MBB SE — Interim / Quarterly Report 2015

Nov 30, 2015

QUARTERLY FINANCIAL REPORT SEPTEMBER 30, 2015

MBB SE, Berlin

MBB in figures

Nine months	2015	2014	Δ 2015 /
(unaudited)			2014
	IFRS	IFRS
Earnings figures	€ thou	€ thou	%
Revenue	186,571	172,875	7.9
Operating performance	186,184	173,360	7.4
Total performance	190,467	178,475	6.7
Cost of materials	-119,893	-109,572	9.4
Staff costs	-42,454	-39,046	8.7
EBITDA	17,419	17,984	-3.1
EBITDA margin	9.4%	10.4%
EBIT	12,245	13,345	-8.2
EBIT margin	6.6%	7.7%
EBT	11,408	12,741	-10.5
EBT margin	6.1%	7.3%
Consolidated net profit after
non-controlling interests	8,947	9,786	-8.6
Number of shares	6,600,000	6,600,000
eps in €*	1.36	1.49	-8.7
Figures from the statement	30 Sep	31 Dec
of financial position	€ thou	€ thou	%
Non-current assets	77,629	75,593	2.7
Current assets	120,756	121,098	-0.3
there of cash and equivalents**	55,791	58,672	-4.9
Issued capital (share capital)	6,587	6,600	-0.2
Other equity	73,731	71,953	2.5
Total equity	80,318	78,553	2.2
Equity ratio	40.5%	39.9%
Non-current liabilities	51,502	53,459	-3.7
Current liabilities	66,565	64,679	2.9
Total assets	198,385	196,691	0.9
Net debt (-) or
net cash (+)**	20,622	24,345	-15.3
Employees	1,187	1,152	3.0

* Based on the average number of shares outstanding as at 30 September.

** This figure includes physical gold stocks and securities.

Contents

MBB in figures	1
Contents	2
Interim Group Management Report	3
Business and economic conditions	3
Results of operations, financial position and net assets	3
Segment performance	3
Employees	4
Report on risks and opportunities	4
Share buy-back programme	4
Implementation of the capital resolutions adopted by the Annual General Meeting	4
Supplementary report	4
Report on expected developments	5
IFRS Consolidated Interim Financial Statements for 2015	6
Notes to the interim consolidated financial statements	13
Accounting	13
Accounting policies	13
Segment reporting	13
Dividend	13
Changes in contingent liabilities	14
Related party transactions	14
Events after the end of the reporting period	14
Review	14
Responsibility statement	14
Financial Calendar	15
Contact	15
Legal notice	15

Interim Group Management Report

MBB SE is a family-owned, medium-sized corporation that forms the MBB Group together with its subsidiaries.

Business and economic conditions

The first nine months of 2015 saw global economic growth that has lost momentum. The situation in the industrialised nations improved on the whole, but most of the emerging economies recorded growth that was substantially slower in some cases and find themselves facing different challenges. Within Europe, the northern countries saw solid development and also the southern economies enjoyed rising growth rates. Export-oriented companies in particular are benefiting from the current weakness of the euro. By contrast, the economic situation in Eastern Europe remains strained, due to, among other things, the conflict between Russia and Ukraine.

The sub-markets relevant to MBB are seeing solid development. In the automotive industry, the assessment of the current situation and business expectations have improved recently, despite the VW emissions scandal, the consequences of which are not yet foreseeable. A major driver of economic growth within Germany is domestic demand, which increased due to rising employment and increased income in particular. MBB's subsidiaries have a high order backlog and stable incoming orders.

Results of operations, financial position and net assets

The Group's results of operations, net assets and financial position are positive. In the first nine months of the 2015 financial year, the consolidated revenue of the MBB Group was up 7.9% year-on-year at €186.6 million (previous year: €172.9 million).

Other operating income of €4.3 million (previous year: €3.8 million) includes income from sales of securities and other income from securities of €3.3 million, income from currency translation of €0.1 million as well as other income of €0.9 million.

