Annual Report • Oct 17, 2008
Annual Report
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Dear shareholder,
The 2007/2008 financial year that ended on June 30, 2008 was the most successful in MOBOTIX' history, with revenue growing by some 50 percent to €35.3 million. Only as recently as 2001, the Company had generated revenue of only €0.8 million. Despite the special expenses resulting from MOBOTIX' initial public offering (IPO) and its switch to the Prime Standard segment, the Company reported the best-ever financial results with a 20 percent before tax return on revenue and a €4.9 million profit for the year.
On the balance sheet date of June 30, the Company's share price was 65 percent above the IPO issue price. Earnings per share rose by 84 percent to €1.16, and a dividend of €0.50 per share will be proposed at the annual general meeting. The consistent strategy of MOBOTIX AG to focus on international markets has resulted in a further increase in the export ratio to 62 percent of revenue. Given the strong profitability and sound business model, we believe that MOBOTIX offers a very interesting investment, especially for international investors.
We are delighted that at the end of this year, the three sites we currently use will be merged in the new building located on the A63 autobahn between Kaiserslautern and Frankfurt, providing the Company with the extra space it needs to continue growing. In the past few years, significant new technologies have been developed that only now are creating the technological platform for further growth in the coming years. The most important of these is the Q22M Hemispheric camera as the first representative of a new camera family offering allround view, longterm recording on an internal semiconductor memory (Flash) and new software technology that enables camera systems to be installed and operated without too much IT knowledge. These product developments will open up new applications, for example in the field of mobile security, and, through their ease of installation, will reach new customer target groups. We are confident that MOBOTIX will continue to perform well also in the coming months.
Dr. Ralf Hinkel • CEO MOBOTIX AG
Earnings per share € 1.16 (+84.1%)
| MOBOTIX Cameras In Operation Troughout The Globe | 8 |
|---|---|
| MOBOTIX Shares | 10 |
| Report Of The Supervisory Board | 14 |
| Corporate Governance Report | 18 |
| Joint Declaration Of Compliance On The German Corporate Governance Code | 26 |
| Group Management Report | 30 |
| Business And Market | 30 |
| Results Of Operations, Net Assets and Financial Position, | 35 |
| Research And Development | 38 |
| Employees | 39 |
| Main Aspects Of The Compensation System | 39 |
| Significant Events After The Balance Sheet Date | 39 |
| Information Pursuant To Section 315 (4) Of The Germany Commercial Code (HGB) | 40 |
| Opportunities And Risks Of Future Development And Outlook | 44 |
| Consolidated Financial Statements | 50 |
| Consolidated Income Statement | 50 |
| Consolidated Balance Sheet | 51 |
| Consolidated Cash Flow Statement | 52 |
| Consolidated Statement Of Changes In Equity | 53 |
| Notes To The Consolidated Financial Statements | 54 |
| Responsibility Statement | 97 |
| Audit Opinion | 98 |
| Further Information | 100 |
| Fiscal Year (July 1 to June 30) | 2007/08 | 2006/07 | Delta % |
|---|---|---|---|
| Financial performance | EUR '000s | EUR '000s | |
| Total Output | 36,933 | 24,177 | + 52.8 |
| Revenue | 35,313 | 23,602 | + 49.6 |
| thereof outside of Germany (in %) | 62.3 | 55.8 | |
| EBITDA | 8,218 | 4,618 | + 77.9 |
| EBITDA as a percentage of total output | 22.3 | 19.1 | |
| EBIT | 6,999 | 3,880 | + 80.4 |
| EBIT as a percentage of total output | 19.0 | 16.0 | |
| Profit before tax | 7,096 | 3,742 | + 89.6 |
| Return on revenue in % before tax | 20.1 | 15.9 | |
| Profit for the year | 4,924 | 2,243 | + 119.6 |
| Cash flow from operating activities | 4,338 | 2,582 | + 68.0 |
| Financial position | |||
| Equity | 20,031 | 6,876 | |
| Equity-to-assets ratio in % | 60.0 | 50.3 | |
| Total assets | 33,379 | 13,671 | |
| Return on equity in % (1) | 36.6 | 41.0 | |
| Non-current assets | 11,221 | 4,991 | |
| Current assets | 22,157 | 8,680 | |
| thereof cash and cash equivalents | 10,475 | 1,352 | |
| Employees | |||
| Number of employees (as of June 30, 2008) | 196 | 143 | |
| Revenue per employee | 219(2) | 211(3) | |
| EBIT per employee | 43(2) | 35(3) | |
| Key figures per share (in €) | |||
| Earnings per share (EPS) | 1.16 | 0.63 | + 84.1 |
| Dividend | 0.50(4) | 0.22 | + 127.3 |
| Cash flow as per DVFA/SG(5) | 1.64 | 0.86 | + 90.7 |
1) Based on an average Equity for the fiscal year.
2) Based on an average of 161 employees.
3) Based on an average of 112 employees
4) Proposal
5) Based on an average of 4,256m shares for the fiscal year 2007/08 and 3,557m shares for fiscal year 2006/07.
Total Output € 36.9m (+52.8%)
| July 2007: | Launch of D22 FixedDome Camera product line |
|---|---|
| October 2007: | Successful IPO on Entry Standard segment of the Frankfurt Stock Exchange |
| November 2007: | Launch of CamIO – an input/output module to supplement the MOBOTIX camera systems |
| December 2007: | Mobotix applauded as most successful IPO of the year 2007 in Germany (Frankfurter Allgemeine Zeitung) |
| Construction starts for new administrative and production building | |
| February 2008: | MOBOTIX reports strong first half of fiscal year, with revenue growth exceeding 50% |
| March 2008: | Shift to Prime Standard segment |
| Successful appearance at Cebit with introduction of new product line Q22, the room surveillance camera with a 360° allround view |
|
| MOBOTIX receives the European CCTV and Video Surveillance Product Innovation Award 2008 from Frost & Sullivan for outstanding product innovations |
|
| Launch of "Internal Flash Recording" - a camera-integrated, digital video recorder (DVR) providing high-resolution video images with sound, completely without network load |
|
| May 2008: | MOBOTIX reports nine-month results with continued strong growth including a 46% rise in revenue |
| June 2008: | Delivery of first Q22 cameras to customers |
| Listing on German Entrepreneurial Index (GEX) of the Deutsche Börse |
4
Prime Standard since March 31, 2008
MOBOTIX Firmensitz kaiserslautern, Germany
gy possible and cost efficient. MOBOTIX is currently the only manufacturer that offers network camera systems with this kind of software-based, decentralized system architecture. In addition to network cameras, MOBOTIX also offers a complete video management software solution for video surveillance systems.
MOBOTIX AG is a system provider and technology leader of digital, high-resolution, network-based video security solutions. Unlike the conventional analog cameras that use coaxial cables, network cameras enable video and audio data to be transported via digital computer networks. Thanks to the digital transfer, the stored images are in megapixel resolution unlike with analog cameras that are limited to 0.1 megapixels since they still use an old television standard.
One of MOBOTIX' fundamental technical innovations is the placing of the intelligence into the camera itself by integrating software for image processing, image analysis, event control and recording management, and not in the central control unit, which is typical in video security systems. This decentralized system architecture has made megapixel technolo-
Over 100,000 MOBOTIX cameras are in use worldwide. The cameras' area of application ranges from individual users in the private sector, to utilization in the public sector and all the way to complex applications in globally operating conglomerates. According to a study from IMS Research, MOBOTIX holds fourth place worldwide among network camera manufacturers in terms of market share. In the EMEA region, MOBOTIX occupies the second place. For years, MOBOTIX has been exclusively manufacturing megapixel cameras and with a market share of over 60 percent, is considered a world market leader of highresolution systems.
The German company MOBOTIX AG is known as the leading pioneer in network camera technology and its decentralized concept has made high-resolution video systems cost efficient.
M12D-Secure: Outdoor Day&Night
The German company MOBOTIX AG is known as the leading pioneer in network camera technology since its founding in 1999, and its decentralized concept has made high-resolution video systems cost efficient. Whether in embassies, airports, railway stations, ports, gas stations, hotels or on highways - over hundred thousand MOBOTIX video systems have been in operation on every continent for years.
In a short time, MOBOTIX has gained the second place in Europe and the fourth place worldwide in terms of market share. MOBOTIX has been producing solely megapixel cameras for years and, in this area, ranks as global market leader in highresolution video systems with a market share of over 60%.
The higher the resolution, the more accurate
the detail in the image. With the old analog technology, a live image has no more than 0.4 megapixels and a recorded image generally 0.1 megapixels (CIF). One MOBOTIX camera with 3.1 megapixels, on the contrary, records around 30 times
HiRes Video Innovations Innovationsschmiede Made in Germany more detail. As a result, larger image areas with up to 360° allround views are possible, thus reducing the number of cameras needed and therefore the costs. For example, four lanes of a gas station can be recorded with one MOBOTIX camera instead of four conventional cameras.
Usually cameras only supply the images while the processing and recording is done later on a central PC using video management software. This traditional centralised structure has many limitations, since it requires a high network bandwidth and the PC processing power is not enough for several cameras. An HDTV MPEG4 film already puts considerable strain on a PC, how can it be expected to process dozens of high-resolution live cameras? Traditional centralized systems are therefore less suitable and unprofitable than highresolution systems due to the high number of PCs needed.
MOBOTIX has redefined video. Whether on the Internet, in traffic management, building surveillance or banking environment, the MOBOTIX camera is connected to the network like a printer and live and recorded images can then be retrieved from any PC without installing any software.
Unlike with other systems, with the decentralized MOBOTIX concept a highspeed computer and, if requested, digital memory (SD card) is built into every camera for longterm recording. The PC now serves purely for viewing, not for analysis or recording. As a result, MOBOTIX cameras can record in response to an event even without the PC being switched on and digitally store the videos with sound.
MOBOTIX video solutions therefore require significantly:
therefore do not have to be constantly transported for analysis.
MOBOTIX cameras have no mechanical motors for lenses or for movement. Without any moving parts, they are therefore so robust that maintenance is reduced to a minimum. The unique temperature range from -30°C to +60°C (-22°F to +140°F) is achieved without heating or fan at only 3 watts. Since no PC hard disk is required for recording, there are no parts that wear out in the entire video system.
There are no software and licensing costs with MOBOTIX, because the software is always supplied with the camera; for an unlimited number of cameras and users. The software package supplied with the camera also includes professional control room software, like that used in football stadiums for example. Updates are supplied free of charge on the website. The system price for a weatherproof camera including lens, query software and day-today recording on the SD card is under € 1.000 .
The networking of cameras incl. power supply is encoded and occurs via a normal computer network and not via video cable. This has the advantage of connecting from anywhere in the world with glass, copper or even wireless access using affordable standard IT technology components.
The Jackson High School in Cleveland, Ohio, USA, has replaced its outdated analog video surveillance system with a new digital and high-resolution system based on MOBOTIX cameras, the free MxControlCenter and bidirectional VoIP communication. This has achieved substantial savings and offers unprecedented image quality for both live streams and recorded video.
"With our old system, we had great difficulty recognising particular students, or certain events clearly. The new MOBOTIX IP cameras record clips which are extremely detailed and represent an incredible improvement in image quality," comments Doug Winkler, Business Manager of the Jackson High School and continues, "the better we can keep an eye on our school, the better we can protect our students and teaching staff. So far we have had very positive feedback from parents. They welcome the fact that we have been able to improve the security of their children at school."
At the football stadium in Paris, the new IP video surveillance system serves, in particular, to monitor the influx of spectators at the turnstiles of the stadium entrances.
Like at the World Cup stadium in Kaiserslautern, Germany, the MOBOTIX highresolution D12 and M12 network cameras
MOBOTIX cameras at the football stadium "Parc de Princes"
are being used as cameras for perimeter surveillance during matches and to spot intruders when there are no events at the stadium. A storage system complying with the new French law on video surveillance has been installed in order to store large volumes of video data reliably. In addition, there are plans for a 3D face recognition system to control the admission of annual seasonticket holders at the stadium. This project is currently awaiting approval from the French data protection authorities.
Daimler AG, Deutsche Bahn Station & Service AG, EON Wasserkraft, Le Méridien Parkhotel Frankfurt, MAN Logistics, Max Planck Institute for Chemical Ecology, Commerzbank AG, Skoda Auto Deutschland GmbH, Rheinkalk GmbH, Kliniken Maria Hilf GmbH, Zellstoff Stendal GmbH, etc.
The Abu Dhabi International Airport project is an impressive example of how outstanding solutions can be achieved with MOBOTIX IP video technology in the area of security. Crucial factors in favor of MOBOTIX, in addition to the high accuracy of image detail produced by the network cameras, were the low memory requirements and coverage of the areas to be monitored with a relatively small number of cameras.
Highlights of the system include automatic object and face recognition, central control, network-wide redundancy in case of failures as well as secure offsite recording.
Two of the most important ports of the Panama Ports Company (PPC), Balboa and Cristobal, are being secured by over 50 MOBOTIX cameras. Crucial for the decision was particularly the robustness of the devices that even under the attack of the ocean climate operate maintenance free, while also warning employees of hazardous situations. "When we saw the images from the MOBOTIX cameras for the first time, they were as sharp as if we had been watching a DVD. Such quality has become an absolute necessity in our sector," says Michael Hernandez, Chief Investment Officer of the PPC, explaining their reasons for their choice. He adds, "It is not enough for us to just see what is happening at the moment - we have to hear it, too. Our entire security and safety depends on these two features."
Garfield County Airport (USA),German Antarctic Receiving Station (GARS) - O'Higgins (Antarctic), British Republic Polytechnic (Singapore), Manly Beach (Australia), Heineken House (Olympic Games, Beijing), Orange Mobile (Romania), Integra2 (Barcelona, Spain), Bahrain Defense Hospital (Bahrain), etc.
MOBOTIX AG shares have been listed on the stock exchange since October 10, 2007. After first being launched on the Entry Standard segment of the Frankfurt Stock Exchange, the shares have been listed on the Prime Standard segment since March 31, 2008.
Investor sentiment varied dramatically on the global capital markets since the IPO of MOBOTIX AG. As a result of the strong uncertainty triggered by the subprime mortgage crisis in the USA, along with repeated write-downs in the billions that the banking industry had to face as a consequence of mortgage defaults, the equity markets and above all financial stocks were hard hit on multiple occasions. The crisis reached a temporary climax when the American investment bank Bear Stearns nearly collapsed. The U.S. Fed attempted to bring the crisis under control by drastically reducing interest rates.
In particular since the first quarter of 2008, the subprime crisis led to a pronounced decline in willingness to take risks among private and institutional investors. The strong rise in oil, commodities, and food prices pushed up inflation rates worldwide.
Even in this turbulent market phase, the MOBOTIX share proved to be an exceptionally solid investment. Since the IPO, it rose from the issue price of EUR 15.50 to most recently EUR 25.60 Euro – a 65.2% increase (Xetra). The high was EUR 40.20 on January 10 and the low was on the first trading day, October 10, 2007, at EUR 16.25 (intraday rates).
Both the DAX and the TecDAX lost in value since MOBOTIX AG's initial listing; the DAX lost 19.6% and the TecDAX 23.4%. Both indexes performed significantly worse than the MOBOTIX share since the IPO. The German Entrepreneurial Index (GEX), on which the MOBOTIX share has been listed since June 23, 2008, also showed a poor performance since MOBOTIX AG's IPO and lost 25.1%. The GEX tracks owner-operated German companies within the Prime Standard segment of the Frankfurt Stock Exchange that have been listed for a maximum of ten years and are managed by their owners. To qualify as owner-managed, members of the management and supervisory boards or their families must hold between 25 and 75 percent of the voting shares. Since its introduction in 2005, the GEX has performed better than the DAX, MDAX, TecDAX, and SDAX.
10
| MOBOTIX share | +65.2% |
|---|---|
| DAX | -19.6% |
| TecDax | -23.4% |
| GEX | -25.1% |
MOBOTIX AG pursues a growth-oriented dividend policy that corresponds to corporate growth and the respective business situation. For fiscal year 2007/08, the Management Board plans to propose the distribution of a dividend of EUR 0.50 per share to the Supervisory Board and to the annual general meeting.
At the end of the fiscal year, MOBOTIX AG continues to have a very stable shareholder base that supports the long-term and sustained development of the Company. Following the end of the hard lock-up period for pre-IPO shareholders on April 9, 2008 the shareholder structure changed as follows:
The founder and CEO of the Company, Dr. Ralf Hinkel, continues to hold 50.14% of the shares. Andreas Putsch holds 9.91% and Klaus Borchers 6.42%. The free float as defined by the Deutsche Börse is 33.53%.
Since MOBOTIX AG's IPO, the Management Board has regularly engaged in dialogue with investors, analysts, and financial journalists. Special emphasis is placed on the continuous flow of information. The company fulfills the subsequent obligations of the Prime Standard segment of the German Stock Exchange.
| Opening price (07/10/10) | € 16.25 |
|---|---|
| High (08/01/10) | € 40.20 |
| Low (07/10/10) | € 16.25 |
| Closing price* | € 25.60 |
| Market capitalization* | € 113.2m |
| *reporting date June 30, 2008 |
Key data of the MOBOTIX share
| WKN | 521830 |
|---|---|
| ISIN | DE0005218309 |
| Ticker symbol | MBQ |
| Bloomberg | MBQ:GR |
| Reuters Instrument Code | MBQGn.DE |
| Stock exchange segment | Regulated market (Prime Standard) |
| Prime Segment | Technology |
| Industry Group | Electronic Components & Hardware |
| Stock exchange | Frankfurt |
| Share capital | € 4,423,814 |
| No. of shares outstanding | 4,423,814 |
| Indexes | GEX, CDAX, Technology All Share, Prime All Share |
12
Share price increase € 25.60 (+65.2%)
fiscal year 2007/08 was another important year for MOBOTIX AG. Major milestones inluded the Company's IPO on the Entry Standard segment and the shift to the regulated market (Prime Standard) of the Frankfurt Stock Exchange on March 31, 2008. Other significant developments included the successful launch of the D22 and Q22 product lines, the continued expansion of the export business, and strong internal growth. These factors meant that the Supervisory Board was continuously called upon to advise and monitor management in the past fiscal year. From the perspective of the Supervisory Board, all its dealings with the Management Board were always marked by cooperation and trust. We were directly and promptly involved in all decisions of a fundamental nature.
