Interim / Quarterly Report • May 7, 2018
Interim / Quarterly Report
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T_001
| Three months ended March 31, | ||||
|---|---|---|---|---|
| IN EUR MILLIONS | 2018 | 2017 | CHANGE | % CHANGE |
| Revenue | 251.0 | 244.9 | 6.1 | 2.5% |
| EBIT | 35.0 | 33.3 | 1.7 | 5.1% |
| Adjusted EBIT | 39.3 | 38.4 | 0.9 | 2.3% |
| Profit for the period | 25.6 | 14.6 | 11.0 | 75.3% |
| Capital expenditure | (8.6) | (13.1) | 4.5 | (34.4)% |
| Free cash flow (FCF) | 16.8 | 15.3 | 1.5 | 9.8% |
| EBIT as % of revenue | 13.9% | 13.6% | ||
| Adjusted EBIT as % of revenue | 15.7% | 15.7% | ||
| Profit in % of revenue | 10.2% | 6.0% | ||
| Capital expenditure as % of revenue | 3.4% | 5.4% | ||
| FCF in % of revenue | 6.7% | 6.2% |
| Six months ended March 31, | ||||
|---|---|---|---|---|
| IN EUR MILLIONS | 2018 | 2017 | CHANGE | % CHANGE |
| Revenue | 481.5 | 455.5 | 26.0 | 5.7% |
| EBIT | 64.5 | 57.4 | 7.1 | 12.4% |
| Adjusted EBIT | 73.2 | 67.8 | 5.4 | 8.0% |
| Profit for the period | 47.3 | 44.4 | 2.9 | 6.5% |
| Capital expenditure | (18.9) | (22.6) | 3.7 | (16.4)% |
| Free cash flow (FCF) | 31.5 | 22.1 | 9.4 | 42.5% |
| EBIT as % of revenue | 13.4% | 12.6% | ||
| Adjusted EBIT as % of revenue | 15.2% | 14.9% |
|---|---|---|
| Profit in % of revenue | 9.8% | 9.7% |
| Capital expenditure as % of revenue | 3.9% | 5.0% |
| FCF in % of revenue | 6.5% | 4.9% |
| Net leverage ratio | 1.4x | 2.0x |
22 5 Earnings per share
23 6 Property, plant and equipment
REVENUE BY MARKETS IN H1 FY2018
| 37% | Industrial Business |
|---|---|
| 23% | Industrial / Capital Goods |
| 11% | Vibration & Velocity Control |
| 3% | Commercial Furniture |
for the three and six months ended March 31, 2018
The table below sets out Stabilus Group's consolidated income statement for the second quarter and first half of fiscal 2018 and 2017:
Three months ended March 31, IN € MILLIONS 2018 2017 Change % change Revenue 251.0 244.9 6.1 2.5% Cost of sales (172.8) (169.7) (3.1) 1.8% Gross profit 78.2 75.2 3.0 4.0% Research and development expenses (11.6) (10.7) (0.9) 8.4% Selling expenses (20.3) (20.6) 0.3 (1.5)% Administrative expenses (10.4) (8.8) (1.6) 18.2% Other income 0.8 3.3 (2.5) (75.8)% Other expenses (1.7) (5.0) 3.3 (66.0)% Profit from operating activities (EBIT) 35.0 33.3 1.7 5.1% Finance income 1.4 0.1 1.3 >100.0% Finance costs (6.7) (11.3) 4.6 (40.7)% Profit / (loss) before income tax 29.6 22.1 7.5 33.9% Income tax income/ (expense) (4.0) (7.5) 3.5 (46.7)% Profit / (loss) for the period 25.6 14.6 11.0 75.3%
| Six months ended March 31, | |||
|---|---|---|---|
| 2018 | 2017 | Change | % change |
| 481.5 | 455.5 | 26.0 | 5.7% |
| (335.7) | (320.5) | (15.2) | 4.7% |
| 145.8 | 135.1 | 10.7 | 7.9% |
| (21.7) | (18.6) | (3.1) | 16.7% |
| (40.8) | (40.6) | (0.3) | 0.5% |
| (19.4) | (17.8) | (1.6) | 9.0% |
| 5.4 | 7.2 | (1.8) | (25.0)% |
| (4.8) | (7.9) | 3.1 | (39.2)% |
| 64.5 | 57.4 | 7.1 | 12.4% |
| 1.4 | 12.0 | (10.6) | (88.3)% |
| (9.2) | (5.7) | (3.5) | 61.4% |
| 56.8 | 63.7 | (6.9) | (10.8)% |
| (9.5) | (19.4) | 9.9 | (51.0)% |
| 47.3 | 44.4 | 2.9 | 6.5% |
Group's total revenue developed as follows:
| IN € MILLIONS | Three months ended March 31, | |||
|---|---|---|---|---|
| 2018 | 2017 | Change | % change | |
| Europe1) | 132.2 | 126.1 | 6.1 | 4.8% |
| NAFTA1) | 89.4 | 93.7 | (4.3) | (4.6)% |
| Asia / Pacific and RoW1) | 29.4 | 25.0 | 4.4 | 17.6% |
| Revenue1) | 251.0 | 244.9 | 6.1 | 2.5% |
1) Revenue breakdown by location of Stabilus company (i.e. "billed-from view").
| Revenue1) | 481.5 | 455.5 | 26.0 | 5.7% |
|---|---|---|---|---|
| Asia / Pacific and RoW1) | 60.4 | 51.8 | 8.6 | 16.6% |
| NAFTA1) | 173.0 | 175.3 | (2.3) | (1.3)% |
| Europe1) | 248.1 | 228.4 | 19.7 | 8.6% |
| IN € MILLIONS | 2018 | 2017 | Change | % change |
| Six months ended March 31, |
1) Revenue breakdown by location of Stabilus company (i.e. "billed-from view").
Total revenue of €481.5 million in the first half of fiscal 2018 increased by 5.7% compared to the first half of fiscal 2017.
The Group´s revenue growth in the first half of fiscal 2018 was primarily driven by our entities in Europe (€19.7 million or 8.6%) and Asia / Pacific and RoW (€8.6 million or 16.6%), whereas revenue from our NAFTA's entities decreased by €(2.3) million or (1.3)%.
The decrease in NAFTA is driven by the relatively weaker US dollar, i.e. the currency translation of NAFTA´s revenue from US dollar to euro (average rate per €1: \$1.20 in H1 FY2018 versus \$1.07 in H1 FY2017). This currency translation effect amounted to €(21.2) million. At constant US dollar rates NAFTA´s revenue grew by 10.7%.
| Three months ended March 31, | |||
|---|---|---|---|
| 2018 | 2017 | Change | % change |
| 87.6 | 91.5 | (3.9) | (4.3)% |
| 67.8 | 65.6 | 2.2 | 3.4% |
| 155.4 | 157.1 | (1.7) | (1.1)% |
| 61.3 | 55.1 | 6.2 | 11.3% |
| 26.7 | 25.2 | 1.5 | 6.0% |
| 7.6 | 7.5 | 0.1 | 1.3% |
| 95.6 | 87.7 | 7.9 | 9.0% |
| 251.0 | 244.9 | 6.1 | 2.5% |
| Six months ended March 31, | ||||
|---|---|---|---|---|
| IN € MILLIONS | 2018 | 2017 | Change | % change |
| Automotive Gas Spring | 170.7 | 174.7 | (4.0) | (2.3)% |
| Automotive Powerise® | 132.3 | 119.0 | 13.3 | 11.2% |
| Automotive business | 303.0 | 293.7 | 9.3 | 3.2% |
| Industrial / Capital Goods | 112.2 | 100.9 | 11.3 | 11.2% |
| Vibration & Velocity Control | 51.5 | 46.6 | 4.9 | 10.5% |
| Commercial Furniture | 14.8 | 14.3 | 0.5 | 3.5% |
| Industrial business | 178.5 | 161.9 | 16.7 | 10.3% |
| Revenue | 481.5 | 455.5 | 26.0 | 5.7% |
The revenue of our Automotive business increased by €9.3 million or 3.2% from €293.7 million in the first half of fiscal 2017 to €303.0 million in the first half of fiscal 2018. This is particularly due to our Automotive Powerise® business increasing by €13.3 million or 11.2% to €132.3 million. This is reflecting stronger sales in China and the continuing general trend of opting for this extra equipment. This is slightly offset by decreased revenue in the Automotive Gas Spring business amounting to €(4.0) million or (2.3)%.
