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NORMA Group SE — Interim / Quarterly Report 2016
May 4, 2016
311_10-q_2016-05-04_33dd0705-6399-4f2b-a5ae-2a8c77808992.pdf
Interim / Quarterly Report
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NORMA GROUP SE
Overview of Key Figures 2016
| Q1 2016 | Q1 2015 | change in % | ||
|---|---|---|---|---|
| Order situation Order book (31 Mar) |
EUR millions | 284.7 | 300.0 | – 5.1 |
| Income statement | ||||
| Revenue | EUR millions | 226.6 | 221.5 | 2.3 |
| Gross profit | EUR millions | 137.7 | 133.11 | 3.5 |
| Adjusted EBITA1 | EUR millions | 40.1 | 39.2 | 2.2 |
| Adjusted EBITA margin1 | % | 17.7 | 17.7 | n/a |
| EBITA | EUR millions | 39.6 | 36.2 | 9.5 |
| Adjusted profit for the period1 | EUR millions | 22.6 | 22.9 | – 1.1 |
| Adjusted EPS1 | EUR | 0.71 | 0.72 | – 1.1 |
| Profit for the period | EUR millions | 19.4 | 17.9 | 8.5 |
| EPS | EUR | 0.61 | 0.56 | 8.5 |
| Cash flow | ||||
| Operating cash flow | EUR millions | 19.4 | 10.3 | 89.2 |
| Operating net cash flow | EUR millions | 11.8 | 11.6 | 1.1 |
| Cash flow from investing activities | EUR millions | – 11.1 | – 10.5 | 5.7 |
| Cash flow from financing activities | EUR millions | – 1.6 | – 12.2 | – 86.7 |
| Balance sheet | 31 Mar 2016 | 31 Dec 2015 | ||
| Total assets | EUR millions | 1,164.1 | 1,167.9 | – 0.3 |
| Equity | EUR millions | 437.1 | 429.8 | 1.7 |
| Equity ratio | % | 37.5 | 36.8 | n/a |
| Net debt | EUR millions | 347.8 | 360.9 | – 3.6 |
| Non-financial control parameters | Q1 2016 | Q1 2015 | ||
| Number of new patent applications | 22 | 38 | – 42.1 | |
| Defective parts per million (PPM) | 17 | 14 | 21.4 | |
| Quality-related customer complaints per month | 8 | 10 | – 20.0 | |
| Employees | 31 Mar 2016 | 31 Dec 2015 | ||
| Core workforce | 5,097 | 5,121 | – 0.5 | |
| Share data | ||||
| IPO | April 2011 | |||
| Stock exchange | Frankfurt Stock Exchange, Xetra | |||
| Market segment | Regulated Market (Prime Standard), MDAX | |||
| ISIN | DE000A1H8BV3 | |||
| Security identification number | A1H8BV | |||
| Ticker symbol | NOEJ | |||
| Highest price Q1 20162 | EUR | 51.540 | ||
| Lowest price Q1 20162 | EUR | 39.895 | ||
| Closing price as of 31 Mar 20162 | EUR | 49.230 | ||
| Market capitalisation as of 31 Mar 20162 | EUR millions | 1,569 | ||
| Number of shares | 31,862,400 | |||
1 Adjustments are described in chapter Adjustments on p. 6. Date of publication: 4 May 2016
2 Xetra price.
4
Highlights First Quarter 2016
6 Course of Business
6 Earnings, Assets and Financial Position
9 Outlook
10
Consolidated Statement of Comprehensive Income
12 Consolidated Statement of Financial Position
16
Consolidated Statement of Cash Flows
18 Segment Reporting
20 Financial Calendar, Contact, Imprint
EXPLANATION OF SYMBOLS
Highlights First Quarter 2016
DEVELOPMENT OF SALES Q1 2016
EFFECTS ON GROUP SALES
| Currency effects | – 0.2 | – 0.1 |
|---|---|---|
| Organic growth | 5.2 | 2.4 |
| Sales Q1 2015 | 221.5 | |
| in EUR millions | share in % |
DEVELOPMENT OF SALES CHANNELS
| EJT | DS | |||
|---|---|---|---|---|
| Q1 2016 | Q1 2015 Q1 2016 | Q1 2015 | ||
| Group sales (in EUR millions) | 139.0 | 138.9 | 86.6 | 81.8 |
| Growth (in %) | 0.1 | 5.8 | ||
| Share of sales (in %) | 61.6 | 62.9 | 38.4 | 37.1 |
COSTS OF MATERIALS AND COST OF MATERIALS RATIO1
PERSONNEL E X PENSES A ND PERSONNEL COST R ATIO
OT HER OPER ATING INCOME A ND E X PENSES ALSO IN RELATION TO SALES1
A D JUST ED EBITA A ND ADJUSTED EBITA MARGIN1
10
OPERATING NET CASH FLOW
| Operating net cash flow | 11.8 | 11.6 |
|---|---|---|
| Investments from operating business | – 9.5 | – 10.5 |
| Change in working capital | – 24.1 | – 22.4 |
| (Adjusted) EBITDA1 | 45.4 | 44.5 |
| in EUR millions | Q1 2016 | Q1 2015 |
CORE WORKFORCE BY SEGMENT
1 Adjustments are described in chapter Adjustments on p. 6.
Course of Business
NORMA Group's business developed as expected overall in the first quarter of 2016. Therefore none of the Company's relevant performance indicators deviated significantly from the forecast values.
Earnings, Assets and Financial Position
ADJUSTMENTS
In the first three months of 2016, depreciation of tangible assets from purchase price allocations in the amount of EUR 0.5 million (Q1 2015: EUR 0.6 million) was presented within EBITA (earnings before interest, taxes and amortisation of intangible assets) and amortisation of intangible assets from purchase price allocations in the amount of EUR 4.1 million (Q1 2015: EUR 4.4 million) was adjusted within EBIT as in previous years.
No further adjustments were made in the reporting period. In the same period of the previous year, expenses totalling EUR 2.5 million were adjusted within EBITDA (earnings before interest, taxes, depreciation of tangible assets and amortisation of intangible assets) in connection with the acquisition and integration of National Diversified Sales, Inc. (NDS).
EARNINGS POSITION
Order backlog
The order backlog amounted to EUR 284.7 million on 31 March 2016 and was thus 5.1% lower than in the comparable prior year period (31 Mar 2015: EUR 300.0 million).
