Quarterly Report • Nov 17, 2016
Quarterly Report
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| in EUR million | Q1–3 2016 | Change | Q1–3 20151) restated |
Q3 2016 | Change | Q3 20151) restated |
20151) restated |
|---|---|---|---|---|---|---|---|
| Revenue | 647.6 | –6.4% | 692.1 | 208.9 | –13.4% | 241.3 | 914.7 |
| EBITDA | 72.2 | –4.2% | 75.4 | 19.4 | –22.4% | 25.1 | 96.2 |
| EBITDA margin | 11.1% | +0.2 PP | 10.9% | 9.3% | –1.1 PP | 10.4% | 10.5% |
| EBIT | 46.7 | –13.5% | 53.9 | 10.4 | –41.1% | 17.7 | 66.7 |
| EBIT margin | 7.2% | –0.6 PP | 7.8% | 5.0% | –2.3 PP | 7.3% | 7.3% |
| Earnings after tax | 23.4 | –41.6% | 40.1 | 5.5 | –62.7% | 14.7 | 46.4 |
| Earnings per share (EPS)2), in EUR | 1.14 | –41.6% | 1.95 | 0.27 | –62.7% | 0.72 | 2.26 |
| Gross cash flow | 44.4 | 8.3% | 41.0 | 8.2 | –0.2% | 8.3 | 55.7 |
| Return on equity3) | 8.7% | –6.7 PP | 15.4% | 6.1% | –10.9 PP | 17.0% | 12.8% |
| in EUR million | 30.9.2016 | Change | 30.9.2015 restated1) |
30.6.2016 | Change | 30.6.2015 restated1) |
31.12.2015 restated1) |
|---|---|---|---|---|---|---|---|
| Balance sheet total | 969.4 | +6.4% | 911.1 | 973.1 | +4.8% | 928.1 | 937.8 |
| Equity2) | 359.0 | +3.8% | 346.0 | 356.9 | –1.7% | 363.0 | 363.3 |
| Equity ratio | 37.0% | –1.0 PP | 38.0% | 36.7% | –2.4 PP | 39.1% | 38.7% |
| Investments in tangible and intangible assets |
44.3 | –14.0% | 51.5 | 25.0 | –22.5% | 32.3 | 71.8 |
| Employees (at balance sheet date) |
7,028 | –3.8% | 7,303 | 7,136 | –2.4% | 7,311 | 7,053 |
| Q1–3 20151) | Q3 20151) | 20151) | |||||
|---|---|---|---|---|---|---|---|
| in EUR million | Q1–3 2016 | Change | restated | Q3 2016 | Change | restated | restated |
| Industrial Sector = Semperflex + Sempertrans + Semperform | |||||||
| Revenue | 389.3 | –1.6% | 395.5 | 120.3 | –11.6% | 136.2 | 521.0 |
| EBITDA | 71.7 | –5.1% | 75.6 | 19.4 | –20.7% | 24.5 | 93.6 |
| EBIT | 57.1 | –10.3% | 63.7 | 14.5 | –28.6% | 20.3 | 77.2 |
| Semperflex | |||||||
| Revenue | 153.5 | –1.7% | 156.2 | 47.2 | –2.4% | 48.3 | 203.4 |
| EBITDA | 37.0 | –2.3% | 37.8 | 9.8 | –10.9% | 11.0 | 46.1 |
| EBIT | 30.5 | –4.4% | 31.9 | 7.6 | –15.9% | 9.0 | 38.2 |
| Sempertrans | |||||||
| Revenue | 114.3 | –6.1% | 121.7 | 32.7 | –25.5% | 43.9 | 164.9 |
| EBITDA | 14.5 | –12.9% | 16.6 | 3.0 | –51.3% | 6.2 | 23.2 |
| EBIT | 11.6 | –18.1% | 14.2 | 2.1 | –61.4% | 5.4 | 19.9 |
| Semperform | |||||||
| Revenue | 121.6 | +3.4% | 117.5 | 40.5 | –8.0% | 44.0 | 152.8 |
| EBITDA | 20.3 | –4.1% | 21.2 | 6.7 | –9.4% | 7.3 | 24.3 |
| EBIT | 15.0 | –14.5% | 17.6 | 4.8 | –18.4% | 5.9 | 19.1 |
| Medical Sector = Sempermed | |||||||
| Revenue | 258.3 | –12.9% | 296.7 | 88.6 | –15.7% | 105.1 | 393.7 |
| EBITDA | 9.8 | –49.6% | 19.4 | 1.9 | –76.0% | 7.8 | 29.4 |
| EBIT | –0.9 | – | 10.3 | –2.1 | – | 4.9 | 17.2 |
Note: Rounding differences in the totalling of rounded amounts and percentages may arise from the use of automatic data processing. 1) Values restated, see page 20f. in this report (Foreign Exchange restatement).
2) Attributable to the shareholders of Semperit AG Holding.
3) Based on a full-year projection.
The global economic environment remained challenging. The International Monetary Fund (IMF) forecasts global economic growth of 3.1% for the current year with a moderate rise to 3.4% in 2017. Similar values are expected for the USA and the euro area for 2016, 1.6% and 1.7% respectively. For 2017, an increase in economic performance by 2.2% is expected in the USA, while in the euro zone the forecast is at 1.5%.
In the first two months of 2016, prices for natural rubber and natural latex as well as synthetic latex and synthetic rubber moved sideways or slightly declined compared to the end of 2015. Since the beginning of March 2016, almost all raw materials have recorded a significant price increase, which clearly exceeded the tendencies at the beginning of the year. Depending on the raw material, average prices of the first three quarters of 2016 were roughly at the same level as in the first three quarters of 2015, however above the average prices of the overall year of 2015.
Revenue of the Semperit Group decreased from EUR 692.1 million in the first three quarters of 2015 to EUR 647.6 million in the first three quarters of 2016, a decrease of 6.4%. For the most part, the decrease in revenue was due to lower revenues of the Medical Sector that were influenced by high price pressure. The revenue split slightly shifted in favour of the Industrial Sector. In the first three quarters of 2016 the Industrial Sector accounted for 60% (40% Medical Sector), after 57% in the first three quarters of 2015 (43% Medical Sector).
As an internationally operating group, Semperit is subject to various foreign exchange effects within the scope of its business activities. For the purpose of a more effective internal management as well as a more transparent presentation in the external financial reports of Semperit Group and its segments, foreign exchange gains or losses in the consolidated income statement are not shown as part of the operating result in "Other operating income" or "Other operating expenses" anymore since 1 January 2016, but in financial income / financial expenses and are therefore part of the financial results. In order to guarantee comparability with the quarters of the previous year and the previous year following the change of method pursuant to IAS 8, all comparable figures for 2015 are presented according to the same new reporting method in this report.
Other operating income dropped from EUR 7.8 million to EUR 6.2 million in the first three quarters of 2016. In the first three quarters of 2016, they had been positively influenced by the claim for reimbursement from the arbitration proceedings ICC 1 amounting to EUR 2.5 million. On the other hand, earnings from the acquisition of Leeser, Germany, amounting to EUR 3.2 million, were included in the first three quarters of 2015.
During the reporting period, inventories increased by EUR 1.4 million compared to EUR 2.6 million in the first three quarters of 2015.
Due to active raw material management and the decrease in inventories, cost of materials fell from EUR 421.8 million in the first three quarters of 2015 to EUR 377.8 million, a decrease of 10.4%.
Personnel expenses rose by 3.6% to EUR 128.3 million, due to increases in salaries and wages. Variable salary components for employees with target agreements declined in line with the business development.
Other operating expenses fell by 14.1% due to lower legal and consulting expenses to EUR 85.0 million compared with the first three quarters of 2015.
The item "Share of profits from joint ventures and associated companies" decreased significantly by EUR 8.0 million to EUR 5.0 million. This item comprises almost exclusively the contribution to earnings of the gloves production joint ventures in Thailand.
In the first three quarters of 2016, EBITDA (earnings before interest, tax, depreciation and amortisation) totalled EUR 72.2 million, a minus of 4.2%. The EBITDA margin increased slightly from 10.9% to 11.1%. Depreciation increased in accordance with capacity extensions to EUR 25.6 million.
At EUR 46.7 million (-13.5%), EBIT was significantly below the level of the first three quarters of 2015. The EBIT margin slightly decreased to 7.2%.
| in EUR million | Q1–3 2016 | Q1–3 20151) restated |
Change | Change in EUR million |
20151) restated |
|---|---|---|---|---|---|
| Revenue | 647.6 | 692.1 | –6.4% | –44.5 | 914.7 |
| EBITDA | 72.2 | 75.4 | –4.2% | –3.2 | 96.2 |
| EBITDA margin | 11.1% | 10.9% | +0.2 PP | – | 10.5% |
| EBIT | 46.7 | 53.9 | –13.5% | –7.3 | 66.7 |
| EBIT margin | 7.2% | 7.8% | –0.6 PP | – | 7.3% |
| Earnings after tax | 23.4 | 40.1 | –41.6% | –16.7 | 46.4 |
| Investments in tangible and intangible assets | 44.3 | 51.5 | –14.0% | –7.2 | 71.8 |
| Employees (at balance sheet date) | 7,028 | 7,303 | –3.8% | –274 | 7,053 |
1) Values restated, see page 20f. in this report (Foreign Exchange restatement).
The negative financial result totalled EUR 12.7 million in the first three quarters of 2016 after EUR 5.0 million in the previous year. The financial result (restated) in the first three quarters of 2015 had been influenced by the positive foreign exchange effects as well as profits from hedging transactions for foreign currencies. Financial income, which now also includes foreign exchange gains (so far included in the item "Other operating income"), decreased to EUR 12.2 million compared to the previous year. Financial expenses, which now also include foreign exchange losses (so far included in the item "Other operating expenses"), decreased significantly to EUR 20.2 million compared to the previous year. The reasons for this are primarily the foreign exchange losses (especially in the first quarter of 2016) and the interest expenses due to additional borrowings. The item "Profit/loss attributable to redeemable non-controlling interests" remained largely unchanged at EUR 4.7 million in the first three quarters of 2016 and is mostly related to companies in the Sempermed and Semperflex segments.
Income tax expense increased by EUR 1.7 million to EUR 10.5 million. The increase was negatively influenced by the value adjustment of deferred taxes as well as additional tax payments for prior periods. This also had a negative effect on the tax ratio: it increased from 16.6% to 27.3% (tax rate as a percentage of earnings before tax and redeemable non-controlling interests). Earnings after tax decreased to EUR 23.4 million, resulting in earnings per share of EUR 1.14 in the first three quarters of 2016, following EUR 1.95 in the first three quarters of 2015.
