technotrans’ consolidated revenue rose in absolute terms by € 29.0 million in 2016 to € 151.8 million. Overall, technotrans therefore reported revenue growth of 23.6 percent at the balance sheet date (this includes a revenue contribution of € 19.3 million from new acquisitions). Around 45 percent of consolidated revenue now comes from outside the printing industry (previous year: 35 percent).
Compared with the previous year, business with customers in offset, digital and flexographic printing also developed positively once more thanks to technotrans’ good market position in the printing industry. Revenue in that area grew by 5.2 percent overall. Thanks to the market and revenue shares gained, technotrans again also succeeded in achieving organic growth in all relevant markets in 2016. The biggest revenue increase of 13 percent came from orders in the markets for laser/stamping and forming technology, medical and scanner technology, and electric mobility.
Because of its customer structure in all submarkets, technotrans traditionally achieves a high proportion of deliveries and revenue in Germany. The 2016 financial year saw the proportion of revenue achieved by the group with German customers climb from 50.0 percent in the previous year to 52.7 percent. The revenue share in the remainder of Europe was slightly up on the previous year at 23.5 percent (23.2 percent). Meanwhile the revenue share in America fell to 13.8 percent in the past financial year, compared with 14.8 percent in 2015. The Asia region, having grown in the 2015 financial year, fell back again to 9.9 percent (previous year: 12.0 percent). Africa’s revenue share is 0.1 percent.
technotrans’ standard business with industrial customers is based on release orders. The equipping of certain machine models with technotrans products is usually agreed in advance. Here, the time frame between the release order and delivery is rarely more than four to six weeks. Because of these master agreements, information on incoming orders and order backlogs is not particularly meaningful. In addition, project business frequently entails longer lead times.
Following a moderate start to the year the technotrans Group enjoyed a steady growth in business as the year progressed. The fourth quarter was especially successful, with revenue of € 48.5 million. The operating result (EBIT) of € 3.2 million was well up on the figure for the third quarter (€ 2.1 million).
The financial performance of the technotrans Group improved yet again at December 31, 2016 compared with the previous year. The business performance was very much influenced by the strategic investments in the new acquisitions GWK Gesellschaft Wärme Kältetechnik mbH and Ovidius GmbH.
Gross profit for the group, in other words revenue less cost of sales, came to € 51.2 million (previous year: € 41.4 million). The improvement in gross profit of 23.6 percent compared with the previous year was based above all on the increased revenue volume and the effects of changes to the product mix. The increased costs in proportion to revenue meant the gross margin at year-end remained unchanged from the previous year at 33.7 percent. The cost of purchased materials also grew by around 23 percent in 2016 and therefore at a slightly slower rate than revenue. The cost of purchased materials ratio reached 38.7 percent, almost unchanged from the previous year.
|Operating costs||€ million||142.1||113.9||24.7%||122.5||113.9||7.6%|
|EBIT margin||in %||6.4%||7.3%||7.5%||7.3%|
The growth trajectory of technotrans and the completed acquisitions impose non-operating burdens on earnings that principally span the amortisation of fair value asset valuations in connection with purchase price allocation (€ 0.8 million) and transaction-related incidental costs (€ 1.0 million). The earnings effects (€ 1.5 million) from the acquired companies (including the pro rata revenue and profit contributions of the acquisitions) have been eliminated as a whole from the adjusted operating EBIT. The operating EBIT after adjustment for these factors showed a noticeable rise and, at € 10.0 million, was more than 11 percent up on the prior-year figure.
The operating profit (EBIT), too, exceeded the prior-year level by 8.7 percent in reaching € 9.7 million. The EBIT margin came to 6.4 percent overall, compared with 7.3 percent in 2015. The adjusted EBIT margin was 7.5 percent. technotrans consequently achieved its goal of an EBIT margin of between 7.5 and 8.0 percent for the 2016 financial year with an adjusted figure towards the lower threshold of expectations.
|€ million||%||€ million||%||%|
|Annual net profit||7.3||4.8||6.2||5.1||16.8|
As a result of the acquisitions of GWK and Ovidius in the course of the year, fixed costs for the group also rose year on year. Distribution costs moved more or less in line with revenue, growing 23.4 percent to EUR 21.1 (previous year: EUR 17.1 million). General administrative expenses, too, increased substantially by € 3.2 million to € 16.2 million (previous year: € 13.0 million).
Development costs of € 5.5 million for the 2016 financial year were again higher than in the previous year (€ 4.3 million). technotrans invests in a large number of development projects focusing on the new markets. The new group companies, too, have generated additional development activities.