Sales increased as expected
Group sales amounted to EUR 226.6 million in the first quarter of 2016 and were thus 2.3% higher than last year's level (Q1 2015: EUR 221.5 million).
As expected, organic growth in the first quarter of 2016 was positive compared to the prior year quarter and amounted to 2.4%. This was due to the positive developments of the European automotive industry and the water business. In contrast, the sustained weakness in the commercial vehicle and agricultural machinery sectors in the Americas had a negative impact on the development of sales for NORMA Group.
In addition, negative currency effects lowered the Group's sales growth by 0.1%.
ADJUSTMENTS*
| in EUR millions | Q1 2016 unadjusted |
Total adjustments |
Q1 2016 adjusted |
|---|---|---|---|
| Revenue | 226.6 | 0 | 226.6 |
| Changes in inventories of finished goods and own work capitalised | 0.7 | 0 | 0.7 |
| Other own work capitalised | 0.5 | 0 | 0.5 |
| Raw materials and consumables used | – 90.1 | 0 | – 90.1 |
| Gross profit | 137.7 | 0 | 137.7 |
| Other operating income and expenses | – 29.1 | 0 | – 29.1 |
| Employee benefits expense | – 63.2 | 0 | – 63.2 |
| EBITDA | 45.4 | 0 | 45.4 |
| Depreciation | – 5.8 | 0.5 | – 5.3 |
| EBITA | 39.6 | 0.5 | 40.1 |
| Amortisation | – 6.3 | 4.1 | – 2.1 |
| Operating profit (EBIT) | 33.3 | 4.7 | 38.0 |
| Financial costs - net | – 4.7 | 0 | – 4.7 |
| Profit before income tax | 28.6 | 4.7 | 33.3 |
| Income taxes | – 9.2 | – 1.5 | – 10.7 |
| Profit for the period | 19.4 | 3.2 | 22.6 |
| Non-controlling interests | 0.1 | 0 | 0.1 |
| Profit attributable to shareholders of the parent | 19.4 | 3.2 | 22.6 |
| Earnings per share (in EUR) | 0.61 | 0.71 |
* Deviations may occur due to commercial rounding.
Strong positive organic sales growth in the areas of DS; EJT strengthened by EMEA
NORMA Group posted sales of EUR 139.0 million in the EJT unit in the first quarter of 2016 and thus 0.1% more than in the same period of the previous year (Q1 2015: EUR 138.9 million). Sales of the DS unit, which has benefitted from the positive development in the area of water management, in particular, amounted to EUR 86.6 million and were thus 5.8% higher than in the first quarter of 2015 (EUR 81.8 million).
Improvement of the cost of materials ratio
Costs of materials amounted to EUR 90.1 million in the first quarter of 2016 and thus decreased by 1.0% compared to the same quarter of the previous year (Q1 2015: EUR 91.0 million adjusted). On the basis of revenues generated in the period January to March 2016, this resulted in a cost of materials ratio of 39.8%, which represents an improvement over the previous year (Q1 2015: 41.1% adjusted) of 1.3 percentage points.
In the same period last year, the adjustments made to the costs of materials are related in an amount of EUR 2.4 million to expenses for raw materials, which are a result of the remeasurement of acquired inventories within the purchase price allocation for the acquisition of NDS. The unadjusted cost of materials ratio was 42.2%.
Gross margin increased
Gross profit (sales less the cost of materials plus changes in inventories and other own work capitalised) amounted to EUR 137.7 million in the first quarter of 2016. This equates to an increase of 3.5% compared to the first quarter of 2015 (EUR 133.1 million adjusted). This results in an improved gross margin of 60.8% in relation to sales (Q1 2015: 60.1% adjusted).
Personnel cost ratio increases slightly
As of 31 March 2016, NORMA Group had 6,322 employees worldwide, including temporary workers, 5,097 of whom belong to the Company's core workforce. This means the total number of employees increased by 1.6% compared to the previous year (Q1 2015: 6,225) and that the core workforce grew by 2.6%.
Within the Americas and Asia-Pacific regions, the core workforce grew equally strongly by 2.1% each. This is partly due to the ramp up of another Distribution Center in the US. On the other hand, the core workforce in the Asia-Pacific region grew as a result of the building of a RE-Engineering Center. The number of employees in the EMEA region increased by 3.0% during the same period, mainly due to recruitment at the Serbian site. 2015 Annual Report, p. 70.
As a result of the higher average headcount, expenses for employee benefits also increased by 4.4% to EUR 63.2 million in the first quarter of 2016 compared to the same period last year (Q1 2015: EUR 60.6 million). Based on sales, this resulted in an increased personnel cost ratio of 27.9% (Q1 2015: 27.3%). This increase in the personnel cost ratio can mainly be attributed to temporary below average revenue development in the Americas region in the first quarter of 2016.
PERSONNEL DEVELOPMENT
| 2,883 1,435 779 5,097 1,225 |
2,798 1,405 763 4,966 1,259 |
|---|---|
| 31 Mar 2016 |
31 Mar 2015 |
Other operating income and expenses
In the first quarter of 2016, the balance of other operating income and expenses amounted to EUR – 29.1 million, which was 3.6% above the previous year's figure of EUR – 28.1 million (adjusted). This increase compared to the same period last year is due to the increased activities of NORMA Group. In relation to sales, other operating income and expenses increased slightly compared to the same period last year and amounted to 12.8% (Q1 2015: 12.7%). Selected Notes to the Consolidated Statement of Comprehensive Income, p. 11.
Within other operating income and expenses, acquisition-related costs in the amount of EUR 80 thousand were adjusted in the same period last year.
Improved EBITDA and adjusted EBITA
Earnings before interest, taxes, depreciation and amortisation (EBITDA) amounted to EUR 45.4 million in the first quarter of 2016 and were thus 2.0% above the previous year's figure (Q1 2015: EUR 44.5 million adjusted). This results in an EBITDA margin of 20.0% (Q1 2015: 20.1% adjusted).
Adjusted EBITA, which was adjusted for amortisation of tangible assets from purchase price allocations, amounted to EUR 40.1 million for the 3-month period January to March 2016. This represents a 2.2% increase over the previous year (Q1 2015: EUR 39.2 million). The resulting adjusted EBITA margin was unchanged compared to the same period last year at 17.7% and thus again remained at a sustained high level.