The Semperit Group recorded a decrease in revenue to EUR 208.9 million or 13.4% in the third quarter of 2016 compared with the third quarter of 2015, which was attributable almost equally to both the Industrial and the Medical Sectors. The decline was most significant in the Sempermed segment, followed by the Sempertrans segment (in absolute figures).
EBITDA decreased by 22.4% to EUR 19.4 million and therefore more significantly than revenue, which was down 13.4%. On the one hand, expenses for material and other operating expenses declined, on the other hand the item "Investments in joint ventures and associated companies" dropped significantly and personnel expenses increased. In addition to the mentioned items, the higher depreciation compared to the quarter of the previous year had an effect on the EBIT that fell by 41.1% to EUR 10.4 million. Earnings after taxes amounted to EUR 5.5 million, while the earnings per share were EUR 0.27.
| in EUR million | Q3 2016 | Q3 20151) restated |
Change | Change in EUR million |
20151) restated |
|---|---|---|---|---|---|
| Revenue | 208.9 | 241.3 | –13.4% | –32.4 | 914.7 |
| EBITDA | 19.4 | 25.1 | –22.4% | –5.6 | 96.2 |
| EBITDA margin | 9.3% | 10.4% | –1.1 PP | – | 10.5% |
| EBIT | 10.4 | 17.7 | –41.1% | –7.3 | 66.7 |
| EBIT margin | 5.0% | 7.3% | –2.3 PP | – | 7.3% |
| Earnings after tax | 5.5 | 14.7 | –62.7% | –9.2 | 46.4 |
| Investments in tangible and intangible assets | 19.3 | 19.2 | +0.2% | +0.0 | 71.8 |
| Employees (at balance sheet date) | 7,028 | 7,303 | –3.8% | –274 | 7,053 |
1) Values restated, see page 20f. in this report (Foreign Exchange restatement).
On 26 April 2016, the Annual General Meeting adopted a dividend of EUR 1.20 per share for the year 2015. In total, EUR 24.7 million were distributed. Based on the ordinary dividend, the dividend payout ratio for the financial year 2015 was therefore 53.2%, compared with 59.6% in the previous year. Given the share price of EUR 31.10 as at the end of 2015, this results in a dividend yield of 3.9%. Semperit's dividend policy remains unchanged: the pay-out ratio is around 50% of earnings after tax – assuming continued successful performance and that no unusual circumstances occur.
Compared with 31 December 2015, the balance sheet total rose by 3.4% to EUR 969.4 million in the first three quarters of 2016. On the asset side of the balance sheet, the main reasons for this increase were expansion investments, an increase in the item "Share of profits from joint ventures and associated companies" and higher cash and cash equivalents, with a decrease in other assets and inventories.
On the liabilities side, there were increases in liabilities to banks and other financial liabilities, while trade payables, revenue reserves (due to dividend payment) as well as other provisions decreased.
Trade working capital (inventories plus trade receivables minus trade payables) increased slightly from EUR 160.6 million at the end of 2015 to EUR 165.3 million, and therefore constituted 19.0% of the revenue of EUR 870.2 million of the last four quarters (year-end 2015: 17.6%). The increase is attributable to a decrease in inventories and trade payables while trade receivables remained almost unchanged.
Cash and cash equivalents increased from EUR 126.4 million at the end of 2015 to EUR 131.5 million as of 30 September 2016.
As of 30 September 2016, the Semperit Group's equity (without non-controlling interests) stood at EUR 359.0 million, EUR 4.3 million lower than at the end of 2015 (EUR 363.3 million). The change resulted from earnings after taxes and the change in the currency translation reserve, as opposed to the dividend payment to the shareholders of the Semperit AG Holding in the second quarter of 2016.
The group's reported equity ratio as of 30 September 2016 amounted to 37.0% (year-end 2015: 38.7%). The capital structure of the Semperit Group therefore remains solid. The return on equity stood at 8.7%, following 15.4% in the first three quarters of 2015. The return on equity is calculated based on the earnings after tax in relation to the equity of EUR 359.0 million (each both in respect to the portion attributable to the shareholders of Semperit AG Holding).
Debt is higher at EUR 608.5 million compared with the end of 2015. Liabilities from the corporate Schuldschein loans and liabilities to banks total EUR 347.6 million (year-end 2015: EUR 302.6 million). Taking into consideration cash and cash equivalents, this resulted in an overall net debt of EUR 216.1 million (net debt at year-end 2015: EUR 176.1 million). The net debt/EBITDA ratio (net debt in relation to EBITDA of the last four quarters) on 30 September 2016 is therefore 2.32 (year-end 2015: 1.83). The liabilities from redeemable non-controlling interests remained largely unchanged at EUR 48.3 million. Provisions including social capital were almost the same at EUR 70.0 million. Other liabilities and deferred taxes decreased to EUR 48.7 million.
The gross cash flow in the first three quarters of 2016 amounted to EUR 44.4 million, a year-on-year increase of 8.3%. This change was caused primarily by the change of the items "Earnings before tax", "Depreciation and amortisation" as well as "Share of profits from joint ventures". Cash flow from operating activities improved significantly to EUR 29.6 million in the first three quarters of 2016. The cash flow from investing activities decreased to EUR 44.2 million, among other things, due to the lower investment activities. The cash flow from financing activities decreased to EUR 21.0 million.
Please refer to the interim consolidated financial statements for the related-party transactions with companies and individuals.
At EUR 44.3 million cash-relevant investments in tangible and intangible assets in the first three quarters of 2016 were lower than in the first three quarters of 2015 (EUR 51.5 million). The ratio of capital investment (CAPEX) to depreciation was 1.7 in the first three quarters of 2016 and therefore was below last year's level of 2.4. The investment priorities were on expansion and improvement in the segments Sempermed (expansion of the gloves production in Kamunting, Malaysia), Semperform (expansion of the site in Wimpassing, Austria and in Germany) and Semperflex (expansion of the hose production at the plant in Odry, Czech Republic).
As at 30 September 2016, the group's total headcount stood at 7,028 employees, 3.8% below the level at 30 September 2015. The number of employees has decreased in all segments with the exception of Semperflex and the Corporate Center segments. As regards the split of employees by segment, slightly less than half of them are employed in the Sempermed segment, whereas about 20% of the employees are engaged in the Semperflex segment and about 15% each in the Sempertrans and the Semperform segments.
The Industrial Sector (the Semperflex, Sempertrans and Semperform segments) showed a solid development contrary to the market trend. The Sector recorded a slight decrease in revenue by only 1.6% to EUR 389.3 million despite a challenging economic environment and a weak demand development in August. EBITDA fell by 5.1% to EUR 71.7 million, while EBIT decreased by 10.3% to EUR 57.1 million due to higher depreciation. With more than 50%, the Semperflex segment accounted for the largest share of the Industrial sector, followed by Semperform with more than 25% and Sempertrans at approximately 20%.
The EBITDA and EBIT margins decreased in all segments. However, the values of the first half year of 2015 included net earnings from the Leeser acquisition amounting to EUR 3.2 million. The sector's EBITDA margin was 18.4% in the first three quarters of 2016 after 19.1% in the previous year, while the EBIT margin was 14.7% after 16.1% in the first three quarters of 2015. Semperflex recorded the highest EBIT margin at 19.9%, followed by Semperform at 12.4% and Sempertrans at 10.2%. The comparison of the third quarters of 2016 and 2015 shows a decrease in revenue of EBITDA and EBIT.
| Q1–3 20151) | Q3 20151) | 20151) | |||||
|---|---|---|---|---|---|---|---|
| in EUR million | Q1–3 2016 | Change | restated | Q3 2016 | Change | restated | restated |
| Revenue | 389.3 | –1.6% | 395.5 | 120.3 | –11.6% | 136.2 | 521.0 |
| EBITDA | 71.7 | –5.1% | 75.6 | 19.4 | –20.7% | 24.5 | 93.6 |
| EBITDA margin | 18.4% | –0.7 PP | 19.1% | 16.2% | –1.8 PP | 18.0% | 18.0% |
| EBIT | 57.1 | –10.3% | 63.7 | 14.5 | –28.6% | 20.3 | 77.2 |
| EBIT margin | 14.7% | –1.4 PP | 16.1% | 12.0% | –2.9 PP | 14.9% | 14.8% |
| Investments in tangible and intangible assets |
21.3 | –7.4% | 23.0 | 11.1 | +64.4% | 6.7 | 35.1 |
| Employees (at balance sheet date) | 3,576 | –0.2% | 3,583 | 3,576 | –0.2% | 3,583 | 3,576 |
1) Values restated, see page 20f. in this report (Foreign Exchange restatement).
The Semperflex segment generated further high profitability and slightly declining revenue thanks to very good production and sales performances in a declining market. The business unit for hydraulic hoses achieved sales successes primarily in Europe, while North America and Asia recorded weaker demand. In total, sales of hydraulic hoses increased. The booking situation for the coming months is good.
The test run for the new capacities for industrial hoses in Odry, Czech Republic, was transferred into regular operations in the third quarter of 2016. All capacities were, and still are, well utilised due to strategic partnerships with key customers, while sales of industrial hoses increased.
The comparison of the third quarters of 2016 and 2015 shows a decrease in revenue, EBITDA and EBIT. In this regard, it should be taken into account that the third quarter of 2016 – compared with the third quarter of 2015 – was characterised by a longer maintenance period and therefore a downtime of machines. These longer maintenance intervals for revision of the machines were scheduled and are necessary every three to four years.
The Sempertrans segment defended its position in established markets and held its market position in new regions and market segments. This was achieved against the background of a stabilisation of raw material prices for mining products, which continue to be on a low level. However, demand for investment goods in the mining industry continued to remain subdued despite first indications of a price increase for individual raw materials in recent months. This also applies to conveyor belts. Considering the challenging market and competitive environment the utilisation of production capacities was satisfying. However, year-on-year, the volume sold was slightly increased for steel cord reinforced conveyor belts as well as conveyor belts with textile carcasses.
Visibility of demand continued to be low and was characterised by prolonged uncertainty and strong price pressure. Thus it was necessary to react flexibly to market requirements. In total, revenue as well as EBITDA and EBIT decreased and profitability continued to be in a double-digit range. The comparison of the third quarters of 2016 and 2015 shows a significant decline in revenue, EBITDA and EBIT.