In the year under review, the positive balance of other operating income and expenses fell by € 0.5 million to € 1.4 million. This is mainly attributable to a fall in exchange rate effects. In 2015, the marked exchange rate fluctuations had generated net exchange rate gains of € 0.6 million, whereas for the past financial year of 2016 exchange rate gains and losses were balanced.
Personnel expenses, too, rose in absolute terms from € 42.2 million in the previous year to € 52.9 million in 2016, in particular as a result of the higher regular workforce following the acquisitions and the effect of a pay increase in the group. Furthermore, a characteristic of the acquired companies is a higher personnel costs burden relative to revenue. The overall personnel expenses ratio for the technotrans Group therefore edged up to 34.9 percent (previous year: 34.3 percent).
Depreciation and amortisation rose by 33 percent to € 4.3 million (previous year: € 3.2 million), an effect of the investing activities and increased amortisation from purchase price allocation for the newly acquired businesses. In 2016, as in the previous year, no write-downs were performed.
It was not possible to improve the financial result in 2016 compared with the previous year. The balance of income and expenses in the year under review came to € -0.6 million (previous year: € -0.3 million). The financial result comprises two components, “operating business” and “other business”. “Operating business” encompasses the interest income from bank credit balances and also interest expenses for the group’s debt financing. As a result of the acquisition-led new borrowing raised in September 2016, there was a rise in interest expenses for the technotrans Group compared with the previous year. “Other business” includes a final income component from the termination of the conditional purchase price for the KLH companies. In addition, measurement effects from the compounding of future payment obligations are reported under interest expense.
The tax expense of € 1.9 million for the past financial year is down on the previous year’s level of € 2.5 million; it corresponds to an effective tax rate of 20.7 percent (previous year: 28.5 percent). For the fiscal particularities, please refer to the additional explanations in Section 26 of the Notes to the Consolidated Financial Statements.
The consolidated result after tax (net profit) for the 2016 financial year came to € 7.3 million (previous year: € 6.2 million), equivalent to a return on sales of 4.8 percent (previous year: 5.1 percent). Earnings per share outstanding improved by around 15 percent from € 0.96 to € 1.09.
The Technology segment achieved revenue growth of 27.2 percent to € 103.6 million(previous year: € 81.4 million. As a result, the segment exceeded the € 100 million threshold for the first time since 2008. Some € 14 million of the increase in 2016 was attributable to the acquisition of GWK in the course of the year.
This segment’s share of consolidated revenue therefore grew yet again and at the end of the year under review had risen to over 68 percent (previous year: 66 percent), with a continuing upward trend. As in the previous year, the growth of € 22.2 million was realised in all relevant submarkets of the group. In the printing industry (+8 percent) the positive revenue performance was driven most notably by the successful expansion of the market shares in offset, digital and flexographic printing. The market conditions in that industry also helped.
The segment again also benefited from the organic growth in business in the non-print area. After a tentative start to the financial year, as expected there was a strong performance in the second half of 2016. In the laser/stamping/forming technology markets, as well as in the so-called growth markets, technotrans generated substantial revenue growth.
Because of the customer structure, the revenue of the Technology segment is traditionally very strongly focused on Germany. The proportion of revenue generated by German customers of 57.3 percent was comparable to the previous year (57.2 percent). Meanwhile the revenue share for the rest of Europe showed another year-on-year rise from 19.0 to 20.7 percent. 2016 saw the segment’s revenue share in the Asia region decline from 11.7 percent in the previous year to 10.4 percent in the period under review. At 11.6 percent, America’s revenue share in the Technology segment was also slightly down on the prior-year figure (12.0 percent). The figure for Africa was 0.1 percent.
The financial performance in the Technology segment improved as expected. As well as an improved revenue mix, especially pro rata shares of costs for the acquisitions and the increased expenditure for shows significantly impacted the segment’s earnings situation in 2016. Overall, earnings before interest and taxes (EBIT) for the Technology segment rose year on year from € 2.1 million to € 2.9 million. The rate of return for the segment came to 2.8 percent at year end (previous year: 2.6 percent).
886 employees belonged to the Technology segment at the end of the year (previous year: 566). As in previous years, the general administrative areas have been spread between the segments pro rata, based on their revenue shares. The increase of 320 employees (+57 percent) results almost exclusively from the acquisition-led growth and from the growth-related capacity expansion at the production locations of technotrans AG and Termotek GmbH.
The Services segment achieved growth of 16.4 percent in the period under review and generated revenue of € 48.2 million (previous year: € 41.4 million). The increase in revenue of € 6.8 million is mainly attributable to the acquisitions of GWK and Ovidius. Organic revenue growth in the 2016 financial year reached around 3.5 percent, compared with 7.2 percent in the previous year, and was therefore in line with the forecast made at the start of the year.
