Quarterly Report • Nov 7, 2013
Quarterly Report
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Delticom is Europe's leading online tyre retailer. Founded in 1999, the Hanover-based company has more than 100 online shops in 42 countries, among others ReifenDirekt, www.mytyres.co.uk in UK and www.123pneus.fr in France, as well as the Tirendo shops which enjoy a high level of recognition, not least due to its brand ambassador, Sebastian Vettel. Delticom offers a wide range of products for its private and business customers: more than 25,000 models from over 100 tyre brands for cars, motorcycles, commercial vehicles and buses, but also complete wheels, motor oil, replacement parts and accessories.
Customers enjoy all the advantages of modern E-Commerce: convenience in order placing, quick, efficient delivery, clear cost information and, last but not least, low prices. The products are delivered in two business days to any address the customer chooses. Alternatively, Delticom delivers the tyres to one of more than 37,000 service partners (8,700 in Germany alone) for professional fitting directly on to the customer's vehicle at a reasonable price.
| Key Figures | 01.01.2013 | 01.01.2012 | –/+ | |
|---|---|---|---|---|
| – 30.09.2013 | – 30.09.2012 | (%, %p) | ||
| Revenues | € million | 309.1 | 280.4 | +10.2 |
| Total income | € million | 312.5 | 283.3 | +10.3 |
| 1 Gross margin |
% | 24.3 | 26.2 | –1.9 |
| Gross profit | € million | 78.5 | 76.3 | +2.8 |
| EBIT | € million | 9.7 | 17.5 | –44.5 |
| 2 EBIT margin |
% | 3.1 | 6.2 | –3.1 |
| Net income | € million | 6.2 | 11.7 | –47.5 |
| 3 Earnings per share |
€ | 0.52 | 0.99 | –47.5 |
| Total assets | € million | 233.1 | 181.4 | +28.5 |
| Inventories | € million | 120.7 | 126.5 | –4.6 |
| 4 Investments |
€ million | 1.1 | 1.0 | +8.6 |
| 5 Capital Employed |
€ million | 54.1 | 55.1 | –1.9 |
| 6 Return on Capital Employed |
% | 18.0 | 31.8 | –13.8 |
| Equity | € million | 46.3 | 52.3 | –11.4 |
| Equity ratio | % | 19.9 | 28.8 | –8.9 |
| Return on equity | % | 13.3 | 22.4 | –9.1 |
| 7 Liquidity position |
€ million | 9.2 | 15.0 | –38.5 |
| Operating cash flow | € million | 11.3 | 29.7 | |
| 8 Free cash flow |
€ million | 10.5 | 28.9 |
(1) Gross profit ex other operating income in % of revenues
(2) Consolidated earnings before interest and taxes (EBIT) to revenues
(3) Undiluted
(4) Investments in tangible and intangible assets
(5) Capital Employed = total assets – current liabilities
(6) ROCE = EBIT / Capital Employed
(7) Liquidity position = cash and cash equivalents + liquidity reserve
(8) Free cash flow = Operating cash flow – Capex
Macroeconomic developments While the prospects for the global economy continued to deteriorate over the course of the year, the third quarter showed first signs of stabilisation, albeit at a low level. Growth in emerging markets again failed to meet expectations.
With regard to the eurozone, many experts believe that the economy has bottomed out over past months. However, consumers in many countries are still being affected by high unemployment and the austerity measures put in place by some governments. On the other hand, Germany continues to profit from a stable economy and robust employment.
Development of the tyre market After an already weak prior-year, European 2013 summer tyre business failed again to show sales growth. German tyre dealers were unable to escape the impact from this general market trend. According to wdk (organisation of the German tyre manufacturers), summer tyres sales in the reporting period were down 10,2-% year on year.
Initial situation The share of tyres sold online is still relatively low compared to other product categories. However, buying online offers many advantages: Short delivery times, attractive prices and a large selection of products, even at peak times.
As a first mover, Delticom opened ReifenDirekt.de, one of Germany's first online tyre shops, as early as 2000. With more than 6 million customers in 42 countries, the company is the market leader in a growing sales channel.
Tirendo On 16.09.2013 Delticom acquired Tirendo, a young and innovative company with strengths in IT, marketing and branding. The Berlin-based team has quickly established Tirendo as a fast-growing online retailer of tyres. The brand is already enjoying a high level of recognition, not least due to TV campaigns with four-time Formula 1 world champion Sebastian Vettel, who serves as Tirendo brand ambassador.
In addition to the complementary approaches in terms of digital branding and customer acquisition, Tirendo runs a state-of-the-art IT infrastructure to execute its processes. This enables Tirendo to offer a broad selection in its shops and to swiftly and flexibly expand its product range. Today, Tirendo offers its customers not only car tyres, but also motorcycle tyres, complete wheels, rims and accessories.
Tirendo is active in eight European countries and had generated revenues of €-23.0-million until the date of acquisition.
Synergies Tirendo complements Delticom's existing shop portfolio with another strong brand. The acqusition will allow us to target additional consumer groups. As part of the Delticom Group, Tirendo has access to the extensive industry and logistical network of the Delticom Group in Hanover. As a result, European car drivers will benefiit even more from the advantages and simplicity of a purchase in our online shops.
Over the coming years we will make use of the complementary strengths of Delticom and Tirendo throughout the entire value chain to achieve a good balance between growth and profitability.
Tirendo Holding GmbH and Tirendo Deutschland GmbH (both companies hereinafter collectively referred to as Tirendo) are fully consolidated in the Delticom Group from the date of acquisition, 16.09.2013.
Group Delticom, Europe's leading online tyre retailer, generates the bulk of its revenues through sales of replacement tyres for cars, motorcycles, trucks and industrial vehicles.