At its meetings, the Management Board regularly and comprehensively informed the Supervisory Board of the situation of the Company, in particular the business trend, the financial and human resources, ongoing and new investment projects, and issues relating to the corporate strategy. Through regular reports, the Management Board also advised the Supervisory Board outside of meetings on the most important financial performance indicators and, above all, kept the Supervisory Board up to date on the status of the construction project for the new building. Transactions requiring approval were presented in a timely manner with sufficient opportunity to review the relevant information for subsequent resolutions. No conflicts of interest arose in this context on the Supervisory Board in fiscal year 2007/08.
The interim reports of the Management Board conveyed a fair presentation of the business trend and corresponded with the situation described in the 2007/08 financial statements. In addition, in regular and personal discussions between meetings, the Management Board also apprised the Supervisory Board of all important developments and pending decisions.
The Supervisory Board convened in a total of nine physical meetings and teleconferences in fiscal year 2007/08. In the meetings in the first half of the fiscal year on August 17, 2007, August 31, 2007 (two meetings), October 2, 2007, October 26, 2007, and December 14, 2007, the emphasis of the Supervisory Board's
Chairman of the Supervisory Board, Dr. Thomas Hoch CEO EVP Capital Management AG
advisory activities was on the approval of the annual plan for 2007/08, the audit and approval of the financial statements for the fiscal year 2006/07, decisions concerning the financing and design of the new building, and the preparation and implementation of the Company's IPO. Additionally, the Management Board and Supervisory Board paid special attention to measures to further enhance the attractiveness of the MOBOTIX share. In this regard, the necessary preparations were coordinated for the adoption of the International Financial Reporting Standards (IFRS) as an important condition for the shift to the Prime Standard segment on March 31, 2008.
Throughout the year, and in particular at the meetings in the second half of the fiscal year on February 13, 2008, March 18, 2008, and March 31, 2008, strategic decisions were of central significance. In this regard, the Supervisory Board discussed current business development projects and product innovations. Consultations regarding the continued expansion strategy covered many areas. This topic was especially consequential for the Supervisory Board, not least because it concerns the use of the proceeds from the IPO. Land use planning, upcoming investment projects, the continuous expansion of capacities, and medium-term planning along with planning relating to the corresponding number of employees are just a few aspects of the expansion strategy. Another key area of deliberation was the further development of the risk management system.
At the extraordinary shareholders' meeting on August 31, 2007, the number of Supervisory Board members was reduced and the Board was newly elected. The shareholders reelected the Supervisory Board members already in office before the extraordinary shareholders' meeting on August 31, 2007 – Dr. Thomas Hoch, Prof. Dr. Rainer Gerten, and Ulrich Putsch.
Ulrich Putsch Founder of Keiper Recaro
In accordance with the resolution adopted at the regular shareholders' meeting in August 2007, the Supervisory Board appointed KPMG Deutsche Treuhand-Gesellschaft Aktiengesellschaft Wirtschaftsprüfungsgesellschaft, Mainz office ("KPMG Mainz"), as auditor of the single-entity and consolidated financial statements for fiscal year 2007/08. Prior to the appointment, a declaration of impartiality was obtained from the auditor and found to be unobjectionable. The Supervisory Board noted with approval that KPMG Mainz audited the annual financial statements and management report of MOBOTIX AG in accordance with German accounting principles (Handelsgesetzbuch, HGB) and the consolidated financial statements and Group management report prepared in accordance with International Financial Reporting Standards (IFRS) for the first time for the period ended June 30, 2008 and issued an unrestricted audit opinion for each.
The accounting records provided by the Management Board for the financial statements were presented to the Supervisory Board for review. The Supervisory Board examined and discussed in detail the annual single-entity and consolidated financial statements, the management reports for the parent company and the Group, the Management Board's proposal for the appropriation of profits, and the audit reports of the auditor. The auditor participated in these deliberations, was available for questions, and reported on important results of the audit. Upon completion of its own review, the Supervisory Board confirmed the findings of the auditor and concluded that it had no objections. In its meeting on August 25, 2008, the Supervisory Board approved of the annual financial statements of MOBOTIX AG prepared by the Management Board. Accordingly, the annual financial statements have been adopted in accordance with Section 172 of the German Stock Corporation Act (Aktiengesetz, AktG). Considering the excellent result and strong operational cash flow, the Supervisory Board concurs with the proposal of the Management Board to distribute a dividend of EUR 0.50 per share, retain the remaining net profit from 2007/08, and submit a qualified proposal for the appropriation of profits to the annual general meeting.
The Supervisory Board would like to thank all employees and the management for their hard work and dedication in fiscal year
2007/08. Their contributions are especially commendable considering our very rapid growth rate. We would like to wish the management and our employees considerable success for the challenges we will share in the year ahead. Together, we have arrived at an excellent starting point to set lasting trends in high resolution surveillance technology on the strength of our leading market position. This key technology will also give us the opportunity to profit from additional potentials in fields such as building automation. We are confident that our team will continue to take advantage of these possibilities and achieve enduring economic success in the future as well.
We also wish to sincerely thank our customers, partners, and shareholders for their confidence in MOBOTIX AG.
Kaiserslautern, August 25, 2008
On behalf of the Supervisory Board
Yours,
Dr. Thomas Hoch
The Management Board and Supervisory Board of MOBOTIX AG are committed to ensuring that the Company is managed competently and responsibly. The guidelines laid down in the German Corporate Governance Code (Deutscher Corporate Governance Kodex, DCGK) constitute key parameters of our policy on corporate governance. Our actions are therefore guided by the standards of competent and responsible corporate management, and we ensure that our corporate governance policies are based on the principles of transparency and value creation.
Because the Company joined the regulated market (Prime Standard) of the Frankfurt Stock Exchange on March 31, 2008, the Management Board and Supervisory Board of MOBOTIX AG are obliged to issue an annual declaration of compliance pursuant to Section 161 of the German Stock Corporation Act (Aktiengesetz, AktG) in which they explain to what extent they have complied with, or intend to comply with, the recommendations made by the German Government Commission on the German Corporate Governance Code, which have been published by the German Federal Ministry of Justice in the official Section of the electronic version of the German Federal Gazette, and which recommendations they have not applied or do not intend to apply. The Management Board and Supervisory Board of MOBOTIX AG therefore issued their annual declaration of compliance pursuant to Section 161 AktG on August 22, 2008; this declaration has also been published and made permanently available in the "Investors" Section of MOBOTIX AG's website.
Furthermore, the Management Board and Supervisory Board have for the first time compiled a corporate governance report pursuant to item 3.10 DCGK, which includes the remuneration report pursuant to item 4.2.5 DCGK.
The shareholders exercise their voting rights at the annual general meeting. Voting takes place on the basis of one share, one vote. The annual general meeting elects the members of the Supervisory Board and votes on whether to formally approve the actions of the Management Board and Supervisory Board. It votes on the appropriation of the Company's profits, on capital transactions, on the approval of intercompany agreements, on the remuneration paid to the Supervisory Board, and on amendments to the Company's articles of incorporation. The Company holds an annual
Founder and Chief Executive Officer
general meeting, at which the Management Board and Supervisory Board report to shareholders on the previous financial year. The German Stock Corporation Act allows an extraordinary general meeting to be convened in exceptional cases.
In order to make it easier for shareholders to exercise their voting rights in accordance with the provisions of the Code, the Company offers shareholders who are either unable or do not wish to exercise their voting rights in person the option of having their vote cast at the annual general meeting by a proxy who votes in accordance with their instructions.
The Management Board of MOBOTIX AG consists of three members (Dr. Ralf Hinkel, Horst Pfiffi and Lutz Coelen) and is responsible for running the Company.
The Management Board's main responsibilities are to manage the MOBOTIX Group, to
determine the Company's strategy and to put in place and monitor a risk management system. It is obliged to act in the Company's best interests and to ensure that the value of the Company increases over time. The Management Board consults the Supervisory Board on the Company's strategy and provides it with regular information on the implementation of this strategy as part of a continuous dialog. All members of the Management Board are involved in the Company's day-to-day business and bear operational responsibility.
In accordance with the provisions of the Code, the Company's articles of incorporation require certain specified types of material transactions conducted by the Management Board within the Company to be approved by the Supervisory Board.
The members of the Management Board have signed comprehensive non-compete agreements with MOBOTIX AG which apply while they are working for the Company. They are obliged to act in the Company's best interests. When making decisions, therefore, no member of the Management Board may pursue personal interests or exploit business opportunities that are due to the Company for his or her personal gain and will disclose any conflicts of interest to the Supervisory Board without delay and notify the other members of the Management Board of this fact. All transactions between the Company, on the one hand, and
the Management Board members or related parties, on the other (related-party transactions), must meet the usual standards applicable to the sector.
Furthermore, any secondary employment taken on by members of the Management Board – especially directorships at other companies – must be approved by the Supervisory Board.
Contrary to the recommendations made by the Code, the Company has taken out a directors' and officers' (D&O) insurance policy without any deductible for the Management Board and Supervisory Board.
Contrary to the recommendations made by the Code, the Company's articles of incorporation do not impose an age limit on the members of the Management Board.
The Supervisory Board monitors the Management Board's running of the Company and provides it with advice and support. It is also responsible, among other things, for appointing the members of the Management Board, determining the remuneration paid to the Management Board, and examining the Company's annual financial statements. It consists of three members (Dr. Thomas Hoch, Professor Dr. Rainer Gerten and Ulrich Putsch). The Company is not subject to codetermination legislation.
The Company's articles of incorporation state that the Supervisory Board is allowed to form committees from among its members. However, the Company does not currently comply with the Code's recommendation that the Supervisory Board should form suitably qualified committees and an audit committee from among its members because the Supervisory Board consists of only three members and, in the opinion of the Supervisory Board, it would be inappropriate to form committees given the specific circumstances and the size of the Company because all members of the Supervisory Board are supposed to deal with all issues.
Furthermore, the articles of incorporation state that Dr. Ralf Hinkel – provided that he himself and/or a company either controlled by him (Section 17 AktG) or under his management (Section 18 AktG) in total holds more than 25 percent of the Company's shares – has the nontransferable right to appoint one member of the Company's Supervisory Board. He can only exercise this right of appointment vis-a-vis the Company by issuing a personally signed declaration to both the Management Board and the chairman of the Supervisory Board that states the name of the person to be appointed to
the Supervisory Board. The person thus appointed immediately replaces any Supervisory Board member who has previously been appointed in this way, who is then removed from the Supervisory Board. If, at the time the right of appointment is exercised, no member of the Supervisory Board has been appointed in this way, the person thus appointed only joins the Supervisory Board when the first elected Supervisory Board member steps down, his or her term of appointment expires, or he or she is removed by the annual general meeting.
The term of appointment of the current Supervisory Board members ends at the end of the annual general meeting that votes on whether to formally approve their actions for the fourth financial year after the beginning of their term of appointment.
The work performed by the Supervisory Board is coordinated by its chairman or, if he or she is prevented, by a deputy. The relevant responsibilities and procedures – including the powers vested in the Supervisory Board chairman and his or her deputy as well as the rules governing conflicts of interest – are laid down in the articles of incorporation. The rules governing conflicts of interest and efficiency checks are laid down in the Supervisory Board's rules of procedure, which are due to be drafted in the current financial year.
The members of the Supervisory Board are independent of the Management Board and maintain no business relations with the Company that might influence their independent judgement. There have been and continue to be no consultancy agreements or other contracts for work and services between Supervisory Board members and the Company. If, in exceptional cases, a member of the Supervisory Board performs a function for the Company other than that of Supervisory Board member, this must be approved by the Supervisory Board. The Supervisory Board's report to the annual general meeting provides information on any conflicts of interest that have arisen during the financial year concerned.
Contrary to the recommendations made by the Code, the Company's articles of incorporation do not impose an age limit on the members of the Supervisory Board.
The Management Board and Supervisory Board of MOBOTIX AG work continuously and very closely with each other in the interests of a sound and responsible corporate governance policy. They regularly consult each other on a timely basis in those areas recommended by the Code as well as in other respects. The Management Board uses an established
procedure to report to the Supervisory Board on the Company's general situation, including its risk position.
Members of the Management Board usually attend the regular meetings of the Supervisory Board, which are held at least once every quarter. In certain cases, however, the Supervisory Board meets alone, as suggested by the Code. Extraordinary meetings and teleconferences are also held if required.
There were no directors' dealings (either buying or selling of shares) by the members of the Management Board or Supervisory Board between March 31, 2008 (the date on which MOBOTIX's shares were officially listed in the regulated market [Prime Standard] of the Frankfurt Stock Exchange) and June 30, 2008.
The following members of the Management Board and Supervisory Board held more than 1 percent of the shares issued by the Company (as at June 30, 2008):
| Number of | ||
|---|---|---|
| Management | shares | (%) |
| Dr. Ralf Hinkel | 2,218,134 | 50.14 |
The other members of the Management Board who held shares in MOBOTIX AG were Lutz Coelen (14,200 shares, or 0.32 percent) and Horst Pfiffi (17,210 shares, or 0.39 percent). The Management Board held a total of 2,249,544 shares in MOBOTIX AG, which was 50.85 percent of the Company's share capital.
The members of the Supervisory Board who held shares in the Company were Dr. Thomas Hoch (1,000 shares, or 0.02 percent) and Professor Dr. Rainer Gerten (20,000 shares, or 0.45 percent). The Supervisory Board therefore held a total of 0.47 percent of the shares in MOBOTIX AG as at June 30, 2008.
Both boards together therefore held a total of 2,270,544 shares in MOBOTIX AG, or 51.32 percent of the Company's share capital, as at June 30, 2008.
The remuneration paid to the members of the Management Board of MOBOTIX AG is set at an appropriate level by the Supervisory Board on the basis of an assessment of their performance, taking account of any remuneration received from other group companies. The main criteria used to assess the appropriateness of this remuneration are the responsibilities of the respective
www.mobotix.com
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Management Board´s share 50,85%
Management Board member, his or her personal performance and the performance of the Management Board as well as the Company's financial position, its performance and its future prospects given its competitive environment.
The total remuneration paid to the members of the Management Board of MOBOTIX AG comprises monetary compensation and further entitlements that are listed below. Otherwise, there were no pension entitlements or entitlements in particular in the event of employment being terminated or any third-party payments or benefits that were either promised for work performed on the Management Board or were granted during the financial year.
The remuneration paid to the Management Board was last adjusted by a Supervisory Board resolution adopted on August 31, 2007. This remuneration comprises fixed and variable components. The variable remuneration consists of a bonus of no more than 10 percent of the Company's net income for the year as defined by Section 275 of the German Commercial Code (HGB), with no more than 6 percent of this net income being paid as a bonus to the chairman of the Magagement Board and 2 percent of the net income being paid as a bonus to each of the other members of the Management Board.
In addition, Horst Pfiffi receives an annual performance-related bonus of €10,000, which is paid at the end of the respective financial year on condition that he achieves targets that are agreed with the Supervisory Board at the beginning of the financial year.
Furthermore, the Supervisory Board may decide to award one-off bonuses as remuneration in recognition of outstanding achievements. Last year, the Company's Supervisory Board decided to pay a one-off bonus of €300,000 for the 2006/2007 financial year to the Management Board member Lutz Coelen as a reward for his outstanding performance and his valuable contribution to the Company's success in the 2006/2007 financial year (it was the most successful year in the Company's history to date) and in recognition of the valuable part he played in the Company's initial public offering (IPO).
At present the Company does not offer monetary remuneration components of a speculative nature that provide long-term incentives, such as stock option plans, as recommended by the Code.
In addition, the members of the Management Board are given a luxury-class car
commensurate with their position, which they may use for business and private travel. Furthermore, the Company has taken out accident insurance cover for occupational and day-to-day accidents as well as death for each member of the Management Board for the duration of their employment with the Company. The Company has also provided the members of the Management Board with directors' and officers' (D&O) insurance, for which there is no deductible.
The Company has signed non-compete agreements with the members of the Management Board which apply for a period of one year after their employment contracts have expired. While this non-compete agreement is still in force, the Company is obliged to pay the respective Management Board member compensation amounting to 50 percent of the final remuneration paid under the terms of his or her employment contract.
The table below shows the remuneration paid to the members of the Management Board in the 2007/2008 financial year:
| Management Board |
Fixed EUR'000s* |
Variable EUR'000s |
Total EUR'000s |
|---|---|---|---|
| Dr. Ralf Hinkel | 283 | 254 | 537 |
| Lutz Coelen | 123 | 80 | 203** |
| Horst Pfiffi | 107 | 80 | 187 |
| Total | 513 | 414 | 927 |
*Including benefits in kind
**Not including one-off bonus of €300,000
Each member of the Supervisory Board receives fixed annual remuneration of €10,000 for his or her work. The chairman of the Supervisory Board receives twice this amount.
The Company has also taken out directors' and officers' (D&O) insurance for the members of the Supervisory Board at its own expense.
Contrary to the Code's recommendations, the members of the Supervisory Board of MOBOTIX AG do not currently receive any variable remuneration based on the Company's performance.
The table below shows the remuneration paid to the members of the Supervisory Board in the 2007/2008 financial year:
| Supervisory Board | Total EUR'000s |
|---|---|
| Dr. Thomas Hoch | 20 |
| Prof. Dr. Rainer Gerten | 10 |
| Ulrich Putsch | 10 |
| Total | 40 |
MOBOTIX AG attaches considerable importance to the timely and transparent disclosure of information to its relevant target groups.
