QUARTERLY REPORT FOR THE THREE MONTHS AND TWELVE MONTHS ENDED 31 DECEMBER 2014 (unaudited)

Transcription

1 . QUARTERLY REPORT FOR THE THREE MONTHS AND TWELVE MONTHS ENDED 31 DECEMBER 2014 (unaudited) HYVA GLOBAL B.V. (the Issuer ) 10 APRIL 2015

2 QUARTERLY REPORT FOR THE THREE MONTHS AND TWELVE MONTHS ENDED 31 DECEMBER 2014 (unaudited) Introduction On 24 March 2011, Hyva Global B.V. (the Issuer ) issued its 8.625% Senior Secured Notes due 2016 (the Notes ) pursuant to an indenture dated 24 March 2011 among the Issuer, Hyva III B.V., Wilmington Trust FSB, as Trustee, Principal Paying Agent, Registrar and Transfer Agent, and Wilmington Trust (London) Limited, as Security Agent (as amended or supplemented, the Indenture ). Unless otherwise specified, capitalised terms used herein that are not otherwise defined have the meanings given to such terms in the Indenture. Section 4.16(1)(a) of the Indenture requires, so long as any Notes are outstanding, the Issuer to furnish to the Trustee, within 120 days following the end of the fiscal year beginning with the fiscal year ended 31 December 2014, annual reports containing the following information: (i) information with a level of detail that is substantially comparable in all material respects to the sections in the Offering Memorandum for the issue of the Notes dated 17 March 2011 entitled Management Discussion and Analysis of Financial Condition and Results of Operations, Business, and Description of Other Material Indebtedness and Certain Financing Arrangements, (ii) the Issuer s audited consolidated balance sheet as at the end of the most recent fiscal year end audited consolidated income statements and statements of cash flow of the Issuer for the most recent two fiscal years, including appropriate footnotes to such financial statements, for and as at the end of such fiscal years and the report of the independent auditors on the financial statements; and (iii) calculations of Consolidated EBITDA, Consolidated Non- Guarantor EBITDA, Consolidated Interest Expense and Consolidated Non-Guarantor Debt, in each case, for such fiscal year. Section 4.16(3) of the Indenture further requires the Issuer to make available copies of the report discussed above (a) on the Issuer s public website; (b) through the newswire service of Bloomberg, or, if Bloomberg does not then operate, any similar agency; and (c) if and so long as the Notes are listed and quoted on the Official List of the SGX- ST and to the extent that the rules of the SGX-ST so require, copies of such reports furnished to the Trustee shall also be made available at the specified office of the paying agent in Singapore. This Quarterly Report as of and for the three months and twelve months ended 31 December 2014 and the audited consolidated financial statements of Hyva Global B.V. for the year ended 31 December 2014 as included as Appendix A are published to comply with the reporting requirements in the Indenture discussed above. Forward-Looking Statements This Quarterly Report may include forward-looking statements. All statements other than statements of historical fact contained in this Quarterly Report, including, without limitation, those regarding future financial position and results of operations, strategy, plans, objectives, goals and targets, future developments in the markets in which the Issuer and its consolidated subsidiaries (together Hyva ) participate or seek to participate, and any statements preceded by, followed by or that include the words believe, expect, aim, intend, will, may, anticipate, seek, should or similar expressions or the negative thereof, are forward-looking statements. Such forward-looking statements involve known and unknown risks, uncertainties and other factors, some of which are beyond the control of Hyva, which may cause actual results, performance or achievements, or industry results, to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements. These forward-looking statements are based on numerous assumptions regarding present and future business strategies and the environment in which Hyva will operate in the future. Actual results and the timing of certain events may differ significantly from the results discussed in the forward-looking statements. All forward-looking statements in this document are based on information available to Hyva as of the date of this Quarterly Report and Hyva assumes no obligation to update any such forward-looking statements. 2

3 QUARTERLY REPORT FOR THE THREE MONTHS AND TWELVE MONTHS ENDED 31 DECEMBER 2014 (unaudited) Presentation of Financial Information and Use of Non-GAAP Financial Information The condensed consolidated financial statements presented in this Quarterly Report have been prepared in accordance with International Financial Reporting Standards as adopted by the European Union ( IFRS ) and International Financial Reporting Interpretations Committee interpretations applicable to companies reporting under IFRS. However, this Quarterly Report does not necessarily include all disclosure required by IFRS, including IAS 34 Interim Financial Reporting. The quarterly condensed consolidated financial statements included herein do not include all the information and disclosure required in the annual consolidated financial statements, and should therefore be read in conjunction with the Hyva Group s (as defined herein) annual financial statements as at 31 December 2014, which are included as Appendix A to this Quarterly Report. Detailed information regarding the accounting policies used for preparing the condensed financial statements included in this Quarterly Report is provided in Note 2 to the Hyva Group s consolidated financial statements for the year ended 31 December In this Quarterly Report, reference is made to EBITDA, Pro forma EBITDA and Adjusted EBITDA. EBITDA is defined as operating profit plus depreciation, amortisation and impairment of assets. Pro forma EBITDA is defined as EBITDA adjusted to exclude Transaction (as defined herein) related expenses. Adjusted EBITDA is defined as Pro forma EBITDA adjusted to exclude other additional extraordinary items, non-recurring costs and certain other items. Unless otherwise indicated, the EBITDA, Pro forma EBITDA and Adjusted EBITDA figures in this Quarterly Report are calculated on a consolidated basis, inclusive of all subsidiaries of Hyva Holding B.V., as of 31 December It should also be noted that EBITDA is calculated differently from Consolidated EBITDA as defined and used in the Indenture governing the Notes. Management believes that EBITDA, Pro forma EBITDA and Adjusted EBITDA serve as useful indicators of Hyva s (as defined herein) operating performance. EBITDA, Pro forma EBITDA and Adjusted EBITDA are non-gaap measures and are not required by or presented in accordance with IFRS. They are not intended as a replacement for, or alternatives to, measures such as net cash from operating activities or operating profit as defined and required under IFRS. Hyva believes that EBITDA, Pro forma EBITDA and Adjusted EBITDA are measures commonly used by analysts, investors and peers in the industry. Accordingly, this information is disclosed to permit a more complete analysis of Hyva s operating performance. EBITDA, Pro forma EBITDA and Adjusted EBITDA, as calculated herein, may not be comparable to similarly titled measures reported by other companies. EBITDA, Pro forma EBITDA and Adjusted EBITDA may not be indicative of historical results of operations, nor are they meant to be predictive of future results. In this Quarterly Report, where information has been presented in thousands or millions, amounts may have been rounded. Accordingly, totals of columns or rows of numbers in tables or charts may not be equal to the apparent sum of the individual items. Actual numbers may differ from those contained herein due to such rounding. Important Note Regarding Confidentiality This Quarterly Report is confidential and has been prepared exclusively for use by any holder of the Notes or any prospective investor in accordance with Section 4.16 of the Indenture. You are authorised to use this Quarterly Report solely for the purpose of evaluating your investment in, or considering the purchase of, the Notes. Neither the delivery of, or access to, this Quarterly Report implies that any information set forth in this Quarterly Report is correct as of any date after the date of this Quarterly Report. You may not reproduce or distribute this Quarterly Report, in whole or in part, and you may not disclose any of the contents of this Quarterly Report or use any information herein for any purpose other than evaluating your investment in, or considering the purchase of, the Notes. You agree to the foregoing by accepting delivery of, or access to, this Quarterly Report. 3

4 QUARTERLY REPORT FOR THE THREE MONTHS AND TWELVE MONTHS ENDED 31 DECEMBER 2014 (unaudited) 1. SUMMARY FINANCIAL DATA (unaudited) 1.1 INTRODUCTION This Quarterly Report provides an operational and financial review, including condensed consolidated financial information, for the Issuer for the three months ( Q ) and twelve months ended 31 December 2014 ( FY 2014 ) and for the three months ( Q ) and twelve months ended 31 December 2013 ( FY 2013 ). The audited consolidated financial statements of Hyva Global B.V., in accordance with IFRS, are included as an Appendix A to this Quarterly Report. 1.2 CORPORATE INFORMATION The Issuer s registered address is Antonie van Leeuwenhoekweg 37, 2408 AK Alphen aan den Rijn, The Netherlands. Hyva is engaged in the development, production, marketing and distribution of hydraulic products and solutions for application in heavy duty equipment used in the mining, infrastructure, construction and environmental services end markets. 1.3 MATERIAL RECENT DEVELOPMENTS As discussed in our previous quarterly report, our hook and skip loader manufacturing activities are being relocated from the Netherlands into our existing crane manufacturing facility in Italy. This relocation is completed in the last quarter of There is no material new development since 28 November, 2014, the date of our previous material developments update. Please refer to Section 4 for an update on senior management changes. 4

5 QUARTERLY REPORT FOR THE THREE MONTHS AND TWELVE MONTHS ENDED 31 DECEMBER 2014 (unaudited) 1.4 RESULTS OF OPERATIONS AND FINANCIAL CONDITION The following summarises the condensed consolidated financial data of the Issuer, including the unaudited condensed consolidated statement of income, the unaudited condensed consolidated balance sheet and the unaudited condensed consolidated statement of cash flow including condensed footnote disclosure. Unaudited condensed consolidated statement of income Unaudited condensed consolidated statement of income For the three months and twelve months ended 31 December 2014 and 2013 QTD QTD FY FY 1 Oct Oct Jan Jan 2013 to to to to 31 Dec Dec 2013 Change 31 Dec Dec 2013 Change USD '000 USD '000 % USD '000 USD '000 % Revenue 133, , % 613, , % Cost of sales (99,301) (116,316) -14.6% (452,336) (442,943) 2.1% Gross profit 33,756 47, % 160, , % Selling, general and administrative costs (25,631) (30,110) -14.9% (99,373) (102,235) -2.8% Other operating expenses (5,079) (4,784) 6.2% (20,119) (19,936) 0.9% One-time restructuring costs (1,152) (1,354) -14.9% (2,913) (8,343) -65.1% Total operating costs (31,863) (36,248) -12.1% (122,405) (130,514) -6.2% Operating profit 1,894 11, % 38,496 37, % Interest income % 1,145 1, % Interest costs (9,679) (10,405) -7.0% (37,086) (38,416) -3.5% Other finance (expense)/income (1,298) % (2,413) (1,813) 33.1% Net finance costs (10,916) (10,061) 8.5% (38,354) (38,751) -1.0% (Loss)/profit before income tax (9,023) 1, % 142 (1,633) % Income tax credit/(expense) 534 (3,875) % (13,718) (17,534) -21.8% Result for the period (8,489) (2,704) 213.9% (13,576) (19,167) -29.2% Result attributable to: Owners of the parent (8,452) (2,624) 222.1% (13,464) (19,087) -29.5% Non-controlling interests (37) (80) -53.8% (112) (80) 40.0% (8,489) (2,704) 213.9% (13,576) (19,167) -29.2% Other comprehensive income: Currency translation differences (18,252) (580) % (38,071) 3, % Remeasurements (1,413) % (1,413) % Comprehensive income for the period (28,154) (3,068) 817.7% (53,060) (15,639) 239.3% Comprehensive income attributable to: Owners of the parent (28,112) (2,988) 840.8% (52,943) (15,559) 240.3% Non-controlling interests (42) (80) -47.5% (117) (80) 46.2% (28,154) (3,068) 817.7% (53,060) (15,639) 239.3% Figures presented are derived from figures appearing in the audited 2014 Annual Report as included in the Appendix A to this Quarterly Report. 5

6 QUARTERLY REPORT FOR THE THREE MONTHS AND TWELVE MONTHS ENDED 31 DECEMBER 2014 (unaudited) Unaudited condensed consolidated balance sheet Unaudited condensed consolidated balance sheet As at 31 December 2014 and 2013 As at 31 December USD '000 USD '000 Property, plant and equipment 36,294 40,370 Intangible fixed assets 644, ,605 Deferred income tax assets 10,474 10,273 Financial fixed assets Total non-current assets 691, ,387 Inventories 90,921 92,021 Trade and other receivables 136, ,723 Current income tax receivable 1,454 1,773 Cash and cash equivalents 83,506 93,941 Current assets 312, ,458 Total assets 1,003,182 1,062,845 Equity attributable to the owners of the parent 360, ,691 Non-controlling interest Total equity 360, ,839 Non-current liabilities Borrowings 371, ,723 Deferred income tax liabilities 79,254 87,305 Derivative financial liabilities - 31 Other non-current liabilities 7,733 6,016 Current liabilities Borrowings 975 1,196 Current income tax payable 2,068 3,894 Trade and other payable 175, ,630 Other current liabilities 4,469 5,211 Total liabilities 642, ,006 Total equity and liabilities 1,003,182 1,062,845 Figures presented are derived from figures appearing in the audited 2014 Annual Report as included in the Appendix A to this Quarterly Report. 6

7 QUARTERLY REPORT FOR THE THREE MONTHS AND TWELVE MONTHS ENDED 31 DECEMBER 2014 (unaudited) Unaudited condensed consolidated statement of cash flow Unaudited condensed consolidated statement of cash flow For the three months and twelve months ended 31 December 2014 and 2013 QTD QTD FY FY 1 Oct Oct Jan Jan 2013 to to to to 31 Dec Dec Dec Dec 2013 USD '000 USD '000 USD '000 USD '000 Cash flows from operating activities (Loss) / profit before income tax (9,023) 1, (1,633) Adjustments for: - Depreciation and amortisation 6,493 7,909 26,807 28,357 - Change in provisions 2,090 (704) 975 (267) - Fair value change derivative financial instruments Result on disposal of property, plant and equipment (33) (1,155) (32) (1,260) - Net interest expense 9,620 10,183 35,941 36,938 - Changes in working capital 21,413 15,879 (13,004) 6,821 Cash generated from operating activit\ies 30,560 33,316 50,829 68,989 Taxes paid (2,579) (5,713) (19,263) (19,665) Net Interest (paid)/received (708) 1,398 (32,522) (33,261) Net cash from/(used in) operating activities 27,273 29,001 (956) 16,063 Cash fows used in investing activities Purchases of property, plant and equipment (2,856) (2,174) (6,889) (9,157) Investments in intangible assets (642) (210) (991) (469) Proceeds from sale of property, plant and equipment 1,356 (147) 4, Net cash used in investing activities (2,142) (2,531) (3,346) (9,450) Cash flows used in financing activities Movements in loans and borrowings (300) (974) (990) (2,185) Net cash used in financing activities (300) (974) (990) (2,185) Net increase/(decrease) in cash and cash equivalents 24,831 25,496 (5,292) 4,428 Cash and cash equivalents at beginning of the period 58,380 66,039 93,941 89,239 Exchange gains/(losses) on cash and cash equivalent 295 2,406 (5,143) 274 Cash and cash equivalents at end of the period 83,506 93,941 83,506 93,941 Figures presented are derived from figures appearing in the audited 2014 Annual Report as included in the Appendix A to this Quarterly Report. 7

8 QUARTERLY REPORT FOR THE THREE MONTHS AND TWELVE MONTHS ENDED 31 DECEMBER 2014 (unaudited) 1.5 OPERATING AND FINANCIAL REVIEW Introduction This section presents an operating and financial review, including historical condensed consolidated financial information, for the Issuer for the three months ( Q ) and twelve months ( FY 2014 ) ended 31 December For purposes of this section, the terms we, our and us refer to Hyva Management s discussion and analysis of the results of operations Three months ended 31 December 2014 compared to three months ended 31 December 2013 Revenue The table below sets forth revenue by region on an originating sales entity basis for the Hyva Group: Revenue by region on an originating sales entity For the three months and twelve months ended 31 December 2014 and 2013 (Unaudited) QTD QTD FY FY 1 Oct Oct Jan Jan 2013 to to to to 31 Dec Dec 2013 Change 31 Dec Dec 2013 Change USD '000 USD '000 % USD '000 USD '000 % China 36,065 56, % 173, , % India 22,231 18, % 92,579 79, % Other Asia 11,181 11, % 39,408 39, % Americas 14,545 15, % 64,951 70, % Europe/Middle East/Africa (EMEA) 49,034 62, % 243, , % Total 133, , % 613, , % We achieved a quarterly revenue performance of USD million in Q4 2014, compared to USD million in the prior year corresponding period ( pcp ). The decrease (18.8% versus pcp or 13.5% versus pcp excluding exchange rate movements) was attributable to lower sales in all regions except India. Foreign exchange movements had a negative effect on our revenue performance in Q of USD 8.7 million or 5.3%, compared to the same period last year. Our main geographic markets are Asia (China, India and other Asian countries), EMEA (Europe/Middle East/Africa) and the Americas (largely Brazil and other countries in South America). In Q4 2014, Asia s contribution to our total revenue was 52.2% (52.9% in Q4 2013), EMEA was 36.9% (37.9% in Q4 2013) and the Americas was 10.9% (9.3% in Q4 2013). Within Asia, China s contribution to our total revenues fell to 27% (35% in Q4 2013) while India was up to 17% (11% in Q4 2013). Revenue in China for Q was USD 36.1 million, lower by USD 20.7 million or 36.4% versus pcp (35.8% lower excluding exchange rate movements). The revenue performance in China mirrors the developments in the heavy duty tipper market in China which weakened during Q on the back of a slowdown in the commencement of large scale infrastructure and construction projects in China. Revenue in India increased by 22.3% versus pcp (22.4% higher excluding exchange rate movements), driven by the continued improvement in industrial and infrastructure activity in India which has increased demand for our hydraulics and tipper products. Our market share remained very strong. 8

9 QUARTERLY REPORT FOR THE THREE MONTHS AND TWELVE MONTHS ENDED 31 DECEMBER 2014 (unaudited) Revenue from Other Asia in Q was USD 0.5 million or 4.2% lower compared to Q (1.7% higher excluding exchange rate movements). The decrease was mainly driven by the depreciation of most currencies within the region against US Dollar. Q revenue generated from Indonesia was in line with last year while revenue increase in countries such as South Korea, Japan and Vietnam were offset by the continued soft market conditions in Australia and Thailand. Revenue from the Americas decreased by 4.0% in Q versus pcp (increased by 5.8% excluding exchange rate movements), driven down mainly by the depreciation of Brazilian Real. A strong revenue improvement in our tipper hydraulic business in the US was offset by lower sales in Brazil due to the weak macro-economic environment. EMEA revenues were down by 21.0% in Q compared to Q (down 11.1% excluding exchange rate movements, following the sharp EUR depreciation against the USD in Q4 2014). Revenues decreased mostly in Eastern Europe due to the Russian crisis and in the MEA region after strong growth in the first 3 quarters of the year. This decrease primarily affected our tipper hydraulics and container handling equipment businesses. Cost of Sales Our cost of sales decreased by 14.6% to USD 99.3 million in Q compared to USD million in Q Expressed as a percentage of revenue, our cost of sales was 74.6% in Q4 2014, an increase from the 71.0% level recorded in the same period last year. This mainly results from changes in our regional and product revenue mix compensated by the continued operational cost savings initiatives in procurement, engineering and manufacturing. Gross Profit Our gross profit decreased by 28.9% to USD 33.8 million in Q compared to USD 47.5 million in Q4 2013, following the lower revenues in Q4 this year compared to last year as well as the unfavourable regional and product mix development. Expressed as a percentage of revenue, our gross profit margin was 25.4% in Q4 2014, compared to 29.0% in the same period last year. Selling, general and administrative costs Our SG&A costs decreased by 14.9% to USD 25.6 million in Q compared to USD 30.1 million in Q mainly as a result of (1) a decrease in our variable SG&A in line with lower revenues and (2) various cost containment actions, notably in personnel costs. Expressed as a percentage of revenue, SG&A costs in Q amounted to 19.3%, slightly higher than last year s 18.4% level. Other operating expenses Our other operating expenses in Q remained at the same level as last year. These mainly represent the amortisation of intangible fixed assets since 14 April 2011, that resulted from the purchase price allocation and fair value adjustments arising from the Acquisition. One-time restructuring costs One-time restructuring costs in Q mainly relate to the costs associated with the relocation of manufacturing activities from the Netherlands into our existing crane manufacturing facility in Italy. The one-time restructruring costs recorded in Q mainly represented a portion of these expenses related to the consolidation of our Italian Tecnomet operations into our German facility and the relocation of our Kennis roller crane production in Holland to our main crane facility in Italy. EBITDA (Earnings Before Interest, Tax, Depreciation and Amortisation) Our Q Adjusted EBITDA amounting to USD 13.5 million compared to USD 19.5 million in Q Exchange rates differences had an unfavourable impact of USD 0.6 million on EBITDA compared to last year. Expressed as a percentage of revenue, our Adjusted EBITDA was 10.2% in Q compared to 12.0% in the same period last year. The Adjusted EBITDA for the period is approximately USD 5.1 million higher than reported EBITDA due to the net impact of restructuring costs as well as some other normalization items. 9

10 QUARTERLY REPORT FOR THE THREE MONTHS AND TWELVE MONTHS ENDED 31 DECEMBER 2014 (unaudited) Our reported EBITDA (including the costs described above) for Q was USD 8.3 million, compared to USD 19.1 million in the same period last year. EBITDA adjustments For the three months and twelve months ended 31 December 2014 and 2013 (Unaudited) QTD QTD FY FY 1 Oct Oct Jan Jan 2013 to to to to 31 Dec Dec 2013 Change 31 Dec Dec 2013 Change USD '000 USD '000 % USD '000 USD '000 % EBITDA (as reported) 8,436 19, % 65,351 65, % Transaction related adjustments: Transaction related expenses Pro forma EBITDA 8,436 19, % 65,351 65, % Other exceptional items: Restructuring costs 1,152 1, % 2,913 8, % Various other normalisations 3,953 (1,020) % 5,220 1, % Adjusted EBITDA 13,541 19, % 73,484 75, % EBITDA (as reported) as % of revenue 6.3% 11.8% 10.7% 10.7% Pro forma EBITDA as % of revenue 6.3% 11.8% 10.7% 10.7% Adjusted EBITDA as % of revenue 10.2% 12.0% 12.0% 12.3% Interest income Our interest income decreased by 72.6% to USD 0.1 million in Q compared to USD 0.2 million in Q Interest costs Our interest costs decreased by 7.0% to USD 9.7 million in Q compared to USD 10.4 million Q4 2013, mainly as a result of the decrease in discounting cost of the bank drafts collected from our customers in China at 2014 year end. At the end of 2014, customer collections in China were primarily realized through cash rather than remittance of bank drafts. Other finance (expense)/income net Our other finance net expenses for Q mainly represented foreign exchange loss of approximately USD 1.2 million, largely driven by (mostly unrealized) foreign exchanges losses in China, partly offset by (mostly unrealised) foreign exchange gains on a USD position in Brazil. Income tax credit/(expense) Our income tax expenses decreased by USD 4.4 million and consisted in a USD 0.5 million tax credit in Q (compared to tax expense of USD 3.9 million in Q4 2013). This decrease in tax charge is in line with the lower results before tax generated in Q compared to 2013 in various tax paying countries. Currency translation differences Currency translation differences (as included in other comprehensive income) amount to a negative USD 18.3 million in Q due to the depreciation of the Euro, Chinese Renminbi, Brazilian Real and the Indian Rupees against the US Dollar during the three months ended 31 December