The chart Revenues trend summarises the development of the quarterly revenues.
quarterly revenues in € million
Following a weak first half year, the European replacement market continued to lag expectations in the third quarter. Against this market trend, Delticom generated revenues of €-96.9-million in the past quarter (Q3-12: €-87.2-million) – an increase of 11.1-% year-on-year. For the 9M-13 reporting period as a whole, the company recognised revenues of €-309.1-million, an increase of 10.2-% year-onyear, after €-280.4-million in the prior-year period.
E-Commerce Revenues in the E-Commerce division with its 137 online shops increased yearon-year by 11.6-%, from €-268.7-million to €-299.8-million. The share of divisional revenues amounted to 97.0-%, compared to 95.8-% in the previous year.
Over the past quarter the company was able to acquire a total of 199-thousand new customers via its Delticom-shops (i.e. without Tirendo; Q3-12: 165-thousand, +20.9-%). As a result, over the course of the year the customer base grew by 634-thousand new customers (9M-12: 525-thousand, +20.7-%). During the same period 411-thousand existing customers made repeat purchases at Delticom (9M-12: 353-thousand, +16.4-%).
| in € thousand | ||||||||
|---|---|---|---|---|---|---|---|---|
| 9M13 | % | +% | 9M12 | % | +% | 9M11 | % | |
| Revenues | 309,062 | 100.0 | 10.2 | 280,438 | 100.0 | –5.8 | 297,695 | 100.0 |
| Primary Segments | ||||||||
| E-Commerce | 299,758 | 97.0 | 11.6 | 268,719 | 95.8 | –3.7 | 279,184 | 93.8 |
| Wholesale | 9,304 | 3.0 | –20.6 | 11,719 | 4.2 | –36.7 | 18,511 | 6.2 |
| Regions | ||||||||
| EU | 231,789 | 75.0 | 14.1 | 203,142 | 72.4 | –10.6 | 227,112 | 76.3 |
| Rest | 77,273 | 25.0 | 0.0 | 77,296 | 27.6 | 9.5 | 70,582 | 23.7 |
Transportation costs Among the other operating expenses, transportation costs is the largest line item. They increased in the reporting period from €-23.7-million by 14.7-% to €-27.2-million. The share of transportation costs against revenues went up from 8.4-% in 9M-12 to 8.8-% in 9M-13.
Warehousing costs Rents and overheads increased in 9M-13 by 10.7-%, from €-4.5-million to €-5.0-million. Stocking costs came in at prior year's level (9M-13: €-2.5-million, 9M-12: €-2.4-million).
Gross profit Altogether, the gross profit increased in the reporting period by 2.8-% year-onyear, from €-76.3-million to €-78.5-million. Gross profit in relation to total income of €-312.5-million (9M-12: €-283.3-million) amounted to 25.1-% (9M-12: 26.9-%).
EBIT EBIT for the reporting period came down by 44.5-% from €-17.5-million to €-9.7-million. This equates to an EBIT margin of 3.1-% (9M-12: 6.2-%). Third quarter EBIT saw a decline of 80.9-%, from prior-year's €-4.3-million to €-0.8-million or 0.8-% of revenues (Q3-12: 4.9-%).
Financial result Financial income for the nine months amounted to €-36.6-thousand (9M-12: €-26.0-thousand). Financial expenses decreased to €-71.1-thousand (9M-12: €-190.1-thousand), leading to a financial result of €-–34.6-thousand (9M-12: €-–164-thousand).
The table Abridged P+L statement summarises key income and expense items from multiple years' profit and loss statements.
quarterly, in € million
| in € thousand | ||||||||
|---|---|---|---|---|---|---|---|---|
| 9M13 | % | +% | 9M12 | % | +% | 9M11 | % | |
| Revenues | 309,062 100.0 | 10.2 | 280,438 100.0 | –5.8 | 297,695 100.0 | |||
| Other operating income | 3,479 | 1.1 | 23.6 | 2,815 | 1.0 | –52.6 | 5,939 | 2.0 |
| Total operating income | 312,541 101.1 | 10.3 | 283,253 101.0 | –6.7 | 303,633 102.0 | |||
| Cost of goods sold | 234,055 | 75.7 | 13.1 | 206,933 | 73.8 | –5.4 | 218,638 | 73.4 |
| Gross profit | 78,486 | 25.4 | 2.8 | 76,320 | 27.2 | –10.2 | 84,995 | 28.6 |
| Personnel expenses | 6,961 | 2.3 | 9.7 | 6,344 | 2.3 | 21.9 | 5,204 | 1.7 |
| Other operating expenses | 59,560 | 19.3 | 18.1 | 50,447 | 18.0 | 0.6 | 50,169 | 16.9 |
| EBITDA | 11,966 | 3.9 | –38.7 | 19,529 | 7.0 | –34.1 | 29,622 | 10.0 |
| Depreciation | 2,246 | 0.7 | 11.7 | 2,010 | 0.7 | 40.2 | 1,434 | 0.5 |
| EBIT | 9,720 | 3.1 | –44.5 | 17,518 | 6.2 | –37.9 | 28,188 | 9.5 |
| Net financial result | –35 | 0.0 | –78.9 | –164 | –0.1 –2765.0 | 6 | 0.0 | |
| EBT | 9,685 | 3.1 | –44.2 | 17,354 | 6.2 | –38.4 | 28,194 | 9.5 |
| Income taxes | 3,535 | 1.1 | –37.4 | 5,647 | 2.0 | –38.6 | 9,189 | 3.1 |
| Consolidated net income | 6,151 | 2.0 | –47.5 | 11,707 | 4.2 | –38.4 | 19,005 | 6.4 |
As of 30.09.2013 the balance sheet total amounted to €-233.1-million (31.12.2012: €-156.4-million).
Inventories Among the current assets, inventories is the biggest line item. Since the beginning of the year their value grew by €-46.6-million to €-120.7-million (31.12.2012: €-74.1-million). This corresponds to a share of 51.8-% of total assets (31.12.2012: 47.4-%, 30.09.2012: 69.7-%).
