Quarterly Report • Dec 9, 2015
Quarterly Report
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Report on the First Half-Year 2015/ 16 of Zumtobel Group AG
| Q2 | Q2 | 1 HY | 1 HY | |||
|---|---|---|---|---|---|---|
| Key Data in EUR million | 2015/16 | 2014/15 | Change in % | 2015/16 | 2014/15 | Change in % |
| Revenues | 359.5 | 339.8 | 5.8 | 702.0 | 663.2 | 5.8 |
| Adjusted EBIT | 28.8 | 28.2 | 2.2 | 42.3 | 47.2 | (10.5) |
| as a % of revenues | 8.0 | 8.3 | 6.0 | 7.1 | ||
| EBIT | 24.5 | 26.6 | (7.7) | 36.9 | 35.7 | 3.6 |
| as a % of revenues | 6.8 | 7.8 | 5.3 | 5.4 | ||
| Net profit/loss for the period | 18.3 | 23.1 | (20.9) | 27.5 | 28.9 | (4.7) |
| as a % of revenues | 5.1 | 6.8 | 3.9 | 4.4 | ||
| Cash flow from operating results | 37.6 | 40.5 | (7.1) | 64.9 | 63.0 | 2.9 |
| Investments | 17.0 | 14.8 | 15.4 | 29.8 | 28.9 | 3.0 |
| 31 October 2015 |
30 April 2015 |
Change in % | ||
|---|---|---|---|---|
| Total assets | 1,137.2 | 1,086.3 | 4.7 | |
| Equity | 335.7 | 322.6 | 4.1 | |
| Equity ratio in % | 29.5 | 29.7 | ||
| Net debt | 190.5 | 148.2 | 28.5 | |
| Headcount incl. contract worker (full time equivalent) |
7,200 | 7,234 | (0.5) |
Adjusted EBIT
After a weak start into the new financial year, we recorded sound operating improvement during the second quarter. Group revenues for the first six months rose by 5.8% to EUR 702.0 million (previous year: EUR 663.2 million), although this development was supported by substantial positive currency translation effects of EUR 28.1 million. After an adjustment for these effects, revenues rose by 1.6% for the reporting period (second quarter: plus 2.7%). The technology shift to LED remains unchanged: with a plus of 45.1%, the LED share of Group revenues increased significantly to 61.8% year-on-year.
The Components Segments continued its sound development during the reporting period and made further substantial progress in strengthening its focus on LED technology. Segment revenues rose by 9.7% (FX-adjusted: 6.2%) to EUR 215.5 million (previous year: EUR 196.4 million). Business in the Lighting Segment was less robust, but also with a slight improvement in the second quarter, and an increase of 6.0% in revenues (FX-adjusted: plus 1.8%) to EUR 531.1 million for the reporting period (previous year: EUR 500.9 million). This development resulted, above all, from a market-related sharp drop in demand in France and the continuing weakness in Asia.
Adjusted operating EBIT for the Group improved slightly year-on-year in the second quarter, but declined by EUR 47.2 million to EUR 42.3 million for the reporting period due to the weak first three months. Results for the first half-year show that the projected cost savings and growth impulses from the restructuring measures implemented in sales and production have not yet reached the expected level, above all in the Lighting Segment. Operating EBIT for the reporting period was also influenced by substantially higher research & development costs to strengthen the Group's technology position (plus EUR 7.9 million) and by continuing price pressure and temporary negative currency transaction effects (USD/CHF). In contrast, the second quarter brought a further substantial improvement in supply capability and productivity in our Spennymoor lighting plant. Net profit for the first half-year amounted to EUR 27.5 million and reflected the previous year (EUR 28.9 million).
These temporary negative effects have been anticipated by management for some time and are therefore already included in the outlook for the 2015/16 financial year. However, the development of business has been below the Management Board's expectations due to the weaker FX-adjusted revenue growth and delays in the realisation of projected cost savings during the first six months. The Management Board has therefore reduced its earnings guidance (adjusted EBIT) for the full year from the previously announced EUR 90 to 100 million to EUR 70 to 80 million (previous year adj. EBIT: EUR 66.5 million). The revenue target remains intact with an increase of approx. 5%, which will be supported primarily by positive currency effects.
Our focus for the strategic development of the Zumtobel Group remains on the adjustment of production capacity, a multi-brand sales structure in the lighting business and the Group-wide bundling of procurement activities. These key factors will support a sustainable increase in revenues and strengthen profitability. As previously announced, we are also evaluating further opportunities to optimise structural costs.
Ulrich Schumacher Chief Executive Officer (CEO)
Ulrich Schumacher
The ongoing uncertainty and high volatility on the international financial markets continued during the second quarter of the 2015/16 financial year. The approval of the EU's third assistance programme for Greece and robust economic indicators for the euro zone and the USA initially led to a modest market recovery. However, this optimistic development was followed by a substantial drop in share prices that was caused by weak economic reports from China and the growing recession in Brazil. The Zumtobel Group share was also negatively influenced by results for the first quarter, which were lower than expected by the capital markets. In this market environment, the price of the Zumtobel Group share fell by 15.3% in the first half of 2015/16. The leading Austrian Traded Index also closed the reporting period in the loss zone with a minus of 6.4%.
Based on an unchanged number of 43.5 million common shares outstanding, the market capitalisation of Zumtobel Group AG totalled EUR 900 million at the end of October 2015 (previous year: EUR 612 million). There have been no major changes in the shareholder structure of Zumtobel Group AG since the end of the 2014/15 financial year. The Zumtobel family has remained the stable core shareholder of Zumtobel Group AG since the initial public offering with a stake of 35.4%. Blackrock Inc. holds over 5% of the issued shares. The remainder of the shares is held predominately by other institutional investors. In the ATX, the leading index of the largest listed companies in Austria, the Zumtobel share ranked 17th based on market capitalisation and 18th based on trading volume as of 31 October 2015. The average daily turnover on the Vienna Stock Exchange totalled 143.975 in the reporting period compared with 84,975 in the previous year (double-count, as published by the Vienna Stock Exchange). The company held 353,343 treasury shares as of 31 October 2015.
Key Data on the Zumtobel Group Share for the 1st half-year 2015/16
| Closing price at 30.04.15 | EUR 24.445 | Currency | EUR |
|---|---|---|---|
| Closing price at 31.10.15 | EUR 20.700 | ISIN | AT0000837307 |
| Performance 1st half-year 2015/16 | (15.3)% | Ticker symbol Vienna Stock Exchange (XETRA) |
ZAG |
| Market capitalisation at 31.10.15 | EUR 900 Mio | Market segment | Prime Market |
| Share price - high at 20.07.15 | EUR 29.890 | Reuters symbol | ZUMV.VI |
| Share price - low at 24.09.15 | EUR 18.330 | Bloomberg symbol | ZAG AV |
| Ø Turnover per day (shares) | 143,975 | Number of issued shares | 43,500,000 |
The International Monetary Fund (IMF) issued a further reduction to its outlook for global growth in 2015 with its October report. This latest forecast reflects the weaker growth in China and the negative effects of lower raw material prices for the emerging countries. In contrast, the recovery in the industrial nations remains on course. The IMF is projecting an increase of 3.1% for the global economy in 2015, which represents a decline of 0.2 percentage points compared with the July 2015 forecast, as well as an increase of 3.6% in 2016. The development of the global economy will be influenced, above all, by the trends in oil and raw material prices, the expected normalisation of US monetary policies and the new Chinese growth model. The projections for the euro zone reflect the July report, with an increase of 1.5% in the current calendar year and 1.6% in 2016. The growth rates for Germany and France remain nearly unchanged at 1.5% and 1.2%, respectively, in 2015 and 1.6% and 1.5%, respectively, in 2016. The emerging and developing countries are expected to weaken further for the fifth year in succession. Continued recovery is only forecasted for the USA, with estimates of a 2.6% increase in 2015 and 2.8% in 2016.
The commercial construction industry in Europe reported a first slight increase of 0.4% in 2014 after seven years of crisis and stagnation. In its June 2015 report, Euroconstruct is predicting growth of 1.9% for the 2015 calendar year and 2.5% for the 2016 calendar year in the seven most important European markets for the Zumtobel Group (Austria, Germany, Switzerland, France, Great Britain, Italy and Scandinavia).
The 39th annual general meeting on 24 July 2015 authorised the payment of a EUR 0.22 dividend per share for the 2014/15 financial year. This dividend was distributed to shareholders on 31 July 2015.
On 7 September 2015 the Zumtobel Group acquired a majority interest (60%) in the British LED producer AC/DC LED Holdings Ltd (acdc). The sale agreement also includes a call/ put option for the purchase of the remaining non-controlling interest (40%) in acdc during 2020. acdc is a niche supplier of high-quality architectonic LED facade lighting and lighting solutions for hotels and design-oriented restaurants and bars. In 2014 the company generated annual revenues of approx. EUR 17 million with 120 employees. The parties have agreed not to disclose any information on the price for this transaction.
Tridonic GmbH & Co KG sold its advertising lighting business (signage) to the US AgiLight Inc., a company with headquarters in San Antonio, Texas, as of 30 November 2015. The sale of the signage business, which generated revenues of approx. EUR 20 million in 2014/15, will take the form of an asset deal. The parties have agreed not to disclose any information on the price for this transaction.
In order to secure long-term liquidity at favourable conditions, the Zumtobel Group refinanced the existing consortium credit agreement, which would have ended in October 2016, prematurely during December 2015. The new consortium credit agreement has a base term of five years with two one-year extensions, a maximum volume of EUR 300 million and a clause for an increase of up to EUR 200 million. This agreement was arranged with a syndicate of seven banks.
No other significant events occurred after the balance sheet date on 30 April 2015.
Closely related persons include the Management Board and Supervisory Board of Zumtobel Group AG. As of 31 October 2015 there were no business transactions with closely related persons.
IMF with further reduction in outlook for global growth
Continued moderate growth expected for the euro zone
AGM approves dividend for FY 2014/15
Acquisition in new application areas
Sale of signage business
New consortium credit agreement concluded up to 30 November 2020 The Group has concluded supply and delivery agreements with associated companies, which reflect third party conditions.
Group revenues rise by 5.8%
Group revenues rose by 5.8% to EUR 702.0 million during the first half of the 2015/16 financial year (1 May to 31 October 2015) in a generally stable economic environment in Europe (previous year: EUR 663.2 million). This development was supported by EUR 28.1 million of positive foreign exchange effects, above all from the increase in the Swiss franc (CHF), British pound (GBP) and US dollar (USD). After an adjustment for these effects, revenues were 1.6% higher than the previous year.