11 QUARTERLY REPORT FOR THE THREE MONTHS AND TWELVE MONTHS ENDED 31 DECEMBER 2014 (unaudited) 1.6 FINANCIAL Twelve months ended 31 December 2014 compared to twelve months ended 31 December 2013 Revenue FY 2014 revenue of USD million represents a 0.4% increase (2.7% yoy increase excluding exchange rate movements) over FY 2013 (USD million). Foreign exchange movements negatively impacted our revenue performance by USD 13.5 million or 2.3% versus last year. Asia s contribution to our total revenue in FY 2014 was 49.8% (2013: 52.0%), EMEA was 39.6% (2013: 36.5%) and the Americas was 10.6% (2013: 11.5%). Revenue in China decreased by 12.4% in 2014 compared to 2013 (12.2% excluding exchange rate movements). Following a strong start to the year, the heavy duty tipper truck market in China suffered a major reversal from mid-2014, which dragged our China revenue to finish down for the full year. Notwithstanding the depressed market conditions, we estimate that Hyva has been able to increase its market share in China during the year and expect to retain our market position at this new level during Our technology leadership in tipper hydraulics has been further enhanced with the introduction of our new range of hydraulic cylinders ( Alpha ) that offer significant benefits in speed and weight reduction relative to competitive offerings in the market. We also continue to invest in our waste handling equipment business in China and remain firm believers in the long term prospects for the primary end markets that our products serve in China. Sales in India increased 16.0% in 2014 compared to 2013 (21.4% excluding exchange rate movements) driven by the continued recovery in industrial and infrastructure demand in India, which has increased demand for our hydraulics and tipper products. We have been able to maintain our strong market share in India. Revenue in Other Asia decreased by 0.6% in 2014 compared to last year (4.9% increase excluding exchange rate movements). The positive revenue development results from the strong improvement in Indonesia, which signals some recovery in the mining sector, as well as from an increase in sales to other countries in the region such as South Korea, Japan and Malaysia. That good revenue progression was partly offset by the continued soft market conditions in Thailand and Australia. Sales in the Americas region decreased by 7.4% in 2014 compared to 2013 (0.1% excluding exchange rate movements). Whilst our tipper hydraulic business progressed strongly in North America from a small base, soft market conditions in Brazil (our main market in Americas) pulled down our total regional revenue from tipper hydraulics during This was partly offset by the growth of our crane line, which continues to gain market share despite weak market conditions for capital equipment sales in Brazil. Short term prospects for the heavy duty tipper market in Brazil remain challenging with lowered GDP growth estimates, weak outlook for the HD truck market as well as expected further tightening of fiscal spending (restricted access to FINAME). EMEA revenue increased by 8.9% in 2014 compared to 2013 (9.6% excluding exchange rate movements). The whole region recorded a strong yoy growth thanks to a good development in all sub-regions. Sales in Western Europe continued to benefit from a recovery in the commercial vehicles market as well as the transition to Euro VI emission standards, notably in the UK. Sales levels in Eastern Europe (at constant FX rate) showed improvement compared to last year despite the adverse market conditions in Russia. Good activity levels particularly in Saudi Arabia and the UAE countries contributed to a strong yoy growth in our MEA region as well. Cost of Sales Our cost of sales increased by 2.1% to USD million in 2014 compared to USD million in Expressed as a percentage of revenue, our cost of sales was 73.8% in 2014 compared to 72.5% in The higher costs were driven by unfavourable regional and product mix, which was partly offset by continued yoy operations savings, mostly in procurement. 11

12 QUARTERLY REPORT FOR THE THREE MONTHS AND TWELVE MONTHS ENDED 31 DECEMBER 2014 (unaudited) Gross Profit Our gross profit decreased by 4.0% to USD million in 2014 compared to USD million in prior corresponding year. Expressed as a percentage of revenue, our gross profit decreased from 27.5% last year to 26.2% in 2014, mostly on account of adverse changes in regional and product mix. We were able to hit our operational cost save targets during 2014 which allowed us to offset part of the adverse mix impact on our gross profit. The strength of Hyva s market position and brand allowed us to hold, and in some regions improve, our selling prices and gross profit margins across our main product lines. Selling, general and administrative costs Our SG&A costs decreased by 2.8% to USD 99.4 million in 2014 compared to USD million in 2013 primarily as a result of tight control over our fixed SG&A costs. Variable SG&A costs were in line with the revenue development observed in each region. SG&A costs expressed as a percentage of revenue were 16.2% in FY 2014, compared to 16.7% in FY Other operating expenses Our other operating expenses increased slightly to USD 20.1 million in 2014 compared to USD 19.9 million in These mainly represent the amortisation of intangible fixed assets since 14 April 2011, that resulted from the purchase price allocation and fair value adjustments arising from the Acquisition. One-time restructuring costs During 2013, several reorganisation projects were implemented notably, (1) the closure of our Tecnomet operation in Italy which was consolidated into our Germany-based operations; (2) the relocation of our Holland-based Kennis roller crane production to our main crane facility in Italy and (3) the rationalisation of our logistics and distribution network in Western Europe. The costs associated with these reorganisations were recognised as one-time restructuring costs and these amounted to USD 8.3 million. In 2014 one-time restructuring costs amounted to USD 2.9 million and primarily related to the relocation of our container handling manufacturing operations from the Netherlands into our existing facility in Italy, as explained in Section 1.3 above. Some final one-time costs associated with the definitive termination of our Tecnomet and Kennis entities were also recognised in EBITDA (Earnings before Interest, Tax, Depreciation and Amortisation) Our Adjusted EBITDA decreased by 2.2% to USD 73.4 million for FY 2014 compared to USD 75.1 million in FY Expressed as a percentage of revenue, our adjusted EBITDA was 12.0% in FY 2014 compared to 12.3% in FY Adjusted EBITDA for the year ended 31 December 2014 adds back approximately USD 8.1 million (2013: USD 9.6 million) of non-recurring costs incurred in the year, which relate to restructuring costs (please see above) and some other normalization items. Our reported EBITDA (including the non-recurring costs described above) for FY 2014 was USD 65.3 million (10.7% of sales), compared with USD 65.5 million (10.7% of sales) in FY Interest income Our interest income decreased to USD 1.1 million in 2014 compared to USD 1.5 million in Interest costs Our interest costs decreased to USD 37.1 million in FY 2014 from USD 38.4 million in FY 2013 primarily as a result of decreased discounting charge on bank drafts collected from customers in China at year end, as already explained in Section above. Other finance income/(expense) net Other finance net expense amounts to USD 2.4 million in FY 2014, compared to other finance net expense of USD 1.8 million in FY The 2014 expense was mainly driven by (mostly unrealized) foreign exchanges losses in China, partly offset by (mostly unrealized) foreign exchange gains on a USD position in Brazil. 12

13 QUARTERLY REPORT FOR THE THREE MONTHS AND TWELVE MONTHS ENDED 31 DECEMBER 2014 (unaudited) Income tax expense Our income tax expense amounts to USD 13.7 million in FY 2014, compared to USD 17.5 million in FY This decrease mainly resulted from lower profits before tax generated in FY 2014 compared to FY 2013 in various tax paying entities and the net movement in deferred tax assets and liabilities. Currency translation differences Currency translation differences decreased comprehensive income during the twelve months ended 31 December 2014 by about USD 38.1 million. This mainly results from foreign exchange impact on the push down of the purchase price allocation in local currencies (USD 24.0 million). Other movements decreased the comprehensive income by another USD 14.1 million in 2014 due to the depreciation of the Euro, Brazilian Real and the Indian Rupee against US Dollar at year end. 13

14 QUARTERLY REPORT FOR THE THREE MONTHS AND TWELVE MONTHS ENDED 31 DECEMBER 2014 (unaudited) 1.7 MANAGEMENT S DISCUSSION AND ANALYSIS OF THE FINANCIAL CONDITION Cash and debt Cash and cash equivalents (excluding bank overdraft) totaled USD 83.5 million as at 31 December 2014, decrease from USD 93.9 million as at 31 December The following table below sets forth the gross and net debt of Hyva as at 31 December 2014: Debt (consolidated) (Unaudited) As at As at 31 Dec Dec 2013 USD '000 USD '000 Non-current debt Interest bearing loans and borrowings * 375, ,264 Financial lease liabilities 683 1,193 Other financial liabilities 688 1, , ,721 Current debt Interest bearing loans and borrowings * Financial lease liabilities Bank overdrafts - - Other financial liabilities ** 8,446 5,080 8,834 5,689 Guarantees Gross debt *** 385, ,543 Cash and cash equivalents (excl. bank overdrafts) (83,506) (93,941) Net debt 301, ,602 Gross leverage (Gross debt / Consolidated EBITDA ****) Net leverage (Net debt / Consolidated EBITDA ****) Notes: *: Total interest bearing loans and borrowings classified as non-current debt as at 31 December 2014 include USD 375 million notes issued by the Issuer and USD 0.2 million (2013: USD 0.3 million) government loans in Italy. The amount in the balance sheet is net of the capitalised financing costs (USD 4.4 million as at 31 December 2014 and USD 3.0 million as at 31 December 2013). **: The Other financial liabilities caption includes an amount of USD 7.9 million (2013: 4.5 million) specific to customer payment agreements in India. ***: Gross debt is calculated as per Section 1.01 Indenture dated as of March 24, ****: Consolidated EBITDA is calculated as per Section 1.01 Indenture dated as of March 24, 2011 and shown in Section 4 of this report. Non-current liabilities Non-current liabilities mainly represent the Notes, net of capitalised financing costs (approximately USD million) as at 31 December 2014 (USD million) as well as deferred tax liabilities (approximately USD 79.3 million) which mainly originate from the purchase price allocation (approximately USD 79.0 million). Current assets less current liabilities Current assets less current liabilities amounted to USD million as at 31 December 2014 (31 December 2013: USD million). Working Capital Hyva s net working capital (excluding intercompany receivables and fixed assets related items) increased by USD 0.7 million to USD 58.4 million as at 31 December 2014 (31 December 2013: USD 57.7 million. Expressed in days of sales, net working capital remained stable around 35 days. Excluding the effect of foreign exchange, net working capital would amount to USD 66.4 million, representing an increase of USD 8.0 million, which results from a different regional mix in our 2014 revenues compared to Equity Total equity (including non-controlling interests) amounted to USD million as at 31 December 2014 (31 December 2013: USD million). 14

15 QUARTERLY REPORT FOR THE THREE MONTHS AND TWELVE MONTHS ENDED 31 DECEMBER 2014 (unaudited) 1.8 MANAGEMENT S DISCUSSION AND ANALYSIS OF MATERIAL CHANGES IN LIQUIDITY AND CAPITAL RESOURCES Capital Expenditure 2014 capex of USD 6.9 million is 25% lower than 2013 (2013 capex included our new crane manufacturing facility in Brazil). We largely fund our capital expenditure and investments in property, plant and equipment through cash generated from operating activities and intend to continue to do so going forward. Net Cash from / (used in) Operating Activities Operating activities recorded a net cash outflow of USD 1.0 million in the twelve months ended 31 December 2014 compared to an inflow of USD 16.1 million in the same period last year. Positive operating cash flow (USD 50.8 million) was offset by tax payments (USD 19.3 million) and interest payments (USD 32.5 million). Net Cash from / (used in) Investing Activities Our net cash used in investing activities created an outflow of USD 3.3 million in the twelve months ended 31 December 2014 compared to an outflow of USD 9.5 million in the same period last year. This year outflow was primarily related to normal tangible and intangible capital expenditures in the ordinary course of business for an amount of USD 6.9 million net of the proceeds received from the sale of two buildings in The Netherlands. Net Cash from / (used in) Financing Activities Our net cash used in financing activities created an outflow of USD 1.0 million in the twelve months ended 31 December 2014 compared to an outflow of USD 2.2 million in the twelve months ended 31 December The 2014 outflows were primarily attributable to repayments of current portion of other loans. Available liquidity The Issuer s available liquidity as at 31 December 2014 is USD million (USD 83.5 million in cash and a USD 30 million available credit facility). This provides the business with sufficient cash to meet operating requirements, debt service obligations under the Notes and budgeted capital expenditure and investments. 15

16 QUARTERLY REPORT FOR THE THREE MONTHS AND TWELVE MONTHS ENDED 31 DECEMBER 2014 (unaudited) 2. BUSINESS We are the global market leader in front-end hydraulic cylinders for applications in heavy-duty equipment. For 2014, we estimate that our global market share in front-end hydraulic cylinders has remained stable at approximately 40% in terms of unit sales volume, approximately four times larger than our nearest competitor. We primarily serve the mining, infrastructure, construction and waste management end-markets. Our global scale, product quality, brand recognition, after-sales service and localised manufacturing provide us with a strategic advantage to maintain our leadership position. We also have leading market positions in container handling systems and truck mounted cranes, where we ranked third and fourth, respectively, in terms global of unit sales volume in We have a global operating footprint with a particularly strong presence in emerging markets. We have direct subsidiaries in 27 countries and 13 strategically located factories in China, India, Brazil, Germany and Italy. We sell our products to over 25,000 customers in approximately 130 countries through our global distribution network comprised of 39 subsidiaries, approximately 200 agents and over 1,000 dealers. Our core product is a front-end hydraulic cylinder that we sell as part of an integrated kit mounted on a truck or trailer chassis, used to raise and lower a tipper body. For the year ended 31 December 2014, our hydraulic kits generated revenue of USD million. We have also developed capabilities in adjacent product lines that leverage our global distribution and aftersales service network and utilise our core technical capabilities in hydraulic systems. These products include truck-mounted cranes, tipper bodies, container handling systems (hook and skip loaders), compactors and refuse collection bodies ( RCBs ), and other products, which contributed USD 83.8 million, USD 64.1 million, USD 52.9 million, USD 29.5 million, and USD 41.6 million, respectively, to our revenue for the year ended 31 December See Products. Since 1991, we have pursued an international expansion strategy focused on emerging markets, which account for the largest portion of our business. For the year ended 31 December 2014, over 60% of our revenue was attributable to products sold in emerging markets. We have a particularly strong presence in China, India and Brazil where, as early movers into these markets, we helped create and remain a leader in the market for front-end hydraulic cylinders. In China, India and Brazil our market share 1 was 35.5%, 88% and 66% respectively. We continued our international expansion strategy with the opening of a new sales office in South Africa during Our key end-markets are the mining and infrastructure / construction markets. Heavy tipper trucks and trailers used for material haulage within mines and in infrastructure projects predominantly use front-end hydraulic cylinders. Another key end-market we supply is environmental services, particularly in China. Our compactors and refuse collection bodies, together with our hook and skip loader products, used in the collection and transportation of urban waste, are our key environmental services product offerings. Our sales to these three key end-markets contributed to over 83% of our revenue for the year ended 31 December After having launched the new Alpha 1 Series of front-end hydraulic cylinders in China in 2013, Hyva launched the Alpha Series in the rest of the world during Also, the new Fresh Fruit Bunch (FFB) cranes lines and the new 24-hour spare parts service for Hyva cranes was deployed during ALPHA Series is a new range of front end tipping solutions, for the Construction, Transportation and Mining sectors, which delivers higher transport efficiency and safer operating at lower cost. Performance improvement has been achieved through re-design and re-engineering of the complete hydraulic system, down to the component and sub-assembly level, together with improvements to installation and service procedures. 1 Market share calculation methodology has been revised in 2013 to include all tipping solutions while only front end hydraulic cylinder market was considered in the past for market share calculation purposes. 16

17 QUARTERLY REPORT FOR THE THREE MONTHS AND TWELVE MONTHS ENDED 31 DECEMBER 2014 (unaudited) The new Hyva Crane FFB line comprises three models designed for applications in the agricultural market. The tractor-mounted cranes have been tested in laboratory with the Hyva Crane fatigue cycles program and then in the field in Malaysia and Indonesia under a range of demanding operating conditions. Our container handling division continued the roll out of the Titan boltable hook loader series. We launched the 20/22 ton series in 2013 and we added the strong and efficient 26/30 tons series in A new, web-based, 24-hour service is available on a global basis to all Hyva subsidiaries for all Hyva Crane spare parts. Hyva dealers and end customers can place their orders with their local Hyva subsidiary as usual and parts will be shipped directly to a requested location. The following chart presents the relative contributions to our revenue by product: We have established a multi-tiered sales and distribution network, supported by our strong local sales organisations. We employ multiple routes to market tailored to suit particular markets or products. We mainly sell our hydraulic kits directly to large truck OEMs or bodybuilders. We also sell our hydraulic kits and individual components through our global dealer network, which comprises over 1,000 dealers worldwide. Dealers are also responsible for servicing our installed equipment and selling spare parts. In markets where we do not have a subsidiary, we also sell to agents, who import our products for sale through their own distribution networks. Our agent network has remained stable at approximately 200 agents worldwide as of 31 December For certain of our products, such as compactors, cranes and hook and skip loaders, we also sell directly to end-users. Our revenue split by sales channel has remained fairly stable compared to prior years. As detailed in our section 1.6, our revenue increased for the year ended 31 December 2014 to USD million (refer to Directors report in Annual Report), while Earnings (EBITA) decreased to USD 61.5 million, a decrease of 6% over 2013 EBITA of USD 65.4 million. EBITA margin decreased at 10.0% of sales in 2014, against 10.7% in We believe that demand for our products is supported by several macroeconomic and industryspecific growth drivers, including: Long term-economic growth in emerging markets: We believe that economic growth in emerging markets will lead to continued urbanisation and related investment in infrastructure and construction, such as in roads, highways, railroads, airports, power plants and environmental service facilities, generating a need for heavy-duty equipment in which our products are used. Additionally, we believe that broad-based economic growth tends to drive demand for energy and steel, leading to an increase in the output 17

18 QUARTERLY REPORT FOR THE THREE MONTHS AND TWELVE MONTHS ENDED 31 DECEMBER 2014 (unaudited) of coal and iron ore mines where our products play a key role in material handling and haulage. Mechanisation: We believe that end-users of our products in the mining and infrastructure and construction industries seek to maximise productivity, efficiency and safety by increasing mechanisation and substituting heavy machinery for manpower. We believe that this trend is especially pronounced in emerging markets, where the mining and infrastructure and construction industries currently have a relatively high labor component. We believe that demand for our products is partially driven by this mechanisation trend, as our products enable customers to handle and transport heavier payloads more efficiently and with less manpower, thereby increasing productivity. Replacement: Our products are installed in heavy-duty equipment used for high-intensity applications where minimising downtime is essential. As a result, the machinery in which our products are installed typically has short replacement cycles, and our end-users generally prefer to replace rather than repair such machinery. For example, we estimate that the average useable life of the tipper trucks operated by our end-users in the mining sector ranges from two to four years, supporting steady replacement demand for new tipper trucks and thus for our hydraulic cylinders. Strengths We believe that the following represent our key strengths: Market leader with economies of scale. We are the global market leader in front-end hydraulic cylinders with an estimated market share of approximately 40% by unit sales volume sold in Our estimated 2014 tipping solutions market share 2 by unit sales volume in each of our principal markets of China, Europe, India and Brazil was maintained at approximately 35.5%, 32%, 88% and 66%, respectively, giving us the number one market position in each of these markets. We have developed our strong market positions through more than 35 years of operations and expansion, including establishing direct local operations in key emerging markets that our international competitors generally access through agents and distributors. Most of our competition in front-end hydraulic cylinders is local and fragmented. We estimate that we are approximately four times larger than our largest competitor in the front-end hydraulic cylinders market, measured in terms of unit sales volume in The relative size of our operations compared to our competitors allows us to benefit from economies of scale. For example, our scale allows us to maintain the largest service network in each of our key markets; obtain advantageous arrangements and terms with our suppliers; invest a greater amount in research and development; promote the global Hyva brand; and leverage relationships with existing customers and suppliers as we expand into new markets. Strength in attractive geographies and end-markets. Our hydraulic kits, tipper bodies, cranes and RCBs fulfill vital material haulage and handling functions in our key endmarkets of mining, infrastructure and construction and environmental services. Sales to our key end-markets collectively accounted for over 83% of our 2014 revenue. Our key end-markets, particularly in emerging markets where we generate the majority of our revenues benefit usually and over the long term - from visible, broad-based growth drivers such as high fixed asset investment, increasing urbanisation, increasing mechanisation of production processes, and relatively frequent replacement of the heavyduty vehicles in which our products are utilised. By entering emerging markets early and applying our global resources and know-how to build strong local capabilities, customer relationships, and brand recognition, we have established market leading positions that we believe will be difficult for our competitors to replicate. 2 Market share calculation methodology has been revised in 2013 to include all tipping solutions while only front end hydraulic cylinder market was considered in the past for market share calculation purposes. 18

19 QUARTERLY REPORT FOR THE THREE MONTHS AND TWELVE MONTHS ENDED 31 DECEMBER 2014 (unaudited) Reputation for superior product quality and a recognised brand. We believe that Hyva is the most widely recognised brand in the front-end hydraulic cylinders market and is synonymous with high quality and durable products. Hyva s cylinders are critical components for heavy-duty equipment used in demanding applications, and we believe that we are able to maintain a pricing premium over our competitors owing to the designs and characteristics of our products, including (i) strong, low weight cylinders that enable customers to operate with heavier payloads; (ii) simplicity of design that facilitates maintenance and repairs in industries where minimising downtime is essential, such as coal mining; and (iii) high-speed cylinders that enable delivery of more loads per day such as our recently launched Alpha Series solution. Diversified revenue and earnings base. Our business exposures are diversified and we are not over-reliant on any single region, end-market, customer or supplier. We have sales in approximately 130 countries with direct subsidiaries in 27 countries as of 31 December For the year ended 31 December 2014, 28.3% of our revenue came from China, 39.6% from EMEA, 15.1% from India, 10.6% from the Americas and 6.4% from other Asia, giving us a balanced global exposure that helps to mitigate the impact of declines in any one geographic market during a given year. We also have a welldiversified customer base consisting of many of the world s leading OEMs and bodybuilders, as well as dealers, agents and direct end-user customers. Along with the new customers to whom we sell our products, we have many longstanding customers for example, Volvo has been using our products for more than 26 years. We serve over 25,000 customers across the world with low overall customer concentration. Similarly, we source our raw materials and components from a diversified base of global suppliers. Global presence with local footprint. Our global presence is built upon strong local operations in each of our key markets and complemented by shared promotion, product development, and administrative resources. In each of China, Europe, India and Brazil we have established a comprehensive business infrastructure that is local in all key aspects management, manufacturing, supply chain and sales and service network. Our 13 manufacturing facilities located in China, India, Brazil, Germany and Italy are strategically located in proximity to our key customers and end-user markets, allowing us to deliver products quickly, efficiently and reliably. In addition, we believe we have the strongest sales and after-sales service network among front-end hydraulic cylinder manufacturers, selling products to over 25,000 customers in approximately 130 countries through our global distribution network comprised of 39 subsidiaries, approximately 200 agents and over 1,000 dealers as of 31 December We believe our extensive sales and after-sales service network, developed in more than 35 years, allows us to offer compelling benefits to our end-users, including shorter lead time for new products and rapid deployment of service and spare parts, as well as to our direct customers, who benefit from the Hyva support available for the vehicles they sell worldwide. For example, we are able to supply our global customers, such as Volvo and Scania, with products manufactured locally in their key markets, bearing Hyva s global promise of quality and after-sales service. Similarly, as certain of our local OEM and bodybuilder customers in India and China, such as Tata Motors, CIMC, CNHTC and Shaanxi Automotive, seek to expand internationally, we believe that we are the only front-end hydraulics cylinder supplier on whom they can rely for superior products and after-sales service in all markets where they sell their products. Resilient financial profile. Hyva s leading market share, long established presence in the fastest growing economies and flexible cost structure are key in consistently delivering results. We achieved relatively consistent (Pro forma) EBITDA margins of 10.6% in 2014, 10.7% in 2013, 9.3% in 2012 and 13.1% in A truly global organisation. With recent changes to management structure and appointment of functional experts, Hyva now has strong, experienced, multi-cultural teams leading the business at global, regional and country levels. Collaboration is strong and retention levels are good. The recent (December 2013) and modern Corporate office in Alphen aan den Rijn is a symbol for the future, continued investment in our Netherlands roots with a new, state-of-the-art testing centre and modern R&D facilities. 19