Within the segment, the increase was driven both by growing follow-on business in the technology markets and by a year-on-year improvement in the business performance in the Technical Documentation area. Overall, therefore, the Services segment accounted for around 32 percent of consolidated revenue in 2016 (previous year: 34 percent).
The regional breakdown in revenue for the Services segment reveals a marked shift towards domestic revenue for the 2016 financial year. The revenue shares compared with the previous year were as follows: Germany 43.0 percent (previous year: 35.7 percent), Rest of Europe 29.4 percent (previous year: 31.5 percent), Asia 8.8 percent (previous year: 12.4 percent), and America 18.4 percent (previous year: 20.4 percent). The figure for Africa was 0.4 percent.
Overall, the Services segment confirmed its healthy financial performance. In 2016 technotrans achieved a result for the segment of € 6.8 million, which was therefore on a par with the previous year (€ 6.8 million). However the figure also includes pro rata additional costs and charges in connection with the acquisitions. With a rate of return for the segment of 14.2 percent (EBIT margin), it was consequently not possible to maintain the previous year’s healthy level (16.5 percent). The adjusted result for the segment is, however, in line with expectations.
366 employees belonged to the Services segment at the end of the year (previous year: 262). As in previous years, the general administrative areas have been spread between the segments pro rata, based on their revenue shares.
Based on a comfortable liquidity base, in conjunction with financing commitments by the banks, technotrans is able to invest flexibly at any time. The task of financial management within the technotrans Group is handled centrally by the group parent. For financing, technotrans AG uses long-standing partnership-based ties with a number of sound German financial institutions.
Financial and liquidity management primarily involves managing liquidity, securing borrowed capital and managing interest and foreign currency risks. To a large extent the group constitutes a financial entity and is thus able to optimise its capital procurement and investment opportunities. The overriding goal of technotrans’ financial policy is to assure a balance between growth, return on equity and financing security. In its financial management, technotrans continues to strive to generate internally both the financial resources required to fund the organic growth of its operations, and the investments this involves. This goal was again achieved in the 2016 financial year. Selective investment spending on property, plant and equipment (€ 1.5 million) was again restricted to maintenance investments.
The most important source of financing remains the cash inflow from operating activities (operating cash flow). The optimisation of working capital releases liquid funds, keeps debt low and thus improves the indicators relating to balance sheet structure (such as equity ratio) and return on investment. As a result of the additional capital required in connection with the acquisitions, the financing structure was also adjusted in the 2016 financial year.
Limiting risks encompasses all financial risks that could threaten technotrans’ survival as a going concern. technotrans makes use of selected derivative financial instruments exclusively for the hedging of interest rate risks for borrowings incurring interest at variable rates.
technotrans covers its capital requirements from operating cash flow and by raising medium and long-term financing. If required, the company also manages the group’s need for financing via the available short-term credit facilities of technotrans AG, Termotek GmbH, KLH Kältetechnik GmbH and GWK Gesellschaft Wärme Kältetechnik mbH. Bank borrowings amounted to € 28.1 million (previous year: € 8.1 million) at the balance sheet date.
For financing, technotrans uses its long-standing association with several German financial institutions; stabilising factors in long-term financing include a broadly spread credit volume as well as a balanced repayment structure for alternative financial instruments.
There are no exchange-rate factors affecting external borrowings. Within the group, short-term and long-term lending between the group companies is practised to some degree in order to maintain adequate liquidity locally. Substantial liquidity holdings (cash and cash equivalents) moreover exist in EUR, USD, GBP and AED. No instruments for the hedging of foreign currency positions were used beyond the 2016 reporting date.
Overall, the off-balance-sheet financial instruments and obligations changed in 2016 as a result of the increased scope of consolidation. Off-balance-sheet forms of financing used by technotrans include above all tenancy and operating leases, above all for IT accessories and company vehicles. Future operating lease obligations at December 31, 2016 totalled € 5.6 million.
technotrans’ capital structure comprises a sound equity base and a demand-led level of borrowing. With an equity ratio of 51.0 percent at December 31, 2016 and total borrowing arrangements amounting to € 46.5 million (previous year: € 21.5 million), technotrans has a viable and sustainable financing structure. At the balance sheet date, cash and cash equivalents came to € 23.9 million and available but unused borrowing facilities amounted to € 18.4 million.