Important growth impulses have been created, in particular, by LED technology as well as the trend to intelligently managed, energy-efficient lighting. This was reflected in continued dynamic growth with LED products during the reporting period. Revenues from the sale of LED products rose by 45.1% year-on-year to EUR 433.7 million in the first half of 2015/16 (previous year: EUR 298.9 million). The LED share of Group revenues increased significantly from 45.1% in the first half of the previous financial year to 61.8% within 12 months. Both the Lighting Segment (plus 47.1%) and the Components Segment (plus 50.2%) benefited from the sharp rise in the demand for LED lighting with their extensive portfolio of innovative LED products.
| Q2 | Q2 | 1 HY | 1 HY | |||
|---|---|---|---|---|---|---|
| Segment development in EUR million | 2015/16 | 2014/15 | Change in % | 2015/16 | 2014/15 | Change in % |
| Lighting Segment | 276.3 | 257.6 | 7.3 | 531.1 | 500.9 | 6.0 |
| Components Segment | 106.2 | 99.8 | 6.4 | 215.5 | 196.4 | 9.7 |
| Reconciliation | (22.9) | (17.6) | 29.9 | (44.6) | (34.1) | 30.9 |
| Zumtobel Group | 359.5 | 339.8 | 5.8 | 702.0 | 663.2 | 5.8 |
In the European commercial construction industry, the initial signs of a trend reversal from years of declines to slight growth have strengthened. These signs were also confirmed in a June 2015 report by Euroconstruct, which forecasts growth of 1.9% for the 2015 calendar year and 2.5% for the 2016 calendar year after a series of annual declines in the seven most important European markets for the Zumtobel Group. Revenues in the Lighting Segment rose by 6.0% to EUR 531.1 million in the reporting period (previous year: EUR 500.9 million), whereby growth was slightly stronger in the second quarter with a plus of 7.3%. After an adjustment for positive foreign exchange effects, revenues in the Lighting Segment increased by 1.8%. The ongoing subdued development resulted, above all, from a market-related sharp drop in demand in France and Australia and the continuing weakness in Asia. The second quarter of 2015/16 also brought a further substantial improvement in supply capability for our lighting plant in Spennymoor. Additional positive impulses were provided by the multi-brand sales structure implemented in the previous financial year, which now markets the entire Zumtobel and Thorn product portfolio in all regions from a single hand, and by strong growth in the key account business.
The Components Segment continues to make good progress in strengthening its business focus on LED technology. Revenues from the sale of LED components rose by 50.2% to EUR 146.9 million (previous year: EUR 97.8 million) and more than offset the sharp drop in the demand for electronic ballasts. Segment revenues increased by 9.7% to EUR 215.5 million in the reporting period (previous year: EUR 196.4 million), or by 6.2% after an adjustment for positive foreign exchange effects. Necessary price adjustments to offset the increase in material prices resulting from the stronger US dollar led to weaker sales growth during the second quarter (plus 6.4%).
| Q2 2015/16 Q2 2015/16 1 HY 2015/16 2015/16 |
|||||
|---|---|---|---|---|---|
| Revenues in EUR million |
Change in % | Revenues in EUR million |
Change in % in % of Group | ||
| D/A/CH | 108.9 | 10.1 | 210.8 | 10.2 | 30.0 |
| Northern Europe | 99.7 | 8.5 | 187.3 | 7.3 | 26.7 |
| Benelux & Eastern Europe | 41.3 | 5.3 | 79.2 | 10.2 | 11.3 |
| Southern Europe | 46.4 | 0.3 | 96.3 | (2.6) | 13.7 |
| Asia & Pacific | 35.1 | (12.3) | 73.8 | (4.3) | 10.5 |
| Middle East & Africa | 18.4 | 31.5 | 36.3 | 19.0 | 5.2 |
| Americas | 9.7 | 2.3 | 18.2 | (4.8) | 2.6 |
| Total | 359.5 | 5.8 | 702.0 | 5.8 | 100.0 |
The sales regions were adjusted slightly to reflect the new organisational structure in this area of the Zumtobel Group. The most important changes included the reclassification of the Latin American countries to the America region and the Central Asian countries and Turkey to the Benelux & Eastern Europe region. The distribution of the countries to the individual regions is as follows:
| New organisation | |
|---|---|
| of sales regions |
| D/A/CH: | Germany, Austria, Switzerland |
|---|---|
| Northern Europe: | Great Britain, Ireland, Sweden, Norway, Iceland, Finland, Denmark, Baltic |
| States | |
| Benelux & Eastern Europe: | Belgium, Netherlands, Luxembourg and all countries in Eastern Europe, |
| including Russia, Greece, Malta, Cyprus, Turkey, Central Asia | |
| America: | USA, Canada and all Latin American countries |
| Southern Europe: | France, Italy, Spain, Portugal |
| Asia & Pacific: | All countries in the Far East, including China as well as Japan, Australia |
| and New Zealand | |
| Middle East & Africa: | All countries in Middle East, India, Africa |
These changes were also made retroactively and led to the adjustment of the regional distribution in the first half of 2014/15.
There are major regional differences in the economic environment and the speed of implementation for the restructuring measures and the strategic reorientation of sales. Therefore, the development of revenues in the individual regions differed significantly during the reporting period. The D/A/CH region, the strongest market in the Zumtobel Group, recorded a 10.2% increase in revenues to EUR 210.8 million (FX-adjusted: 5.8%). This region benefited from the rising demand by individual retail chains (key account business) which are looking to convert their shop lighting to LED because of the attractive amortisation periods. Revenues in Northern Europe rose by 7.3% (FX-adjusted: 0.6%) to EUR 187.3 million, whereby Great Britain again served as the growth driver for this region. The solid revenue growth in the second quarter resulted, in particular, from the improved supply capability at the Spennymoor lighting plant. The Benelux & Eastern Europe region, which now also includes Turkey and the countries in Central Asia, increased revenues by 10.2% in the first half of 2015/16. Solid development was recorded, above all, in Eastern Europe (Czech Republic, Poland, Hungary). In Southern Europe, the development of business in France remained clearly
Solid growth in European core markets with the exception of France below expectations during the reporting period, while Italy recorded slight growth in the second quarter. Revenues in this region fell by 2.6% to EUR 96.3 million. The Asia & Pacific region is undergoing extensive restructuring. The Components Segment generated sound growth, but the lighting business was disappointing in Asia and the second quarter also brought increasing market-related weakness in Australia. Revenues in the Asia & Pacific region fell by 4.3% (FX-adjusted: minus 8.7%) to EUR 73.8 million. In the Middle East & Africa region, the sound development from previous quarters continued during the reporting period with a 19.0% increase in revenues (FX-adjusted: 11.6%) to EUR 36.3 million. Business development in the America region, which now also includes the Latin American countries, was generally disappointing during the first half-year, but the current project activity and order levels lead to optimism concerning the remainder of the year. Revenues in this region fell by 4.8% (FX-adjusted: minus 18.7%) to EUR 18.2 million in the first half-year, but increased by 2.3% in the second quarter.
| Income statement in EUR million | Q2 2015/16 |
Q2 2014/15 |
Change in % | 1 HY 2015/16 |
1 HY 2014/15 |
Change in % |
|---|---|---|---|---|---|---|
| Revenues | 359.5 | 339.8 | 5.8 | 702.0 | 663.2 | 5.8 |
| Cost of goods sold | (239.7) | (223.9) | 7.1 | (474.6) | (440.0) | 7.9 |
| Gross profit | 119.8 | 115.9 | 3.4 | 227.4 | 223.2 | 1.9 |
| as a % of revenues | 33.3 | 34.1 | 32.4 | 33.7 | ||
| SG&A expenses adjusted for special effects | (91.0) | (87.7) | 3.8 | (185.1) | (175.9) | 5.2 |
| Adjusted EBIT | 28.8 | 28.2 | 2.2 | 42.3 | 47.2 | (10.5) |
| as a % of revenues | 8.0 | 8.3 | 6.0 | 7.1 | ||
| Special effects | (4.3) | (1.6) | <(100) | (5.4) | (11.6) | (53.7) |
| EBIT | 24.5 | 26.6 | (7.7) | 36.9 | 35.7 | 3.6 |
| as a % of revenues | 6.8 | 7.8 | 5.3 | 5.4 | ||
| Financial results | (0.9) | (2.0) | 54.8 | (1.2) | (3.7) | 68.5 |
| Profit/loss before tax | 23.6 | 24.6 | (4.0) | 35.8 | 31.9 | 12.1 |
| Income taxes | (5.3) | (1.5) | <(100) | (8.3) | (3.0) | >100 |
| Net profit/loss for the period | 18.3 | 23.1 | (20.9) | 27.5 | 28.9 | (4.7) |
| Earnings per share (in EUR) | 0.42 | 0.54 | (21.6) | 0.64 | 0.67 | (4.4) |
Note: EBITDA (EBIT plus depreciation and amortisation) amounted to EUR 67.6 million in the first half of 2015/16.
Group EBIT adjusted for special effects improved slightly year-on-year in the second quarter, but declined from EUR 47.2 million to EUR 42.3 million for the reporting period due to the weak first three months. Consequently, the return on sales fell from 7.1% to 6.0%. Adjusted earnings were higher than the previous year in the Components Segment, but lower in the Lighting Segment. The gross profit margin for the Zumtobel Group fell to 32.4% in the first half of 2015/16 (previous year: 33.7%). Results for the first six months show that the projected cost savings and growth impulses from the restructuring measures implemented in sales and production have not yet reached the expected level, above all in the Lighting Segment. Gross profit for the reporting period was also influenced by substantially higher development costs to strengthen the Zumtobel Group's technology position (plus EUR 7.3 million) as well as continuing pressure on prices and temporary negative currency transaction effects (USD/CHF). In contrast, a substantial improvement in the supply capability and productivity in our Spennymoor lighting plant was achieved during the second quarter.
Selling expenses as a per cent of revenues fell from 23.5% to 23.3% in spite of wage and salary increases mandated by collective negotiations. The number of employees in the sales area rose by roughly 30 from the end of the previous quarter to 31 October 2015 due to the initial consolidation of the recently acquired AC/DC LED Holdings Ltd. Administrative expenses were slightly higher than the previous year at EUR 24.9 million (previous year: EUR 22.3 million). Other operating results, excluding special effects, amounted to EUR 3.6 million (previous year: EUR 2.1 million) and included, among others, license income from the LED business.
