MBB SE — Interim / Quarterly Report 2018

Nov 20, 2018

INTERIM STATEMENT SEPTEMBER 30, 2018

MBB SE, Berlin

MBB in figures

(unaudited) adjusted* IFRS IFRS Earnings figures €k €k Revenue 372,778 282,368 Operating performance 373,495 284,868	2017 %
	32.0
	31.1
Total performance 383,602 290,009	32.3
Cost of materials -237,779 -185,973	27.9
Staff costs -85,769 -61,321	39.9
EBITDA 39,792 27,553	44.4
EBITDA margin 10.7% 9.7%
EBIT 29,976 20,711	44.7
EBIT margin 8.0% 7.3%
EBT 28,901 19,508	48.1
EBT margin 7.7% 6.8%
Consolidated net profit after non-controlling interests 10,444 9,964	4.8
eps in € 1.59 1.51	5.3
Consolidated net profit before adjustments 9,928 9,964	-0.4
Number of shares in circulation 6,587 6,587
eps before adjustments in € 1.51 1.51	0.0
4,347 4,018 Dividend in €k	8.2
4,347 4,018 Extra dividend in €k	8.2
Dividend (total) per share in € 1.32 1.22
Figures from the statement 30 Sep 31 Dec
of financial position €k €k	%
Non-current assets 209,939 190,229	10.4
Current assets 496,175 421,000	17.9
thereof cash and equivalents** 352,703 279,213	26.3
Issued capital (share capital) 6,587 6,587	0.0
Other equity 489,289 378,470	29.3
Total equity 495,876 385,057	28.8
Equity ratio 70.2% 63.0%
Non-current liabilities 86,514 86,589	-0.1
Current liabilities 123,724 139,583	-11.4
Total assets 706,114 611,229	15.5
Net debt (-) or
net cash (+)** 292,446 222,026	31.7
Employees 2,160 2,006	7.7

* Adjustments relate primarily to the write-down on USK's order backlog capitalised in the context of PPA.

** This figure includes physical gold reserves and securities.

Business development, result of operations, financial position and net assets

Business development

Revenue by quarters

In the first nine months of 2018, MBB achieved revenue growth of 32.0% to €372.8 million while adjusted EBITDA increased by 44.4% to €39.8 million. The EBITDA margin was 10.7%, one percentage point higher than in the same period one year ago. Earnings per share grew by 5.3% to €1.59.

In particular, the companies Aumann, Delignit and DTS grew strongly in the first nine months of 2018. The Technical Applications segment, which includes Aumann and Delignit, increased revenues by 42.5% while EBIT increased by 39.8%. The Trading and Services segment, which includes DTS, showed revenue growth of 16.6% and an EBIT increase of 25.8%. The Industrial Production segment grew by 12.1% compared to the previous year, whereas EBIT fall to €-0.3 million due to significant increases in raw material prices.

With a net cash position of €292.4 million, of which €261.9 million are attributable to the MBB SE holding, MBB is optimally positioned for further acquisitions. In addition to acquisitions for subsidiaries, MBB plans to build new business areas through acquisitions. In particular, MBB's excellent capitalization, world-class references from previous transactions, and a long-term investment approach are compelling arguments for potential sellers. As a result, MBB is increasingly becoming a preferred partner for succession solutions.

Results of operations, financial position and net assets

The results of operations, financial position and net assets remain still on track. At €372.8 million, the consolidated revenue of the MBB Group is up 32.0% year-on-year after nine months of the 2018 financial year (previous year: €282.4 million).

Other operating income of €10.1 million (previous year: €5.1 million) includes proceeds from the sale of securities and other income from securities of €3.0 million, income from the reversal of provisions of €2.5 million, income from own work capitalized of €2.5 million and other income of €2.1 million. The income from own work capitalized relate in particular to the recognition of development activities of €1.6 million in the area of E-mobility by Aumann AG.

The ratio of the cost of material to the total operating performance of €373.5 million fell from 65.3% in the previous year to 63.7% in nine months of 2018 (previous year: €284.9 million), while the staff costs ratio rose from 21.5% to 23.0%. The diverging development of material- and staff ratio is attributable to a higher degree of value add, and the takeover of temporary staff to permanent employment.

