors. Had the market interest rate level been higher (lower) by 100 basis points, equity would have been higher by 295 thousand Euro (decrease in equity by 304 thousand Euro) due to group accounting outside profit or loss (2014: increase (decrease) in equity by 493 (501) thousand Euro). Deferred tax on this amount would also have to be considered.
There is also the risk of interest rate changes with respect to the securities classified as "available for sale". Had the market interest rate level been higher (lower) by 100 basis points, equity would have been lower by 738 thousand Euro (increase in equity by 759 thousand Euro) (2014: decrease (increase) in equity by 1,265 (1,236) thousand Euro) and expenses of 23 thousand Euro (income of 24 thousand Euro) (2014: 0 (0) thousand Euro). Deferred tax on these amounts would also have to be considered.
With respect to the put option, a 100 basis points higher (lower) market interest rate level would result in an increase (decrease) in equity of 4 (0) thousand Euro (2014: increase (decrease) in equity by 59 (0) thousand Euro). The effect on other non-current liabilities would come to a corresponding amount.
For the forward loans described under note 28, there is no risk from loan commitments as of December 31, 2015 – corresponding with the previous year – as all loan commitments have been utilized and there are no new loan commitments.
Elmos is exposed to interest rate risks primarily in the euro area. Within the context of financing decisions, the Management Board regularly determines the target mix of fixed and variableinterest liabilities, and the financing structure is derived and implemented on that basis. For long-term financing projects, fixed interest rates are usually agreed on for securing the basis of calculation. Interest derivatives are also utilized if necessary.
Further information about securing long-term financing can be found under note 28.
Elmos has secured the supply with electricity and natural gas since fiscal year 2014 for the medium term by concluding a fixed price in advance. A 10% higher (lower) electricity rate would result in an increase (decrease) in earnings by 175 thousand Euro (175 thousand Euro) for fiscal year 2015 (2014: increase (decrease) in earnings by 142 thousand Euro (141 thousand Euro)). A 10% higher (lower) gas price would result in an increase (decrease) in earnings by 238 thousand Euro (237 thousand Euro) for fiscal year 2015 (2014: increase (decrease) in earnings by 317 thousand Euro (317 thousand Euro)). The Group's equity effect with respect to electricity and natural gas would have been the same amount via the result effect in consideration of income tax incurred.
It is the primary objective of the Elmos Group's capital management to assure that an adequate credit rating, liquidity at any time and at high financial flexibility, and a solid capital structure are maintained in support of the Company's business operations and their continuation in the long term and for the protection of the interests of the shareholders, employees, and all other addressees of the annual report. Elmos stands for the strategy of a continuous, sustained increase in shareholder value.
The Management Board actively controls the capital structure of the Elmos Group and makes adjustments in consideration of the economic framework as well as the risks carried by the corresponding assets. For maintaining or adjusting the capital structure, e.g. dividends may be paid to the shareholders or new stock may be issued. As of December 31, 2015 and December 31, 2014, no changes were made to the objectives, guidelines, or procedures.
The Group monitors its capital based on net debt or rather net cash in absolute terms and the equity ratio. Net cash includes cash and cash equivalents as well as securities less current and non-current financial liabilities. The equity ratio puts equity in proportion to total assets.
| 2015 | 2014 | |
|---|---|---|
| Net cash | 53.7 million Euro | 47.0 million Euro |
| Equity ratio | 71.5% | 70.0% |
The Company receives subsidies or government grants used for financing research and development projects as well as subsidies in accordance with the German Combined Heat and Power Act ("Kraft-Wärme-Kopplungsgesetz" – KWKG). Government grants used for research and development projects were offset against research and development expenses and recognized in that item (653 thousand Euro in 2015, 611 thousand Euro in 2014). Subsidies according to the KWKG were allocated to the individual functional areas depending on causation and offset accordingly (399 thousand Euro in 2015, 491 thousand Euro in 2014). Government grants for capital expenditures for property, plant and equipment were collected in the amount of 46 thousand Euro in 2015 (0 thousand Euro in 2014).
The Company has entered into non-cancelable rental and lease agreements for the administration building and a parking garage, the terms of which extend until 2021. The Company has also entered into lease agreements for technical equipment and machinery as well as factory and office equipment, the terms of which extend until 2019 in part. Furthermore, there are lease agreements for the car pool, office machines, and technical equipment and machinery to a customary extent.