Receivables Trade receivables usually follow the seasons, but reporting date effects are often unavoidable. At the end of the quarter, the accounts receivable amounted to €-20.9-million (30.09.2012: €-15.7-million).
Payables In the wake of the inventory build-up, the accounts payable increased from €-74.8-million at the beginning of the year by €-61.9-million to €-136.7-million (30.09.2012: €-112.4-million). This corresponds to a share of 58.6-% of the balance sheet total (31.12.2012: 47.8-%, 30.09.2012: 62.0-%).
Liquidity position Liquidity (cash and cash equivalents plus liquidity reserve) as of 30.09.2013 totalled €-9.2-million (30.09.2012: €-15.0-million, 31.12.2012: €-46.2-million). The company's net cash position amounted to €-–18.0-million (liquidity less liabilities from current accounts, 30.09.2012: €-11.8-million).
| in € thousand | ||||||||
|---|---|---|---|---|---|---|---|---|
| 30.09.13 | % | +% | 31.12.12 | % | +% | 31.12.11 | % | |
| Assets | ||||||||
| Non-current assets | 70,456 | 30.2 357.8 | 15,391 | 9.8 | –7.7 | 16,669 | 10.0 | |
| Fixed assets | 69,371 | 29.8 377.1 | 14,540 | 9.3 | –9.7 | 16,098 | 9.7 | |
| Other non-current assets | 1,085 | 0.5 | 27.4 | 852 | 0.5 | 49.1 | 571 | 0.3 |
| Current assets | 162,667 | 69.8 | 15.4 | 140,982 | 90.2 | –5.8 | 149,695 | 90.0 |
| Inventories | 120,671 | 51.8 | 62.8 | 74,107 | 47.4 –30.4 | 106,492 | 64.0 | |
| Receivables | 32,798 | 14.1 | 58.4 | 20,707 | 13.2 | –1.4 | 21,006 | 12.6 |
| Liquidity | 9,199 | 3.9 –80.1 | 46,168 | 29.5 108.0 | 22,197 | 13.3 | ||
| Securities | 0 | 0.0 | 0 | 0.0 | 0 | 0.0 | ||
| Cash and cash equivalents | 9,199 | 3.9 –80.1 | 46,168 | 29.5 108.0 | 22,197 | 13.3 | ||
| Assets | 233,123 100.0 | 49.1 | 156,374 100.0 | –6.0 | 166,364 100.0 | |||
| Equity and Liabilities | ||||||||
| Long-term funds | 54,094 | 23.2 –17.5 | 65,560 | 41.9 –17.1 | 79,108 | 47.6 | ||
| Equity | 46,314 | 19.9 –26.1 | 62,636 | 40.1 –17.0 | 75,480 | 45.4 | ||
| Long-term debt | 7,780 | 3.3 166.1 | 2,924 | 1.9 –19.4 | 3,628 | 2.2 | ||
| Provisions | 313 | 0.1 103.7 | 154 | 0.1 411.2 | 30 | 0.0 | ||
| Liabilities | 7,467 | 3.2 169.6 | 2,770 | 1.8 –23.0 | 3,597 | 2.2 | ||
| Short-term debt | 179,029 | 76.8 | 97.1 | 90,814 | 58.1 | 4.1 | 87,256 | 52.4 |
| Provisions | 1,873 | 0.8 –14.0 | 2,177 | 1.4 –66.8 | 6,560 | 3.9 | ||
| Liabilities | 177,156 | 76.0 | 99.9 | 88,637 | 56.7 | 9.8 | 80,696 | 48.5 |
| Equity and Liabilities | 233,123 100.0 | 49.1 | 156,374 100.0 | –6.0 | 166,364 100.0 |
Operating cash flow Due to the net working capital increase in Q2 and the weaker earnings situation, the cash flow from ordinary business activities of €-11.3-million for the period under review was significantly lower than last year, at (9M-12: €-29.7-million).
The operating cash flow reflects the changes in net working capital at Tirendo from first-time consolidation (16.09.2013) to the end of the quarter.
Investments As part of the acquisition of Tirendo, Delticom paid €-–42.3-million as equity value (ex cash).
In the reporting period Delticom invested €-0.4-million into property, plant and equipment, after €-0.9-million the previous year. In total, the cash flow from investments was €-–43.1-million (30.09.2012: €-–0.8-million, 31.12.2012: €-–1.0-million).
Financing activities In the reporting period, Delticom recorded a cash flow from financing activities amounting to €-–5.0-million, thereof the dividend payout for the last financial year of €-22.5-million and disbursements due to redemption of loans of €-7.5-million. The cash outflow was offset by inflows from shortterm financial liabilities of €-24.9-million and €-0.1-million capital increase from the excercise of stock options. The redemption of loans includes the repayment of €-6.6-million of shareholder loans which were purchased from former shareholders of Tirendo as part of the acquisition.
The acquisition of Tirendo was funded with cash and credit lines. Follow-up financing is planned in Q4.
Based on the cash flow, the chart Liquidity Bridge illustrates how the liquidity position changed in the trailing 12 months.
Legal structure As of 30.09.2013, the Delticom Group comprised the following subsidiaries.
An overview of all subsidiaries of Tirendo Holding GmbH can be found in the notes in the section Group of consolidated companies.
Delticom AG owns 100-% of the shares in Delticom North America Inc. and its new subsidiary Wholesale Tire and Automotive Inc., founded on 19.07.2013.
Delticom holds a majority interest in Singapore-based Tyrepac Pte. Ltd and its subsidiaries amounting to 50.9-%. Of the other subsidiaries, Delticom AG owns 100-% of the outstanding shares.