The ratio of cost of materials to the total operating performance of €186.2 million in the first nine months of 2015 (previous year: €173.4 million) climbed from 63.2% in the same period of the previous year to 64.4%.

EBITDA (earnings before interest, taxes, depreciation and amortisation) fell by 3.1% to €17.4 million (previous year: €18.0 million). After depreciation and amortisation of €5.2 million, EBIT (earnings before interest and taxes) for the MBB Group amounted to €12.2 million (previous year: €13.3 million). Adjusted for net finance costs of minus €0.8 million, EBT (earnings before taxes) amounted to €11.4 million (previous year: €12.7 million). The consolidated net profit after non-controlling interests was €8.9 million (previous year: €9.8 million) or €1.36 per share (based on an average of 6,591,448 shares outstanding) in the first nine months.

The consolidated statement of financial position as at 30 September 2015 reported equity of €80.3 million (31 December 2014: €78.6 million). Based on total consolidated assets of €198.4 million, the equity ratio was therefore 40.5% after 39.9% as at 31 December 2014.

As at 30 September 2015, the MBB Group had financial liabilities of €35.2 million (31 December 2014: €34.3 million) and cash and cash equivalents including securities and physical gold reserves of €55.8 million (31 December 2014: €58.7 million). Accordingly, net cash from the above liabilities and cash positions of the MBB Group amounted to €20.6 million compared to €24.3 mi llion as at 31 December 2014. The reduction in net cash is due to the dividend payment of €3.8 million on 1 July 2015 in particular.

Segment performance

The following segments are reported:

• Technical Applications
• Industrial Production
• Trade & Services

Revenue and EBIT in the Technical Applications segment remained largely unchanged. In the first nine months of 2015, external revenue in this segment amounted to €101.0 million (previous year: €102.1 million) and segment EBIT amounted to €7.5 million (previous year: €8.7 million). This was due to the more muted performance of MBB Fertigungstechnik compared with the previous year, accompanied by lower margins on project orders.

In the Industrial Production segment, there was significant revenue growth as a result of the investments made at Hanke in the previous year. The acquisition of a Huntsman division by OBO also contri buted to the revenue growth. External segment revenue for the period from 1 January to 30 September 2015 amounted to €60.5 million after €46.1 million in the same period of 2014, while EBIT was lower than in the previous year at €2.4 million after €5.2 million. One of the reasons for this development is the non-recurring income from first-time consolidation of €1.3 million that was reported in prior-year EBIT as a result of the aforementioned transaction for OBO.

Revenue in the Trade & Services segment increased slightly year-on-year to €25.1 million (previous year: €24.7 million). By contrast, segment EBIT declined to minus €187 thousand (previous year: €31 thousand). This reflects the deterioration in purchasing conditions in this segment, among other things.

Employees

The number of people employed by the MBB Group increased by 3%, from 1,152 as at 31 December 2014 to 1,187 as at 30 September 2015.

Report on risks and opportunities

The risks and opportunities for the business development of the MBB Group are described in the Group management report for the 2014 financial year, which is available on our website. There have been no significant changes in the risks and opportunities presented since 31 December 2014. The risk management system of MBB SE is appropriate for detecting risks at an early stage and taking immediate countermeasures.

Share buy-back programme

MBB SE implemented a share buy-back programme for the period from 18 March to 7 May 2015. 13,225 shares were bought back at an average price of €23.55.

Implementation of the capital resolutions adopted by the Annual General Meeting

The authorised capital extended by five years by the Annual General Meeting on 30 June 2015 was entered in the commercial register on 24 November 2015. The authorisation to issue convertible bonds and bonds with warrants was extended by five years on the same day; the corresponding contingent capital has not yet been entered in the commercial register due to the alleged ambiguity of its content, which is disputed by the Board. If these objections cannot be resolved, the Board will present a corr esponding clarification resolution to the next Annual General Meeting.