In fiscal year 2015 lease agreements with respect to the production building were terminated amicably ahead of schedule. The underlying assets (land and building) were bought back and are now reported under property, plant and equipment in the consolidated financial statements (cf. note 14).
Within the framework of the lease agreements with Epigone, Elmos is committed to lease payments of 4,988 thousand Euro until 2021 (including contributions to administrative expenses and sales tax) plus payments of 2,340 thousand Euro for tenant loans (cf. note 14).
SMI entered into a property lease agreement on January 26, 2006 for land and a plant erected thereon with McCarthy Manager LLC, Washington/U.S.A. The contract provides for a term of 15 years. The monthly lease is 60 thousand U.S. dollars with the provision of an annual adjustment linked to the U.S. consumer price index, plus supplementary lease of currently 18 thousand U.S. dollars. The agreement is not cancelable during the lease term. After the completion of the lease term, SMI may demand the extension of the lease for another ten years, and the lessor may demand an extension for another five years.
In 2005 Elmos entered into an agreement for the provision of research and development services as well as the use of a production line with a contract term until 2015; the period for using the production line has meanwhile been extended to 2017.
Total expenditure for rental and lease agreements amounted to 8,404 thousand Euro in 2015 and 9,791 thousand Euro in 2014.
As of December 31, 2015 and December 31, 2014, future minimum payments owed under noncancelable rental, lease, maintenance, and insurance agreements with initial or remaining terms of more than one year are as follows:
| December 31, 2015 thousand Euro |
December 31, 2014 thousand Euro |
|
|---|---|---|
| 2015 | n/a | 24,312 |
| 2016 | 25,615 | 17,242 |
| 2017 | 10,898 | 10,733 |
| 2018 | 7,556 | 6,159 |
| 2019 | 4,164 | 5,429 |
| 2020 | 3,060 | n/a1 |
| Later years | 2,043 | 5,043 |
| 53,336 | 68,918 |
1 Included in later years
There is a purchase commitment in the amount of 4,283 thousand Euro from investment orders placed (2014: 2,867 thousand Euro).
Elmos has assumed joint liability, in effect until 2016 at the latest, with respect to lease liabilities transferred to a third-party company within the framework of an asset deal in the amount of 45 thousand Euro as of the reporting date (2014: 379 thousand Euro). So far no claims have been filed. The risk of future claims is considered low.
The parent company as well as the subsidiaries controlled in accordance with IFRS 10 have been included in the consolidated financial statements at hand.
| Capital share 1 | |
|---|---|
| (direct and indirect) in % |
|
| Parent | |
| Elmos Semiconductor AG, Dortmund | |
| Subsidiaries | |
| Elmos Design Services B.V., Nijmegen/Netherlands | 100.0 |
| Elmos Korea Co. Ltd., Seoul/Korea | 100.0 |
| Elmos N.A. Inc., Farmington Hills/U.S.A. | 100.0 |
| Elmos Semiconductor B.V., Nijmegen/Netherlands | 100.0 |
| Elmos Semiconductor Singapore Pte. Ltd., Singapore | 100.0 |
| Elmos Japan K.K., Tokyo/Japan | 100.0 |
| Elmos Semiconductor Technology (Shanghai) Co., Ltd., Shanghai/China | 100.0 |
| Elmos Services B.V., Nijmegen/Netherlands | 100.0 |
| European Semiconductor Assembly (eurasem) B.V., Nijmegen/Netherlands | 100.0 |
| GED Electronic Design GmbH, Frankfurt/Oder | 100.0 |
| DMOS Dresden MOS Design GmbH, Dresden | 74.8 |
| MAZ Mikroelektronik-Anwendungszentrum GmbH im Land Brandenburg, Berlin | 80.0 |
| Mechaless Systems GmbH, Bruchsal | 100.0 |
| Micro Systems on Silicon (MOS) Limited, Pretoria/South Africa | 51.0 |
| Silicon Microstructures Inc., Milpitas/U.S.A. | 100.0 |
1 Unchanged from the previous year
Subsidiaries Elmos Central IT Services GmbH and Elmos Facility Management GmbH were merged into Elmos Semiconductor AG in fiscal year 2015. This measure aimed at streamlining structures and processes and at realizing synergy effects.