Employees In the reporting period an average of 148 persons were employed at Delticom (9M-12: 143), thereof 8 apprentices and trainees.
There were no events of particular importance after the end of the period under review.
As a company that operates internationally, Delticom is exposed to varying types of risk. In order to be able to identify, evaluate and respond to such risks in a timely fashion, Delticom put in place a risk management system early on. The system is based on corporate guidelines for the early risk detection and risk management. An outline of the risk management process is presented in the Annual Report for fiscal year 2012 on pages 42ff, together with a list of key individual risks.
The improvement of our market position by means of acquisitions and interests is a part of our corporate strategy. We work to keep the risk from entering into business combinations within acceptable limits by means of preliminary due diligence audits and fairness opinions. We also analyse investment opportunities with regard to their strategic relevance and profitability.
Concerning other risks stated in the Annual Report 2012, the risk situation has not changed materially. Individual risks endangering the company do not exist, and considered together, the aggregate risk does not pose any danger to Delticom's going concern.
| Economic environment | In spite of a more optimistic mood, the eurozone is only recovering slowly from the crisis. Nevertheless, it remains to be seen to what extent a further improve ment in sentiment and the ongoing fiscal consolidation in the crisis countries will contribute to further growth. |
|---|---|
| Prospects for the German economy remain comparatively good due to stable labour market. |
|
| Tyre retail | After a disappointing summer tyre business, the hopes of the German tyre trade are on the the all-important fourth quarter. Unfortunately, due to mild weather conditions across Europe, the winter season has not taken-off yet. Experts predict that, even in case of the winter business gaining momentum, revenues are un likely to grow year-on-year. The development of tyre prices will also depend on the weather to a considerable extent. |
| In the past months, tyre dealers have only been cautiously stocking up for the winter season. If the remaining weeks of the fourth quarter see some good snowfall, shortages in some tyre dimensions might crop up. |
|
| Forecast | Despite the disappointing weather conditions so far, Delticom should be able to exceed previous year's revenues. The company will once again significantly out perform the industry as a whole in 2013, regardless of broader sector develop ments. |
| The development of the Tirendo brand will affect profits in the coming quarters. Our focus is therefore on the rapid integration of business processes in order to make the best use of existing synergies. |
|
| With its shops in Hanover and Berlin, the Delticom Group is well positioned to drive future growth and strengthen its position as the market leader. |
|
| Medium term outlook | For the medium term we expect revenues to grow double-digit. We are confident that Delticom will continue to grow at a rate above the market trend. |
| 01.01.2013 | 01.01.2012 | 01.07.2013 | 01.07.2012 | |
|---|---|---|---|---|
| in € thousand | – 30.09.2013 | – 30.09.2012 | – 30.09.2013 | – 30.09.2012 |
| Revenues | 309,062 | 280,438 | 96,855 | 87,168 |
| Other operating income | 3,479 | 2,815 | 789 | 747 |
| Total operating income | 312,541 | 283,253 | 97,644 | 87,915 |
| Cost of goods sold | –234,055 | –206,933 | –73,550 | –64,761 |
| Gross profit | 78,486 | 76,320 | 24,094 | 23,154 |
| Personnel expenses | –6,961 | –6,344 | –2,416 | –1,970 |
| Depreciation of intangible assets and property, plant and equipment |
–2,246 | –2,010 | –901 | –678 |
| Other operating expenses | –59,560 | –50,447 | –19,963 | –16,235 |
| Earnings before interest and taxes (EBIT) | 9,720 | 17,518 | 815 | 4,271 |
| Financial expenses | –71 | –190 | –36 | –81 |
| Financial income | 37 | 26 | 9 | 3 |
| Net financial result | –35 | –164 | –27 | –78 |
| Earnings before taxes (EBT) | 9,685 | 17,354 | 788 | 4,193 |
| Income taxes | –3,535 | –5,647 | –645 | –1,276 |
| Consolidated net income | 6,151 | 11,707 | 143 | 2,917 |
| Thereof allocable to: | ||||
| Shareholders of Delticom AG | 6,151 | 11,707 | ||
| Earnings per share (basic) | 0.52 | 0.99 | ||
| Earnings per share (diluted) | 0.51 | 0.98 |
| 01.01.2013 | 01.01.2012 | 01.07.2013 | 01.07.2012 | |
|---|---|---|---|---|
| in € thousand | – 30.09.2013 | – 30.09.2012 | – 30.09.2013 | – 30.09.2012 |
| Consolidated Net Income | 6,151 | 11,707 | 143 | 2,917 |
| Changes in the financial year recorded directly in equity | ||||
| Changes in currency translation | –135 | 31 | –111 | –45 |
| Net Investment Hedge Reserve | ||||
| Changes in current value recorded directly in equity | 37 | 0 | 10 | 0 |
| Deferred taxes relating to Net Investment Hedge Reserve | –12 | 0 | –3 | 0 |
| Other comprehensive income for the period | –109 | 31 | –104 | –45 |
| Total comprehensive income for the period | 6,042 | 11,738 | 39 | 2,871 |
| in € thousand | 30.09.2013 | 31.12.2012 |
|---|---|---|
| Non-current assets | 70,456 | 15,391 |
| Intangible assets | 57,328 | 1,053 |
| Property, plant and equipment | 11,194 | 12,660 |
| Financial assets | 848 | 826 |
| Deferred taxes | 571 | 335 |
| Other receivables | 515 | 517 |
| Current assets | 162,667 | 140,982 |
| Inventories | 120,671 | 74,107 |
| Accounts receivable | 20,922 | 9,585 |
| Other current assets | 5,449 | 8,173 |
| Income tax receivables | 6,427 | 2,949 |
| Cash and cash equivalents | 9,199 | 46,168 |
| Assets | 233,123 | 156,374 |
| in € thousand | 30.09.2013 | 31.12.2012 |
|---|---|---|
| Equity | 46,314 | 62,636 |
| Subscribed capital | 11,859 | 11,847 |
| Share premium | 24,446 | 24,311 |
| Other components of equity | –111 | –2 |
| Retained earnings | 200 | 200 |
| Net retained profits | 9,920 | 26,279 |
| Liabilities | 186,809 | 93,738 |