Supplementary report

MBB SE has acquired 75% of shares in the Aumann Group from its sole managing partner on 19 November 2015. Aumann is a leading manufacturer of systems for coil winding of electric motors and for emobility.

Through the collaboration of Aumann and MBB Fertigungstechnik, MBB and the managing partner of the Aumann Group intend to meet the rapid rise in demand for e-mobility solutions and are forecasting significant growth.

The Aumann Group has experienced strong growth in recent years, and will generate profitable revenue of around €33 million with roughly 160 employees in 2015. Founded in 1936, Aumann is a leading manufacturer of highly automated coil winding systems with locations in Espelkamp (East Westphalia), Berlin and the US. The company's products are used in the automotive industry for applications in the field of e-mobility and electrification of cars. Customers in the area of electric household appliances and in other industries use Aumann systems to achieve the best possible energy efficiency of their products. As part of the MBB Group, Aumann will continue to operate under its current name and at its current locations under the established management.

Report on expected developments

For the 2015 financial year, the Executive Management is still forecasting total revenue of between €250 million with earnings of at least €1.75 per share.

The Executive Management considers the Group's equity and liquidity situation to be important factors in enabling it to grow in the current market environment, both organically and through the acquisition of new equity investments, while ensuring that it remains in a position to act at all times and even in the event of new global crises.

Berlin, 30 November 2015

The Executive Management

IFRS consolidated statement of comprehensive income	1 Jan -	1 Jan -
(unaudited)	30 Sep 2015	30 Sep 2014
	€ thou	€ thou
Revenue	186,571	172,875
Increase (+) / decrease (-) in finished goods
and work in progress	-387	485
Operating performance	186,184	173,360
Badwill	0	1,301
Other operating income	4,283	3,814
Total performance	190,467	178,475
Cost of raw materials and supplies	-93,449	-88,152
Cost of purchased services	-26,444	-21,420
Cost of materials	-119,893	-109,572
Wages and salaries	-31,626	-29,130
Social security
and pension costs	-10,828	-9,916
Staff costs	-42,454	-39,046
Other operating expenses	-10,701	-11,873
Earnings before interest, taxes, depreciation,
and amortisation (EBITDA)	17,419	17,984
Amortisation and depreciation expense	-5,174	-4,639
Earnings before interest and taxes (EBIT)	12,245	13,345
Other interest and similar income	388	369
Interest and similar expenses	-1,225	-973
Net finance costs	-837	-604
Earnings before taxes (EBT)	11,408	12,741
Income tax expense	-2,121	-2,565
Other taxes	-194	-139
Profit or loss for the period	9,093	10,037
Non-controlling interests	-146	-251
Consolidated net profit	8,947	9,786
Earnings per share (in €)	1.36	1.49

IFRS Consolidated Interim Financial Statements for 2015

IFRS consolidated statement of comprehensive income	1 July -	1 July -
(unaudited)	30 Sep 2015	30 Sep 2014
	€ thou	€ thou
Revenue	62,145	61,679
Increase (+) / decrease (-) in finished goods
and work in progress	50	324
Operating performance	62,195	62,003
Other operating income	535	2,425
Total performance	62,730	64,428
Cost of raw materials and supplies	-30,762	-33,734
Cost of purchased services	-8,789	-7,890
Cost of materials	-39,551	-41,624
Wages and salaries	-10,534	-9,810
Social security
and pension costs	-3,624	-3,363
Staff costs	-14,158	-13,173
Other operating expenses	-3,426	-3,576
Earnings before interest, taxes, depreciation,
and amortisation (EBITDA)	5,595	6,055
Amortisation and depreciation expense	-1,661	-1,582
Earnings before interest and taxes (EBIT)	3,934	4,473
Other interest and similar income	79	83
Interest and similar expenses	-425	-338
Net finance costs	-346	-255
Earnings before taxes (EBT)	3,588	4,218
Income tax expense	-485	-912
Other taxes	-64	-47
Profit or loss for the period	3,039	3,259
Non-controlling interests	-11	-88
Consolidated net profit	3,028	3,171
Earnings per share (in €)	0.46	0.48