In a difficult or contracting market environment with volatile demand, the Semperform segment profited from gaining market shares in the handrail as well as the window and door profile businesses. In the second and third quarter of 2016, two new extrusion lines for profiles was put into operation by the profile manufacturer Leeser, which was acquired in the second quarter of 2015. Thanks to market share gains in Western and Central Europe, sales of window and door profiles were increased compared with the first three quarters of 2015 – despite the difficult market environment in Russia and Ukraine, which caused further substantial declines of the business volume in these markets. In the USA, the market entry for window and door profiles was successful. Demand for products of the business unit Semperit Engineered Solutions remained roughly the same year-on-year, though it continued to show a volatile development. The business unit Special Applications increased sales.
In the summary of all business units, revenue increased. The development of operating profitability is satisfactory – taking into account that the values of the first three quarters of 2015 include a positive special effect of approximately EUR 3.2 million from the Leeser acquisition. Profitability was supported by the good sales performance and further by measures to enhance efficiency and minimise costs. The comparison of the third quarters of 2016 and 2015 shows a noticeable decline in revenue, EBITDA and EBIT.
| in EUR million | Q1–3 2016 | Change | Q1–3 20151) restated |
Q3 2016 | Change | Q3 20151) restated |
20151) restated |
|---|---|---|---|---|---|---|---|
| Revenue | 153.5 | –1.7% | 156.2 | 47.2 | –2.4% | 48.3 | 203.4 |
| EBITDA | 37.0 | –2.3% | 37.8 | 9.8 | –10.9% | 11.0 | 46.1 |
| EBITDA margin | 24.1% | –0.1 PP | 24.2% | 20.7% | –2.0 PP | 22.7% | 22.7% |
| EBIT | 30.5 | –4.4% | 31.9 | 7.6 | –15.9% | 9.0 | 38.2 |
| EBIT margin | 19.9% | –0.5 PP | 20.4% | 16.1% | –2.5 PP | 18.6% | 18.8% |
| Investments in tangible and intangible assets |
9.9 | –11.8% | 11.2 | 5.8 | +77.9% | 3.3 | 14.6 |
| Employees (at balance sheet date) |
1,578 | 3.2% | 1,529 | 1,578 | +3.2% | 1,529 | 1,536 |
1) Values restated, see page 20f. in this report (Foreign Exchange restatement).
| Q1–3 20151) | Q3 20151) | ||||||
|---|---|---|---|---|---|---|---|
| in EUR million | Q1–3 2016 | Change | restated | Q3 2016 | Change | restated | 20151) restated |
| Revenue | 114.3 | –6.1% | 121.7 | 32.7 | –25.5% | 43.9 | 164.9 |
| EBITDA | 14.5 | –12.9% | 16.6 | 3.0 | –51.3% | 6.2 | 23.2 |
| EBITDA margin | 12.7% | –1.0 PP | 13.7% | 9.2% | –4.9 PP | 14.1% | 14.0% |
| EBIT | 11.6 | –18.1% | 14.2 | 2.1 | –61.4% | 5.4 | 19.9 |
| EBIT margin | 10.2% | –1.5 PP | 11.7% | 6.3% | –5.9 PP | 12.2% | 12.1% |
| Investments in tangible and intangible assets |
3.3 | –49.0% | 6.4 | 1.7 | +58.3% | 1.1 | 12.3 |
| Employees (at balance sheet date) |
1,055 | –2.0% | 1,076 | 1,055 | –2.0% | 1,076 | 1,086 |
| Q1–3 20151) | Q3 20151) | 20151) | |||||
|---|---|---|---|---|---|---|---|
| in EUR million | Q1–3 2016 | Change | restated | Q3 2016 | Change | restated | restated |
| Revenue | 121.6 | +3.4% | 117.5 | 40.5 | –8.0% | 44.0 | 152.8 |
| EBITDA | 20.3 | –4.1% | 21.2 | 6.7 | –9.4% | 7.3 | 24.3 |
| EBITDA margin | 16.7% | –1.3 PP | 18.0% | 16.4% | –0.3 PP | 16.7% | 15.9% |
| EBIT | 15.0 | –14.5% | 17.6 | 4.8 | –18.4% | 5.9 | 19.1 |
| EBIT margin | 12.4% | –2.6 PP | 15.0% | 11.9% | –1.5 PP | 13.4% | 12.5% |
| Investments in tangible and intangible assets |
8.2 | +50.1% | 5.5 | 3.6 | +48.7% | 2.4 | 8.1 |
| Employees (at balance sheet date) | 943 | –3.6% | 977 | 943 | –3.6% | 977 | 954 |
1) Values restated, see page 20f. in this report (Foreign Exchange restatement).
The development of the Sempermed segment was characterised by a difficult market environment. This included increased production costs due to higher gas and electricity rates in Malaysia, which could not entirely be passed on to the market, as well as a challenging pricing policy in the overall market, in particular for nitrile gloves. Raw material prices included a rise in the second quarter of 2016, in particular for natural latex, followed by a decline and another significant increase during the third quarter of 2016. These increases could only be passed on to the market with a certain delay. In addition, the use of merchandise enhanced the margin situation.
The negative impact of the cooperation with the joint venture partner in Thailand (availability of the gloves was not sufficiently secured, conditions were not satisfying) persists and involves additional costs.
Considering this unsatisfying price situation and the persisting burdening influence on the cooperation with the joint venture partner in Thailand, Sempermed now focuses on the core markets Europe and North America as well as selected markets in Asia (Japan and South Korea). The overall focus is on sales of Sempermed brand gloves. This sales strategy, which was adapted to the current market conditions, is intended to lead to further cost savings and efficiency enhancements in the coming quarters.
The expansion of the plant and the optimisation of existing capacities in Malaysia were continued. Relevant start-up costs occur due to the expansion. In total, the initiated cost-cutting programme (production, marketing, sales) already shows first positive results that will be reflected with a delay in the overall picture.
Revenue of the Sector fell by 12.9% to EUR 258.3 million due to heavy price pressure and a weak start of the year 2016. EBITDA decreased to EUR 9.8 million, while EBIT fell to EUR –0.9 million. Comparison of the third quarters of 2016 and 2015 showed a decrease of revenue, EBITDA and EBIT. Negative effects of the inventory valuation had a negative effect on EBIT amounting to EUR 1 million in the third quarter of 2016.
Demand for examination and protective gloves improved slightly during 2016. Especially the structured market access to the Industrial (occupational health and retail) and Medical market segments contributed to this development. Sales of surgical gloves, which are produced in the core production facility in Wimpassing, Austria, showed development above average due to higher demand in the core markets compared to the previous year.
For further information on the arbitration proceedings against the joint venture partner Sri Trang-Agro Industry Public Co Ltd. Group or the joint venture company Siam Sempermed Corp. Ltd. (SSC) please refer to page 35f.
| Q1–3 20151) | Q3 20151) | 20151) | |||||
|---|---|---|---|---|---|---|---|
| in EUR million | Q1–3 2016 | Change | restated | Q3 2016 | Change | restated | restated |
| Revenue | 258.3 | –12.9% | 296.7 | 88.6 | –15.7% | 105.1 | 393.7 |
| EBITDA | 9.8 | –49.6% | 19.4 | 1.9 | –76.0% | 7.8 | 29.4 |
| EBITDA margin | 3.8% | –2.7 PP | 6.5% | 2.1% | –5.4 PP | 7.5% | 7.5% |
| EBIT | –0.9 | – | 10.3 | –2.1 | – | 4.9 | 17.2 |
| EBIT margin | –0.3% | –3.8 PP | 3.5% | –2.3% | –6.9 PP | 4.6% | 4.4% |
| Investments in tangible and intangible assets |
18.5 | –22.1% | 23.8 | 7.2 | –35.7% | 11.2 | 29.6 |
| Employees (at balance sheet date) | 3,232 | –10.1% | 3,595 | 3,232 | –10.1% | 3,595 | 3,344 |
The global economic environment remains challenging. The International Monetary Fund (IMF) forecasts a global economic growth of 3.1% for the current year with a slight increase to 3.4% in 2017. For 2016, 1.6% and 1.7% are expected for the USA and the euro area respectively. For 2017, an increase in economic performance by 2.2% is expected in the USA, while in the euro area the forecast is at 1.5%. The emerging and developing countries are expected to show further higher growth rates: 4.2% for 2016 and 4.6% for 2017. The IMF expects a further slowdown in growth to 6.6% in China for 2016 and 6.2% in 2017.
For the fourth quarter of 2016, Semperit expects no significant changes of the market conditions. The generally low demand in the Industrial Sector is expected to continue due to the economic situation. In the Medical Sector, which is not cyclically sensitive, increased raw material and energy prices and continuing price pressure are to be expected, while demand will develop steadily.
Semperit confirms the outlook updated on 20 September 2016. Due to the ongoing difficult situation in the Medical Sector and declining demand in the Industrial Sector caused by the economic situation, in particular in the Sempertrans segment, the operational results of 2016 of the Semperit Group will be well below the results of 2015 (restated values). This results in a forecast decline in EBITDA by approximately 10% and in EBIT by approximately 20% for the overall financial year of 2016.
In the next months of 2016, Semperit refers to a good order situation. The production capacities of Semperflex are well booked although high growth rates similar to the past years cannot be expected in the current financial year 2016 due to market and capacity conditions. At Sempertrans the booking situation of the production capacities is satisfying despite the difficult situation in the customer markets. However, demand is characterised by uncertainty and strong price pressure. The business development of the Semperform segment is assessed as stable for the next months. All in all, Semperit nevertheless expects a business trend for the Industrial Sector that is better than the development of the total market.
In the Medical Sector (Sempermed segment) the focus will continue to be on sales in core markets. The profitability shall be improved by continuing process optimisations and efficiency enhancements as well as realising a cost reduction programme. In Malaysia, further production capacities are put into operation. The financial burdens due to the Thai joint venture will probably persist.
The Semperit Group will continue its growth strategy consistently despite more difficult economic conditions. The focus will be on the entering into new markets in the Industrial Sector and the expansion and optimisation of existing production capacities. In the Medical Sector, the focus will be set on the expansion of the glove production in Malaysia in addition to further production and sales optimisations as well as efficiency enhancements. Altogether, capital investments (CAPEX) of approximately EUR 60 million are planned for 2016.
Going forward, Semperit aims at achieving average double-digit volume growth (quantities sold) and attractive earnings margins. The aspired range of a target margin is between 11% and 14% for EBITDA and between 8% and 11% for EBIT.
This outlook is based on the assessments of the Management Board as of 15 November 2016, and does not take into account the effects of possible acquisitions, divestments or other unforeseeable structural or economic changes during the further course of 2016. These assessments are subject to both known and unknown risks and uncertainties, which may result in actual events and outcomes differing from the statements made here.