It regularly informs shareholders, financial analysts, shareholder associations, the media and interested members of the public about the Company's situation and material changes in its business. MOBOTIX notifies all shareholders and interested members of the public of all new facts at the same time that they are made available to financial analysts and institutional investors. MOBOTIX uses the internet as well as other communication channels to ensure that it provides timely information.
An overview of all material information published during the financial year concerned can be found on our website at www.mobotix.com.
The Company complies with the legal requirements by publishing insider information directly affecting the Company itself without delay, including outside its regular reporting cycle. Ad-hoc disclosures published by MOBOTIX AG are made available to shareholders on the Company's website at ["investors/ news/ad_hoc_messages"].
We also publish in a Europe-wide information system and on our website the fact that someone's shareholding in the Company has reached, exceeded or fallen below 3 percent, 5 percent, 10 percent, 15 percent, 25 percent, 30 percent, 50 percent or 75 percent of the Company's voting rights by buying or selling shares or in some other way as soon as we have been notified of such changes pursuant to Section 21 of the German Securities Trading Act (Wertpapierhandelsgesetz, WpHG).
Dealings in securities by members of the Management Board or Supervisory Board of MOBOTIX AG or by certain executives who have regular access to insider information and are authorized to make key operational decisions (as well as by related parties as defined by the German Securities Trading Act) must be disclosed by these persons pursuant to Section 15a WpHG. As soon as the Company is notified of such dealings, they are published in a Europe-wide information system and on the Company's website.
Our financial calendar, which is shown in our annual and quarterly reports and is permanently available on our website, provides our shareholders and the capital markets with advance notification of the
dates of material publications (such as our annual and interim reports and the annual general meeting).
MOBOTIX AG prepares its consolidated financial statements in accordance with International Financial Reporting Standards (IFRS). Its annual and quarterly reports inform shareholders and other interested parties about the Company's general situation. All reports are simultaneously made available to all interested parties on our website.
The Company has agreed with its auditors that the chairman of the Supervisory Board should be notified without delay of any grounds for exclusion or partiality arising during the audit unless they are immediately resolved. Furthermore, the auditors must noify the Supervisory Board without delay of all findings and incidents of which they become aware in the course of the audit that are of significance for the remit of the Supervisory Board. The auditors must also notify the Supervisory Board or note accordingly in the audit report if, when conducting the audit, they become aware of facts that are incompatible with the declaration of compliance issued by the Management Board and Supervisory Board pursuant to Section 161 of the German Stock Corporation Act (AktG).
Section 161 of the German Stock Corporation Act (AktG) requires the Management Board and Supervisory Board to issue an annual declaration stating that the Company has complied with, or intends to comply with, the recommendations made by the German Government Commission on the German Corporate Governance Code and also stating which recommendations it has not applied or does not intend to apply.
The Management Board and Supervisory Board of MOBOTIX AG hereby declare that the Company has complied with the recommendations made by the German Government Commission on the German Corporate Governance Code, as amended on June 14, 2007, for the period from March 31, 2008 (the date on which the Company's shares were officially listed in the regulated market [Prime Standard] of the Frankfurt Stock Exchange) to June 30, 2008 with the following exceptions:
Item 3.8: If the company takes out D&O insurance for the management board and supervisory board, an appropriate deductible shall be agreed.
Reason: No deductible has been agreed for the directors' and officers' (D&O) insurance cover currently provided for the Management Board and Supervisory Board. We believe that the agreement of a deductible for D&O insurance policies in the event of claims for damages does not encourage responsible behavior on the part of company directors. Moreover, the directors' legal responsibility for criminal acts involving gross negligence or breach of trust is not affected by the terms and conditions of any D&O insurance policy.
Item 4.2.1: Rules of procedure shall govern the activities of the Management Board, in particular the responsibilities of individual Management Board members, those matters to be dealt with by the Management Board as a whole, and majority required for resolutions adopted by the Management Board (unanimous or majority votes).
Reason: There are no rules of procedure for the Management Board at present. Such rules of procedure are due to be drafted by the end of the current financial year.
Item 5.1.2: An age limit shall be set for members of the Management Board.
Reason: We believe that a general age limit would unnecessarily restrict our search for suitably qualified and experienced candidates for the Management Board. Age is not a suitable criterion for excluding such candidates.
Item 5.1.3: The supervisory board shall provide itself with rules of procedure.
Reason: There are no rules of procedure for the Supervisory Board at present. Such rules of procedure are due to be drafted by the end of the current financial year.
Item 5.2: The chairman of the Supervisory Board shall also chair the committees that deal with the Management Board's employment contracts and prepare the Supervisory Board meetings.
Reason: Because the Supervisory Board of MOBOTIX AG consists of only three members, the Supervisory Board believes that the formation of suitably qualified committees would currently be inappropriate given the specific circumstances and the size of the Company. This recommendation is therefore not being applied at present.
Item 5.3.1: Depending on the number of people on the Supervisory Board and the specific circumstances of the Company, the Supervisory Board shall form suitably qualified committees to help improve the efficiency of the Supervisory Board's work and deal with complex issues. The chairmen
of the relevant committees shall report regularly to the Supervisory Board on the committees' work.
Reason: Because the Supervisory Board of MOBOTIX AG consists of only three members, the Supervisory Board believes that the formation of suitably qualified committees would currently be inappropriate given the specific circumstances and the size of the Company because all members of the Supervisory Board are supposed to deal with all issues.
Item 5.3.2: The Supervisory Board shall set up an audit committee to deal with issues such as accounting, risk management and compliance, the legally required independence of auditors, the engagement of auditors, the determination of audit focal points and the agreement of fees. The chairman of the audit committee shall possess specific expertise in, and experience of, the application of accounting principles and internal control procedures.
Reason: Because the Supervisory Board of MOBOTIX AG consists of only three members, the formation of suitably qualified committees would currently be inappropriate given the specific circumstances and the size of the Company.
Item 5.3.3: The Supervisory Board shall form a nominations committee consisting exclusively of shareholder representatives to propose suitable candidates to the Supervisory Board so that the latter in turn can submit proposals to the annual general meeting concerning the election of suitable candidates.
Reason: Because the Supervisory Board of MOBOTIX AG consists of only three members, the formation of suitably qualified committees would currently be inappropriate given the specific circumstances and the size of the Company.
Item 5.4.1: An age limit shall be set for members of the Supervisory Board.
Reason: As with the issue of an age limit for members of the Management Board, we believe the most important criteria for Supervisory Board candidates to be qualifications and experience. Moreover, an age limit would, in our opinion, inappropriately restrict the annual general meeting's right to appoint the members of the Supervisory Board.
Item 5.4.7: The members of the Supervisory Board shall receive performance-related remuneration in addition to their fixed compensation.
Reason: The Management Board and Supervisory Board of MOBOTIX AG are convinced that it is in the Company's interests to remunerate the members of the Supervisory Board appropriately; the agreement on their existing fixed remuneration ensures that this is the case. By contrast, we do not believe that the agreement of a variable, performancerelated remuneration component would create any significant additional incentive for the Supervisory Board to approach its work with the due level of care and commitment. Furthermore, anecdotal evidence suggests that most publicly traded companies that pay some of their Supervisory Board's remuneration in the form of a variable, performancerelated bonus merely tie these payments to the company's dividend.
Because this criterion is based on a decision in which the Supervisory Board is involved, namely the proposal submitted to the annual general meeting for the appropriation of the company's profits, this could give the impression that the company's dividend policy was being influenced by improper considerations.
Moreover, recent rulings handed down by the highest courts have been extremely critical of stock option plans for Supervisory Board members. For these reasons, we do not believe that the benefits of such a system of variable remuneration would justify the consequent drawbacks.
MOBOTIX AG
Kaiserslautern, August 22, 2008
On behalf of the Management Board
Dr. Ralf Hinkel (Chief Executive Officer)
On behalf of the Supervisory Board
Dr. Thomas Hoch (Chairman of the Supervisory Board)
MOBOTIX is a European system provider and technology leader of digital, high-resolution, network-based video security systems. At the heart of MOBOTIX technology are proprietary and internally manufactured, fully digital network cameras. The Company was established in 1999 and recorded revenue of €35.3 million in fiscal year 2007/08.
One of the most important innovations of MOBOTIX is the decentralized system architecture, where the intelligence is placed into the camera itself by integrating software for image processing, image analysis, event control and recording management, and not in the central control unit, which is typical in traditional video security systems. MOBOTIX is currently the only manufacturer that offers network camera
systems with such software-based, decentralized system architecture.
The Company's product portfolio includes the product lines M12 (DualNight Camera), M22 (Allround Camera), D12 (DualDome Camera), D22 (MonoDome Camera), V12 (Vandalism Camera), and, since the end of fiscal 2007/08, the product line Q22 (Hemispheric 360° Camera). In addition to its network cameras, MOBOTIX also offers the MxControlCenter, a complete video management solution, as a control center soft-
ware that is able to integrate cameras also from other manufacturers. The MOBOTIX video management software is offered free of charge. In addition, various accessories are available in the Company's product mix.
Thanks to the decentralized system architecture, MOBOTIX cameras have a number of advantages over traditional systems.
Processing the image within the camera considerably reduces the required com-
MOBOTIX Allround M22M
puting power of a central PC and saves bandwidth within the network permitting a significantly larger number of recording cameras per PC to be used in video security systems, particularly when high image rates and resolutions are needed. In addition, the fully digital design of MOBOTIX cameras enables them to transmit images in megapixel quality and also permits event-controlled adjustment of the image rate in response to changes in the image, noises or sound signals. The cameras also have other functions such as dual-camera technology with picture-in-picture and 360° panorama, day/night switching with exposure
adjustment, lip-synchronized audio transmission, alarm messages via VoIP telephony and soft pan-tilt-zoom functionality. Through the total elimination of mechanically moving parts, with wide temperature range and low power usage, MOBOTIX cameras offer a very powerful and failureresistant video monitoring system at a comparatively low cost.
MOBOTIX Video MAQnagement Software MxC
The MOBOTIX Group consists of MOBOTIX AG, Kaiserslautern, and MOBOTIX CORP, New York.
New products are manufactured and developed exclusively at the Kaiserslautern location. Kaiserslautern also controls global sales.
The subsidiary MOBOTIX CORP is exclusively a distribution company for the American market. MOBOTIX CORP is managed by Dr. Hinkel (CEO and president) and Mr. Lutz Coelen (CFO).
The MOBOTIX Group uses a number of operational key indicators to measure the Group's strategic growth and profitability objectives. These include sales figures for the individual segments as well as profitability indicators for the Company as a whole. The Company's performance is monitored and controlled through regular monitoring of trends in the individual sales regions. Other financial figures are also analyzed and evaluated. EBIT and EBITDA are the primary control parameters for the profitability of the MOBOTIX Group. These financial indicators are presented to the Management Board on a monthly basis as part of the internal reporting process, so that any necessary changes can be initiated promptly.
In Germany, the Company's most important market with a 37.7% share of total sales, the products are currently sold via MOBOTIXcertified Secure Partners, specialized ITretailers or directly, e.g. via the Company's online store, to commercial and private customers.
Most of MOBOTIX' international sales are made via distributors and their qualified systems integrators and resellers. The distributors are supported in this process by a number of locally-based Business Development Managers who are employed directly by MOBOTIX AG.
More than 135,000 MOBOTIX cameras are in use worldwide. In addition to numerous projects in Germany, MOBOTIX AG also has a number of international reference projects, such as railroad crossings in
Japan, urban monitoring in Alaska, the campus of Singapore Polytechnic, pipelines in Saudi Arabia, gold mines in South Africa and post offices in Israel. In the USA, the Company sells its products through its own sales subsidiary, MOBOTIX CORP. Sales in Switzerland are handled by an associated company (MOBOTIX AG Schweiz).
MOBOTIX AG conducted a successful initial public offering (IPO) on October 10, 2007 in the Entry Standard segment of the Frankfurt Stock Exchange, laying the foundation for financing the Company's future growth. Very soon after the IPO, on March 31, 2008, MOBOTIX changed from the Entry Standard to the Prime Standard of the Frankfurt Stock Exchange. The change is a sign of a strong commitment from MOBOTIX AG to the quality of investor relations and at the same time, to attract international investors.
As of the end of the fiscal year, the MOBOTIX share price of €25.60 significantly exceeded the issue price of €15.50.
MOBOTIX operates in the market for video security systems. This market is generally referred to as the CCTV market. Today's market for video security systems includes both analog video security systems and network camera systems, as well as video management software and accessories. Combinations of analog and network camera systems are known as hybrid systems.
Software und Speicher in der MOBOTIX-Kamera integriert Software and storage integrated in the Mobotix camera
In a study made by the market research firm Frost & Sullivan (World Internet Protocol Surveillance Markets, 2006), the authors presume that global sales in the market for network cameras will grow by an annual average of approximately 40% from 2005 to 2012. MOBOTIX is now the world's fourth largest network camera manufacturer, with a market share of 6.6% in 2006 (source: IMS Research, The World Market for CCTV & Video Surveillance Equipment, 2007 Edition), up from fifth place in 2005 with a 6.2% market share. According to IMS, MOBOTIX was in second place in the EMEA region in 2006. The study shows that MOBOTIX has a solid global market share that should increase further in the coming years.
The favorable market environment and the excellent global market position are a good basis for further successful growth of the Company. In addition to its important primary product features and unique selling propositions (USPs), MOBOTIX has a further advantage over most of its global competitors. The company offers not just a camera, but – as one of the very few manufacturers of IP video products – a complete monitoring system, including accessories and its own video management software.
MOBOTIX' technology leadership is reflected distinctively in its receiving the Frost & Sullivan "European CCTV and Video Surveillance Product Innovation Award 2008" for outstanding product innovation. The award recognized MOBOTIX for its sophisticated, innovative megapixel cameras, which provide highly detailed resolution to best meet the demands of the security industry.
MOBOTIX camera original image from the zugspitze mountain
The MOBOTIX Group maintains its strong revenue and earnings growth from the previous years. The positive trend continues uninterrupted since the second quarter of 2002, recording significant net income in each period.
In fiscal year 2007/08, MOBOTIX Group revenue grew by 49.6% to approx. €35.3 million (prior year: €23.6 million), and pretax earnings increased by 89.6% to €7.1 million.
Total output (sales revenue, increase in finished goods and work in progress, and other own work capitalized) rose by €12.8 million to €36.9 million.
EBITDA came to €8.2 million (prior year: €4.6 million), or approx. 23.3% percent of sales.
EBIT amounted to €7.0 million (prior year: €3.9 million). Net income for the year increased by 119.6% to €4.9 million (prior year: €2.2 million).
Revenue growth was achieved to a large extent through increased sales of dome cameras, which grew from approx. €5.6 million to €11.5 million (+105.3%), while revenues from fixed cameras increased from €16.4 million to approx. €22.0 million (+ 34.1%). The product line D22 introduced at the end of the prior fiscal year was successfully established on the market during the reporting year. The launch of the product line Q22 in June 2008 did not have a noticeable effect on sales growth in fiscal year 2007/08.
Once again, the export business was a growth driver. The export ratio grew to 62.3% in fiscal 2007/08, compared to 55.8% in the prior year. In Germany, revenue rose from €10.4 million to €13.3 million (27.5%), while in the rest of Europe, revenue climbed 61.3% to €14.1 million. In the remaining countries, revenue rose 78.7% to €7.9 million, up from €4.4 million a year earlier.
The material usage ratio (cost of materials to total operating performance) increased slightly from 28.1% to 28.9%. The gross profit margin declined slightly in response to price pressures and changes in the distribution mix, and was not fully offset even by the positive effects of economies of scale due to significant volume increases.
Staff costs rose in response to the significant number of new hires, but grew at a slightly lower rate than total operating performance. The personnel usage ratio (personnel expenses to total operating
Revenue Rest of World € 7.9m (+78.7%)
performance) declined from 28.0% to 27.8%.
Other operating expenses increased slower than revenues, thus contributing to the increase in profit for the year. Other operating expenses include non-recurring consulting expenses of €524 thousand from the IPO and the segment change at the Frankfurt Stock Exchange.
Depreciation and amortization rose by €481 thousand, or 65.2% to €1,219 thousand. This item includes write-downs of €104 thousand for prototypes and tools due to the postponement of a development project, as well as €81 thousand allocated to development projects capitalized for the first time in the period under review.
The subsidiary MOBOTIX CORP reported a loss of approx. USD 0.2 million with sales growth of approximately 114.8%. This includes currency losses of approx. USD 0.3 million.
Development costs of €847 thousand were capitalized for the first time in the year under review. Investments in intangible assets amounted to €128 thousand in the fiscal year.
Property, plant, and equipment grew by €5.5 million (+123.7%) to approx. €10.0 million, with new investments in property, plant, and equipment totaling €6.5 million during the reporting period. The investments primarily involved construction at the new Winnweiler location. Investments in technical systems consist primarily of investments in injection molding tools and IT equipment.
Inventories increased moderately by €657 thousand, or 17.5%, to €4.4 million due to the expansion of the product range with the product line Q22 and the increase in operational activities.
High sales revenues in June boosted trade receivables by €1.7 million over the prior year figure, to a total of €4.7 million.
Other assets rose from €371 thousand to €2.3 million primarily due to the investment of available funds in fixed-income securities.
Cash and cash equivalents grew by €9.1 million (+674.8%) to €10.5 million following
36
the proceeds from the IPO as well as the assumption of a loan for the construction of the Company's new location.
On the liabilities side, the increase of approx. €13.2 million in equity due to proceeds from the IPO as well as the net profit for the year led to an increase in the equity-to-assets ratio from 50.3% to 60.0%.
The rise in provisions can be explained in particular by corresponding tax provisions based upon the high net profit for the year.