| Non-current liabilities | 7,780 | 2,924 |
| Long-term borrowings | 1,350 | 2,250 |
| Non-current provisions | 313 | 154 |
| Deferred tax liabilities | 6,117 | 520 |
| Current liabilities | 179,029 | 90,814 |
| Provisions for taxes | 128 | 432 |
| Other current provisions | 1,745 | 1,745 |
| Accounts payable | 136,705 | 74,814 |
| Short-term borrowings | 25,820 | 905 |
| Other current liabilities | 14,631 | 12,918 |
| Shareholders' equity and liabilities | 233,123 | 156,374 |
| 01.01.2013 | 01.01.2012 | |
|---|---|---|
| in € thousand | – 30.09.2013 | – 30.09.2012 |
| Earnings before interest and taxes (EBIT) | 9,720 | 17,518 |
| Depreciation of intangible assets and property, plant and equipment | 2,246 | 2,010 |
| Changes in other provisions | 159 | –759 |
| Net gain on the disposal of assets | –240 | –65 |
| Changes in inventories | –46,564 | –19,965 |
| Changes in receivables and other assets not allocated to | ||
| investing or financing activity | –6,602 | –3,432 |
| Changes in payables and other liabilities not allocated to | ||
| investing or financing activity | 59,834 | 43,907 |
| Interest received | 36 | 27 |
| Interest paid | –69 | –191 |
| Income tax paid | –7,254 | –9,318 |
| Cash flow from operating activities | 11,267 | 29,731 |
| Proceeds from the disposal of property, plant and equipment | 331 | 217 |
| Payments for investments in property, plant and equipment | –406 | –936 |
| Proceeds from the disposal of intangible assets | 3 | 0 |
| Payments for investments in intangible assets | –704 | –91 |
| Payments for investments in financial assets | –5 | 0 |
| Auszahlung für den Erwerb konsolidierter Tochterunternehmen | –42,343 | 0 |
| Cash flow from investing activities | –43,125 | –811 |
| Dividends paid by Delticom AG | –22,510 | –34,950 |
| Payments from additions to capital | 147 | 0 |
| Cash inflow of financial liabilities | 24,915 | –343 |
| Cash outflow of financial liabilities | –7,529 | –900 |
| Cash flow from financing activities | –4,977 | –36,193 |
| Changes in cash and cash equivalents due to currency translation | –135 | 31 |
| Cash and cash equivalents at the start of the period | 46,168 | 22,197 |
| Changes in cash and cash equivalents | –36,969 | –7,242 |
| Cash and cash equivalents - end of period | 9,199 | 14,955 |
| For information only: | ||
| Liquidity – start of period | 46,168 | 22,197 |
| Changes in cash and cash equivalents | –36,969 | –7,242 |
| Liquidity – end of period | 9,199 | 14,955 |
| Net Cash – start of period | 43,013 | 17,803 |
| Changes in cash and cash equivalents | –36,969 | –7,242 |
| Changes in financial liabilities | –17,386 | 1,243 |
| Net Cash – end of period | –11,342 | 11,803 |
| Accumulated profits / losses | ||||||||
|---|---|---|---|---|---|---|---|---|
| Net Invest | ||||||||
| Sub | Reserve from | ment | Net | |||||
| scribed | Share | currency | Hedge | Retained | retained | Total | ||
| in € thousand | capital | premium | translation | Reserve | earnings | profits | total | equity |
| as of 1 January 2012 | 11,847 | 24,311 | 50 | 0 | 200 | 39,072 | 39,272 | 75,480 |
| Dividends paid | –34,950 | –34,950 –34,950 | ||||||
| Total comprehensive income for | ||||||||
| the period | 31 | 11,707 | 11,707 | 11,738 | ||||
| as of 30 September 2012 | 11,847 | 24,311 | 80 | 0 | 200 | 15,829 | 16,029 | 52,268 |
| as of 1 January 2013 | 11,847 | 24,311 | –2 | 200 | 26,279 | 26,479 | 62,636 | |
| Shares of capital increase | 12 | 12 | ||||||
| Capital increase of issue new | ||||||||
| shares | 135 | 135 | ||||||
| Dividends paid | –22,510 | –22,510 –22,510 | ||||||
| Total comprehensive income for | ||||||||
| the period | –135 | 25 | 6,151 | 6,151 | 6,042 | |||
| as of 30 September 2013 | 11,859 | 24,446 | –136 | 25 | 200 | 9,920 | 10,119 | 46,314 |
| in € thousand | E-Commerce | Wholesale | not allocated | Group |
|---|---|---|---|---|
| Revenues | 299,758 | 9,304 | 0 | 309,062 |
| Other operating income | 3,101 | 42 | 337 | 3,479 |
| Cost of goods sold | –225,754 | –8,301 | 0 | –234,055 |
| Gross profit | 77,105 | 1,045 | 337 | 78,486 |
| Personnel expenses | –3,744 | –160 | –3,057 | –6,961 |
| Depreciation and amortization | –2,130 | 0 | –116 | –2,246 |
| thereof property, plant and equipment | –1,812 | 0 | –71 | –1,883 |
| thereof intangible assets | –318 | 0 | –44 | –362 |
| Other operating expenses | –56,588 | –326 | –2,646 | –59,560 |
| thereof bad debt losses and one-off loan provisions |
–1,311 | 0 | 0 | –1,311 |
| Segment result | 14,643 | 558 | –5,481 | 9,720 |
| Net financial result | –35 | |||
| Income taxes | –3,535 | |||
| Consolidated net income | 6,151 |
| in € thousand | E-Commerce | Wholesale | not allocated | Group |
|---|---|---|---|---|
| Revenues | 268,719 | 11,719 | 0 | 280,438 |
| Other operating income | 2,703 | 101 | 10 | 2,815 |
| Cost of goods sold | –196,442 | –10,491 | 0 | –206,933 |
| Gross profit | 74,980 | 1,330 | 10 | 76,320 |
| Personnel expenses | –3,096 | –477 | –2,772 | –6,344 |
| Depreciation and amortization | –1,902 | –1 | –107 | –2,010 |
| thereof property, plant and equipment | –1,829 | –1 | –66 | –1,896 |
| thereof intangible assets | –73 | 0 | –42 | –115 |
| Other operating expenses | –48,258 | –345 | –1,844 | –50,447 |
| thereof bad debt losses and one-off loan provisions |
–935 | 0 | 0 | –935 |
| Segment result | 21,723 | 507 | –4,713 | 17,518 |
| Net financial result | –164 | |||
| Income taxes | –5,647 | |||
| Consolidated net income | 11,707 |
Delticom, Europe's leading online tyre retailer, was founded in Hanover in 1999. With 137 online shops in 42 countries, the company offers its private and business customers a broad assortment of car tyres, motorcycle tyres, truck tyres, bus tyres, special tyres, bicycle tyres, rims, complete wheels (pre-mounted tyres on rims), selected replacement car parts and accessories, motor oil and batteries. Further information about the reporting company can be found in the chapter Business Operations and in the chapter Organisation of the annual report 2012.