IFRS consolidated statement of comprehensive income	1 Jan -	1 Jan -
(unaudited)	30 Sep 2015	30 Sep 2014
	€ thou	€ thou
Consolidated net profit	8,947	9,786
Non-controlling interests	146	251
Profit or loss for the period	9,093	10,037
Items that may be subsequently reclassified
to profit and loss
Currency translation differences	55	-120
Available for sale financial assets	-3,293	-864
Other comprehensive income after taxes	-3,238	-984
Comprehensive income for the reporting period	5,855	9,053
there of attributable to:
- Shareholders of the parent company	5,761	8,860
- Non-controlling interests	94	193

Statement of financial position	30 Sep 2015	31 Dec 2014
Assets (IFRS)	unaudited	audited
	€ thou	€ thou
Non-current assets
Concessions, industrial property rights and similar rights	5,176	5,691
Goodwill	1,816	1,816
Advance payments	85	37
Intangible assets	7,077	7,544
Land and buildings
including buildings on third-party land	28,065	28,586
Technical equipment and machinery	16,597	18,387
Other equipment, operating and office equipment	3,835	4,092
Advance payments and assets under development	3,633	543
Property, plant and equipment	52,130	51,608
Investment securities	12,528	9,507
Other loans	48	101
Financial assets	12,576	9,608
Deferred tax assets	5,846	6,833
	77,629	75,593
Current assets
Raw materials and supplies	7,067	6,356
Work in progress	2,909	2,613
Finished goods	9,092	9,913
Advance payments	429	1,344
Inventories	19,497	20,226
Trade receivables	19,608	20,560
Receivables from construction contracts	32,152	26,561
Other current assets	6,236	4,586
Trade receivables
and other current assets	57,996	51,707
Gold and commodities	1,759	1,724
Securities	12,897	10,048
Available-for-sale financial assets	14,656	11,772
Cash in hand	12	16
Bank balances	28,595	37,377
Cash in hand, bank balances	28,607	37,393
	120,756	121,098
Total assets	198,385	196,691

Statement of financial position	30 Sep 2015	31 Dec 2014
Equity and liabilities (IFRS)	unaudited	audited
	€ thou	€ thou
Equity
Issued capital	6,587	6,600
Capital reserve	17,480	17,779
Legal reserve	61	61
Retained earnings	52,610	50,603
Non-controlling interests	3,580	3,510
	80,318	78,553
Non-current liabilities
Liabilities to banks	23,199	24,847
Trade payables	395	395
Other liabilities	1,643	1,887
Pension provisions	22,479	22,386
Other provisions	624	692
Deferred tax liabilities	3,162	3,252
	51,502	53,459
Current liabilities
Liabilities to banks	10,075	7,449
Advance payments received	6,963	2,806
Trade payables	16,823	19,637
Other liabilities	6,140	7,137
Provisions with the nature of a liability	10,022	8,210
Tax provisions	1,386	2,983
Other provisions	15,156	16,457
	66,565	64,679
Total equity and liabilities	198,385	196,691