Currency related increase of financial expenditure
The financial result for the first quarter of 2016 amounted to EUR – 4.7 million. In the same quarter of last year, it amounted to EUR – 3.1 million. This change in the financial result is partly due to currency effects. Thus the high exchange rate volatility of the euro against the US dollar had a negative impact on the financial result, considering the dynamic security concept of current exposures. 2015 Annual Report, p. 146.
Adjusted earnings after taxes
Earnings after taxes adjusted for depreciation from purchase price allocations amounted to EUR 22.6 million in the reporting period and were thus 1.1% lower compared to the previous year (Q1 2015: EUR 22.9 million).
Adjusted income taxes for the reporting period from January to March 2016 amounted to EUR 10.7 million (Q1 2015: EUR 11.5 million). This results in a lower adjusted tax rate of 32.1% compared to the previous year (Q1 2015: 33.5%), which is mainly due to the inclusion of NORMA Group SE in the German tax group since 2015.
Adjusted earnings per share
Adjusted earnings per share amounted to EUR 0.71 in the first quarter of 2016 (Q1 2015: EUR 0.72). Unadjusted earnings per share were EUR 0.61 and thus 8.5% higher (Q1 2015: EUR 0.56).
NET ASSET POSITION
Total assets
Total assets as of 31 March 2016 amounted to EUR 1,164.1 million and were thus a slight 0.3% lower than at the end of 2015 (EUR 1,167.9 million).
Compared to 31 March 2015 (EUR 1,185.4 million), they declined by 1.8% as a result of the appreciation of the euro against the US dollar.
Assets impacted by currency effects
Non-current assets amounted to EUR 767.6 million as of 31 March 2016. This means they declined by 3.3% compared to the end of 2015 (EUR 793.6 million). This can be attributed for the most part to currency effects caused by the appreciation of the euro as of the reporting date and resulted in a decrease in goodwill, other intangible assets and fixed assets. Non-current assets accounted for 65.9% of total assets as of 31 March 2016.
Current assets amounted to EUR 396.5 million as of 31 March 2016 and thus rose by 5.9% compared to the end of 2015 (EUR 374.3 million). This increase resulted for the most part from the increase in trade receivables (EUR 15.9 million). By contrast, inventories decreased by EUR 4.6 million to EUR 125.3 million. Current assets accounted for 34.1% of total assets.
Compared to the previous year (31 Mar 2015: EUR 372.9 million), current assets rose by 6.3%.
Rise in (trade) working capital
(Trade) working capital (inventories plus receivables minus liabilities, both primarily from trade payables and trade receivables) was EUR 172.5 million as of 31 March 2016, and thus 13.5% higher than at the end of the year 2015 (EUR 151.9 million) for seasonal reasons. The increase resulted primarily from the expansion of business activities and the increase in trade receivables, but also from the reduction in liabilities from goods and services.
Compared to the previous year (31 Mar 2015: EUR 182.6 million), trade working capital declined by 5.5%. This can be attributed to the continued optimisation of working capital management.
Group equity ratio continues to improve
Group equity amounted to EUR 437.1 million on 31 March 2016 and was thus 1.7% higher than in December 2015 (EUR 429.8 million). This equates to an increased equity ratio of 37.5% (31 Dec 2015: 36.8%). The change in equity is mainly the result of the earnings for the period. By contrast, negative currency translation differences reduced Group equity. Selected Notes to the Consolidated Statement of Financial Position, p. 14.
Net debt significantly lower
Net debt amounted to EUR 347.8 million as of 31 March 2016 and thus declined by 3.6% compared to the end of the year (31 Dec 2015: EUR 360.9 million). This includes derivative hedging instruments in the amount of EUR 4.4 million. The reduction in net debt essentially resulted from the decline in loan liabilities in US dollars from the syndicated credit line and the promissory note issued in financial year 2014 due to exchange rate effects, but also from the increase in cash and cash equivalents.
This resulted in gearing (net debt in relation to equity) of 0.80 (31 Dec 2015: 0.84) and leverage (net debt in relation to adjusted EBITDA) of 1.9 (31 Dec 2015: 2.0).
Lower non-current liabilities, higher current liabilities
Non-current liabilities amounted to EUR 563.8 million as of 31 March 2016 and were thus 2.0% lower than at the end of 2015 (EUR 575.4 million). This was due to the currency-related decline in financial liabilities in US dollars. This means non-current liabilities accounted for 48.4% of total assets (31 Dec 2015: 49.3%).
Current liabilities, on the other hand, increased slightly by 0.4% from EUR 162.6 million at the end of the year to EUR 163.2 million and thus accounted for 14.0% of total assets at the end of the reporting period (31 Dec 2015: 13.9%).
FINANCIAL POSITION
Group-wide financial management
For a more detailed overview of NORMA Group's general financial management, please refer to the 2015 Annual Report. 2015 Annual Report, p. 53.
Operating net cash flow
Operating net cash flow amounted to EUR 11.8 million for the 3-month period and was thus 1.1% higher than in the same quarter of last year (Q1 2015: EUR 11.6 million). This was mainly due to a year on year increase in EBITDA (prior year adjusted) and reduced capital expenditure (Q1 2016: EUR 9.5 million; Q1 2015: EUR 10.5 million). By contrast, changes in working capital had the opposite effect (Q1 2016: EUR 24.1 million; Q1 2015: EUR 22.4 million).
In relation to total sales, net operating cash flow for the period January to March 2016 was unchanged at 5.2%.
Cash flow from operating activities
Cash inflow from operating activities amounted to EUR 19.4 million for the reporting period January to March 2016 (Q1 2015: EUR 10.3 million) and rose mainly as a result of improved working capital management. Selected Notes to the Consolidated Statement of Cash Flows, p. 17.
Among other measures, NORMA Group uses a supplier-side reverse factoring programme to improve its working capital. An attempt is also made to optimise working capital on the customer side, however, by using the appropriate instruments, such as an Asset Backed Securities (ABS) programme, for example. 2015 Annual Report, p. 148.
Cash flow from investing activities
Cash flow from investing activities amounted to EUR – 11.1 million in the first quarter of 2016 (Q1 2015: EUR – 10.5 million) and was primarily influenced by payments made to purchase intangible assets and fixed assets (EUR 9.5 million). In addition, net payments for acquisitions from previous years (Q1 2016: EUR 1.6 million; Q1 2015: EUR 0.1 million) also had an impact on cash flow from investing activities.