20 QUARTERLY REPORT FOR THE THREE MONTHS AND TWELVE MONTHS ENDED 31 DECEMBER 2014 (unaudited) Business Strategy Our strategy is to continue to build on the global scale and strength of our front-end hydraulics cylinder business while at the same time leveraging our global network, particularly in emerging markets, to expand our business into complementary products, such as fixed cranes, waste compactors and container handling systems. Our business strategy consists of the following principal elements: Consolidate our leadership position in front-end hydraulic cylinders and become a full tipping solutions provider. We will continue to consolidate and defend our leadership position in our core front-end hydraulic cylinder business in our key markets. We intend to achieve this consolidation by continuing to improve our local business infrastructure in our key markets by expanding manufacturing capacity to meet increases in local demand, improving operational efficiencies to further lower our cost of production, continuing to expand our distribution and service network to better serve our customers and further improving the quality and performance of our product. In addition, we will seek to further expand the geographic breadth of our business into regions where we believe we can grow our market share. Some of the key geographic markets that we have targeted for further growth and expansion include North America, Indonesia, Russia, Turkey, Africa including particularly South Africa and South East Asia. To advance our strategy we have set up new regional structures for Asia and MEA (Middle East & Africa), managed from Singapore and Dubai respectively. In addition to establishing a subsidiary in Indonesia in 2012, and an office in South Africa (2013), we are also planning to open up a subsidiary in Turkey in This should allow us to be closer to our customers there and, significantly reduce lead time to our customers and increase customer satisfaction leading to a significant sales increase. We believe we have the critical elements required to succeed with this strategy: a high quality product adaptable to suit unique local requirements, a well-recognised brand name and a low cost global manufacturing base allowing for competitive pricing. Our management s track record of building leadership positions in a number of international markets gives us confidence that we will be able to further consolidate our leadership position and grow our business. Leverage our global platform for front-end hydraulic cylinders to expand into complementary products. We will seek to cross-sell complementary products to our existing customer base by leveraging the distribution channels and service network of our core front-end hydraulics products. This will also allow us to serve a greater proportion of customers requirements, thereby further improving our relationships with our customer base and strengthening our competitive position. For example, we are expanding our truck-mounted cranes business by utilising our existing hydraulics platform in Brazil, China and India. We are also introducing underbody hydraulic cylinders to complement the hydraulic range and position ourselves as a full solutions provider. Examples of other complementary products into which we intend to expand further are Cranes into India and China as well as hook loaders in India and South America. We also seek to introduce our static and mobile compactors to the Indian & other emerging markets. Capitalise on opportunities in environmental services. We believe that the rapid increase in waste generation arising from growing urbanisation in China, India and Brazil coupled with increased environmental awareness will create significant demand for more efficient waste disposal equipment in these markets. We are targeting this market with a product suite comprised of waste compactors and RCBs as well as our container handling systems (hook and skip loaders), which we generally sell as part of a complete waste collection and transportation solution. While our customers in the environmental services market (municipalities and third party waste management contractors) are different from those we serve in our core front-end hydraulics cylinder market, we expect to be able to utilise our core technical know-how in hydraulic systems and our countrylevel organisations to grow these markets. We believe our strategy of pursuing further growth in the environmental services industry will also provide greater diversification benefits to our business. 20

21 QUARTERLY REPORT FOR THE THREE MONTHS AND TWELVE MONTHS ENDED 31 DECEMBER 2014 (unaudited) Streamline our global supply chain. We believe we have opportunities to further optimise our global supply chain and lower our cost base. The location of our manufacturing facilities in low cost countries present opportunities for local sourcing of high-quality components, raw materials and supplies at low cost, thus reducing our costs and improving the results of our operations. We are sourcing increasingly from local suppliers close to our manufacturing facilities or encourage our existing suppliers to establish local manufacturing facilities close to us in key markets. We are starting to capitalise upon vertical integration opportunities for in-house manufacturing of certain key hydraulic components, including double-acting cylinders valves, air controls, pumps and tanks. This may be appropriate where we believe that investing in in-house capacity would improve the quality of these components and result in cost-savings. During 2014, the supply chain in Europe was critically reviewed and areas for improvement identified. A new supply chain structure was introduced while inventories and warehouses are being streamlined. Products We develop, produce, assemble, market and sell an assortment of hydraulic products and solutions for application in heavy-duty equipment used in the mining, infrastructure and construction and environmental services industries. Our product range includes tipping solutions (front-end hydraulic cylinders a, wet kits & tipper bodies) cranes, hook and skip loaders, compactors and RCBs, moving floors and tipper bodies. Our main products, front-end hydraulic cylinders and wet kits, accounted for 55.7% of revenue for the year ended 31 December Cranes, tipper bodies, hook and skip loaders, compactors and RCBs and other products accounted for 13.7%, 10.5%, 8.6%, 4.8% and 6.7% of revenue for the year ended 31 December 2014, respectively. The table below sets forth revenue for our key products as a percentage of revenue for the years ended 31 December 2014 and 2013: For the years ended 31 December USD % USD % (USD in thousands, except percentages) Hydraulics 341, % 370, % Tipper bodies (1) 64, % 54, % Cranes 83, % 79, % Hook and Skip loaders 52, % 50, % Compactors and RCBs 29, % 23, % Accessories 30, % 29, % Full Built Vehicles 11, % 2, % Total 613, % 610, % (1): Sale of tipper bodies excludes the sale of hydraulic components and wet kits installed as part of tipper bodies. Hydraulic Cylinders and Wet Kits Our hydraulic cylinders and wet kits business includes front-end hydraulic cylinders, customised wet kits and related components for tipper trucks. Cylinders are mounted on a truck or trailer chassis to raise or lower the tipper body. Our telescopic cylinders can be further categorised into front-end cylinders and underbody cylinders (two- and three-way). Underbody cylinders are only cost effective when three-way or side tipping capabilities are needed, whereas in all other situations, front-end cylinders are a more effective way to empty a tipper body. While our main focus is on front-end cylinders, we also serve the underbody market for customers in need of side tipping functions and are particular used in the agricultural segment. As we are positioning ourselves as a full tipping solutions provider we have launched an extensive range of underbody solutions to complete our tipping solutions offer and to enable us to further penetrate the agricultural market. Our front-end cylinders have a lifting capacity ranging from 5 to 90 tons (tipper body plus payload). We estimate our market share as approximately 40% in front-end hydraulic cylinders (or approximately 60% if the United States, where we have a limited presence, is excluded) in 2014 in terms of unit sales volume. 21

22 QUARTERLY REPORT FOR THE THREE MONTHS AND TWELVE MONTHS ENDED 31 DECEMBER 2014 (unaudited) Our underbody cylinders have a lifting capacity ranging from 2 to 40 tons (tipper body plus payload). We also design and manufacture in our Olbersdorf manufacturing facility a range of double-acting cylinders used in our production of compactors, RCBs, container handling systems and truck-mounted cranes. We have improved the operation of our cylinders through research and development. Examples of improvement include increased product durability designed to last the average life of a truck, as well as an improved design requiring 15% less oil volume for operation and progressive tube diameters that we believe have the best weight-to-lifting force ratio in the industry. We sell a range of wet kit components, such as pumps, tipping valves and oil tanks, that are used to operate hydraulic equipment in commercial vehicles. These components are either manufactured in-house or are produced by sub-contractors. In the latter case, the products bear our brand and are produced according to our quality specifications. These components follow a modular approach and can be combined to match any specific customer demand. By offering customers a complete kit, we ensure that the kit is designed and assembled using our expertise in the industry. In addition, we maintain the flexibility to adjust kits and components if truck manufacturers change their chassis design and to adjust tank volumes to coincide with technological advancements in hydraulic cylinders and new models. Our front-end hydraulic cylinders, wet kit components and underbody cylinders are all sold under the Hyva brand. Our hydraulic cylinders are used mainly for tipper bodies in the mining, infrastructure and construction, environmental and agricultural industries. Cranes We sell fixed cranes and rolloader cranes, which represented 12.2% and 1.5% of revenue for the year ended 31 December 2014, respectively. Our range of truck-mounted cranes consists of both telescopic and articulated cranes. The primary use for mounted cranes is to load and unload materials, and sales growth is predominantly driven by infrastructure and construction end-markets. Other end-market applications include maintenance of oil or gas installations and electricity pylons and other marine and agricultural applications. We believe that we are among the top four players in the global market for truck-mounted cranes, with an estimated market share of approximately 5% in terms of unit sales volume in Cranes are currently our second largest product group, with a contribution to revenue of approximately 13.7% for the year ended 31 December We sell and market our fixed cranes under three different brands: HyvaCrane, Amco Veba and Ferrari. Our rolloader cranes are sold under the Kennis brand. The Amco Veba and Ferrari brands are sold via their respective agents around the world. HyvaCrane is sold through existing subsidiaries and agents. We leverage our existing routes to market by marketing cranes through the same distribution channels and to the same customer base as our existing cylinder and container handling businesses. Also as of 31 December 2014, approximate 50% of Amco Veba s sales in units were generated through the Hyva network. Tipper Bodies We began manufacturing tipper bodies in India to introduce front-end hydraulic cylinders to the Indian market. Before our entry into the market in 1996, the tipper truck market in India was largely composed of small tipper bodies with underbody cylinders. Tipper bodies are currently our third largest product group, with a contribution to revenue of approximately 10.4% for the year ended 31 December Demand for tipper bodies is directly related to the demand for tipper trucks. Our tipper bodies are predominantly used in the mining and infrastructure and construction industries. These industries are heavy users of tipper trucks, which shortens the replacement cycles for tipper trucks and hence our tipper bodies as well. We produce tipper bodies for clients such as Tata Motors, Ashok Leyland, Daimler, Scania, Volvo-Eicher and MAN-Force, predominantly in India. Such clients are original equipment manufacturers that utilise our tipper bodies in the tipper trucks that they manufacture. We sell our tippers bodies as part of a kit that includes our hydraulic cylinders and wet kits. 22

23 QUARTERLY REPORT FOR THE THREE MONTHS AND TWELVE MONTHS ENDED 31 DECEMBER 2014 (unaudited) Our tipper bodies are currently manufactured exclusively in our manufacturing facilities in Pune, Bangalore and Jamshedpur, close to our customers and supply source. The majority of components used for manufacturing the tipper bodies are locally sourced in India. Our manufacturing facility in Mumbai focuses on hydraulic cylinders and valves. Hook and Skip Loaders Our container handling systems provide solutions using hook and skip loading systems. These systems are used for the loading and unloading of platforms, such as tipping bodies or compactors, onto trucks or trailer chassis. We sell our products under the name HyvaLift. We believe HyvaLift is among the top three manufacturers of container handling systems with an estimated stable market share of approximately 15% in 2014 in terms of unit sales volume. It is currently our fourth largest product group with a contribution to revenue of approximately 8.6% for the year ended 31 December HyvaLift s hook loaders are sold with either a sliding main arm (boom) or a combination sliding and knuckle arm. The sliding arm system has a lifting range of 3 to 40 tons, and the lifting range of the combination system is 18 to 20 tons. Both systems are suitable for a range of vehicles and can transport container lengths of approximately 2 meters up to 10 meters. HyvaLift skip loaders are sold as systems with fixed or telescopic arms (with a lifting range of 6 to 18 tons) or knuckle arms (with a lifting range of 12 to 18 tons). The skip loaders can transport containers from 2 cubic meters up to 20 cubic meters. In addition to stand alone container handling systems, Hyva also offers various combinations of container handling systems and cranes. HyvaLift s container handling systems are used in a variety of different end-markets, such as the environmental services (loading and unloading of portable compactors), agricultural, defense, fire department and transport industries. Compactors and RCBs We began selling compactors and RCBs in Compactors allow the collection and compression of large quantities of waste and are offered in both static and portable forms. Portable compactors have a capacity of 20 to 40 tons per work day of day shifts, and static compactors have a capacity of 50 to 500 tons of waste per day. This product group contributed approximately 4.8% to revenue for the year ended 31 December 2014 and mainly services the environmental services end-market. HyvaPress compactors have integrated intelligent electronic controls, with a self-diagnosis system, remote monitoring and management tools. Portable compactors can be transferred with HyvaLift hook loaders to larger transfer systems or waste-processing sites. Our RCBs are bodies that can be mounted on trucks through assembly. They have maximum capacity of 30 tons per day of waste collection and are used primarily for residential waste collection. These products are predominantly used in the Chinese and Indian markets and have been specifically adapted for the composition of municipal solid waste in these markets, which consists of a greater percentage of organic waste as compared to waste streams of more developed countries. Other Products and Services In addition to our main product groups, we also sell other specialised hydraulic solutions and components, such as moving floors, valves and body locks. For example, HyvaFloor is a flexible hydraulic moving floor system. This system enables transport of bulk material, pallets, agricultural products or general cargo by providing a horizontal loading and unloading solution that can be used in trailers or as a stationary application. These other products, such as HyvaFloor, represented approximately 6.8% of revenue for the year ended 31 December Our product offering is complemented by the sale of spare parts and maintenance and renovation packages, advice and commissioning and installation services. These products and services provide complete services for our products throughout the supply chain. 23

24 QUARTERLY REPORT FOR THE THREE MONTHS AND TWELVE MONTHS ENDED 31 DECEMBER 2014 (unaudited) After-Sales Service Our extensive local and worldwide service network provides support and reassurance to our customers that we will be available to assist them promptly. Our service network includes full online integration. Our customers are able to register their products and locate the nearest dealer through our website. The HyvaCare network consists of over 1,000 dealer service partners in approximately 130 countries with the capability to provide after-sales service through HyvaCare-approved service workshops. We also have our own service network in more than 27 countries. Our service partners receive standardised training worldwide. There is at least one official Hyva service partner in every country in which our products are sold. Our policy is to respond to service requests within 24 hours and provides replacements parts within 48 hours. We also provide solutions to technical questions for all our products. This support can be provided on site, by phone or by remote diagnostics as required. Geographic Areas From a trading company in the Netherlands in 1979, we have developed into a global company, with a wholly owned sales, distribution and service network in 27 countries and selling directly to end-users or indirectly via agents and importers in approximately 130 countries. We have a track record of geographical diversification, with our first international venture initiated within two years of our founding. We expanded throughout Western Europe as from 1981 and Eastern Europe in the 1990s. Beginning in 1991, we shifted our expansion into the emerging markets such as Asia (entry in 1991 through Malaysia) and Latin America (entry in 1995 through Brazil). We now have significant market operations in key emerging markets, including China, India and Brazil. As a result of our expansion into the emerging markets in the past years, there has been a shift in the percentage of revenue contribution from the more mature economies in Europe to the more rapidly growing economies in the emerging markets. For the year ended 31 December 2014, almost 50% of our sales were generated in Asia Pacific, and about 60% of our net sales were attributable to products sold in emerging markets, including China, India, Brazil and other emerging market jurisdictions. The table below sets forth revenue by region on an originating sales entity basis 3 as a percentage of revenue for the years ended 31 December 2014 and 2013: For the years ended 31 December USD % USD % (USD in thousands, except percentages) China 173, % 197, % India 92, % 79, % Other Asia 39, % 39, % EMEA 243, % 223, % Americas 64, % 70, % Total 613, % 610, % A description of our key geographical operations is provided below. China We estimate that we have a 35.5% market share 4 for front-end hydraulic and underbody cylinders in China in terms of unit sales volume. With four production facilities, 8 sales offices and approx. 200 service points, China is one of our most important markets, and is the single largest contributor to our revenue. In China, we are sourcing all of our components locally to optimise our procurement costs. In 2007, we started providing solutions for the environmental services segment. By introducing advanced European technology, we believe we have become 3 Originating sales entity basis has been adopted in 2014 instead of end-destination basis 4 Market share calculation methodology for has been revised in 2013 to include all tipping solutions while only front end hydraulic cylinder market was considered in the past for market share calculation purposes. 24

25 QUARTERLY REPORT FOR THE THREE MONTHS AND TWELVE MONTHS ENDED 31 DECEMBER 2014 (unaudited) a leading provider of solutions in the high-end waste management market in China. Approximately 14% of revenue in China for the year ended 31 December 2014 was generated in this end-market. In China, we sell our hydraulic products and solutions predominantly to body and trailer builders, assuring service and spare parts supply for these customers through our dealer network. We sell portable and static compactors and other environmental solutions through our network of agents, who are located throughout China, and to end-users directly. We entered the Chinese front-end hydraulic cylinders market earlier than our competitors in 1999 and started selling our products in Our first mover advantage has enabled us to develop and maintain a market leadership position in China. Currently, the overall market for hydraulic cylinders used in tipper trucks is highly consolidated in China. Based on management estimates, we believe we are the market leader with the above mentioned market share. The next five largest competitors are local and, according to our management estimates, collectively account for approximately 31% of the market share in front-end hydraulic cylinders based on unit sales volume in India In 1996, we established an Indian subsidiary and in 1997 opened a manufacturing facility (our second manufacturing facility outside of Europe at that time). We primarily sell and manufacture tipper bodies (including the hydraulic kits) in India. We initially started with importing many components from Europe for our production in India, but now source most of our components locally to take advantage of lower procurement costs. We initially launched our Indian operations by focusing on tipper bodies (into which front-end hydraulic cylinders are integrated) to create a market for our front-end hydraulic cylinders. The market entry strategy incorporated an education process that included expanding the product range to build and market tipper bodies with front-end cylinders to convince customers that frontend cylinders were faster and more economical than underbody cylinders. We estimate we have an 88% market share in India. We opened two manufacturing facilities in Bangalore and Jamshedpur in Our first milestone in entering the Indian waste handling market came in 2007 with the supply of 10 stationary compactors mounted on trailers to the Mumbai Municipal Corporation. Currently, market penetration of compactors and RCBs is still relatively low given different waste processing requirements in India compared to our other markets, such as China. In India, our main customers are original equipment manufacturers such as Tata Motors, Daimler, Ashok Leyland and Volvo-Eicher and bodybuilders. As of 31 December 2014, we had 5 sales offices, about 30 dealers and 6 dealer branches dealers in India. Other Asia (including Pacific) We started selling into the Asia Pacific region in Due to an increasing number of clients in Asia, we established our first subsidiary outside Europe in Malaysia in This enabled us to maintain customer proximity and better manage the time difference between Europe and Asia. Currently, our distribution network in the region includes three subsidiaries responsible for domestic sales (Australia, Malaysia and Thailand) and 27 agents. Our products are sold in approximately 20 countries in the Asia Pacific. Key countries in terms of sales contribution include Indonesia, Taiwan, Thailand, South Korea, Australia and Malaysia. In our other Asia Pacific markets, we are the market leader for front-end cylinders with a market share of approximately 80%. 25

26 QUARTERLY REPORT FOR THE THREE MONTHS AND TWELVE MONTHS ENDED 31 DECEMBER 2014 (unaudited) EMEA Europe Our presence in Western Europe dates back to our foundation and our early decision to expand operations outside the Netherlands. Beginning in 1981, we established subsidiaries in Western European countries, including Belgium, France, the United Kingdom, Germany and Spain. Western Europe remains one of our main markets. From the 1990s, we expanded into Eastern Europe as a part of our globalisation strategy to grow in emerging markets and extend our service network in our customers locations. We established agents in countries that opened new markets for us, many of which developed into local partnerships. We established a subsidiary in Russia in 2002 and acquired our distributors in Hungary (Eurotruck) and Romania (Inscut) in In Western and Eastern Europe, we distribute our products primarily through our own subsidiaries. In Europe our key customers are Wielton, Schmitz, Gotha, Waf, Benalu, Carnehl, Volvo, Scania and Lag. We have manufacturing facilities in Germany and Italy. Components for cylinder production in our plant in Germany are sourced in Italy, Korea, India and Eastern Europe. Components for container handling and cranes produced in Italy are mainly purchased in Europe. We believe we are the market leader in front-end hydraulic cylinders in Europe with a market share 5 of approximately 32% based on unit sales volumes, according to management estimates. There are mainly 4 key competitors in Europe specialising in hydraulic cylinders. Middle East and Africa We entered the Middle East market in We used to largely sell our products by developing relationships with local agents in the Middle East. With an approximately 60% market share in terms of unit sales volume and 21 agents selling our products in the region, we are the market leader for front-end hydraulic cylinders in the Middle East. We established a subsidiary in Morocco in 2003, and we believe that we are able to use our first-mover advantage to establish our products as the industrial standard and to further expand in the African market. Furthermore, we customise our products to offer less complex solutions that address local market needs. In 2012 we have set up a regional structure for the Middle East and Africa with a sales and distribution centre in Dubai. After establishing a new subsidiary in South Africa in 2013, in 2015 we are planning to set up a subsidiary in Turkey. This allows us to be closer to our customer and thereby significantly reduce lead time as well as increase customer satisfaction leading to a significant sales increase. The extensive dealer and agents network is managed from Dubai. Our distribution network in the Middle East & Africa currently includes 3 subsidiaries (Morocco, Dubai and South Africa), 22 Hyva agents and 25 Amco Veba/Ferrari agents who are dispersed in the region. These agents sell to a variety of customers including OEMs, bodybuilders and end-users, such as governmental institutions or commercial environmental services companies. In the Middle East and Africa, we are the market leader for front-end cylinders with market share 5 of approximately 27% based on unit sales volume, as already mentioned above, and with 6 main competitors selling into in the region. 5 Market share calculation methodology has been revised in 2013 to include all tipping solutions while only front end hydraulic cylinder market was considered in the past for market share calculation purposes. 26