The increase in liabilities to banks results in particular from the assumption of approx. €4.3 million in subsidized low-interest development loans for the new construction.
Trade payables as of the reporting date grew by €1.3 million to €1.9 million due to payment obligations related to the construction activity at the new location as well as increased operational activity.
The increase in other liabilities from €1.0 million to €1.5 million as of June 30, 2008 can be explained primarily by an increase in payroll liabilities and liabilities for commissions and bonuses.
Based upon the developments described above, the total assets of the MOBOTIX Group grew by €19.7 million (144.2%) to €33.4 million as of June 30, 2008 compared to a year earlier.
Cash flow from operating activities of the MOBOTIX Group was €4.3 million in the year under review, compared to €2.6 million in the prior year. Cash outflows for investments increased by €3.8 million to €7.0 million. Cash flow from financing activities grew by €11.0 million to €11.8 million as a result of the proceeds from the IPO and the use of external funds for construction of the Company's new location.
As a result of changes in individual cash flows, the Company had liquid assets of €10.5 million available on the reporting date of June 30, 2008. The Company's solvency was guaranteed at all times during the current fiscal year. Because of the Company's credit standing, it has a number of financing options available.
Cash inflows from the capital increase performed in fiscal year 2007/2008, together with the net profit for the year, led to a 9.7% increase in the equity-to-assets ratio to 60.0%. Non-current liabilities increased by €4,409 thousand to €6,772 thousand, in particular due to borrowing for the new construction of the production and
administrative building. Non-current liabilities as a share of total assets increased from 17.3% to 20.3%. Current liabilities as of the reporting date correspond to 19.7% of total assets, compared to 32.4% in the prior year. Current liabilities include tax provisions of €2,453 thousand. A cash outflow for tax payments in the amount of €1,396 thousand is still expected for fiscal year 2008/09.
The Group's results of operations, net assets, and financial position, which are distinguished by continued strong growth and high profitability, fully reflect the expectations of the Management Board, and exceed the expectations from the beginning of the reporting year, even when the additional charges from the IPO and the segment change are taken into account.
Development activities were also further expanded during the year under review. As of June 30, 2008, the MOBOTIX Group had 47 employees in its Development department. As in previous years, the primary development focus was on the creation of new hardware and software products and components as well as further optimization of product functionality.
Development activities are essentially done only in-house. Outsourcing of development
38
196 (Full-time equivalent, trainees included)
activities occurs only on a very small scale, and only in the area of tool design and PC board layout.
During the current fiscal year, the Company introduced the newly developed 360° camera product line Q22 and the CAM IO input/output module. The video control system software MxCC underwent further development. Other product innovations are currently in development and should be introduced to the market in fiscal year 2008/09.
As in the past years, the number of employees grew in almost every area of the Company. As of June 30, 2008, the MOBOTIX Group had 196 employees, compared to 143 employees at the beginning of the fiscal year. There will be personnel increases in fiscal 2008/09 as well, primarily in national and international sales. The Company will also focus on strengthening its development activities.
Information on compensation for the Management Board can be found in the remuneration report of the Corporate Governance Report, which should be considered part of the Group Management Report.
In July 2008, the Company signed a supplemental agreement to the general contractor agreement, in which the general contractor was commissioned to provide additional services related to the construction of the new location. The agreement involves an additional construction volume of approx €1.3 million.
Thereof Development 47
In response to the German Takeover Directive Implementation Act, Section 315 (4) of the German Commercial Code (HGB) requires publicly traded companies to provide takeover-relevant information on their capital structure, shareholders' rights and restrictions, shareholding ratios and governing bodies.
MOBOTIX AG states the following with regard to the required information:
The subscribed capital of MOBOTIX AG is €4,423,814 divided into 4,423,814 no-par bearer shares, each representing €1.00 of share capital. Each share entitles the bearer to one vote. As far as the Management Board of the Company is aware, there are no restrictions on voting rights of the shares.
Based upon the Company's IPO on October 10, 2007, the existing shareholders of MOBOTIX AG have committed to the syndicate leader, DZ Bank, for the following lockup of their shares.
All existing shareholders of the Company at the time of the stock exchange listing, with the exception of VRP Venture Capital Rheinland Pfalz GmbH & Co. KG and Co-Investor AG (and/or the trustor of Co-Investor AG) have committed to DZ BANK in the course of the introduction of the Company's stock on the stock exchange in October 2007 to refrain from either directly or indirectly offering or selling shares of the Company, or announcing such offer or sale or taking other measures economically equivalent to a sale, for a period of six months after the inclusion of the Company's shares for trading on the stock exchange in the Entry Standard segment of the Open Market of the Frankfurt Stock Exchange. This period ended on April 9, 2008. For an additional six months after this period, i.e. the period from April 10, 2008 to October 9, 2008, the aforementioned persons have further committed to refrain from either directly or indirectly offering or selling shares of the Company, or announcing such offer or sale or taking other measures economically equivalent to a sale, without the prior written consent of DZ BANK.
VRP Venture Capital Rheinland Pfalz GmbH & Co. KG and Co-Investor AG and their trustors have, with respect to the dissolution of the trusteeship and the transfer of the shares held by Co-Investor AG to the former, committed themselves to DZ BANK in the course of the introduction of the Company's
stock on the stock exchange in October 2007 to refrain from either directly or indirectly offering or selling shares of Company, or announcing such offer or sale or taking other measures economically equivalent to a sale, for a period of six months after the inclusion of the Company's shares for trading on the stock exchange in the Entry Standard segment of the Open Market of the Frankfurt Stock Exchange. This period ended on April 9, 2008.
Dr. Ralf Hinkel, CEO of MOBOTIX AG, holds 50.14% of the subscribed capital.
So long as Dr. Ralf Hinkel himself and/or a company controlled by him (Section 17 of the Stock Corporation Act (AktG)) or under his direction (Section 18 AktG) holds a total of more than 25% of the Company's shares, Dr.Ralf Hinkel shall have the nontransferable right to appoint one member to the Supervisory Board of the Company.
The regulations on the appointment and dismissal of Management Board members and amendments to the articles of incorporation (Section 315 (4) No. 6 HGB) are based upon the Stock Corporation Act and the articles of incorporation of MOBOTIX AG, which are published on the website in the Corporate Governance section.
According to Section 5 of the MOBOTIX AG articles of incorporation, the Management Board consists of three persons.
Pursuant to Section 15 (2) of the MOBOTIX AG articles of incorporation, an amendment of the articles of incorporation is permitted only if capital with voting rights present in the meeting of shareholders represents at least 60% of the share capital. If a proposed resolution for amendment of the articles of incorporation is not voted upon due to a lack of such presence, then the obligation for presence will not apply in a second meeting of shareholders.
With the consent of the Supervisory Board, the Management Board is authorized to increase the Company's share capital on one or more occasions in the period from January 1, 2008 to November 31, 2011 by a total of up to €1,272,544 through the issuance of up to 1,272,544 new no-par bearer shares in return for cash contributions or contributions in kind (authorized capital). In this process, the shareholders shall be granted a subscription right, which can also be granted to the shareholders in the form of an indirect subscription right (Section 186 (5) AktG).
Nevertheless, the Management Board is authorized, with the consent of the Supervisory Board, to exclude the subscription right of shareholders,
(I) if the capital increase is made in return for cash contributions, and the proportional amount of share capital assigned to the new shares issued under exclusion of the subscription right pursuant to Section 186 (3) Sentence 4 AktG does not exceed a total of 10% of the share capital, either at the time that this authorization takes effect or at the time that it is exercised, and the issue price of the new shares is not materially lower, within the meaning of Sections 203(1) and (2), 186 (3) Sentence 4 AktG, than the stock exchange price of the shares of the same class and features already being traded on the stock exchange at the time the issue price is finally determined. Shares to be counted against this maximum limit are those which were issued or are to be issued for the servicing of warrant-linked or convertible bonds or participation rights with conversion or option rights, so long as these bonds were issued in corresponding application of Section 186 (3) Sentence 4 AktG under exclusion of the subscription right. Furthermore, the Company's own shares to be counted against the maximum limit of 10% of the share capital are those that will be sold during the term of the subscribed capital under exclusion of the subscription right of shareholders pursuant to Sections 71 (1) No. 8 Sentence 5, 186 (3) Sentence 4 AktG;
(II) in the case of capital increases in return for contributions in kind, particularly the acquisition of companies, portions of companies, and shareholdings in companies;
(III) in order to issue employee shares to employees and pensioners of the Company and its affiliated companies;
(IV) for fractional amounts.
The Management Board is authorized, with the consent of the Supervisory Board, to stipulate additional details for the performance of the capital increase.
The MOBOTIX Group has implemented an adequate risk management system to ensure that risks are detected and mitigated at an early stage. The Group's risk management system is intended to identify, monitor, and control any risks that occur. In addition to risks that could jeopardize the Company's continued existence as a going concern, the system also records activities, events, and developments that could significantly affect the future performance of the Company's business.
Precautions are taken against typical business risks that could have a material influence on the Group's results of operations, net assets, or financial position.
Based on the information currently available, the MOBOTIX Group is not at present faced with any dominant specific risks which, in themselves, are highly likely to jeopardize its continued existence as a going concern.
The Company continues to refine its internal structures in line with its growth and to adapt them to the scale of its business. The Company plans additional measures to strengthen and improve quality management, the internal control system, and risk management.
In addition to the public security market
MOBOTIX cameras monitore coventry Airport
(railway stations, airports, urban security, prisons, harbors, highways), MOBOTIX products are now also being used in the market segment of mobile security (police, railways, buses, goods transportation, logistics) because of their compact design and high temperature resistance. In coming fiscal years, further simplification of the products will also lead to a more aggressive marketing in the private security sector (home security, medical care, consumer). The Management Board expects the Company to continue growing strongly in
MOBOTIX Cameras at Panama's Cargo-Port
the coming fiscal years as it introduces new product families. Product innovations will play a central role in this growth.
External market studies confirm the expectation of high growth rates over the coming years in the area of digital IP video monitoring systems. Thus the market environment can be considered very attractive. In the Company's view, the competitive situation has not changed to its dis-advantage in recent months. It remains to be seen, however, to what extent the traditional providers of analog security systems will join the technological shift to digital systems, or whether they will withdraw from the market. MOBOTIX already has a market presence as a system provider offering not only a complete range of hardware and accessories, but also video software for control centers. MOBOTIX is differentiating itself from its competitors by acting as a one-stop shop for complete projects while at the same time putting pressure on pure-play software providers by offering its own control center software free of charge, thereby reducing the overall project cost for customers.
The Management Board deems the procurement market risks to be within the customary range for the industry. In its view there is no material medium-term or longterm dependency on individual suppliers. A short-term loss of critical suppliers, e.g. for processors, that could lead to significant disruptions of production is likewise considered very unlikely.
Thanks to its comfortable liquidity position and excellent credit standing, the Company currently has no material financial risks. Currency risks exist primarily in connection with operations in the USA. The positive cash flow from the
MxControlCenter-software MxCC
business in the USA covers MOBOTIX AG's purchasing requirements in the dollar zone. There is no material risk of changes in interest rates at the present time. Existing thirdparty financing was acquired at fixed interest rates. Other external financing related to the new location will be finalized in the near future at attractive fixed terms. Bad debt risks are limited through an efficient credit management system, including dunning and collection, with very restrictive terms of payment.
Public perception of video monitoring has developed in a very positive direction overall. The presence of video monitoring increases public perception of security and it is therefore finding increased public acceptance.
There have been a growing number of political initiatives aimed at improving the quality of monitoring systems in public areas. One example is the French video law of October 1, 2006. If standards change in favor of a high-resolution systems in the public security area, then MOBOTIX can also profit from this thanks to its position as an important manufacturer of such systems.
The Management Board therefore presumes that the Company's regulatory environment will have a significantly positive effect on its further growth.
At a growth rate of more than 45% annually in recent years, MOBOTIX has an ongoing need for organizational adaptation. The Company counters the entailing fundamental risks with an ongoing adaptation of human resources, control systems and infrastructure.
Production and sale of technical products are always associated with warranty risks. These risks are reflected in appropriate provisions on the balance sheet. The Company has also purchased product liability insurance to protect against possible losses and risks.
The Company has begun building a new corporate location to accommodate its expected strong growth. A bidding consortium was engaged as general contractor for the construction. A large part of the construction work was completed by the end of June 2008. The Company plans to move into its new location at the end of the calendar year.
Basically the Management Board presumes that along with the planned corporate growth, operating results will also continue to increase in line with current profitability. In this regard, the significant market potential in the US market, as well as other startup losses of MOBOTIX CORP commensurate with business development must be taken into account.
The Company sees no risks at the present time or in the future that would endanger the Company's continued existence or would have a material influence on its development. Technological innovation and further expansion of the distribution network are extremely important for the Group's sustained success.
MOBOTIX new company's site
| FFFFFFFFFFFFFFFFFFFFFFFFFFFFFFFFFFFFF | 闵闵 | |
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| BE BE BE BE BE BE IKI I |
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The positive market environment with continued forecasts for high growth rates will form the basis for the Company's further growth. Market growth will be driven by the switch from analog to digital technology. If this switch should happen sooner than expected, it could produce additional opportunities for MOBOTIX. Factors that could lead to an acceleration include political initiatives such as the aforementioned French video law.
The Management Board presumes that technological market drivers such as increasing image resolution of video systems and more complex security installations will favor the advantages of a decentralized technology approach. This would strengthen the MOBOTIX Group's competitive position and put pressure on the competition.
In the opinion of the Management Board, increased publicity will provide new opportunities, e.g. to acquire new employees, sales partners, and customers. MOBOTIX is represented throughout the world. A key issue to unlock the potential for further growth is the targeted expansion of its partner network. With its outstanding global market position, particularly in the subsegment of high-resolution network cameras, the Company is in a very good position to take advantage of the tremendous growth potential at hand.
In terms of regions, the Management Board sees key growth areas for the coming years in North America, South America, Asia, and Russia.
The market introduction of Q22 in June 2008 was very promising, with extremely positive feedback from distributors. The fact that the Company's main competitors cannot offer any comparable products shows MOBOTIX AG's innovative strength, and enables it to occupy a unique position in this product segment over the medium term.
In addition, MOBOTIX will use additional product innovations in the coming months to strengthen its competitive position and create the conditions for developing new market segments.
The consolidated financial statements show an increase in revenue of approx. 50% to €35.3 million, compared to €23.6 million in fiscal year 2006/07. Profit for the year improved from €2.2 million to €4.9 million. Our goal for fiscal year 2008/09 and the following year is growth in line with market growth in the segment of network cameras. The main market research institutions estimate this growth rate to be approx. 40% per year. As in recent years, this growth should be achieved with continued profitability.
| Jul. 01, 2007 - | Jul. 01, 2006 - | ||
|---|---|---|---|
| EUR '000s | See Note | Jun. 30, 2008 | Jun. 30, 2007 |
| Revenue | (1) | 35,313 | 23,602 |
| Increase/decrease in finished | (2) | 719 | 473 |
| goods and work in progress | |||
| Other own work capitalized | (3) | 902 | 102 |
| Total output | 36,933 | 24,177 | |
| Cost of materials | (4) | -10,681 | -6,798 |
| Gross profit | 26,252 | 17,379 | |
| Staff costs | (5) | -10,261 | -6,777 |
| Depreciation, amortization and impairment | (6) | -1,219 | -738 |
| Other operating income | (7) | 260 | 139 |
| Other operating expenses | (8) | -8,032 | -6,123 |
| Operating profit | 6,999 | 3,880 | |
| Profit or loss from investments accounted for using the | (9) | 9 | 4 |
| equity method | |||
| Other interest and similar income | (10) | 344 | 23 |
| Interest expense and similar charges | (10) | -256 | -165 |
| Profit before tax | 7,096 | 3,742 | |
| Income taxes | (11) | -2,172 | -1,499 |
| Profit for the year | 4,924 | 2,243 | |
| Earnings per share (diluted / basic) | (12) | 1.16 | 0.63 |
| See Note | Jun. 30, 2008 EUR '000s |
Jun. 30, 2007 EUR '000s |
|
|---|---|---|---|
| Intangible assets | (13) | 993 | 239 |
| Property, plant and equipment | (13) | 9,983 | 4,463 |
| Investments accounted for using the equity method | (14) | 32 | 25 |
| Prepaid expenses | (19) | 133 | 151 |
| Deferred tax assets | (11) | 80 | 113 |
| Non-current assets | 11,221 | 4,991 | |
| Inventories | (15) | 4,402 | 3,745 |
| Trade receivables | (16) | 4,677 | 2,979 |
| Other assets | (17) | 2,301 | 371 |
| Cash and cash equivalents | (18) | 10,475 | 1,352 |
| Prepaid expenses | (19) | 303 | 233 |
| Current assets | 22,157 | 8,680 | |
| ASSETS | 33,379 | 13,671 | |
| Subscribed capital | (20) | 4,424 | 3,814 |
| Capital reserves | (20) | 9,665 | 1,249 |
| Accumulated other comprehensive income | (20) | 88 | 44 |
| Profit or loss carried forward | (20) | 930 | -474 |
| Profit for the year | (20) | 4,924 | 2,243 |
| Equity | 20,031 | 6,876 | |
| Liabilities to banks | (23) | 6,478 | 2,3 |
| Deferred tax liablilities | (11) | 294 | 63 |
| Non-current liabilities | 6,772 | 2,363 | |
| Tax provisions | (21) | 2,453 | 1,661 |
| Other provisions | (22) | 123 | 161 |
| Liabilities to banks | (23) | 589 | 955 |
| Trade payables | (23) | 1,905 | 620 |
| Other liabilities | (24) | 1,506 | 1,036 |
| Current liabilities | 6,576 | 4,432 | |
| EQUITY AND LIABILITIES | 33,379 | 13,671 |
| Jul. 01, 2007 - | Jul. 01, 2006 - | |
|---|---|---|
| EUR '000s Profit before tax |
Jun. 30, 2008 7,096 |
Jun. 30, 2007 3,742 |
| -/+ Net interest income or expense | -88 | 142 |
| - Profit or loss from investments accounted for using | ||
| the equity method | -9 | -4 |
| + Depreciation, amortization and impairment of property, | 1,219 | 738 |
| plant and equipment, and intangible assets | ||
| + Interest received | 315 | 22 |
| -/+ Decrease/increase in other provisions | -38 | 35 |
| + Loss on disposal of non-current assets | 4 | 7 |
| + Other non-cash expenses | 18 | 18 |
| Operating profit before changes in working capital | 8,517 | 4,701 |
| - Increase in inventories, trade receivables and other assets not | -3,847 | -2,684 |
| attributable to investing or financing activities | ||
| + Increase trade payables and other liabilities not attributable | 582 | 586 |
| to investing or financing activities | ||
| Cash flow from operating activities before tax | 5,252 | 2,602 |
| - Income tax paid | -914 | -20 |
| Cash flow from operating activities | 4,338 | 2,582 |
| - Cash paid for purchases of property, plant and equipment | -5,670 | -3,127 |
| - Cash paid for purchases of intangible assets | -975 | -98 |
| - Cash paid for the issuance of loans | -430 | 0 |
| + Cash received from disposals of property, plant and equipment | 16 | 13 |
| Cash flow from investing activities | -7,060 | -3,212 |
| + Cash received from additions to equity | 9,455 | 525 |
| - Cost of capital increase | -631 | -4 |
| - Dividends paid | -839 | 0 |
| - Cash paid for the redemption of loans | -1,155 | -339 |
| + Cash received from borrowings | 5,204 | 736 |
| - Interest paid | -190 | -161 |
| Cash flow from financing acitivities | 11,844 | 757 |
| Net change in cash and cash equivalents | 9,123 | 128 |
| Effect of exchange rate and other changes on cash and cash equivalents | 0 | -2 |
| Cash and cash equivalents at the beginning of the reporting period | 1,352 | 1,225 |
| Cash and cash equivalents at the end of the reporting period | 10,475 | 1,352 |
Material non-cash transactions:
No material non-cash transactions occurred in the current fiscal year.