NORMA Group invests the funds from its operating cash flow in further growth and in the maintenance of its production machinery. The investments in the first quarter of 2016 related mainly to the sites in Germany, Serbia, Poland, China and the US.
Cash flow from financing activities
Cash flow from financing activities for the period January to March 2016 amounted to EUR – 1.6 million (Q1 2015: EUR – 12.2 million). This mainly comprises cash flows from interest paid in the amount of EUR – 1.8 million (Q1 2015: EUR – 2.6 million). Furthermore, cash flow from financing activities was impacted by payments received in connection with hedging derivatives in the amount of EUR 0.3 million (Q1 2015: EUR – 10.0 million).
Outlook
The Management Board confirms the forecast published in the 2015 Annual Report without any changes. 2015 Annual Report, p. 77.
Consolidated Statement of Comprehensive Income
for the period from 1 January to 31 March 2016
| in EUR thousands | Q1 2016 | Q1 2015 |
|---|---|---|
| Revenue | 226,565 | 221,486 |
| Changes in inventories of finished goods and work in progress | 734 | 2,259 |
| Other own work capitalised | 495 | 335 |
| Raw materials and consumables used | – 90,081 | – 93,403 |
| Gross profit | 137,713 | 130,677 |
| Other operating income | 3,785 | 3,736 |
| Other operating expenses | – 32,882 | – 31,889 |
| Employee benefits expense | – 63,228 | – 60,557 |
| Depreciation and amortisation | – 12,071 | – 11,903 |
| Operating profit | 33,317 | 30,064 |
| Financial income | 20 | 154 |
| Financial costs | – 4,707 | – 3,295 |
| Financial costs – net | – 4,687 | – 3,141 |
| Profit before income tax | 28,630 | 26,923 |
| Income taxes | – 9,199 | – 9,017 |
| PROFIT FOR THE PERIOD | 19,431 | 17,906 |
| Other comprehensive income for the period, net of tax | ||
| Other comprehensive income that can be reclassified to profit or loss, net of tax | – 12,046 | 27,423 |
| Exchange differences on translation of foreign operations | – 10,804 | 27,970 |
| Cash flow hedges, net of tax | – 1,242 | – 547 |
| Other comprehensive income for the period, net of tax | – 12,046 | 27,423 |
| TOTAL COMPREHENSIVE INCOME FOR THE PERIOD | 7,385 | 45,329 |
| Profit attributable to | ||
| Shareholders of the parent | 19,374 | 17,838 |
| Non-controlling interests | 57 | 68 |
| 19,431 | 17,906 | |
| Total comprehensive income attributable to | ||
| Shareholders of the parent | 7,331 | 45,372 |
| Non-controlling interests | 54 | – 43 |
| 7,385 | 45,329 | |
| Undiluted earnings per share (in EUR) | 0.61 | 0.56 |
Selected Notes to the Consolidated Statement of Comprehensive Income
REVENUE AND RAW MATERIALS AND CONSUMABLES USED
Revenue for the first three months of 2016 (EUR 226,565 thousand) was 2.3% higher than revenue for the first three months of 2015 (EUR 221,486 thousand).
The raw materials and consumables used increased disproportionately lower in relation to revenues, leading to a ratio of 39.8% (Q1 2015: 42.2%). Also in relation to the total value, raw materials and consumables used are, with a ratio of 39.5%, below last year's level (Q1 2015: 41.7%). In 2015, EUR 2,434 thousand, associated with the acquisition of NDS, were adjusted within expenses for raw materials and consumables used, leading to an adjusted ratio of 40.6% in Q1 2015.
OTHER OPERATING INCOME AND OTHER OPERATING EXPENSES
Other operating income in the first three months of 2016 totaled EUR 3,785 thousand, which was EUR 49 thousand higher than in the first three months of 2015 (EUR 3,736 thousand). Other operating income included, in particular, operational currency gains in the amount of EUR 2,292 thousand (Q1 2015: EUR 2,955 thousand), government grants and reversals from provisions as well as from accruals for compensation elements for employees.
Other operating expenses for the first three months of 2016 (EUR 32,882 thousand) were 3.1% higher than other operating expenses for the first three months of 2015 (EUR 31,889 thousand). In relation to the total value, other operating expenses increased slightly disproportionately higher with a ratio of 14.4% (Q1 2015: 14.2%). Other operating expenses included currency losses in the amount of EUR 1,885 thousand (Q1 2015: EUR 2,741 thousand). The composition of other operating expenses did not change significantly compared to financial year 2015.
EMPLOYEE BENEFITS EXPENSE
In the first three months of 2016, employee benefits expense amounted to EUR 63,228 thousand compared to EUR 60,557 thousand in the first three months of 2015. This 4.4% increase is mainly due to an increase in the average headcount in the first three months of 2016 compared to the first three months of 2015. In relation to the total value, employee benefits expense increased slightly disproportionately higher with a ratio of 27.8% (Q1 2015: 27.0%).
Average headcount was 5,117 in the first three months of 2016 (Q1 2015: 4,900).
FINANCIAL RESULT
The financial result for the first three months of 2016 (EUR – 4,687 thousand) changed by EUR – 1,546 thousand compared to the first three months of 2015 (EUR – 3,141 thousand). In the first three months of 2016, net foreign exchange gains / losses (including income / expense from the valuation of foreign exchange derivatives) amounted to EUR – 1,624 thousand (Q1 2015: EUR 1,020 thousand). Net interest expenses (EUR 2,864 thousand) decreased by EUR 1,132 thousand in the first three months of 2016 compared to the first three months of 2015 (EUR 3,996 thousand).