In many countries, business with car replacement tyres depends to a large extent on the seasons with their different weather and road conditions. For example, the business in the northern parts of Europe and in German-speaking countries is characterized by two peak periods - the purchase of summer tyres in spring and winter tyres in early winter. Volume is generally weaker in the first quarter, as most winter tyres are bought and fitted with the first snow, and thus before the end of the year. The second quarter is characterized by strong sales: the weather in April and May is usually quite warm and car drivers buy their new summer tyres.
The third quarter is a transitional quarter between the summer and winter business, with unit sales again being somewhat weaker. In most European countries, the last quarter generates the highest sales as car drivers face difficult road conditions and become aware of the fact that they need new tyres.
Delticom's consolidated interim financial statements as of 30.09.2013 were prepared according to the International Financial Reporting Standards (IFRS), as prescribed by the International Accounting Standards Board (IASB), that were mandatory according to the European Union (EU) Directive. All applicable and mandatory IFRS standards on the balance sheet date were applied, especially IAS 34 (Interim Financial Reporting).
To the extent that there were no changes to standards requiring first-time application, the accounting, valuation and calculation methods explained in the 2012 Consolidated Financial Statements have also been applied in this set of interim financial statements, and apply correspondingly.
These interim financial statements contain all clarifications and information required for annual financial statements, and can therefore be read in conjunction with the annual financial statements as of 31.12.2012.
The Annual Report 2012 is made available on the Delticom website in the section Investor Relations or can be downloaded directly using the following link:
www.delti.com/Investor\_Relations/Delticom\_AnnualReport\_2012.pdf
One deviation from the Annual Report 2012 was the recognition for the first time of a net investment hedge reserve in equity. A net investment hedge uses derivative or non-derivative financial instruments to hedge exchange rate-related fluctuations in the net assets of foreign business operations by recognizing the effective portion of the exchange rate-related fluctuations of the hedging instruments within equity in the net investment hedge reserve and thus compensating the exchange rate-related fluctuations in the net assets of the foreign business operations.
In the case of the sale of part or all of the foreign operation, the amount previously shown in the net investment hedge reserve is recognized in profit or loss.
The group of consolidated companies comprises Delticom AG as controlling company, four domestic and four foreign subsidiaries, all fully consolidated in the interim financial accounts.
The group of fully consolidated companies has changed in the reporting period by the following accesses since 01.01.2013:
Due to its negligible impact on Delticom's net assets, financial position and results of operations, the following companies are not consolidated, but instead recognized as a financial instrument pursuant to IAS 39.
The Tyrepac Pte. Ltd., Singapore of which Delticom owns 50.9-% of the shares, and Tyrepac's fully owned subsidiaries Hongkong Tyrepac Ltd., Hongkong and Guangzhou Tyrepac Trading Ltd., Guangzhou, China.
Tirendo Switzerland Holding UG, Berlin (Germany) 100-% subsidiary of Tirendo Holding GmbH and its 100-% subsidiary Tirendo Switzerland GmbH, Zug (Switzerland)
Tirendo Poland Holding UG, Berlin (Germany) 100-% subsidiary of Tirendo Holding GmbH and its 100-% subsidiary Tirendo Poland sp.z.o.o., Warsaw (Poland)
Identifiable and recognisable assets, liabilities and contingent liabilities of an acquired business are always reported at their fair value at the transaction date. Any remaining differences between the acquisition costs and the acquired net assets are recognized as goodwill.
On 16.09.2013, Delticom acquired 100-% of Tirendo, a Berlin-based online tyre retailer (share deal). The provisional purchase price amounts to €-43.6-million and was paid in cash. In addition, Delticom paid €-6.6-million in cash to the former shareholders to redeem shareholder loans.
Tirendo complements Delticom's existing shop portfolio with another strong brand. The acqusition will allow Delticom to target additional consumer groups. As part of the Delticom Group, Tirendo has access to the extensive industry and logistical network of the Delticom Group in Hanover. As a result, European car drivers will benefiit even more from the advantages and simplicity of a purchase in the Group's online shops. Over the coming years the Management we will make use of the complementary strengths of Delticom and Tirendo throughout the entire value chain to achieve a good balance between growth and profitability.