In the course of 2016 three aspects of the financing structure were adjusted to reflect the future requirements of the group:
For the financing of the interest acquired in GWK Gesellschaft Wärme Kältetechnik mbH, several long-term loans amounting to € 20.0 million in total were raised including € 12.0 million in the form of credit facilities collateralised by land charges. The financing structure at GWK, too, was adjusted.
New short-term credit lines with a total volume of € 5.7 million were agreed with the existing principal banks. All measures were implemented with varying maturities, making use of the best possible interest terms.
In November 2016 all the remaining treasury shares still held by technotrans AG (374,915 shares, equivalent to 5.43 percent of the share capital) were sold to institutional investors, excluding the subscription right of shareholders. The proceeds from the successful placement amounting to € 8.1 million were added to cash and cash equivalents, and are helping to increase the group’s financial flexibility.
At December 31, 2016 the maturities of the group’s existing debt financing averaged five years. Short-term credit lines were used only intermittently in the past financial year. At the end of the financial year the average weighted interest rate for borrowing was approx. 1.8 percent (previous year: 3.0 percent). Wherever economically advisable, technotrans supplements financing by operating lease agreements. Other off-balance-sheet financial instruments are of only minor significance. In 2016 there were no restrictions on the availability of the loans provided.
For its financial and liquidity planning, technotrans AG is working on the assumption that it will have adequate liquidity including for business operations in 2017, enabling it to meet its foreseeable payment obligations at all times. Based on a sound equity base and a comfortable liquidity base, in conjunction with financing commitments by the banks, technotrans is able to invest flexibly at any time. As a listed company, technotrans also has access to capital market instruments.
The Board of Management and Supervisory Board will propose to the Annual General Meeting in May 2017 that a dividend of €0.55 per share outstanding be distributed for the 2016 financial year.
Investment spending in the year under review rose markedly to € 12.9 million. Of this figure, around € 11.3 million went on corporate acquisitions, € 1.5 million on investments in property, plant and equipment (previous year: € 1.3 million) and € 0.1 million on investments in intangible fixed assets (previous year: € 0.4 million). The emphasis of investing activities was on replacement purchases and IT equipment. Overall, the investment statement showed a net cash outflow of € 20.9 million for the acquisition of the shares in the new companies. Of the investment spending of € 1.6 million, € 0.8 million went on the Technology segment and € 0.8 million on the Services segment.
|Investment||Depreciation & amortisation|
|* of which addition from company acquisition (2013: € 6.5 million, 2016: € 11.3 million)|
The development expenditure reported in the Income Statement came to € 5.5 million. This amounts to 3.6 percent of revenue. No development costs were recognised as an intangible asset in the financial year (previous year: € 0.2 million). Within development costs, intangible assets decreased to € 0.8 million (previous year: € 1.2 million). In the year under review, the amortisation of development expenditure recognised as an intangible asset came to € 0.4 million (previous year: € 0.4 million).
Depreciation and amortisation for the 2016 financial year totalled € 4.3 million (previous year € 3.2 million). Of this, € 3.7 million is attributable to the Technology segment (previous year: € 2.5 million) and € 0.6 million to the Services segment (previous year: € 0.7 million). The assets of KLH, Ovidius and GWK identified in the course of purchase price allocation as well as the property in Sassenberg accounted for a major part of the depreciation and amortisation. No impairment of intangible assets was required in the year under review.
From the starting position of profit after tax, the operating cash flow for 2016 developed positively compared with the previous year. The cash flow from operating activities before working capital changes (cash inflow) of € 14.2 million was up € 2.4 million on the previous year (€ 12.0 million). The cash flow benefited especially from the net profit for the year of € 7.3 million (previous year: € 6.2 million).
|Cash flow from operating activities||14.2||12.0|
|Net cash flow from operating activities||9.7||10.2|
|Cash flow from investing activities||-22.4||-1.7|
|Free cash flow||-12.6||8.5|
|Cash and cash equivalents at end of period||23.9||20.0|
The cash flow from operating activities (net cash from operating activities) of € 9.7 million remained almost at the prior-year level (previous year: € 10.2 million) in the year under review. The changes in working capital had a negative cash flow effect of around € 2.0 million (previous year: positive effect of € 0.8 million). The cash outflow for interest and taxes paid was around € 2.5 million, as in the previous year.
The cash flow from investing activities (cash outflow) at the end of the financial year rose sharply to € 22.4 million (previous year: € 1.7 million). This item includes the net cash outflows for the corporate acquisitions completed during the year amounting to € 20.9 million. The net cash employed for the investments in the 2016 financial year mainly comprised maintenance investments of € 1.5 million (previous year: € 1.7 million).
Because of the acquisition activity, the free cash flow stayed negative as expected at € -12.6 million and was unable to match the very healthy prior-year figure (previous year: € 8.5 million).