Between the balance sheet date on 30 September 2016 and this report's approval for publication on 15 November 2016, several Corporate Schuldschein Loans with a total volume of EUR 141 million were issued. This transaction is expanded on page 30f in this report in the chapter on debt structure of the Semperit Group.
Vienna, 15 November 2016
The Management Board
Thomas Fahnemann Chief Executive Officer
Declan Daly Chief Information Officer
Richard Ehrenfeldner Chief Operating Officer Sempermed
Johannes Schmidt-Schultes Chief Financial Officer
Michele Melchiorre Chief Technical Officer
Interim consolidated financial statements and notes
| 1.1.- | 1.7.- | |||
|---|---|---|---|---|
| in EUR thousand | 1.1.- 30.9.2016 |
30.9.2015 restated1) |
1.7.- 30.9.2016 |
30.9.2015 restated1) |
| Revenue | 647,603 | 692,131 | 208,925 | 241,306 |
| Changes in inventories | 1,356 | 2,589 | 5,115 | –366 |
| Own work capitalised | 3,126 | 4,451 | 916 | 1,365 |
| Operating revenue | 652,084 | 699,171 | 214,955 | 242,305 |
| Other operating income | 6,198 | 7,765 | 528 | 717 |
| Cost of material and purchased services | –377,836 | –421,765 | –130,800 | –148,438 |
| Personnel expenses | –128,278 | –123,880 | –40,386 | –40,305 |
| Other operating expenses | –84,968 | –98,920 | –27,033 | –35,342 |
| Share of profits from joint ventures and associated companies | 5,007 | 13,027 | 2,181 | 6,126 |
| Earnings before interest, tax, depreciation and amortisation (EBITDA) | 72,207 | 75,399 | 19,447 | 25,064 |
| Depreciation, amortisation and impairment of tangible and intangible assets | –25,557 | –21,456 | –9,023 | –7,363 |
| Earnings before interest and tax (EBIT) | 46,650 | 53,944 | 10,423 | 17,701 |
| Financial income | 12,227 | 25,998 | 2,527 | 13,126 |
| Financial expenses | –20,212 | –26,395 | –3,618 | –12,114 |
| Profit / loss attributable to redeemable non-controlling interests | –4,738 | –4,612 | –1,638 | –1,826 |
| Financial result | –12,723 | –5,009 | –2,728 | –814 |
| Earnings before tax | 33,927 | 48,935 | 7,695 | 16,888 |
| Income taxes | –10,540 | –8,872 | –2,198 | –2,142 |
| Earnings after tax | 23,386 | 40,063 | 5,496 | 14,746 |
| thereof attributable to the shareholders of Semperit AG Holding | 23,407 | 40,071 | 5,505 | 14,741 |
| thereof attributable to non-controlling interests | –21 | –8 | –9 | 4 |
| Earnings per share in EUR (diluted and undiluted)2) | 1.14 | 1.95 | 0.27 | 0.72 |
1) Values restated, see page 20f. in this report (Foreign Exchange restatement). 2) Attributable to the shareholders of Semperit AG Holding.
| in EUR thousand | 1.1.- 30.9.2016 |
1.1.- 30.9.2015 restated1) |
1.7.- 30.9.2016 |
1.7.- 30.9.2015 restated1) |
|---|---|---|---|---|
| Earnings after tax according to the consolidated income statement | 23,386 | 40,063 | 5,496 | 14,746 |
| Other comprehensive income | ||||
| Amounts that will not be recognised through profit and loss in future periods2) |
||||
| Remeasurements of defined benefit plans (IAS 19) | –4,281 | 0 | 0 | 0 |
| Related deferred taxes | 467 | 0 | 0 | 0 |
| –3,814 | 0 | 0 | 0 | |
| Amounts that will potentially be recognised through profit and loss in future periods |
||||
| Available-for-sale financial assets | ||||
| Revaluation gains / losses for the period | 350 | 29 | 54 | 235 |
| Cash flow hedges | ||||
| Revaluation gains / losses for the period | –700 | 624 | 638 | 47 |
| Reclassification to profit and loss for the period | –85 | 831 | –85 | 7 |
| –785 | 1,456 | 553 | 55 | |
| Other comprehensive income from joint ventures | ||||
| Currency translation differences for the period | 1,594 | –984 | 522 | –7,688 |
| Currency translation differences | ||||
| Currency translation differences for the period | –420 | –14,864 | –4,526 | –24,657 |
| Related deferred taxes | 126 | –362 | –113 | –65 |
| 864 | –14,726 | –3,511 | –32,120 | |
| Other comprehensive income | –2,950 | –14,726 | –3,510 | –32,120 |
| Total recognised comprehensive income | 20,437 | 25,337 | 1,986 | –17,374 |
| thereof on earnings attributable to the shareholders of Semperit AG Holding | 20,423 | 25,638 | 2,074 | –17,069 |
| thereof on earnings attributable to non-controlling interests | 14 | –301 | –88 | –305 |
1) Values restated, see page 20f. in this report (Foreign Exchange restatement).
2) Reevaluation due to material development of interest rate parameters during the year.
| in EUR thousand | 1.1.- 30.9.2016 |
1.1.- 30.9.2015 restated1) |
|---|---|---|
| Earnings before tax | 33,927 | 48,935 |
| Depreciation, amortisation, impairment and write-ups of tangible and intangible assets | 25,557 | 21,450 |
| Profit / loss from disposal of assets (including current and non-current financial assets) |
161 | –35 |
| Change in non-current provisions | –2,647 | –2,436 |
| Share of profits from joint ventures and associated companies | –5,007 | –13,027 |
| Badwill arising from business combinations | 0 | –3,221 |
| Profit / loss attributable to redeemable non-controlling interests | 4,738 | 4,612 |
| Net interest income (including income from securities) | 3,776 | 2,571 |
| Interest paid | –5,246 | –3,881 |
| Interest received | 724 | 780 |
| Taxes paid on income | –11,557 | –14,741 |
| Gross cash flow | 44,426 | 41,007 |
| Change in inventories | 2,409 | –7,125 |
| Change in trade receivables | –443 | –28,189 |
| Change in other receivables and assets | 891 | –11,999 |
| Change in trade payables | –12,797 | 11,318 |
| Change in other liabilities and current provisions | –5,026 | 9,271 |
| Changes in working capital resulting from currency translation adjustments | 170 | 8,596 |
| Cash flow from operating activities | 29,631 | 22,879 |
| Proceeds from sale of tangible and intangible assets | 65 | 285 |
| Proceeds from sale of current and non-current financial assets | 2 | 0 |
| Investments in tangible and intangible assets | –44,290 | –51,507 |
| Net cash outflow on business combinations (net of cash acquired) | 0 | –17,474 |
| Cash flow from investing activities | –44,223 | –68,697 |
| Cash receipts from current and non-current financing liabilities | 45,834 | 234,020 |
| Repayment of current and non-current financing liabilities | –126 | –77,926 |
| Dividend to shareholders of Semperit AG Holding | –24,688 | –123,441 |
| Acquisition of non-controlling interests | –42 | –59 |
| Cash flow from financing activities | 20,978 | 32,595 |
| Net increase / decrease in cash and cash equivalents | 6,385 | –13,224 |
| Effects resulting from currency translation | –1,359 | 653 |
| Cash and cash equivalents at the beginning of the period | 126,430 | 115,574 |
| Cash and cash equivalents at the end of the period | 131,456 | 103,003 |
| in EUR thousand | 30.9.2016 | 31.12.2015 restated1) |
|---|---|---|
| ASSETS | ||
| Non-current assets | ||
| Intangible assets | 111,869 | 111,314 |
| Tangible assets | 301,059 | 276,630 |
| Investments in joint ventures and associated companies | 109,270 | 102,670 |
| Other financial assets | 11,701 | 12,372 |
| Other assets | 7,367 | 5,275 |
| Deferred taxes | 14,066 | 16,717 |
| 555,331 | 524,978 | |
| Current assets | ||
| Inventories | 133,303 | 135,711 |
| Trade receivables | 125,962 | 125,519 |
| Other financial assets | 5,518 | 2,284 |
| Other assets | 11,417 | 16,670 |
| Current tax receivables | 6,441 | 6,192 |
| Cash and cash equivalents | 131,456 | 126,430 |
| 414,097 | 412,806 | |
| ASSETS | 969,428 | 937,784 |
| EQUITY AND LIABILITIES | ||
| Equity | ||
| Share capital | 21,359 | 21,359 |
| Capital reserves | 21,503 | 21,503 |
| Revenue reserves | 312,332 | 317,733 |
| Currency translation reserve | 3,803 | 2,664 |
| Equity attributable to the shareholders of Semperit AG Holding | 358,997 | 363,260 |
| Non-controlling interests | 1,892 | 1,924 |
| 360,890 | 365,183 | |
| Non-current provisions and liabilities | ||
| Provisions for pension and severance payments | 44,006 | 40,775 |
| Other provisions | 9,840 | 11,421 |
| Liabilities from redeemable non-controlling interests | 48,274 | 44,192 |
| Corporate Schuldschein loan | 132,659 | 132,615 |
| Liabilities to banks | 208,259 | 162,898 |
| Other financial liabilities | 770 | 862 |
| Other liabilities | 1,001 | 746 |
| Deferred taxes | 9,556 | 11,924 |
| 454,365 | 405,433 | |
| Current provisions and liabilities | ||
| Provisions for pension and severance payments | 3,091 | 2,866 |
| Other provisions | 13,094 | 19,033 |
| Corporate Schuldschein loan | 617 | 1,481 |
| Liabilities to banks | 6,046 | 5,560 |
| Trade payables | 93,976 | 100,660 |
| Other financial liabilities | 19,688 | 13,762 |
| Other liabilities | 14,408 | 19,037 |
| Current tax liabilities | 3,253 | 4,769 |
| 154,173 | 167,168 | |
| EQUITY AND LIABILITIES | 969,428 | 937,784 |
| Revenue reserves | |||||||||
|---|---|---|---|---|---|---|---|---|---|
| in EUR thousand | Share capital |
Capital reserves |
Re valuation reserves |
Other revenue reserves |
Total revenue reserves |
Currency translation reserve |
Total equity attributable to the share holders of Semperit AG Holding |
Non control ling interests |
Total equity |
| As at 1.1.2015 | 21,359 | 21,503 | 284 | 393,405 | 393,690 | 7,211 | 443,762 | 2,211 | 445,973 |
| Earnings after tax | 0 | 0 | 0 | 40,071 | 40,071 | 0 | 40,071 | –8 | 40,063 |
| Other comprehensive income |
0 | 0 | 22 | 1,101 | 1,122 | –15,556 | –14,433 | –293 | –14,726 |
| Total recognised comprehensive income |
0 | 0 | 22 | 41,172 | 41,194 | –15,556 | 25,638 | –301 | 25,337 |
| Dividend | 0 | 0 | 0 | –123,441 | –123,441 | 0 | –123,441 | 0 | –123,441 |
| Acquisition of non controlling interests |
0 | 0 | 0 | 6 | 6 | 0 | 6 | –65 | –59 |
| As at 30.9.2015 restated1) |
21,359 | 21,503 | 306 | 311,143 | 311,449 | –8,345 | 345,966 | 1,844 | 347,811 |
| As at 1.1.2016 restated1) |
21,359 | 21,503 | 200 | 317,533 | 317,733 | 2,664 | 363,260 | 1,924 | 365,183 |
| Earnings after tax | 0 | 0 | 0 | 23,407 | 23,407 | 0 | 23,407 | –21 | 23,386 |
| Other comprehensive income |
0 | 0 | 262 | –4,386 | –4,123 | 1,139 | –2,984 | 35 | –2,950 |
| Total recognised comprehensive income |
0 | 0 | 262 | 19,021 | 19,284 | 1,139 | 20,423 | 14 | 20,437 |
| Dividend | 0 | 0 | 0 | –24,688 | –24,688 | 0 | –24,688 | 0 | –24,688 |
| Acquisition of non controlling interests |
0 | 0 | 0 | 3 | 3 | 0 | 3 | –45 | –42 |
| As at 30.9.2016 | 21,359 | 21,503 | 463 | 311,869 | 312,332 | 3,803 | 358,997 | 1,892 | 360,890 |
These interim consolidated financial statements have been prepared in accordance with the Prime Market rules of the Vienna Stock Exchange and with International Financial Reporting Standards (IFRS) as well as IAS 34 for interim financial statements.