The revenue of our Industrial business increased by €16.7 million or 10.3% from €161.9 million in the first half of fiscal 2017 to €178.5 million in the first half of fiscal 2018. This increase was primarily driven by our Industrial / Capital Goods business which grew by €11.3 million or 11.2% and our Vibration & Velocity business which grew by €4.9 million or 10.5%. Both businesses benefit from the strong growth in several relevant segments
(e.g. independent aftermarket, solar dampers, agriculture machinery, construction machinery).
Commercial Furniture revenue increased by 3.5% from €14.3 million in the first half of fiscal 2017 to €14.8 million in the first half of fiscal 2018.
Cost of sales increased from €(320.5) million in the first half of fiscal 2017 by 4.7% to €(335.7) million in first half of fiscal 2018, primarily due to the stronger sales. The cost of sales increase (4.7%) is less than the increase in revenue (5.7%). Consequently, cost of sales as a percentage of revenue decreased by 70 basis points to 69.7% (PY: 70.4%) and the gross profit margin improved to 30.3% (PY: 29.7%).
R&D expenses (net of R&D cost capitalization) increased by 16.7% from €(18.6) million in the first half of fiscal 2017 to €(21.7) million in the first half of fiscal 2018. The increase in R&D expenses reflects engineering activities to develop new products and product applications to open new areas of business for Stabilus. In addition the capitalization rate is lower as resources are currently reassigned from capitalizable activities to others. As a percentage of revenue, R&D expenses increased by 40 basis points to 4.5% (PY: 4.1%). The capitalization of R&D expenses decreased from €(6.0) million in the first half of fiscal 2017 to €(4.2) million in the first half of fiscal 2018.
Selling expenses increased slightly from €(40.6) million in the first half of fiscal 2017 by 0.5% to €(40.8) million in the first half of fiscal 2018. As a percentage of revenue, the selling expenses decreased by 40 basis points to 8.5% (PY: 8.9%).
Administrative expenses increased from €(17.8) million in the first half of fiscal 2017 by 9.0% to €(19.4) million in the first half of fiscal 2018. This is due to slightly increased headcount addressing the overall growth of the Stabilus Group and increased personnel related provisions. As a percentage of revenue, administrative expenses increased slightly by 10 basis points to 4.0% (PY: 3.9%).
Other income decreased from €7.2 million in the first half of fiscal 2017 by €(1.8) million to €5.4 million in the first half of fiscal 2018. This mainly comprises foreign currency translation gains from the operating business.
Other expenses decreased from €(7.9) million in the first half of fiscal 2017 by €3.1 million to €(4.8) million in the first half of fiscal 2018. This mainly comprises foreign currency translation losses from the operating business.
Finance income decreased from €12.0 million in the first half of fiscal 2017 to €1.4 million in the first half of fiscal 2018. In the first half of fiscal 2018 an amount of €1.3 million is due to the adjustment of the carrying value of the term loan facility. This reflects the decrease in the margin in February 2018 based on the improved net leverage ratio of the Group. Finance income in the first half of fiscal 2017 was strongly impacted by net foreign exchange gains especially on euro loans of our US entities amounting to €11.8 million due to the strengthening US dollar (closing rate per €1: \$1.12 as at September 2016 versus €1: \$1.07 as at March 2017). As in the first half of fiscal 2018 the US dollar weakened (closing rate per €1: \$1.18 as at September 2017 versus €1: \$1.23 as at March 2018) and due to certain measures we took to reduce the foreign exchange exposure the effect from the first half of fiscal 2017 is not recurring in the first half of fiscal 2018.
Finance costs increased from €(5.7) million in the first half of fiscal 2017 to €(9.2) million in the first half of fiscal 2018. Finance costs in the first half of fiscal 2018 were impacted by net foreign exchange losses especially due to the relatively weaker US dollar (closing rate per €1: \$1.18 as at September 30, 2017 versus \$1.23 as at
March 31, 2018). Finance costs in the first half of fiscal 2018 were also influenced by interest expense on financial liabilities amounting to €(4.2) million compared to interest expense on financial liabilities of €(5.3) million in the first half of fiscal 2017.
Interest expense on financial liabilities include ongoing interest expense of €(4.2) million (PY: €(5.3) million) especially related to the euro term loan facility. Thereof, an amount of €(2.1) million (PY: €(4.7) million) is cash interest. This decrease reflects the lower margin based on the improved net leverage ratio of the Group and the reduced outstanding nominal amount. In addition, an amount of €(2.3) million (PY: €(0.5) million) is due to the amortization of debt issuance cost and the amortization of the adjustment of the carrying value by using the effective interest rate method.
The income tax expense decreased from €(19.4) million in the first half of fiscal 2017 to €(9.5) million in the first half of fiscal 2018. The Group´s tax rate in the first half of fiscal 2018 is 16.7% (PY: 30.5%). The decrease in the tax rate is due to effects from the US tax reform
signed in December 2017 and to the optimization of the legal structure of our US operations in the second quarter of fiscal 2018. The US tax reform reduces the federal income tax rate from 35% to 21% with effect from January 1, 2018 and consequently requires a remeasurement of the deferred tax position of our US operations. The non-recurring net effect reflected in the first half of fiscal 2018 amounted to €3.9 million. In comparison to the first quarter of fiscal 2018 the expected tax benefit has been reduced by €(0.2) million reflecting a better estimate based on new information regarding the interpretation of the new tax rules. The optimization of the legal structure of the US entities in the second quarter of fiscal 2018 effects the recoverability of interest expense from prior years. Currently an amount of €3.4 million deferred tax income was recognized in the second quarter of fiscal 2018 reflecting the portion of interest expenses from prior years where recoverability is virtually certain.
The following table shows a reconciliation of EBIT (earnings before interest and taxes) to adjusted EBIT for the second quarter and first half of fiscal 2018 and 2017:
| Reconciliation of EBIT to adjusted EBIT | T _ 008 | |||
|---|---|---|---|---|
| Three months ended March 31, | ||||
| IN € MILLIONS | 2018 | 2017 | Change | % change |
| Profit from operating activities (EBIT) | 35.0 | 33.3 | 1.7 | 5.1% |
| PPA adjustments – depreciation and amortization | 4.3 | 5.1 | (0.8) | (15.7)% |
| Adjusted EBIT | 39.3 | 38.4 | 0.9 | 2.3% |
| Six months ended March 31, | ||||
| IN € MILLIONS | 2018 | 2017 | Change | % change |
| Profit from operating activities (EBIT) | 64.5 | 57.4 | 7.1 | 12.4% |
| PPA adjustments – depreciation and amortization | 8.7 | 10.4 | (1.7) | (16.3)% |
Adjusted EBIT represents EBIT, adjusted for exceptional nonrecurring items (e.g. restructuring or one-time advisory costs) and depreciation / amortization of fair value adjustments from purchase price allocations (PPAs).
Adjusted EBIT is represented because we believe it is a useful indicator of the Group´s operating performance before items which are
considered exceptional and not relevant to an assessment of our operational performance.
The PPA adjustments in the current year contain €4.6 million (PY: €6.2 million) related to the April 2010 PPA and €4.1 million (PY: €4.2 million) to the June 2016 PPA.
The Stabilus Group is organized and managed primarily on a regional level. The three reportable operating segments of the Group are Europe, NAFTA, Asia / Pacific and RoW.