| Currency | Shares | Equity | Earnings | |
|---|---|---|---|---|
| Germany | % | thousand | thousand | |
| DMOS Dresden MOS Design GmbH, Dresden | Euro | 74.8 | 1,550 | 2031 |
| Epigone Grundstücksverwaltungsgesellschaft mbH & | ||||
| Co. Vermietungs KG, Mainz | Euro | 6.0 | –64 | – 71 |
| GED Electronic Design GmbH, Frankfurt/Oder | Euro | 100.0 | 1,498 | 01, 4 |
| Mechaless Systems GmbH, Bruchsal | Euro | 100.0 | 339 | 1291 |
| MAZ Mikroelektronik-Anwendungszentrum GmbH | ||||
| im Land Brandenburg, Berlin | Euro | 80.0 | 2,236 | 6841 |
| International | ||||
| Elmos Services B.V., Nijmegen (NL) | Euro | 100.0 | 65,698 | 42,5181 |
| Elmos Semiconductor B.V., Nijmegen (NL) | Euro | 100.0 | 11,233 | 3,0701, 2 |
| Elmos Design Services B.V., Nijmegen (NL) | Euro | 100.0 | 405 | 01, 2 |
| European Semiconductor Assembly (eurasem) B.V., Nijmegen (NL) |
Euro | 100.0 | 107 | 291, 2 |
| Micro Systems on Silicon (MOS) Limited, Pretoria | ||||
| (South Africa) | ZAR | 51.0 | 15,286 | 14,9341, 2 |
| Elmos USA Inc., Farmington Hills (U.S.A.) | USD | 100.0 | – | –3 |
| Elmos N.A. Inc., Farmington Hills (U.S.A.) | USD | 100.0 | 1,017 | 621, 2 |
| Silicon Microstructures Inc., Milpitas (U.S.A.) | USD | 100.0 | 4,245 | 1,8881, 2 |
| Elmos Korea Co. Ltd., Seoul (Korea) | KRW | 100.0 | 526,944 | 94,5481 |
| Elmos Semiconductor Singapore Pte. Ltd., Singapore | SGD | 100.0 | 740 | 441 |
| Elmos Japan K.K., Tokyo (Japan) | JPY | 100.0 | 35,475 | 3,3121 |
| Elmos Semiconductor Technology (Shanghai) Co., Ltd., | ||||
| Shanghai (China) | CNY | 100.0 | 3,674 | 5211, 2 |
Indirect investment of Elmos Semiconductor AG, Dortmund
3 Financial statements of this entity are not available yet.
4 Profit and loss transfer agreement
Additional summarized financial information on non-controlling interests as of December 31, 2015 (IFRS 12 B10):
| Entity | Non controlling interests |
Current assets |
Non current assets |
Current liabilities |
Non current liabilities |
Sales | Allocated dividend |
|---|---|---|---|---|---|---|---|
| thousand | thousand | thousand | thousand | thousand | thousand | ||
| % | Euro | Euro | Euro | Euro | Euro | Euro | |
| DMOS Dresden MOS Design GmbH, Dresden |
25.2% | 1,250 | 2,001 | 1,562 | 37 | 4,333 | 0 |
| MAZ Mikroelektronik Anwendungszentrum GmbH im Land |
|||||||
| Brandenburg, Berlin | 20.0% | 2,927 | 3,419 | 853 | 604 | 5,849 | 0 |
| Micro Systems on Silicon (MOS) Limited, |
|||||||
| Pretoria/South Africa | 49.0% | 959 | 4 | 56 | 0 | 1,666 | 408 |
Additional summarized financial information on non-controlling interests as of December 31, 2014
| (IFRS 12 B10): | |||||||
|---|---|---|---|---|---|---|---|
| Entity | Non controlling interests |
Current assets |
Non current assets |
Current liabilities |
Non current liabilities |
Sales | Allocated dividend |
| thousand | thousand | thousand | thousand | thousand | thousand | ||
| % | Euro | Euro | Euro | Euro | Euro | Euro | |
| DMOS Dresden MOS Design GmbH, Dresden |
25.2% | 1,193 | 1,949 | 1,300 | 42 | 3,096 | 0 |
| MAZ Mikroelektronik Anwendungszentrum GmbH im Land Brandenburg, Berlin |
20.0% | 2,373 | 3,699 | 952 | 701 | 4,085 | 400 |
| Micro Systems on Silicon (MOS) Limited, Pretoria/South Africa |
49.0% | 801 | 6 | 11 | 0 | 1,361 | 266 |
Remuneration of Management Board and Supervisory Board for 2015
| Short-term payments | Share-based payments | |||
|---|---|---|---|---|
| Fixed remuneration thousand Euro |
Variable remuneration thousand Euro |
Stock options (fair value) thousand Euro |
Share matching plan (fair value) thousand Euro |
|
| Management Board | 1,515 | 997 | 0 | 0 |
| Supervisory Board | 84 | 218 | 0 | 0 |
| Short-term payments | Share-based payments | |||
|---|---|---|---|---|
| Fixed remuneration thousand Euro |
Variable remuneration thousand Euro |
Stock options (fair value) thousand Euro |
Share matching plan (fair value) thousand Euro |
|
| Management Board | 1,512 | 775 | 0 | 86 |
| Supervisory Board | 82 | 158 | 0 | 0 |
There are indirect pension commitments to Management Board members for benefits after termination of employment for which no pension provisions must be made because of completely congruent coverage by reinsurance policies. In 2015 contributions to these pension plans amounted to 454 thousand Euro (2014: 451 thousand Euro), included in the fixed remuneration component. Within the framework of the share matching plan no stock claims were issued to members of the Management Board in fiscal year 2015 (2014: 3,488 stock claims ).