Negative special effects totalling EUR 5.4 million were recorded during the first half of 2015/16 (previous year: 11.6 million). These effects are related, above all, to the restructuring of the sales organisation and adjustments to the global plant network. Additional information is provided in the notes to the consolidated interim financial statements.
| Q2 | Q2 | 1 HY | 1 HY | |||
|---|---|---|---|---|---|---|
| Adjusted EBIT in EUR million | 2015/16 | 2014/15 Change in % | 2015/16 | 2014/15 Change in % | ||
| Reported EBIT | 24.5 | 26.6 | (7.7) | 36.9 | 35.7 | 3.6 |
| thereof special effects | (4.3) | (1.6) | <(100) | (5.4) | (11.6) | (53.7) |
| Adjusted EBIT | 28.8 | 28.2 | 2.2 | 42.3 | 47.2 | (10.5) |
| as a % of revenues | 8.0 | 8.3 | 6.0 | 7.1 |
Financial results improved EUR 2.6 million over the previous year to minus EUR 1.2 million (previous year: minus EUR 3.7 million). Interest expense consists mainly of interest on the current credit agreement. Other financial income and expenses totalled plus EUR 3.2 million (previous year: plus EUR 0.6 million). The Zumtobel Group hedges foreign exchange transaction risk primarily with forward exchange contracts that have a maximum term of one year and also uses options in individual cases. The Group's key currencies are the EUR, GBP, USD, AUD and CHF. The positive change since 30 April 2015 resulted mainly from the fair value measurement of financial instruments, respectively from the realisation of foreign currency transactions with a negative market value, in particular forward exchange contracts in Swiss francs. Additional information is provided in the notes to the consolidated interim financial statements.
| Financial result in EUR million | Q2 2015/16 |
Q2 | 2014/15 Change in % | 1 HY 2015/16 |
1 HY | 2014/15 Change in % |
|---|---|---|---|---|---|---|
| Interest expense | (2.4) | (2.1) | 13.0 | (4.7) | (4.5) | 3.2 |
| Interest income | 0.1 | 0.1 | 52.4 | 0.2 | 0.2 | 16.9 |
| Net financing costs | (2.3) | (2.0) | (11.4) | (4.5) | (4.4) | (2.6) |
| Other financial income and expenses | 1.4 | 0.1 | >100 | 3.2 | 0.6 | >100 |
| Result from companies accounted for at equity |
0.0 | 0.0 | <(100) | 0.1 | 0.1 | >100 |
| Financial results | (0.9) | (2.0) | 54.8 | (1.2) | (3.7) | 68.5 |
Profit before tax rose to EUR 35.8 million in the first half of the reporting year (previous year: EUR 31.9 million). Negative special effects were clearly below the previous year at EUR 5.4 million (previous year: EUR 11.6 million). Net profit for the period declined 4.7% to EUR 27.5 million due to higher income tax expense (previous year: EUR 28.9 million). Earnings per share for the shareholders of Zumtobel Group AG (basic EPS based on 43.1 million shares) equalled EUR 0.64 (previous year: EUR 0.67).
Net profit totals EUR 27.5 million
Selling expenses in % of revenues slightly below previous year
Negative special effects from transformation process
Cash flow was determined on a monthly basis in accordance with the indirect method. The resulting monthly cash flows were translated at the applicable average monthly exchange rate and then aggregated, while the balance sheet positions were translated at the exchange rate in effect on the respective closing date. Individual positions on the cash flow statement therefore differ significantly from the respective balance sheet positions, above all under cash flow from operating activities.
Seasonal cash outflows for increase in working capital
Cash flow from operating results rose from EUR 63.0 million in the first half of the previous year to EUR 64.9 million for the reporting period, above all due to an improvement in profit before tax from EUR 31.9 million to EUR 35.8 million. This development was contrasted by cash outflows for the increase in working capital. Working capital totalled EUR 271.3 million as of 31 October 2015 and was EUR 37.5 million higher than on 30 April 2015. The seasonal rise in working capital was increased by higher inventories, a reduction in trade payables and the initial consolidation of the recently acquired British LED lighting producer AC/DC LED Holdings Ltd. Stocks of raw materials and finished goods were increased above the growth in revenues to ensure sufficient supplies for production and customer orders based on the expected stronger growth in revenues during the course of this year. The transformation process to LED also led to an increase in the carrying amount of inventories because the LED raw materials and LED finished products have a higher value than comparable conventional products. In comparison with the first half of the previous year, working capital rose from 18.0% to 20.1% of rolling 12-month revenues. Cash flow from operating activities declined by EUR 17.1 million to plus EUR 3.3 million in the first half-year (previous year: plus EUR 20.4 million).
Free cash flow at minus EUR 24.9 million
Investments in property, plant and equipment for various production facilities totalled EUR 29.8 million in the first half of 2015/16 (previous year: EUR 28.9 million). These expenditures covered tools for new products as well as expansion, maintenance and capitalised R&D costs (EUR 8.4 million). The sale of the property in Landskrona, Sweden, led to cash inflow of EUR 2.7 million, which is reported under "proceeds from the sale of non-current assets". The position "change in liquid funds from changes in the scope of consolidation" represents the positive cash effect from the sale of Tridonic NZ Limited in Auckland, New Zealand, as well as the cash outflow for the acquisition of the British LED lighting producer AC/DC LED Holdings Ltd. The position "Assets held for Sale" represents the sale of the signage business. Free cash flow declined to minus EUR 24.9 million (previous year: plus EUR 3.2 million).
Cash flow from financing activities consists primarily of the increased use of the facilities provided by the consortium credit agreement and interest paid during the first half of the reporting year. The EUR 0.22 dividend per share for the 2014/15 financial year (EUR 9.5 million), which was approved by the annual general meeting on 24 July 2015, was distributed to the shareholders on 31 July 2015 and is included in cash outflows for the reporting period.
| Balance sheet data in EUR million | 31 October 2015 | 30 April 2015 |
|---|---|---|
| Total assets | 1,137.2 | 1,086.3 |
| Net debt | 190.5 | 148.2 |
| Debt coverage ratio | 1.81 | 1.48 |
| Equity | 335.7 | 322.6 |
| Equity ratio in % | 29.5 | 29.7 |
| Gearing in % | 56.7 | 46.0 |
| Investments | 29.8 | 76.6 |
| Working capital | 271.3 | 233.8 |
| As a % of rolling 12 month revenues | 20.1 | 17.8 |
The quality of the balance sheet structure remains nearly unchanged. The equity ratio declined slightly from 29.7% on 30 April 2015 to 29.5% on 31 October 2015. Net debt followed the normal seasonal pattern with an increase of EUR 42.2 million to EUR 190.5 million (previous year: EUR 148.2 million), and gearing – – the ratio of net debt to equity – therefore deteriorated from 46.0% to 56.7%.
The Zumtobel Group is well aware that an effective risk management system plays an important role in protecting and expanding its competitive position. The goal of risk management is to identify risks and opportunities at an early point in time through a systematic approach, and thereby permit the prompt implementation of suitable measures to deal with changes in the operating environment.
One of the major risks for business development in the Zumtobel Group is the uncertain development of its key markets, above all in Europe. Renewed economic weakness could lead to a significant decline in incoming orders and the postponement or cancellation of projects in progress. Revenues could also be negatively affected by further cost-cutting measures in the public sector and increased de-stocking by wholesalers. These factors, in turn, would create a risk for the general development of earnings due to lower capacity utilisation, rising pressure on prices and negative shifts in the product mix.
Earnings could also be negatively affected by additional restructuring costs resulting from measures required to bring structural costs and/or capacity in line with the difficult market environment as well as measures related to the organisational and structural reorientation of the Zumtobel Group. The adjustment of plant capacity and the relocation of products could also lead to temporary production inefficiencies and, as a result, to supply shortages and a stronger increase in inventories.
No major change in the balance sheet structure
| Risk management for |
|---|
| early identification of |
| opportunities and |
| risks |
| Risks arising from |
| economic |
| developments |
| Risks arising from |
| restructuring |
| Technological change to LED |
The speed of the technological transformation from conventional lighting to LED represents a major challenge for the entire lighting industry. In particular, the larger range of products, shorter innovation cycles and rising complexity of digital lighting systems lead to substantially higher R&D expenditures. |
|---|---|
| Market acceptance of | Differentiation from the competition can strengthen a company's market position and protect appropriate |
| new products | margins. In both the lighting and components business, the Zumtobel Group is regularly challenged to prove |
its strong technology position in the industry and adjust its new developments to reflect the changing requirements in different areas of application. This challenge is addressed through a steady focus on innovation as well as close cooperation between development and sales.
The foreign exchange markets are still characterised by high uncertainty and volatility. The earnings recorded by the Zumtobel Group are exposed to foreign exchange risk, in particular from transaction effects – i.e. when local companies buy and/or sell their products in a currency other than their local currency. Intragroup dividends or loans can also be paid and received in a currency other than the local currency. Translation risk – i.e. when foreign company financial statements are converted into the Group currency (euro) for consolidation – is of lesser importance for the Zumtobel Group and is not hedged. Transaction risk is generally hedged with forward exchange contracts that have a term of up to one year and, in selected cases, by options. The Group's main currencies are the EUR, GBP, USD (as well as Asian currencies that are linked to the USD), AUD and CHF. Foreign exchange exposure is determined on the basis of general forecast assumptions and not on the basis of specific contracts and, for this reason, the requirements for hedge accounting are usually not met. Current information indicates that the second half of 2015/16 can be expected to bring slight positive translation effects, in particular from the British pound, as well as slight negative transaction effects.
Balance sheet risks arise, above all, from the valuation of individual assets. The Group's asset and earnings positions are directly influenced by foreign exchange effects as well as the necessary use of estimates and judgment in valuing non-financial assets, deferred tax assets, inventories, receivables, the provisions for pensions, severance payments and service anniversary bonuses, and the provisions for guarantees and warranties. The major balance sheet risks for the Zumtobel Group are related to the valuation of capitalised development costs and inventories as well as the valuation of the pension fund in Great Britain.
Additional information on the potential risks and opportunities facing the Zumtobel Group is provided in the 2014/15 annual financial report. Based on the information available at the present time, there are no major individual risks that could endanger the continued existence of the Zumtobel Group.
These temporary negative effects have been anticipated by management for some time and are therefore already included in the outlook for the 2015/16 financial year. However, the development of business has been below the Management Board's expectations due to the weaker FX-adjusted revenue growth and delays in the realisation of projected cost savings during the first six months. The Management Board has therefore reduced its earnings guidance (adjusted EBIT) for the full year from the previously announced EUR 90 to 100 million to EUR 70 to 80 million (previous year adj. EBIT: EUR 66.5 million). The revenue target remains intact with an increase of approx. 5%, which will be supported primarily by positive currency effects.
Our focus for the strategic development of the Zumtobel Group remains on the adjustment of production capacity, a multi-brand sales structure in the lighting business and the Group-wide bundling of procurement activities. These key factors will support a sustainable increase in revenues and strengthen profitability. As previously announced, we are also evaluating further opportunities to optimise structural costs.