27 QUARTERLY REPORT FOR THE THREE MONTHS AND TWELVE MONTHS ENDED 31 DECEMBER 2014 (unaudited) Americas Our Americas region incorporates North and South America, of which the latter is by far the greater contributor to our revenue. We entered the South American market in 1995 by establishing a subsidiary and opening a production facility in Brazil (our first plant outside of Europe). We estimate we have a market share 6 of approximately 6% in the front-end hydraulic and underbody cylinders market in Brazil. In 2014 we opened up a second factory in Brazil, dedicated to crane production for local markets. We entered the United States and Mexico in 2005 and 2008, respectively, and established a subsidiary in both countries. Originally, we focused on the sale of hydraulic telescopic cylinders in the U.S. and in 2008 we expanded into selling wet kits. Due to our historic focus on expanding in attractive emerging markets, we still have a relatively small market share (approximately 7.6% market share in tipping solutions based on unit sales volume) in the U.S. market. However, we still believe that the U.S. market provides an attractive opportunity, and we are seeking to grow our position in the market in the medium to long term. In Canada, we estimate that we have a market share of approximately 20% in front-end hydraulic cylinders market based on unit sales volume. In Mexico, we believe that there is an attractive opportunity to develop a market for front-end hydraulic cylinders as underbody cylinders are still a large proportion of all cylinders sold for tipping solutions and to introduce wet kits. In Brazil, we sell our front-end hydraulic cylinders mainly to bodybuilders. For exports to other Latin American countries, we use agents that have a presence in neighboring countries such as, but not limited to, Argentina, Venezuela, Colombia, Chile, Peru and Uruguay. For cranes, we sell directly to end-customers or through dealers. In the Americas, we currently have approximately 54 dealers and agents. In the United States, the majority of our customers are bodybuilders. Manufacturing Facilities We currently operate 13 manufacturing facilities based in five countries (China, India, Brazil, Germany and Italy). We have developed a lean manufacturing structure based on: Key performance indicators ( KPI ) reporting from all units on a weekly basis, including weekly production, efficiency, manpower, production hours per product and other data; Yearly manufacturing meetings (production / quality / research and development / purchasing) On-going improvements have included the introduction of new layouts, flow concepts, 8D and lean thinking. Drive quality performance requires the development of several quality management and tools application. In 2012, the 8D (8 Dimensions) problem resolution Corrective Action Report were introduced for basic Problem Ownership, Problem description, Containment, Root Cause Analysis, Corrective action, Preventive Action, Effectiveness measure and Closure. In Cores Tools on Quality Management were rolled out to all global Technical Centers and Manufacturing Plants. These 5 Core Tools are APQP Advance Product Quality Planning and Control Plan, FMEA Failure Mode and Effect Analysis. Applied on both stages, design and process risk, MSA Measurement System Analysis, SPC Statistical Process Control and PPAP Production Part Approval Process. In 2014, we focused on driving the applications of these 5 Core Tools to set the foundation of the quality management process in Hyva. Quality systems have been upgraded accordingly in every facility and direct correlation between manufacturing and field performance allows our engineers to continuously improve. This contributed to appreciable warranty savings. In 2014, Capital Equipment manufacturing operations have been consolidated into our crane manufacturing factory in Poviglio, Italy. The Kennis rolloader crane factory and the Hook- & Skip-loaders in the Netherlands therefore were closed in 2013 and 2014 respectively and 6 Market share calculation methodology has been revised in 2013 to include all tipping solutions while only front end hydraulic cylinder market was considered in the past for market share calculation purposes. 27

28 QUARTERLY REPORT FOR THE THREE MONTHS AND TWELVE MONTHS ENDED 31 DECEMBER 2014 (unaudited) production of the current line of rolloader cranes and Hookloaders were transferred to our Italian factory. Being close to the expertise, skills and experience embedded in the Centre of Excellence for Capital Equipment in Italy means faster product improvements and new product developments for our customers. Also, a consolidated manufacturing organization will generate significant benefits to our business by balancing the workforce and allows us to leverage and efficiently develop our supply base. Ultimately, this will reduce costs and increase our productivity. Finally, it also allows us to further intensify our drive on quality as well as our spares and accessories business. Our manufacturing facilities have a combined production capacity of 304,000 units for hydraulic cylinders, 4,300 units for cranes, 3,050 units for hook and skip loaders, 1,000 units for compactors and 15,000 units for tippers as of 31 December Our production capacity for hydraulic cylinders is approximately 172,000 units, 60,000 units, 45,000 units and 57,000 (incl approx. approx. 30,000 double acting capacity) units in China, India, Brazil and Germany, respectively. The diagram and table below provides further details concerning the hydraulic cylinder manufacturing facilities as of 31 December The manufacturing facilities, other than Mumbai, India, are currently leased. We believe our plants are located in areas with access to labour at competitive wage levels. 28

29 QUARTERLY REPORT FOR THE THREE MONTHS AND TWELVE MONTHS ENDED 31 DECEMBER 2014 (unaudited) Yangzhou (China) Yangzhou (China) [Leased] 12,400sqm manufacturing and 18,000sqm workshop area on 23,000sqm land Production of cylinders (pistons/covers) [Leased] 2,604sqm manufacturing and 4,284sqm workshop area on 10,000sqm land Production of cylinders (stages/assembling/painting) Yangzhou (China) Yinbao (China) [Leased] 11,000sqm manufacturing and 12,000sqm workshop on 31,400sqm land Production of hookloaders, portable compactors, static compactors [Leased] 10,600sqm manufacturing and 10,800sqm workshop area on 46,000sqm land Refitting of waste handling vehicles & crane vehicles Bangalore (India) Jamshedpur (India) [Leased] 12,000sqm factory building + 800sqm office on 18,000sqm production site Production of tippers [Leased] 6,000sqm factory on 12,000sqm land Production of tippers Mumbai (India) Pune (India) [Owned] 5,200sqm ground surface and 2,500sqm manufacturing area on first floor, constructed on 11,000sqm land Production of cylinders, tippers and RCB s Caxias do Sul (Brazil) [Leased] 219,912.9 sq ft plant area, 95,715 sq ft manufacturing area, 11,413 sq ft office and 112,784.9 sq ft open space Production of tippers and RCB s Caxias do Sul (Brazil) [Leased] 8,000sqm manufacturing and workshop area on 12,000sqm land Production of Hydraulic telescopic cylinders, wet kits, moving floors and rollertrack [Leased] 12,000sqm manufacturing and workshop area on 14,000sqm land Production of Cranes Poviglio (Italy) Olbersdorf (Germany) [Leased] * 2 plants Manufacturing locations of 7,300sqm and 3,700sqm on sqm site sqm R&D building Production of Amco Veba / Ferrari / Hyva cranes [Leased] 8,200sqm production facility on 24,800sqm site Production of cylinders (front-end and double acting) Research and Development We emphasise research and development in order to support product development and provide our customers with innovative solutions adapted to local market needs. We believe the value of our research and development function is demonstrated through recent product improvements, such as faster, lighter and stronger hydraulic cylinders, new product lines for our crane and hook and skip loader businesses and the support of major, strategically planned initiatives such as the penetration in environmental services. In Hydraulics, every single component has reached a strength and quality level that is incomparable in the market. Products have been developed to 29

30 QUARTERLY REPORT FOR THE THREE MONTHS AND TWELVE MONTHS ENDED 31 DECEMBER 2014 (unaudited) combat the harsh conditions encountered in the Mining sector. We manage our product and service innovation through our Centres of Excellence. Currently, we have seven of these Centres worldwide, coordinated centrally from our corporate center in Alphen aan den Rijn. As of 31 December 2014, we employed 141 engineers worldwide (research and development and application engineering), of which about 80 FTE (full-time equivalent) were engaged in research and development, with the remainder devoted to application engineering. We believe that locating these Centres close to our different production facilities around the world has enabled us to develop close relationships among our research and development, product management and production teams. Each Centre is responsible for a particular product group and our engineers are working daily to specify customer needs and translate these into requirements and priorities for engineering. For example, Hyva in India is responsible for tipper bodies, and Hyva in China is responsible for compactors. In 2014 significant investment in R&D has also been made, with enhancements to our three centres of excellence (the Netherlands, China and Italy), in design and testing. New and improved processes introduced in R&D include IP process, NPD gate process, industrial design and rapid prototyping. In 2014 we continued to strongly connect the engineering centers by professionalizing working methods, connecting the Hyva engineering world by a global product data management system and by reinforcing the teams with new resources, an engineering director for the waste management solutions and the hiring of a Chief Technical Officer who is ultimately responsible for all engineering activities in Hyva Group. Competition We compete in each of our markets based on our product, brand, after-sales services, reliability and price. Currently, none of our competitors operates in each of the markets in which we sell our products. Rather, we compete mainly with local competitors in each of our geographic markets. For a discussion of the competitive landscape in each of our geographic markets, see Geographic Areas. Intellectual Property We own patents relating to technologies used in waste disposal vehicles, compression and valve design, although most of our product designs are not protected by patents. We have various registered and unregistered trademarks and licenses that are of material importance to our business. This includes trademarks that protect our trading names and logos. We believe our ownership of intellectual property is adequately protected in customary fashions under applicable law in the majority of jurisdictions in which we operate, and we balance the risks of not holding patents against the costs involved in applying for and protecting a patent over its lifetime. No single patent, trademark or license is critical to our overall business. Suppliers In order to support and manage the global network of suppliers, we have developed a Lead Buyer structure supervised and managed by the Group Strategic Sourcing Director. The goals of this structure are to benefit from new supply sources in order to facilitate sourcing from lowcost countries, for example by initiating and promoting localisation projects. Each Lead Buyer is globally responsible for a specific product or product family (e.g., tubes, pumps, castings) or for a strategic supplier. We plan to increase the proportion of purchases sourced from low-cost countries through ongoing localisation initiatives (identification and development of suppliers near our production facilities). We have developed our supply chain in close cooperation with key suppliers. We seek multiple supply sources so that we are not dependent on any single supplier for our raw materials and other components. This helps minimise disruptions to our manufacturing facilities and supply chain. We increasingly source from local suppliers close to our manufacturing facilities and have encouraged our existing suppliers to establish local manufacturing facilities near us in key markets. In 2013, the number of suppliers has been significantly reduced, a sourcing board was established and we have e-bidding and e-purchasing. In 2014, the purchasing and procurement organisation was awarded with two of the most prestigious awards at the Procurement Leaders 2014 Awards for Asia Pacific region. 30

31 QUARTERLY REPORT FOR THE THREE MONTHS AND TWELVE MONTHS ENDED 31 DECEMBER 2014 (unaudited) The primary materials that we use in our manufacturing process are steel-based components, including steel DOM tubes. We also purchase pumps and electrical equipment and other semiand fully-processed materials. Marketing Our marketing teams around the world work in close collaboration with each other and use both traditional and new media to communicate with customers and the Hyva organisation. In 2014 Hyva s participation in exhibitions continued as a way of showcasing its extensive range of products together with its commitment to safety, environment and innovation. Exhibits were mounted at 17 locations around the world. Key exhibitions included the IAA in Germany, and exhibitions in Russia and Dubai. Internet-based initiatives are increasingly important in our global marketing efforts and 23 countries have their own local websites. Our online interactive i-catalogue, giving registered customers access to our products and services customised to local requirements, has grown and is available to all customers. Social media is being investigated and tested as a channel to improve both internal communications for group projects and information sharing and external communications through more direct engagement with customers. Marketing support is also provided through the more traditional activities of exhibitions, advertising, press releases and relations, brochures and an internal magazine, the Hyva Magazine. Sales and Distribution We leverage our global distribution network of dealers, agents and subsidiaries through a combined sales model, and therefore we distribute our products through a number of channels. We sell our products to bodybuilders, agents, OEMs, dealers and directly to end-users of our products. The particular distribution channel that we use in each market is adapted to the specific conditions that vary in each of the markets in which we operate. For example, in many of the markets in which we operate, we do not produce and sell tippers, because to do so would compete with bodybuilders, who are generally large purchasers of our products. In some cases, such as Scania and Volvo, sales for a specific OEM account are coordinated by a key account manager with support from our local subsidiaries. Compensation agreements for the distributors and agents are based on sales, margin, a commission agreement or a combination of both, depending upon the products and end customer. Our main agents, such as AFI, Hytec and HSK in Korea have worked with us for many years. Our revenue split by sales channel (Bodybuilders, OEMs, dealers, agents and end-users) has remained fairly stable compared to prior years. As of 31 December 2014, we employed 519 full time employees for sales, marketing, customer service, application engineering, R&D and after-sales service who have day-to-day customer interface. These employees are located near our customers in various locations around the world. Customers We sell our products to the following: Bodybuilders We sell hydraulics to bodybuilders who manufacture tipper truck bodies for truck manufacturers (OEMs) and truck dealers. Dealers and Agents We have a network of dealers in markets where we have subsidiaries. These dealers mainly sell spare parts and servicing products, although they may also sell other products in our portfolio. In countries where we do not have a subsidiary, agents are used as importers. These agents import Hyva goods and distribute them through their marketing networks. Original Equipment Manufacturers (OEMs) OEMs purchase hydraulics or tipper bodies from us. Direct customers These are sales directly to end-users, predominantly consisting of compactors, cranes and hook and skip loaders. In each market in which we operate, we typically sell to one type of customer. For example, in India, where our most significant customers are OEMs, we rely relatively less on sales to dealers or to end-users. 31

32 QUARTERLY REPORT FOR THE THREE MONTHS AND TWELVE MONTHS ENDED 31 DECEMBER 2014 (unaudited) Employees As of 31 December 2014, we employed 2,152 full-time employees, pretty much stable compared to 31 December We segment our employees as direct or indirect employees. The majority of direct employees (929 in total) worked in production, with the remainder working in workshops where they carry out mounting (cranes and hook loaders), maintenance and repair operations. The majority of indirect employees (1,223 in total) worked in sales, logistics, research and development and engineering, with the balance being dispersed over various other back-office functions. In addition, as of 31 December 2014, we employed approximately 955 contractors, mainly in China and India, as direct and indirect workers in the production and logistic departments. The following chart shows our employees by region as of 31 December 2014: Employees by Region as of 31 December 2014 Americas, 228, 10% China, 618, 29% EMEA, 581, 27% RoA, 104, 5% India, 621, 29% We have collective bargaining contracts with labor unions in Italy, Brazil and the Netherlands and we comply with all local labour requirements related to these collective agreements. On a global basis, approximately 20% of our employees are subject to the terms of collective bargaining contracts. We believe that we have satisfactory relations with our unions and, therefore, anticipate reaching new agreements on satisfactory terms as the existing agreements expire. Property, Plant and Equipment We operate from approximately 30 individual sites worldwide, and have two freehold sites, including in La Croix Saint Ouen, France and Kontich, Belgium. All other sites are leasehold, including the manufacturing facility sites (other than Mumbai, India, where the building is owned but the appurtenant land is leased for a period of 95 years). Insurance We currently maintain liability insurance intended to cover claims and other liabilities that may arise in our business. We believe our global insurance plan is adequate and consistent with industry practice, and our insurance coverage is at a level that we consider to be reasonable in light of the risks typically faced by companies conducting the same or similar business as ours in the markets in which we operate. In particular, we have insurance policies relating to public and products liability, property damage, directors and officers liability and credit insurance. 32

33 QUARTERLY REPORT FOR THE THREE MONTHS AND TWELVE MONTHS ENDED 31 DECEMBER 2014 (unaudited) Legal Proceedings From time to time, we have been involved in legal proceedings or other disputes arising in the ordinary course of our business, which primarily have related to disputes with our customers, suppliers and employees, and we have not incurred significant legal costs and expenses in connection with these legal proceedings. We have contingent liabilities with respect to legal claims arising in the ordinary course of business. However, we are not aware of any material legal proceedings (including arbitrations), claims or disputes currently existing, pending, or to the best of our knowledge, threatened against us that may have a material adverse impact on our business or our results of operations. Factors Affecting Results of Operations and Financial Condition and Qualitative Disclosure Regarding Market Risks Macroeconomic Conditions Our results of operations are directly affected by our sales volume, which in turn is a function of general macroeconomic conditions in each of the countries in which we operate, and the level of growth and demand in our end-markets such as the infrastructure and construction, mining and environmental industries. Competition Our competitors in the various markets in which we sell our products may exert downward pricing pressure on our products by undercutting the prices we offer to our customers and potential customers. Any downward pricing pressure on our products would impact our revenue and results of operations. We generally price our products at a higher price point when compared to our competitors in each of our markets. We believe that this pricing strategy is appropriate as our products have a strong reputation for quality and performance. Our extensive sales and after sales support network also supports this pricing strategy. Raw Materials Prices and Other Cost of Sales Components We use large amounts of steel-based components in manufacturing our products, including welded-steel DOM tubes, pumps, tanks and valves. We estimate that the cost of these steelbased components accounts for approximately 30% of our cost of sales. Historically, steel tube purchase prices were fixed pursuant to six-month contracts; however, due to high volatility in steel prices, contracts with shorter time frames (e.g., three months) have become increasingly common. Our cost of sales is also a function of other factors, including other raw materials costs, labor expenses and other expenses that we incur to operate our manufacturing facilities. In addition to prices of steel-based components, some of the key components to our cost of sales include: wages and benefits to employees; guarantee costs; non-production materials and supplies; and shipping and handling expenses. Significant increases or fluctuations in the prices or costs of these items could affect our results of operations as well as gross profit margins. We believe that our variable cost structure has helped us to vary our costs to match our revenues, which has enhanced our ability to maintain our margins. We have generally been able to align our fixed and operating costs with our revenues giving us increased ability to protect our margins. We seek to source our raw materials and other supplies from low-cost countries, and the regional shift in our business to the emerging markets has also allowed us to explore new sources for low-cost materials. 33

34 QUARTERLY REPORT FOR THE THREE MONTHS AND TWELVE MONTHS ENDED 31 DECEMBER 2014 (unaudited) Exchange Rates We operate internationally and are exposed to foreign exchange risk arising from changes in foreign currency exchange rates. Our reporting currency for purposes of our financial statements is the US Dollar. However, we incur expenses and have revenue in non-us Dollar-denominated currencies, such as the Chinese renminbi, Indian rupee, Australian dollar, British pound sterling, Euro and Brazilian real. We recognise foreign currency gains or losses in the period incurred. As a result, currency fluctuations between the US Dollar and non-us Dollar-denominated currencies in which we do business will cause us to incur foreign currency translation gains and losses. We cannot predict the effects of exchange rate currency exposure and the potential volatility of currency exchange rates. We also have certain investments in foreign operations whose net assets are exposed to foreign currency translation risk. While the amount of our non-us Dollar-denominated debt is limited, we seek to manage our currency exposure arising from the net assets of our foreign operations through liabilities denominated in the relevant foreign currencies. Currency fluctuations between US Dollar and non-us Dollar-denominated currencies arise in relation to both our international transactions and as a result of our holding of foreign assets as described above may affect our results of operations from period to period. Cash Flow and Fair Value Interest Rate Risk As we have no significant interest-bearing assets, our income and operating cash flow are substantially independent of changes in market interest rates. As a result of our (fixed rate) Notes, we have limited exposure to interest rate fluctuations with respect to our financing activities. However, the fluctuations in interest rates can lead to significant fluctuations in the fair value of our debt obligations, including the fair value of the Notes. The interest rates of finance leases as to which we are lessee are fixed at the inception of the lease. Such leases expose us to fair value interest rate risks. 34

35 QUARTERLY REPORT FOR THE THREE MONTHS AND TWELVE MONTHS ENDED 31 DECEMBER 2014 (unaudited) 3. CERTAIN CALCULATIONS This section should be read in conjunction with the section titled Presentation of Financial Information and Use of Non-GAAP Financial Information in this Quarterly Report. In order to calculate Consolidated EBITDA, Consolidated Non-Guarantor EBITDA and Consolidated Interest Expense, this report includes financial information for the Issuer for the twelve months period ended 31 December Hyva Global B.V. (Unaudited) Twelve month period ended 31 Dec 2014 USD '000 Consolidated EBITDA 76,588 Consolidated Non-Guarantor EBITDA 67,452 Consolidated Interest Expense 33,167 Consolidated Non-Guarantor Debt 8,125 The following table below sets forth the reconciliation from Reported EBITDA to Consolidated EBITDA. Hyva Global B.V. EBITDA calculation (Unaudited) Twelve month 31 Dec 2014 USD '000 Reported EBITDA 65,351 Transaction related expenses - Pro forma EBITDA 65,351 Restructuring costs 2,913 Other adjustments 5,220 Adjusted EBITDA 73,484 Realised FX gains/(losses) (671) Management fee 1,327 Interest income 1,085 Other adjustments 1,363 Consolidated EBITDA 76,588 35

36 QUARTERLY REPORT FOR THE THREE MONTHS AND TWELVE MONTHS ENDED 31 DECEMBER 2014 (unaudited) 4. SENIOR MANAGEMENT UPDATE As already announced in a public release made on 19 March 2015, Hyva has appointed a new CEO, Marco Mazzu, who will assume the position on 10 April, Mr Mazzu, a seasoned executive who has had leadership roles for the last 20 years with Fiat Auto, Case New Holland and Iveco, replaces Brice de La Morandiere, who has left Hyva. As an industry insider, Mr Mazzu s extensive knowledge of the commercial vehicle industry and global manufacturing perspective will be invaluable in taking Hyva to its next stage of development. Also, following the announcement made in our previous quarterly report dated 29 August 2014 about the reorganisation of the Operations function, Mr Sudhakar Kolli has been appointed Chief Technology Officer in January Mr Kolli joins Hyva with nearly 30 years of extensive R&D and innovation background acquired in Construction and Mining equipment sectors. Mr Kolli will be based in our Alphen (NL) Corporate Office, Finally, Mr Uwe Gohr, Chief Human Resources Officer, has left Hyva in January A reappraisal of the Group s needs in terms of HR expertise is under way in order to determine what organisation best supports the Group s future strategy. There are no other significant developments since 29 August 2014, the date of our previous senior management update. 5. DESCRIPTION OF OTHER MATERIAL INDEBTEDNESS AND CERTAIN FINANCING ARRANGEMENTS The following is a summary of the material terms of our principal financing arrangements. The following summaries do not purport to describe all of the applicable terms and conditions of such arrangements and are qualified in their entirety by reference to the actual agreements. The Notes The terms of the Notes are summarised in the Description of the Notes and the guarantees section set forth in the offering memorandum dated 17 March Revolving Credit Facility The Issuer has entered into a revolving facility agreement dated 13 April 2011 (the Revolving Credit Facility Agreement ) with Hyva III B.V. as the parent guarantor ( Parent Guarantor ), Bank of America, N.A., Goldman Sachs International, Nomura International (Hong Kong) Limited and Standard Chartered Bank (Hong Kong) Limited as mandated lead arrangers, Bank of America, N.A. as agent (the RCF Agent ), Wilmington Trust (London) Limited as security agent (the Security Agent ) and Bank of America, N.A., Deutsche Bank Netherland, N.V., and Standard Chartered Bank (Hong Kong) Limited as original lenders, that provides the Issuer with a revolving credit facility (the Revolving Credit Facility ). The Subsidiary Guarantors entered into accession deeds and acceded to certain obligations as additional guarantors under the Revolving Credit Facility Agreement on 13 April Under the Revolving Credit Facility, the lenders thereunder have agreed to provide up to USD 30,000,000 for the general corporate and working capital purposes of the Group (as defined in the Revolving Credit Facility Agreement). As of 31 December 2014, there is no utilisation of the Revolving Credit Facility. Repayments and Prepayments The Revolving Credit Facility matures four years (the Termination Date ) from the Completion Date (as defined below). However, issuer has successfully extended the Revolving Credit Facility Agreement for a period of six months from April 2015 to Oct Under the terms of the Revolving Credit Facility Agreement, the Issuer may voluntarily prepay its utilisations and/or permanently cancel all or part of the available commitments under the Revolving Credit Facility in a minimum amount of USD 1.0 million by giving five business days (or such shorter period as the required majority of lenders under the Revolving Credit Facility Agreement agree) prior notice to the RCF Agent. Subject to certain exceptions, amounts repaid may be re-borrowed. The Revolving Credit Facility requires mandatory prepayment and cancellation in full or in part in certain circumstances, including in the event of: 36