Consolidated Statement of Financial Position as of 31 March 2016
ASSETS
| Non-current assets | 335,821 | ||
|---|---|---|---|
| Goodwill | 343,829 | 346,551 | |
| Other intangible assets | 256,181 | 271,009 | 288,314 |
| Property, plant and equipment | 166,879 | 169,939 | 163,157 |
| Other non-financial assets | 227 | 234 | 318 |
| Income tax assets | 457 | 458 | 911 |
| Deferred income tax assets | 8,032 | 8,105 | 13,179 |
| 767,597 | 793,574 | 812,430 | |
| Current assets | |||
| Inventories | 125,312 | 129,902 | 130,789 |
| Other non-financial assets | 15,328 | 13,711 | 12,100 |
| Other financial assets | 3,902 | 3,856 | 2,621 |
| Derivative financial assets | 2,063 | 248 | 675 |
| Income tax assets | 6,189 | 3,772 | 2,559 |
| Trade and other receivables | 138,765 | 122,865 | 147,800 |
| Cash and cash equivalents | 104,957 | 99,951 | 76,389 |
| 396,516 | 374,305 | 372,933 |
| Total assets | 1,164,113 | 1,167,879 | 1,185,363 |
|---|---|---|---|
EQUITY AND LIABILITIES
| in EUR thousands | 31 March 2016 | 31 Dec 2015 | 31 March 2015 |
|---|---|---|---|
| Equity attributable to equity holders of the parent | |||
| Subscribed capital | 31,862 | 31,862 | 31,862 |
| Capital reserves | 210,323 | 210,323 | 216,603 |
| Other reserves | 9,085 | 21,128 | 30,030 |
| Retained earnings | 184,974 | 165,600 | 134,056 |
| Equity attributable to shareholders | 436,244 | 428,913 | 412,551 |
| Non-controlling interests | 864 | 898 | 816 |
| Total equity | 437,108 | 429,811 | 413,367 |
| Liabilities | |||
| Non-current liabilities | |||
| Retirement benefit obligations | 11,878 | 11,951 | 12,457 |
| Provisions | 10,507 | 10,842 | 6,799 |
| Borrowings | 435,274 | 443,711 | 367,149 |
| Other non-financial liabilities | 1,234 | 1,368 | 1,726 |
| Other financial liabilities | 658 | 681 | 4,174 |
| Derivative financial liabilities | 4,238 | 2,510 | 3,443 |
| Deferred income tax liabilities | 99,976 | 104,380 | 117,760 |
| 563,765 | 575,443 | 513,508 | |
| Current liabilities | |||
| Provisions | 9,820 | 9,972 | 6,714 |
| Borrowings | 7,889 | 7,056 | 79,308 |
| Other non-financial liabilities | 33,470 | 28,653 | 27,846 |
| Other financial liabilities | 4,508 | 6,019 | 2,281 |
| Derivative financial liabilities | 185 | 876 | 31,882 |
| Income tax liabilities | 15,751 | 9,172 | 14,420 |
| Trade and other payables | 91,617 | 100,877 | 96,037 |
| 163,240 | 162,625 | 258,488 | |
| Total liabilities | 727,005 | 738,068 | 771,996 |
| Total equity and liabilities | 1,164,113 | 1,167,879 | 1,185,363 |
Selected Notes to the Consolidated Statement of Financial Position
PROPERTY, PLANT AND EQUIPMENT AND INTANGIBLE ASSETS
Intangible assets are as follows:
| Carrying amounts | |||
|---|---|---|---|
| in EUR thousands | 31 March 2016 | 31 Dec 2015 | |
| Goodwill | 335,821 | 343,829 | |
| Customer lists | 179,268 | 190,749 | |
| Licenses, rights | 644 | 717 | |
| Software | 9,518 | 10,384 | |
| Trademarks | 43,320 | 45,586 | |
| Patents & technology | 12,271 | 13,203 | |
| Internally generated intangible assets | 6,024 | 6,259 | |
| Intangible assets, other | 5,136 | 4,111 | |
| Total | 592,002 | 614,838 |
The change in goodwill from EUR 343,829 thousand as of 31 December 2015 to EUR 335,821 thousand as of 31 March 2016 resulted from foreign exchange differences, mainly from the USD area.
The change in goodwill is summarised as follows:
| in EUR thousands | |
|---|---|
| Balance as of 31 December 2015 | 343,829 |
| Currency effect | – 8,008 |
| Balance as of 31 March 2016 | 335,821 |
For details regarding the historical development of the cumulative amortisation and impairments, please refer to 2015 Annual Report. 2015 Annual Report, p. 138.
Tangible assets are as follows:
| Carrying amounts | |||
|---|---|---|---|
| in EUR thousands | 31 March 2016 | 31 Dec 2015 | |
| Land and buildings | 58,000 | 59,258 | |
| Machinery & tools | 71,465 | 75,318 | |
| Other equipment | 13,664 | 13,320 | |
| Assets under construction | 23,751 | 22,043 | |
| Total | 166,879 | 169,939 |
In the first three months of 2016, EUR 8,584 thousand were invested in property, plant and equipment and intangible assets, including own work capitalised in the amount of EUR 495. The main focus of investments was on expansion in Germany, Serbia, Poland, China and the USA. There were no major disinvestments.
CURRENT ASSETS
The increase in current assets is due to an increase in trade receivables resulting from the increased sales volume in the first quarter of 2016 compared to the last quarter of 2015. Furthermore, cash and cash equivalents increased by EUR 5,006 thousand despite cash outflows from investing activities in the amount of EUR 11,106 thousand.
EQUITY
Changes in equity resulted from the profit for the period (EUR 19,431 thousand), exchange differences on translation of foreign operations (EUR – 10,804 thousand) and cash flow hedges (EUR – 1,242 thousand). Furthermore, NORMA Group paid out dividends to non-controlling interests in the amount of EUR 88 thousand in the first three months of 2016.
FINANCIAL DEBT
NORMA Group's net debt is as follows:
| 31 March 2016 | 31 Dec 2015 |
|---|---|
| 443,163 | 450,705 |
| 3,312 | |
| 157 | 74 |
| 0 | 62 |
| 247 | 289 |
| 4,919 | 6,411 |
| 452,752 | 460,853 |
| 104,957 | 99,951 |
| 347,795 | 360,902 |
| 4,266 |
NORMA Group's financial debt decreased by 1.8% from EUR 460,853 thousand as of 31 December 2015 to EUR 452,752 thousand as of 31 March 2016. The decrease within the bank borrowings is due to effects from changes in the exchange rates on the USD portion of parts of the syndicated bank facilities issued in December 2015 and of the promissory note issued in financial year 2014. A slightly opposite effect results from the increase in the negative market value of the hedging derivatives. The decrease in other financial liabilities is due to the repayment of the contingent consideration resulting from the acquisition of National Diversified Sales, Inc. in 2014.
Compared to 31 December 2015 (EUR 360,902 thousand), net debt decreased by EUR 13,107 thousand or 3.6% to EUR 347,795 thousand. An increase in cash and cash equivalents in the amount of EUR 5,006 thousand as well as a decline in USD
financial liabilities due to changes in the exchange rate positively influenced net debt, whereby valuation effects on derivatives had negative effects on net debt.