The table below sets out the development of our operating segments for the second quarter and first half of fiscal 2018 and 2017:
| Three months ended March 31, | ||||
|---|---|---|---|---|
| IN € MILLIONS | 2018 | 2017 | Change | % change |
| Europe | ||||
| External revenue1) | 132.2 | 126.1 | 6.1 | 4.8% |
| Intersegment revenue1) | 8.4 | 8.5 | (0.1) | (1.2)% |
| Total revenue1) | 140.6 | 134.6 | 6.0 | 4.5% |
| Adjusted EBIT | 22.5 | 19.5 | 3.0 | 15.4% |
| as % of total revenue | 16.0% | 14.5% | ||
| as % of external revenue | 17.0% | 15.5% | ||
| NAFTA | ||||
| External revenue1) | 89.4 | 93.7 | (4.3) | (4.6)% |
| Intersegment revenue1) | 6.3 | 6.7 | (0.4) | (6.0)% |
| Total revenue1) | 95.7 | 100.4 | (4.7) | (4.7)% |
| Adjusted EBIT | 12.5 | 15.8 | (3.3) | (20.9)% |
| as % of total revenue | 13.1% | 15.7% | ||
| as % of external revenue | 14.0% | 16.9% | ||
| Asia / Pacific and RoW | ||||
| External revenue1) | 29.4 | 25.0 | 4.4 | 17.6% |
| Intersegment revenue1) | 0.0 | 0.3 | (0.3) | (100.0)% |
| Total revenue1) | 29.4 | 25.3 | 4.1 | 16.2% |
| Adjusted EBIT | 4.4 | 3.2 | 1.2 | 37.5% |
| as % of total revenue | 14.9% | 12.6% | ||
| as % of external revenue | 15.0% | 12.8% | ||
1) Revenue breakdown by location of Stabilus company (i.e. "billed-from view").
| Six months ended March 31, | ||||
|---|---|---|---|---|
| IN € MILLIONS | 2018 | 2017 | Change | % change |
| Europe | ||||
| External revenue1) | 248.1 | 228.4 | 19.7 | 8.6% |
| Intersegment revenue1) | 16.5 | 15.6 | 0.9 | 5.8% |
| Total revenue1) | 264.6 | 244.0 | 20.6 | 8.4% |
| Adjusted EBIT | 38.8 | 31.6 | 7.2 | 22.8% |
| as % of total revenue | 14.7% | 13.0% | ||
| as % of external revenue | 15.6% | 13.8% | ||
| NAFTA | ||||
| External revenue1) | 173.0 | 175.3 | (2.3) | (1.3)% |
| Intersegment revenue1) | 12.6 | 12.5 | 0.1 | 0.8% |
| Total revenue1) | 185.6 | 187.8 | (2.2) | (1.2)% |
| Adjusted EBIT | 24.9 | 28.1 | (3.2) | (11.4)% |
| as % of total revenue | 13.4% | 15.0% | ||
| as % of external revenue | 14.4% | 16.0% | ||
| Asia / Pacific and RoW | ||||
| External revenue1) | 60.4 | 51.8 | 8.6 | 16.6% |
| Intersegment revenue1) | 0.1 | 0.4 | (0.3) | (75.0)% |
| Total revenue1) | 60.5 | 52.2 | 8.3 | 15.9% |
| Adjusted EBIT | 9.5 | 8.2 | 1.3 | 15.9% |
| as % of total revenue | 15.7% | 15.7% | ||
| as % of external revenue | 15.7% | 15.8% | ||
1) Revenue breakdown by location of Stabilus company (i.e. "billed-from view").
The external revenue generated by our European companies increased from €228.4 million in the first half of fiscal 2017 by 8.6% to €248.1 million in the first half of fiscal 2018. This is driven by the Automotive business and the Industrial business respectively. Within the Industrial business the contribution to Europe`s revenue is substantially contributed by the Industrial / Capital Goods business with €8.4 million reflecting a growth of 12.6%. In the Automotive business Automotive Powerise® grew by 10.8% and contributed €5.3 million while Automotive Gas Spring grew by 5.2% and contributed €3.9 million to Europe's revenue growth. The adjusted EBIT of the European segment increased by 22.8% or €7.2 million and the adjusted EBIT margin, i.e. adjusted EBIT in percent of external revenue, increased in the first half of fiscal 2018 by 180 basis points to 15.6% (PY: 13.8%).
The external revenue of our companies located in the NAFTA region decreased from €175.3 million in the first half of fiscal 2017 by
1.3% to €173.0 million in the first half of fiscal 2018. The Automotive business contributed €(5.3) million offset by a contribution of €3.0 million by the Industrial business. The decrease in NAFTA is generally driven by the relatively weaker US dollar, i.e. the currency translation of NAFTA´s revenue from US dollar to euro (average rate per €1: \$1.20 in H1 FY2018 versus \$1.07 in H1 FY2017). The currency translation effect was €(21.2) million. At constant US dollar rates NAFTA´s revenue grew by 10.7%. Measured in US dollars the Automotive business grew by 7.5%. This is due to our Powerise® business with a growth rate of 11.5% and our Automotive Gas Spring business with a growth rate of 2.6%. The Industrial business grew by 18.8%. The adjusted EBIT of the NAFTA segment decreased by 11.4% or €3.2 million and the adjusted EBIT margin, i.e. adjusted EBIT in percent of external revenue, decreased in the first half of fiscal 2018 by 160 basis points to 14.4% (PY: 16.0%).
The external revenue of our companies located in the region Asia / Pacific and RoW increased from €51.8 million in the first half of fiscal 2017 by 16.6% to €60.4 million in the first half of fiscal 2018. This increase is mainly driven by the Automotive Powerise® business which grew by €8.3 million, especially due to the ramp-up of the Powerise® production in our Chinese entity and our Vibration and
Velocity Control business which grew by €2.3 million. The adjusted EBIT of the Asia / Pacific and RoW segment increased by €1.3 million or 15.9% and the adjusted EBIT margin, i.e. adjusted EBIT in percent of external revenue, decreased slightly in the first half of fiscal 2018 by 10 basis points to 15.7% (PY: 15.8%).
| IN € MILLIONS | March 31, 2018 | Sept 30, 2017 | Change | % change |
|---|---|---|---|---|
| Assets | ||||
| Non-current assets | 633.8 | 647.8 | (14.0) | (2.2)% |
| Current assets | 312.1 | 282.2 | 29.9 | 10.6% |
| Total assets | 945.9 | 930.0 | 15.9 | 1.7% |
| Equity and liabilities | ||||
| Equity | 360.8 | 336.4 | 24.4 | 7.3% |
| Non-current liabilities | 421.2 | 430.8 | (9.6) | (2.2)% |
| Current liabilities | 163.9 | 162.8 | 1.1 | 0.7% |
| Total liabilities | 585.1 | 593.6 | (8.5) | (1.4)% |
| Total equity and liabilities | 945.9 | 930.0 | 15.9 | 1.7% |
The Group's balance sheet total increased from €930.0 million as of September 30, 2017 by 1.7% to €945.9 million as of March 31, 2018.
Our non-current assets decreased from €647.8 million as of September 30, 2017 by (2.2)% or €(14.0) million to €633.8 million as of March 31, 2018. This reduction is mainly attributable to the €(15.1) million decrease of other intangible assets that mainly results from the ongoing amortization of intangible assets from the purchase price allocations 2010 and 2016. The relatively weaker US dollar (closing rate per €1: \$1.18 as at September 30, 2017 versus €1: \$1.23 as at March 31, 2018) is generally effecting all line items, e.g. causing a decrease in goodwill of (€2.3) million. This was partly offset by ongoing capacity expansions, i.e. the purchase of property plant and equipment (€14.3 million) and intangible assets (€4.6 million). The increase of deferred tax assets is mainly driven by the optimization of the legal structure of our US entities.
Current assets increased from €282.2 million as of September 30, 2017 by 10.6% or €29.9 million to €312.1 million as of March 31, 2018. This is driven by an increase in trade accounts receivable by €21.5 million mainly as a consequence of ongoing business growth and an increase in the cash balance by €7.7 million that results from our strong cash flow in the first half year of fiscal 2018.
The Group's equity increased from €336.4 million as of September 30, 2017 by €24.4 million to €360.8 million as of March 31, 2018. This increase results from the profit of €47.3 million that was generated in the first half of fiscal 2018, which was partially offset by other comprehensive income of €(3.1) million. Other comprehensive income comprises unrealized actuarial gains on pensions (net of tax) amounting to €0.9 million and unrealized losses from foreign currency translation amounting to €(4.0) million. In the second quarter of fiscal 2018 dividends amounting to €(19.8) million were paid to our shareholders.
Non-current liabilities decreased from €430.8 million as of September 30, 2017 by (2.2)% or €(9.6) million to €421.2 million as of March 31, 2018. This decrease is primarily due to the reduction of the deferred tax liabilities by €(6.4) million which was mainly affected by the US tax reform and the necessary remeasurement of the deferred tax positions of our US entities. In addition, the pension liabilities decreased by €(1.6) million as a consequence of an increased discount rate (March 31, 2018: 2.06% versus September 30, 2017: 1.87%) and the other financial liabilities decreased by €(0.9) million due to an early settlement of a finance lease arrangement.