37 QUARTERLY REPORT FOR THE THREE MONTHS AND TWELVE MONTHS ENDED 31 DECEMBER 2014 (unaudited) a) a Change of Control (as defined in the Revolving Credit Facility Agreement) or a sale of all or substantially all of the assets; or b) a Notes Repurchase (as defined in the Revolving Credit Facility Agreement) which results in less than 50% of the original issued amount of the Notes remaining outstanding (the Trigger Amount ) and any further reduction of the amount of the Notes remaining outstanding beneath the Trigger Amount (other than pursuant to a refinancing which complies with certain conditions); in each case, at the option of any lender (an RCF Lender ) who has elected to have its loans prepaid and its commitment cancelled. In the case of clause (b), such prepayment and cancellation of commitment shall be pro rata to the reduction of the Notes in the same proportion as (x) the amount by which the aggregate principal amount then outstanding under the Notes is less than 50% of the original issued amount of the Notes bears to (y) 50% of the original issued amount of the Notes. Availability The Revolving Credit Facility is available for utilisation from and including 13 April 2011 (the Completion Date ) to and including the date which is one month prior to the Termination Date, provided that the Revolving Credit Facility shall be cancelled in full if a Special Mandatory Redemption has occurred. As also mentioned below in the Covenants paragraph, the Group meets the covenants provided in Revolving Credit Facility ( RCF ) and therefore RCF is available. The Group has not used the facility for more than 3 consecutive days over the last 18 months. The RCF, that originally matured on 13 April 2015, has recently been extended for a period of 6 months. Interest and Fees The Revolving Credit Facility bears interest at a rate per annum equal to LIBOR or (for loans in euro) EURIBOR plus certain mandatory costs and a margin of 3.75% per annum. The margin may be reduced by reference to a leverage ratio (as detailed in the Revolving Credit Facility Agreement). The Issuer is also required to pay a commitment fee, quarterly in arrear, on available but unused commitments under the Revolving Credit Facility at a rate of 40% of the applicable margin. The Issuer is also required to pay an arrangement fee and certain fees to the RCF Agent and the Security Agent in connection with the Revolving Credit Facility. Security and Guarantees The Issuer is the original borrower under the Revolving Credit Facility. The Revolving Credit Facility is guaranteed by the Parent Guarantor, the Subsidiary Guarantors (together with the Parent Guarantor, the Guarantors ), and secured by security over the same assets that secure the Notes. Covenants The Revolving Credit Facility Agreement contains customary affirmative and negative covenants (including restrictive covenants that are substantially similar to those contained in the Indenture), subject to certain agreed exceptions. The covenants include a restriction on any member of the Group from making directly or indirectly any voluntary prepayment, purchase, defeasance, redemption, acquisition or retirement of the Notes if any event of default under the Revolving Credit Facility Agreement is continuing or would result from such prepayment, purchase, defeasance, redemption, acquisition or retirement. In addition, members of the Group may only make a prepayment, purchase, defeasance, redemption, acquisition or retirement of the Notes following the occurrence of a Change of Control if the Group is in compliance with its obligations under the Revolving Credit Facility Agreement to have offered to cancel the commitments and repay the participations of the RCF Lenders following the occurrence of a Change of Control and has cancelled the commitments and repaid the participations of those RCF Lenders who have accepted such offer within 30 days of the occurrence of a Change of Control. As a condition to utilising the Revolving Credit Facility or to the extent that there are any outstanding thereunder at the end of any test period or the relevant financial covenant reporting date, the Revolving Credit Facility Agreement also requires the Group to comply with a leverage 37

38 QUARTERLY REPORT FOR THE THREE MONTHS AND TWELVE MONTHS ENDED 31 DECEMBER 2014 (unaudited) covenant and cash flow cover covenant. The RCF Lenders may cancel the Revolving Credit Facility if such financial covenants have not been satisfied for two consecutive quarters. As at 31 December 2014, the Group meets the covenants provided in Revolving Credit Facility ( RCF ) and therefore RCF is available. The Group has not used the facility for more than 3 consecutive days over the last 18 months. Events of Default The Revolving Credit Facility contains customary events of default (subject in certain cases to agreed grace periods, thresholds and other qualifications), including a cross default with respect to an Event of Default under, and as defined in, the Indenture, the occurrence of which would allow the lenders to accelerate all or part of the outstanding utilisations and/or cancel their commitments and/or declare all or part of their utilisations are payable on demand and/or declare that cash cover in respect of ancillary facilities and outstanding letters of credit is immediately due and payable or is payable on demand and/or instruct the Security Agent to enforce the Transaction Security. Governing Law The Revolving Credit Facility is governed by English law although certain of the restrictive covenants and certain events of default, which are included in the Revolving Credit Facility and are substantially similar to those contained in the Indenture, will be interpreted in accordance with New York law (without prejudice to the fact that the Revolving Credit Facility is governed by English law). Intercreditor Agreement In connection with entry into the Revolving Credit Facility Agreement and the Indenture, the Parent, the Issuer, Wilmington Trust FSB as the Senior Secured Trustee, the Security Agent, other Revolving Credit Facility borrowers and the Guarantors from time to time in their capacity as Debtors (as referred to below), among others, entered into an intercreditor agreement on 13 April 2011 (the Intercreditor Agreement ) to govern the relationships and relative priorities among: (i) the RCF Lenders and the other parties to the Revolving Credit Facility Agreement; (ii) persons that accede to the Intercreditor Agreement as counterparties to certain interest rate hedging agreements (the Hedging Agreements, and such persons, which shall include the RCF Lenders and their affiliates acting in such capacity, the Hedge Counterparties ); (iii) persons that accede (including through a trustee on their behalf) to the Intercreditor Agreement as creditors in respect of certain loan, credit or debt facility or security (the Pari Passu Documents ) which are permitted to share in the Transaction Security with the rights and obligations of Pari Passu Creditors as provided for in the Intercreditor Agreement (the Pari Passu Creditors ); (iv) the Trustee on behalf of the holders of the Notes; (v) the Security Agent and (vi) certain intra-group creditors and debtors, including certain permitted refinancings and replacements of some or all of the foregoing. In addition, the Intercreditor Agreement regulates the relationship between the Issuer and its subsidiaries, on the one hand, and the Parent, on the other hand. In connection with the issuance of the Notes, the Trustee on behalf of the holders of the Notes, the Issuer and each Guarantor has become parties to the Intercreditor Agreement. The Parent, the Issuer and each of its subsidiaries that incurs any liability or provides any guarantee under the Revolving Credit Facility Agreement or the Indenture is referred to in this description as a Debtor and are referred to collectively as the Debtors. The Intercreditor Agreement sets out: the relative ranking of certain security granted by the Debtors; when enforcement actions can be taken in respect of certain indebtedness of the Debtors; turnover provisions; and when security and guarantees will be released to permit a sale of the Collateral. Unless expressly stated otherwise in the Intercreditor Agreement, the provisions of the Intercreditor Agreement override anything in the Revolving Credit Facility Agreement or the Indenture to the contrary. The preceding sentence as between any Senior Creditor and any Debtor or any member of the Group does not cure, postpone, waive or negate any default or 38

39 QUARTERLY REPORT FOR THE THREE MONTHS AND TWELVE MONTHS ENDED 31 DECEMBER 2014 (unaudited) event of default (however described) under any debt document as provided for in the relevant debt document. By accepting a Note, holders of the Notes are deemed to have agreed to, and accepted the terms and conditions of, the Intercreditor Agreement and instructed the Trustee to enter into the Intercreditor Agreement on their behalf. The RCF Lenders and the Hedge Counterparties are Super Senior Creditors. The holders of Senior Secured Notes (which includes the Notes and certain other indebtedness which is permitted under the Notes and/or used to refinance the Notes in whole or in part (the Senior Secured Notes )), the Trustee, certain additional senior secured creditors (if any) and related trustee (if any) and the Pari Passu Creditors are the Senior Secured Creditors and, together with the Super Senior Creditors, are the Senior Creditors. The following description is a summary of certain provisions, among others, contained in the Intercreditor Agreement. It does not restate the Intercreditor Agreement and you are advised to read that document in its entirety because it, and not the discussion that follows, defines certain rights of the holders of the Notes. Ranking and Priority The Intercreditor Agreement provides that the liabilities of the Debtors under or in respect of the Revolving Credit Facility Agreement (the Revolving Creditor Liabilities ), the Hedging Agreements (the Hedging Liabilities ), the Senior Secured Notes (the Senior Secured Liabilities ) and the Pari Passu Documents (the Pari Passu Liabilities ) rank in right and priority of payment pari passu and without any preference between them. The Intercreditor Agreement also provides that certain intra-group claims and certain claims of the Parent are subordinated to the claims of the Senior Creditors. The parties to the Intercreditor Agreement agree that the security provided by the Debtors ranks and secures the following liabilities (but only to the extent that such security is expressed to secure those liabilities) in the following order: first, the fees, costs and expenses owed to any agent for the RCF Lenders including the Security Agent (the Revolving Agent ) and the Trustee and/or any additional Senior Secured Trustee (together, the Senior Secured Trustees ) pari passu and without any preference between them; second, the Revolving Creditor Liabilities (other than the liabilities to any Revolving Agent referred to above) and the Hedging Liabilities pari passu and without any preference between them; and third, the Senior Secured Liabilities (other than liabilities to the Senior Secured Trustees referred to above) and the Pari Passu Liabilities pari passu and without any preference between them. Under the Intercreditor Agreement, all proceeds from enforcement of any security will be applied as provided below under Application of Proceeds. Permitted Payments The Intercreditor Agreement permits, among other things: in respect of Revolving Creditor Liabilities, Debtors to make payments at any time under the Revolving Credit Facility in accordance with the Revolving Credit Facility Agreement; in respect of Hedging Liabilities, Debtors to make payments to Hedge Counterparties in accordance with the relevant Hedging Agreement; in respect of the Notes, Debtors to make payments at any time in accordance with the Senior Secured Documents (as defined in the Intercreditor Agreement) and the Revolving Credit Facility Agreement; in respect of the Pari Passu Liabilities, Debtors to make payments at any time in accordance with the Pari Passu Documents; in respect of payments by the Issuer to the Parent, Debtors may make any payment that is not prohibited under the Revolving Credit Facility Agreement, each Senior Secured Indenture or the Pari Passu Documents, or if the Majority Senior/ Pari Creditors (as defined below) consent to that payment; payments to lenders under any intra-group loan agreement (together, the Intra-Group Liabilities ) if at the time of payment no acceleration event has occurred in respect of the Revolving Credit Facility, the Notes or the Pari Passu Liabilities or if such an acceleration event occurs prior to the Senior Discharge Date (as defined in the 39

40 QUARTERLY REPORT FOR THE THREE MONTHS AND TWELVE MONTHS ENDED 31 DECEMBER 2014 (unaudited) Intercreditor Agreement), with the consent of the Majority Super Senior Creditors and the Majority Senior/ Pari Creditors (each, as defined below) or if that payment is made solely to facilitate the payment of the Revolving Creditor Liabilities, the Hedging Liabilities, the Senior Secured Liabilities and the Pari Passu Liabilities. The Group is restricted from making directly or indirectly any voluntary prepayment, purchase, defeasance, redemption, acquisition or retirement of the Notes if any event of default under the Revolving Credit Facility Agreement is continuing or would result from such prepayment, purchase, defeasance, redemption, acquisition or retirement. In addition, members of the Group may only make a prepayment, purchase, defeasance, redemption, acquisition or retirement of the Notes following the occurrence of a Change of Control if the Group is in compliance with its obligations under the Revolving Credit Facility Agreement to have offered to cancel the commitments and repay the participations of the RCF Lenders following the occurrence of a Change of Control (as defined in the Revolving Credit Facility Agreement) and has cancelled the commitments and repaid the participations of those RCF Lenders who have accepted such offer within 30 days of the occurrence of a Change of Control. For the purposes of the Intercreditor Agreement: Majority Senior/Pari Creditors are the Majority Secured Noteholders, and if applicable and the aggregate amount of Pari Passu Debt is equal to or more than USD 50,000,000, the Majority Pari Passu Creditors; Majority Super Senior Creditors are Super Senior Creditors having at least 662/3 rd % of the aggregate of: (i) commitments under the Revolving Credit Facility Agreement and (ii) any amount which has become due to a Super Senior Creditor following the termination or close-out of any Hedging Agreement and any amount that would be payable under any of the Hedging Agreements which has not terminated or been closed-out if the date of calculation were an early termination date under such Hedging Agreements (where the relevant Debtor is Defaulting Party); Majority Secured Noteholders are holders of, where specified, the minimum majority required to vote in favour of any direction, approval, consent or waiver under the terms of the Indenture, and where not specified, not less than a simple majority in aggregate principal amount of Senior Secured Notes then outstanding under the Indenture and/or (in the case of Senior Secured Notes other than the Notes) each other applicable indenture (the indenture and such other indentures referred to as the Senior Secured Indentures ); and Majority Pari Passu Creditors are holders of, where specified, the minimum majority required to vote in favour of any direction, approval, consent or waiver under the terms of any Pari Passu Debt, and where not specified, not less than a simple majority in principal amount of Pari Passu Debt then outstanding. Security for Noteholders and other Senior Secured Creditors At any time prior to the Super Senior Discharge Date (as defined in the Intercreditor Agreement), the Senior Secured Creditors may not take, accept or receive from any Debtor or any member of the Group (as defined in the Intercreditor Agreement) the benefit of any security ( Transaction Security ), guarantee, indemnity or other assurance against loss in respect of the Senior Secured Liabilities other than: the common transaction security; any guarantee, indemnity or other assurance against loss contained in the Indenture or any other Senior Secured Indenture (in its relevant form), the Intercreditor Agreement, any common assurance given to all the secured parties in relation to their liabilities, and as otherwise contemplated in the context of security permitted to be granted to secure the Revolving Creditor Liabilities; or with the consent of the Majority Super Senior Creditors. Enforcement The Intercreditor Agreement provides that the Security Agent may refrain from enforcing the security interests in the Collateral unless instructed otherwise either by the Majority Super Senior Creditors or the Majority Secured Noteholders, and subject to any specific exclusions in the Intercreditor Agreement. 40

41 QUARTERLY REPORT FOR THE THREE MONTHS AND TWELVE MONTHS ENDED 31 DECEMBER 2014 (unaudited) Subject as provided below, prior to taking any enforcement action, the Revolving Agent and the Senior Secured Trustee (each a Creditor Representative ) must deliver a copy of its proposed enforcement instructions to the other Creditor Representatives and to the Security Agent. The Creditor Representatives shall consult with each other in good faith for a period of up to 30 days (or such shorter period as they may agree) from the date of receipt of the proposed enforcement instructions with a view to co-coordinating the enforcement instructions. If during the consultation period the Creditor Representatives are able to agree the manner in which enforcement action shall be implemented, they shall give joint instructions to the Security Agent to enforce the Transaction Security. If the Creditor Representatives have not been able to agree on an enforcement strategy by the end of the consultation period, the Security Agent shall follow the instructions as to how to enforce or to refrain from enforcing the Transaction Security given by the Senior Secured Trustee (if it is so instructed). In the event that a Senior Secured Trustee fails or is unable to give instructions as to how to enforce or to refrain from enforcing the Transaction Security within 30 days of the end of the consultation period, or a Senior Secured Trustee has given instructions as to how to enforce the Transaction Security but the Super Senior Creditors have not been fully repaid within the six-month period following the end of the consultation period, then the instructions of the Majority Super Senior Creditors shall prevail (with effect from the date of the earliest to occur of such events). The Creditor Representatives (acting on behalf of the Majority Super Senior Creditors or the Majority Senior/Pari Creditors, as the case may be) may at any time provide immediate enforcement instructions to the Security Agent and will not be obliged to consult (as described above) if the security interests in the collateral have become enforceable as a result of an Insolvency Event (as defined in the Intercreditor Agreement) or if an Event of Default (as defined in the Intercreditor Agreement) is continuing and the relevant Creditor Representative determines in good faith that to do so and thereby delay enforcement could reasonably be expected to have a material adverse effect on its ability to enforce the security interests in the Transaction Security or on the proceeds of realisation of the security interests in the Transaction Security. In such case, the Security Agent shall act in accordance with the enforcement instructions first received, provided that: (i) the Creditor Representative instructing the Security Agent gives notice of such enforcement instructions to the other Creditor Representative and notify the Security Agent of the delivery of such notice; and (ii) if the Senior Secured Trustee provides instructions after the Revolving Agent, the instructions from the Senior Secured Trustee shall prevail (provided such instructions are given no later than three months after the date the enforcement instructions of the Revolving Agent are delivered). Turnover The Intercreditor Agreement provides that if at any time prior to the Senior Discharge Date, subject to certain exceptions, certain intra-group creditors, the Parent or any Senior Creditor receives or recovers (in the case of a revolving creditor, a Senior Secured Creditor or a Pari Passu Creditor only in the case of the fourth bullet point below): any payment or distribution of, or on account of or in relation to, any liability owed by a Debtor which payment is prohibited under the Intercreditor Agreement or made in violation of Application of Proceeds below; (except with respect to certain set-off rights), any amount by way of set off in respect of any liability owed by a Debtor which does not give effect to a payment that is not prohibited under the Intercreditor Agreement; any amount (i) on account of or in relation to any liability owed by a Debtor after the occurrence of an acceleration event under the Revolving Credit Facility Agreement, the Indenture or the Pari Passu Documents or as a result of the enforcement of any Transaction Security (each, a Distress Event ) or as a result of proceedings against a Debtor or a member of the Group (other than after the occurrence of an Insolvency Event in respect of that Debtor or member of the Group), or (ii) by way of set off in respect of any liability of a Debtor after the occurrence of a Distress Event; the proceeds of any enforcement of any Transaction Security except in accordance with Application of Proceeds below; or (other than in relation to certain set-off rights) any distribution in cash or in kind or payment of, or on account of or in relation to, any liability owed by any Debtor or any member of the Group which is in violation of Application of Proceeds below and which is made as a result of, or after, the occurrence of an Insolvency Event in respect of that Debtor or member of the Group, then the relevant creditor; 41

42 QUARTERLY REPORT FOR THE THREE MONTHS AND TWELVE MONTHS ENDED 31 DECEMBER 2014 (unaudited) in relation to receipts or recoveries not received or recovered by way of set off, must hold that amount on trust for the Security Agent and promptly pay that amount to the Security Agent for application in accordance with the terms of the Intercreditor Agreement; and in relation to receipts and recoveries received or recovered by way of set off, must promptly pay an amount equal to that receipt or recovery to the Security Agent for application in accordance with the terms of the Intercreditor Agreement. Application of Proceeds The Intercreditor Agreement provides that amounts received by the Security Agent (acting on the instructions of an Instructing Group (as defined in the Intercreditor Agreement)) in connection with the realisation or enforcement of all or any part of the Transaction Security or a transaction in lieu of the enforcement of Transaction Security will be applied in the following order of priority: first, (i) in discharging any sums owing to the Security Agent and any receiver or any delegate appointed, (ii) in payment to the Revolving Agent for application towards the discharge of the fees, costs and expenses and other indemnification amounts owed to the Revolving Agent under the Revolving Credit Facility Agreement, and (iii) in payment to each Senior Secured Trustee and any paying, transfer or other agent for application towards the discharge of the fees, costs and expenses and other indemnification amounts owed to that Senior Secured Trustee or agent under the Indenture, on a pro rata basis and ranking pari passu between (i), (ii) and (iii) above and, in the case of (ii) and (iii) above, including any amounts arising in connection with any realisation or enforcement of the Transaction Security taken in accordance with the terms of the Intercreditor Agreement or any action taken at the request of the Security Agent in accordance with the Intercreditor Agreement; second, in payment to the Revolving Agent and the Hedge Counterparties for application towards the discharge of the Senior Arrangers Liabilities (as defined in the Intercreditor Agreement), the Revolving Creditor Liabilities and the Hedging Liabilities, on a pro rata basis and pari passu between them; third, in payment to each Senior Secured Trustee on behalf of the holders of the Senior Secured Notes (or representatives thereof) and the Pari Passu Creditors (or representatives thereof) for application towards the discharge of the Notes Liabilities (in accordance with the terms of the Senior Secured Documents) and of the Pari Passu Liabilities, on a pro rata basis and pari passu between them; fourth, if none of the Debtors is under any further actual or contingent liability under the Revolving Credit Facility Agreement, the Hedging Agreements, the Senior Secured Documents or the Pari Passu Documents, in payment to any person whom the Security Agent is obliged to pay in priority to any Debtor; and fifth, the balance, if any, in payment to the relevant Debtor. Release of the Guarantees and the Security Disposals The Intercreditor Agreement provides that in relation to the disposal of an asset which is being effected: on instructions from the requisite majority of Senior Creditors in circumstances where the Transaction Security is enforceable; by an enforcement of the Transaction Security; or after the occurrence of a Distress Event (as defined in the Intercreditor Agreement) by a Debtor to a person outside of the Group, the Security Agent is authorised to: release the Transaction Security over the relevant asset; if the relevant asset consists of shares in the capital of a Debtor, to release that Debtor and any of its subsidiaries from its liabilities in its capacity as a guarantor or a borrower (and certain other liabilities) under, without limitation, the Revolving Credit Facility, the Senior Secured Notes and the Pari Passu Documents and to release any Transaction Security granted by that Debtor over any of its assets and to release intra-group and Parent claims; if the relevant asset consists of shares in the capital of a holding company of a Debtor, to release that holding company and any of its subsidiaries from their liabilities in their capacity as a guarantor or a borrower under, without limitation, the Revolving Credit Facility, the Senior Secured Notes and the Pari Passu Documents, and certain other liabilities, and to release any Transaction Security granted by that subsidiary or holding 42