EBITDA (earnings before interest, taxes, depreciation and amortisation) climbed by 44.4% to €39.8 million (previous year: €27.6 million) with a margin of 10.7%. After depreciation and amortisation of €9.8 million, adjusted EBIT (earnings before interest and taxes) amounted to €30.0 million (previous year: €20.7 million). Adjustments include the write-down on USK's capitalised order backlog as part of purchase price allocation amounting to €1.5 million and staff costs of €k376.1 (Elimination of expenses relating to a member of the Executive Board of Aumann AG).

Taking into account net finance costs of €-1.1 million, adjusted EBT (earnings before taxes) amounted to €28.9 million (previous year: €19.5 million). Adjusted consolidated net profit after non-controlling interests was €10.4 million (previous year: €10.0 million) or €1.59 per share in nine months. Without adjustment, consolidated net profit amounted to €9.9 million or €1.51 per share. The significant increase in non-controlling interests (minorities) is due to MBB SE's reduced shareholding in Aumann AG from 93.5% before the IPO in March 2017 to 38.0% after the IPO and capital increase in 2017 and the secondary offering in February 2018.

The secondary offering of Aumann shares significantly increased MBB Group's equity and liquidity. Accordingly, the consolidated statement of financial position reports equity of €495.9 million as of 30 September 2018 (31 December 2017: €385.1 million). Based on consolidated total assets of €706.1 million, the equity ratio is 70.2% after 63.0% as of 31 December 2017.

As of 30 September 2018, MBB Group had financial liabilities of €60.3 million (31 December 2017: €57.2 million) and cash funds including securities and physical gold reserves of €352.7 million (31 December 2017: €279.2 million). The MBB Group's net cash from the above liabilities and cash items therefore amounts to €292.4 million versus €222.0 million on 31 December 2017. By comparison, prior to the Aumann IPO, MBB had equity of only €98.4 million (equity ratio: 36.9%) and net cash funds of €22.2 million as at 31 December 2016.

Outlook

A significantly increased price level of raw materials and a tense labour market for skilled personnel remain still the key operating challenges. At the same time, competition as well as the price level in the M&A market remain high. Nevertheless Executive Management still forecast revenue of more than €500 million and earnings per share of between €2.30 and €2.45 for the 2018 financial year.

Berlin, 19 November 2018

The Executive Management of MBB SE

IFRS consolidated statement of comprehensive income	1 Jan -	1 Jan -
(unaudited)	30 Sep 2018	30 Sep 2017
adjusted	€k	€k
Revenue	372,778	282,368
Increase (+) / decrease (-) in finished goods
and work in progress	717	2,500
Operating performance	373,495	284,868
Other operating income	10,107	5,141
Total performance	383,602	290,009
Cost of raw materials and supplies	-189,033	-148,251
Cost of purchased services	-48,746	-37,722
Cost of materials	-237,779	-185,973
Wages and salaries	-68,221	-48,373
Social security
and pension costs	-17,548	-12,948
Staff costs	-85,769	-61,321
Other operating expenses	-20,262	-15,162
Earnings before interest, taxes, depreciation,
and amortisation (EBITDA)	39,792	27,553
Amortisation and depreciation expense	-9,816	-6,842
Earnings before interest and taxes (EBIT)	29,976	20,711
Other interest and similar income	370	216
Interest and similar expenses	-1,445	-1,419
Net finance costs	-1,075	-1,203
Earnings before taxes (EBT)	28,901	19,508
Income tax expense	-7,661	-5,644
Other taxes	-295	-336
Profit or loss for the period	20,945	13,528
Non-controlling interests	-10,501	-3,564
Consolidated net profit	10,444	9,964
Earnings per share (in €)	1.59	1.51
Consolidated net profit before adjustments	9,928	9,964
Earnings per share (in €) before adjustments	1.51	1.51