Remuneration paid to former Management Board members or their surviving dependents amounted to 224 thousand Euro in fiscal year 2015 (2014: 167 thousand Euro). Moreover, insurance premiums in the amount of 111 thousand Euro were paid (2014: 111 thousand Euro). These amounts are balanced by reimbursements from reinsurance policies in the amount of 119 thousand Euro (2014: 123 thousand Euro).
The amount of pension provisions for acting and former members of the Management Board or their surviving dependents was 1,543 thousand Euro as of December 31, 2015 (2014: 1,610 thousand Euro).
For other services, particularly consulting services, the Company compensated members of the Supervisory Board in the amount of 0 thousand Euro (2014: 22 thousand Euro).
The Annual General Meeting of May 13, 2014 decided with a majority in excess of the required three quarters not to provide the disclosures stipulated under Section 285 no. 9a sentences 5-8 HGB (Commercial Code) for the next five years.
As of December 31, 2015 the following members of Management Board and Supervisory Board were members of statutory supervisory boards or comparable domestic or foreign supervisory bodies.
-> Dr. Anton Mindl: Member of the Assembly of IHK Dortmund (Chamber of Commerce)
As of December 31, 2015 the following members of Management Board and Supervisory Board held Elmos shares, stock options, and share matching claims:
| Management Board | Shares | Stock options | Share matching stock (claims) |
|---|---|---|---|
| Dr. Anton Mindl | 14,337 | 48,333 | 654 |
| Dr. Arne Schneider | 2,146 | 6,050 | 327 |
| Reinhard Senf | 26,529 | 35,000 | 654 |
| Dr. Peter Geiselhart | 11,077 | 17,778 | 654 |
| Supervisory Board | Shares | Stock options |
|---|---|---|
| Prof. Dr. Günter Zimmer | 41,851 | 0 |
| Dr. Burkhard Dreher | 14,619 | 0 |
| Dr. Klaus Egger | 14,000 | 0 |
| Thomas Lehner | 6,199 | 3,750 |
| Sven-Olaf Schellenberg | 4,300 | 750 |
| Dr. Klaus Weyer | 216,276 | 0 |
The companies of the Elmos Group received the following services rendered by appointed group auditor Warth & Klein Grant Thornton AG in fiscal year 2015:
| 2015 thousand Euro |
2014 thousand Euro |
|
|---|---|---|
| Audit services | 165 | 141 |
| Other certification services | 39 | 39 |
| Tax counselling | 116 | 161 |
| Other services | 8 | 17 |
| 327 | 358 |
The position "Other certification services" includes fees for the review of the interim consolidated financial statements as of June 30, 2015 (or rather as of June 30, 2014 for 2014).
Management Board and Supervisory Board propose to the Annual General Meeting in May 2016 the payment of a dividend of 33 cents per share for fiscal year 2015 out of the 2015 retained earnings of Elmos Semiconductor AG in the amount of 76.9 million Euro. The total dividend payout would thus amount to 6.5 million Euro, based on 19,727,277 shares entitled to dividend as of December 31, 2015.