For more information on accounting and valuation methods, please see the consolidated financial statements as of 31 December 2015, which in this regard form the basis for these interim financial statements.
Material changes to the accounting and valuation methods relate to the recognition of the foreign exchange gains or losses in the consolidated income statement. For more details please see the next section in this report.
The reporting currency is the Euro, in which case figures are rounded off to thousands of Euros, unless specified otherwise. Rounding differences in the totalling of rounded amounts and percentages may arise from the automatic processing of data.
These interim consolidated financial statements of the Semperit Group have not been audited or reviewed by the group's auditor.
As an internationally operating group, Semperit is subject to various foreign exchange effects within the scope of its business activities. For the purpose of a more effective internal management as well as a more transparent presentation in the external financial reports of Semperit Group and its segments, foreign exchange gains or losses in the consolidated income statement are no longer shown as part of the operating result in other operating income / other operating expenses anymore since 1 January 2016, but in financial income / financial expenses and therefore within the financial result. In order to ensure comparability with the quarters of the previous year and the previous year following the change of method pursuant to IAS 8, all comparable figures for 2015 are presented according to the same new accounting method in this report.
The restated consolidated income statement as of 30 September 2015 is as follows:
| 1.1.- | 1.1.- 30.9.2015 |
||
|---|---|---|---|
| in EUR thousand | 30.9.2015 | Restatement | restated |
| Revenue | 692,131 | 0 | 692,131 |
| Changes in inventories | 2,589 | 0 | 2,589 |
| Own work capitalised | 4,451 | 0 | 4,451 |
| Operating revenue | 699,171 | 0 | 699,171 |
| Other operating income | 32,915 | –25,150 | 7,765 |
| Cost of material and purchased services | –421,765 | 0 | –421,765 |
| Personnel expenses | –123,880 | 0 | –123,880 |
| Other operating expenses | –118,938 | 20,019 | –98,920 |
| Share of profits from joint ventures and associated companies | 13,027 | 0 | 13,027 |
| Earnings before interest, tax, depreciation and amortisation (EBITDA) | 80,531 | –5,131 | 75,399 |
| Depreciation, amortisation and impairment of tangible and intangible assets | –21,456 | 0 | –21,456 |
| Earnings before interest and tax (EBIT) | 59,075 | –5,131 | 53,944 |
| Financial income | 848 | 25,150 | 25,998 |
| Financial expenses | –6,376 | –20,019 | –26,395 |
| Profit / loss attributable to redeemable non-controlling interests | –4,612 | 0 | –4,612 |
| Financial result | –10,140 | 5,131 | –5,009 |
| Earnings before tax | 48,935 | 0 | 48,935 |
| Income taxes | –8,872 | 0 | –8,872 |
| Earnings after tax | 40,063 | 0 | 40,063 |
| thereof attributable to the shareholders of Semperit AG Holding | 40,071 | 0 | 40,071 |
| thereof attributable to non-controlling interests | –8 | 0 | –8 |
| Earnings per share in EUR (diluted and undiluted)1) | 1.95 | 0.00 | 1.95 |
1) Attributable to the shareholders of Semperit AG Holding.
The restated consolidated income statement as of 31 December 2015 is as follows:
| 1.1.- | |||
|---|---|---|---|
| 1.1.- | 31.12.2015 | ||
| in EUR thousand | 31.12.2015 | Restatement | restated |
| Revenue | 914,686 | 0 | 914,686 |
| Changes in inventories | 6,788 | 0 | 6,788 |
| Own work capitalised | 6,217 | 0 | 6,217 |
| Operating revenue | 927,691 | 0 | 927,691 |
| Other operating income | 37,099 | –27,953 | 9,145 |
| Cost of material and purchased services | –555,785 | 0 | –555,785 |
| Personnel expenses | –164,813 | 0 | –164,813 |
| Other operating expenses | –160,639 | 23,548 | –137,092 |
| Share of profits from joint ventures and associated companies | 17,078 | 0 | 17,078 |
| Earnings before interest, tax, depreciation and amortisation (EBITDA) | 100,630 | –4,406 | 96,224 |
| Depreciation, amortisation and impairment of tangible and intangible assets | –29,478 | 0 | –29,478 |
| Earnings before interest and tax (EBIT) | 71,152 | –4,406 | 66,746 |
| Financial income | 1,252 | 27,953 | 29,206 |
| Financial expenses | –8,228 | –23,548 | –31,776 |
| Profit / loss attributable to redeemable non-controlling interests | –5,395 | 0 | –5,395 |
| Financial result | –12,371 | 4,406 | –7,965 |
| Earnings before tax | 58,781 | 0 | 58,781 |
| Income taxes | –12,419 | 0 | –12,419 |
| Earnings after tax | 46,363 | 0 | 46,363 |
| thereof attributable to the shareholders of Semperit AG Holding | 46,394 | 0 | 46,394 |
| thereof attributable to non-controlling interests | –31 | 0 | –31 |
| Earnings per share in EUR (diluted and undiluted)1) | 2.26 | 0.00 | 2.26 |
1) Attributable to the shareholders of Semperit AG Holding.
The consolidated financial statements include the financial statements of the parent company and the financial statements of the companies under its control, i.e. the subsidiaries of the parent. The group controls a company when it is exposed, or has rights, to variable returns from its involvement with the company and has the ability to affect those returns through its power over the company. The financial statements of subsidiaries are included in the consolidated financial statements from the time at which control begins until the time at which control ends.
On the assessment whether the definition of control within the meaning of IFRS 10 is met where the group's de facto shareholding in subsidiaries is either 50% or 41.43%, please refer to the consolidated financial statements as of 31 December 2015, note 3.1., page 96f. In the first three quarters of 2016 there have been no material developments that would have led to a revised assessment of control within the meaning of IFRS 10.
The following amended standards were applicable for the first time in the reporting period from 1 January until 30 September 2016:
| First-time adoption of standards | Effective date1) | Endorsement | |
|---|---|---|---|
| Amended standards | |||
| IFRS 11 | Joint Arrangements — Amendments: Accounting for Acquisitions of Interests in Joint Operations |
1.1.2016 | November 2015 |
| IAS 1 | Presentation of Financial Statements — Amendments: Disclosure Initiative |
1.1.2016 | December 2015 |
| IAS 19 | Employee Benefits — Amendments: Employee Contributions |
1.2.2015 | December 2014 |
| IAS 27 | Separate Financial Statements — Amendments: Equity Method in Separate Financial Statements |
1.1.2016 | December 2015 |
| IAS 16, 38 | Property, Plant and Equipment and Intangible Assets — Amendments: Clarification of Acceptable Methods of Depreciation and Amortisation |
1.1.2016 | December 2015 |
| IAS 16, 41 | Property, Plant and Equipment and Agriculture — Amendments: Bearer Plants |
1.1.2016 | November 2015 |
| Misc. | Annual Improvements to IFRS, cycle 2010–2012 | 1.2.2015 | December 2014 |
| Misc. | Annual Improvements to IFRS, cycle 2012–2014 | 1.1.2016 | December 2015 |
1) According to the Official Journal of the EU, the standards are obligatory for financial years commencing on or after the effective date.
The listed amended standards are not of relevance for the Semperit Group or do not have a material effect on the interim or annual consolidated financial statements.
There were no material changes in the scope of consolidation during the first three quarters of 2016.
In the first three quarters of 2016 an additional 0.03% interest in Latexx Partners Berhad was acquired for EUR 42 thousand. As of 30 September 2016 the group's interest totalled 98.54%, up from 98.50% as of 31 December 2015. In the first three quarters of 2015 a 0.04% interest was acquired for EUR 59 thousand, increasing the group's total interest to 98.50% as of 30 September 2015.
The transactions in the first three quarters of 2016 and in the first three quarters of 2015 were accounted for as equity transactions. For further information, please refer to the explanations on the principles and methods of consolidation in the consolidated financial statements as of 31 December 2015.
The investments in joint ventures and associated companies are comprised as follows:
| in EUR thousand | 30.9.2016 | 31.12.2015 restated1) |
|---|---|---|
| Joint ventures | ||
| Siam Sempermed Corp. Ltd., Hat Yai, Thailand | 106,758 | 100,535 |
| Associated companies | ||
| Synergy Health Allershausen GmbH, Allershausen, Germany | 2,512 | 2,135 |
| 109,270 | 102,670 |
1) Values restated, see page 20f. in this report (Foreign Exchange restatement).
| 1.1.- | 1.1.- | ||
|---|---|---|---|
| 1.1.- 30.9.2016 |
30.9.2015 restated1) |
31.12.2015 restated1) |
|
| in EUR thousand | |||
| As at 1.1. | 102,670 | 82,835 | 82,835 |
| Proportionate period result and intercompany elimination results | 5,007 | 13,027 | 17,078 |
| Currency translation | 1,594 | –984 | 2,545 |
| Revaluation of defined benefit obligation | 0 | 0 | 211 |
| As at 30.9. / 31.12. | 109,270 | 94,879 | 102,670 |
1) Values restated, see page 20f. in this report (Foreign Exchange restatement).