The net cash employed for financing activities had a positive balance in the 2016 financial year, amounting to € 16.6 million (previous year: € -6.1 million). The disposal of treasury shares in November 2016 produced an inflow of liquidity amounting to € 8.2 million. In addition, new loans totalling € 20.0 million were raised in connection with the interests acquired. In all, € 6.0 million (previous year € 3.6 million) was used for the scheduled repayment of borrowings (loan redemptions) over the course of the year, and € 3.1 million (previous year € 2.2 million) was paid out to technotrans shareholders for the distribution of a dividend. There were further outflows of liquidity amounting to € 2.4 million in connection with the acquisition of the remaining shares in the KLH companies.
Cash and cash equivalents at year-end came to € 23.9 million and were therefore again up on the previous year (€ 20.0 million). From a capital management perspective the group’s liquidity remains comfortable. In 2017, the group therefore remains in a position to meet its payment obligations from business operations at any time.
Compared with the previous year, the balance sheet total at December 31, 2016 grew by more than € 45 million to € 121.5 million (previous year: € 76.0 million) substantially as a result of the acquisitions and the expanded volume of business.
|Other short-term assets||2.1||1.7|
|Equity and liabilities||2016||2015|
Non-current assets at the reporting date grew from € 25.2 million to € 52.1 million, thus more than doubling. This development is mainly attributable to the corporate acquisitions and the associated consolidation effects. Goodwill and other intangible assets increased by € 22.8 million, and property, plant and equipment by € 3.0 million. Other non-current assets came to € 2.5 million, an increase of € 1.0 million compared with the previous year.
Current assets, too, were up and grew by € 18.6 million to reach € 69.4 million. Inventories and receivables climbed by € 14.3 million mainly as a result of the first-time inclusion of the newly acquired companies in the Consolidated Balance Sheet. The increased assets are also reflected in the group’s expanded business base at the balance sheet date. Other current assets showed little year-on-year change at € 2.1 million (previous year: € 1.7 million). Cash and cash and cash equivalents of € 23.9 million showed an increase on the prior-year level (previous year: € 20.0 million).
Within equity and liabilities, there was an absolute rise in equity of € 10.2 million to € 61.9 million (previous year: € 51.7 million). The equity ratio fell from 68.0 percent to 51.0 percent in the same period due to the sharp rise in the total group assets. The return on equity, representing net income as a proportion of equity, was 11.6 percent (previous year: 12.3 percent). Minority interests in equity amounted to only € 0.1 million (previous year: € 0.9 million).
At the end of the 2016 financial year non-current liabilities were € 19.7 million up on the previous year. The increase is attributable to higher non-current financial liabilities (€ +17.0 million) and deferred taxes (€ +1.7 million) as a result of the acquisitions.
Current liabilities rose by € 15.5 million to € 31.8 million mainly as a result of increased financial liabilities (€ +3.1 million) and higher trade payables as well as prepayments (€ +5.9 million). This item includes such components as prepayments received and trade payables. The current provisions, too, rose by € 3.2 million. There was a further effect of € +3.3 million from other current liabilities.
At the balance sheet date, technotrans had financial liabilities totalling € 28.1 million (previous year: € 8.1 million). The non-current financial liabilities stem principally from investments in fixed assets, as well as from acquisitions of interests. They are protected in part by land charges. Details of the structure of financial liabilities are provided in the Notes to the Consolidated Financial Statements (Section 11).
Provisions at the end of 2016 totalled € 9.8 million, an increase of € 3.2 million compared with the previous year.
The long-term provisions of around € 1.2 million (previous year: € 1.1 million) comprise both personnel-related obligations (pensions) and those Board of Management remuneration components that focus on sustainable corporate performance. The short-term provisions amounting to € 8.6 million (previous year: € 5.4 million) consist of other obligations towards personnel (€ 4.7 million), payments to be made under warranty (€ 1.4 million), provisions for litigation settlements (€ 1.0 million) and other provisions (€ 1.5 million).
technotrans calculates working capital as current assets less current liabilities. At December 31, 2016 working capital was € 37.6 million, an increase of 9.1 percent on the prior-year reporting date (€ 34.5 million).
The group’s net debt, calculated as the difference between non-current plus current interest-bearing borrowings and cash and cash equivalents, amounted to € 5.3 million at the end of the year under review (previous year: net liquidity of € 11.6 million). The ratio of net debt to equity (gearing) is 8.5 percent (previous year: -22.4 percent). The ratio of net debt to EBITDA is 0.4. The gearing ratio is therefore at a comfortable rating level.