Listed below are directors' dealings reportable under the German Securities Trading Act (WpHG) for the year 2015 involving shares of Elmos Semiconductor AG (ISIN DE0005677108). The issuer is Elmos Semiconductor AG, Heinrich-Hertz-Str. 1, 44227 Dortmund, Germany.
| Date Place |
Name | Function | Transaction | Number Price/Basic price (Euro) |
Total volume (Euro) |
|
|---|---|---|---|---|---|---|
| 03/26/2015 Off-market |
Sven-Olaf Schellenberg |
Supervisory Board member | Sale of Elmos shares from exercise of stock options |
400 | 17.22 | 6,887 |
| 05/22/2015 Off-market |
Dr. Anton Mindl |
CEO | Sale of Elmos shares from exercise of stock options |
5,000 | 19.43 | 97,146 |
| 06/01/2015 Off-market |
Dr. Anton Mindl |
CEO | Sale of Elmos shares from exercise of stock options |
6,667 | 19.83 | 132,184 |
| 06/01/2015 Off-market |
Reinhard Senf |
Management Board member | Sale of Elmos shares from exercise of stock options |
2,500 | 19.83 | 49,567 |
| 06/02/2015 Off-market |
Reinhard Senf |
Management Board member | Sale of Elmos shares from exercise of stock options |
2,500 | 19.66 | 49,153 |
| 08/11/2015 Xetra |
Sven-Olaf Schellenberg |
Supervisory Board member | Sale of Elmos shares | 500 | 16.17 | 8,085 |
| 09/21/2015 Xetra |
Sven-Olaf Schellenberg |
Supervisory Board member | Sale of Elmos shares | 488 | 14.01 | 6,837 |
| 11/13/2015 Xetra |
Dr. Klaus Egger |
Supervisory Board member | Purchase of Elmos shares | 603 | 12.15 | 7,327 |
Pursuant to IAS 24 "Related Party Disclosures", individuals or companies in control of or controlled by the Elmos Group must be disclosed unless they are already included in the consolidated financial statements of the Elmos Group as a consolidated company. Control is assumed if a shareholder holds more than half of the voting rights in Elmos Semiconductor AG or if the shareholder is in a position, by virtue of the Articles of Incorporation or contractual agreement, to control the financial and business policies of the Elmos Group management.
Mandatory disclosure pursuant to IAS 24 also includes transactions with associated companies and individuals who have significant influence over the Elmos Group's financial and business policies, including close relatives or interconnected companies. Significant influence on the Elmos Group's financial and business policies may be based on an interest in Elmos Semiconductor AG of 20% or more, a position on the Management Board or Supervisory Board of Elmos Semiconductor AG, or another key function in management.
The Elmos Group maintains relationships with closely related companies and persons in the context of usual business activity. These supply and performance relationships are transacted at market prices.
Apart from the remuneration of Management Board and Supervisory Board, representing the key management personnel of the Elmos Group, disclosed under note 34 ("Information on Management Board and Supervisory Board"), there are no material relationships with related individuals.
Beyond that, companies of the Elmos Group did not engage in any material reportable transactions with members of the Management Board or the Supervisory Board of Elmos Semiconductor AG, other key executives in management, or with companies whose managing or supervising bodies these individuals are represented in. This also applies for close relatives of said group of people.
In fiscal year 2015 the average number of employees in the Group was 1,117 (2014: 1,104).
| Group | 2015 Number |
2014 Number |
||
|---|---|---|---|---|
| Production | 520 | 5301 | ||
| Sales | 100 | 991 | ||
| Administration | 162 | 1581 | ||
| Quality control | 40 | 37 | ||
| Research & development | 295 | 2801 | ||
| Total | 1,117 | 1,104 |
The average number of employees can be broken down as follows:
Prior-year number has been adjusted
In January 2016 Elmos Semiconductor AG acquired shares in a company concerned with sensor technology. The company will be included in the consolidated financial statements of Elmos as an associated company starting in fiscal year 2016.
There have been no other reportable events or transactions of special significance after the end of the fiscal year.
In September 2015 Management Board and Supervisory Board of Elmos Semiconductor AG released the declaration pursuant to Section 161 AktG (Stock Corporation Act) and made it permanently available to the shareholders on the Company's website.