Current liabilities slightly increased from €162.8 million as of September 30, 2017 by €1.1 million or 0.7% to €163.9 million as of March 31, 2018. This increase was essentially driven by current provisions for warranties amounting to €2.8 million (e.g. warranties driven by higher sales for the current fiscal year) and an increase in our current tax liabilities by €2.4 million. This increase was partly offset by a significant reduction of our trade accounts payables by €(4.0) million or (5.0)% which is a consequence of shorter payment cycles for trade payables to benefit from early payment discounts.
| Six months ended March 31, | ||||
|---|---|---|---|---|
| IN € MILLIONS | 2018 | 2017 | Change | % change |
| Cash flow from operating activities | 50.3 | 44.6 | 5.7 | 12.8% |
| Cash flow from investing activities | (18.8) | (22.5) | 3.7 | (16.4)% |
| Cash flow from financing activities | (23.0) | (30.0) | 7.0 | (23.3)% |
| Net increase / (decrease) in cash | 8.5 | (7.8) | 16.3 | <(100.0)% |
| Effect of movements in exchange rates on cash held | (0.9) | 0.8 | (1.7) | <(100.0)% |
| Cash as of beginning of the period | 68.1 | 75.0 | (6.9) | (9.2)% |
| Cash as of end of the period | 75.8 | 68.0 | 7.8 | 11.5% |
Cash flow from operating activities increased from €44.6 million in the first half of fiscal 2017 by €5.7 million to €50.3 million in the first half of fiscal 2018. This increase is mainly due to the strong revenue and earnings growth and partly offset by higher net working capital as a consequence of the continuing growth and shorter payment cycles for trade payables.
Cash outflow for investing activities decreased from €(22.5) million in the first half of fiscal 2017 by €3.7 million to €(18.8) million in the first half of fiscal 2018 due to lower capital expenditures in property, plant and equipment of €(2.7) million and reduced investments in intangible assets, especially due to a reduction of capitalized R&D costs (less related customer contributions) amounting to €(1.0) million.
The cash outflow from financing activities decreased from €(30.0) million in the first half of fiscal 2017 by €7.0 million to €(23.0) million in the first half of fiscal 2018. In the first half of fiscal 2017 we made a voluntary repayment of € 12.5 million of the term loan facility and no comparable repayment in the first half of fiscal 2018. In addition, the cash interest in the first half year of fiscal 2018 is €(2.6) million lower compared to the first half year of fiscal 2017. This reflects the lower margin based on the improved net leverage ratio of the Group and the reduced outstanding nominal amount. This was offset by the dividend payments of €(19.8) million (PY: €(12.4) million) made to our shareholders in February 2018.
Free cash flow (FCF) is defined as the total of cash flow from operating and investing activities. The following table sets out the composition of FCF.
| Free cash flow | T _ 012 | |||
|---|---|---|---|---|
| Six months ended March 31, | ||||
| IN € MILLIONS | 2018 | 2017 | Change | % change |
| Cash flow from operating activities | 50.3 | 44.6 | 5.7 | 12.8% |
| Cash flow from investing activities | (18.8) | (22.5) | 3.7 | (16.4)% |
| Free cash flow | 31.5 | 22.1 | 9.4 | 42.5% |
The net leverage ratio is defined as net financial debt divided by adjusted EBITDA for the last twelve months (adjusted EBITDA LTM).
Net financial debt is the nominal amount of financial debt, i.e. current and non-current financial liabilities, less cash and cash equivalents. Adjusted EBITDA is defined as adjusted EBIT before depreciation and amortization.
The net leverage ratio is presented because we believe it is a useful indicator to evaluate the Group's debt leverage and financing structure.
The net leverage ratio decreased from 2.0x for the twelve months ending March 31, 2017 to 1.4x for the twelve months ending March 31, 2018. See the following table:
| IN € MILLIONS | March 31, 2018 | March 31, 2017 | Change | % change |
|---|---|---|---|---|
| Financial debt | 342.3 | 392.5 | (50.2) | (12.8)% |
| Cash and cash equivalents | (75.8) | (68.0) | (7.8) | 11.5% |
| Net financial debt | 266.5 | 324.5 | (58.0) | (17.9)% |
| Adjusted EBITDA (LTM ended March, 31) | 184.1 | 159.2 | 24.9 | 15.6% |
| Net leverage ratio1) | 1.4x | 2.0x |
1) The net leverage ratio is defined as net financial debt divided by adjusted EBITDA for the last twelve months.
We refer to the risk-related disclosures in the Group Management Report and in the audited Consolidated Financial Statements as of and for the fiscal year ended September 30, 2017.
The positive development of our business gives us confidence for the remaining months of the fiscal year and allows us to raise the guidance on revenue growth at constant US dollar rates, i.e. based on the average rate of €1: \$1.10 from FY2017, from circa 7.1% to circa 8.8% for FY2018. As such we confirm our revenue guidance of about €960 million, now assuming a currency rate of €1: \$1.20, and our adjusted EBIT margin guidance of approximately 15.5% for FY2018.
As of May 3, 2018, there were no further events or developments that could have materially affected the measurement and presentation of Group's assets and liabilities as of March 31, 2018.
as of and for the three and six months ended March 31, 2018
for the three and six months ended March 31, 2018 (unaudited)
| 2018 2017 2018 2017 IN € THOUSANDS NOTE Revenue 250,993 244,866 481,546 2 Cost of sales (172,815) (169,706) (335,721) Gross profit 78,178 75,160 145,825 Research and development expenses (11,588) (10,742) (21,670) Selling expenses (20,337) (20,647) (40,794) Administrative expenses (10,425) (8,788) (19,430) Other income 806 3,325 5,364 Other expenses (1,664) (5,032) (4,775) Profit from operating activities 34,970 33,278 64,520 Finance income 1,370 97 1,435 3 Finance costs (6,693) (11,279) (9,169) 4 Profit / (loss) before income tax 29,647 22,096 56,786 Income tax income / (expense) (4,029) (7,541) (9,457) Profit / (loss) for the period 25,618 14,556 47,329 thereof attributable to non-controlling interests (69) 6 (96) thereof attributable to shareholders of Stabilus 25,687 14,550 47,425 Other comprehensive income / (expense) Foreign currency translation difference1) 2,003 8,384 (4,021) 11 Unrealized actuarial gains and losses2) 684 (157) 883 11 Other comprehensive income / (expense), net of taxes 2,687 8,226 (3,138) Total comprehensive income / (expense) for the period 28,305 22,782 44,191 thereof attributable to non-controlling interests (69) 6 (96) thereof attributable to shareholders of Stabilus 28,374 22,776 44,287 Earnings per share (in €): basic 1.04 0.59 1.92 5 diluted 1.04 0.59 1.92 5 |
Three months ended March 31, | Six months ended March 31, | ||
|---|---|---|---|---|
| 455,548 | ||||
| (320,466) | ||||
| 135,082 | ||||
| (18,640) | ||||
| (40,581) | ||||
| (17,803) | ||||
| 7,193 | ||||
| (7,851) | ||||
| 57,400 | ||||
| 12,002 | ||||
| (5,664) | ||||
| 63,738 | ||||
| (19,365) | ||||
| 44,373 | ||||
| 14 | ||||
| 44,359 | ||||
| (348) | ||||
| 2,766 | ||||
| 2,418 | ||||
| 46,791 | ||||
| 14 | ||||
| 46,777 | ||||
| 1.80 | ||||
| 1.80 |
1) Item that may be reclassified ('recycled') to profit and loss at a future point in time when specific conditions are met.
2) Item that will not be reclassified to profit and loss.