The increase in cash and cash equivalents results from the increase of net cash provided by operating activities which overcompensated the cash outflows from investing and financing activities.
The maturity of the syndicated bank facilities and the promissory note on 31 March 2016 is as follows:
| 0 | 32,946 | 210,551 | 100,371 |
|---|---|---|---|
| 4,861 | 4,861 | 87,502 | 0 |
| up to 1 year |
> 1 year up to 2 years |
> 2 years up to 5 years |
> 5 years |
Parts of the syndicated bank facilities and the majority of tranches of the promissory note with variable interest rates are hedged against interest rate changes. The derivative liability increased from EUR 2,510 thousand as of 31 December 2015 to EUR 4,238 thousand as of 31 March 2016.
OTHER NON-FINANCIAL LIABILITIES
The other non-financial liabilities are as follows:
| in EUR thousands | 31 March 2016 | 31 Dec 2015 |
|---|---|---|
| Non-current | ||
| Government grants | 1,180 | 1,316 |
| Other liabilities | 54 | 52 |
| 1,234 | 1,368 | |
| Current | ||
| Government grants | 94 | 0 |
| Non-income tax liabilities | 3,533 | 1,559 |
| Social liabilities | 5,530 | 3,547 |
| Personnel-related liabilities (e.g. holiday, bonus, premiums) |
22,632 | 21,544 |
| Deferred income | 24 | 1,113 |
| Prepayments received | 931 | 0 |
| Other liabilities | 726 | 890 |
| 33,470 | 28,653 | |
| Total other non-financial liabilities | 34,704 | 30,021 |
DERIVATIVE FINANCIAL INSTRUMENTS
Foreign exchange derivatives
On 31 March 2016, foreign exchange derivatives with a positive market value of EUR 198 thousand and a negative market value of EUR 16 thousand were classified as cash flow hedges. Furthermore, foreign exchange derivatives with a positive market value of EUR 1,823 thousand and a negative market value of EUR 12 thousand were classified as fair value hedges.
Foreign exchange derivatives classified as cash flow hedges are used to hedge foreign currency risk within the operative business. The foreign exchange derivatives classified as fair value hedges are used to hedge foreign currency risk of external debt and intragroup monetary items.
As part of its financial risk management, NORMA Group not only employs traditional approaches, such as using so-called natural hedges to reduce USD exposure and rolling hedging with foreign currency derivatives, but has also delegated certain parts of its exposure to banking partners. The purpose of this instrument is to protect NORMA Group against any unfavourable exchange rate developments while at the same time letting the Company take advantage of positive developments in foreign exchange markets. A dynamic protection concept with variable rate hedging is used here that analyses market trends on the basis of quantitative models and implements these findings in a technical security model. All activities must always follow the strict requirements of internal risk management. Foreign exchange derivatives resulting from the described dynamic protection concept are classified as held for trading. On 31 March 2016, this led to foreign exchange derivatives with a positive market value of EUR 42 thousand and a negative market value of EUR 157 thousand.
Interest rate swaps
In order to avoid interest rate fluctuations, NORMA Group has hedged parts of its loans against changes in interest rates.
The development of the effective part recognised in other comprehensive income in the first quarter of 2016 is as follows:
| in EUR thousands | Foreign exchange derivatives |
Interest rate swaps |
Total |
|---|---|---|---|
| Balance as of 31 December 2015 | 24 | – 2,509 | – 2,485 |
| Foreign currency translation effects | – 1 | 0 | – 1 |
| Reclassification in profit or loss | – 24 | 369 | 345 |
| Net fair value changes | – 1 | – 2,098 | – 2,099 |
| Balance as of 31 March 2016 | – 2 | – 4,238 | – 4,240 |
Amounts recognised in the hedging reserve in equity will be released in profit or loss during the maturity of the loans.
Consolidated Statement of Cash Flows
for the period from 1 January to 31 March 2016
| in EUR thousands | Q1 2016 | Q1 2015 |
|---|---|---|
| Operating activities | ||
| Profit for the period | 19,431 | 17,906 |
| Depreciation and amortisation | 12,071 | 11,903 |
| Gain (–)/loss (+) on disposal of property, plant and equipment | 22 | 42 |
| Change in provisions | – 490 | – 1,126 |
| Change in deferred taxes | 224 | – 54 |
| Change in inventories, trade account receivables and other receivables, which are not attributable to investing or financing activities |
– 22,747 | – 35,403 |
| Change in trade and other payables, which are not attributable to investing or financing activities | 5,881 | 9,598 |
| Change in reverse factoring liabilities | 20 | 5,541 |
| Interest expenses of the period | 2,830 | 3,673 |
| Income (–)/ expenses (+) due to measurement of derivatives within a hedge | – 2,640 | 12,818 |
| Other non-cash expenses (+)/income (–) | 4,789 | – 14,647 |
| Net cash provided by operating activities | 19,391 | 10,251 |
| thereof interest received | 36 | 20 |
| thereof income taxes | – 4,997 | – 5,918 |
| Investing activities | ||
| Payments for acquisitions of subsidiaries, net | – 1,622 | – 52 |
| Investments in property, plant and equipment and intangible assets | – 9,534 | – 10,533 |
| Proceeds from the sale of property, plant and equipment | 50 | 80 |
| Net cash used in investing activities | – 11,106 | – 10,505 |
| Financing activities | ||
| Interest paid | – 1,773 | – 2,565 |
| Dividends paid to non-controlling interests | – 88 | – 110 |
| Proceeds from borrowings | 22 | 451 |
| Repayment of borrowings | – 62 | 0 |
| Proceeds from /repayment of hedging derivatives | 314 | – 9,982 |
| Repayment of lease liabilities | – 41 | – 36 |
| Net cash used in financing activities | – 1,628 | – 12,242 |
| Net change in cash and cash equivalents | 6,657 | – 12,496 |
| Cash and cash equivalents at the beginning of the year | 99,951 | 84,271 |
| Effect of foreign exchange rates on cash and cash equivalents | – 1,651 | 4,614 |
| Cash and cash equivalents at the end of the period | 104,957 | 76,389 |
Selected Notes to the Consolidated Statement of Cash Flows
In the statement of cash flows, a distinction is made between cash flows from operating activities, investing activities and financing activities.