43 QUARTERLY REPORT FOR THE THREE MONTHS AND TWELVE MONTHS ENDED 31 DECEMBER 2014 (unaudited) company over any of its assets and any other claims and to release intra-group and Parent claims; if the relevant asset consists of shares in the capital of a Debtor or holding company of a Debtor (the Disposed Entity ) and the Security Agent is instructed by the requisite majority of senior creditors to dispose to another entity (the Receiving Entity ) all or any part of the liabilities of that Disposed Entity or its subsidiaries or holding company, enter into any relevant documentation provided that, if it is intended that the Receiving Entity should not be a Senior Creditor or secured party, the Receiving Entity shall not be treated as a Senior Creditor or secured party, and if it is intended that the Receiving Entity should be a Senior Creditor or secured party, then all (and not part) of the liabilities owed to Senior Creditors, and all or part of any other liabilities and Debtor liabilities should be disposed; and if the relevant asset consists of shares in the capital of a Debtor or holding company of a Debtor (the Disposed Entity ) and the Security Agent is instructed by the requisite majority of senior creditors to transfer to another Debtor (the Receiving Entity ) all or any part of the Disposed Entity or its obligations or any obligations of any subsidiary of that Disposed Entity in respect of liabilities owed to a Debtor or intragroup lender, transfer all or part of such obligations on behalf of the person to which they are owed and accept the transfer of those obligations on behalf of the Receiving Entity. Subject to certain exceptions, as conditions to a disposal as detailed above, the proceeds of the disposal must be received in cash in an amount sufficient to fully discharge the Revolving Creditor Liabilities and the Hedging Liabilities and, in relation to a disposal pursuant to the instructions of the Majority Super Senior Creditors, the disposal must be effected by public auction, court approved process or subject to obtaining an opinion of a financial adviser that the consideration for the disposal is fair and the claims of Senior Creditors against any Disposed Entity and its subsidiaries are unconditionally released and discharged concurrently with such disposal and not assumed by the purchaser or any affiliate thereof. In addition, if (a) a disposal relates to an asset of a Debtor or an asset which is subject to Transaction Security to a person or persons within or outside the Group, (b) that disposal is not prohibited by or is permitted under, respectively, (prior to the Revolving Facility Discharge Date) the Revolving Facility Documents (each, as defined in the Intercreditor Agreement), and (prior to the Senior Secured Discharge Date) the Senior Secured Documents, and (c) that disposal is not a disposal being effected in the circumstances described above, the Security Agent shall, at the cost of the relevant Debtor or the Company and without any consent, sanction, authority or further confirmation from any other party to the Intercreditor Agreement, (i) release the Transaction Security over that asset, (ii) where that asset consists of shares in the capital of a Debtor, release the Transaction Security over that Debtor s assets, or, to the extent they are at such time being disposed of, the assets of any subsidiary of that Debtor, and (iii) execute and deliver or enter into any release of security and any claim described in (i) and (ii) above and, if required, issue certificates of non-crystallisation of any floating charge or any consent to dealing that the Security Agent considers to be necessary or desirable. New Transaction Security If subject to certain qualifications (i) additional Senior Secured Liabilities incurred in accordance with the Intercreditor Agreement cannot be secured pari passu with, as applicable, the then existing or Senior Secured Liabilities, under the applicable existing security documents without the security under such existing security documents first being released or (ii) if security over any asset under the applicable security documents is released, whether by operation of law or otherwise, in connection with a refinancing or replacement of Revolving Creditor Liabilities or Senior Secured Liabilities, (provided that, if an event of default under the Revolving Credit Facility Agreement is continuing at that time, the requisite consent under the Revolving Credit Facility Agreement is obtained) the Security Agent is authorised to release the security granted pursuant to such existing security documents provided that: immediately on such release, security shall be provided in favor of the providers of, as applicable, such Revolving Creditor Liabilities, the additional Senior Secured Creditors in respect of such additional Senior Secured Liabilities, and the Senior Creditors on terms substantially the same as the terms of the security documents released and subject to the same ranking as set out in Ranking and Priority above; and 43

44 QUARTERLY REPORT FOR THE THREE MONTHS AND TWELVE MONTHS ENDED 31 DECEMBER 2014 (unaudited) each Creditor Representative receives opinions satisfactory to it (acting reasonably) in relation to such security (excluding as to any new hardening periods that existed prior to such release and re-granting) and solvency certificates signed by the directors of the relevant chargor. Each party to the Intercreditor Agreement agrees that it shall promptly execute and each secured party authorises the Security Agent to execute all such documents as may reasonably be considered necessary in order to give effect to the refinancing of the Revolving Creditor Liabilities and/or the issuance of additional Notes and/or the refinancing of any of the liabilities contemplated under this paragraph New Transaction Security, and to give effect to providing security as contemplated by this paragraph New Transaction Security in respect of such additional or refinanced liabilities. Amendment The Intercreditor Agreement provides that it may only be amended with the consent of the Issuer, the Majority Super Senior Creditors, Majority Secured Noteholders, the Security Agent, each Senior Secured Trustee and the Majority Pari Passu Creditors (as defined in the Intercreditor Agreement) unless: such amendments are made to cure defects, resolve ambiguities or reflect changes of a minor, technical or administrative nature, which amendments may be made by the Issuer and the Security Agent, or such amendments are made to meet the requirements of any person proposing to act as a Creditor Representative which are customary for persons acting in such capacity, which amendments may be made by the Issuer and the Security Agent. No amendment or waiver of the Intercreditor Agreement may impose new or additional obligations on any Senior Creditor without their prior written consent other than in the case of Hedge Counterparties where the amendment does not adversely affect their rights, or where the rights of the other Senior Creditors are also amended or waived. The Security Agent may amend the terms of, waive any of the requirements of, or grant consents under, any of the Security Documents acting on the instructions of each Creditor Representative, with the consent of the Issuer, unless provided otherwise under the relevant documents. No such amendment, waiver or consent may affect the nature or scope of the obligations, the security or the manner in which the proceeds of enforcement of the security are distributed without the consent of the relevant party, save where such amendment would affect the rights of Senior Creditors generally or save as provided under Disposals above. No such amendment, waiver or consent shall adversely affect the Issuer or any of its Subsidiaries without the consent of the Issuer. Notwithstanding the foregoing, the prior consent of the Revolving Agent only is required to authorise any amendment or waiver of, or consent under, any Security Document that is entered into only for the benefit of the Super Senior Creditors. Governing Law The Intercreditor Agreement is governed by English law. 6. RISK FACTORS An investment in our Notes involves significant risks. This Quarterly Report does not include a detailed discussion of these risks. Existing and prospective investors should refer to the risk factors set forth in the Offering Memorandum dated 17 March 2011 relating to the Notes. Prospective investors should consider those risks carefully before making a decision to invest in the Notes. If any of those risks actually materialise, then our business, financial condition and results of operations would suffer. In addition, there may be risks of which we are currently unaware or that we currently regard as immaterial based on the information available to us that later prove to be material. These risks may adversely affect our business, financial condition and operating results. As a result, you may lose all or part of your original investment in the Notes. 44

45 QUARTERLY REPORT FOR THE THREE MONTHS AND TWELVE MONTHS ENDED 31 DECEMBER 2014 (unaudited) Appendix A HYVA GLOBAL B.V. (the Issuer ) Audited financial statements for the year ended 31 December

46 Annual Report 2014

47 Hyva Group is a leading global provider of the most innovative and efficient transport solutions for the commercial vehicle and environmental service industries

48 ANNUAL REPORT 2014 Hyva Global B.V.

49 Contents Introduction... 3 Hyva Group in Brief... 4 Corporate Values... 5 Hyva Group Milestones... 6 Directors report... 8 Directors report... 9 Financial risks Consolidated financial statements Consolidated statement of comprehensive income Consolidated balance sheet Consolidated statement of changes in equity Consolidated statement of cash flows Notes to the consolidated financial statements Company-only financial statements Company-only statement of income Company-only balance sheet Notes to the company-only financial statements Other Information

50 Introduction 3

51 Hyva Group in Brief Hyva in brief Hyva Global B.V. ( the Company ) is the parent company of Hyva Holding B.V. and its subsidiaries. In this Annual Report, the terms Hyva, Hyva Group and Group refer to the consolidated activities of Hyva Global B.V.. Hyva Group is a leading global provider of innovative and highly efficient transport solutions for the commercial vehicle and environmental service industries. The Company is committed to the development, production, marketing and distribution of components used in hydraulic loading and unloading systems on trucks and trailers. Its products are used worldwide across a range of sectors including transport, construction, mining, materials handling and environmental services providers. Hyva produces the strongest front end hydraulic telescopic cylinder in the world, double acting cylinders, mobile and static compactors and waste collection units. Hyva s portfolio comprises: hydraulics (cylinders and tipping gear), container handling systems (hook- and skip-loaders), floors (horizontal unloading/loading floors) and cranes (fixed and rolling). These products are designed and marketed under several well respected brands: Hyva, Kennis, F.lli Ferrari and Amco Veba. Hyva is also a distributor of high value components. Hyva has significant manufacturing facilities in Brazil, China, Germany, India and Italy. Hyva Group has a global sales and after sales network, operating across more than 130 countries with over 25,000 customers and more than 2,000 employees, encompassing 39 subsidiaries and 13 production facilities. 4

52 Hyva Mission Hyva is committed to being the world's #1 provider of lifting, loading, stacking, compacting and tipping solutions to the commercial vehicle and environmental service industries.'' Corporate Values Hyva Group is an ambitious and dynamic organisation. To preserve our character, as we grow and develop, our organisation's entity has been anchored in seven Corporate Values. These Corporate Values serve as a framework to guide the daily actions and decisions of Hyva employees. They set the standards that all Hyva employees must strive to meet in their individual and collective actions. Passion We are committed, dedicated, enthusiastic, and proud and have the energy to keep Hyva as the #1 and make a positive difference both internally and externally to everyone that we work with. Trust & Respect We value and respect our people in full and have confidence and trust in their abilities to deliver success, and we are fully committed to building lasting quality relationships in all our business dealings with people around the world. Customer Excellence We are dedicated to being recognised as the first choice business partner internally and externally and adding value to our customer s business in many different ways, while always prepared to go the extra mile and treat our customer as a King. Integrity We are real, consistent, transparent and fair in all we do. Empowerment We encourage, develop and support our people to take initiative and being accountable for everything they do. Innovative & Entrepreneurial Spirit We create, sustain and increase our key differentiators through our expertise, experience and commitment to be the best in class, this through savouring our entrepreneurial spirit. Social Responsibility We are committed to responsible manufacturing, care for our employees and, beyond this, to responsible behaviour towards both the communities in which we operate and where our products are used. 5

53 Hyva Group Milestones 1979 Hyva founded in Alphen aan den Rijn, the Netherlands Hyva France and Hyva Belgium become the first two subsidiaries, expanding Hyva s network Hyva GmbH and Hyva UK are founded to continue expansion into the European market. Hyva produces its first hydraulic cylinder Hyva Iberica becomes the fifth European subsidiary Hyva acquires Kennis, which specialises in rolloader cranes, fitting smoothly into Hyva s existing range of products and soon becoming the benchmark for rolloader cranes. Hydraulic Floor Systems B.V. (moving floor) is acquired. Hyva Malaysia becomes the first subsidiary outside Europe representing Hyva s first foray into the Far East Hyva Brazil becomes the first factory outside Europe Hyva Thailand and Poland are founded Hyva India becomes the second factory outside Europe Hyva acquires Technamics B.V. which specialises in the development, production and marketing of hook lifts and skiploaders (generally known as container handling systems) under the brand name Hyva Lift Hyva acquires the hydraulic division of Georg Group in Germany, a leading supplier of high pressure cylinders with a factory in Olbersdorf, located close to the borders with Poland and the Czech Republic Expansion into new markets continues with the establishment of Hyva operations in Morocco and the Czech Republic. Foundation of Hyva China and Hyva Russia Hyva opens its manufacturing plant in Yangzhou, China primarily serving growing demand in the domestic market Hyva starts operations in the USA (Hyva Corporation) and successfully enters this market with its hydraulic telescopic cylinders Hyva acquires its sole distributor Hyva Lift in Ireland. Hyva opens its latest state of the art facility in Mumbai, India for production, research and development of its extensive range of products. Hyva acquires the Amco Veba/Ferrari Group in Poviglio, Italy, specialising in the production of fixed mounted truck cranes The Altatec Group of Companies in Australia is acquired and currently continues business under the name of Hyva Pacific Official foundation of Hyva Mexico, Hyva Romania, Hyva Hungary and acquisition of Tecnomet, a producer of double acting cylinders th anniversary of the foundation of Hyva Group Major investment in two new factories in India and China to create additional capacity. 6

54 2011 New ownership Hyva. New factories operational in India and China Hyva Indonesia, Hyva HK Holding and Hyva Asia Holdings were founded. Regional office Hyva MEA in Dubai was founded. Third Year Winner Best managed Companies Corporate Center Hyva Holding Alphen aan den Rijn moved to a new location in Alphen aan den Rijn. Hyva South Africa was founded. Kennis Crane production was integrated in Italian crane manufacturing facility. Hyva acquires Jiangsu Yinbao Special Vehcile Co., Ltd ( Yinbao ) in China Hyva launches Alpha Series front end tipping solutions. Hyva launches new Fresh Fruit Bunch (FFB) line cranes. Poviglio factory in Italy obtains ISO certification. Hyva consolidates European Capital Equipment manufacturing operations into Poviglio, Italy. Double success for Hyva at Asia Procurement Awards: Procurement Excellence Award and Best Procurement Team. 7

55 Directors report 8

56 Directors report 2014 was a good year overall with increased revenues, substantial organic growth, continued cost savings and productivity improvements. These improvements largely compensated for the decrease in the heavy duty commercial vehicle market in China, Brazil and, to a lesser extent, Russia. New products introduction was led by the global launch of the new ALPHA Series tipping solutions at IAA in Germany. Also, European capital equipment manufacturing was centralised in Italy. The outlook for 2015 is cautious given the uncertain macro-economic outlook for China, Russia and Brazil. This should somewhat be compensated by better potential in Western Europe, India, the Middle East and Africa. The continued launch of new products, the brand equity, the service network and our deep customer intimacy will ensure that market shares and premium positioning are maintained and that every market opportunity to grow will be seized. We will also continue to contain costs, increase productivity, maintain our purchasing savings efforts and actively work to decrease working capital and improve cash flows. Revenues improvement and stable margins despite challenging market conditions in some of our main markets Financial highlight Year ended 31 December Operating profit 38,496 37,118 - Amortisation 19,520 20,336 - One-time restructuring costs 2,913 8,343 - Other operating expenses/(income) Normalised EBITA 61,528 65,397 Normalised EBITA as % of sales 10.0% 10.7% - Depreciation 7,287 8,021 Normalised EBITDA 68,815 73,418 Normalised EBITDA as % of sales 11.2% 12.0% Revenue increased to USD 613 million in 2014 from USD 611 million in Excluding the impact of foreign exchange, the year-on-year ( yoy ) revenue increase would amount to USD 16 million or 2.6%. Gross margin slightly decreased in 2014 to 26.2% compared to 27.4% last year mostly on account of product and regional mix. This good performance in adverse market conditions in our main markets was mainly driven by increased revenues in some of our more mature markets, i.e. Western Europe, continued costs savings as well as productivity improvements notably driven by the various operations restructuring executed in the last 2 years. Earnings ( EBITA ) slightly decreased to USD 62 million from USD 65 million last year. It however remained in the double digit figures area with 2014 level at 10.0% compared to 10.7% last year thanks to a good control and cost containment of our SG&A in most regions. Excluding the impact of foreign exchange, EBITA would amount to USD 63 million or 10.1% of sales. Working Capital (excluding upstream intercompanies and fixed assets related items) increased by USD 0.7 million, from USD 57.7 million to USD 58.4 million at 31 December Expressed in days of sales, working capital remained stable around 35 days. As already expressed above, we have experienced a sensibly different regional mix in our revenues in 2014 when compared to 2013 which had a major impact on our working capital levels. Indeed, whilst working capital levels by region have not suffered major variations compared to last year, our revenue progression in 2014 was largely driven by these regions where market practice traditionally commands reliatively higher working capital levels. 9

57 Regions As explained further below, an appreciable growth was achieved in many regions/countries and our market share and price positioning was improved in many of them. Our performance at consolidated level is however significantly impacted by the market downturns observed primarily in China (where the Heavy Duty Tipper market is estimated to be down 25% yoy vs 2013), Brazil and to a lesser extent Russia. China As already mentioned above, the Heavy Duty Tipper market suffered a major yoy decrease in 2014 compared to 2013, that has accelerated in the last quarter. Whilst this impacted our sales development, our market share actually increased in 2014 and is expected to stabilise at new level in Our waste handling business on the other hand benefited from good end user demand which pushed our sales up compared to We continue to believe that the long term prospects for our products in infrastructure, mining, construction and waste management remain strong. Also, it is worth noting that our China operations went through a smooth ERP upgrade in Q Finally, consistently with prior years, Hyva s commitment to local communities was again demonstrated with the opening of the Chuan Yuan Village Primary School in a remote part of Sichuan Province that was affected by a major earthquake a couple of years ago. India Revenues in India grew steadily thanks to improved industrial and infrastructure activity which has increased demand for our hydraulics and tipper products. That helped us maintain our strong market share. Successful partnerships in waste handling, such as that with Municipal Corporation of Greater Mumbai (MCGM), continued with the delivery and commissioning of another batch of new trailer-mounted, stationary compactors. Other Asia Excluding the impact of foreign exchange rates, our revenues grew in that region and were especially strong in Indonesia which signals some recovery in the mining sector. In Malaysia, Micro Refuse Collection (MRC) vehicles, ideally suited to inner city environments, have made a significant contribution to our waste handling systems business. Market conditions however remained soft in Australia and Thailand. Americas Excluding the impact of foreign exchange rates, 2014 revenues in the region were flat compared with last year. Whilst we observed a strong development of our sales in North America, the softness of the Brazilian hydraulics market continued to impact on our sales in Brazil. That was partly offset by good progress of our cranes line despite the subdued market conditions also in that segment. The crane division introduced two new models specially developed for the Brazilian market and achieved ISO 9001 certification for its Quality Management System. Short term prospects for the Heavy Duty Tipper market in Brazil remain challenging with lowered GDP estimated growth, weak truck market development as well as expected further tightening of fiscal spending. EMEA (Europe, Russia, Middle East and Africa) The whole region recorded a strong yoy growth thanks to a good development in all sub-regions. Particularly, sales in Western Europe continued to benefit from the recovery of the Commercial Vehicles market as well as the transition to Euro VI emission standards, particularly in the UK. Excluding the impact of foreign exchange rates, sales level in Eastern Europe showed improvement compared to last year despite the adverse market conditions in Russia due to the political situation. Indeed, Russia, the largest rigid tipping market in the region, suffered a 23% yoy volume drop compared to Sales in MEA region were boosted by good activity levels particularly in Saudi Arabia and the UAE countries. 10

58 Expanding the Hyva offering New products and solutions After having launched the new Alpha 1 Series solution in China in 2013, Hyva launched in 2014 the ALPHA Series tipping solutions in the rest of the world. Also, the new FFB line cranes, further deployment of the boltable Titan hookloader as well as a new 24-hour spare parts service for Hyva Crane was deployed in ALPHA Series is a new range of front end tipping solutions, for the Construction, Transportation and Mining sectors, which delivers higher transport efficiency and safer operating at lower cost. Performance improvement has been achieved through re-design and re-engineering of the complete hydraulic system, down to the component and sub-assembly level, together with improvements to installation and service procedures. The new Hyva Crane FFB line comprises three models designed for applications in the agricultural market. The tractor-mounted cranes have been tested in laboratory with the Hyva Crane fatigue cycles program and then in the field in Malaysia and Indonesia under a range of demanding operating conditions. Our container handling division continued the roll out of the Titan boltable hookloader series. We launched the 20/22 ton series in 2013 and added the strong and efficient 26/30 tons series in A new, web-based, 24-hour service is available on a global basis to all Hyva subsidiaries for all Hyva Crane spare parts. Hyva dealers and end customers can place their orders with their local Hyva subsidiary as usual and parts will be shipped directly to a requested location. Operations We are in the process of establishing a new subsidiary at Izmir in Turkey to supply and service that country and other countries in Central Asia Pakistan, Kyrgyzstan, Tajikistan, Turkmenistan and Afghanistan. Turkey is the second largest trailer market in Europe and a growing market for cranes, container handling and RCBs. European Capital Equipment manufacturing operations including all crane ranges, hookloaders and skiploaders were centralised into Poviglio, Italy in This consolidation helps balance the workforce, improve supply base efficiency and drive quality in our spares and accessories business. In addition, the proximity to the expertise, skills and experience embedded in this Centre of Excellence means that customers will benefit in the future from faster development and implementation of new products. The excellence of our factory in Poviglio, Italy in terms of environmental management was recognised in 2014 through the ISO certification. The excellence of Hyva s purchasing and procurement organisation was recognised with two of the most prestigious awards at the Procurement Leaders 2014 Awards for Asia Pacific. In Europe, the supply chain was critically reviewed and areas for improvement identified. A new supply chain structure was introduced and inventory and warehouse were streamlined. Supply chain analysis and improvement will continue through 2015 to ensure that we are delivering the right quality, on time and in line with customer expectations. Investing for growth Investment continued in Research and Development, Marketing and the After Sales network. In 2014 our global engineering teams focused strongly on product development in all our four lines of business. In Tipping Solutions, our new ALPHA Series front end tipping solutions and wetkits were launched and will continue to be rolled out globally through Our Container Handling division continued the roll out of the Titan boltable hookloader series. The 20/22 and 26/30 ton series will be completed in 2015 with a low and fast 12/18 ton series. Cranes division engineers are working hard in the complete renewal of our whole crane range. In 2014 we added specific cranes for specific markets, like the FFB series for palm oil and agriculture, and the HBR series for our Brazilian customers. The first models of our new crane line will hit the market in In Waste Handling Systems, engineers are fully focused on the development of our new range of mobile and static compactors and refuse collection vehicles. 11