Dortmund, March 2, 2016
Dr. Anton Mindl Dr. Arne Schneider Reinhard Senf Dr. Peter Geiselhart
We have issued the following audit opinion on the consolidated financial statements and the joint management report, the audited version of which includes the complete and identical remuneration report as contained here as part of the corporate governance report:
"We have audited the consolidated financial statements prepared by Elmos Semiconductor AG, Dortmund, comprising the consolidated statement of financial position, consolidated income statement, consolidated statement of comprehensive income, consolidated statement of cash flows, consolidated statement of changes in equity, and the notes to the consolidated financial statements, together with the group management report, combined with the management report of Elmos Semiconductor AG, for the fiscal year ended December 31, 2015. The preparation of the consolidated financial statements and the joint management report in accordance with IFRS as applicable in the EU and the additional requirements of German commercial law pursuant to Sec. 315a (1) HGB (Commercial Code) is the responsibility of the Company's management. Our responsibility is to express an opinion on the consolidated financial statements and on the joint management report based on our audit.
We conducted our audit of the consolidated financial statements in accordance with Section 317 HGB and the generally accepted German standards for the audit of financial statements promulgated by the Institut der Wirtschaftsprüfer (IDW – Institute of Public Auditors in Germany). Under those standards we are required to plan and perform the audit such that misstatements and violations materially affecting the presentation of the net assets, financial position and results of operations in the consolidated financial statements in accordance with the applicable financial reporting framework and in the joint management report are detected with reasonable assurance. Knowledge of the business activities and the economic and legal environment of the Group and expectations as to possible misstatements are taken into account in the determination of audit procedures. The effectiveness of the accounting-related internal control system and the evidence supporting the disclosures in the consolidated financial statements and the joint management report are examined primarily on a test basis within the framework of the audit. The audit includes assessing the annual financial statements of the entities included in the consolidated financial statements, the definition of the basis of consolidation, the accounting and consolidation principles used and the significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements and the joint management report. We believe that our audit provides a reasonable basis for our opinion.
Our audit has not led to any reservations.
In our opinion, based on the findings of our audit, the consolidated financial statements of Elmos Semiconductor AG, Dortmund, for the fiscal year ended December 31, 2015 comply with the IFRS as applicable in the EU and the additional requirements of German commercial law pursuant to Sec. 315a (1) HGB and give a true and fair view of the net assets, financial position and results of operations of the Group in accordance with these requirements. The joint management report is consistent with the consolidated financial statements and as a whole provides a fair view of the Group's position and presents the opportunities and risks of future development correctly."
Düsseldorf, March 2, 2016
Warth & Klein Grant Thornton AG Wirtschaftsprüfungsgesellschaft
| Dr. Thomas Senger | Ulrich Diersch |
|---|---|
| Wirtschaftsprüfer | Wirtschaftsprüfer |
To the best of our knowledge, and in accordance with the applicable reporting principles, the consolidated financial statements give a true and fair view of the assets, liabilities, financial position and profit or loss of the Group, and the group management report, which has been combined with the management report for Elmos Semiconductor AG, includes a fair review of the development and performance of the business and the position of the Group, together with a description of the principal opportunities and risks associated with the expected development of the Group.
Dortmund, March 2, 2016
Dr. Anton Mindl Dr. Arne Schneider Reinhard Senf Dr. Peter Geiselhart
Advanced driver assistance systems Advanced driver assistance systems (ADAS) are electronic devices in cars for the driver's support in certain driving situations. The focus is often placed on safety aspects but also on increasing the driving comfort (e.g. by automatic parking or automatic braking systems).
Ambient lighting Colored LEDs are used for lighting car interiors. Using such flexible LEDs results in new concepts for the interior the driver can influence in terms of color.
ASIC An application specific integrated circuit (ASIC) is a circuit developed individually for a specific application and a specific customer, as opposed to standard components that are not configured in a customer specific way, for example voltage regulators, memory chips, and processors.
ASSP An application specific standard product (ASSP) is an integrated circuit developed individually for a specific application. It can be marketed to several customers as an application standard.
Backend manufacturing Backend manufacturing describes the part of the semiconductor manufacturing process that is carried out after the wafer has left the clean room. The inspection of the chips on the wafer, assembly (fitting the IC into the package), the functional testing of the assembled components, and packing (tape&reel) are all part of this process.
BLDC motor A brushless DC motor is a rotating electric machine with a classic three-phase stator. BLDC motors operate lossless unlike brush motors. They are also maintenance-free and durable.