Net cash provided by operating activities is derived indirectly from profit for the period. The profit for the period is adjusted to eliminate non-cash expenses such as depreciation and amortisation as well as expenses and payments for which the cash effects are investing or financing cash flows and to eliminate other non-cash expenses and income. Net cash provided by operating activities of EUR 19,391 thousand (Q1 2015: EUR 10,251 thousand) represents changes in current assets, provisions and liabilities (excluding liabilities in connection with financing activities).
The Group participates in a reverse factoring programme and in an ABS programme. The payments to the factor and from the ABS programme are included in cash flows from operating activities, as this represents the economic substance of the transactions.
The correction of income due to measurement of derivatives within a hedge in the amount of EUR – 2,640 thousand (Q1 2015: expenses in the amount of EUR 12,818 thousand) relates to fair value gains and losses recognised within the income statement assigned to the cash flows from financing activities.
Other non-cash income (–) / expenses (+) in net cash provided by operating activities mainly include foreign exchange rate gains and losses on external debt and intragroup monetary items in the amount of EUR 4,715 thousand (Q1 2015: EUR – 15,133 thousand). Furthermore, other non-cash income (–) / expenses (+) include non-cash interest expenses from the amortisation of accrued costs, amounting to EUR 74 thousand (Q1 2015: EUR 351 thousand). In the prior year, non-cash personnel expenses from the Matching Stock Programme amounting to EUR 135 thousand were also included in this position.
Cash flows resulting from interest paid are disclosed as cash flows from financing activities.
Cash flows from investing activities include net cash outflows from the acquisition and disposal of property, plant and equipment and intangible assets amounting to EUR 9,484 thousand (Q1 2015: EUR 10,453 thousand) including the repayment of liabilities from prior year investments in property, plant and equipment and intangible assets amounting to EUR – 950 thousand (Q1 2015: EUR – 4,071 thousand). Furthermore, net payments for acquisitions of subsidiaries in the amount of EUR 1,622 thousand (Q1 2015: EUR 52 thousand) are included in the cash flows from investing activities.
Cash flows from financing activities mainly comprise outflows resulting from interest paid (Q1 2016: EUR – 1,773 thousand, Q1 2015: EUR – 2,565 thousand) as well as proceeds from hedging derivatives in the amount of EUR 314 thousand (Q1 2015: repayment of EUR – 9,982 thousand).
Furthermore, dividend payments to non-controlling interests in the amount of EUR 88 thousand (Q1 2015: EUR 110 thousand), net repayment from other loans amounting to EUR 40 thousand (Q1 2015: net proceed of EUR 451 thousand) and repayments from finance lease liabilities in the amount of EUR 41 thousand (Q1 2015: EUR 36 thousand) are disclosed as cash flows from financing activities.
The changes in balance sheet items that are presented in the Consolidated Statement of Cash Flows cannot be derived directly from the balance sheet, as the effects of currency translation are non-cash transactions and changes in the consolidated Group are shown directly in the net cash used in investing activities.
On 31 March 2016, cash and cash equivalents consisted of cash on hand and demand deposits of EUR 104,826 thousand (31 March 2015: EUR 75,800 thousand) as well as cash equivalents valued at EUR 131 thousand (31 March 2015: EUR 589 thousand).
Segment Reporting
for the period from 1 January to 31 March 2016
| EMEA | Americas | Asia-Pacific | ||||
|---|---|---|---|---|---|---|
| in EUR thousands | Q1 2016 | Q1 2015 | Q1 2016 | Q1 2015 | Q1 2016 | Q1 2015 |
| Total revenue | 113,865 | 99,951 | 18,744 | |||
| thereof inter-segment revenue | 118,856 6,806 |
8,303 | 98,226 2,262 |
2,228 | 19,238 687 |
543 |
| Revenue from external customers | 112,050 | 105,562 | 95,964 | 97,723 | 18,551 | 18,201 |
| Contribution to consolidated | ||||||
| Group sales | 50% | 48% | 42% | 44% | 8% | 8% |
| Gross profit1 | 70,818 | 68,136 | 58,417 | 56,741 | 9,234 | 8,759 |
| EBITDA1 | 26,242 | 23,782 | 20,390 | 20,113 | 2,183 | 2,081 |
| EBITDA margin1,2 | 22.1% | 20.9% | 20.8% | 20.1% | 11.3% | 11.1% |
| Depreciation without PPA depreciation3 | – 2,510 | – 2,401 | – 1,882 | – 1,968 | – 631 | – 625 |
| Adjusted EBITA | 23,732 | 21,381 | 18,508 | 18,145 | 1,552 | 1,456 |
| Adjusted EBITA margin2 | 20.0% | 18.8% | 18.8% | 18.2% | 8.1% | 7.8% |
| Assets (prior year as of 31 Dec 2015)4 | 476,219 | 489,161 | 603,940 | 636,294 | 84,922 | 84,422 |
| Liabilities (prior year as of 31 Dec 2015)5 |
106,951 | 136,903 | 328,228 | 358,563 | 29,446 | 30,805 |
| CAPEX | 2,869 | 1,849 | 1,996 | 3,021 | 952 | 743 |
1 Adjusted in 2015.
2 Based on segment sales.
3 Depreciation from purchase price allocations.
4 Including allocated goodwills, taxes are shown within the column 'consolidations'.
5 Taxes are shown within the column 'consolidations'.
Selected Notes to the Segment Reporting
In the first three months of 2016, the share of sales realised internationally increased to around 78%, which means that this figure rose slightly compared to the previous year (Q1 2015: 77%). The main reason for this was the increase in sales in the EMEA region.
EMEA
External sales in the EMEA region amounted to EUR 112.1 million in the first quarter of 2016 and thus increased by 6.1% over the same quarter of the previous year (Q1 2015: EUR 105.6 million). This can be mainly attributed to the positive development in the area of EJT. The EMEA region's share of total sales amounted to approximately 50% (Q1 2015: 48%).
EBITDA in the EMEA region as of 31 March 2016 amounted to EUR 26.2 million and was thus 10.3% higher than in the previous year (Q1 2015: EUR 23.8 million). This resulted in an EBITDA margin of 22.1% (Q1 2015: 20.9%). Adjusted EBITA for the 3-month period amounted to EUR 23.7 million and thus rose by 11.0% compared to the same quarter of the previous year (Q1 2015: EUR 21.4 million). Accordingly, the adjusted EBITA margin in the EMEA region was 20.0% (Q1 2015: 18.8%).