The accompanying Notes form an integral part of these Consolidated Financial Statements.
as of March 31, 2018 (unaudited)
| March 31, 2018 IN € THOUSANDS NOTE Assets Property, plant and equipment 169,182 6 Goodwill 191,910 Other intangible assets 253,797 7 Other assets 3,318 9 |
T _ 015 |
|---|---|
| Sept 30, 2017 | |
| 169,659 | |
| 194,184 | |
| 268,911 | |
| 2,951 | |
| Deferred tax assets 15,513 |
12,083 |
| Total non-current assets 633,720 |
647,788 |
| Inventories 85,388 10 |
85,262 |
| Trade accounts receivable 126,623 |
105,147 |
| Current tax assets 7,186 |
5,802 |
| Other financial assets 2,612 8 |
5,155 |
| Other assets 14,513 9 |
12,718 |
| Cash and cash equivalents 75,816 |
68,123 |
| Total current assets 312,138 |
282,207 |
| Total assets 945,858 |
929,995 |
| NOTE | March 31, 2018 | Sept 30, 2017 |
|---|---|---|
| 247 | 247 | |
| 225,848 | 225,848 | |
| 167,105 | 139,440 | |
| 11 | (32,336) | (29,198) |
| 360,864 | 336,337 | |
| (91) | 43 | |
| 360,773 | 336,380 | |
| 12 | 311,734 | 311,951 |
| 13 | 915 | 1,830 |
| 14 | 3,216 | 3,771 |
| 15 | 51,652 | 53,236 |
| 53,633 | 60,036 | |
| 421,150 | 430,824 | |
| 75,094 | 79,073 | |
| 12 | 11,033 | 10,000 |
| 13 | 10,382 | 9,613 |
| 17,979 | 15,612 | |
| 14 | 35,239 | 33,061 |
| 16 | 14,208 | 15,432 |
| 163,935 | 162,791 | |
| 585,085 | 593,615 | |
| 945,858 | 929,995 | |
The accompanying Notes form an integral part of these Consolidated Financial Statements.
for the six months ended March 31, 2018 (unaudited)
| Changes in Equity | T _ 016 | |||||||
|---|---|---|---|---|---|---|---|---|
| IN € THOUSANDS | NOTE | Issued capital |
Capital reserves |
Retained earnings |
Other reserves |
Equity attributable to shareholders of Stabilus |
Non controlling interests |
Total equity |
| Balance as of Sept 30, 2016 | 247 | 225,848 | 72,535 | (35,832) | 262,798 | 94 | 262,892 | |
| Profit/ (loss) for the period | – | – | 44,359 | – | 44,359 | 14 | 44,373 | |
| Other comprehensive income / (expense) |
11 | – | – | – | 2,418 | 2,418 | – | 2,418 |
| Total comprehensive income for the period |
– | – | 44,359 | 2,418 | 46,777 | 14 | 46,791 | |
| Dividends | – | – | (12,350) | – | (12,350) | (54) | (12,404) | |
| Balance as of March 31, 2017 | 247 | 225,848 | 104,544 | (33,414) | 297,225 | 54 | 297,278 | |
| Balance as of Sept 30, 2017 | 247 | 225,848 | 139,440 | (29,198) | 336,337 | 43 | 336,380 | |
| Profit/ (loss) for the period | – | – | 47,425 | – | 47,425 | (96) | 47,329 | |
| Other comprehensive income / (expense) |
11 | – | – | – | (3,138) | (3,138) | – | 3,138 |
| Total comprehensive income for the period |
– | – | 47,425 | (3,138) | 44,287 | (96) | 44,191 | |
| Dividends | – | – | (19,760) | – | (19,760) | (38) | (19,798) | |
| Balance as of March 31, 2018 | 247 | 225,848 | 167,105 | (32,336) | 360,864 | (91) | 360,773 |
The accompanying Notes form an integral part of these Consolidated Financial Statements.
for the six months ended March 31, 2018 (unaudited)
| Six months ended March 31, | |||
|---|---|---|---|
| IN € THOUSANDS | NOTE | 2018 | 20171) |
| Profit / (loss) for the period | 47,329 | 44,373 | |
| Income tax expense | 9,457 | 19,365 | |
| Net finance result | 3 / 4 | 7,734 | (6,544) |
| Interest received | 3 / 4 | 144 | 206 |
| Depreciation and amortization (incl. impairment losses) | 29,182 | 31,699 | |
| Gains / losses from the disposal of assets | 97 | – | |
| Changes in inventories | (126) | (6,078) | |
| Changes in trade accounts receivable | (21,476) | (19,029) | |
| Changes in trade accounts payable | (3,979) | (4,418) | |
| Changes in other assets and liabilities | (1,105) | (1,709) | |
| Changes in provisions | 1,306 | 3,267 | |
| Income tax payments | 20 | (18,269) | (16,485) |
| Cash flow from operating activities | 50,294 | 44,647 | |
| Proceeds from disposal of property, plant and equipment | 172 | 104 | |
| Purchase of intangible assets | 7 | (4,615) | (5,647) |
| Purchase of property, plant and equipment | 6 | (14,338) | (16,984) |
| Cash flow from investing activities | (18,781) | (22,526) | |
| Receipts from financial liabilities | 6,427 | – | |
| Payments for redemption of financial liabilities | (129) | – | |
| Payments for redemption of senior facilities | (6,427) | (12,500) | |
| Payments for finance leases | (945) | (314) | |
| Dividends paid | (19,760) | (12,350) | |
| Dividends paid to non-controlling interests | (38) | (54) | |
| Payments for interest | 20 | (2,097) | (4,744) |
| Cash flow from financing activities | (22,969) | (29,962) | |
| Net increase / (decrease) in cash and cash equivalents | 8,544 | (7,841) | |
| Effect of movements in exchange rates on cash held | (851) | 794 | |
| Cash and cash equivalents as of beginning of the period | 68,123 | 75,037 | |
Cash and cash equivalents as of end of the period 75,816 67,990
1) Prior-year figures have been reported following the adjusted structure of the year ended September 30, 2017. The accompanying Notes form an integral part of these Consolidated Financial Statements.
as of and for the three and six months ended March 31, 2018
Stabilus S.A., Luxembourg, hereinafter also referred to as "Stabilus" or the "Company" is a public limited liability company (société anonyme) incorporated in Luxembourg and governed by Luxembourg law. The Company is registered with the Luxembourg Trade and Companies Register (Registre de Commerce et des Sociétés Luxembourg) under No. B0151589 and its registered office is located at 2, rue Albert Borschette, L-1246 Luxembourg, Grand Duchy of Luxembourg. The Company was founded under the name Servus HoldCo S.à r. l. on February 26, 2010.
The Company's fiscal year is from October 1 to September 30 of the following year (twelve-month period). The Consolidated Financial Statements of Stabilus S.A. include Stabilus and its subsidiaries (hereafter also referred to as "Stabilus Group" or the "Group").
The Stabilus Group is a leading manufacturer of gas springs and dampers, as well as electric tailgate opening and closing equipment. The products are used in a wide range of automotive and industrial applications, as well as in the furniture industry. Typically the products are used to support the lifting and lowering or dampening of movements. As world market leader for gas springs, the Group ships to all key vehicle manufacturers. Various Tier 1 suppliers of the global car industry as well as large technically focused distributors further diversify the Group's customer base.
The accompanying Condensed Interim Consolidated Financial Statements present the operations of Stabilus, Luxembourg, and its subsidiaries. The Company has prepared these statements under the going-concern assumption.
The Condensed Interim Consolidated Financial Statements as of and for the three and six months ended March 31, 2018 have been prepared in accordance with IAS 34 "Interim Financial Reporting"; they comply with the International Financial Reporting Standards (IFRS) as adopted by the European Union. Selected explanatory notes are included to explain events and transactions that are significant to an understanding of the changes in the financial position and performance of Stabilus Group since the last annual Consolidated Financial Statements as of and for the fiscal year ended September 30, 2017. These Interim Consolidated Financial Statements are condensed and do not include all information for full annual financial statements prepared in accordance with International Financial Reporting Standards and therefore should be read in connection with the Consolidated Financial Statements as of September 30, 2017.
The accounting policies adopted in the preparation of the Condensed Interim Consolidated Financial Statements are consistent with those followed in the preparation of the Group's annual Financial Statements for the fiscal year ended September 30, 2017. The interim Consolidated Financial Statements and the interim Group management report has not been audited or reviewed by our Group Auditor.
These Condensed Interim Consolidated Financial Statements as of and for the three and six months ended March 31, 2018 comprise the Consolidated Statement of Comprehensive Income for the three and six months ended March 31, 2018, the Consolidated Statement of Financial Position as of March 31, 2018, the Consolidated Statement of Changes in Equity for the six months ended March 31, 2018, the Consolidated Statement of Cash Flows for the six months ended March 31, 2018 and explanatory Notes to the Condensed Interim Consolidated Financial Statements. The Condensed Interim Consolidated Financial Statements are prepared in euros (€) rounded to the nearest thousand. Due to rounding, numbers presented may not add up precisely to the totals provided.
The Condensed Interim Consolidated Financial Statements were authorized for issue by the Management Board on May 3, 2018.