As of 31 December 2014 the method of consolidation of Siam Sempermed Corp. Ltd. (SSC) was changed from full consolidation under IFRS 10 Consolidated Financial Statements to the equity method in accordance with IFRS 11 Joint Arrangements and IAS 28 Investments in Associates and Joint Ventures.
As the result of a special audit of the consolidated financial statements as of 31 December 2013 and the consolidated interim financial statements as of 30 June 2014, the Austrian Financial Market Authority (FMA) reached the conclusion in its decision from 30 July 2015 that SSC was no longer eligible for full consolidation already as of 30 June 2014.
Based on this finding of error as of 30 June 2015, the above-mentioned change in the method of consolidation used for SSC as of 31 December 2014 (from full consolidation to the equity method) was retrospectively restated to 31 March 2014.
At the end of August 2015 Semperit AG Holding submitted an appeal to the Austrian Federal Administrative Court against the decision mentioned above. Following the FMA's negative preliminary decision on the appeal, Semperit AG Holding submitted in November 2015 a corresponding application for appeal to the Austrian Federal Administrative Court for a ruling.
The appeal to the Austrian Federal Administrative Court was withdrawn by Semperit AG Holding in July 2016.
The consolidated carrying amount of the investment in Siam Sempermed Corp. Ltd. totalled EUR 106,758 thousand as of 30 September 2016 (31 December 2015: EUR 100,535 thousand). As of 30 September 2016 group companies conducted transactions that resulted in the following assets and liabilities against the joint venture, and their business relationships resulted in the following income and expenses in 2016 and 2015:
| 1.1.- | ||
|---|---|---|
| in EUR thousand | 1.1.- 30.9.2016 |
30.9.2015 restated1) |
| Revenue | 688 | 1,305 |
| Other operating income | 496 | 365 |
| Cost of material and purchased services | 112,367 | 121,764 |
| Other operating expenses | 0 | 115 |
| 30.9.2016 | 31.12.2015 restated1) |
|
| Inventories | 17,156 | 16,167 |
| Trade receivables | 258 | 1,319 |
| Trade payables | 23,347 | 24,533 |
1) Values restated, see page 20f. in this report (Foreign Exchange restatement).
The consolidated carrying amount of the investment in Synergy Health Allershausen GmbH totalled EUR 2,512 thousand as of 30 September 2016 (31 December 2015: EUR 2,135 thousand). As of 30 September 2016 group companies conducted transactions that resulted in the following assets and liabilities against the associated company, and their business relationships resulted in the following income and expenses in 2016 and 2015:
| in EUR thousand | 1.1.- 30.9.2016 |
1.1.- 30.9.2015 restated1) |
|---|---|---|
| Other operating expenses | 288 | 282 |
| Financial income | 6 | 7 |
| 30.9.2016 | 31.12.2015 restated1) |
|
| Other financial assets | 569 | 566 |
| Trade payables | 39 | 173 |
| in EUR thousand | Sempermed | Semperflex | Sempertrans | Semperform | Corporate Center and Group eliminations |
Group |
|---|---|---|---|---|---|---|
| 1.1.-30.9.2016 | ||||||
| Revenue | 258,316 | 153,484 | 114,250 | 121,553 | 0 | 647,603 |
| EBITDA | 9,780 | 36,970 | 14,465 | 20,295 | –9,303 | 72,207 |
| EBIT = segment result | –850 | 30,482 | 11,610 | 15,043 | –9,635 | 46,650 |
| 1.1.-30.9.2015 restated1) | ||||||
| Revenue | 296,675 | 156,206 | 121,729 | 117,520 | 0 | 692,131 |
| EBITDA | 19,414 | 37,837 | 16,617 | 21,155 | –19,623 | 75,399 |
| EBIT = segment result | 10,330 | 31,893 | 14,184 | 17,596 | –20,059 | 53,944 |
1) Values restated, see page 20f. in this report (Foreign Exchange restatement).
The income and expenses of companies involved in production and distribution in more than one segment are subdivided and allocated to the appropriate segments accordingly so that no further eliminations are necessary. The Corporate Center consists of Semperit AG Holding, which is not involved in operating activities, and those portions of a management company in China and a service company in Singapore that are allocated to the Corporate Center. Internal charging and the allocation of Corporate Center costs have already been made to the segments as far as possible.
In the first three quarters of 2016 the result of the segment Semperflex is affected by an impairment of EUR 12 thousand due to the impairment of land, an impairment of EUR 382 thousand relates to the impairment of technical equipment and machinery in the segment Sempermed. In the first three quarters of 2015 there were no impairments on either tangible or intangible assets.
In the first three quarters of 2016 the Semperit Group made investments in tangible and intangible assets totalling EUR 44,289 thousand (previous year: EUR 51,507 thousand). In contrast, tangible and intangible assets with a net carrying amount of EUR 228 thousand (previous year: EUR 249 thousand) were sold.
As of 30 September 2016 the group has contractual obligations to acquire tangible assets totalling EUR 42,996 thousand (31 December 2015: EUR 30,835 thousand). The increase compared to the previous year is mainly due to the investment projects to expand production capacities.
Semperit performed an indicator-based impairment test of the Sempermed segment as of 30 June 2016. Overall, this impairment test confirmed the recoverability of the capitalised goodwill of the Sempermed segment as of this date. Please refer to page 26f. of Semperit´s half-year financial report 2016 for further details.
The following tables show the carrying amounts of the individual financial assets and liabilities classified in accordance with the valuation categories stipulated in IAS 39.9.
| in EUR thousand | Valuation category IAS 39 | Carrying Amount 30.9.2016 |
Carrying amount 31.12.2015 restated1) |
|---|---|---|---|
| Trade receivables | Loans and receivables | 125,962 | 125,519 |
| Other financial assets | |||
| Securities | Available-for-sale | 6,837 | 6,490 |
| Loans to associated companies | Loans and receivables | 563 | 563 |
| Other loans | Loans and receivables | 11 | 11 |
| Derivative financial instruments | Held for trading | 3,618 | 4,469 |
| Derivative financial instruments | Designated as a hedging instrument | 70 | 0 |
| Other financial assets | Loans and receivables | 6,121 | 3,123 |
| Cash and cash equivalents | |||
| Cash on hand, cheques and cash deposits in banks | – | 131,456 | 126,430 |
1) Values restated, see page 20f. in this report (Foreign Exchange restatement).
| in EUR thousand | Valuation category IAS 39 | Carrying Amount 30.9.2016 |
Carrying amount 31.12.2015 restated1) |
|---|---|---|---|
| Corporate Schuldschein loan | Liabilities at amortised cost | 133,275 | 134,096 |
| Liabilities from redeemable non-controlling interests | Liabilities at amortised cost | 48,274 | 44,192 |
| Trade payables | Liabilities at amortised cost | 93,976 | 100,660 |
| Liabilities to banks | Liabilities at amortised cost | 214,305 | 168,458 |
| Other financial liabilities | |||
| Derivative financial liabilities | Held for trading | 3 | 240 |
| Derivative financial liabilities | Designated as a hedging instrument | 979 | 0 |
| Liabilities from finance leases | Liabilities at amortised cost | 44 | 91 |
| Other financial liabilities | Liabilities at amortised cost | 19,432 | 14,293 |
The three levels in the fair value hierarchy are defined as follows:
In the first three quarters of 2016 there were no reclassifications of financial instruments between the above mentioned levels.
Financial instruments at fair value include securities and derivative financial instruments.
| in EUR thousand | Valuation category IAS 39 | Fair Value 30.9.2016 |
Fair Value 31.12.2015 restated1) Level |
|
|---|---|---|---|---|
| Assets | ||||
| Securities | Available-for-sale | 6,837 | 6,490 | 1 |
| Derivative financial instruments | Held for trading | 3,618 | 4,469 | 2 |
| Derivative financial instruments | Designated as a hedging instrument | 70 | 0 | 2 |
| Liabilities | ||||
| Derivative financial liabilities | Held for trading | 3 | 240 | 2 |
| Derivative financial liabilities | Designated as a hedging instrument | 979 | 0 | 2 |
1) Values restated, see page 20f. in this report (Foreign Exchange restatement).
The fair values of available-for-sale securities are determined using publicly available prices.
The derivative financial instruments held for trading purposes are foreign exchange forward contracts.
The derivative financial instruments designated as hedges are cross currency swaps as well as further foreign exchange forward contracts. Their fair values of the cross currency swaps are determined using generally accepted financial valuation models, in which future cash flows are simulated using the yield curves published on the closing date. In addition, the carrying amount is adjusted to take into account the credit risk of the respective counterparty. When doing so, positive exposures are measured considering the default risk of the counterparty, while negative exposures are measured considering the group's own default risk.
The fair values of the foreign exchange forward contracts are determined using generally accepted financial valuation models (e.g. determination of the present value of expected future cash flows based on current foreign exchange rates and yield curves).
The fair value of all other financial assets and liabilities, except for the following items and liabilities from redeemable non-controlling interests, corresponds to their carrying amount.
| in EUR thousand | Valuation category IAS 39 | Fair Value 30.9.2016 |
Fair Value 31.12.2015 restated1) Level |
|
|---|---|---|---|---|
| Liabilities | ||||
| Corporate Schuldschein loan | Liabilities at amortised cost | 152,529 | 144,794 | 3 |
| Liabilities from finance leases | Liabilities at amortised cost | 44 | 92 | 3 |
1) Values restated, see page 20f. in this report (Foreign Exchange restatement).
The fair value of the corporate Schuldschein loan was determined by discounting the contractual payment streams with current interest rates. The comparable interest rates as at the reporting date were derived from capital market yields with matching maturities and then adjusted for current risk and liquidity costs that are observable on the market. These comparable interest rates were derived based on management's current assessment of the rating of the Semperit Group.
For existing fixed-interest finance lease liabilities, current third-party interest rates were queried and then compared with the contractually agreed interest rates. As a result, the difference between the carrying amount and the fair value shows the margin between the contractually agreed historical return and the return currently available on the market. The finance lease liabilities are shown under the item other financial liabilities.