Operating Cashflow € 4.3m (+68.0%)
| Accumulated other | Profit or | |||||
|---|---|---|---|---|---|---|
| EUR '000s | Subscribed | Capital reserves |
comprehensive income |
loss carried forward |
Profit for the period |
Total |
| Balance as at Jul. 1, 2006 | 1,382 | 3,333 | 10 | -647 | 0 | 4,078 |
| Issuance of shares | 525 | 525 | ||||
| Capital increase from the | 1,907 | -1,907 | 0 | |||
| Company's own funds | ||||||
| Cost of capital increase | -4 | -4 | ||||
| Withdrawal from capital | -173 | 173 | 0 | |||
| reserves | ||||||
| Currency translation | 34 | 34 | ||||
| Profit for the period | 2,243 | 2,243 | ||||
| Balance as at Jun. 30, 2007 | 3,814 | 1,249 | 44 | -474 | 2,243 | 6,876 |
| Balance as at Jul. 1, 2007 | 3,814 | 1,249 | 44 | 1,769 | 0 | 6,876 |
| Issuance of shares | 610 | 8,845 | 9,455 | |||
| Cost of capital increase | -429 | -429 | ||||
| Dividend payment | -839 | -839 | ||||
| Currency translation | 44 | 44 | ||||
| Profit for the period | 4,924 | 4,924 | ||||
| Balance as at Jun. 30, 2008 | 4,424 | 9,665 | 88 | 930 | 4,924 | 20,031 |
Equity-to-assets ratio 60.0%
MOBOTIX AG was established on June 21, 1999. Since June 16, 2001, the Company's registered office has been in Kaiserslautern (Luxemburger Str. 6, 67657 Kaiserslautern, Germany).
MOBOTIX AG is a European technology leader and system provider in the production of highresolution digital, network-based video security systems, video management software and systems accessories. Its technology centers on its proprietary, internally manufactured, fully digital network cameras.
MOBOTIX products are sold worldwide primarily via distributors, qualified systems integrators and specialist retailers.
The initial listing of the shares of MOBOTIX AG in the Entry Standard of Deutsche Börse AG was made on October 10, 2007. Since March 31, 2008, the shares of MOBOTIX AG have been listed in the Prime Standard of Deutsche Börse AG.
MOBOTIX AG maintains one subsidiary in the U.S. and one joint venture in Switzerland.
The Management Board and the Supervisory Board have issued a declaration of compliance to the German Corporate Governance Code, as prescribed by section 161 of the German Stock Corporation Act (Aktiengesetz, AktG), and has made this declaration available to the public on a permanent basis (in German only) on its website under www.mobotix.com.
The Group's fiscal year starts on July 1 and ends on June 30 of the following calendar year.
The consolidated financial statements are prepared in euro (EUR). Unless otherwise indicated, all amounts are stated in EUR thousand (EUR '000s).
The consolidated financial statements of MOBOTIX AG have been prepared pursuant to section 315a of the German Commercial Code (Handelsgesetzbuch, HGB) in accordance with International Financial Reporting Standards (IFRS) and the related interpretations of the International Accounting Standards Board (IASB), as required to be applied in the European Union pursuant to Regulation (EC) No. 1606/2002 of the European Parliament and of the Council on the application of international accounting standards.
All separate financial statements of the companies included in the consolidated
financial statements have been prepared in accordance with applicable local law and have been adjusted to IFRS as well as to the accounting policies of the MOBOTIX Group. The same accounting policies as in the financial statements for the fiscal year 2006/ 2007 were applied.
The income statement has been prepared according to the nature of expense method.
The Management of MOBOTIX AG authorized the consolidated financial statements for issue on August 25, 2008.
The following new or amended standards, which have already been published, but which are not yet required to be applied, were not applied earlier:
IFRIC 14 "IAS 19 The Limit on a Defined
IFRIC 14 "IAS 19 The Limit on a Defined Benefit Asset, Minimum Funding Requirements and their Interaction" (required to be applied for fiscal years beginning on or after January 1, 2008).
We expect that the first-time application of these standards and interpretations will not have a material impact on the presentation of the results of operations.
The following IASB pronouncements were applied by MOBOTIX AG for the first time in the fiscal year under review.
The first-time adoption of the other pronouncements did not have a material impact on the presentation of the results of operations, net assets, and financial position.
MOBOTIX AG has applied IFRS 8 on a voluntary basis since fiscal year 2006/2007.
In the year 2003, the subsidiary MOBOTIX CORP, New York, New York (formerly MOBOTIX LLC, Columbia, South Carolina) was founded in order to penetrate the U.S. market. On July 7, 2005, a 50% stake in MOBOTIX AG, Freienbach, Switzerland was acquired. MOBOTIX CORP was fully consolidated in the consolidated financial statements of MOBOTIX AG as of the opening balance sheet date. In addition, MOBOTIX AG Switzerland was included in the consolidated financial statements using the equity method as the Company is able to exercise a significant influence over its financial and operating policy decisions (associate). MOBOTIX Ltd., Birmingham, United Kingdom, is not included in the consolidated financial statements as the company was not operating in the year under review.
The financial statements of the companies included in the consolidated financial statements of MOBOTIX AG were prepared in accordance with uniform accounting policies in accordance with IFRS as of the balance sheet date of June 30, 2008.
MOBOTIX CORP was included in the consolidated financial statements as of July 1, 2005, i.e. the date of the opening balance sheet, in accordance with IFRS 1. Accordingly, the subsidiary's equity as of the date of the opening balance sheet was offset with the carrying amount of the equity investment at the parent company.
The investment in the associate, which is measured using the equity method, is recognized at the proportionate revalued equity. Intra-group profits from this company were insignificant in the years under review.
| Registered | Shareholding | Equity as of | ||||
|---|---|---|---|---|---|---|
| Company | office | 30.6.08 | 30.6.07 | 30.6.08* | 30.6.07* | |
| MOBOTIX CORP | New York, USA | 100.0% | 100.0% | -530 | -328 | USD |
| MOBOTIX Ltd. | Birmingham, GB | 100.0% | 100.0% | 1 | 1 | GBP |
| MOBOTIX AG | Freienbach, CH | 50.0% | 50.0% | 103 | 73 | CHF |
* Equity pursuant to local law
Intra-group receivables and liabilities as well as any income and expenses from intragroup transactions are offset. Intragroup profits between the consolidated companies are also eliminated as part of the consolidation process. Deferred taxes are documented for consolidation adjustments recognized in income in accordance with IAS 12.
Foreign currency transactions included in the separate financial statements, which were prepared in local currencies, are translated using the exchange rates applicable at the transaction date. Assets and liabilities denominated in foreign currencies are translated into the local currency at the closing rate, with any resulting gains or losses recognized in income.
The translation of financial statements prepared in a foreign currency is based on the functional currency concept in accordance with IAS 21 "The Effects of Changes in Foreign Exchange Rates." The relevant functional currencies of the foreign companies are identical with the respective local currency. All balance sheet items, except equity, are translated at the middle rate on the balance sheet date, while expense and income items are translated at average rates. Equity is translated at historical rates. Any resulting translation differences are offset directly in equity. Foreign exchange differences arising compared to the prior year are also offset directly in equity.
The currency translation differences of the material currencies of the MOBOTIX Group developed as follows:
| Currency translation | Average rates | Closing rates | |||
|---|---|---|---|---|---|
| 1 EUR = | ISO code | 2007/08 | 2006/07 | 2007/08 | 2006/07 |
| Swiss franc | CHF | 1.629 | 1.608 | 1.608 | 1.565 |
| U.S. dollar | USD | 1.467 | 1.304 | 1.579 | 1.255 |
Revenue is generally recognized upon delivery of the goods to the customer or when the goods are picked up by the courier. Revenue from the delivery of goods is recognized once the significant risks and rewards of ownership of the relevant goods have been transferred to the customer and the Company no longer retains effective control over the goods sold, and the amount of revenue can be reliably determined and an inflow of economic benefits from the sale is probable.
Revenue from services (primarily training) are only generated at a very insignificant amount in the MOBOTIX Group. They are recognized when the services are rendered.
This item mainly includes own development work capitalized as intangible assets. Own development work exclusively relates to staff costs.
Earnings per share are determined in accordance with IAS 33 "Earnings per Share." Basic earnings per share are calculated by dividing the Group's profit for the year by the average number of shares. There is no dilutive effect at MOBOTIX AG.
Intangible assets acquired for a consideration are capitalized in accordance with IAS 38 "Intangible Assets" if it is probable that the use of the asset results in a future economic benefit and the cost of the asset can be reliably measured. They are measured at amortized cost. Financing costs are not capitalized as part cost. Intangible assets are generally amortized using the straight-line method in accordance with their useful ecosnomic lives.
Amortization is primarily based on the following useful lives:
| Useful life | Years |
|---|---|
| Industrial property rights | 3 to 8 |
| IT software | 3 |
Research costs are not to be capitalized in accordance with IAS 38 "Intangible Assets." Development costs may only be capitalized if certain, clearly defined criteria are met. Accordingly, development costs must be capitalized when it is probable that the development activities will result in a future inflow of cash, the amount of which will cover not just the costs of production but also the corresponding development costs. In addition, the development project or the product or process to be developed must fulfill all of the further criteria defined in IAS 38. Since July 1, 2007, MOBOTIX AG has fulfilled these criteria for some of its development projects. Accordingly, the Company capitalizes development costs for product development in the area of camera housings, electronics, and software at cost if the relevant expenses can be clearly allocated and it is certain that the products will be technically feasible and can be successfully marketed. The capitalized development costs comprise all costs directly attributable to the development process. Capitalized development costs are amortized over the expected product lifecycle of generally three years, beginning on the date of the start of production.
All items of property, plant and equipment are subject to wear and tear and are measured at cost less depreciation. The cost includes purchase prices, transaction costs as well as subsequent expenditure less any purchase price deductions granted. The costs of production are determined on the basis of directly attributable individual unit costs as well as applicable proportionate overheads. Financing costs are not capitalized as part of the cost.
Items of property, plant and equipment are generally depreciated using the straight-line method in accordance with their useful economic lives. Depreciable assets of property, plant and equipment are depreciated individually if they have different useful lives. Low-value assets reported as noncurrent assets, which had been previously recognized as an expense, have been recognized in a collective item and depreciated over a useful life of five years since the fiscal year 2006/2007.
Depreciation is based on the following useful lives:
| Useful life | Years |
|---|---|
| Buildings on third-party land | 10 - 15 |
| Mechanical equipment | 10 - 13 |
| Furnitue and fixtures | 10 |
| Electronic laboratory appliances | 3 - 10 |
| Die cast tools | 3 - 8 |
| Testing equipment | 3 - 7 |
| IT equipment | 3 - 5 |
A shorter useful life applies if the asset can only be used for a shorter period of time for legal reasons.
The carrying amounts of intangible assets and of property, plant and equipment are reviewed for impairment in accordance with IAS 36 "Impairment of Assets," provided that there are indicators of impairment. An impairment loss is recognized when the recoverable amount of the asset, which is the higher of its fair value less costs to sell and its value in use, is lower than its carrying amount. If the reasons for the recognition of an earlier impairment loss no longer exist, the impairment loss is reversed and the carrying amount increased up to amortized cost.
Government grants are recognized only when there is reasonable assurance that the Group complies with the conditions attached to it and the grants have been authorized. Subsidies received from the government for the purchase of tangible assets result in a reduction of cost.
The currently existing rental and lease agreements of the MOBOTIX Group are exclusively operating leases. A lease is classified as an operating lease when the lessor retains substantially all the risks and rewards of ownership of the leased assets. The leases refer to the lease agreements for the production and administrative building in Kaiserslautern and lease agreements for operating and office equipment as well as for the vehicle fleet.
Investments in associates are accounted for using the equity method. Accordingly, the costs of acquisition incurred on the purchase date are adjusted by the future, pro-rata share in the profit or loss of the associate. Impairment losses are recognized when the recoverable amount falls below the carrying amount of the investment.
In accordance with IAS 12 "Income Taxes," deferred taxes are recognized for all temporary differences between the tax base and the carrying amounts in the financial statements. Deferred tax assets also include claims for tax reductions resulting from the anticipated use of loss carryforwards in subsequent years, the realization of which is deemed probable.
The basis for recognition is the tax rate applicable at the date of the reversal. Deferred tax assets and liabilities are not discounted and are reported in the consolidated financial statements in accordance with IAS 12.74.
Inventories are measured at cost, with the costs of the purchase of raw materials and supplies being determined using average prices and taking into account the net realizable value as of the balance sheet date. Work in progress and finished goods are measured at cost of conversion, also taking into account the net realizable value as of the balance sheet date. Costs of conversion include directly allocable individual unit costs and production overheads, assuming normal capacity utilization. Financing costs are not capitalized as part of the cost. The net realizable value represents the estimated selling price less the estimated costs necessary to make the sale. Write-downs are recognized for inventory risks in an appropriate and sufficient amount.
A financial instrument is any contract that simultaneously gives rise to a financial asset of one company and a financial liability or equity instrument of another company.
Financial assets include in particular cash and cash equivalents, trade receivables as well as other loans extended and receivables.
Receivables and other assets are recognized at their nominal amount or at amortized cost. Identifiable individual risks are provided for by appropriate valuation allowances. In accordance with IAS 39 "Financial Instruments: Recognition and measurement," the Group regularly assesses whether there is objective evidence that a financial asset or group of financial assets may be impaired. Any impairment loss resulting from an impairment test is recognized in "Other operating expenses."
Cash and cash equivalents include cash accounts and short-term deposits at banks with a remaining term to maturity of not more than three months at the time of addition. They are measured at face value. Foreign currency balances are measured at the middle rate prevailing on the balance sheet date. Ratable interest income generated from cash equivalents is recognized in income. Financial liabilities such as trade payables or liabilities to banks are regularly associated with a claim to receive compensation in cash or another financial assets. Financial assets and financial liabilities are generally reported on a gross basis. They are only offset when there is currently a legally enforceable right to offset and there is an intention to settle on a net basis. Financial assets are measured initially at fair value.
Financial liabilities are measured initially at fair value less any transaction costs directly attributable to borrowing. Financial liabilities are subsequently measured at amortized cost. The MOBOTIX Group does not have any liabilities held for trading.
In accordance with IAS 37 "Provisions, Contingent Liabilities and Contingent Assets," provisions are recognized in the balance sheet for legal or constructive obligations as a result of past events when the outflow of resources required to settle the obligation is probable and can be reliably estimated. The carrying amount of provisions is based on best estimates. Provisions are only recognized for legal or constructive obligations towards third parties and discounted where necessary.
Liabilities, including financial liabilities, are generally measured at amortized cost.
The preparation of the consolidated financial statements in accordance with IFRS requires the use of assumptions made by the management that have an influence on the measurement of assets and liabilities, the disclosure of contingent assets and liabilities as of the balance sheet date, and the reported income and expenses during the fiscal year. These estimates may differ from the actual development. The preparation of the present consolidated financial statements was in particular subject to estimates with regard to useful lives of property, plant and equipment, the measurement of other provisions and the realizability of tax loss carryforwards. Further estimates were made for the calculation of valuation allowances on trade receivables as well as for the measurement of inventories. Actual values may vary in specific cases from the assumptions and estimates made. Changes in assumptions or estimates are recognized in profit or loss once new information becomes available.
The cash flow statement shows the changes that have occurred in the balance of the Group's cash and cash equivalents during the reporting periods in the form of cash inflows and cash outflows. In accordance with IAS 7 "Cash Flow Statements," a distinction is made between cash flows from operating, investing and financing activities. Cash and cash equivalents include balances with banks and cash on hand. Cash and cash equivalents are not subject to any restrictions.