The Group's revenue developed as follows:
| Three months ended March 31, | Six months ended March 31, | |||||
|---|---|---|---|---|---|---|
| IN € THOUSANDS | 2018 | 2017 | 2018 | 2017 | ||
| Europe1) | 132,174 | 126,141 | 248,147 | 228,385 | ||
| NAFTA1) | 89,371 | 93,686 | 172,966 | 175,325 | ||
| Asia / Pacific and RoW1) | 29,448 | 25,039 | 60,433 | 51,838 | ||
| Revenue1) | 250,993 | 244,866 | 481,546 | 455,548 |
1) Revenue breakdown by location of Stabilus company (i.e. "billed-from view").
| Three months ended March 31, | Six months ended March 31, | |||
|---|---|---|---|---|
| IN € THOUSANDS | 2018 | 2017 | 2018 | 2017 |
| Automotive Gas Spring | 87,582 | 91,507 | 170,708 | 174,672 |
| Automotive Powerise® | 67,808 | 65,620 | 132,300 | 119,002 |
| Automotive business | 155,390 | 157,127 | 303,008 | 293,674 |
| Industrial / Capital Goods | 61,336 | 55,066 | 112,249 | 100,949 |
| Vibration & Velocity Control | 26,684 | 25,175 | 51,454 | 46,597 |
| Commercial Furniture | 7,583 | 7,498 | 14,835 | 14,328 |
| Industrial business | 95,603 | 87,739 | 178,538 | 161,874 |
| Revenue | 250,993 | 244,866 | 481,546 | 455,548 |
| Three months ended March 31, | Six months ended March 31, | ||||
|---|---|---|---|---|---|
| IN € THOUSANDS | 2018 | 2017 | 2018 | 2017 | |
| Interest income on loans and financial receivables | 71 | 20 | 132 | 75 | |
| Net foreign exchange gain | – | – | – | 11,796 | |
| Gains from changes in carrying amount of financial liabilities | 1,291 | – | 1,291 | – | |
| Other interest income | 8 | 77 | 12 | 131 | |
| Finance income | 1,370 | 97 | 1,435 | 12,002 | |
Finance costs T_021 Three months ended March 31, Six months ended March 31, IN € THOUSANDS 2018 2017 2018 2017 Interest expenses on financial liabilities (2,164) (2,576) (4,233) (5,330) Net foreign exchange loss (4,344) (8,435) (4,678) – Interest expenses finance lease (13) (20) (30) (33) Other interest expenses (172) (248) (228) (301) Finance costs (6,693) (11,279) (9,169) (5,664)
The weighted average number of shares used for the calculation of earnings per share in the six months ended March 31, 2018 and 2017 is set out in the following table:
| Weighted average number of shares | T _ 022 | ||||
|---|---|---|---|---|---|
| DATE | Number of days | Transaction | Change | Total shares | Total shares (time-weighted) |
| October 1, 2016 | 182 | – | – | 24,700,000 | 24,700,000 |
| March 31, 2017 | – | – | 24,700,000 | 24,700,000 | |
| October 1, 2017 | 182 | – | – | 24,700,000 | 24,700,000 |
| March 31, 2018 | – | – | 24,700,000 | 24,700,000 |
The earnings per share for the six months ended March 31, 2018 and 2017 were as follows:
| Six months ended March 31, | ||
|---|---|---|
| 2018 | 2017 | |
| Profit / (loss) attributable to shareholders of Stabilus | 47,425 | 44,359 |
| Weighted average number of shares | 24,700,000 | 24,700,000 |
| Earnings per share (in €) | 1.92 | 1.80 |
Basic and diluted earnings per share are calculated by dividing the profit attributable to the shareholders of the Company by the weighted average number of shares outstanding.
Property, plant and equipment as of March 31, 2018 amounted to €169,182 thousand (Sept 30, 2017: €169,659 thousand). Additions to property, plant and equipment in the first six months of fiscal 2018 amounted to €14,252 thousand (H1 FY2017: €16,406 thousand).
Disposals occurred only in the ordinary course of business. The net value of disposed property, plant and equipment in the first six months of fiscal 2018 amounted to €195 thousand (H1 FY2017: €119 thousand).
The Group did not recognize impairment losses in the first six months of fiscal 2018 (H1 FY2017: €261).
Other intangible assets as of March 31, 2018 amounted to €253,797 thousand (Sept 30, 2017: €268,911 thousand). Additions to intangible assets in the first six months of fiscal 2018 amounted to €4,561 thousand (H1 FY2017: €5,647 thousand) and mainly comprised capitalized development costs (less related customer contributions) of €3,966 thousand (H1 FY2017: €5,003 thousand). Borrowing costs capitalized in the first six months of fiscal 2018 amounted to €54 thousand (H1 FY2017: €113 thousand).
In the first six months of fiscal 2018 total amortization expenses on intangible assets amounted to €16,472 thousand (H1 FY2017: €17,376 thousand). Amortization expenses on development costs include impairment losses of €1,135 thousand (H1 FY2017: €1,665 thousand) due to withdrawal of customers from the respective projects and change in expected benefits.
No significant disposals have been recognized.
| March 31, 2018 | Sept 30, 2017 | |||||
|---|---|---|---|---|---|---|
| IN € THOUSANDS | Current | Non-current | Total | Current | Non-current | Total |
| Other miscellaneous | 2,612 | – | 2,612 | 5,155 | – | 5,155 |
| Other financial assets | 2,612 | – | 2,612 | 5,155 | – | 5,155 |
Other financial assets as of March 31, 2018 amounting to €2,612 thousand (Sept 30, 2017: €5,155 thousand) comprised only assets related to the sale of trade accounts receivable program. The decrease is mainly due to the payment of the receivable from the sale of the land and building of Stabilus Spain.
| Other assets | T _ 025 | |||||
|---|---|---|---|---|---|---|
| March 31, 2018 | Sept 30, 2017 | |||||
| IN € THOUSANDS | Current | Non-current | Total | Current | Non-current | Total |
| VAT | 2,469 | – | 2,469 | 3,570 | – | 3,570 |
| Prepayments | 3,963 | 593 | 4,556 | 3,062 | 507 | 3,569 |
| Deferred charges | 6,183 | – | 6,183 | 4,274 | – | 4,274 |
| Other miscellaneous | 1,898 | 2,725 | 4,623 | 1,812 | 2,444 | 4,256 |
| Other assets | 14,513 | 3,318 | 17,831 | 12,718 | 2,951 | 15,669 |
Non-current prepayments comprise prepayments on property, plant and equipment.
| Inventories | T _ 026 | |
|---|---|---|
| IN € THOUSANDS | March 31, 2018 | Sept 30, 2017 |
| Raw materials and supplies | 38,998 | 39,876 |
| Finished products | 21,555 | 22,095 |
| Work in progress | 15,481 | 14,203 |
| Merchandise | 9,354 | 9,088 |
| Inventories | 85,388 | 85,262 |
The development of the Group's equity is presented in the Statement of Changes in Equity.
Other reserves comprise all foreign currency differences arising from the translation of the financial statements of foreign operations and unrealized actuarial gains and losses. The following table shows the changes in other reserves recognized in equity through other comprehensive income as well as the income tax recognized in equity through other comprehensive income:
| IN € THOUSANDS | Unrealized actuarial gains and losses |
Unrealized gains / (losses) from foreign currency translation |
Total |
|---|---|---|---|
| Balance as of Sept 30, 2016 | (14,207) | (21,625) | (35,832) |
| Before tax | 4,591 | 3,328 | 7,919 |
| Tax (expense) / benefit | (1,285) | – | (1,285) |
| Other comprehensive income / (expense), net of taxes | 3,306 | 3,328 | 6,634 |
| Non-controlling interest | – | – | – |
| Balance as of Sept 30, 2017 | (10,901) | (18,297) | (29,198) |
| Before tax | 1,268 | (4,021) | (2,753) |
| Tax (expense) / benefit | (385) | – | (385) |
| Other comprehensive income / (expense), net of taxes | 883 | (4,021) | (3,138) |
| Non-controlling interest | – | – | – |
| Balance as of March 31, 2018 | (10,018) | (22,318) | (32,336) |
1) See also Consolidated Statement of Comprehensive Income above.