59 In addition to product development, significant activity continues around connecting the engineering centres by professionalising working methods, developing a global product data management system and reinforcing the teams with new director level appointments Engineering Director for waste management solutions and Chief Technical Officer, responsible for all engineering activities in Hyva Group. Exhibitions continued to be a key component of our marketing programme. The IAA exhibition in Hannover, Germany, led the way with a broad showcase of Hyva products and, most prominently, the global launch of the new ALPHA Series front end tipping solutions. Other important exhibitions included Bauma (China), CTT (Moscow, Russia), ITTES (Melbourne, Australia), JIMS (Johannesburg, South Africa) and INTERMAT (Abu Dhabi, UAE). Product marketing support continued through press releases, newsletters, brochures, website and increased social media activity. A truly global organisation With past changes to management structure and appointment of functional experts, Hyva now has strong, experienced, multi-cultural teams leading the business at global, regional and country levels. Collaboration is strong and retention levels are good. The new and modern Corporate office in Alphen aan den Rijn, operational since end of 2013, is a symbol for the future continued investment in our Netherlands roots with a new, state-of-the-art testing centre and modern R&D facilities. On 1 January 2013, the Law on Management and Supervision came into force. This law aims at reaching a better balanced distribution between men and women in the executive management of large corporations in the Netherlands. A balanced distribution means that at least 30% of the Board composition is to be occupied by women and equally at least 30% by men. Due to its very international character, Hyva has a long tradition of promoting diversity whether cultural or other in the group. Taking into account the current nature and extent of the (activities of the) company as well as the required knowledge and expertise of its directors, the Board of Directors composition, which is made up of only men, continues to remain deemed to be appropriate. Hyva will naturally take into account this new regulation upon the renewal of its directors mandate in the future. Outlook and forecast The market demand for tippers is unlikely to recover to previous levels in our historically strong market segments such as transportation and mining. However, we will continue to strive for increased market share and to increase our penetration of other segments such as construction and agriculture. Revenues from our waste handling systems are also likely to increase. Better products, brought to market more quickly will improve revenues and share across all market segments. In this new market environment, brand is an essential differentiator and Hyva will, from an already strong position of trust, deliver value through design, productivity, quality, new products and after sales service. Organic growth will continue through innovation in design and product development, optimisation of supply chain and manufacturing costs, deployment of new products on a global basis, and, new partnerships and possibly acquisitions. Management Change As announced in March, Hyva has appointed a new CEO and Mr Brice de la Morandiere will be leaving the Group in April. After 4 years of transformation, both within the group and in our market positioning, the Board and Mr de la Morandiere have mutually agreed to a change in leadership. As we turn to the future, Mr Marco Mazzu will be joining Hyva as CEO with effect from 10 April Mr Mazzu is a seasoned executive and industry insider who has had leadership roles for the last 20 years with Fiat, Case New Holland and Iveco and brings a truly global manufacturing perspective to our business. 12

60 Financial risks The Company is exposed to a variety of financial risks including market risk (including currency risk, price risk and cash flow risk), liquidity risk and credit risk. The Company seeks to minimise the exposure to these risks by using natural hedges and derivative financial instruments. Market risk Hyva Group operates and sells its products globally, and a substantial portion of its assets, liabilities, costs, sales and income are denominated in currencies other than the USD (the presentation currency of the Group). The exchange rates between foreign currencies and the USD may fluctuate which will have an impact on the presentation of the financial performance and position of the Group. The main sensitivities on revenues and costs can be derived from geographical segmentation as provided in note 5 to the consolidated financial statements. Although the great variety of currencies in which the Group operates reduces its exposure to fluctuations in a single currency, these fluctuations may adversely affect the financial performance of the Group. Currency risks are naturally hedged as much as possible if deemed necessary specific foreign currency instruments are applied. As the Company has no significant interest-bearing assets, the Company s income and operating cash flows are substantially independent of changes in market interest rates. The Company also does not possess any securities, which limits its exposure to price risk. The Company is exposed to some cash flow risk especially due to the semi-annual interest payments on the senior secured notes. Nevertheless, the available cash is expected to meet the financing obligations of the Company. Liquidity risk Negative developments impacting the global liquidity markets could affect the ability to raise or re-finance debt or could lead to significant increase in the cost of borrowing. Also a reduction in the credit rating of the Group might influence the Group's ability to finance its operations and increase its financing costs, which could affect revenues and profitability. The Company has two covenants relating to its Super Senior Revolving Credit Facility ( SSRCF ) of USD 30 million. In case of breach of the covenant conditions all or part of the utilisations, together with accrued interest may become immediately due and payable, and may limit new utilisations. The senior secured notes issued are also subject to covenant conditions which limit the debt ratio of the Group and of the nonguarantor group. As further detailed in the note 3 to the consolidated financial statements, the Group meets the SSRCFrelated covenants and has access to the facility. As at 31 December 2014, the Group continues not to meet the Consolidated Fixed Charge Coverage Ratio condition of the senior secured notes issued. The only consequences thereof are that the Group is prevented from (1) incurring additional debt (outside of the permitted debt) and (2) paying out a dividend, until the covenant condition is met again. Finally, in the context of liquidity risk, we also refer you to note 1 to the consolidated financial statements that further develops on the ongoing evaluation made by management about the refinancing and the use of the going concern assumption to prepare the 2014 annual report. Credit risk Credit risk of counterparties that have outstanding payment obligations creates exposure for the Group, particularly in relation to accounts receivable and liquid assets. Although there are no customers representing more than 10% of the consolidated revenues, a default by counterparties can have a material adverse effect on the financial condition and operating results of the Group. For banks and financial institutions only independent rated parties with a sufficiently high credit rating are accepted. 13

61 Consolidated financial statements 14

62 Consolidated statement of comprehensive income Year ended 31 December (x USD 1,000) Note Revenue 5, , ,575 Cost of sales , ,943 Gross profit 160, ,632 Selling, general and administrative costs 20-99, ,235 Other operating expenses 20-23,032-28,279 Total operating costs -122, ,514 Operating profit 38,496 37,118 Interest income 22 1,145 1,478 Interest costs 22-37,086-38,416 Other finance expenses 22-2,413-1,813 Net finance costs -38,354-38,751 Result before income tax 142-1,633 Income tax expense 23-13,718-17,534 Result for the year -13,576-19,167 Result attributable to: Owners of the parent -13,464-19,087 Non-controlling interests ,576-19,167 Other comprehensive income Item that may be subsequently reclassified to profit or loss Currency translation differences 12-38,071 3,312 Item that will not be reclassified to profit or loss Remeasurements 12, 16-1, Total comprehensive income for the year -53,060-15,639 Total comprehensive income attributable to: Owners of the parent -52,943-15,559 Non-controlling interests ,060-15,639 The notes on pages 19 to 68 are an integral part of these consolidated financial statements. 15

63 Consolidated balance sheet As at 31 December (x USD 1,000) Note ASSETS Non-current assets Property, plant and equipment 6 36,294 40,370 Intangible fixed assets 7 644, ,605 Deferred income tax assets 15 10,474 10,273 Financial fixed assets , ,387 Current assets Inventories 8 90,921 92,021 Trade and other receivables 9 136, ,723 Current income tax receivable 1,454 1,773 Cash and cash equivalents 11 83,506 93, , ,458 Total assets 1,003,182 1,062,845 EQUITY AND LIABILITIES Equity attributable to the owners of the parent Share capital Share premium , ,717 Legal reserves 12-46,147-6,671 Retained earnings 12-45,844-32, , ,691 Non-controlling interests Total equity 360, ,839 LIABILITIES Non-current liabilities Borrowings , ,723 Deferred income tax liabilities 15 79,254 87,305 Derivative financial instruments Retirement benefit obligations 16 4,975 3,893 Provisions for other liabilities and charges 17 2,758 2, , ,075 Current liabilities Trade and other payables , ,630 Current income tax liabilities 2,068 3,894 Borrowings ,196 Provisions for other liabilities and charges 17 4,469 5, , ,931 Total liabilities 642, ,006 Total equity and liabilities 1,003,182 1,062,845 The notes on pages 19 to 68 are an integral part of these consolidated financial statements. 16

64 Consolidated statement of changes in equity Attributable to the owners of the parent Non- Share Share Legal Retained controlling Total (x USD 1,000) Note capital premium reserves earnings Total interests equity Balance at 1 January ,717-10,197-13, , ,250 Comprehensive income Result for the year ,087-19, ,167 Other comprehensive income Currency translation differences ,310-3,312-3,312 Remeasurements 12, Total comprehensive income 2-3,526-19,087-15, ,639 Transactions with owners Acquisition of non-controlling interest Proceeds from shares issued Capital contributions Dividends Total transactions with owners Balance at 31 December ,717-6,671-32, , ,839 Comprehensive income Result for the year ,464-13, ,576 Other comprehensive income Currency translation differences , , ,071 Remeasurements 12, , , ,413 Total comprehensive income ,476-13,464-52, ,060 Transactions with owners Acquisition of non-controlling interest Proceeds from shares issued Capital contributions Dividends Total transactions with owners Balance at 31 December ,717-46,147-45, , ,779 The notes on pages 19 to 68 are an integral part of these consolidated financial statements. 17

65 Consolidated statement of cash flows Year ended 31 December (x USD 1,000) Note Cash flows from operating activities Profit/(Loss) before income tax 142-1,633 Adjustments for: - Depreciation and amortisation 6, 7 26,807 28,357 - Changes in provisions 16, Fair value change derivative financial instruments Result on disposal of property, plant and equipment -32-1,260 - Net interest costs 22 35,941 36,938 - Changes in working capital 25-13,004 6,821 Cash generated from operating activities 50,829 68,989 Taxes paid -19,263-19,665 Interest received 983 1,575 Net cash from operating activities 32,549 50,899 Cash flows used in investing activities Purchases of property, plant and equipment 6-6,889-9,157 Investments in intangible assets Proceeds from sale of property, plant and equipment 4, Net cash used in investing activities -3,346-9,450 Cash flows used in financing activities Proceeds/repayments other borrowings ,185 Interest paid -33,505-34,836 Net cash used in financing activities -34,495-37,021 Net (decrease)/increase in cash and cash -5,292 4,428 equivalents Cash and cash equivalents at beginning of year 11 93,941 89,239 Exchange (loss)/gain on cash and cash equivalents -5, Cash and cash equivalents at end of year 11 83,506 93,941 The notes on pages 19 to 68 are an integral part of these consolidated financial statements. 18

66 Notes to the consolidated financial statements for the year ended 31 December General information and going concern Hyva Global B.V. ( Hyva or the Company ) and its subsidiaries (together the Group ) are engaged in development, production, marketing and distribution of components for the commercial vehicle industry. The Company was incorporated in the Netherlands on 20 January 2009 and its registered address is Antonie van Leeuwenhoekweg 37, 2408 AK, Alphen aan den Rijn, the Netherlands. These financial statements have been prepared on a going concern basis, which contemplates the realisation of assets and the satisfaction of liabilities in the normal course of business. In the context of the above, we also refer you to note 3.2 Capital Management and note 14 Borrowings that deal with the Group financing and short term liquidity profile. Hyva Group is financed through USD 375 million senior secured notes that mature on 24 March The preparation of these financial statements on a going concern basis relies on the assumption that Hyva Group will be able to refinance the senior secured notes. As mentioned above, the senior secured notes need to be repaid at the latest by 24 March 2016 and Hyva Group management is currently evaluating several available capital raising alternatives to facilitate the same. Based on discussions with our main shareholders and our lead banks, we believe adequate capital will be available to Hyva to facilitate a refinancing. Hyva is evaluating the possibilities as well as the timing of implementing the refinancing exercise. In addition to the refinancing aspects, Hyva has maintained a good liquidity profile and shown resilience even in the years that some of its major markets suffered downturns, such as in 2012 and to a lesser extent, in Indeed, the 2014 net ending cash position, excluding the impact of foreign exchange, is fairly stable compared to the end of The good liquidity profile is also demonstrated by the healthy level of cash maintained all year, which allows Hyva Group to absorb significant seasonal movements in its main markets. Current available liquidity is more than sufficient to operate the 2015 business plan. Finally, it is also worth noting that Hyva Group complies with the SSRCF-related covenants and therefore maintains access to USD 30 million short term facility. That facility has actually not been used for more than 3 consecutive days over the last 18 months. The SSRCF, that originally matured on 13 April 2015, has recently been extended for a period of 6 months. The absence of a formally agreed refinancing plan at the date of this report creates a material uncertainty which may cast significant doubt about the company s ability to refinance the current senior secured loan. Management however considers that, based on cash flow projections for the coming year, the application of the going concern assumption for the preparation of these consolidated financial statements is appropriate. These financial statements were authorised for issue by the Board of Directors on 25 March The financial statements are subject to adoption by the Annual General Meeting of Shareholders. 2. Summary of significant accounting policies The principal accounting policies applied in the preparation of these consolidated financial statements are set out below. These policies have been consistently applied to all the years presented, unless otherwise stated. 2.1 Basis of preparation The consolidated financial statements of the Company have been prepared in accordance with International Financial Reporting Standards as adopted by the European Union ( IFRS ) and IFRIC Interpretations applicable to companies reporting under IFRS. As the company-only financial information of Hyva Global B.V. is included in the consolidated financial statements, the company-only statement of income for the year 2014 is presented in abbreviated format in accordance with Section 402 of Book 2 of the Dutch Civil Code. 19

67 The consolidated financial statements have been prepared under the historical cost convention except for the revaluation of derivative financial instruments at fair value through the statement of comprehensive income. Furthermore, the consolidated financial statements are presented in USD and all values are rounded to the nearest thousand unless otherwise indicated. The preparation of financial statements in conformity with IFRS requires the use of certain critical accounting estimates. It also requires management to exercise its judgment in the process of applying the Group s accounting policies. The areas involving a higher degree of judgment or complexity or areas where assumptions and estimates are significant to the consolidated financial statements are disclosed in note 4. New and amended standards and interpretations adopted by the Group The following standards have been adopted by the Group for the first time for the financial year beginning on or after 1 January 2014 and have no material impact on the Group: Amendments to IAS 36, Impairment of assets, on the recoverable amount disclosures for non-financial assets. This amendment removed certain disclosures of the recoverable amount of cash-generating units ( CGUs ) which had been included in IAS 36 by the issue of IFRS 13. Other standards, amendments and interpretations which are effective for the financial year beginning on 1 January 2014 are not material to the Group. New standards, amendments and interpretations not yet adopted A number of new standards and amendments to standards and interpretations are effective for annual periods beginning after 1 January 2014, and have not been applied in preparing these consolidated financial statement. None of these is expected to have a significant effect on the consolidated financial statements of the Group, except the following set out below: IFRS 9, Financial instruments, addresses the classification, measurement and recognition of financial assets and financial liabilities. The complete version of IFRS 9 was issued in July It replaces the guidance in IAS 39 that relates to the classification and measurement of financial instruments. IFRS 9 retains but simplifies the mixed measurement model and establishes three primary measurement categories for financial assets: amortised cost, fair value through other comprehensive income ( OCI ) and fair value through profit or loss. The basis of classification depends on the entity s business model and the contractual cash flow characteristics of the financial asset. Investments in equity instruments are required to be measured at fair value through profit or loss with the irrevocable option at inception to present changes in fair value in OCI not recycling. There is now a new expected credit losses model that replaces the incurred loss impairment model used in IAS 39. For financial liabilities there were no changes to classification and measurement except for the recognition of changes in own credit risk in other comprehensive income, for liabilities designated at fair value through profit or loss. IFRS 9 relaxes the requirements for hedge effectiveness by replacing the bright line hedge effectiveness tests. It requires an economic relationship between the hedged item and hedging instrument and for the hedged ratio to be the same as the one management actually use for risk management purposes. Contemporaneous documentation is still required but is different to that currently prepared under IAS 39. The standard is effective for accounting periods beginning on or after 1 January Early adoption is permitted. The Group is yet to assess IFRS 9 s full impact. IFRS 15, Revenue from contracts with customers deals with revenue recognition and establishes principles for reporting useful information to users of financial statements about the nature, amount, timing and uncertainty of revenue and cash flows arising from an entity s contracts with customers. Revenue is recognised when a customer obtains control of a good or service and thus has the ability to direct the use and obtain the benefits from the good or service. The standard replaces IAS 18 Revenue and IAS 11 Construction contracts and related interpretations. The standard is effective for annual periods beginning on or after 1 January Earlier application is permitted. The Group is assessing the impact of IFRS 15. There are no other IFRSs or IFRIC interpretations that are not yet effective that would be expected to have a material impact on the Group. 20

68 2.2 Consolidation Subsidiaries Subsidiaries are all entities (including structured entities) over which the Group has control. The Group controls an entity when the Group is exposed to, or has rights to, variable returns from its involvement with the entity and has the ability to affect those returns through its power over the entity. Subsidiaries are fully consolidated from the date on which control is transferred to the Group. They are deconsolidated from the date that control ceases. The consolidated wholly owned companies are listed below: Hyva Global B.V. Alphen aan den Rijn, the Netherlands Hyva Holding B.V. Alphen aan den Rijn, the Netherlands Hyva Group B.V. Alphen aan den Rijn, the Netherlands Hyva Holding Hong Kong Ltd. Hong Kong, People s Republic of China Hyva Asia Holdings Pte Ltd. Singapore Hyva Securities B.V. Alphen aan den Rijn, the Netherlands Hyva International B.V. Alphen aan den Rijn, the Netherlands Technamics B.V. Hoogeveen, the Netherlands Kennis Service Drachten B.V. Alphen aan den Rijn, the Netherlands Hyva Pacific Pty. Ltd. Hexham, Australia Hyva Belgium N.V. Kontich, Belgium Hyva France S.A. La Croix Saint Ouen Cedex, France Hyva Germany GmbH Mönchengladbach, Germany Georg Hydraulik GmbH Olbersdorf, Germany Hyva Hungária KFT Dunavarsány, Hungary Hyva Romania S.r.l. Bucharest, Romania Hyva de Mexico, S. de R.L. de C.V. Guadalupe, Mexico Hyva Corporation Wood Dale, United States of America Hyva Transporttechnik GmbH Gmunden, Austria Hyva Mechanics (China) Co. Ltd. Yangzhou, People s Republic of China Hyva do Brasil Hidráulica Ltda. Caxias do Sul, Brazil Hyva (India) Pvt. Ltd. Navi Mumbai, India Hyva Holding (Thailand) Co. Ltd. Bang Phli, Thailand Hyva Thailand Co. Ltd. Samutprakarn, Thailand Hyva (Malaysia) SDN.BHD. Kuala Lumpur, Malaysia Pt Hyva Indonesia Bekasi Utara, Indonesia Hyva Maroc S.A.R.L. Casablanca, Morocco Hyva MEA FZE Jebel Ali, United Arab Emirates Hyva Polska Sp. z o.o. Krakow, Poland Hyva-CS, s.r.o. Prague, Czech Republic Hyva Rusland Z.a.o. Moscow, Russia Hyva (UK) Ltd. Irlam, United Kingdom Hyva Ibérica S.A. Olérdola, Spain Hyva Italia S.r.l. Milan, Italy Amco Veba S.r.l. Poviglio, Italy F.IIi Ferrari Corporation S.p.A. Poviglio, Italy Tecnomet S.r.l. (in liquidation) Brescello, Italy Hyva Ireland Ltd. (in liquidation) Newhall, Naas, Co Kildare, Ireland Hyva Southern Africa (Pty) Ltd. South Africa The consolidated majority owned companies are listed below: JiangSu YinBao Special Vehicle Co. Ltd. JiangSu, People s Republic of China Inter-company transactions, balances, income and expenses on transactions between group companies are eliminated. Profits and losses resulting from inter-company transactions that are recognised in assets are also eliminated. Accounting policies of subsidiaries have been changed where necessary to ensure consistency with the policies adopted by the Group. 21

69 Transactions with non-controlling interests that do not result in loss of control are accounted for as equity transactions that is, as transactions with the owners in their capacity as owners. The difference between fair value of any consideration paid and the relevant share acquired of the carrying value of net assets of the subsidiary is recorded in equity. Gains or losses on disposals to non-controlling interests are also recorded in equity. When the Group ceases to have control any retained interest in the entity is remeasured to its fair value at the date when control is lost, with the change in carrying amount recognised in the statement of comprehensive income. The fair value is the initial carrying amount for the purposes of subsequently accounting for the retained interest as an associate, joint venture or financial asset. In addition, any amounts previously recognised in other comprehensive income in respect of that entity are accounted for as if the Group had directly disposed of the related assets or liabilities. This may mean that amounts previously recognised in other comprehensive income are reclassified to the statement of comprehensive income. 2.3 Business combinations The Group applies the acquisition method to account for business combinations. The consideration transferred for the acquisition of a subsidiary is the fair values of the assets transferred, the liabilities incurred to the former owners of the acquiree and the equity interests issued by the Group. The consideration transferred includes the fair value of any asset or liability resulting from a contingent consideration arrangement. Identifiable assets acquired and liabilities and contingent liabilities assumed in a business combination are measured initially at their fair values at the acquisition date. The Group recognises any non-controlling interest in the acquiree on an acquisition-by-acquisition basis, either at fair value or at the non-controlling interest s proportionate share of the recognised amounts of acquiree s identifiable net assets. Acquisition-related costs are expensed as incurred. If the business combination is achieved in stages, the acquisition date fair value of the acquirer s previously held equity interest in the acquire is remeasured to fair value at the acquisition date through the statement of comprehensive income. Any contingent consideration to be transferred by the Group is recognised at fair value at the acquisition date. Subsequent changes to the fair value of the contingent consideration that is deemed to be an asset or liability is recognised in accordance with IAS 39 either in the statement of comprehensive income or as a change to other comprehensive income. Contingent consideration that is classified as equity is not remeasured, and its subsequent settlement is accounted for within equity. 2.4 Goodwill Goodwill arises on the acquisition of subsidiaries and represents the excess of the consideration transferred, the amount of any non-controlling interest in the acquiree and the acquisition-date fair value of any previous equity interest in the acquiree over the fair value of the identifiable net assets acquired. If the total of consideration transferred, non-controlling interest recognised and previously held interest measured at fair value is less than the fair value of the net assets of the subsidiary acquired, in the case of a bargain purchase, the difference is recognised directly in the statement of comprehensive income. For the purpose of impairment testing, goodwill acquired in a business combination is allocated to each of the CGUs, or Groups of CGUs, that is expected to benefit from the synergies of the combination. Each unit or Group of units to which the goodwill is allocated represents the lowest level within the entity at which the goodwill is monitored for internal management purposes. Goodwill is monitored at the operating segment level. Goodwill impairment reviews are undertaken annually or more frequently if events or changes in circumstances indicate a potential impairment. The carrying value of the CGU containing the goodwill is compared to the recoverable amount, which is the higher of value in use and the fair value less costs of disposal. Any impairment is recognised immediately as an expense and is not subsequently reversed. 22

70 2.5 Other intangible assets Intangible assets acquired separately Intangible assets acquired separately are reported at cost less accumulated amortisation and accumulated impairment losses. Amortisation is charged on a straight-line basis over their estimated useful lives. The estimated useful life and amortisation method are reviewed at the end of each annual reporting period, with the effect of any changes being accounted for on a prospective basis. Intangible assets acquired in a business combination. Intangible assets acquired in a business combination are identified and recognised separately from goodwill where they satisfy the definition of an intangible asset. The cost of such an intangible asset is its fair value at the acquisition date. Customer relationships with finite useful lives are recorded at costs and amortised using the straight line method over the anticipated lifetime of years. Software is recorded at cost and amortised using the straight line method of 3-5 years, the anticipated lifetime of software. Other intangible assets are recorded at costs and are amortised using the straight line method over the anticipated finite lifetime. Subsequent to initial recognition, intangible assets acquired in a business combination are reported at cost less accumulated amortisation and accumulated impairment losses, on the same basis as intangible assets acquired separately. Impairment of other intangible assets Intangible assets that have an indefinite useful life or intangible assets not ready to use are not subject to amortisation and are tested annually for impairment. Assets that are subject to amortisation are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. An impairment loss is recognised for the amount by which the asset s carrying amount exceeds its recoverable amount. The recoverable amount is the higher of an asset s fair value less costs of disposal and value in use. For the purposes of assessing impairment, assets are grouped at the lowest levels for which there are largely independent cash inflows (cash-generating units). Prior impairments of other intangible assets (other than goodwill) are reviewed for possible reversal at each reporting date. 2.6 Property, plant and equipment Property, plant and equipment comprise mainly buildings, machinery and equipment. All property, plant and equipment are stated at historical cost less accumulated depreciation and accumulated impairment losses. Historical cost includes expenditures that are directly attributable to the acquisition of the items. Subsequent costs are included in the asset s carrying amount or recognised as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the Group and the cost of the item can be measured reliably. All other repairs and maintenance charges are expensed in the financial period in which these are incurred. Depreciation is calculated using the straight-line method to allocate the cost of the assets to their residual values over their estimated useful lives. Land is not depreciated. Other property, plant and equipment are depreciated as follows: Buildings: years Machinery and equipment: 3-10 years The assets depreciation methods, residual values and useful lives are reviewed, and adjusted if appropriate, at each balance sheet date. An asset s carrying amount is written down immediately to its recoverable amount if the asset s carrying amount is greater than its estimated recoverable amount (also refer to note 2.7). Assets held under finance leases are depreciated over their expected useful lives on the same basis as owned assets or, where shorter, the term of the relevant lease contract. Gains and losses on disposals are determined by comparing the proceeds with the carrying amount. Gains and losses are included in the statement of comprehensive income. 23