Consolidated statement of comprehensive income

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IFRS consolidated statement of comprehensive income	1 Jan -	1 Jan -
(unaudited)	30 Sep 2018	30 Sep 2017
	€k	€k
Consolidated net profit before adjustments	9,928	9,964
Non-controlling interests	9,657	3,564
Profit or loss for the period	19,585	13,528
Items that may be subsequently reclassified
to profit and loss
Currency translation differences	-64	451
Available for sale financial assets	2,008	583
Other comprehensive income after taxes	1,944	1,034
Comprehensive income for the reporting period	21,529	14,562
thereof attributable to:
- Shareholders of the parent company	11,666	11,001
- Non-controlling interests	9,863	3,561

(unaudited) 30 Sep 2018 30 Sep 2017 adjusted €k €k Revenue 132,545 88,508 Increase (+) / decrease (-) in finished goods and work in progress -121 1,490
Operating performance 132,424 89,998
Other operating income 4,307 1,028
Total performance 136,731 91,026
Cost of raw materials and supplies -69,063 -46,611
Cost of purchased services -17,298 -11,678
Cost of materials -86,361 -58,289
Wages and salaries -23,074 -16,178
Social security
and pension costs -5,980 -4,367
Staff costs -29,054 -20,545
Other operating expenses -8,117 -5,660
Earnings before interest, taxes, depreciation,
and amortisation (EBITDA) 13,199 6,532
Amortisation and depreciation expense -3,494 -2,247
Earnings before interest and taxes (EBIT) 9,705 4,285
Other interest and similar income 173 63
Interest and similar expenses -551 -455
Net finance costs -378 -392
Earnings before taxes (EBT) 9,327 3,893
Income tax expense -2,345 -1,120
Other taxes -99 -164
Profit or loss for the period 6,883 2,609
Non-controlling interests -3,212 -953
Consolidated net profit 3,671 1,656
Earnings per share (in €) 0.56 0.25
Consolidated net profit before adjustments 3,532 1,656
Earnings per share (in €) before adjustments 0.54 0.25

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Statement of financial position	30 Sep 2018	31 Dec 2017
Assets (IFRS)	unaudited	audited
	€k	€k
Non-current assets
Concessions, industrial property rights and similar rights	10,083	10,137
Goodwill	40,300	40,300
Advance payments and assets under development	178	122
Intangible assets	50,561	50,559
Land and buildings
including buildings on third-party land	52,745	49,080
Technical equipment and machinery	27,147	23,920
Other equipment, operating and office equipment	11,132	8,575
Advance payments and assets under development	4,346	9,795
Property, plant and equipment	95,370	91,370
Investment securities	56,192	37,621
Other loans	866	907
Financial assets	57,058	38,528
Deferred tax assets	6,950	9,772
	209,939	190,229
Current assets
Raw materials and supplies	13,204	13,194
Work in progress	7,089	6,721
Finished goods	12,880	12,328
Advance payments	5,978	3,241
Inventories	39,151	35,484
Trade receivables	49,047	44,937
Receivables from construction contracts	98,551	83,091
Other current assets	12,915	15,896
Trade receivables
and other current assets	160,513	143,924
Gold and commodities	2,648	1,931
Securities	6,428	5,845
Available-for-sale financial assets	9,076	7,776
Cash in hand	24	19
Bank balances	287,411	233,797
Cash in hand, bank balances	287,435	233,816
	496,175	421,000
Total assets	706,114	611,229

Consolidated statement of financial position

Statement of financial position	30 Sep 2018	31 Dec 2017
Equity and liabilities (IFRS)	unaudited	audited
	€k	€k
Equity
Issued capital	6,587	6,587
Capital reserve	296,111	214,333
Legal reserve	61	61
Retained earnings	71,029	68,058
Non-controlling interests	122,088	96,018
	495,876	385,057
Non-current liabilities
Liabilities to banks	36,027	39,814
Trade payables	0	51
Other interest bearing liabilities	8,904	7,406
Pension provisions	23,950	23,975
Other provisions	9,622	8,959
Deferred tax liabilities	8,011	6,384
	86,514	86,589
Current liabilities
Liabilities to banks	19,550	13,511
Advance payments received	11,481	28,741
Trade payables	48,900	43,333
Other liabilities	8,667	13,292
Provisions with the nature of a liability	19,446	20,091
Tax provisions	274	3,031
Other provisions	15,406	17,584
	123,724	139,583
Total equity and liabilities	706,114	611,229