Consolidated statement of cash flows 1 Jan - 1 Jan - (unaudited) 30 Sep 2015 30 Sep 2014 € thou € thou
1. Cash flow from operating activities
Earnings before interest and taxes (EBIT) 12,245 13,345
Adjustments for non-cash transactions
Write-downs on non-current assets 5,174 4,639
Increase (+) /decrease (-) in provisions -1,131 -2,118
Gains (+) / Losses (-) from disposal of PPE 19 -32
Other non-cash expenses / income -206 -75
3,856 1,113
Change in working capital:
Increase (-) / decrease (+) in inventories, trade receivables
and other assets -5,560 -11,861
Decrease (-) / increase (+) in trade payables
and other liabilities 1,769 5,682
-3,791 -6,179
Income taxes paid -3,015 -5,426
Interest received 388 369
-2,627 -5,057
Cash flow from operating activities 9,683 3,222
2. Cash flow from investing activities
Investments (-) / divestments (+) intangible assets -24 -696
Investments (-) / divestments (+) property, plant and equipment -5,205 -7,344
Investments (-) / divestments (+) financial assets 53 446
Investments (-) / divestments (+) of available-for-sale financial
assets and securities -9,198 -4,313
Cash from disposal of assets 30 0
Cash flow from investing activities -14,344 -11,907
3. Cash flow from financing activities
Profit distribution to shareholders -3,754 -3,630
Payments to Non-Controlling Interests -24 -90
Share buy back programme -312 3,528
Proceeds from borrowing financial loans 2,230 3,084
Repayments of financial loans -1,252 0
Interest payments -973 -855
Cash flow from financing activities -4,085 2,037
Cash and cash equivalents at end of period
Change in cash and cash equivalents
(Subtotal 1-3) -8,746 -6,648
Effects of changes in foreign exchange rates (non-cash) -40 28
Cash and cash equivalents at start of reporting period 37,393 36,703
Cash and cash equivalents at end of period 28,607 30,083
Composition of cash and cash equivalents
Cash in hand 12 16
Bank balances 28,595 30,067
Reconciliation to liquidity reserve on 30 Sep 2015 2015
Cash and cash equivalents at end of period 28,607 30,083
Gold 1,759 1,698
Securities 25,425 19,876 Liquidity reserve on 30 Sep 55,791 51,657

Statement of changes in consolidated equity (unaudited)
					Retained earnings
	Issued	Capital	Legal	Currency	Available	Pension	Generated	Share of	Non	Consoli
	capital	reserve	reserve	translation	for sale	reserve	consoli	sharehold	controlling	dated
				difference	financial assets		dated equity	ers of MBB SE	interests	equity
	€ thou	€ thou	€ thou	€ thou	€ thou	€ thou	€ thou	€ thou	€ thou	€ thou
1 Jan 2014	6,456	14,395	61	-218	1,179	6	43,057	64,936	2,853	67,789
Payments to shareholders	0	0	0	0	0	0	-3,630	-3,630	-93	-3,723
Subtotal	6,456	14,395	61	-218	1,179	6	39,427	61,306	2,760	64,066
Amounts recognised in other comprehensive income	0	0	0	0	266	-2,693	0	-2,427	-15	-2,442
Currency translation difference	0	0	0	-398	0	0	0	-398	31	-367
Consolidated net profit	0	0	0	0	0	0	13,199	13,199	569	13,768
Total comprehensive income	0	0	0	-398	266	-2,693	13,199	10,374	585	10,959
Non-Controlling Interests Hanle Tissue	0	0	0	0	0	0	-165	-165	165	0
Sale of treasury shares	144	3,384	0	0	0	0	0	3,528	0	3,528
31 Dec 2014	6,600	17,779	61	-616	1,445	-2,687	52,461	75,043	3,510	78,553
Payments to shareholders	0	0	0	0	0	0	-3,754	-3,754	-24	-3,778
Subtotal	6,600	17,779	61	-616	1,445	-2,687	48,707	71,289	3,486	74,775
Amounts recognised in other comprehensive income	0	0	0	0	-3,293	0	0	-3,293	0	-3,293
Currency translation difference	0	0	0	107	0	0	0	107	-52	55
Consolidated net profit	0	0	0	0	0	0	8,947	8,947	146	9,093
Total comprehensive income	0	0	0	107	-3,293	0	8,947	5,761	94	5,855
Treasury shares	-13	-299	0	0	0	0	0	-312	0	-312
30 Sep 2015	6,587	17,480	61	-509	-1,848	-2,687	57,654	76,738	3,580	80,318

Notes to the interim consolidated financial statements

Accounting

The interim financial report of the MBB Group for the period 1 January to 30 September 2015 was prepared on the basis of the International Financial Reporting Standards (IFRS) published by the Inte rnational Accounting Standards Board (IASB) as adopted in the EU. It was prepared in accordance with IAS 34.