The financial liabilities comprise the following items:
| March 31, 2018 | Sept 30, 2017 | |||||
|---|---|---|---|---|---|---|
| IN € THOUSANDS | Current | Non-current | Total | Current | Non-current | Total |
| Senior facilities | 10,000 | 306,565 | 316,565 | 10,000 | 311,951 | 321,951 |
| Other financial liabilities | 1,033 | 5,169 | 6,202 | – | – | – |
| Financial liabilities | 11,033 | 311,734 | 322,767 | 10,000 | 311,951 | 321,951 |
The Group´s liability under the senior facility agreement (the remaining €336.1 million term loan) is measured at amortized cost under consideration of transaction costs and the adjustment of the carrying value using the effective interest rate method. The adjustment of the carrying value of the euro term loan facility reflects the change in estimated future cash flows discounted with the original effective interest rate due to a decreased margin based on the improved net leverage ratio of the Group and the extension of the maturity by one year.
Next to the prepayments in prior years (€50.0 million on August 31, 2016, €10.0 million on December 31, 2016, €2.5 million on March 31, 2017, €50.0 million in September 30, 2017) another prepayment of €6.4 million was made on March 29, 2018 and reduced the outstanding principal amount to €336.1 million. The current portion of the financial liability reflects the expected next two semi-annual prepayments of €5.0 million on September 30, 2018 and of €5.0 million on March 31, 2019.
As of March 31, 2018, the Group had no liability under the committed €70 million revolving credit facility. The Group utilized €3.8 million out of the €70.0 million revolving credit facility to secure existing guarantees.
| Other financial liabilities | T _ 029 | ||||||
|---|---|---|---|---|---|---|---|
| March 31, 2018 | Sept 30, 2017 | ||||||
| IN € THOUSANDS | Current | Non-current | Total | Current | Non-current | Total | |
| Liabilities to employees | 7,136 | – | 7,136 | 6,796 | – | 6,796 | |
| Social security contribution | 3,065 | – | 3,065 | 2,514 | – | 2,514 | |
| Finance lease obligation | 181 | 915 | 1,096 | 303 | 1,830 | 2,133 | |
| Other financial liabilities | 10,382 | 915 | 11,297 | 9,613 | 1,830 | 11,443 |
The liabilities to employees mainly comprise outstanding salaries and wages. The finance lease obligation relates to leasing contracts for land and buildings for the production facility in Romania. The finance lease obligations decreased by €0.9 million due to an early settlement of a finance lease arrangement.
| Provisions | T _ 030 | |||||
|---|---|---|---|---|---|---|
| March 31, 2018 | Sept 30, 2017 | |||||
| IN € THOUSANDS | Current | Non-current | Total | Current | Non-current | Total |
| Anniversary benefits | 17 | 110 | 127 | 29 | 105 | 134 |
| Early retirement contracts | 1,412 | 1,496 | 2,908 | 811 | 1,851 | 2,662 |
| Employee-related costs | 11,921 | – | 11,921 | 12,099 | – | 12,099 |
| Environmental protection | – | 1,226 | 1,226 | 48 | 1,421 | 1,469 |
| Other risks | 2,112 | – | 2,112 | 2,868 | – | 2,868 |
| Legal and litigation costs | 107 | – | 107 | 111 | – | 111 |
| Warranties | 15,777 | – | 15,777 | 12,984 | – | 12,984 |
| Other miscellaneous | 3,893 | 384 | 4,277 | 4,111 | 394 | 4,505 |
| Provisions | 35,239 | 3,216 | 38,455 | 33,061 | 3,771 | 36,832 |
The provision for environmental protection, in particular long-term bioremediation of the former Colmar US site, decreased in the first six months of fiscal 2018 from €1,469 thousand to €1,226 thousand. This provision is to cover the contractor expense to finish the bioremediation program in the next years. The provision for warranties increased from €12,984 thousand as of September 30, 2017 to €15,777 thousand as of March 31, 2018 partially due to higher sales as well as the regional mix of these sales to provide for potential warranty cases.
The Group's liability for pension plans and similar obligations decreased from €53,236 thousand as of September 30, 2017 by €1,584 thousand to €51,652 thousand as of March 31, 2018. The decrease was mainly due to the higher discount rate (March 31, 2018: 2.06% versus September 30, 2017: 1.87%).
The following table sets out the breakdown of Group's other current and non-current liabilities:
| March 31, 2018 | Sept 30, 2017 | |||||
|---|---|---|---|---|---|---|
| IN € THOUSANDS | Current | Non-current | Total | Current | Non-current | Total |
| Advanced payments received | 2,459 | – | 2,459 | 2,807 | – | 2,807 |
| Vacation expenses | 4,964 | – | 4,964 | 3,396 | – | 3,396 |
| Other personnel-related expenses | 4,941 | – | 4,941 | 6,517 | – | 6,517 |
| Outstanding costs | 1,589 | – | 1,589 | 2,472 | – | 2,472 |
| Miscellaneous | 255 | – | 255 | 240 | – | 240 |
| Other liabilities | 14,208 | – | 14,208 | 15,432 | – | 15,432 |
Contingent liabilities are uncertainties for which the outcome has not been determined. If the outcome is probable and estimable, the liability is shown in the Statement of Financial Position.
In regards to the potential contingent obligation in the EPA Colmar case, please refer to Note 24 in the Annual Report 2017.
A detailed description of the guarantees the Group has issued can be found in the 2017 Annual Report.
The nominal values of the other financial commitments as of March 31, 2018 are as follows:
| Total | 28,739 | 30,575 |
|---|---|---|
| Obligations under rental and leasing agreements | 21,250 | 22,728 |
| Capital commitments for fixed and other intangible assets | 7,489 | 7,847 |
| IN € THOUSANDS | March 31, 2018 | Sept 30, 2017 |
The following table shows the carrying amounts and fair values of the Group's financial instruments. The fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.
| Financial instruments | T _ 033 | ||||
|---|---|---|---|---|---|
| March 31, 2018 | Sept 30, 2017 | ||||
| IN € THOUSANDS | Measurement category acc. to IAS 39 |
Carrying amount |
Fair value | Carrying amount |
Fair value |
| Trade accounts receivables | LaR | 126,623 | 126,623 | 105,147 | 105,147 |
| Cash | LaR | 75,816 | 75,816 | 68,123 | 68,123 |
| Other financial assets | LaR | 2,612 | 2,612 | 5,155 | 5,155 |
| Total financial assets | 205,051 | 205,051 | 178,425 | 178,425 | |
| Financial liabilities | FLAC | 322,767 | 322,904 | 321,951 | 321,435 |
| Trade accounts payable | FLAC | 75,094 | 75,094 | 79,073 | 79,073 |
| Finance lease liabilities | – | 1,096 | 2,213 | 2,133 | 3,469 |
| Total financial liabilities | 398,957 | 400,211 | 403,157 | 403,977 | |
| Aggregated according to categories in IAS 39: | |||||
| Loans and receivables (LaR) | 205,051 | 205,051 | 178,425 | 178,425 | |
| Financial liabilities measured at amortized cost (FLAC) |
397,861 | 397,998 | 401,024 | 400,508 |
The following table provides an overview of the classification of financial instruments presented above in the fair value hierarchy, except for financial instruments with fair values corresponding to the carrying amounts (i.e. trade accounts receivable and payable, cash, other financial assets and finance lease liabilities).
| Financial instruments | T _ 034 | |||||||
|---|---|---|---|---|---|---|---|---|
| March 31, 2018 | Sept 30, 2017 | |||||||
| IN € THOUSANDS | Total | Level 11) | Level 22) | Level 33) | Total | Level 11) | Level 22) | Level 33) |
| Financial liabilities | ||||||||
| Senior facilities | 316,702 | – | 316,702 | – | 321,435 | – | 321,435 | – |
| Other financial liabilities | 6,202 | – | 6,202 | – | – | – | – | |
| Finance lease liabilities | 2,213 | – | – | 2,213 | 3,469 | – | – | 3,469 |
1) Fair value measurement based on quoted prices (unadjusted) in active markets for these or identical instruments.
2) Fair value measurement based on inputs that are observable on active markets either directly (i.e. as prices) or indirectly (i.e. derived from prices).
3) Fair value measurement based on inputs that are not observable market data.
The fair value is the price that would be received to sell an asset or paid to transfer the liability in an orderly transaction between market participants at the measurement date. The following methods and assumptions were used to estimate the fair values.
The determination of the fair value of the senior facilities is based on the discounted cash flow model where the projected cash flows are discounted to the valuation date using independently sourced market data.