Consolidated statement of cash flows

Consolidated statement of cash flows	1 Jan -	1 Jan -
(unaudited)	30 Sep 2018	30 Sep 2017
	€k	€k
1. Cash flow from operating activities
Earnings before interest and taxes (EBIT) before adjustments	28,032	20,711
Adjustments for non-cash transactions
Write-downs on non-current assets	11,384	6,842
Increase (+) / decrease (-) in provisions	-1,675	-132
Gains (+) / losses (-) from disposal of PPE	-75	-201
Other non-cash expenses / income	-68	216
Change in working capital:	9,566	6,725
Increase (-) / decrease (+) in inventories, trade receivables
and other assets	-23,814	-40,411
Decrease (-) / increase (+) in trade payables
and other liabilities	-16,334	945
	-40,148	-39,466
Income taxes paid	-4,122	-3,655
Interest received	370	216
	-3,752	-3,439
Cash flow from operating activities	-6,302	-15,469
2. Cash flow from investing activities
Investments (-) / divestments (+) intangible assets	-2,591	-2,803
Investments (-) / divestments (+) property, plant and equipment	-12,028	-15,290
Investments (-) / divestments (+) financial assets	41	0
Investments (-) / divestments (+) of available-for-sale financial
assets and securities	-17,693	-10,694
Cash from disposal of assets	118	599
Cash flow from investing activities	-32,153	-28,188
3. Cash flow from financing activities
Replacement Aumann Shares	102,117	0
IPO Aumann AG (less IPO cost)	0	203,363
Profit distribution to shareholders	-8,695	-8,036
Payments to Non-Controlling Interests	-2,173	-351
Proceeds from borrowing financial loans	6,113	10,161
Repayments of financial loans	-3,861	-987
Finance lease payments	-30	-23
Interest payments	-1,310	-1,419
Cash flow from financing activities	92,161	202,708
Cash and cash equivalents at end of period
Change in cash and cash equivalents
(Subtotal 1-3)	53,706	159,051
Effects of changes in foreign exchange rates (non-cash)	-87	-163
Cash and cash equivalents at start of reporting period	233,816	44,899
Cash and cash equivalents at end of period	287,435	203,787
Composition of cash and cash equivalents
Cash in hand	24	25
Bank balances	287,411	203,763
Reconciliation to liquidity reserve on 30 Sep	2018	2017
Cash and cash equivalents at end of period	287,435	203,787
Gold	2,648	1,920
Securities	62,620	41,907
Liquidity reserve on 30 Sep	352,703	247,614

Segment reporting

1 Jan - 30 Sep 2018	Technical Applications	Industrial Production	Trade & Services	Recon- ciliation	Group
(unaudited)
	€k	€k	€k	€k	€k
Revenue from third parties	256,141	78,486	38,151	0	372,778
Other segments	7	100	383	-490	0
Total revenue	256,148	78,586	38,534	-490	372,778
EBIT before adjustments	23,897	-271	2,009	2,397	28,032
Amortisation and depreciation	5,581	3,607	2,163	33	11,384
Investments	4,160	5,316	5,143
Segment assets	260,075	66,633	16,767
Segment liabilities	104,640	20,076	7,617

1 Jan - 30 Sep 2017	Technical Applications	Industrial Production	Trade & Services	Recon- ciliation	Group
(unaudited)	€k	€k	€k	€k	€k
Revenue from third parties	179,784	69,987	32,597	0	282,368
Other segments	6	88	453	-547	0
Total revenue	179,790	70,075	33,050	-547	282,368
EBIT	17,091	2,676	1,597	-653	20,711
Amortisation and depreciation	2,332	2,912	1,565	33	6,842
Investments	8,997	5,086	2,103
Segment assets	155,207	62,596	11,717
Segment liabilities	78,948	18,491	4,224

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Financial calendar

Analyst Conference German Equity Forum Frankfurt/Main 26 - 28 November 2018

16th Berenberg European Conference, London 3 - 6 December 2018

End of financial year

31 December 2018

ODDO BHF Forum, Lyon

10 - 11 January 2019

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