The following fair values of the identifiable assets and liabilities were recognised as first-time consolidation amounts:
| Fair Vaues at acquisition date in € thousand |
||
|---|---|---|
| Non-current assets | 17,719 | |
| Accounts receivable | 1,400 | |
| Other current assets | 556 | |
| Cash and cash equivalents | 1,257 | |
| Assets total | 20,933 | |
| Deferred tax liabilities | 5,299 | |
| Other current provisions | 135 | |
| Accounts payable | 3,062 | |
| Other current liabilities | 7,225 | |
| there of shareholder loans | 6,629 | |
| Liabilities total | 15,721 | |
| Net assets | 5,212 | |
| Goodwill | 38,388 | |
| Total purchase price | 43,600 |
The intangible assets identified as part of the purchase price allocation with a total value of €-17.5-million and their expected useful lives are listed in the following table:
| in € thousand | Fair Value | Useful life years |
|---|---|---|
| Customer Relationships | 615 | 5 |
| Trademarks | 8,223 | 5 |
| Rights of sale | 6,539 | 2 |
| Software | 2,167 | 5 |
The assessment of the non-tax-deductible loss carryforwards, and consequently the formation of related deferred taxes, has not yet been finalised. The purchase price allocation can be adjusted within one year following acquisition.
The main factors determining the goodwill are primarily the strategically well-positioned marketing appearance of the Tirendo group, the workforce, employee know-how and synergies resulting from the merger. The goodwill is not amortisable for tax purposes.
The acquired trade accounts receivable carry a fair value of €-1.4-million. The receivables amount to €-1.8-million on a gross basis, of which €-0.4-million was categorised as uncollectible and written down accordingly.
Between 16.09.2013 and 30.09.2013 the Tirendo group generated revenues of €-2.9-million and net income of €-–0.8-million. If the transaction had already been completed by 01.01.2013, Tirendo would have added 2013 revenues of €-25.8-million. The impact on consolidated net income would have been €-–10.4-million.
Incidental acquisition costs of €-1.1-million as a result of the transaction were recognised under Other operating expenses and reduced profit.
No significant matters have arisen that affect the assets, liabilities, equity, result for the period, or cash flows, and which are unusual for Delticom AG's business due to their type, extent or frequency. Business trends are explained in the interim management report.
The following table shows the development of the other operating expenses.
| in € thousand | 9M13 | 9M12 |
|---|---|---|
| Transportation costs | 27,163 | 23,686 |
| Warehousing costs | 2,457 | 2,427 |
| Credit card fees | 2,493 | 2,201 |
| Bad debt losses and one-off loan provisions | 1,311 | 935 |
| Marketing costs | 10,325 | 6,700 |
| Operations centre costs | 3,763 | 3,867 |
| Rents and overheads | 5,005 | 4,520 |
| Financial and legal costs | 2,621 | 755 |
| IT and telecommunications | 1,020 | 881 |
| Expenses from exchange rate differences | 2,151 | 3,139 |
| Other | 1,251 | 1,335 |
| Total | 59,560 | 50,447 |
Detailed information with regards to business trends and the profit and loss statement can be found in the chapter Business performance and earnings situation of the interim management report. The chapter Financial and assets position presents additional Information concerning the balance sheet and the cash flow statement.
As part of a stock option program, Delticom has granted to Frank Schuhardt (CFO) option rights that are settled with equity instruments. This commitment is based on the option terms of 09.08.2007. On 02.05.2013, Mr. Schuhardt exercised 12,000 options from the 25.11.2008 tranche. The exercise price amounted to € 12.227 per ordinary share. This transaction increased the subscribed capital by €-12,000.00 to €-11,859,440.00. The capital reserves increased by €-134,724.00 to €-24,446,102.69.
Basic earnings per share totalled €-0.52 (9M-12: €-0.99). The diluted earnings per share totalled €-0.51 (9M-12: €-0.98).
Pursuant to IAS-33, undiluted (basic) earnings per share are calculated by dividing the consolidated net income of €-6,150,836.71 (previous year: €-11,707,499.68) by the 11,854,082 weighted average number of ordinary shares in circulation during the financial year (previous year: 11,847,440 shares).
During the period under review, there were 15,810 potential shares (financial instruments and other agreements which entitle their holders to subscribe to ordinary shares) from the tranche dated 22.11.2007, 37,500 potential shares from the tranche dated 08.05.2008, 17,500 potential shares from the tranche dated 25.11.2008 and 15,000 potential shares from the tranche dated 30.03.2009. The exercise prices for the tranches 22.11.2007, 08.05.2008, 25.11.2008 and 30.03.2009 were below the average share prices since the options were issued on 22.11.2007, 08.05.2008, 25.11.2008 and 30.03.2009. As a result all tranches are included in the diluted earnings per share.
The calculation of the diluted earnings per share was based (in accordance with IAS-33) on net income after taxes totalling €-6,150,836.71 (previous year: €-11,707,499.68) and the weighted average number of shares outstanding during the fiscal year and the number of potential shares from options totalling 11,945,250 shares (previous year: 11,945,250 shares).
On 02.05.2013 Delticom has paid a dividend of €-1.90 for fiscal year 2012 (previous year: €-2.95)
Related companies and persons in the meaning of IAS 24 include the Managing and Supervisory boards of Delticom AG (category persons in key positions), the majority shareholders Binder GmbH and Prüfer GmbH (category companies with a significant influence on the Group), as well as not cosolidated subsidiaries (category not cosolidated subsidiaries). All transactions with related parties are agreed contractually, and conducted on terms as would also be usual with third parties. Transactions which occured during the interim reporting period did not have any signifanct effects on the earnings, financial and asset positions.