The valuation technique used for the determination of the obligations under finance leases is the discounted cash flow method. The valuation model considers the present value of the expected payments, discounted using a risk-adjusted discount rate depending on the maturity of the payment. The expected payments are determined by considering contractual redemption payments and interest payments with the currently agreed interest rate. Significant unobservable inputs are the risk-adjusted discount rate, from 4.75% and the forecast interest payments. Therefore, the fair value would change if the riskadjusted discount rate or the interest rate changed.
All aspects of the Group's financial risk management objectives and policies are consistent with those disclosed in the Consolidated Financial Statements as of and for the fiscal year ended September 30, 2017.
The Statement of Cash Flows is prepared in compliance with IAS 7. The Statement of Cash Flows of the Stabilus Group shows the development of the cash flows from operating, investing and financing activities. Inflows and outflows from operating activities are presented in accordance with the indirect method and those from investing and financing activities by the direct method.
The cash funds reported in the Statement of Cash Flows comprise all liquid funds, cash balances and cash at banks reported in the Statement of Financial Position.
Interest payments in the first half of fiscal 2018 amounting to €(2,097) thousand (H1 FY2017: €(4,744) thousand) are taken into account in the cash outflows from financing activities. Income tax payments in the same period of €(18,269) thousand (H1 FY2017: €(16,485) thousand) are reflected in operating activities.
The Stabilus Group is organized and managed primarily on a regional level. The three reportable operating segments of the Group are Europe, NAFTA and Asia / Pacific including RoW. The product portfolio is largely similar in these three regional segments.
The Group measures the performance of its operating segments through a measure of segment profit or loss (key performance indicator) which is referred to as "adjusted EBIT". Adjusted EBIT represents
EBIT, adjusted for exceptional non-recurring items (e.g. restructuring or one-time advisory costs) and depreciation / amortization of fair value adjustments from purchase price allocations (PPA).
Segment information for the six months ended March 31, 2018 and 2017 is as follows:
| Segment reporting | T _ 035 | |||||
|---|---|---|---|---|---|---|
| Europe | NAFTA | Asia / Pacific and RoW | ||||
| Six months ended March 31, | Six months ended March 31, | Six months ended March 31, | ||||
| IN € THOUSANDS | 2018 | 2017 | 2018 | 2017 | 2018 | 2017 |
| External revenue1) | 248,147 | 228,384 | 172,966 | 175,325 | 60,433 | 51,838 |
| Intersegment revenue1) | 16,502 | 15,567 | 12,567 | 12,465 | 72 | 368 |
| Total revenue1) | 264,649 | 243,951 | 185,533 | 187,790 | 60,505 | 52,206 |
| Depreciation and amortization (incl. impairment losses) |
(15,361) | (16,789) | (6,104) | (6,364) | (3,078) | (2,385) |
| EBIT | 36,323 | 29,136 | 23,415 | 26,342 | 9,422 | 8,082 |
| Adjusted EBIT | 38,794 | 31,611 | 24,945 | 28,059 | 9,497 | 8,163 |
| Total segments | Other / Consolidation | Stabilus Group | ||||
| Six months ended March 31, | Six months ended March 31, | Six months ended March 31, | ||||
| IN € THOUSANDS | 2018 | 2017 | 2018 | 2017 | 2018 | 2017 |
| External revenue1) | 481,546 | 455,548 | – | – | 481,546 | 455,548 |
| Intersegment revenue1) | 29,141 | 28,400 | (29,141) | (28,400) | – | – |
| Total revenue1) | 510,687 | 483,948 | (29,141) | (28,400) | 481,546 | 455,548 |
| Depreciation and amortization (incl. impairment losses) |
(24,543) | (25,539) | (4,640) | (6,160) | (29,183) | (31,699) |
| EBIT | 69,160 | 63,560 | (4,640) | (6,160) | 64,520 | 57,400 |
| Adjusted EBIT | 73,236 | 67,834 | – | – | 73,236 | 67,834 |
1) Revenue breakdown by location of Stabilus company (i.e. "billed-from view").
The column "Other / Consolidation" includes the effects from the purchase price allocation for the April 2010 business combination. The effects from the purchase price allocation for the June 2016 business combination are included in the regions.
The following table sets out the reconciliation of the total segments' profit (adjusted EBIT) to profit before income tax.
| Six months ended March 31, | ||||
|---|---|---|---|---|
| IN € THOUSANDS | 2018 | 2017 | ||
| Total segments' profit (adjusted EBIT) | 73,236 | 67,834 | ||
| Other / consolidation | – | – | ||
| Group adjusted EBIT | 73,236 | 67,834 | ||
| Adjustments to EBIT | (8,716) | (10,434) | ||
| Profit from operating activities (EBIT) | 64,520 | 57,400 | ||
| Finance income | 1,435 | 12,002 | ||
| Finance costs | (9,169) | (5,664) | ||
| Profit / (loss) before income tax | 56,786 | 63,738 |
In accordance with IAS 24, persons or entities that control or are controlled by the Stabilus Group shall be disclosed, unless they are included in the scope of consolidation as a consolidated entity.
The disclosure obligation under IAS 24 furthermore extends to transactions with persons who exercise a significant influence on the financial and business policies of the Stabilus Group, including close family members or interposed entrepreneurs. A significant influence on the financial and business policies of the Stabilus Group can hereby be based on a shareholding in Stabilus of 20% or more, a seat on the Stabilus Management Board or another key position.
As of May 3, 2018, there were no further events or developments that could have materially affected the measurement and presentation of Group's assets and liabilities as of March 31, 2018.
To the best of our knowledge, and in accordance with the applicable accounting principles for interim financial reporting, the interim Consolidated Financial Statements give a true and fair view of the assets, liabilities, financial position and profit or loss of the corporation, and the interim management report of the corporation includes a fair review of the development and performance of the business and the position of the corporation, together with a description of the principal opportunities and risks associated with the expected development of the corporation for the remaining months of the fiscal year.
Luxembourg, May 3, 2018
Management Board Dietmar Siemssen Mark Wilhelms Andreas Schröder Andreas Sievers
| Financial calendar | ||
|---|---|---|
| T _ 037 |
|---|
| PUBLICATION / EVENT |
| Publication of the second-quarter results for fiscal year 2018 (Interim Report Q2 FY18) |
| Publication of the third-quarter results for fiscal year 2018 (Quarterly Statement Q3 FY18) |
| Publication of preliminary financial results for fiscal year 2018 |
| Publication of full year results for fiscal year 2018 (Annual Report 2018) |
1) We cannot rule out changes of dates. We recommend checking them on our website in the Investor Relations/ Financial Calendar section (www.ir.stabilus.com). 2) Please note that our fiscal year (FY) comprises a twelve-month period from October 1 until September 30 of the following calendar year, e.g. the fiscal year 2018 comprises a year ended September 30, 2018.
This interim report contains forward-looking statements that relate to the current plans, objectives, forecasts and estimates of the management of Stabilus S.A. These statements take into account only information that was available up to and including the date that this interim report was prepared. The management of Stabilus S.A. makes no guarantee that these forward-looking statements will prove to be right. The future development of Stabilus S.A. and its subsidiaries and the results that are actually achieved are subject to a variety of risks and uncertainties which could cause actual events or results to differ significantly from those reflected in the forward-looking statements. Many of these factors are beyond the control of Stabilus S.A. and its subsidiaries and therefore cannot be precisely predicted. Such factors include, but are not limited to, changes in economic conditions and the competitive situation, changes in the law, interest rate or exchange rate fluctuations, legal disputes and investigations, and the
availability of funds. These and other risks and uncertainties are set forth in the Group Management Report. However, other factors could also have an adverse effect on our business performance and results. Stabilus S.A. neither intends nor assumes any separate obligation to update forward-looking statements or to change these to reflect events or developments that occur after the publication of this interim report.
Certain numbers in this interim report have been rounded up or down. There may therefore be discrepancies between the actual totals of the individual amounts in the tables and the totals shown as well as between the numbers in the tables and the numbers given in the corresponding analyses in the text of the interim report. All percentage changes and key figures in the Group Management Report were calculated using the underlying data in millions of euros rounded to one decimal place (€ millions).
Further information including news, reports and publications can be found in the Investor Relations section of our website at www.ir.stabilus.com.
Phone: +352 286 770 21 Fax: +352 286 770 99 Email: [email protected]
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