For information on the valuation of liabilities from redeemable non-controlling interests, please refer to the explanations in the consolidated financial statements as of 31 December 2015. The calculation of the fair value would require a disproportionally high effort and is thus not disclosed in this report.
Since 2015 the Semperit Group has used increasingly financial debt instruments for its financing purposes. On the one hand, these financial debt instruments include a term loan of EUR 100 million and a revolving credit line up to EUR 150 million out of a syndicated loan facility / Rahmenkreditvertrag (SLF/RKV 2014).
On the other hand, Semperit Group has issued two corporate Schuldschein loans (SSD 2013 and SSD 2015) with a nominal value of EUR 58 million and EUR 75 million respectively. In November 2016, this corporate Schuldschein loan portfolio was broadened by additional corporate Schuldschein loans in US Dollar, Polish Zloty and Czech Koruna with a total volume of EUR 141 million (SSD 2016).
In July 2013 Semperit AG Holding issued a corporate Schuldschein loan totalling EUR 125 million (SSD 2013). In the second quarter of 2014 and in the first quarter of 2015, additional corporate Schuldschein loans amounting to EUR 5 million with the same conditions as the 10-year fixed-interest tranche of the original corporate Schuldschein loan were issued to "Privatstiftung zur Förderung der Gesundheit von Beschäftigten der Semperit AG Holding" (in English: Private Foundation to Promote the Health of the Employees of Semperit AG Holding). Consequently, the total notional volume increased to EUR 130 million. The average interest rate of this Schuldschein offering was 2.35%.
In June 2015 Semperit AG Holding redeemed the variable five- and seven-year tranches (notional volume EUR 36,500 thousand and EUR 35,500 thousand) of the existing corporate Schuldschein loan from 2013. At almost the same time in July 2015, Semperit AG Holding issued a new corporate Schuldschein loan for a total amount of EUR 75,000 thousand (SSD 2015) in order to take advantage of the decline in financing costs. This corporate Schuldschein loan consists of three long-term fixedinterest tranches with durations of seven, ten and fifteen years. The average interest rate of this second Schuldschein offering was 2.16%. This corporate Schuldschein loan was primarily placed in Austria and Germany. The cash inflows in July 2015 were primarily used to repay the variable tranches of the previous corporate Schuldschein loan from July 2013.
In November 2016 Semperit AG Holding issued additional corporate Schuldschein loans with a total volume of EUR 141 million (SSD 2016), which are denominated in US Dollar (approx. 63%), in Polish Zloty (approx. 23%) and in Czech Koruna (approx. 14%). By using these additional corporate Schuldschein loans, Semperit Group further optimizes its financing structure as well as its foreign exchange exposure management. Primarily, the proceeds from the SSD 2016 transaction are intended to be used to reduce Semperit´s current long-term borrowings provided by the revolving credit facility.
| in EUR thousand | Carrying amount of the current finance structure as of 30.9.2016 |
Additions due to the SSD 2016 transaction in Nov. 2016 |
|---|---|---|
| Corporate Schuldschein loan - non-current | 132,659 | 141,188 |
| thereof with remaining term between 1 and 5 years | 40,918 | 134,526 |
| thereof with remaining term of more than 5 years | 91,741 | 6,662 |
| Liabilities to banks - non-current | 208,259 | 0 |
| thereof with remaining term between 1 and 5 years | 207,278 | 0 |
| thereof with remaining term of more than 5 years | 981 | 0 |
| Corporate Schuldschein loan - current | 617 | 0 |
| thereof with remaining term of less than 1 year | 617 | 0 |
| Liabilities to banks - current | 6,046 | 0 |
| thereof with remaining term of less than 1 year | 6,046 | 0 |
| 347,581 | 141,188 |
The corporate Schuldschein loans 2016 are composed of various long-term tranches with fixed and also variable interest rates with a maturity inbetween three and seven years. The average interest rate of these Schuldschein offerings were 1.10% up to 3.22% depending on their underlying currencies and durations. These corporate Schuldschein loans were primarily placed in Austria, in Germany, in the Netherlands as well as in various countries in Asia.
As of 30 September 2016 accrued interest amounting to EUR 617 thousand is recognised with the current liabilities section. The differences between the carrying amounts excluding interest (clean prices) and the nominal amounts are the transaction cost of the Schuldschein offerings in July 2013 and July 2015. These differences are allocated over the terms of the corporate Schuldschein tranches in accordance with the effective interest rate method.
In October 2013, Semperit entered into two interest rate swaps (hedged notional volume of EUR 30,240 thousand) to hedge the variable-interest-rate tranches of the corporate Schuldschein loan from 2013. As a result, a part of the variable-interest-rate tranche was converted into a fixed one. Both interest rate swaps were accounted for as cash flow hedges in accordance with IAS 39. When the variable tranches of the corporate Schuldschein loan were redeemed in July 2015, both interest rate swaps were settled as well and the hedge accounting relationships were terminated.
In order to hedge Semperit's financing to a subsidiary company issued in Malaysian Ringgit, Semperit AG Holding entered into a cross currency swap in April 2015. On the one hand, the cross currency swap causes the variable refinancing to be converted into fixed interest rates, on the other hand, the exchange rate of the Euro and the Malaysian Ringgit was fixed. According to IAS 39 the cross currency swap was classified as a cash flow hedge (regarding interest rate risk) and as a fair value hedge (regarding the foreign exchange risk) too. In total, the derivative was accounted for at fair value. As of 31 December 2015 the requirements for hedge accounting in accordance with IAS 39 were no longer met. Since then, all fair value changes are recognised completely through profit and loss within the financial result section of the consolidated income statement. Considering also the ongoing negative EURIBOR, an interest rate floor was added to the existing cross currency swap on 30 September 2016 with the intention to increase the effectiveness of these counter-balancing fair value changes.
In order to hedge Semperit's further financing to a subsidiary company issued in Malaysian Ringgit, Semperit AG Holding entered into two additional cross currency swaps in March 2016 and in August 2016. On the one hand, the cross currency swaps again caused the variable refinancing to be converted into fixed interest rates, on the other hand, the exchange rates of the Euro and the Malaysian Ringgit were fixed. According to IAS 39 these cross currency swaps are also classified as cash flow hedges (regarding interest rate risk) and as fair value hedges (regarding the foreign exchange risk). In total, these derivatives are also accounted for at fair value. During the first three quarters 2016 the effective portion of this cash flow hedge of EUR 90 thousand was recognised in other comprehensive income and EUR 85 thousand were reclassified in the consolidated income statement. As of 30 September 2016 the cash flow hedge reserve from both cross currency swaps amount to EUR 5 thousand (31 December 2015: EUR 0 thousand).
Furthermore, there are cash flow hedges in connection with foreign exchange forward contracts in US Dollar. During the first three quarters 2016, fair value changes of these cash flow hedges were recognised in other comprehensive income with the amount of EUR -790 thousand. As of 30 September 2016 the cash flow hedge reserve from foreign exchange forward contracts is EUR -790 thousand (31 December 2015: EUR 0 thousand).
All in all, the cash flow hedge reserve amounts to EUR -785 thousand as of 30 September 2016 (31 December 2015: EUR 0 thousand).
In the case of defined benefit plans of the Semperit Group, the cost of providing the benefit is calculated using the Projected Unit Credit Method; for this purpose, an actuarial assessment is carried out at each balance sheet date. Remeasurements of provisions for pensions and severance payments due to actuarial gains and losses are reported directly in equity within the other comprehensive income section in accordance with IAS 19 (2011). On the contrary, actuarial remeasurements of provisions for other long-term benefits such as long-services bonuses are recognised through profit and loss as personnel expenses in accordance with IAS 19 (2011) in the consolidated income statement.
As of 30 June 2016, an actuarial assessment was carried out for provisions for pensions, severance payments and long-service bonuses, due to the declining interest rate levels. This resulted in an increase of the provisions for pensions and severance payments by EUR 4,281 thousand recognised in the other comprehensive income section as well as in an increase of the provision for long-service bonuses of EUR 318 thousand reported in the consolidated income statement.
On 26 April 2016 the Annual General Meeting adopted a dividend of EUR 1.20 per share, for the year 2015. A total of EUR 24,688 thousand was distributed on 6 May 2016 (previous year: EUR 123,441 thousand).
Semperit AG Holding has no treasury stock as of 30 September 2016.
There were no material changes in contingent liabilities since the last reporting date as of 31 December 2015.
Outstanding balances and transactions between Semperit AG Holding and its subsidiaries were eliminated in the course of consolidation and are not further discussed here.
B & C Semperit Holding GmbH is the direct majority shareholder of Semperit AG Holding, and B & C Privatstiftung is the dominant legal entity. B & C Holding Österreich GmbH is the shareholder holding an indirect majority stake which draws up and publishes consolidated financial statements in which the Semperit Group is consolidated. Under IAS 24, B & C Privatstiftung and all its subsidiaries, joint ventures and associated companies are related parties of the Semperit Group.
Related parties of the Semperit Group include the members of the Management and Supervisory Boards of Semperit AG Holding, the managing directors and supervisory board members of all companies which directly or indirectly hold a majority stake in Semperit AG Holding, and finally the members of the Management Board of B & C Privatstiftung and the close family members of these management and supervisory board members and managing directors.
With the other related parties mentioned below the group has the following transactions:
In the first three quarters of 2016 the group conducted transactions with unit-it GmbH in the amount of EUR 337 thousand (previous year: EUR 569 thousand). This related to the purchase and maintenance of SAP licences and was conducted at arm's length conditions. As of 30 September 2016 there are unpaid liabilities to the company in the amount of EUR 112 thousand (previous year: EUR 0 thousand).
In the first three quarters of 2016 the group conducted transactions with Grohs Hofer Rechtsanwälte Gesellschaft m.b.H. and Grohs Hofer Rechtsanwälte GmbH & Co KG in the amount of EUR 381 thousand (previous year: EUR 201 thousand). These transactions relate to legal consulting services and were conducted at arm's length conditions. As of the reporting date there are unpaid liabilities of EUR 189 thousand to these companies (previous year: EUR 38 thousand).
The remaining level of transactions with associated companies and other related parties is low, and they are conducted on normal business terms and conditions.
The fully consolidated company Semperflex Asia Corp. Ltd. has a business relationship with the noncontrolling co-partner of this subsidiary, Sri Trang Agro-Industry Public Co Ltd.
In addition, Sempertrans Best (Shandong) Belting Co. Ltd. conducts business with Wang Chao Coal & Electricity Group, the non-controlling co-partner of this subsidiary.