Please see the segment report for a breakdown of revenue by region and product.
Changes in inventories comprise increases and decreases in the amount of finished goods and work in progress.
Other own work capitalized reported in the fiscal year 2007/08 comprises development costs capitalized for the first time in the amount of €847 thousand. This item also includes internally generated testing equipment and production facilities
| Jul. 01, 2007 - |
Jul. 01, 2006 - |
|
|---|---|---|
| Jun. 30, 2008 EUR '000s |
Jun. 30, 2007 EUR '000s |
|
| Cost of raw materi als, supply and mer chandise |
10,630 | 6,696 |
| Cost of purchased services |
51 | 102 |
| Total | 10,681 | 6,798 |
Cost of materials comprises any materials used for the production of cameras. This item also comprises, to a small extent, expenses for purchased services, which include expenses for outsourced manufacturing and development activities.
| Jul. 01, 2007 - Jun. 30, 2008 EUR '000s |
Jul. 01, 2006 - Jun. 30, 2007 EUR '000s |
|
|---|---|---|
| Wages and salaries |
8,576 | 5,511 |
| Commissions, trade fair bonuses |
110 | 90 |
| Other | 281 | 239 |
| Wages and salaries |
8,967 | 5,841 |
| Social security contributions |
1,215 | 881 |
| Pension benefits | 7 | 5 |
| Other | 72 | 50 |
| Social security | 1,294 | 936 |
| Total | 10,261 | 6,777 |
In fiscal year 2007/2008, the employer's contributions to social security included expenses for a defined contribution plan (Deutsche Rentenversicherung) in the amount of €584 thousand (prior year: €412 thousand), of which €6 thousand (prior year: €6 thousand) referred to related parties.
66
In fiscal year 2007/2008, the Company employed 161 persons (2006/07: 112) on average (excluding Management Board members, trainees and temporary staff).
The following groups of employees were employed by the Company in the year under review:
| Group of employees | 2007/08 | 2006/07 |
|---|---|---|
| Full-time employees | 151 | 104 |
| Part-time employees | 10 | 8 |
| Jul. 01, 2007 - Jun. 30, 2008 EUR '000s |
Jul. 01, 2006 - Jun. 30, 2007 EUR '000s |
|
|---|---|---|
| Amortization and impairment of intangible assets |
221 | 128 |
| Depreciation and impairment of property, plant and equipment |
998 | 610 |
| Total | 1,219 | 738 |
Amortization of capitalized development costs amounted to €19 thousand in the fiscal year 2007/2008. The development projects underlying the amortization were transferred to production at the beginning of January 2008. As of June 30, 2008, the Company recognized an impairment loss amounting to €62 thousand due to the discontinuation of a development project, which was capitalized for the first time as of December 31, 2007. Depreciation and impairment of property, plant and equipment includes impairment losses related to tools no longer used in the amount of €104 thousand.
We refer to Note (13) for an overview of amortization, depreciation and impairment.
| Jul. 01, 2007 - Jun. 30, 2008 EUR '000s |
Jul. 01, 2006 - Jun. 30, 2007 EUR '000s |
|
|---|---|---|
| Income from employees |
66 | 77 |
| Income from ex change differences |
30 | 24 |
| Income from the disposal of non current assets |
0 | 13 |
| Miscellaneous | 164 | 25 |
| Total | 260 | 139 |
Income from employees results from amounts reimbursed by employees for their private use of company cars.
| Jul. 01, 2007 - |
Jul. 01, 2006 - |
|
|---|---|---|
| Jun. 30, 2008 |
Jun. 30, 2007 |
|
| EUR '000s | EUR '000s | |
| Advertising and mar keting expenses |
2,509 | 2,484 |
| Office material, tele communications, postage, packaging |
1,006 | 911 |
| Travel, entertainment and vehicle expenses |
1,262 | 602 |
| Occupancy, opera ting and office equip ment |
709 | 914 |
| Legal and consulting fees as well as IPO costs |
852 | 320 |
| Accounting costs and cost for preparing financial statements |
271 | 159 |
| Expenses from ex change differences |
136 | 68 |
| Miscellaneous | 1,286 | 666 |
| Total | 8,032 | 6,123 |
The profit or loss from investments accounted for using the equity method amounts to €9 thousand (2006/07: €4 thousand) and includes the pro rata share in the profit or loss of the associate MOBOTIX AG, Freienbach, Switzerland.
Interest and similar income primarily includes interest income from demand deposits and short-term time deposits at banks as well as income from a granted loan.
| Jul. 01, 2007 - |
Jul. 01, 2006 - |
|
|---|---|---|
| Jun. 30, 2008 |
Jun. 30, 2007 |
|
| EUR '000s | EUR '000s | |
| Interest on | -255 | -165 |
| borrowings | ||
| Other | -2 | 0 |
| Interest expenses | -256 | -165 |
| Interest income | 329 | 23 |
| from banks | ||
| Other interest | 15 | 0 |
| income | ||
| Interest income | 344 | 23 |
| Net interest | 88 | -142 |
| income or expense |
Interest expenses arise, among other things, from the loans taken out for the new construction of the production and administrative building as well as for other existing loans. Interest on loans and the other interest items can be allocated to financial assets and financial liabilities of the "loans and receivables" category.
As a result of the German Corporate Tax Reform Act 2008, which was adopted by the Bundesrat (the Upper House of the German
Parliament), on July 6, 2007, German tax rates have changed considerably since the beginning of the year 2008. The corporation tax rate was reduced from 25% to 15%, and the municipal trade tax rate of assessment was reduced from a maximum of 5% to a uniform rate of 3.5%. In turn, the municipal trade tax is no longer tax-deductible as business expenses. The solidarity surcharge continues to amount to 5.5% of the corporation tax. These measures resulted in a reduction of the Group's tax rate from 38.86% to 29.96%.
The following table shows the reconciliation of the income taxes derived from profit before tax to income taxes reported in the financial statements:
| Jul. 01, 2007 - |
Jul. 01, 2006 - |
|
|---|---|---|
| Jun. 30, 2008 |
Jun. 30, 2007 |
|
| Tax reconciliation | EUR '000s | EUR '000s |
| Profit before tax | 7,096 | 3,742 |
| Income taxes derived from profit before tax |
2,104 | 1,454 |
| Loss carryforwards not capitalized |
54 | 57 |
| Other non tax deductible expenses |
31 | 14 |
| Differences to the Group tax rate |
-13 | 1 |
| Taxes from previous years |
-32 | -7 |
| Adjustment resulting tax rate changes |
14 | 0 |
| Other non tax effective income |
0 | -2 |
| Other | 14 | -18 |
| Reported income taxes |
2,172 | 1,499 |
Income taxes can be broken down as follows:
| Jul. 01, 2007 - |
Jul. 01, 2006 - |
|
|---|---|---|
| Jun. 30, 2008 EUR '000s |
Jun. 30, 2007 EUR '000s |
|
| Current taxes | 1,738 | 1,496 |
| Deferred taxes | 466 | 10 |
| Taxes from previous years |
-32 | -7 |
| Total | 2,172 | 1,499 |
In accordance with IAS 12 "Income Taxes," deferred taxes were recognized on temporary differences between the IFRS balance sheet and the tax base as well as on tax loss carryforwards.
The amount reported for deferred tax assets and liabilities by balance sheet items as of June 30 are as follows:
| Deferred tax assets EUR '000s |
Deferred tax liabilities EUR '000s |
|||
|---|---|---|---|---|
| Jun. 30, 2008 | Jun. 30, 2007 | Jun. 30, 2008 | Jun. 30, 2007 | |
| Development costs | 0 | 0 | 227 | 0 |
| Property plant and equipment | 4 | 3 | 0 | 0 |
| Inventories | 80 | 128 | 33 | 5 |
| Trade receivables | 0 | 13 | 12 | 9 |
| Other assets | 0 | 0 | 0 | 63 |
| Promotional loans | 5 | 0 | 0 | 0 |
| Provisions | 0 | 11 | 31 | 28 |
| Total deferred taxes on temporary differences |
89 | 155 | 303 | 105 |
| Offset | -9 | -42 | -9 | -42 |
| Amount reported on the balance sheet | 80 | 113 | 294 | 63 |
In the past years, MOBOTIX CORP generated tax losses. Due to the Company's history of losses, we have not recognized deferred taxes on the existing tax loss carryforwards, which amount to €763 thousand (June 30, 2007: €620 thousand).
Earnings per share are calculated by dividing the profit for the year attributable to shareholders of MOBOTIX AG by the weighted number of shares outstanding.
On October 10, 2007, MOBOTIX AG carried out an initial public offering of its shares, which were listed on the Open Market (Entry Standard) of the Frankfurt Stock Exchange. The rights issue carried out in this context led to an increase in the number of shares by 610,000.
In the fiscal year 2006/07, the Company conducted a capital increase from reserves, by which the number of shares doubled without the Company receiving new capital. For this reason, the share split was taken into account retrospectively in the determination of earnings per share in accordance with the provisions of IAS 33 "Earnings per Share.
There is no dilutive effect on earnings at MOBOTIX AG.
| 2007/08 | 2006/07 | |
|---|---|---|
| EUR '000s | EUR '000s | |
| Profit attributable to shareholders of MOBOTIX AG (in EUR '000s) | 4,924 | 2,243 |
| Number of shares outstanding as of July 1 (in thousand) | 3,814 | 1,382 |
| Number of shares outstanding as of June 30 (in thousand) | 4,424 | 3,814 |
| Weighted average of shares taking into account retrospectively the effects of the share split in 2006/07 (in thousand) |
4,256 | 3,557 |
| Basic / diluted earnings per share (in EUR) | 1.16 | 0.63 |
Earning per share € 1.16
The following table shows the changes of the individual items of non-current assets based on total cost.
| Balance as of Jul. 01, |
Reclassi | Exchange | Balance as of Jun. |
|||
|---|---|---|---|---|---|---|
| EUR '000s | 2007 | Additions | Disposals | fications | differences | 30, 2008 |
| Cost | ||||||
| Development costs | 0 | 847 | 0 | 0 | 0 | 847 |
| Software and industrial property rights | 611 | 128 | 0 | 0 | 0 | 739 |
| Total intangible assets | 611 | 975 | 0 | 0 | 0 | 1,586 |
| Land and buildings on third-party land | 1,526 | 59 | 0 | 1 | 0 | 1,586 |
| Machinery | 3,192 | 307 | 10 | 376 | 0 | 3,865 |
| Other plant and equipment | 1,451 | 293 | 17 | 48 | -9 | 1,766 |
| Advance payments and construction in progress |
621 | 5,881 | 0 | -425 | 0 | 6,077 |
| Total property, plant and equipment | 6,790 | 6,540 | 27 | 0 | -9 | 13,294 |
| Accumulated amortization, depreciation and impairment |
||||||
| Development costs | 0 | 81 | 0 | 0 | 0 | 81 |
| Software and industrial property rights | 372 | 140 | 0 | 0 | 0 | 512 |
| Total intangible assets | 372 | 221 | 0 | 0 | 0 | 593 |
| Land and buildings on third-party land | 200 | 44 | 0 | 0 | 0 | 244 |
| Machinery | 1,453 | 601 | 8 | 0 | 0 | 2,046 |
| Other plant and equipment | 674 | 248 | 0 | 0 | -5 | 917 |
| Advance payments and construction in progress |
0 | 104 | 0 | 0 | 0 | 104 |
| Total property, plant and equipment | 2,327 | 998 | 8 | 0 | -5 | 3,311 |
| Net carrying amounts | ||||||
| Development costs | 0 | 766 | ||||
| Software and industrial property rights | 239 | 227 | ||||
| Total intangible assets | 239 | 993 | ||||
| Land and buildings on third-party land | 1,326 | 1,342 | ||||
| Machinery | 1,739 | 1,819 | ||||
| Other plant and equipment | 777 | 849 | ||||
| Advance payments and construction in progress |
621 | 5,973 | ||||
| Total property, plant and equipment | 4,463 | 9,983 |
| Balance as of Jul. |
Reclassi | Exchange diffe |
Balance as of Jun. |
|||
|---|---|---|---|---|---|---|
| EUR '000s Cost |
01, 2006 | Additions | Disposals | fications | rences | 30, 2007 |
| Software and industrial property rights | 514 | 98 | 0 | 0 | 0 | 611 |
| Total intangible assets | 514 | 98 | 0 | 0 | 0 | 611 |
| Land and buildings on third-party land | 434 | 1,093 | 0 | 0 | 0 | 1,526 |
| Machinery | 2,066 | 724 | -5 | 408 | 0 | 3,192 |
| Other plant and equipment | 955 | 405 | -24 | 118 | -4 | 1,450 |
| Advance payments and construction in progress |
242 | 906 | 0 | -526 | 0 | 621 |
| Total property, plant and equipment | 3,696 | 3,127 | -29 | 0 | -4 | 6,790 |
| Accumulated amortization, depreciation and impairment |
||||||
| Software and industrial property rights | 244 | 128 | 0 | 0 | 0 | 372 |
| Total intangible assets | 244 | 128 | 0 | 0 | 0 | 372 |
| Land and buildings on third-party land | 159 | 42 | 0 | 0 | 0 | 200 |
| Machinery | 1,032 | 425 | -5 | 0 | 0 | 1,453 |
| Other plant and equipment | 536 | 144 | -4 | 0 | -2 | 674 |
| Advance payments and construction in progress |
0 | 0 | 0 | 0 | 0 | 0 |
| Total property, plant and equipment | 1,727 | 610 | -9 | 0 | -2 | 2,327 |
| Net carrying amounts | ||||||
| Software and industrial property rights | 270 | 239 | ||||
| Total intangible assets | 270 | 239 | ||||
| Land and buildings on third-party land | 275 | 1,326 | ||||
| Machinery | 1,034 | 1,739 | ||||
| Other plant and equipment | 418 | 776 | ||||
| Advance payments and construction in progress |
242 | 621 | ||||
| Total property, plant and equipment | 1,969 | 4,463 |
In the fiscal year 2007/08, expenses for research and development amounted to €3,335 thousand (prior year: €2,482 thousand), of which development costs for camera housings, electronics and software projects in the amount of €847 thousand (prior year: €0 thousand) were capitalized for the first time. The capitalized development costs comprise all costs directly attributable to the development process. Two of the development projects that meet the criteria of IAS 38 "Intangible Assets" were completed at the end of December 2007 and were transferred to production at the beginning of January 2008. They are amortized over a useful life of three years from that date. In the fiscal year 2007/2008, this resulted in amortization expenses in the amount of €19 thousand. As of June 30, 2008, the Company recognized an impairment loss amounting to €62 thousand due to the discontinuation of a development project, which was capitalized for the first time as of December 31, 2007.
The item "land and buildings on third-party land" includes extensions of office and production space at the Company's site in Kaiserslautern. In the past fiscal year, the Company purchased land to be used for the construction of the new company site.
The item "machinery" mainly includes capitalized costs for tools. The tools are located at the Company's suppliers. In addition, the item comprises in particular IT equipment, electronic laboratory appliances, testing equipment, and production facilities.
The item "operating and office equipment" primarily consists of fittings for trade fairs, furniture and fixtures as well as operating equipment and production facilities.
The additions to property, plant and equipment mainly relate to the construction of the new production building. The total investment volume of this project, which is scheduled to be completed in December 2008, amounts to €14 million. Depreciation and impairment of property, plant and equipment includes impairment losses related to tools no longer used in the amount of €104 thousand (2006/2007: €0 thousand).
Investments accounted for using the equity method amounted to €32 thousand (June 30, 2007: €25 thousand) and consist of the shareholding in the associate MOBOTIX AG, Freienbach, Switzerland.
The financial indicators of the company accounted for using the equity method as of the balance sheet date are as follows:
| 2007/08 | 2006/07 | |
|---|---|---|
| EUR '000s | EUR '000s | |
| MOBOTIX AG, | ||
| Freienbach, CH | ||
| Revenue | 927 | 682 |
| Net profit | 18 | 8 |
| for the year |
| June 30, 2008 EUR '000s |
June 30, 2007 EUR '000s |
|
|---|---|---|
| MOBOTIX AG, Freienbach, CH |
||
| Non-current assets | 17 | 30 |
| Liabilities | 237 | 130 |
Inventories are composed of the following:
| Jun. 30, 2008 EUR '000s |
Jun. 30, 2007 EUR '000s |
|
|---|---|---|
| Raw materials | 1,785 | 1,860 |
| and supplies Finished goods |
1,453 | 1,151 |
| Work in progress | 1,139 | 721 |
| Advance payments | 26 | 13 |
| Total | 4,402 | 3,745 |
The inventories of raw materials and supplies consist of products that were purchased from other companies and integrated into the Company's own products or further processed otherwise, i.e. in particular printed circuit boards, housings, and sensors.
Work in progress relates to the inventory of pre-fabricated components and cameras in production as of the balance sheet date.
Finished goods mainly relate to finished cameras and accessories.
In the fiscal year 2007/2008, the Company recognized write-downs to the lower net realizable value for the first time.
The carrying amount of inventories shown at net realizable value is €110 thousand. Writedowns to net realizable value amounted to €518 thousand, of which €308 thousand related to raw materials and supplies and €210 thousand to finished goods and products.
The default risk associated with trade receivables is monitored and limited by the management based on clearly defined requirements. Valuation allowances, which are based on the individual default risk, existed in the amount of €53 thousand (June 30, 2007: €56 thousand).
As in the previous years, all trade receivables had terms of less than one year. The market values of trade receivables largely correspond to their carrying amounts.