Related companies and persons (Category persons in key positions): In the reporting period, goods and services worth €-235-thousand (9M-12: €-521-thousand) were purchased from related companies and persons, and goods and services worth €-1-thousand (9M-12: €-1-thousand) were sold to related companies and persons. Accounts receivable from business with related companies and persons amounted to €-1-thousand (9M-12: €-0-thousand) and accounts payable totalled €-9-thousand (9M-12: €-53-thousand).
Related companies and persons (category not cosolidated subsidiaries): In the reporting period, goods and services worth €-0-thousand (9M-12: €-51-thousand) were purchased from related companies and persons, and goods and services worth €-1,743-thousand (9M-12: €-923-thousand) were sold to related companies and persons. Accounts receivable from business with related companies and persons amounted to €-1,407-thousand (9M-12: €-538-thousand) and accounts payable totalled €-0-thousand (9M-12: €-0-thousand). Other current assets amounted to €-195-thousand (9M-12:-€-0-thousand) and other current liabilities totalled €-185-thousand (9M-12:-€-0-thousand)
As compared to 31.12.2012, the situation with regards to other financial commitments has not changed significantly. As of the reporting date, there were no contingent liabilities or claims.
From 01.01.2013 to 30.09.2013 Delticom had an average of 148 employees (thereof 8 apprentices and interns). The calculation is based on full-time equivalents, thus taking into account the actual work hours.
There were no key events that occurred after the reporting date.
The interim financial statements and the interim management report has not been reviewed by our auditors.
The website www.delti.com/Investor\_Relations/Entsprechungserklaerung.html shows the current statements made by the Managing and Supervisory boards of Delticom AG pursuant to Section 161 of the German Public Limited Companies Act (AktG).
To the best of our knowledge, we declare that, according to the principles of proper interim consolidated reporting applied, the interim consolidated financial statements provide a true and fair view of the company's net assets, financial position and results of operations, that the interim consolidated management report presents the company's business including the results and the company's position such as to provide a true and fair view and that the major opportunities and risks of the company's anticipated growth for the remaining financial year are described.
Hanover, 07.11.2013
(The Management Board)
WKN 514680 ISIN DE0005146807 Reuters / Bloomberg DEXGn.DE / DEX GR Index membership SDAX, CXPR, GEX, NISAX Type of shares No-par value, registered Transparency level Prime Standard
12 November 2013 German Equity Forum
| 01.01.2013 – 30.09.2013 |
01.01.2012 – 31.12.2012 |
||
|---|---|---|---|
| Number of shares | shares | 11,859,440 | 11,847,440 |
| 1 Share price on first trading day |
€ | 32.88 | 67.00 |
| 1 Share price on last trading day of the period |
€ | 41.66 | 32.30 |
| 1 Share performance |
% | +26.7 | –51.8 |
| 1 Share price high/low |
€ | 42.87 / 31.43 | 82,51 / 30,74 |
| 2 Market capitalisation |
€ million | 494.1 | 382.7 |
| Average trading volume per day (XETRA) | shares | 20,498 | 28,309 |
| EPS (undiluted) | € | 0.52 | 1.87 |
| EPS (diluted) | € | 0.51 | 1.85 |
| Equity per share | € | 3.91 | 5.29 |
(1) based on closing prices
(2) based on official closing price at end of quarter
| Estimates for 2013 | Estimates for 2014 | ||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|
| Broker | Analyst | Recommen dation |
Target price |
Sales (€m) |
EBIT (€m) |
EBIT (%) |
EPS (€) |
Sales (€m) |
EBIT (€m) |
EBIT (%) |
EPS (€) |
| NordLB | Frank Schwope | Buy | 43.00 | 501.0 | 31.0 | 6.2 | 1.76 | 544.0 | 35.9 | 6.6 | 2.03 |
| Metzler | Jürgen Pieper | Sell | 36.00 | 495.0 | 33.0 | 6.7 | 1.70 | 590.0 | 38.5 | 6.5 | 2.05 |
| Exane | Andreas Inderst | Outperform | 51.00 | 516.4 | 18.6 | 3.6 | 1.00 | 657.4 | 24.2 | 3.7 | 1.35 |
| Berenberg | Stanislaus Thurn und Taxis |
Hold | 40.50 | 484.0 | 33.0 | 6.8 | 1.89 | 540.0 | 39.0 | 7.2 | 2.13 |
| Deutsche Bank | Tim Rokossa | Hold | 35.00 | 511.0 | 31.0 | 6.1 | 1.77 | 573.0 | 39.0 | 6.8 | 2.22 |
| BH Lampe | Christian Ludwig | Sell | 28.00 | 498.6 | 25.4 | 5.1 | 1.46 | 536.0 | 29.0 | 5.4 | 1.67 |
| Commerzbank | Dennis Schmitt | Add | 47.00 | 529.0 | 26.7 | 5.0 | 1.47 | 657.0 | 32.4 | 4.9 | 1.80 |
| HSBC | Christopher Johnen | Neutral | 40.00 | 531.4 | 25.1 | 4.7 | 1.42 | 626.3 | 21.2 | 3.4 | 1.20 |
| Hauk & Aufhäuser | Sascha Berresch | Sell | 33.00 | 493.8 | 32.1 | 6.5 | 1.84 | 539.1 | 36.5 | 6.8 | 2.09 |
| Montega | Hendrik Emrich | Sell | 30.00 | 470.0 | 29.9 | 6.4 | 1.69 | 500.0 | 32.2 | 6.4 | 1.83 |
| Average | 38.35 | 503.0 | 28.6 | 5.7 | 1.60 | 576.3 | 32.8 | 5.8 | 1.84 |
as of 1 November 2013
| Publisher | Delticom AG |
|---|---|
| Brühlstraße 11 | |
| 30169 Hanover | |
| Germany | |
| Contact Investor Relations | Melanie Gereke |
| Brühlstraße 11 | |
| 30169 Hanover | |
| Phone: +49-511-93634-8903 | |
| E-Mail: [email protected] | |
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