Dornbirn, 9 December 2015
Ulrich Schumacher Karin Sonnenmoser Chief Executive Officer (CEO) Chief Financial Officer (CFO)
| in TEUR | Q2 2015/16 |
Q2 2014/15 |
Change in % |
1 HY 2015/16 |
1 HY 2014/15 |
Change in % |
|---|---|---|---|---|---|---|
| Revenues | 359,548 | 339,766 | 5.8 | 701,990 | 663,221 | 5.8 |
| Cost of goods sold | (239,716) | (223,866) | 7.1 | (474,613) | (440,042) | 7.9 |
| Gross profit | 119,832 | 115,900 | 3.4 | 227,377 | 223,179 | 1.9 |
| as a % of revenues | 33.3 | 34.1 | 32.4 | 33.7 | ||
| Selling expenses | (80,653) | (78,552) | 2.7 | (163,739) | (155,781) | 5.1 |
| Administrative expenses | (12,584) | (10,660) | 18.1 | (24,942) | (22,299) | 11.9 |
| Other operating results | (2,075) | (124) | <(100) | (1,757) | (9,442) | (81.4) |
| thereof special effects | (4,272) | (1,606) | <(100) | (5,353) | (11,572) | (53.7) |
| Operating profit/loss | 24,520 | 26,564 | (7.7) | 36,939 | 35,657 | 3.6 |
| as a % of revenues | 6.8 | 7.8 | 5.3 | 5.4 | ||
| Interest expense | (2,393) | (2,118) | 13.0 | (4,689) | (4,545) | 3.2 |
| Interest income | 128 | 84 | 52.4 | 209 | 179 | 16.9 |
| Other financial income and expenses | 1,396 | 84 | >100 | 3,168 | 568 | >100 |
| Result from companies accounted for at-equity | (14) | (2) | <(100) | 131 | 53 | >100 |
| Financial results | (883) | (1,952) | 54.8 | (1,181) | (3,745) | 68.5 |
| as a % of revenues | (0.2) | (0.6) | (0.2) | (0.6) | ||
| Profit/loss before tax | 23,637 | 24,612 | (4.0) | 35,758 | 31,912 | 12.1 |
| Income taxes | (5,332) | (1,457) | <(100) | (8,251) | (3,035) | <(100) |
| Net profit/loss from continuing operations | 18,305 | 23,155 | (20.9) | 27,507 | 28,877 | (4.7) |
| Net loss from discontinued operations | 0 | (14) | 100.0 | 0 | (14) | 100.0 |
| Net profit/loss for the period | 18,305 | 23,141 | (20.9) | 27,507 | 28,863 | (4.7) |
| as a % of revenues | 5.1 | 6.8 | 3.9 | 4.4 | ||
| thereof due to non-controlling interests | 91 | (100) | >100 | 164 | (176) | >100 |
| thereof due to shareholders of the parent company | 18,214 | 23,241 | (21.6) | 27,343 | 29,039 | (5.8) |
| Average number of shares outstanding – basic (in 1,000 pcs.) | 43,146 | 43,141 | 43,146 | 43,140 | ||
| Average diluting effect (stock options) (in 1,000 pcs.) | 0 | 3 | 0 | 3 | ||
| Average number of shares outstanding – diluted (in 1,000 pcs.) | 43,146 | 43,144 | 43,146 | 43,143 | ||
| Earnings per share (in EUR) | ||||||
| Basic earnings per share | 0.42 | 0.54 | 0.64 | 0.67 | ||
| Diluted earnings per share | 0.42 | 0.54 | 0.64 | 0.67 | ||
| Earnings per share from continuing operations (in EUR) | ||||||
| Basic earnings per share | 0.42 | 0.54 | 0.64 | 0.67 | ||
| Diluted earnings per share | 0.42 | 0.54 | 0.64 | 0.67 | ||
| Earnings per share from discontinued operations (in EUR) | ||||||
| Basic earnings per share | 0.00 | 0.00 | 0.00 | 0.00 | ||
| Diluted earnings per share | 0.00 | 0.00 | 0.00 | 0.00 |
| in TEUR | Q2 2015/16 |
Q2 2014/15 |
Change in % |
1 HY 2015/16 |
1 HY 2014/15 |
Change in % |
|---|---|---|---|---|---|---|
| Net profit/loss for the period | 18,305 | 23,141 | (20.9) | 27,507 | 28,863 | (4.7) |
| Actuarial loss | 0 | (14,936) | 100.0 | 0 | (14,936) | (100.0) |
| Deferred taxes due to actuarial loss | 0 | 2,600 | (100.0) | 0 | 2,600 | (100.0) |
| Total of items that will not be reclassified ("recycled") subsequently to the income statement |
0 | (12,336) | 100.0 | 0 | (12,336) | (100.0) |
| Currency differences | (1,664) | 3,888 | <(100) | (6,398) | 5,872 | <(100) |
| Currency differences arising from loans | (739) | 493 | <(100) | 825 | 2,111 | (60.9) |
| Hedge accounting | 169 | (132) | >100 | 461 | (375) | >100 |
| Deferred taxes due to hedge accounting | (42) | 33 | <(100) | (111) | 94 | <(100) |
| Total of items that will be reclassified ("recycled") subsequently to the income statement |
(2,276) | 4,282 | <(100) | (5,223) | 7,702 | <(100) |
| Subtotal other comprehensive income | (2,276) | (8,054) | (71.7) | (5,223) | (4,634) | (12.7) |
| thereof due to non-controlling interests | 2 | 98 | (97.5) | 43 | 155 | (72.2) |
| thereof due to shareholders of the parent company | (2,278) | (8,152) | (72.1) | (5,266) | (4,789) | (10.0) |
| Total comprehensive income | 16,029 | 15,088 | 6.2 | 22,284 | 24,229 | (8.0) |
| thereof due to non-controlling interests | 96 | (1) | >100 | 209 | (21) | >100 |
| thereof due to shareholders of the parent company | 15,933 | 15,089 | 5.6 | 22,075 | 24,250 | (9.0) |
| in TEUR | 31 October 2015 |
in % | 30 April 2015 | in % |
|---|---|---|---|---|
| Goodwill | 211,893 | 18.6 | 198,891 | 18.3 |
| Other intangible assets | 62,048 | 5.5 | 60,540 | 5.6 |
| Property, plant and equipment | 235,786 | 20.8 | 236,671 | 21.7 |
| Financial assets accounted for at-equity | 2,426 | 0.2 | 2,295 | 0.2 |
| Financial assets | 1,214 | 0.1 | 1,811 | 0.2 |
| Other assets | 4,340 | 0.4 | 4,289 | 0.4 |
| Deferred taxes | 41,954 | 3.7 | 48,075 | 4.4 |
| Non-current assets | 559,661 | 49.3 | 552,572 | 50.8 |
| Inventories | 212,648 | 18.8 | 201,785 | 18.6 |
| Trade receivables | 249,891 | 22.0 | 234,587 | 21.6 |
| Financial assets | 3,223 | 0.3 | 4,034 | 0.4 |
| Other assets | 34,246 | 3.0 | 29,133 | 2.7 |
| Liquid funds | 73,363 | 6.6 | 59,345 | 5.5 |
| Available for sale assets | 4,150 | 0.4 | 4,819 | 0.4 |
| Current assets | 577,521 | 50.7 | 533,703 | 49.2 |
| ASSETS | 1,137,182 | 100.0 | 1,086,275 | 100.0 |
| Share capital | 108,750 | 9.6 | 108,750 | 10.0 |
| Additional paid-in capital | 335,316 | 29.5 | 335,316 | 30.9 |
| Reserves | (140,375) | (12.4) | (137,848) | (12.7) |
| Net profit/loss for the period | 27,343 | 2.4 | 12,231 | 1.1 |
| Capital attributed to shareholders of the parent company | 331,034 | 29.1 | 318,449 | 29.3 |
| Capital attributed to non-controlling interests | 4,698 | 0.4 | 4,152 | 0.4 |
| Equity | 335,732 | 29.5 | 322,601 | 29.7 |
| Provisions for pensions | 95,912 | 8.4 | 99,994 | 9.2 |
| Provisions for severance compensation | 49,939 | 4.4 | 49,348 | 4.5 |
| Provisions for other employee benefits | 12,500 | 1.1 | 13,433 | 1.2 |
| Other provisions | 832 | 0.1 | 1,238 | 0.1 |
| Borrowings | 255,941 | 22.5 | 190,904 | 17.7 |
| Other liabilities | 12,679 | 1.1 | 4,174 | 0.4 |
| Deferred taxes | 5,707 | 0.5 | 5,556 | 0.5 |
| Non-current liabilities | 433,510 | 38.1 | 364,647 | 33.6 |
| Provisions for taxes | 22,501 | 2.0 | 21,521 | 2.0 |
| Other provisions | 37,870 | 3.3 | 31,927 | 2.9 |
| Borrowings | 7,561 | 0.7 | 17,301 | 1.6 |
| Trade payables | 158,977 | 14.0 | 174,040 | 16.0 |
| Other liabilities | 141,031 | 12.4 | 153,989 | 14.2 |
| Liabilities held for Sale | 0 | 0.0 | 249 | 0.0 |
| Current liabilities | 367,940 | 32.4 | 399,027 | 36.7 |
| EQUITY AND LIABILITIES | 1,137,182 | 100.0 | 1,086,275 | 100.0 |
| in TEUR | 1 HY 2015/16 | 1 HY 2014/15 |
|---|---|---|
| Profit/loss before tax | 35,758 | 31,912 |
| Depreciation and amortisation | 30,612 | 27,075 |
| Gain/loss from disposal of fixed assets | (2,689) | 208 |
| Other financial income and expenses | 4,471 | (623) |
| Interest income/ Interest expense | (3,291) | 4,367 |
| Changes in the consolidation range | 0 | 120 |
| Results from discontinued operations | 0 | (14) |
| Cash flow from operating results | 64,861 | 63,045 |
| Inventories | (13,072) | (7,943) |
| Trade receivables | (12,681) | (4,581) |
| Trade payables | (20,727) | (14,566) |
| Prepayments received | 4,712 | (1,537) |
| Change in working capital | (41,768) | (28,627) |
| Non-current provisions | (6,200) | (6,896) |
| Current provisions | 6,388 | 3,845 |
| Other current and non-current assets and liabilities | (18,964) | (7,154) |
| Change in other operating items | (18,776) | (10,205) |
| Taxes paid | (1,007) | (3,834) |
| Cash flow from operating activities | 3,310 | 20,379 |
| Proceeds from the sale of non-current assets | 5,323 | 636 |
| Capital expenditures on non-current assets | (29,807) | (28,929) |
| Change in non-current and current financial assets | 1,845 | 1,599 |
| Change in liquid funds from changes in the consolidation range | (1,380) | 9,522 |
| Assets/Liabilities held for Sale/Liabilities | (4,150) | 0 |
| Cash flow from investing activities | (28,169) | (17,172) |
| FREE CASH FLOW | (24,859) | 3,207 |
| Change in net borrowings | 63,524 | 18,060 |
| thereof restricted cash | (2) | (359) |
| Capital increases | 733 | 0 |
| Dividends | (9,888) | (7,765) |
| Exercise of options | 0 | 11 |
| Interest paid | (4,595) | (3,505) |
| Interest received | 209 | 173 |
| Cash flow from financing activities | 49,983 | 6,974 |
| Effects of exchange rate changes on cash and cash equivalents | (2,157) | 2,776 |
| CHANGE IN CASH AND CASH EQUIVALENTS | 22,967 | 12,957 |
| Cash and cash equivalents at the beginning of the period | 43,151 | 70,583 |
| Cash and cash equivalents at the end of the period | 66,118 | 83,540 |
| Change absolute | 22,967 | 12,957 |
1st Half- 1st Half-Year2015/16
| Attributed to shareholders of the parent company | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|
| in TEUR | Share capital |
Additional paid-in capital |
Other Reserves |
Currency reserve |
Hedge accounting |
Reserve for stock options |
Reserve IAS 19 |
Net profit/loss for the period |
Total | Non controlling interests |
Total equity |
| 30 April 2015 | 108,750 | 335,316 | (2,013) | (9,782) | (2,814) | 19,479 | (142,718) | 12,231 | 318,449 | 4,152 | 322,601 |