BUS A communication system that allows the exchange of information between several participants on an electronic or optical basis. Among the standards used in the automobile are the following: LIN, CAN, MOST, and FlexRay™.
Chip An electronic circuit that contains electric functions realized in semiconductor material.
Clean room A sealed-off part of a building where humidity, temperature and dust particle contamination are monitored and maintained precisely.
CMOS Complementary metal oxide semiconductor (CMOS) is the basic technology for manufacturing microchips with a high integration rate and low energy consumption.
Design win or design in A design win is a new contract for a project acquired from a customer. Such a contract covers product development (in case of an ASIC) or the use of an existing component (in case of an ASSP, so-called design in), usually by specifying planned unit numbers and prices. Binding orders are placed at a later point in time.
Distributor Distributors are business partners responsible for pushing the marketing and distribution primarily of standard products.
Electronic circuit A combination of different electrical components, each assuming a specific function within an electrical system.
ESD Electrostatic discharge (ESD) is for instance a spark which causes a short high electric voltage pulse in an electronic device. Depending on the circumstances, such a voltage pulse can damage electrical components.
FlexRay™ The high-speed bus system FlexRay™ is a standard for time-critical applications e.g. in car networks. Among other fields of use, FlexRay™ facilitates real-time communication in active chassis control systems.
Foundry A semiconductor manufacturer whose primary business objective is the production and sale of processed silicon wafers. Development and distribution of the wafer-based products are provided by the foundry's customers.
Frontend manufacturing The production of electronic circuits on silicon wafers by means of physical and chemical processing methods under clean room conditions.
Functional safety Functional safety according to ISO 26262 defines a process model for the development of safety relevant systems, aiming at the avoidance of unjustifiable risks.
HALIOS® HALIOS® (High Ambient Light Independent Optical System) technology is distinguished by its detection of three-dimensional motion. Optical outside influences such as strong incidence of light or dust do not affect the performance. The electronic compensation of external light influence is the technically deciding function.
HMI The acronym HMI stands for Human-Machine Interface. It describes the different ways a human being can operate a machine. This can happen for instance by way of switches, voice command, or gesture control.
Industry 4.0 The term industry 4.0 stands for creating an intelligent network of product development, production, logistics, and customers. Its goal is the autonomous sensor-supported planning and control of production resources (manufacturing machinery, robots, feed and storage systems, and operating material).
Integrated circuit, IC An electronic circuit consisting of different miniaturized electronic components (e.g. resistors, capacitors, transistors, etc.) embedded in semiconductor material.
IO-Link is a communication standard for connecting sensors and actuators to an industrial automation system.
KNX The KNX protocol is a global standard for data exchange most often used in building automation. KNX controls the heat, lights, blinds, air condition, multimedia, and security technology, among other things.
Layout Describes the information gained from circuit development that is required for manufacturing integrated circuits with simple geometric shapes.
MEMS Micro-electro-mechanical systems are in particular sensors based on semiconductor technologies. Among other values, they can detect pressure, acceleration, or tilt.
Microprocessor/Microcontroller An integrated, complex electronic unit programmed to control and operate an electronic system. Microprocessors are the central brains of an electronic system such as the computer.
Microsystem A microsystem is the combination of sensorics and readout electronics in a special package. Among other advantages, a microsystem requires very little constructed space due to its high integration level.
Mixed-signal A combination of analog and digital signals simultaneously generated, controlled, or modified on one and the same chip.
MOS Metal oxide semiconductor (MOS) describes the setup of the central control device for the field effect in a particular category of semiconductor transistors.
OEM An original equipment manufacturer (OEM) distributes (partial) systems to a reseller. In the automotive industry, the car manufacturers are referred to as OEMs.
PIR sensor The PIR sensor (for passive infrared) is the most commonly used type of motion detector. It shows the optimal response to angle changes, i.e. if a person walks by the sensor.
Pressure sensor The pressure sensor can detect low or high pressure, depending on the application, and transmit the data to readout electronics. Pressure sensors find use for instance in medical applications (e.g. respirators, blood pressure meters) or automotive applications (e.g. tire pressure monitoring).
RoIC The return on invested capital (RoIC) is a key ratio used in finance and describes the profitability of invested capital. RoIC is determined by earnings before interest and taxes divided by invested capital.