The Annual General Meeting on 26 April 2016 elected Stephan B. Tanda into the Supervisory Board, Andreas Schmidradner has been re-elected. Ingrid Wesseln has left the Supervisory Board on her own request.
In the subsequent Supervisory Board meeting Dr. Veit Sorger has been re-elected as Chairman of the Supervisory Board and Dr. Felix Strohbichler as his deputy. Totalling, the Supervisory Board continues to consist of 12 members.
In the meeting as of 26 April 2016 the Supervisory Board of the Semperit AG Holding extended the mandate of the Chairman Thomas Fahnemann for an additional period of office till 31 December 2019.
In the same meeting the Supervisory Board appointed Michele Melchiorre for three years as a member of the Management Board. His mandate commenced on 1 June 2016. Mr. Melchiorre is responsible as technical director for the Industrial Sector. Richard Ehrenfeldner is focused on the development of the Sempermed segment.
Chief Financial Officer Johannes Schmidt-Schultes and Chief Information Officer Declan Daly informed the Supervisory Board in September, that after expiry of their terms of office (end of April 2017 and end of May 2017) they would not be available for another contract renewal. Johannes Schmidt-Schultes has been working for Semperit since April 2011, Declan Daly since June 2014. Both persons have decided to seek out new professional challenges outside of the Semperit Group.
Since 2014, the Semperit Group has been involved in several legal proceedings with domestic courts in Thailand and with international arbitration tribunals seated in Zurich based on the rules of the International Chamber of Commerce (ICC). These proceedings relate in particular to the competencies and internal organisation of the Board of Directors (BoD) being the management body of Siam Sempermed Corp. Ltd. (SSC), a joint venture in Thailand. They also concern the business conduct of SSC, SSC's business relationships with group subsidiaries of the Thai joint venture partner, Sri Trang Agro-Industry Public Co Ltd. (Sri Trang), and the exclusive distribution rights of the Semperit Group.
The opposing parties in the arbitration proceedings are the contracting parties in the joint venture agreements and SSC itself. In the proceedings at Thai courts, the opposing parties are the BoD members who have been nominated by Sri Trang. Semperit is the plaintiff in the ICC proceedings. The BoD members appointed by Semperit are the defendants in most of the proceedings at Thai courts.
The core issue at dispute is that the members of SSC's BoD who have been nominated by the joint venture partner Sri Trang are currently hindering the exercise of control by Semperit.
Due to this inability to exercise control over SSC and the assessment of a loss of control under IFRS 10.B24, Semperit decided to change the method of consolidation for SSC as of 31 March 2014, from full consolidation according to IFRS 10 to the equity method in accordance with IFRS 11 / IAS 28 (see note 2.18. in the annual report 2015).
Currently, the arbitration proceedings are mostly at an advanced or final stage; the arbitration tribunals have been constituted and case management conferences have been held. Semperit has then prepared and submitted detailed statements of claim and additional briefs. In addition, hearings were held where witnesses were questioned.
In the second quarter 2016, a final award was rendered in favour of Semperit in the arbitration proceeding against the joint venture partners concerning the possibility to pass board resolutions with a reduced quorum. The arbitral tribunal decided that the Sri Trang nominated directors of SSC cannot and may not block SSC's decision-making and also the Casting Vote of the Semperit nominated Chairman, by not participating in board meetings. Further, the joint venture partners are ordered to bear the costs of the arbitration proceedings and of the ICC Court and to reimburse to Semperit an amount of approximately EUR 2.5 million (net value less the costs of arbitration already paid to the ICC). The joint venture partners failed to honour the award.
Semperit has taken necessary legal actions in Thailand to enforce the award and in both, Thailand and Singapore, to execute the claim for cost reimbursement.
Semperit has recognised the claim in accordance with IAS 37.11 since 30 June 2016.
Semperit will, for the time being, not change the current method of consolidation (according to the equity method) in relation to SSC.
In the first quarter 2016, a partial award was rendered in the arbitration proceedings against the joint venture partner concerning the business operations and the business relationships with the joint venture company SSC. The arbitral tribunal decided that Sri Trang and the other Thai joint venture partners must comply with Semperit's request for access to SSC's accounts and company records as well as for the restoration of transparency at SSC.
The joint venture partners failed to honour the partial award, as a consequence Semperit has taken necessary legal actions in Thailand to enforce the partial award.
Other contentious issues that have not been included in the partial award remain subject of the ongoing proceedings. Another partial award is expected to be rendered during the first half of 2017.
In the second quarter of 2016, a Partial Award in this case was issued. The arbitration tribunal decided, that SSC itself has to fulfill the demands of Semperit of restoration for transparency, access to the books and accounts and access to the premises.
SSC failed to honour the partial award, as a consequence Semperit has taken necessary legal actions in Thailand to enforce the partial award.
For all ICC Cases, the 30-day-periods for application to set aside the (partial) awards have expired according to Swiss Law.
Several proceedings are still pending at the Thai courts.
Some of these lawsuits were submitted by a Sri Trang nominated director against SSC directors nominated by Semperit and against SSC itself. In the course of 2016, three decisions in favour of Semperit have been made by the courts, the counterparty has filed or is expected to file appeals against these decisions.
Semperit nominated directors have also initiated a lawsuit against Sri Trang nominated directors. In this litigation, the court of appeal overturned the lower court decision and confirmed the legal position of the Semperit directors. The counterparty has filed an appeal against this decision which has remained enforceable so far.
Additionally, Semperit has sued two Sri Trang nominated SSC directors.
At the beginning of 2016, one of the Sri Trang nominated directors commenced a lawsuit against the validity of one shareholders' resolution regarding a shareholder-audit, which was previously passed by an unanimous consent of all SSC shareholders.
In these proceedings, further court hearings are expected until the end of 2016.
In October 2015, the Austrian Federal Competition Authority (BWB) – acting on a petition from Sri Trang companies, which are Semperit's joint venture partners in SSC – commenced a proceeding against Semperit and these Sri Trang companies with the antitrust court in Vienna. The proceeding relates to exclusive distribution rights in Europe. In December 2015, Semperit submitted extensive briefs to defend its legal position. In the first quarter 2016, a court hearing was held and Semperit submitted additional briefs. By the end of June 2016, the antitrust court in Vienna determined in a partial ruling the incompatibility of the exclusive distribution rights with the legal regulations of the EU Competition Law. In July 2016, Semperit filed an appeal with the Austrian Supreme Court. Semperit also proposed that this legal issue be decided by the European Court of Justice because there has so far been no ruling in similar cases on the prohibition of distribution regulations. A decision is expected during the first half of 2017.
The Semperit Group continues to anticipate that its interpretation of the law will be confirmed in these proceedings. The costs for the proceedings in which Semperit is the claimant are being expensed as incurred. Appropriate provisions have been set up for the expected costs of the proceedings in which Semperit is the defendant.
Between the balance sheet date on 30 September 2016 and this report's approval for publication on 15 November 2016, several Corporate Schuldschein Loans with a total volume of EUR 141 million were issued. Please refer for further details of this transaction to page 30f. in the chapter debt capital structure of the Semperit Group in this report.
Vienna, 15 November 2016
The Management Board
Thomas Fahnemann Chief Executive Officer
Johannes Schmidt-Schultes Chief Financial Officer
Declan Daly Chief Information Officer
Richard Ehrenfeldner Chief Operating Officer Sempermed
Michele Melchiorre Chief Technical Officer
We confirm to the best of our knowledge that the condensed interim consolidated financial statements as at 30 September 2016 prepared in accordance with International Financial Reporting Standards (IFRS) as adopted by the European Union (EU) give a true and fair view of the assets, liabilities, financial position and profit or loss of the group, and that the group management report gives a true and fair view of important events that have occurred during the first nine months of the financial year and their impact on the condensed interim financial statements, of the principal risks and uncertainties for the remaining three months of the financial year and of the major related party transactions to be disclosed.
Vienna, 15 November 2016
The Management Board
Thomas Fahnemann Chief Executive Officer
Johannes Schmidt-Schultes Chief Financial Officer
Declan Daly Chief Information Officer
Richard Ehrenfeldner Chief Operating Officer Sempermed
Michele Melchiorre Chief Technical Officer
| 17.11.2016 | Report on the first three quarters 2016 | |
|---|---|---|
| Semperit AG Holding Modecenterstrasse 22 1031 Vienna, Austria |
Financial Calendar 2017 | |
| Tel.: +43 1 79 777 0 | ||
| Fax: +43 1 79 777 600 www.semperitgroup.com/en |
23.3.2017 | Publication of 2016 annual financial statements and press conference |
| 16.4.2017 | Record date of the Annual General Meeting | |
| 26.4.2017 | Annual General Meeting | |
| Investor Relations Stefan Marin Tel.: +43 1 79 777 210 [email protected] www.semperitgroup.com/en/ir Addresses of the Semperit Group www.semperitgroup.com/en/contact |
28.4.2017 | Last possible day to purchase shares entitled to receive the dividend |
| 2.5.2017 | Dividend ex day | |
| 3.5.2017 | Dividend record date (= day at the end of which CSD Austria determines the securities entitled to receive the dividend) |
|
| 4.5.2017 | Dividend payment day | |
| 16.5.2017 | Report on the first quarter of 2017 | |
| 17.8.2017 | Half-year financial report 2017 | |
| 16.11.2017 | Report on the first three quarters 2017 | |
Financial Calendar 2016
Ownership and publisher: Semperit Aktiengesellschaft Holding, Modecenterstrasse 22, 1031 Vienna, Austria Produced in-house with FIRE.sys.
The terms "Semperit" or "Semperit Group" in this report refer to the group; "Semperit AG Holding" or "Semperit Aktiengesellschaft Holding" is used to refer to the parent company (individual company).
This interim report of the Semperit Group has not been audited or reviewed by the group's auditor.
We have prepared this report and verified the information it contains with the greatest possible care. In spite of this, rounding, typesetting and printing errors cannot be ruled out. Rounding of differences in the totalling of rounded amounts and percentages may arise from the automatic processing of data.
The forecasts, plans and forward-looking statements contained in this report are based on the knowledge and information available and the assessments made at the time that this report was prepared (editorial deadline: 16 November 2016). As is true of all forward-looking statements, these statements are subject to risk and uncertainties. As a result, actual events may deviate significantly from these expectations. No liability whatsoever is assumed for the accuracy of projections or for the achievement of planned targets or for any other forward-looking statements.
All references to people are gender neutral.
This report has been produced in German and English. In case of doubt, the German version shall take precedence.
www.semperitgroup.com
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