| +/- Additions to reserves | 0 | 0 | 12,231 | 0 | 0 | 0 | 0 | (12,231) | 0 | 0 | 0 |
| +/- Total comprehensive | |||||||||||
| income | 0 | 0 | 0 | (5,614) | 348 | 0 | 0 | 27,343 | 22,077 | 209 | 22,286 |
| +/- Capital increases | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 733 | 733 |
| +/- Dividends | 0 | 0 | (9,492) | 0 | 0 | 0 | 0 | 0 | (9,492) | (396) | (9,888) |
| 31 October 2015 | 108,750 | 335,316 | 726 | (15,396) | (2,466) | 19,479 | (142,718) | 27,343 | 331,034 | 4,698 | 335,732 |
| Attributed to shareholders of the parent company | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|
| in TEUR | Share capital |
Additional paid-in capital |
Other Reserves |
Currency reserve |
Hedge accounting |
Reserve for stock options |
Reserve IAS 19 |
Net profit/loss for the period |
Total | Non controlling interests |
Total equity |
| 30 April 2014 | 108,750 | 335,249 | 11,083 | (42,259) | (2,960) | 19,479 | (100,558) | (4,995) | 323,789 | 3,765 | 327,554 |
| +/- Additions to reserves | 0 | 0 | (4,995) | 0 | 0 | 0 | 0 | 4,995 | 0 | 0 | 0 |
| +/- Total comprehensive income |
0 | 0 | 0 | 7,828 | (281) | 0 | (12,336) | 29,039 | 24,250 | (21) | 24,229 |
| +/- Stock options – exercises |
0 | 11 | 0 | 0 | 0 | 0 | 0 | 0 | 11 | 0 | 11 |
| +/- Dividends | 0 | 0 | (7,765) | 0 | 0 | 0 | 0 | 0 | (7,765) | 0 | (7,765) |
| +/- Changes in the | |||||||||||
| consolidation range | 0 | 0 | (336) | 0 | 0 | 0 | 369 | 0 | 33 | 252 | 285 |
| 31 October 2014 | 108,750 | 335,260 | (2,013) | (34,431) | (3,241) | 19,479 | (112,525) | 29,039 | 340,318 | 3,996 | 344,314 |
The balance sheet position "reserves" comprises other reserves as well as the currency reserve, the reserve for hedge accounting, the reserve for stock options and the IAS 19 reserve for "employee benefits".
The condensed consolidated interim financial statements as of 31 October 2015 were prepared in accordance with the principles set forth in International Financial Reporting Standards (IAS 34, Interim Financial Reporting). The company has elected to make use of the option set forth in IAS 34 and provide selected explanatory notes.
These condensed consolidated interim financial statements were prepared in accordance with all IFRS/IAS issued by the International Accounting Standards Board (IASB) as well as all interpretations (IFRIC/SIC) of the International Financial Reporting Interpretations Committee and Standing Interpretations Committee that were adopted by the European Union through its endorsement procedure and were applicable as of the balance sheet date.
The accounting and valuation methods applied as of 31 October 2015 reflect the methods applied in preparing the consolidated financial statements as of 30 April 2015, with the exception of the IFRS that require mandatory application as of 1 January 2015.
The following standards and interpretations were adopted by the European Union. Their application has been mandatory since the last balance sheet date:
| Revised standards and interpretations | Mandatory application in financial years beginning on or after |
|
|---|---|---|
| Changes to IAS 19 | Defined benefit plant: employee contributions | 1 February 2015 |
| IFRIC 21 | Levies | 1 February 2015 |
| Miscellaneous | Improvements to IFRS 2011 - 2013 | 1 January 2015 |
| Miscellaneous | Improvements to IFRS 2010 - 2012 | 1 February 2015 |
| Miscellaneous | Improvements to IFRS 2012 - 2014 | 1 January 2015 |
An analysis of the changes resulting from the application of the new standards and interpretations did not show any significant effects on the consolidated interim financial statements.
In order to improve the clarity and informative value of these financial statements, individual positions on the income statement and balance sheet were combined and are reported separately in the notes. The amounts in the tables are presented in thousand euros (TEUR), unless indicated otherwise. The use of automatic data processing equipment can lead to rounding differences.
The quarterly financial statements of the companies included in the consolidated interim financial statements were prepared on the basis of uniform accounting and valuation principles.
The major currencies used to translate the financial statements of subsidiaries into the euro are as follows:
| Average exchange rate Income | |||||
|---|---|---|---|---|---|
| Statement | Closing rate Balance sheet | ||||
| 1 EUR equals | 31 October 2015 |
31 October 2014 |
31 October 2015 |
30 April 2015 | |
| AUD | 1.5067 | 1.4444 | 1.5544 | 1.4161 | |
| CHF | 1.0657 | 1.2133 | 1.0900 | 1.0486 | |
| USD | 1.1156 | 1.3281 | 1.1017 | 1.1215 | |
| SEK | 9.3705 | 9.1549 | 9.3866 | 9.3261 | |
| NOK | 8.9955 | 8.2520 | 9.3930 | 8.3845 | |
| GBP | 0.7212 | 0.7980 | 0.7182 | 0.7267 |
The condensed consolidated interim financial statements include all major Austrian and foreign companies that are controlled by Zumtobel Group AG. The changes in the scope of consolidation during the interim financial period are shown below:
| Consolidation Method | |||
|---|---|---|---|
| full | at equity | Total | |
| 30 April 2015 | 94 | 2 | 96 |
| Included during reporting period for first time | 5 | 5 | |
| thereof newly founded | 1 | 1 | |
| thereof acquisition | 4 | 4 | |
| Deconsolidated during reporting period | (1) | (1) | |
| 31 October 2015 | 98 | 2 | 100 |
>> The shares in Tridonic NZ Limited, New Zealand, were sold during June 2015. The company was therefore deconsolidated in the first quarter of 2015/16.
>> The newly founded ZG Innovation France Sarl was initially consolidated as of October 2015.
The changes in the consolidation range did not have a material effect on the interim consolidated financial statements.
As of 7 September 2015 the Zumtobel Group acquired a controlling interest (60%) in the British LED lighting producer AC/DC LED Holdings Ltd (acdc) and therefore also a controlling interest in the acdc Group, which comprises four companies. The sale agreement also includes a call/put option to purchase the remaining interest (40%) in acdc in 2020.
acdc is a niche supplier of high-quality architectonic LED facade lighting and lighting solutions for hotels and design-oriented restaurants and bars. The company's products will complement the Zumtobel Group's existing portfolio. The Zumtobel Group expects this acquisition will lead to a stronger market presence in the above-mentioned areas and to the realisation of synergy effects across the entire value chain.
acdc generated revenues of approx. EUR 17 million in 2014 and has 120 employees.
The following overview summarises the acquired assets and assumed liabilities resulting from this transaction as well as the agreed purchase price.
| in TEUR | acdc |
|---|---|
| Other intangible assets | 3,048 |
| Property, plant and equipment | 1,279 |
| Financial assets | 13 |
| Inventories | 2,034 |
| Trade receivables & Other assets | 2,227 |
| Cash and cash equivalents | 44 |
| Borrowings | (4,572) |
| Other provisions | (2,969) |
| Trade payables & Other liabilities | (2,179) |
| Purchase price | 13,388 |
| Equity | (1,075) |
| Goodwill | 14,463 |
The purchase price for the controlling interest (60%) is based on acdc's balance sheet structure on the acquisition date. In addition, the sale agreement includes a call/put option for the purchase of the remaining interest (40%) in acdc in 2020. The purchase price for this 40% interest is linked to the future development of acdc's revenues. The holder of the non-controlling interest no longer has access to the company's returns, and the valuation of the remaining 40% was therefore based on the anticipated acquisition method. Under this method, 100% of the shares were recognised as of the acquisition date and no noncontrolling interest is reported. The amount included in the purchase price for the obligation resulting from the call/put option was recognised as a non-current liability.
The fair value of trade receivables equals TEUR 1,705, whereby none are classified as uncollectable.
The costs of TEUR 288 connected with this business combination (for legal advising and due diligence) are reported on the income statement for the first half of 2015/16 under administrative expenses.
acdc contributed TEUR 1,680 to Group revenues and TEUR -519 to net profit for the first half of 2015/16.
The accounting treatment of this business combination will be adjusted if new information becomes known within one year of the acquisition date concerning facts and circumstances that existed as of that date and would have led to the adjustment of the recognised amounts or to the recognition of additional provisions.
The following comments explain the major changes to individual items in relation to the comparable prior year period.
Sales volumes are generally higher during the first two quarters than in the second half-year for seasonal reasons; in particular, the third quarter falls significantly below the average. This distribution reflects the Group's dependency on developments in the construction industry as well as the seasonal distribution of business in this sector.
Revenues include an adjustment of TEUR 29,009 (prior year: TEUR 26,464) for sales deductions (primarily customer discounts). Gross revenues total TEUR 730,999 (prior year: TEUR 689,685).