Accounting policies

The accounting policies adopted are the same as those applied in preparing the consolidated financial statements as at 31 December 2014. The preparation of the financial statements is influenced by accounting policies and assumptions and estimates affecting the amount and reporting of recognised assets, liabilities, contingent liabilities and income and expense items. Matters relati ng to revenue are deferred intra-year.

Segment reporting

The management of the MBB Group classifies the segments as reported in the interim Group management report.

1 Jan - 30 Sep 2015	Technical Applications	Industrial Production	Trade & Services	Recon- ciliation	Group
(unaudited)	€ thou	€ thou	€ thou	€ thou	€ thou
Revenue from third parties	101,028	60,480	25,063	0	186,571
Other segments	11	69	158	-238	0
Total revenue	101,039	60,549	25,221	-238	186,571
Earnings (EBIT)	7,457	2,352	-187	2,623	12,245
Amortisation and depreciation	1,942	2,227	973	32	5,174
Investments	963	3,424	842
Segment assets	71,563	51,355	10,055
Segment liabilities	58,303	15,430	3,962

1 Jan - 30 Sep 2014	Technical	Industrial	Trade &	Recon-	Group
(unaudited)	Applications	Production	Services	ciliation
	€ thou	€ thou	€ thou	€ thou	€ thou
Revenue from third parties	102,148	46,073	24,654	0	172,875
Other segments	77	130	195	-402	0
Total revenue	102,225	46,203	24,849	-402	172,875
Earnings (EBIT)	8,710	5,242	31	-638	13,345
Amortisation and depreciation	1,808	1,954	844	33	4,639
Investments	1,510	4,827	849
Segment assets	75,858	50,477	7,672
Segment liabilities	55,605	12,285	3,150

Segment liabilities do not include any liabilities from taxes, finance lease liabilities or liabilities to banks.

Dividend

The dividend of €3.75 million for the 2014 financial year (€0.57 per entitled share) was paid on 1 July 2015.

Changes in contingent liabilities

There were no changes in contingent liabilities as against 31 December 2014.

Related party transactions

Business transactions between fully consolidated Group companies and unconsolidated Group companies are conducted at arm's-length conditions.

Events after the end of the reporting period

On 19 November 2015 MBB Technologies GmbH, a 100% subsidiary of MBB SE, acquired 75% of Aumann GmbH, Espelkamp, Aumann Berlin GmbH, Hennigsdorf, and Wojtynia Immobilien GmbH, Espelkamp, from its sole managing partner Ingo Wojtynia.

Aumann is a leading manufacturer of systems for coil winding of electric motors and for e-mobility. The companies of the Aumann Group will strengthen the Technical Application Segment.

Review

The condensed interim consolidated financial statements as at 30 September 2015 and the interim Group management report were neither audited in accordance with section 317 of the German Commercial Code (HGB) nor reviewed by an auditor.

Responsibility statement

To the best of our knowledge, and in accordance with the applicable reporting principles for interim financial reporting, the consolidated interim financial statements give a true and fair view of the net assets, financial position and results of operations of the Group, and the interim management report of the Group includes a fair review of the development and performance of the business and the position of the Group, together with a description of the principal opportunities and risks associated with the expected development of the Group for the remaining months of the financial year.

Berlin, 30 November 2015

The Executive Management

Financial Calendar

End of the financial year

31 December 2015

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Contact

MBB SE Joachimsthaler Straße 34 10719 Berlin, Germany Phone: +49 (0)30 - 844 15 330 Fax: +49 (0)30 - 844 15 333 www.mbb.com request@mbb.com

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