Trade receivables include receivables from the associate MOBOTIX AG, Freienbach, Switzerland, totaling €189 thousand (June 30, 2007: €121 thousand).
| Jun. 30, 2008 EUR '000s |
Jun. 30, 2007 EUR '000s |
|
|---|---|---|
| Trade receivables, gross |
4,730 | 3,035 |
| Specific valuation allowances |
-53 | -56 |
| Total | 4,677 | 2,979 |
The balance of the specific valuation allowances changed as follows in the fiscal years 2007/2008 and 2006/2007:
| Specific valuation allowances EUR '000s |
|
|---|---|
| Balance at July 1, 2006 | 31 |
| Exchange differences | -1 |
| Reversals | -2 |
| Utilization | -2 |
| Additions | 30 |
| Balance as of June 30, 2007 /July 1, 2007 |
56 |
| Exchange differences | -1 |
| Reversals | -32 |
| Utilization | -7 |
| Additions | 37 |
| Balance as of June 30, 2008 |
53 |
As of June 30, 2007 and 2008, the maturity structure of trade receivables and receivables from associates was as follows:
| Jun. 30, 2008 EUR '000s |
Jun. 30, 2007 EUR '000s |
|
|---|---|---|
| Carrying amount | 4,677 | 2,979 |
| neither impaired | 3,633 | 2,556 |
| nor past due |
past due in the following time bands
| < 31 days | 750 | 356 |
|---|---|---|
| 31-90 days | 276 | 37 |
| 91-180 days | 18 | 30 |
| >181 days | 0 | 0 |
| Receivables subject | 60 | 65 |
| to impairment (gross) |
No circumstances exist that suggest that trade receivables that are neither impaired nor past due and trade receivables that are not impaired but past due will not be paid as contractually agreed by the relevant debtors. Specific valuation allowances are recognized after a detailed analysis of individual cases based on the customer's creditworthiness. Trade receivables /
Other assets are composed of the following:
| Jun. 30, 2008 EUR '000s |
Jun. 30, 2007 EUR '000s |
|
|---|---|---|
| Other securities (other money market investments) |
1,499 | 0 |
| Receivables from shareholders |
430 | 0 |
| VAT receivables | 125 | 100 |
| Receivables from employees |
6 | 58 |
| Creditors with debit balances |
10 | 23 |
| Rent deposits | 49 | 23 |
| Miscellaneous | 181 | 168 |
| Total | 2,301 | 371 |
As in the previous years, all other assets had terms of less than one year. The market value of the other assets corresponds to their carrying amount.
Cash includes cash on hand, balances with banks, and term deposits with a maturity of less than three months.
| Jun. 30, 2008 EUR '000s |
Jun. 30, 2007 EUR '000s |
|
|---|---|---|
| Cash on hand | 6 | 12 |
| Bank balances | 3,149 | 1,340 |
| Term deposits | 7,320 | 0 |
| Total | 10,475 | 1,352 |
Prepaid expenses primarily include accrued expenses for prepaid rent and special lease payments.
| Jun. 30, 2008 EUR '000s |
Jun. 30, 2007 EUR '000s |
|
|---|---|---|
| Prepaid rent for production building |
151 | 187 |
| Vacation pay | 0 | 91 |
| Trade fair costs | 120 | 22 |
| Other | 165 | 84 |
| Total | 436 | 384 |
The prepaid rent for the production building is reported on an accrual basis and is divided into a long-term and a short-term portion.
Subscribed capital corresponds to the share capital of MOBOTIX AG as of the relevant balance sheet date. On October 10, 2007, MOBOTIX AG carried out an initial public offering of its shares, which were listed on the Open Market (Entry Standard) of the Frankfurt Stock Exchange. In connection with this initial
public offering, the Company issued a total of 950,981 shares at a price of €15.50 per share. 610.000 shares of the total number were used for a capital increase. Accordingly, MOBOTIX AG increased its share capital by €610 thousand. In connection with the initial public offering, the preferred shares were exchanged against common shares.
As of the balance sheet date, the Company had 4,423,814 common shares (June 30, 2007: 3,330,178) and no preferred shares (June 30, 2007: 483,636) in issue. The no parvalue shares have a proportional interest in the share capital of €1.00 per share. The share capital is fully paid in.
The Management Board is authorized, subject to the consent of the Supervisory Board, to increase the Company's share capital on one or more occasions between January 1, 2008 and November 30, 2011 by up to a total of €1,273 thousand by issuing up to 1,272,544 new no-par value bearer shares against cash contributions or contributions in kind (authorized capital).
The capital reserve consists of share premiums of various capital increases. In the context of the initial public offering on October 10, 2007, a share premium of €8,845 thousand was transferred to the capital reserve. In turn, the capital reserve was reduced by the costs of the capital increase (€429 thousand).
Accumulated other comprehensive income includes the differences from currency translation recognized directly in equity.
The profit or loss carried forward comprises the accrued, retained profits. In the prior years, this item included the losses accumulated during the start-up phase.
In September 2007, dividends amounting to €839 thousand were paid out. This corresponds to a dividend of EUR 0.22 per share.
Capital management at the MOBOTIX Group focuses on long-term capital appreciation for the benefit of shareholders, employees, and customers. The main objective of this approach is to generate high profitability and high growth rates. Capital management also focuses on the participation of shareholders in the successful development of the company by using an appropriate dividend policy.
MOBOTIX AG is not subject to statutory capital requirements.
The tax provisions in the amount of €2,453 thousand (June 30, 2007: €1,661 thousand) include provisions for municipal trade tax, corporation tax and solidarity surcharge for the years 2007 and 2008.
| Balance as of | Balance as of | |||
|---|---|---|---|---|
| EUR '000s | June 30, 2007 | Utilization | Additions | June 30, 2008 |
| Product returns | 80 | 80 | 0 | 0 |
| Warranties | 55 | 45 | 68 | 78 |
| Miscellaneous | 26 | 10 | 29 | 45 |
| Other provisions | 161 | 135 | 97 | 123 |
In accordance with IAS 37 "Provisions, Contingent Liabilities and Contingent Assets," provisions are recognized for legal and constructive obligations as a result of past events when the outflow of resources required to settle the obligation is probable and can be reliably estimated.
Provisions for warranties are recognized for warranty obligations specified by law in connection with the Company's products. Recognition of provisions for warranties is based on historical experience. We expect utilization of the provisions for warranties to occur within the next two years according to the legal warranty obligations. Starting in fiscal year 2007/2008, the credits to be issued due to expected product returns are already offset against trade receivables as of the balance sheet date.
The liabilities to banks have the following terms to maturity:
Donnersberg in the amount of €845 thousand has a term of 20 years and is intended to be used for the purchase of land
| Balance as of | Due within | Due between | Due after more | |
|---|---|---|---|---|
| EUR '000s | June 30, 2008 | 1 year | 1 and 5 years | than 5 years |
| Loan from Deutsche Bank | 4,022 | 489 | 1,800 | 1,733 |
| Loan from Commerzbank | 2,000 | 0 | 2,000 | 0 |
| Loan from Sparkasse Donnersberg |
845 | 0 | 0 | 845 |
| Loan from Kreissparkasse Kaiserslautern |
200 | 100 | 100 | 0 |
| Total | 7,067 | 589 | 3,900 | 2,578 |
| EUR '000s | Balance as of June 30, 2007 |
Due within 1 year |
Due between 1 and 5 years |
Due after more than 5 years |
|---|---|---|---|---|
| Loan from Commerzbank | 2,000 | 0 | 2,000 | 0 |
| Loan from Sparkasse Donnersberg |
119 | 119 | 0 | 0 |
| Building loan from Sparkasse Donnersberg |
736 | 736 | 0 | 0 |
| Loan from Kreissparkasse Kaiserslautern |
400 | 100 | 300 | 0 |
| Total | 3,255 | 955 | 2,300 | 0 |
The term of the Commerzbank loan ends on December 15, 2010 and bears interest at the rate of 5.65% per annum.
The redemption payments for the loan from Kreissparkasse Kaiserslautern amount to €100 thousand per year. The loan bears interest at the rate of 5.4% per annum.
In fiscal year 2007/08, the Company took out three new loans. The loan from Sparkasse for the new company site. The loan bears interest at the rate of 5.5% per annum.
The loans from Investitions- und Strukturbank (ISB) Rheinland-Pfalz GmbH in the amount of €2,000 thousand and from KfW Bankengruppe (KfW) in the amount of €2,500 thousand, both of which were extended by Deutsche Bank, have a term of ten years each and are intended to be used to finance
the construction of the new production building. The loans are promotional loans and bear effective interest rates of 4.19% (ISB) and 4.55% (KfW), respectively. In order to determine the fair value of the loans, we used a reference interest rate of 5.5% for discounting purposes. The promotional contributions included in the loans in the amount of €258 thousand were offset against property, plant and equipment.
The loan from Investitions- und Strukturbank (ISB) Rheinland-Pfalz GmbH and the loan from KfW Bankengruppe (KfW) as well as the loan from Sparkasse Donnersberg are secured by way of registered land charges on the production and administrative building in Winnweiler, Germany. The registered land charges had not been registered in the land registry as of the balance sheet date. The carrying amount of the collateral property amounts to €7,146 thousand as of the balance sheet date.
The fair value of the liabilities to banks largely corresponds to their carrying amount.
The following table shows the contractually agreed (undiscounted) interest and principal payments of non-derivative financial liabilities:
| Carrying amount June 30, |
Cashflow | ||||||||
|---|---|---|---|---|---|---|---|---|---|
| 2008 | 2009 | 2010-2012 | 2013-2017 | 2018 ff. | |||||
| EUR'000s | Interest | Principal | Interest | Principal | Interest | Principal | Interest | Principal | |
| Non-current liabilities to banks |
6,478 | 308 | 0 | 675 | 3,450 | 509 | 2,250 | 482 | 1,195 |
| Current liabilities to banks | 589 | 13 | 589 | ||||||
| Trade payables | 1,905 | 1,905 | |||||||
| Other financial liabilities | 902 | 902 |
| Carrying amount June 30, |
Cashflows | ||||||||
|---|---|---|---|---|---|---|---|---|---|
| 2007 | 2008 | 2009-2011 | 2012-2016 | 2017 and later | |||||
| EUR'000s | Interest Principal | Interest Principal | Interest Principal | Interest Principal | |||||
| Non-current liabilities to banks |
2,300 | 113 | 0 | 287 | 2,300 | 0 | 0 | 0 | 0 |
| Current liabilities to banks | 955 | 26 | 955 | ||||||
| Trade payables | 1,905 | 1,905 | |||||||
| Other financial liabilities | 480 | 480 |
The following table shows the classification of the individual assets and liabilities pursuant to the measurement categories in accordance with IAS 39 and the classes in accordance with IFRS 7:
| Measurement category in accordance with IAS 39 |
Carrying amount as of June 30, 2008 |
Class in accordance with IFRS 7 | |
|---|---|---|---|
| Asset | |||
| Cash and cash equivalents | n.a. | 10,475 | Cash |
| Trade receivables | LaR | 4,677 | Trade receivables |
| Other financial assets | |||
| Loans to shareholders | LaR | 430 | Other financial assets |
| Securities | LaR | 1,499 | Other financial assets |
| Miscellaneous financial assets | LaR | 41 | Other financial assets |
| Liabilities | |||
| Non-current liabilities to banks | LaR | 6,478 | Liabilities to banks |
| Current liabilities to banks | LaR | 589 | Liabilities to banks |
| Trade payables | LaR | 1,905 | Trade payables |
| Other financial liabilities | |||
| Liabilities from wages and salaries | LaR | 1,109 | Other financial liabilities |
| Miscellaneous other financial liabilities | LaR | 116 | Other financial liabilities |
LaR: loans and receivables
| Measurement category in accordance with IAS 39 |
Carrying amount as of June 30, 2007 |
Class in accordance with IFRS 7 | |
|---|---|---|---|
| Asset | |||
| Cash and cash equivalents | n.a. | 1,352 | Cash |
| Trade receivables | LaR | 2,979 | Trade receivables |
| Other financial assets | LaR | 28 | |
| Liabilities | |||
| Non-current liabilities to banks | LaR | 2,300 | Liabilities to banks |
| Current liabilities to banks | LaR | 955 | Liabilities to banks |
| Trade payables | LaR | 620 | Trade payables |
| Other financial liabilities | |||
| Liabilities from wages and salaries | LaR | 578 | Other financial liabilities |
| Miscellaneous other financial liabilities | LaR | 294 | Other financial liabilities |
LaR: loans and receivables
The fair values of cash, trade receivables, trade payables as well as other financial assets and liabilities correspond to their carrying amounts. The maximum exposure to credit risk corresponds to the carrying amounts. The measurement of trade receivables led to a net loss of €5 thousand in the "loans and receivables" category.
The MOBOTIX Group is subject to various financial risks as a result of its business model. The control and limitation of these risks is ensured through risk management, which pursues a central currency and liquidity management approach. The main financial decisions are directly made by the Management Board.
Financial risks mainly consist of currency risks, liquidity risks, interest rate risks, and credit risks.
Liquidity management is based on shortterm rolling liquidity forecasts as well as on medium and long-term integrated planning of results of operations, net assets, and financial position. In view of the large liquidity position and the high creditworthiness of the Group, there are currently no material liquidity risks. Excess liquidity is invested in risk-free, fixed-income financial instruments, especially overnight deposits and commercial paper. Financings directly connected with the financing of the location are collateralized through land charges. There is no further collateral provided for existing financial liabilities.
Invoices are denominated in EUR, with the exception of product sales in the U.S. This means that the currency risk is directly borne by the customers of MOBOTIX AG and does not lead to exchange losses at MOBOTIX AG. Accordingly, currency risks exist primarily in connection with the U.S. operations. Currency risks are hedged, in some cases due to in essence closed positions, where values or cash flows from receivables from MOBOTIX CORP and from the purchase of goods in the U.S. dollar zone match in terms of timing and amount. However, the positive cash flow from U.S. operations currently exceeds the purchase requirements of MOBOTIX AG in the U.S. dollar zone as a result of the positive business trend in the U.S. We have not yet decided to use derivatives for reasons of volume.
The interest rate risk to which MOBOTIX AG is exposed is currently insignificant. Fixed interest rates were agreed for the existing borrowings. Further borrowings in connection with the new company site will be agreed at favorable financing terms on a short-term basis. The weighted average nominal interest rate of the borrowings is 4.4% (June 30, 2007: 5.7%).
The credit risk of non-derivative financial instruments is managed through an active receivables management, including dunning and collection processes. Credit terms are granted according to uniform guidelines applicable throughout the Group on a very restrictive basis, taking into account appropriate assessments of the relevant customers' creditworthiness. New customers in foreign countries are generally required to make advance payments for their first orders.
As in the previous years, trade payables had terms of less than one year.
The market values of trade payables largely correspond to their carrying amounts.
| EUR '000s | Jun. 30, 2008 | Jun. 30, 2007 |
|---|---|---|
| Liabilities from wages and salaries | 510 | 391 |
| Bonuses and commissions | 599 | 187 |
| Liabilities from wage and church tax | 5 | 153 |
| Debtors with credit balances | 76 | 42 |
| Remuneration of the Supervisory Board | 40 | 26 |
| Liabilities for social security | 70 | 11 |
| Advance payments received | 19 | 1 |
| Miscellaneous | 187 | 225 |
| Total | 1,506 | 1,036 |
As in the previous years, the other liabilities had terms of less than one year.
The market value of the other liabilities largely corresponds to their carrying amount.
As in the previous year, there were no contingencies in the year under review.
The other financial obligations relate to purchase obligations under supply agreements (June 30, 2008: €4,185 thousand; June 30, 2007: €3,434 thousand), obligations from rental and lease agreements (June 30, 2008: €1,610 thousand; June 30, 2007: €1,891 thousand), and the general contractor agreement in connection with the new construction of the administrative and production building in Winnweiler (June 30, 2008: €6,065 thousand; June 30, 2007: €0 thousand).
The agreements have terms of up to nine years and are partly subject to renewal options. The main portion (June 30, 2008: €1,264 thousand; June 30, 2007: €1,445 thousand) of the other financial obligations results from the lease in relation to the production building at Luxemburger Strasse 6 in Kaiserslautern. The minimum term of the lease agreement expires on May 1, 2016. The vehicle leases include mileage-based contingent rents.
Within the framework of the rental and lease agreements, payments in the amount of €579 thousand (2006/07: €487 thousand) were recognized as an expense in the fiscal year under review. Contingent rents did not have to be paid in the year under review.
The sum of future minimum lease payments from non-cancelable rental agreements and operating leases by maturity is as follows:
| 30.6.08 EUR '000s |
30.6.07 EUR '000s |
|
|---|---|---|
| Maturity | ||
| up to 1 year | 442 | 357 |
| from 1 year to | 804 | 834 |
| 5 years | ||
| more than 5 years | 364 | 699 |
| Total | 1,610 | 1,890 |
The following expenses were incurred for the auditors of MOBOTIX AG, KPMG Deutsche Treuhand-Gesellschaft Aktiengesellschaft Wirtschaftsprüfungsgesellschaft, in accordance with section 314 (1) number 9 of the German Commercial Code:
| 2007/08 EUR '000s |
2006/07 EUR '000s |
|
|---|---|---|
| Audit of financial statements |
||
| From provisions | 45 | 25 |
| Other audit services |
||
| Invoiced | 187 | 12 |
| From provisions | 0 | 62 |
| Total | 232 | 99 |
In accordance with IAS 24 "Related party disclosures," relations with persons or companies that control MOBOTIX AG or are subject to control by MOBOTIX AG have to be disclosed unless such parties are already included in the consolidated financial statements as a consolidated company. Control is deemed to exist when a shareholder holds more than one half of the voting power of MOBOTIX AG or has the power to direct, by statute or agreement, the financial and operating policies of the management of MOBOTIX AG or its subsidiaries.
Disclosure is also required, in accordance with IAS 24 "Related party disclosures," of transactions with associates as well as transactions with persons who exercise significant influence over MOBOTIX AG or its subsidiaries in making financial and operating decisions, including close family members or intermediate companies. Significant influence over the financial and operating policies of MOBOTIX AG may result from a shareholding in MOBOTIX AG of 20% or more, or from the membership in the Management Board or Supervisory Board of MOBOTIX AG or in the executive boards of one of its subsidiaries.