The income statement was prepared in accordance with the cost of sales method. The following categories of income and expenses are included in the cost of goods sold (incl. development costs), selling expenses (incl. research costs), administrative expenses and other operating results:
| Cost of goods | Selling | Administrative | Other | Total | |
|---|---|---|---|---|---|
| in TEUR | sold | expenses | expenses | operating results |
|
| Cost of materials | (296,814) | (3,055) | (22) | (29) | (299,920) |
| Personnel expenses | (115,841) | (95,834) | (17,265) | (6,901) | (235,841) |
| Depreciation | (26,151) | (3,752) | (512) | (197) | (30,612) |
| Other expenses | (47,501) | (61,236) | (8,991) | 1,154 | (116,574) |
| Own work capitalised | 8,628 | 0 | 0 | 0 | 8,628 |
| Internal charges | 1,825 | (3,514) | 1,689 | 0 | 0 |
| Total expenses | (475,854) | (167,391) | (25,101) | (5,973) | (674,319) |
| Other income | 1,241 | 3,652 | 159 | 4,216 | 9,268 |
| Total | (474,613) | (163,739) | (24,942) | (1,757) | (665,051) |
| Cost of goods sold |
Selling expenses |
Administrative expenses |
Other operating |
Total | |
|---|---|---|---|---|---|
| in TEUR | results | ||||
| Cost of materials | (279,196) | (2,546) | (21) | 0 | (281,763) |
| Personnel expenses | (108,320) | (87,586) | (15,359) | (10,553) | (221,818) |
| Depreciation | (23,638) | (2,882) | (486) | (69) | (27,075) |
| Other expenses | (40,887) | (62,241) | (8,828) | (1,349) | (113,305) |
| Own work capitalised | 8,901 | 7 | 0 | 0 | 8,908 |
| Internal charges | 2,521 | (4,497) | 1,976 | 0 | 0 |
| Total expenses | (440,619) | (159,745) | (22,718) | (11,971) | (635,053) |
| Other income | 577 | 3,964 | 419 | 2,529 | 7,489 |
| Total | (440,042) | (155,781) | (22,299) | (9,442) | (627,564) |
The cost of goods sold includes development costs of TEUR 41,471 (prior year: TEUR 34,158).
Development costs of TEUR 8,417 were capitalised during the reporting period (prior year: TEUR 8,646). The amortisation of capitalised development costs amounted to TEUR 9,023 (prior year: TEUR 7,102).
| in TEUR | Q2 2015/16 | Q2 2014/15 | 1 HY 2015/16 | 1 HY 2014/15 |
|---|---|---|---|---|
| Government grants | 1,262 | 578 | 1,703 | 712 |
| License revenues | 1,046 | 792 | 1,854 | 1,298 |
| Special effects | (4,272) | (1,606) | (5,353) | (11,572) |
| Restructuring | (3,060) | (1,606) | (5,233) | (11,140) |
| Impairment charges to current assets | (1,212) | 0 | (1,349) | (312) |
| Changes in the consolidation range | 0 | 0 | 1,229 | (120) |
| Miscellaneous | (111) | 112 | 39 | 120 |
| Total | (2,075) | (124) | (1,757) | (9,442) |
As in the previous year, government grants for the first half of 2015/16 represent subsidies recognised directly to income.
License income for the reporting period comprises income from the LED business, similar to the first half of the previous year.
The special effects reported under restructuring in the first half of 2015/16 are related almost entirely to the Lighting Segment with TEUR 5,001 and also include TEUR 232 for Zumtobel Group AG. These expenses represent TEUR 5,387 for the restructuring of the global sales organisations (among others in the DACH region, Australia, Asia, Northern and Southern Europe) and TEUR 2,913 for the restructuring of global operations. A substantial positive effect of TEUR 2,676 resulted from the sale of property in Landskrona, Sweden, and the related release of a maintenance provision with a positive effect of TEUR 623.
In 2014/15 the comparable restructuring expenses include TEUR 3,849 for the Components Segment, TEUR 7,148 for the Lighting Segment and TEUR 143 for Zumtobel Group AG. The expenses attributable to the Components Segment are related primarily to the termination of production in Ennenda, Switzerland. The restructuring expenses in the Lighting Segment resulted chiefly from the closing of the lighting production plant in Landskrona, Sweden, and the restructuring of the sales organisation in Germany.
The impairment charges recognised to current assets in 2015/16 include TEUR 747 for the relocation of production from Landskrona, Sweden, to Spennymoor, Great Britain, and TEUR 466 for the closing of the plant in Tianjin, China. The impairment charges recognised to current assets in the first half of the previous year were related to the closing of plants in the Components Segment.
The deconsolidation of Tridonic NZ Limited, New Zealand, which was sold during the first quarter of 2015/16, resulted in a gain of TEUR 1,229. This transaction involved the sale of net assets with a total value of TEUR 1,539. Impairment charges to current assets also include TEUR 135 related to this sale.
In 2014/15 this position included the deconsolidation results from the sale of Tridonic connection technology GmbH & Co KG, Austria, and Tridonic connection technology GmbH, Austria.
Miscellaneous items represent the net total of income and expenses arising from ordinary business operations, which cannot be clearly allocated to other functional areas.
Interest expense consists primarily of interest on the current credit agreement and interest expense from a finance lease.
| in TEUR | Q2 2015/16 | Q2 2014/15 | 1 HY 2015/16 | 1 HY 2014/15 |
|---|---|---|---|---|
| Interest component as per IAS 19 less income on plan assets | (819) | (1,026) | (1,641) | (2,053) |
| Foreign exchange gains and losses | (845) | 215 | (1,451) | 1,251 |
| Market valuation of financial instruments | 3,060 | 895 | 6,260 | 1,370 |
| Total | 1,396 | 84 | 3,168 | 568 |
Foreign exchange gains and losses consist mainly of effects from the revaluation of receivables and liabilities that are denominated in a foreign currency.
The market valuation of financial instruments shows the results from the valuation of forward exchange contracts at fair value as of the balance sheet date for these consolidated interim financial statements. The positive effect compared with the previous year resulted primarily from the realisation of foreign exchange transactions with a negative market valuation, in particular forward exchange contracts in Swiss francs.
The classification of income taxes into current and deferred taxes is shown in the following table:
| in TEUR | Q2 2015/16 | Q2 2014/15 | 1 HY 2015/16 | 1 HY 2014/15 |
|---|---|---|---|---|
| Current taxes | (269) | (2,410) | (2,107) | (4,015) |
| thereof current year | (118) | (2,391) | (1,959) | (3,991) |
| thereof prior years | (151) | (19) | (148) | (24) |
| Deferred taxes | (5,063) | 953 | (6,144) | 980 |
| Income taxes | (5,332) | (1,457) | (8,251) | (3,035) |
The deferred tax expense recognised in the first half of 2015/16 were based chiefly on the positive results recorded for the reporting period and the subsequent use of deferred tax assets.
Basic earnings per share were calculated by dividing net profit for the period by the average number of shares outstanding as of the balance sheet date for these interim financial statements.
Diluted earnings per share reflect the assumption that that the options granted under the stock option programme (SOP/MSP) will be exercised. These shares are included in the calculation of the average number of shares outstanding. No options were exercised in 2015/16 because the stock option programme was terminated as of 30 April 2015.
| Balance Sheet Date |
Average |
|---|---|
| 43,146 | 43,146 |
| 0 | 0 |
| 43,146 | 43,146 |
| in 1,000 pcs. | Balance Sheet Date |
Average |
|---|---|---|
| 1 May 2014 | 43,139 | 43,139 |
| Stock options – exercises | 1 | 1 |
| 31 October 2014 | 43,140 | 43,140 |
| Stock options – exercises | 6 | 0 |
| 30 April 2015 | 43,146 | 43,140 |
This position comprises translation effects resulting from the conversion of the financial statements of subsidiaries as well as the effects of foreign currency-related adjustments to goodwill following the application of IAS 21 ("The Effects of Changes in Foreign Exchange Rates").
These currency differences result from long-term SEK, GBP and USD loans that qualify for classification as a net investment in a foreign operation and must therefore be reported under comprehensive income. This position also includes currency differences resulting from an interest rate hedge.
The actuarial losses reported in the previous year resulted from the revaluation of the Group's pension and severance obligations and were caused by the substantial decline in interest rates during the first half of 2014/15. The revaluation of the Group's pension and severance obligations in the first half of 2015/16 was not necessary because interest rates remained generally stable.
The following comments refer to major changes in individual items compared to the balance sheet date on 30 April 2015.
In accordance with the reporting structure, the goodwill resulting from the acquisition of the Thorn Lighting Group has been allocated to the "CGU Lighting" since 2014/15 and is tested annually for indications of impairment. The "CGU Lighting" represents the operating Lighting Segment in the sense of IFRS 8.5.
The application of IAS 21 ("The Effects of Changes in Foreign Exchange Rates") led to foreign currency-based adjustments of TEUR -1,478 in the first half of 2015/16 (prior year: TEUR 3,124) which were not recognised through profit or loss. These foreign exchange effects are allocated to assets in the Lighting Segment for segment reporting.
Goodwill of TEUR 14.463 was capitalised in connection with the acquisition of acdc and is allocated to the Lighting Segment for segment reporting.
This position consists primarily of capitalised reinsurance for the fulfilment of pension commitments.
Inventories were increased during the first half of 2015/16 to ensure sufficient supplies for production and customer orders based on the expected stronger growth in revenues during the course of this year.
The increase in trade receivables over the level at 30 April 2015 resulted, above all, from the year-on-year increase in the volume of business.
The higher balance of non-current financial liabilities resulted chiefly from an increase in the use of the consortium credit agreement from TEUR 80,000 as of 30 April 2015 to TEUR 145,000 as of 31 October 2015.
The decline in other current liabilities is attributable primarily to a decrease in amounts due to employees.
Tridonic GmbH & Co KG sold its advertising lighting business ("signage") to the US AgiLight Inc., which is headquartered in San Antonio, Texas, as of 30 November 2015. The sale of the signage activities will take the form of an asset deal.
The signage business offers its customers, above all, LED components and systems for advertising lighting. In accordance with IFRS 5, the components of production equipment and inventories attributable to the signage product line is presented as a disposal group available for sale. This disposal group is allocated to the Components Segment for segment reporting.
Other comprehensive income does not include any accumulated income or expenses related to this disposal group.
The determination of fair value is based on a three-level hierarchy that reflects the valuation certainty.