Investments in the 3-month period amounted to EUR 2.9 million and were thus 55.2% higher than last year's level (Q1 2015: EUR 1.8 million). The EMEA region's assets were valued at EUR 476.2 million as of 31 March 2016 (31 Dec 2015: EUR 489.2 million).
AMERICAS
Sales growth in the Americas region was primarily negatively affected by the continued weakness of the commercial vehicle and agricultural machinery sectors in the Americas region. External sales amounted to EUR 96.0 million and were thus 1.8% lower than in the same quarter of the previous year (Q1 2015: EUR 97.7 million). This means the share of sales of the Americas region declined from around 44% (Q1 2015) to approximately 42% in the quarter that just ended.
| Total segments Central functions |
Consolidation | Consolidated Group | |||||
|---|---|---|---|---|---|---|---|
| Q1 2016 | Q1 2015 | Q1 2016 | Q1 2015 | Q1 2016 | Q1 2015 | Q1 2016 | Q1 2015 |
| 236,320 | 232,560 | 7,197 | 7,466 | – 16,952 | – 18,540 | 226,565 | 221,486 |
| 9,755 | 11,074 | 7,197 | 7,466 | – 16,952 | – 18,540 | 0 | 0 |
| 226,565 | 221,486 | 0 | 0 | 0 | 0 | 226,565 | 221,486 |
| 100% | 100% | ||||||
| 138,469 | 133,636 | n/a | n/a | – 756 | – 525 | 137,713 | 133,111 |
| 48,815 | 45,976 | – 3,382 | – 1,536 | – 45 | 41 | 45,388 | 44,481 |
| 20.0% | 20.1% | ||||||
| – 5,023 | – 4,994 | – 244 | – 241 | 0 | 0 | – 5,267 | – 5,235 |
| 43,792 | 40,982 | – 3,626 | – 1,777 | – 45 | 41 | 40,121 | 39,246 |
| 17.7% | 17.7% | ||||||
| 1,165,081 | 1,209,877 | 359,122 | 404,821 | – 360,090 | – 446,819 | 1,164,113 | 1,167,879 |
| 464,625 | 526,271 | 520,734 | 556,760 | – 258,354 | – 344,963 | 727,005 | 738,068 |
| 5,817 | 5,613 | 2,767 | 849 | n/a | n/a | 8,584 | 6,462 |
EBITDA in the Americas region amounted to EUR 20.4 million (Q1 2015: EUR 20.1 million adjusted). This resulted in an increased EBITDA margin of 20.8% (Q1 2015: 20.1% adjusted). Adjusted EBITA of EUR 18.1 million also rose by 2.0% from EUR 18.1 million in the same quarter of the previous year to EUR 18.5 million. This resulted in an adjusted EBITA margin of 18.8% (Q1 2015: 18.2%).
Investments in the Americas region amounted to EUR 2.0 million for the 3-month period (Q1 2015: 3.0 million) and included mainly the plants in the US. Assets decreased by 5.1% to EUR 603.9 million as of the balance sheet date (31 Dec 2015: EUR 636.3 million).
ASIA-PACIFIC
The Asia-Pacific region generated external sales of EUR 18.6 million in the first quarter of 2016 (Q1 2015: EUR 18.2 million) and thus showed positive growth of 1.9%. Besides strong organic growth, negative currency effects had the opposite effect on sales. The share of sales of the Asia-Pacific region remained unchanged compared to the same quarter of the previous year at around 8%.
EBITDA amounted to EUR 2.2 million and was thus 4.9% higher than last year's level (Q1 2015: EUR 2.1 million). The EBITDA margin amounted to 11.3% and thus increased compared to last year (Q1 2015: 11.1%). At the same time, adjusted EBITA increased to EUR 1.6 million (Q1 2015: EUR 1.5 million), which resulted in an 8.1% increase in the adjusted EBITA margin (Q1 2015: 7.8%).
Investments amounted to EUR 1.0 million for the 3-month period (Q1 2015: EUR 0.7 million). Assets increased slightly by 0.6% to EUR 84.9 million compared to the end of 2015.
Financial Calendar 2016
| 04.05.2016 | Publication of Q1 Interim Results 2016 |
|---|---|
| 02.06.2016 | Annual General Meeting 2016 in Frankfurt / Main |
| 03.08.2016 | Publication of Q2 Interim Results 2016 |
| 02.11.2016 | Publication of Q3 Interim Results 2016 |
The financial calendar is constantly updated. Please visit the Investor Relations section on the Company website @ http://investors.normagroup.com for up-to-date information.
Contact and Imprint
If you have any questions regarding NORMA Group or would like to be included in the distribution list, please contact the Investor Relations team:
E-Mail: [email protected]
Andreas Trösch Vice President Investor Relations Phone: + 49 6181 6102 741 | Fax: + 49 6181 6102 7641 E-mail: [email protected]
Dana Feuerberg Manager Investor Relations Phone: + 49 6181 6102 748 | Fax: + 49 6181 6102 7648 E-mail: [email protected]
EDITOR
NORMA Group SE Edisonstraße 4 63477 Maintal Germany Phone: + 49 6181 6102 740 E-mail: [email protected] Internet: www.normagroup.com
CONCEPT AND LAYOUT 3st kommunikation, Mainz
Note on the interim statement
This interim statement is also available in German. If there are differences between the two, the German version takes priority.
Note on rounding
Please note that slight differences may arise as a result of the use of rounded amounts and percentages.
Forward-looking statements
This interim statement contains certain future-oriented statements. Future-oriented statements include all statements which do not relate to historical facts and events and contain future-oriented expressions such as 'believe', 'estimate', 'assume', 'expect', 'forecast', 'intend', 'could' or 'should' or expressions of a similar kind. Such future-oriented statements are subject to risks and uncertainties since they relate to future events and are based on the company's current assumptions, which may not in the future take place or be fulfilled as expected. The company points out that such future-oriented statements provide no guarantee for the future and that the actual events including the financial position and profitability of the NORMA Group SE and developments in the economic and regulatory fundamentals may vary substantially (particularly on the down side) from those explicitly or implicitly assumed in these statements. Even if the actual assets for the NORMA Group SE, including its financial position and profitability and the economic and regulatory fundamentals, are in accordance with such future-oriented statements in this interim statement, no guarantee can be given that this will continue to be the case in the future.