Dr. Ralf Hinkel, Chairman of the Management Board and shareholder, and the Company as tenant signed a rental agreement for office and warehouse premises in Höringen, Germany on July 30, 1999. The tenancy began on July 1, 1999. The agreement was concluded with an indefinite term and may be terminated upon three months' notice to the end of the month. The annual gross rent (not including utilities, service costs, etc.) amounts to €30 thousand. On June 24, 2008, Dr. Hinkel was granted a loan in the amount of €430 thousand. The term of the loan ends on June 29, 2009 and bears interest at the rate of 6.45% per annum.
Ulrich Putsch is a member of the Supervisory Board and, at the same time, shareholder of Putsch GmbH & Co. KG, which has concluded a rental agreement with MOBOTIX AG as the tenant for warehouse space in Kaiserslautern via KEIPER GmbH & Co. KG. The tenancy began on January 1, 2007 and was initially concluded for a period of twelve months. The agreement may be terminated upon one month's notice to the end of the month. The annual gross rent (not including utilities, service costs, etc.) amounts to €40 thousand.
Revenue in a total amount of €628 thousand (2006/2007: €483 thousand) was generated from the sale of finished goods to the associate MOBOTIX AG, Freienbach, Switzerland. These transactions resulted in receivables from MOBOTIX AG, Freienbach, Switzerland, of €189 thousand as of June 30, 2008 (June 30, 2007: €121 thousand). The payment terms are in line with the usual payment terms applicable for transactions with third parties. The receivables are settled through payment of cash.
MOBOTIX AG has not entered into any further material transactions with persons or companies that exercise a significant influence over the Company in making financial and operating decisions, including their close family members.
All related party transactions, without exception, can be allocated to the Company's ordinary activities.
| Number of shares held on June 30, 2008 |
Share in subscribed capital in % |
|
|---|---|---|
| Management Board | ||
| Dr. Ralf Hinkel (CEO) | 2,218,134 | 50.14 |
| Lutz Coelen (CFO) | 14,200 | 0.32 |
| Horst Pfiffi (CTO) | 17,210 | 0.39 |
| Supervisory Board | ||
| Dr. Thomas Hoch (Chairman) |
1,000 | 0.02 |
| Prof. Dr. Gerten | 20,000 | 0.45 |
| Ulrich Putsch | 0 | 0.00 |
Ulrich Putsch is a family member related to the shareholder Andreas Putsch, who holds approx. 9.91% of the share capital of MOBOTIX AG.
Each member of the Supervisory Board receives a fixed annual remuneration of €10 thousand for its board activities. The Chairman of the Supervisory Board receives twice this amount.
The remuneration of the members of the Management Board amounted to €1,227 thousand (2006/2007: €586 thousand). Remuneration to the Management Board members exclusively relates to short-term benefits and consists of the following:
| EUR '000s | Fixed | Variable | Total |
|---|---|---|---|
| Remuneration of the Management Board 2007/2008 |
|||
| Dr. Ralf Hinkel | 283 | 254 | 537 |
| Lutz Coelen | 123 | 80 | 203 |
| Horst Pfiffi | 107 | 80 | 187 |
| Total | 513 | 414 | 927 |
| Remuneration of the Management Board 2006/2007 |
|||
| Dr. Ralf Hinkel | 181 | 60 | 241 |
| Lutz Coelen | 135 | 45 | 180 |
| Horst Pfiffi | 114 | 51 | 165 |
| Total | 430 | 156 | 586 |
In the fiscal year 2007/2008, Lutz Coelen received a one-off variable remuneration in the amount of €300 thousand in addition to the remuneration components described above.
The bonus for one fiscal year will be paid only in the following fiscal year upon the approval of the financial statements for the past fiscal year. The bonus for the fiscal year 2007/08 is expected to amount to €400 thousand. Bonuses paid for the previous year amounted to €156 thousand.
In the case of disability due to ill health or accident, the remuneration of the members of the Management Board will continue to be paid for a period of six months unless the employment contract ends earlier.
Furthermore, the members of the Management Board will be provided with an upper class car that is appropriate for their position and which may be used for both private and business purposes. The Management Board members shall pay taxes incurred for the non-cash benefits from the private use of the company car. The company car has to be returned to the Company upon the end of the relevant employment contract.
In addition, the Company has taken out accident insurance policies for each member of the Management Board for the period of the employment contracts to cover occupational and private accidents. The amount covered for Mr. Coelen and Mr. Pfiffi is €250,000 each and for Dr. Hinkel €2.5 million. The sum payable upon death amounts to €500,000 each for Mr. Coelen and Mr. Pfiffi, and €2.5 million for Dr. Hinkel. Either the relevant member of the Management Board or the legal heirs are entitled to the insurance benefits. The Company also has taken out a D&O (directors' and officers' liability insurance) policy for the members of its Management Board, though without a deductible. Any wage taxes payable for the insurance premiums are paid by the relevant members of the Management Board.
The Declaration of Compliance, as required by section 161 of the Stock Corporation Act, was issued by the Management Board and the Supervisory Board for the fiscal year 2007/2008 with respect to the period starting on the date of the transfer from the Open Market (Entry Standard) to the Regulated Market (Prime Standard) of the Frankfurt Stock Exchange. A summary of the Company's corporate governance practices can be found in the annual report and on the website (www.mobotix.com). The declaration of compliance has been made permanently available on the Company's website (in German only).
The cash flow statement was prepared in accordance with IAS 7 "Cash Flow Statements." The cash flows from operating activities, investing activities, and financing activities are stated separately. The cash flows from investing activities and financing activities are determined on the basis of payments, while the cash flows from operating activities are derived using the indirect method. Cash and cash equivalents include balances with banks and cash on hand. Cash and cash equivalents are not subject to any restrictions.
Revenue by product line is broken down as follows:
| Jul. 01, 2007 - | Jul. 01, 2006 - | |
|---|---|---|
| Revenue EUR '000s | Jun. 30, 2008 | Jun. 30, 2007 |
| Fixed Cams | 21,966 | 16,375 |
| Dome Cams | 11,549 | 5,627 |
| Other | 1,798 | 1,601 |
| Total | 35,313 | 23,602 |
Revenue by region is broken down as follows:
| Jul. 01, 2007 - | Jul. 01, 2006 - | |
|---|---|---|
| Revenue EUR '000s | Jun. 30, 2008 | Jun. 30, 2007 |
| Germany | 13,316 | 10,441 |
| Rest of Europe | 14,087 | 8,734 |
| Other | 7,911 | 4,427 |
| Total | 35,313 | 23,602 |
In accordance with IFRS 8 "Operating Segments," the definition of the segments is based on the Company's internal reporting structure. At MOBOTIX AG, these segments are primarily defined by region, but also by product category. The regions represent the basis for corporate planning and allocation of resources.
The presentation of the segment report was adjusted compared to the consolidated financial statements of MOBOTIX AG as of June 30, 2007 due to the change of internal control. Internal control is now based on product categories rather than on individual product lines.
The control of the MOBOTIX Group is based on revenue in view of the individual segments due to the internal structures and the size of the Company. Profitability ratios and performance-based statements are only made on the level of the entire company.
The Company's product categories are broken down as detailed below:
The fixed cams category includes the M12, M22 and V12 models.
The M12 is usually equipped with two image sensors and a passive infrared sensor. This camera series also comes with a microphone and a speaker for audio communication. If there is no DSL connection, the M12 can be easily connected to the internet via its integrated ISDN connection that can be used to transmit data over the internet and to forward voice messages and alarm alerts, for example, to telephones. IP telephony based on the VoIP SIP standard is also available directly from the camera. Various camera modules can be used so that a wide-angle lens can be combined with a telephoto lens. The M12 Day/Night model is equipped with a light-sensitive black-and-white sensor for use at night and a color sensor that provides
MOBOTIX DualNight M12M
sharp color images in daylight. Switching between lenses is purely electronic without need of mechanical parts.
The M22 is the mono version of the M12 and, with the exception of the passive infrared sensor and ISDN connection, features all the functionality of the M12. Audio communication is also available via the integrated microphone and speaker. All telephony functionality is based on the VoIP SIP standard.
The V12 vandalism-protected camera has been specially designed for use in locations at a high risk of vandalism, such as prisons, and is encased in a housing made from 3mm-thick stainless steel. It is also protected by a 6mm-thick cover and is triangular in shape so that it can be mounted in the corner of a room and fixed in place using heavy-duty dowels. To illuminate the room when it is dark, the V12 is equipped with integrated, remote-controlled IR lighting via 20 infrared LEDs.
The dome cams category includes the D12, D22 and Q22 models. The D12 is a dome camera that features two manually adjustable modules. It is based on the same hardware as the M12, although unlike the M12, its camera modules can be individually
positioned in any direction when mounted. This makes it possible, for example, to position a wide-angle lens in one direction and a telephoto lens in another direction. If super-wide-angle lenses each covering a 90-degree horizontal viewing angle are used in both camera modules, the camera can monitor an area with a 180 degree panorama view. The software integrated into the camera enables the two generated images either to be shown separately or to be combined into a single image.
The D22 is a dome camera that features a manually adjustable module and offers all the software functionality of the other camera series. Although it is not equipped with an infrared sensor, microphone or speaker, these can be externally retrofitted. In locations with a high risk of vandalism, the already robust D22 models can be given extra protection in the form of the optional Vandalism Set, which includes a 3mm-thick polycarbonate dome and an additional stainless steel cover.
The Q22 model is an ultra-compact IP-Dome camera that features a 360° allround view. The camera line allows a hemispherical allround view for complete room coverage, digital, continuous zooming and panning as well as event-driven complete room recording directly in the camera. In addition, the camera features all the software functionality of the other camera series. The speaker and microphone are integrated into the camera. The range of accessories includes, for example, a vandalism housing and an in-ceiling set.
MOBOTIX offers the appropriate accessories for all camera series to enable the cameras to be properly mounted and to protect their cables and leads. Various installation kits for mounting cameras on surfaces and walls or integrating them into suspended ceilings are supplied for each model. MOBOTIX AG also generates a small amount of revenue from training seminars.
Internal reports are submitted to the Management Board. Only revenue is reported for each product category and region. Intersegment revenue is not netted. No single customer generates more than 10% of total revenue.
Dr. Ralf Hinkel, Graduate in Computer Sciences, Höringen (Chairman, CEO)
Horst Pfiffi, Graduate Engineer, Queidersbach (CTO)
Lutz Coelen, Graduate in Business Administration, Herrsching am Ammersee (CFO, also responsible for sales)
Dr. Thomas Hoch, Graduate in Business Informatics, Executive, Dreieich-Sprendlingen (Chairman)
Ulrich Putsch, Graduate Engineer, Rockenhausen
Prof. Dr. Rainer Gerten, Graduate in Computer Sciences, Professor, Neuhofen
Ulrich Dörr, Sales Director, Mainz (until August 31, 2007)
Sabine Hinkel, Graduate in Business Administration, Head of Human Resources, Höringen (until August 31, 2007)
Dr. Hans Dieter Rompel, Graduate in Business Administration, Executive, Diez (until August 31, 2007)
A supplemental agreement to the general contractor agreement was concluded in July 2008. The purpose of this supplement is the extension of the construction project by additional space. The volume amounts to €1,295 thousand.
Kaiserslautern, August 24, 2008
The Management Board
Dr. Ralf Hinkel • CEO MOBOTIX AG
Lutz Coelen • CFO MOBOTIX AG
Horst Pfiffi • CTO MOBOTIX AG
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 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.
Kaiserslautern, August 24, 2008
The Management Board
Dr. Ralf Hinkel • CEO MOBOTIX AG
Lutz Coelen • CFO MOBOTIX AG
We have audited the consolidated financial statements prepared by the MOBOTIX AG, comprising the balance sheet, the income statement, statement of changes in equity, cash flow statement and the notes to the consolidated financial statements, together with the group management report for the business year from 1 July 2007 to 30 June 2008. The preparation of the consolidated financial statements and the group management report in accordance with IFRSs, as adopted by the EU, and the additional requirements of German commercial law pursuant to § 315a Abs. 1 HGB [Handelsgesetzbuch "German Commercial Code"] are the responsibility of the parent company`s management. Our responsibility is to express an opinion on the consolidated financial statements and on the group management report based on our audit.
We conducted our audit of the consolidated financial statements in accordance with § [Article] 317 HGB [Handelsgesetzbuch "German Commercial Code"] and German generally accepted standards for the audit of financial statements promulgated by the Institut der Wirtschaftsprüfer [Institute of Public Auditors in Germany] (IDW). Those standards require that we plan and perform the audit such that misstatements 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 group 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 group management report are examined primarily on a test basis within the framework of the audit. The audit includes assessing the annual financial statements of those entities included in consolidation, the determination of entities to be included in consolidation, the accounting and consolidation principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements and group 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 comply with IFRSs, as adopted by the EU, the additional requirements of German commercial law pursuant to § 315a Abs. 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 group management report is consistent with the consolidated financial statements and as a whole provides a suitable view of the Group's position and suitably presents the opportunities and risks of future development.
Saarbrücken, August 25, 2008
KPMG Deutsche Treuhand-Gesellschaft
Aktiengesellschaft
Wirtschaftsprüfungsgesellschaft
Geis-Sändig Kiener
Wirtschaftsprüfer Wirtschaftsprüfer
| CCD | Image Sensor Charged Coupled Device; a light sensitive hardware component |
|
|---|---|---|
| CIF | Common Intermediate Format, an image compression format | |
| CMOS Image Sensor | Complementary Metal Oxide Semiconductor - a light sensitive hardware component |
|
| CPU | Central Processing Unit | |
| DVR | Digital Video Recorder | |
| Fixdome | Camera without any moving parts, inside a dome housing | |
| HDTV | High Definition TV | |
| HiRes | High Resolution | |
| IP Network | Data network based on the internet protocol | |
| IP Standard | Standardized network protocol | |
| JPEG Format | A lossy image data format which reduces the file size by compressing the same or similar image content. |
|
| LAN | Local Area Network; local network | |
| Control Center Computer The computer at a central control center that enables the information supplied by the camera to be handled |
||
| Megapixel | Image size of more than 1 million pixels | |
| MPEG Format | Video format for creating data steams for streaming images, defined by the Motion Picture Experts Group |
|
| SD Card | SD Memory Card (short for Secure Digital Memory Card) is a digital memory device that works according to the principle of flash memory, such as a USB card |
|
| TCP/IP Protocol | Transmission Control Protocol/Internet Protocol | |
| Video Server | Central storage unit for video images or video streams | |
| VoIP | Voice over IP; standard for voice transmission via IP networks |
| EBITDA | Earnings before interest, taxes, depreciation and amortization. | |
|---|---|---|
| EBITDA margin | EBITDA divided by total output multiplied by 100 (the higher the percentage, the higher the financial performance) |
|
| EBIT | Earnings before interest and taxes. | |
| EBIT margin | EBIT divided by total output multiplied by 100 (the higher the percentage, the higher the financial performance) |
|
| Total output | Revenue plus/minus changes in inventories plus other own work capitalized |
|
| Gross profit | Total output less cost of materials | |
| Corporate governance | Responsible corporate management and control aimed at long-term value creation |
|
| Dividend yield | Dividend divided by share price multiplied by 100 | |
| Equity-to-assets ratio | Equity as reported on the balance sheet divided by total assets multiplied by 100 (the higher the figure, the lower the debt-to-equity ratio) |
|
| Return on equity | Earnings after tax divided by equity multiplied by 100 | |
| Free float | Shares of a public listed company that are freely available to the investing public |
|
| Market capitalization | Number of shares multiplied by share price |
This financial report contains MOBOTIX AG statements and information which relate to future periods. Such future-oriented statements may be recognised from wording such as plan, expect, intend, endeavour, will, estimate, assume, aim at or similar such terms. Statements of this kind have been made on the basis of current circumstances and current expectations and may differ considerably from the actual development both to positive and negative effect. The following factors, amongst others, may give rise to uncertainties: changes to the overall economic situation both nationally and internationally, changes to the underlying political situation, the introduction of new products or technologies by other companies, changes to investment activities in the customer markets important to MOBOTIX AG, changes to exchange rates and interest rates, integration of acquired companies along with other factors. MOBOTIX AG does not accept any obligation over and above existing legal obligations to correct or update future-oriented statements.
This is an English translation of the German original. Only the German version is binding. The financial reports from MOBOTIX AG are available as pdf files on the homepage (www.mobotix.com).
| Annual Report for fiscal year 2007/08 | September 30, 2008 |
|---|---|
| Annual press conference | September 30, 2008 |
| Annual General Meeting 2007/08 | October 6, 2008 |
| Analyst presentation, German Equity Forum (Deutsche Börse AG) | November 12, 2008 |
| Report on the first three months of fiscal year 2008/09 (German Equity Forum) |
November 12, 2008 |
| DVFA Smart Equities Conference | December 2-3, 2008 |
| Report on the first six months of fiscal year 2008/09 | Wednesday, February 11, 2009 |
| Report on the first nine months of fiscal year 2008/09 | Wednesday, May 13, 2009 |
Lutz Coelen CFO Phone: +49 (0) 631 3033 111 Fax: +49 (0) 631 3033 190 E-Mail: [email protected]
Timo Keppler Investor Relations Manager Phone: +41 (0)79 521 69 59 Fax: +49 (0) 631 3033 190 E-Mail: [email protected] MOBOTIX AG
Investor Relations Luxemburger Straße 6 67657 Kaiserslautern E-Mail: [email protected]
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... the HiRes Video Company
MOBOTIX AG Security-Vision-Systems Luxemburger Straße 6 D-67657 Kaiserslautern, Germany Tel.: +49 (631) 30 33 111 Fax: +49 (631) 30 33 190 Email: [email protected] www.mobotix.com
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