As of 31 October 2015, the balance sheet of the Zumtobel Group shows non-current financial assets of TEUR 1,214 (30 April 2015: TEUR 1,811), current financial assets of TEUR 3,223 (30 April 2015: TEUR 4,034) and miscellaneous current liabilities of TEUR 141,031 (30 April 2015: TEUR 153,989). The financial instruments measured at fair value through profit or loss are classified in the valuation hierarchy as follows:
| in TEUR | Carrying amount |
Fair Value | Level 1 | Level 2 | Level 3 |
|---|---|---|---|---|---|
| Non-current financial assets | |||||
| Securities and similar rights | 601 | 601 | - | - | 601 |
| Loans originated and other receivables | - | - | - | - | - |
| Current financial assets | |||||
| Loans originated and other receivables | - | - | - | - | - |
| Positive market values of derivatives held for trading | 3,204 | 3,204 | - | 3,204 | - |
| Other | - | - | - | - | - |
| Total | 3,805 | 3,805 | - | 3,204 | 601 |
| in TEUR | Carrying amount |
Fair Value | Level 1 | Level 2 | Level 3 |
| Other current liabilities | |||||
| Derivatives held for trading | 4,522 | 4,522 | - | 4,522 | - |
| Derivatives (hedge accounting) | 9,661 | 9,661 | - | 9,661 | - |
| Total | 14,183 | 14,183 | - | 14,183 | - |
| in TEUR | Carrying amount |
Fair Value | Level 1 | Level 2 | Level 3 |
|---|---|---|---|---|---|
| Non-current financial assets | |||||
| Securities and similar rights | 587 | 587 | - | - | 587 |
| Loans originated and other receivables | - | - | - | - | - |
| Current financial assets | |||||
| Loans originated and other receivables | - | - | - | - | - |
| Positive market values of derivatives held for trading | 3,398 | 3,398 | - | 3,398 | - |
| Other | - | - | - | - | - |
| Total | 3,985 | 3,985 | - | 3,398 | 587 |
| in TEUR | Carrying amount |
Fair Value | Level 1 | Level 2 | Level 3 |
| Other current liabilities | |||||
| Derivatives held for trading | 10,516 | 10,516 | - | 10,516 | - |
| Derivatives (hedge accounting) | 11,077 | 11,077 | - | 11,077 | - |
| Total | 21,593 | 21,593 | - | 21,593 | - |
In Zumtobel Group, the calculation of fair value is based primarily on input factors that can be monitored on the market (Level 2). The fair value of forward exchange contracts is determined by calculating the present value of the related cash flows based on the observable market interest rate curves for the respective currency and the exchange rates in effect on the valuation date. The fair value of the remaining derivative financial instruments can be reliably determined as of each balance sheet date because these measurements are based on input factors that can be monitored on the market. These valuations reflect the Level 2 criteria. The financial instruments classified under Level 2 represent the derivatives included under financial assets and financial liabilities. The risks arising from the non-fulfilment of financial assets and liabilities are reflected in discounts, in cases where these risks are material.
These consolidated interim financial statements of Zumtobel Group do not include any financial instruments whose valuation is based on listed prices on active markets (Level 1).
The consolidated interim financial statements of Zumtobel Group as of 31 October 2015 also include an insignificant amount of financial instruments whose valuation is not based on listed prices or input factors that can be monitored on the market (Level 3). These items consist primarily of minor shareholdings in various companies. There were no significant changes in these shareholdings since 30 April 2015, and no profit distributions were received on these investments during the reporting period.
Cash flow was determined on a monthly basis in accordance with the indirect method. The resulting monthly cash flows were translated at the applicable average monthly exchange rate and then aggregated, while the balance sheet positions were translated at the exchange rate in effect on the respective closing date. This procedure leads to currency translation differences, above all in individual positions under cash flow from operating activities, and therefore to material differences compared with the respective balance sheet positions.
In agreement with the indirect method, profit before tax is adjusted for the effects of non-cash transactions (e.g. depreciation and amortisation) as well as income and expenses that relate to investing or financing activities.
Cash flow from operating results rose from TEUR 63,045 in the first half of the previous year to TEUR 64,861 for the reporting period, above all due to an improvement in profit before tax from TEUR 31,912 to TEUR 35,758. This development was contrasted by cash outflows for the increase in working capital. The increase in working capital from 30 April 2015 to 31 October 2015 resulted primarily from higher inventories, a reduction in trade payables and amounts due to employees as well as the initial consolidation of the recently acquired British LED lighting producer AC/DC LED Holdings Ltd. Stocks of raw materials and finished goods were increased above the growth in revenues to ensure sufficient supplies for production and customer orders based on the expected stronger growth in revenues during the course of this year. The higher inventory levels also reflect the more cost-intensive and higher value LED raw materials and LED finished products, which are a result of the continuing transformation process to LED. These factors led to a year-on-year decline in cash flow from operating activities from TEUR 20,379 to TEUR 3,310.
Cash flow from investing activities consists mainly of investments related to development projects and investments in property, plant and equipment for various production facilities. The sale of property in Landskrona, Sweden, led to a cash inflow of TEUR 2,676, which is reported under proceeds from the sale of non-current assets. The change in liquid funds from changes in the consolidation range includes the positive cash effect from the sale of Tridonic NZ Limited as well as the cash outflow for the acquisition of the British LED lighting producer AC/DC LED Holdings Ltd. (acdc). The positive cash effect in the previous year resulted from the sale of Tridonic connection technology and the initial consolidation of Thorn Lighting Limited Liability Company, Qatar. The cash outflow from assets held for sale represents the reclassification of inventories and production equipment related to the sale of the signage business.
Cash flow from financing activities consists mainly of the increased use of the credit lines provided by the consortium credit agreement and interest paid during the first half of the reporting year. The dividend for the 2014/15 financial year, which was approved by the annual general meeting on 24 July 2015 (TEUR 9,492) was paid on 31 July 2015.
| in TEUR | 31 October 2015 |
30 April 2015 | 30 April 2014 |
|---|---|---|---|
| Liquid funds | 73,363 | 59,345 | 74,191 |
| Not available for disposal | (200) | (204) | (169) |
| Overdrafts | (7,045) | (15,990) | (3,439) |
| Cash and cash equivalents | 66,118 | 43,151 | 70,583 |
The annual general meeting on 24 July 2015 approved the payment of a EUR 0.22 dividend per share for the 2014/15 financial year. Based on this resolution, TEUR 9,492 was paid to the holders of the 43,146,657 shares outstanding (43,500,000 shares issued less 353,343 treasury shares) on 31 July 2015.
This position includes profit carried forward.
This reserve includes the currency differences resulting from the application of the historical exchange rate on the initial consolidation date and the exchange rate in effect on the balance sheet date for companies that do not report in the euro as well as differences resulting from the translation of the income statement at the monthly average exchange rate and the exchange rate in effect on the balance sheet date. Also included here are the currency differences arising from long-term Group loans granted in SEK, GBP and USD, which are classified as net investments in foreign operations in accordance with IAS 21. This reserve also contains the foreign currency effects of an interest rate hedge and foreign currency-related adjustments to goodwill.
The changes in equity from the application of hedge accounting reflect the changes in the fair value of derivative contracts that are recorded directly in equity as well as amounts transferred from equity to profit or loss following the exercise or realisation of contracts and the related deferred taxes.
| in pcs. | Total |
|---|---|
| Share buyback (to 30 April 2015) | 1,539,211 |
| Exercised (to 30 April 2015) | (1,185,868) |
| 31 October 2015 | 353,343 |
The Stock Option Programme (SOP) was terminated as of 30 April 2015, and there will be no further exercise of options in this connection.
The reserve for stock options resulted from the accounting treatment of two share-based remuneration programmes in previous years. The Stock Option Programme (SOP) and the Matching Stock Programme (MSP) were settled and are no longer active, and there were no allocations from either programme during the reporting year or the previous year.
The change in the previous year resulted from the initial consolidation of Thorn Lighting Limited Liability Company, Qatar.
The Zumtobel Group comprises two operating segments: the Lighting Segment and the Components Segment. The Lighting Segment covers Thorn, Zumtobel, OEM & TPP and acdc and markets lighting solutions, interior and exterior lighting, electronicdigital lighting and room management systems. The Components Segment includes the Tridonic business, which develops, produces and markets electronic lighting components, LED lighting components and, up to the end of the 2013/14 financial year, also magnetic ballasts. The transfer of goods and services between the two divisions is based on ordinary market conditions.
Segment reporting is principally based on the same presentation, accounting and valuation methods used to prepare the consolidated financial statements. In accordance with the management approach prescribed by IFRS 8, operating profit (EBIT) – a key indicator used for internal reporting – is included as part of the segment data.
The assets allocated to the two segments include property, plant and equipment that can be directly assigned as well as intangible assets and working capital (excluding accrued interest, tax receivables and tax liabilities).
The column "Reconciliation" comprises assets and the related income statement items that could not be allocated to either segment as well as property, plant and equipment, financial liabilities and taxes that involve both segments.
| Lighting Segment | Components Segment | Reconciliation | Group | |||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Q2 2015/16 |
Q2 2014/15 |
Q2 2013/14 |
Q2 2015/16 |
Q2 2014/15 |
Q2 2013/14 |
Q2 2015/16 |
Q2 2014/15 |
Q2 2013/14 |
Q2 2015/16 |
Q2 2014/15 |
Q2 2013/14 |
|
| in TEUR | ||||||||||||
| Net revenues | 276,283 257,569 | 246,753 | 106,176 | 99,832 | 98,283 (22,911) | (17,635) | (20,888) | 359,548 | 339,766 324,148 | |||
| External | ||||||||||||
| revenues | 276,077 257,180 | 246,540 | 83,465 | 82,515 | 77,603 | 6 | 71 | 5 | 359,548 | 339,766 324,148 | ||
| Inter-company | ||||||||||||
| revenues | 206 | 389 | 213 | 22,711 | 17,317 | 20,680 (22,917) | (17,706) | (20,893) | 0 | 0 | 0 | |
| Operating | ||||||||||||
| profit/loss | 19,291 | 23,213 | 18,780 | 12,887 | 8,652 | 6,392 | (7,658) | (5,301) | (6,813) | 24,520 | 26,564 | 18,359 |
| Investments | 9,236 | 9,441 | 10,338 | 6,021 | 4,688 | 3,065 | 1,790 | 643 | 1,091 | 17,047 | 14,772 | 14,494 |
| Depreciation | (9,018) | (8,273) | (8,415) | (5,699) | (4,816) | (5,221) | (1,009) | (630) | (528) | (15,726) | (13,719) (14,164) |
| Lighting Segment | Components Segment | Reconciliation | Group | |||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| in TEUR | 1 HY 2015/16 |
1 HY 2014/15 |
1 HY 2013/14 |
1 HY 2015/16 |
1 HY 2014/15 |
1 HY 2013/14 |
1 HY 2015/16 |
1 HY 2014/15 |
1 HY 2013/14 |
1 HY 2015/16 |
1 HY 2014/15 |
1 HY 2013/14 |
| Net revenues | 531,079 500,927 | 476,658 | 215,525 196,385 | 197,935 (44,614) | (34,091) | (41,166) | 701,990 | 663,221 633,427 | ||||
| External revenues |
530,654 500,048 | 476,314 | 171,271 163,030 | 157,091 | 65 | 143 | 22 | 701,990 | 663,221 633,427 | |||
| Inter-company revenues |
425 | 879 | 344 | 44,254 | 33,355 | 40,844 (44,679) | (34,234) | (41,188) | 0 | 0 | 0 | |
| Operating profit/loss |
27,742 | 35,154 | 33,680 | 23,778 | 11,437 | 6,168 (14,581) | (10,934) | (10,631) | 36,939 | 35,657 | 29,217 | |
| Investments | 17,585 | 19,060 | 19,188 | 9,653 | 8,918 | 6,003 | 2,569 | 951 | 1,168 | 29,807 | 28,929 | 26,359 |
| Depreciation | (18,029) (16,275) | (16,284) | (10,628) | (9,588) | (13,303) | (1,955) | (1,212) | (1,020) | (30,612) | (27,075) (30,607) |
| in TEUR | 31 October 2015 |
30 April 2015 |
30 April 2014 |
31 October 2015 |
30 April 2015 |
30 April 2014 |
31 October 2015 |
30 April 2015 |
30 April 2014 |
31 October 2015 |
30 April 2015 |
30 April 2014 |
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Assets | 782,269 | 743,925 | 668,998 | 216,976 | 207,140 | 209,046 | 137,937 | 135,210 | 128,557 1,137,182 1,086,275 1,006,601 | |||
| 31 October 2015 |
30 April 2015 |
30 April 2014 |
31 October 2015 |
30 April 2015 |
30 April 2014 |
31 October 2015 |
30 April 2015 |
30 April 2014 |
31 October 2015 |
30 April 2015 |
30 April 2014 |
|
| Headcount (full time equivalent) |
5,311 | 5,302 | 5,186 | 1,683 | 1,752 | 1,971 | 206 | 180 | 134 | 7,200 | 7,234 | 7,291 |
The number of employees reported in the above table includes temporary employees working in the Zumtobel Group.