Semiconductor A solid material (e.g. silicon or germanium) whose electrical conductivity can be changed toward positive and/or negative currents by deliberate doping (mostly with phosphor or boron).
Sensor An electronic unit that measures or detects a real physical quantity, e.g. motion, pressure, heat, or light, and converts it subsequently into an analog or digital electric signal.
Silicon The most common semiconductor material, used for approx. 95% of all chips produced.
Stepper motor A stepper motor is a synchronous motor whose rotor (rotatable motor part with a shaft) can be rotated through a controlled electromagnetic field of stator coils (stator = non-rotatable motor part), rotating step by step, by either a minimal angle (step) or its multiple.
Structure width The term structure width is used for integrated circuits and identifies the technical feasibility of the width of current circuits and electrical components. Structure width is indicated in micrometers (µm) or nanometers (nm).
TPMS A tire pressure monitoring system (TPMS) monitors the pressure in the car tire and notifies the driver if the pressure is too low.
USPA USPA stands for Ultrasonic Park Assist Systems, monitoring the parking process and informing the driver optically and acoustically on the distance to the next object.
Wafer The basic material in chip production. A wafer is a disc sawn out of a single silicon crystal and polished. Typical diameters are 150mm (6-inch), 200mm (8-inch), and 300 mm (12-inch). In series production wafers are processed in so-called charges of 25 wafers each.
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| Ergebnis 20151 , Bilanzpresse- und Analystenkonferenz |
16. März 2016 |
|---|---|
| Quartalsergebnis Q1/20161 | 3. Mai 2016 |
| Hauptversammlung in Dortmund | 11. Mai 2016 |
| Quartalsergebnis Q2/20161 | 3. August 2016 |
| Quartalsergebnis Q3/20161 | 8. November 2016 |
1 Das deutsche Wertpapierhandelsgesetz verpflichtet Emittenten, Informationen mit erheblichem Kursbeeinflussungspotenzial – unabhängig vom Finanzkalender – unverzüglich zu veröffentlichen. Aufgrund dessen ist es möglich, dass wir Eckdaten unserer Quartals- und Geschäftsjahresergebnisse vor den oben genannten Terminen publizieren. Da wir Terminverschiebungen grundsätzlich nicht ausschließen können, empfehlen wir, die Termine und Nachrichten kurzfristig zu überprüfen (www.elmos.com).
Janina Rosenbaum | Investor Relations Telefon: + 49 (0) 231-75 49-287 Telefax: + 49 (0) 231-75 49-111 [email protected]
Heinrich-Hertz-Straße 1 44227 Dortmund | Deutschland Telefon: + 49 (0) 231-75 49-0 Telefax: + 49 (0) 231-75 49-149 [email protected] | www.elmos.com
Herausgeber und Redaktion Elmos Semiconductor AG, Dortmund
Elmos Semiconductor AG, Dortmund, Investor Relations
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Scholz Druck, Dortmund
Der Begriff Mitarbeiter wird im vorliegenden Geschäftsbericht für Mitarbeiter und Mitarbeiterinnen zwecks besserer Lesbarkeit gleichermaßen verwendet.
Dieser Bericht enthält in die Zukunft gerichtete Aussagen, die auf Annahmen und Schätzungen der Unternehmensleitung von Elmos beruhen. Obwohl wir annehmen, dass die Erwartungen dieser vorausschauenden Aussagen realistisch sind, können wir nicht dafür garantieren, dass die Erwartungen sich auch als richtig erweisen. Die Annahmen können Risiken und Unsicherheiten bergen, die dazu führen können, dass die tatsächlichen Ergebnisse wesentlich von den vorausschauenden Aussagen abweichen. Zu den Faktoren, die solche Abweichungen verursachen können, gehören u.a. Veränderungen im wirtschaftlichen und geschäftlichen Umfeld, Wechselkurs- und Zinsschwankungen, Einführungen von Konkurrenzprodukten, mangelnde Akzeptanz neuer Produkte und Änderungen der Geschäftsstrategie. Eine Aktualisierung der vorausschauenden Aussagen durch Elmos ist weder geplant noch übernimmt Elmos die Verpflichtung dazu.
Elmos Semiconductor AG Heinrich-Hertz-Straße 1 44227 Dortmund | Deutschland Telefon +49(0)231 -75 49 - 0 Fax +49(0)231 -75 49 -149 [email protected] | www.elmos.com
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