The elimination of inter-segment revenues is shown in the reconciliation column.
The reconciliation column comprises the following:
| in TEUR | Q2 2015/16 | Q2 2014/15 | 1 HY 2015/16 | 1 HY 2014/15 |
|---|---|---|---|---|
| Group parent companies | (7,745) | (4,998) | (14,548) | (10,631) |
| Group entries | 87 | (303) | (33) | (303) |
| Operating profit/loss | (7,658) | (5,301) | (14,581) | (10,934) |
The Group parent companies represent companies that provide administrative or financing services for the entire Group and cannot be allocated to a specific segment. The reconciliation to operating profit includes Group entries for the elimination of interim profits in current and non-current assets.
| in TEUR | 31 October 2015 |
30 April 2015 |
|---|---|---|
| Assets used by more than one segment | 132,948 | 130,995 |
| Group parent companies | 60,054 | 58,155 |
| Group entries | (55,065) | (53,940) |
| Assets | 137,937 | 135,210 |
No individual external customer is responsible for more than 10% of total revenues.
Closely related persons include the Management Board and Supervisory Board of Zumtobel Group AG. As of 31 October 2015 there were no business transactions with closely related persons.
The Group has concluded supply and delivery agreements with associated companies, which reflect third party conditions. Trade receivables due from associated companies totalled TEUR 1,618 as of 31 October 2015 (30 April 2015: TEUR 932) and trade payables equalled TEUR 2,561 (30 April 2015: TEUR 2,560). No receivables due from associated companies were derecognised due to failed collection in the first half of 2015/16, and no receivables due from associated companies were classified as uncollectible as of 31 October 2015.
As of 30 April 2015, a financial liability of TEUR -339 was due to an associated company (30 April 2015: financial receivable of TEUR 616).
The Zumtobel Group has issued bank guarantees totalling TEUR 8,170 (30 April 2015 TEUR 8,898) for various purposes.
Tridonic GmbH & Co KG sold its advertising lighting business (signage) to the US AgiLight Inc., a company with headquarters in San Antonio, Texas, as of 30 November 2015. The sale of the signage business, which generated revenues of approx. EUR 20 million in 2014/15, will take the form of an asset deal.
In order to secure long-term liquidity at favourable conditions, the Zumtobel Group refinanced the existing consortium credit agreement, which would have ended in October 2016, prematurely during December 2015. The new consortium credit agreement has a base term of five years with two one-year extensions, a maximum volume of EUR 300 million and a clause for an increase of up to EUR 200 million. This agreement was arranged with a syndicate of seven banks.
We confirm to the best of our knowledge that the condensed interim financial statements give a true and fair view of the assets, liabilities, financial position and profit or loss of the group as required by the applicable accounting standards and that the group management report gives a true and fair view of important events that have occurred during the first six months of the financial year and their impact on the condensed interim financial statements, of the principal risks and uncertainties for the remaining six months of the financial year and of the major related party transactions to be disclosed.
Dornbirn, 9 December 2015
The Management Board
Ulrich Schumacher Karin Sonnenmoser Chief Executive Officer (CEO) Chief Financial Officer (CFO)
We have reviewed the accompanying condensed interim consolidated financial statements of
for the period from 1 May 2015 to 31 October 2015. These condensed interim consolidated financial statements comprise the consolidated statement of financial position as of 31 October 2015 and the consolidated income statement, the consolidated statement of comprehensive income, the consolidated statements of cash flows and the consolidated statement of changes in equity for the period from 1 May 2015 to 31 October 2015 and the condensed notes, summarizing the significant accounting policies and other explanatory notes.
Management is responsible for the preparation of the condensed interim consolidated financial statements in accordance with International Financial Reporting Standards (IFRS's) for Interim Reporting as adopted by the EU.
Our responsibility is to express a conclusion on these condensed consolidated interim financial statements. Our liability towards the Company and towards third parties is limited in accordance with § 275 par. 2 of the Austrian Commercial Code (UGB).
We conducted our review in accordance with Austrian Standards for Chartered Accountants, in particular in compliance with KFS/PG 11 "Principles of Engagements to Review Financial Statements" and with the International Standard on Review Engagements (ISRE 2410) "Review of Interim Financial Information Performed by the Independent Auditor of the Entity". A review of interim financial statements is limited primarily to making inquiries, primarily of Company personnel, responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with Austrian Standards on Auditing and International Standards on Auditing and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.
Based on our review, nothing came to our attention that causes us to believe that the accompanying condensed interim consolidated financial statements are not prepared, in all material respects, in accordance with International Financial Reporting Standards (IFRS's) for Interim Reporting as adopted by the EU.
We have read the consolidated interim management report and evaluated whether it does not contain any apparent inconsistencies with the condensed interim consolidated financial statements. Based on our evaluation, the consolidated interim management report does not contain any apparent inconsistencies with the condensed interim consolidated financial statements.
The interim financial information contains the statement by management in accordance with § 87 par. 1 subpar. 3 Austrian Stock Exchange Act.
KPMG Austria GmbH
Wirtschaftsprüfungs- und Steuerberatungsgesellschaft
Vienna, 9 December 2015
KPMG Austria GmbH
Wirtschaftsprüfungs- und Steuerberatungsgesellschaft
signed by:
Mag. Thomas Smrekar pp Mag. Kerstin Weißhaupt
Wirtschaftsprüfer Wirtschaftsprüferin
(Austrian Chartered Accountants)
Note: The condensed interim consolidated financial statements together with our review report may be published or transmitted only as agreed by us.
| Adjusted EBIT | EBIT adjusted for special effects |
|---|---|
| Adjusted EBIT margin | = Adjusted EBIT as a percentage of revenues |
| Adjusted EBITDA | EBITDA adjusted for special effects |
| Average capital employed | = Goodwill + intangible assets + property, plant and equipment + inventories + trade receivables - trade payables - provisions for income taxes - other provisions - other liabilities, as an average over four quarters |
| CAPEX | Capital expenditure |
| Debt coverage ratio | Net debt divided by EBITDA |
| EBIT | Earnings before interest and taxes |
| EBITDA | Earnings before interest, taxes, depreciation and amortisation |
| Equity ratio | = Equity as a percentage of assets |
| Gearing | = Net debt as a percentage of equity |
| Net debt | = Non-current borrowings + current borrowings - liquid funds - current financial receivables from associated companies |
| WACC | Weighted average cost of capital (debt and equity) |
| Working capital | = Inventories + trade receivables - trade payables - prepayments received |
| Report on the First Three Quarters 2015/16 (1 May 2015 – 31 January 2016) | 02 March 2016 |
|---|---|
| Capital Markets Day in Frankfurt am Main | 15 March 2016 |
| Annual Result 2015/16 (1 May 2015 - 30 April 2016) | 22 June 2016 |
| Record Date Annual General Meeting | 12 July 2016 |
| 40th Annual General Meeting of Zumtobel Group AG | 22 July 2016 |
| Ex-Dividend Day | 29 July 2016 |
| Record Date Dividend | 01 August 2016 |
| Dividend Payout Day | 02 August 2016 |
| Report on the First Quarter 2016/17 (1 May 2016 - 31 July 2016) | 06 September 2016 |
| Report on the First Half-Year 2016/17 (1 May 2016 - 31 October 2016) | 06 December 2016 |
| Report on the First Three Quarters 2016/17 (1 May 2016 - 31 January 2017) | 07 March 2017 |
| Investor Relations Relations | Press / Corporate Communications Corporate Communications |
|---|---|
| Harald Albrecht | Astrid Kühn-Ulrich |
| Head of Investor Relations | Head of Corporate Communications |
| Telephone +43 (0)5572 509-1125 | Telephone +43 (0)5572 509-1570 |
| E-Mail [email protected] | E-Mail [email protected] |
Our financial reports are available in English and German for download under: http://www.zumtobelgroup.com. You can also order a copy by calling +43 (0)5572 509-1510.
on Zumtobel Group AG and our brands can be found in the Internet under:
www.zumtobelgroup.com www.zumtobel.com www.thornlighting.com www.tridonic.com
Publisher: Zumtobel Group AG, Investor Relations, Harald Albrecht Coordination Financials: Jan Güstemeyer Translation: Donna Schiller-Margolis Copyright: Zumtobel Group AG 2015
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This quarterly financial report includes statements on future developments, which are based on information available at the present time and involve risks and uncertainties that could cause the results realised at a later date to vary from these forward-looking statements. These statements on future developments are not to be under-stood as guarantees. On the contrary, future developments and results are dependent on a wide range of factors and connected with various risks and incalculable events. Moreover, they are based on assumptions that may prove to be incorrect. Included here, for example, are unforeseeable changes in the political, economic and business environment, especially in the regions where the Zumtobel Group operates, as well as the competitive situation, interest rates and foreign exchange rates, technological developments and other risks and incalculable events. Other risks may arise as a result of price developments, unforeseeable events in the operating environments of acquired companies or Group companies as well as ongoing cost optimisation programmes. The Zumtobel Group does not plan to update these forward-looking statements. This interim financial report is also presented in English, but only the German text is binding.
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