71 2.7 Impairment of tangible and intangible assets excluding goodwill At each balance sheet date, the Group reviews the carrying amounts of its tangible and intangible assets to determine whether there is any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss (if any). Where it is not possible to estimate the recoverable amount of an individual asset, the Group estimates the recoverable amount of the (group of) cash-generating unit(s) to which the asset belongs. Where a reasonable and consistent basis of allocation can be identified, corporate assets are also allocated to individual cash-generating units, or otherwise they are allocated to the smallest group of cashgenerating units for which a reasonable and consistent allocation basis can be identified. Intangible assets with indefinite useful lives and intangible assets not yet available for use are tested for impairment annually, and whenever there is an indication that the asset may be impaired. The Group did not recognise any intangible assets (excluding goodwill) with an indefinite useful live during the financial year. Recoverable amount is the higher of fair value less costs to sell and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset for which the estimates of future cash flows have not been adjusted. If the recoverable amount of an asset (or (group of) cash-generating unit(s)) is estimated to be less than its carrying amount, the carrying amount of the asset (or (group of) cash-generating unit(s)) is reduced to its recoverable amount. An impairment loss is recognised immediately in the statement of comprehensive income. Where an impairment loss subsequently reverses, the carrying amount of the asset (or (group of) cashgenerating unit(s)) is increased to the revised estimate of its recoverable amount, but so that the increased carrying amount does not exceed the carrying amount that would have been determined had no impairment loss been recognised for the asset (or (group of) cash-generating unit(s)) in prior years. A reversal of an impairment loss is recognised immediately in the statement of comprehensive income. 2.8 Financial instruments and derivative financial instruments Classification Financial instruments carried on the balance sheet date include cash, trade and other receivables, trade and other payables and borrowings. The Company has financial assets in the categories loans and receivables and financial assets at fair value through the statement of comprehensive income (i.e. derivative financial instruments). The classification depends on the purpose for which the financial assets were acquired. Management determines the classification of its financial assets at initial recognition. Financial assets at fair value through the statement of comprehensive income are financial assets held for trading. A financial asset is classified in this category if acquired principally for the purpose of selling in the short term. Derivative financial instruments are classified as held for trading unless they are designated as hedges. Assets in this category are classified as current assets. All other financial assets are classified as loans and receivables. Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. They are included in current assets, except for maturities greater than 12 months after the balance sheet date, which are classified as non-current assets. The Company has financial liabilities in the category other liabilities at amortised cost. The classification depends on the purpose for which the financial liabilities were acquired. Management determines the classification of its financial liability at initial recognition. Other financial liabilities at amortised costs are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. They are included in current liabilities, except for maturities greater than 12 months after the balance sheet date, which are classified as non-current liabilities. 24

72 The classification of financial instruments is specified below: At 31 December 2014 At fair value through statement Assets of comprehensive income Loans and receivables Total Trade and other receivables - 136, ,203 Cash and cash equivalents - 83,506 83,506 Total - 219, ,709 At fair value through statement Liabilities of comprehensive income Other financial liabilities Total Borrowings (including financial lease liabilities) - 372, ,929 Trade and other payables - 175, ,950 Total - 548, ,879 At 31 December 2013 At fair value through statement Assets of comprehensive income Loans and receivables Total Trade and other receivables - 132, ,723 Cash and cash equivalents - 93,941 93,941 Total - 226, ,664 At fair value through statement Liabilities of comprehensive income Other financial liabilities Total Borrowings (including financial lease liabilities) - 370, ,919 Derivative financial instruments Trade and other payables - 175, ,630 Total , ,580 Recognition and measurement Regular purchases and sales of financial assets are recognised on the trade-date the date on which the Group commits to purchase or sell the asset. Investments are initially recognised at fair value plus transaction costs for all financial assets not carried at fair value through the statement of comprehensive income. Financial assets carried at fair value through the statement of comprehensive income are initially recognised at fair value, and transaction costs are expensed in the statement of comprehensive income. Financial assets are derecognised when the rights to receive cash flows from the investments have expired or have been transferred and the Group has transferred substantially all risks and rewards of ownership. Loans and receivables are carried at amortised cost using the effective interest method. Gains or losses arising from changes in the fair value of financial assets in the category at fair value through the statement of comprehensive income are presented in the statement of comprehensive income within finance cost in the period which they arise. The Company assesses at each balance sheet date whether there is objective evidence that a financial asset or a group of financial assets carried at amortised cost is impaired. When impairment is identified, the amount of the impairment is the difference between the financial asset s carrying amount and the present value of estimated future cash flows, discounted at the original effective interest rate. The amount of the impairment is recognised in the statement of comprehensive income within Other operating expenses. 25

73 Derivative financial instruments and hedging activities Derivative financial instruments are initially recognised at fair value on the date a derivative contract is entered into and are subsequently remeasured at their fair value. The method of recognising the resulting gain or loss depends on whether the derivative is designated as a hedging instrument, and if so, the nature of the item being hedged. Since the Group does not apply hedge accounting, the Group only has derivative financial instruments accounted for at fair value through the statement of comprehensive income. Changes in the fair value of any of these derivative instruments (i.e. foreign currency forward contracts) are recognised immediately in the statement of comprehensive income within Other finance expenses. 2.9 Inventories Inventories are stated at the lower of cost and net realisable value. Costs, including an appropriate portion of fixed and variable overhead expenses, are assigned to inventories on a first-in-first-out basis. Net realisable value represents the estimated selling price for inventories less all estimated costs of completion and costs necessary to make the sale Trade receivables Trade and other receivables are recognised initially at fair value and subsequently measured at amortised cost using the effective interest method, less provision for impairment. A provision for impairment of trade receivables is established when there is objective evidence that the Group will not be able to collect all amounts due according to the original terms of the receivables. The amount of bad debt expense is included in the statement of comprehensive income within Selling, general and administrative costs Cash and cash equivalents Cash and cash equivalents includes cash in hand, deposits held at call with banks, cheques readily convertible into a known amount of cash and subject to an insignificant risk of change in value and other short-term highly liquid investments with original maturities of three months or less. Bank overdrafts are shown within borrowings in current liabilities on the balance sheet Equity and borrowings Ordinary shares Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of new shares are shown in equity as a deduction, net of tax, from the proceeds. Borrowings Borrowings are recognised initially at fair value, net of transaction costs incurred. Borrowings are subsequently stated at amortised cost, any difference between the proceeds (net of transaction costs) and the redemption value is recognised in the statement of comprehensive income over the period of the borrowings using the effective interest method. Borrowings are classified as current liabilities unless the Group has an unconditional right to defer settlement of the liability for at least 12 months after the balance sheet date ( non-current liabilities ). Borrowing cost General and specific borrowing costs directly attributable to the acquisition, construction or production of qualifying assets, which are assets that necessarily take a substantial period of time to get ready for their intended use or sale, are added to the cost of those assets, until such time as the assets are substantially ready for their intended use or sale. Investment income earned on the temporary investment of specific borrowings pending their expenditure on qualifying assets is deducted from the borrowing costs eligible for capitalisation. All other borrowing costs are recognised in profit or loss in the period in which they are incurred. 26

74 2.13 Trade payables Trade payables are recognised initially at fair value and subsequently measured at amortised cost using the effective interest method Taxation The tax expense for the period comprises current and deferred tax. Tax is recognised in the statement of comprehensive income, except to the extent that it relates to items recognised in other comprehensive income or directly in equity. In this case, the tax is also recognised in other comprehensive income or directly in equity, respectively. Current tax The tax currently payable is based on taxable profit for the year. Taxable profit differs from profit as reported in the consolidated statement of comprehensive income because it excludes items of income or expense that are taxable or deductible in other years and it further excludes items that are never taxable or deductible. The Group s liability for current tax is calculated using tax rates that have been enacted or substantively enacted by the balance sheet date. Deferred tax Deferred tax is recognised on differences between the carrying amounts of assets and liabilities in the financial statements and the corresponding tax base used in the computation of taxable profit. Deferred tax liabilities are generally recognised for all taxable temporary differences, and deferred tax assets are generally recognised for all deductible temporary differences to the extent that it is probable that taxable profits will be available against which those deductible temporary differences can be utilised. Such assets and liabilities are not recognised if the temporary difference arises from goodwill or from the initial recognition (other than in a business combination) of other assets and liabilities in a transaction that affects neither the taxable profit nor the accounting profit. Deferred income tax is provided on temporary differences arising on investments in subsidiaries and associates, and interests in joint ventures, except for deferred income tax liability where the timing of the reversal of temporary differences is controlled by the Group and it is probable that the temporary differences will not reverse in the foreseeable future. Deferred income tax assets are recognised for tax loss carry-forwards to the extent that the realisation of the related tax benefit through future taxable profits is probable. The probability is based on, amongst others, the budget for the coming years as well as the specific tax laws and regulations applicable in the respective tax jurisdictions. The Group has unrecognised tax losses regarding some start-up companies and other subsidiaries for which the recognition criteria were not met, although management expects that a part of the unrecognised tax losses that expire can be recovered. The carrying amount of deferred tax assets is reviewed at each balance sheet date and reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered. Deferred tax assets and liabilities are measured at the tax rates that are expected to apply in the period in which the liability is settled or the asset realised, based on tax rates (and tax laws) that have been enacted or substantively enacted by the balance sheet date. The measurement of deferred tax liabilities and assets reflects the tax consequences that would follow from the manner in which the Group expects, at the reporting date, to recover or settle the carrying amount of its assets and liabilities. 27

75 Deferred tax assets and liabilities are offset when there is a legally enforceable right to set off current tax assets against current tax liabilities and when they relate to income taxes levied by the same taxation authority and the Group intends to settle its current tax assets and liabilities on a net basis. Current and deferred tax for the period Current and deferred tax are recognised as an expense or income in the statement of comprehensive income, except when they relate to items credited or debited directly to equity, in which case the tax is also recognised directly in equity, or where they arise from the initial accounting for a business combination. In the case of a business combination, the tax effect is taken into account in calculating goodwill or in determining the excess of the acquirer s interest in the net fair value of the acquiree s identifiable assets, liabilities and contingent liabilities over the cost of the business combination Employee benefits and share-based payments (a) Pension obligations A defined contribution plan is a pension plan under which the Group pays fixed contributions into a separate entity. The Group has no legal or constructive obligations to pay further contributions if the fund does not hold sufficient assets to pay all employees the benefits relating to employee service in the current and prior periods. A defined benefit plan is a pension plan that is not a defined contribution plan. Typically defined benefit plans define an amount of pension benefit that an employee will receive on retirement, usually dependent on one or more factors such as age, years of service and compensation. The liability recognised in the balance sheet in respect of defined benefit pension plans is the present value of the defined benefit liability at the end of the reporting period less the fair value of plan assets. The defined benefit liability is calculated annually by independent actuaries using the projected unit credit method. The present value of the defined benefit liability is determined by discounting the estimated future cash outflows using interest rates of high-quality corporate bonds that are denominated in the currency in which the benefits will be paid, and that have terms to maturity approximating to the terms of the related pension obligation. In countries where there is no deep market in such bonds, the market rates on government bonds are used. The current service cost of the defined benefit plan, recognised in the statement of comprehensive income in employee benefit expense, except where included in the cost of an asset, reflects the increase in the defined benefit liability resulting from employee service in the current year, benefit changes curtailments and settlements. Past-service costs are recognised immediately in statement of comprehensive income. The net interest cost is calculated by applying the discount rate to the net balance of the defined benefit liability and the fair value of plan assets. This cost is included in employee benefit expense in the statement of comprehensive income. Actuarial gains and losses arising from experience adjustments and changes in actuarial assumptions are charged or credited to equity in other comprehensive income in the period in which they arise. Defined benefit plans Hyva Group B.V., Hyva International B.V., Hyva Holding B.V., Hyva Belgium N.V., Amco Veba S.r.l. and F.lli Ferrari Corporation S.p.A. contribute to a defined benefit plan. Defined contribution plans For defined contribution plans, the Group pays contributions to publicly or privately administered pension insurance plans on a mandatory, contractual or voluntary basis. The Group has no further payment obligations once the contributions have been paid. The contributions are recognised as employee benefit expense when they are due. Prepaid contributions are recognised as an asset to the extent that a cash refund or a reduction in the future payments is available. 28

76 (b) Share-Based Payments Selected managers of the Group participate in the Company through indirect share ownership via the foundation Stichting Administratiekantoor Hyva II. In relation with a change in control event, the depository receipts for (preference) shares will be settled in cash either by the majority shareholder or the acquirer. The Company or another group entity will under no circumstances be required to settle in cash. Accordingly, this arrangement is classified as an equity-settled share-based payment arrangement in accordance with IFRS 2 Share-based payment. The Company therefore determines the fair value of the (preference) shares at the grant date and recognises, if applicable, an expense for the services received over the service period with a corresponding increase in equity as per the IFRS 2 provisions. The total amount to be expensed is determined by reference to the fair value of the award granted. For this purpose, the Company analyses whether the price paid by an employee is in line with the market price of the underlying depository receipts for ordinary and preference shares. If a positive difference exists between (i) the actual market value of the depository receipts and (ii) the purchase price, this results in a fair value to be reported as an expense under IFRS 2. This analysis is performed at each grant date Provisions Provisions are recognised when the Group has a present legal or constructive obligation as a result of past events; it is probable that an outflow of resources will be required to settle the obligation; and the amount can be reliably estimated. Provisions are measured at the present value of the expenditures expected to be required to settle the obligation using a pre-tax rate that reflects current market assessment of the time value of money and the risks specific to the obligation. The increase in the provision due to passage of time is recognised as interest expense. The warranty provision relates to Hyva cylinders, Kennis cranes, Amco Veba and Ferrari cranes and Technamics hook- and skip-loaders, and is mainly of a short term nature. The provision for warranties is recorded based on the estimated costs expected to arise from the current warranties on account of goods delivered. Warranty claims are deducted from these provisions Revenue Revenue comprises the fair value of the consideration received or receivable for the sale of goods and services in the ordinary course of the Group s activities. Revenue is recognised net of indirect taxes, returns, rebates and trade discounts. Revenue consists primarily of the sale of goods. Revenue from services rendered is applicable but do not represent significant amounts in 2014 and Revenue is recognised when the following criteria are met: evidence of an arrangement exists; delivery has occurred or services have been rendered and the significant risks and rewards of ownership have been transferred to the purchaser; transaction costs can be reliably measured; the selling price is fixed or determinable; and collectability is reasonably assured. The timing of the revenue recognition is as follows: revenue from the sales of goods is recognised when the Group no longer retains continuing managerial involvement associated with ownership or effective control; revenue from services rendered is based on the stage of completion of the transaction, based on the proportion that costs incurred to date bear to the total cost of the transaction. The stage of completion regarding services rendered is generally based on physical progress, man-hours and costs incurred. Any expected loss on a transaction is charged immediately to the statement of comprehensive income. IAS 11 Construction contracts did not apply to the Group s business in 2014 and Therefore revenue is recognised based on IAS 18 Revenue. There is no significant amount of revenue arising from exchanges of goods or services included in the revenue. 29

77 2.18 Cost of sales Cost of sales represents the direct and indirect expenses attributable to turnover, including raw materials and consumables, cost of work contracted out and other external expenses, personnel expenses in respect of production employees, the directly attributable amortisation and depreciation costs relating to fixed assets and other operating expenses that are attributable to the cost of sales Leases Leases in which a significant portion of the risks and rewards of ownership are retained by the lessor are classified as operating leases. Payments made under operating leases (net of any incentives received from the lessor) are charged to the statement of comprehensive income on a straight-line basis over the period of the lease. Leases of property, plant and equipment where the Group bears substantially all the risks and rewards of ownership are classified as finance leases. Finance leases are capitalised at the lease s commencement at the lower of the fair value of the leased property and the present value of the minimum lease payments. Each lease payment is allocated between the liability and finance charges so as to achieve a constant rate on the finance balance outstanding. The corresponding rental obligations, net of finance charges, are included in Borrowings. The interest element of the finance cost is charged to the statement of comprehensive income over the lease period so as to produce a constant periodic rate of interest on the remaining balance of the liability for each period. Items of property, plant and equipment acquired under finance leases are depreciated over the shorter of the useful life of the asset and the lease term (see note 2.6) Dividend distribution Dividend distribution to the Company s shareholders is recognised as a liability in the Group s financial statements in the period in which the dividends are approved by the Company s shareholders Foreign currency translation Items included in the financial statements of each of the Group s entities are measured using the currency of the primary economic environment in which the entity operates ( the functional currency ). The consolidated financial statements are presented in USD, which is the Group s presentation currency. The functional currency of Hyva Global B.V. is USD. Foreign currency transactions are translated into the functional currency using the exchange rates prevailing at the dates of the transactions or valuation where items are remeasured. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation at year-end exchange rates of monetary assets and liabilities denominated in foreign currencies are recognised in the statement of comprehensive income. Equity items are translated at historical rates except for share capital which is translated at the year-end closing rate. Foreign exchange gains and losses on translation of share capital are recognised in the legal reserves. Foreign exchange gains and losses that relate to borrowings and cash and cash equivalents are presented in the statement of comprehensive income within other finance expenses. All other foreign exchange gains and losses are presented in the statement of comprehensive income within other finance expenses. Changes in the fair value of monetary securities denominated in foreign currency classified as available for sale are analysed between translation differences resulting from changes in the amortised cost of the security and other changes in the carrying amount of the security. Translation differences related to changes in amortised cost are recognised in the statement of comprehensive income, and other changes in carrying amount are recognised in other comprehensive income. Translation differences on non-monetary financial assets and liabilities such as equities held at fair value through the statement of comprehensive income are recognised in the statement of comprehensive income as part of the fair value gain or loss. Translation differences on non-monetary financial assets, such as investments in foreign operations and equities classified as available for sale, are included in other comprehensive income. 30

78 The results and financial position of all the Group entities (none of which has the currency of a hyperinflationary economy) that have a functional currency different from the presentation currency are translated into the presentation currency as follows: (a) assets and liabilities for each balance sheet presented are translated at the closing rate at the date of that balance sheet; (b) income and expenses for each statement of comprehensive income are translated at average exchange rates (unless this average is not a reasonable approximation of the cumulative effect of the rates prevailing on the transaction dates, in which case income and expenses are translated at the rate on the dates of the transactions); and (c) all resulting exchange differences are recognised in other comprehensive income. Goodwill and fair value adjustments arising on the acquisition of a foreign entity are treated as assets and liabilities of the foreign entity and translated at the closing rate. Exchange differences arising are recognised in equity Segment reporting Operating segments are reported in a manner consistent with the internal reporting provided to the Group s chief operating decision maker. The chief operating decision maker, who is responsible for allocating resources and assessing performance of the operating segments, has been identified as Chief Executive Officer ( the CEO ). 3. Financial risk management 3.1 Financial risk factors The risks include market risk (including currency risk and price risk), credit risk and liquidity risk. As the Group has no significant interest-bearing assets and the significant non-current liability has a fixed interest rate, the Group s income and operating cash flows are substantially independent of changes in market interest rates. The Group seeks to minimise the effects of market risk (including currency risk, price risk and cash flow and fair value interest rate risk), credit risk and liquidity risk by using natural hedges and derivative financial instruments to hedge these risk exposures. The Group does not enter into or trade financial instruments, including derivative financial instruments, for speculative purposes. (a) Market risk Hyva Group is geographically spread over five continents. The Group has a diversity of products and client groups, and a strong market position in different market segments. Hyva Group has many recurring clients, including truck, trailer and body manufacturers, transport companies, governmental institutions and distributors. Part of the turnover relates to capital investment programs in construction, infrastructure and mining, which often have longer lead times. Because of the global, geographical, product and customer spread, although situations like the recent economic turmoil impact Hyva significantly, Hyva s market risk is relatively limited. (i) Foreign exchange risk The Group operates internationally and is exposed to foreign exchange risk arising from various currency exposures. Foreign exchange risk arises when future commercial transactions or recognised assets or liabilities are denominated in a currency that is not the entity s functional currency. Management has set up a policy to require group companies to manage their foreign exchange risk against their functional currency. The group companies are required to report their expected cash flow in foreign currency against their functional currency on a regular basis. On group level the total exposure is assessed. Currency risks are naturally hedged as much as possible. If deemed necessary specific foreign currency instruments are applied. The Group has certain investments in foreign operations, whose net assets are exposed to foreign exchange risk. Currency exposure arising from the net assets of the Group s foreign operations is managed as much as possible through liabilities denominated in the relevant foreign currencies. 31

79 At 31 December 2014, if the USD had weakened/strengthened by 5% against all other currencies with all other variables held constant, result before tax for the year would have been USD 105 lower/higher, mainly as a result of foreign exchange gains and losses on translation of USD denominated receivables and payables in non-usd countries. (ii) Cash flow and fair value interest rate risk As the Group has no significant interest-bearing assets, the Group s income and operating cash flows are substantially independent of changes in market interest rates. The interest rates of all significant borrowings are fixed and therefore limit the cash flow interest rate risk. Significant borrowings are not carried at fair value and therefore limit the fair value interest rate risk. Bank borrowings other than the bond loan generally bear a floating interest rate. (iii) Other price risks The financial instruments are not subject to significant price risks other than those discussed above. (b) Credit risk The Group does not have significant concentrations of credit risk. The Group s clients are subject to creditworthiness tests. Sales are subject to payment conditions varying between payments in advance and terms of payment of 180 days. For larger projects, deviations to these policies may apply, in which case additional security, including guarantees, may be required and may be requested if deemed necessary. For banks and financial institutions only independent rated parties with a sufficiently high credit rating are accepted. The maximum exposure to credit risk regarding trade and other receivables is the carrying value of each class of receivables. The credit quality of trade receivables can be shown with historical percentages of actual write downs. The table below shows the write-down of trade receivables expressed as a percentage of the sales. Write-off of trade receivables 0.11% 0.08% The credit quality of cash at bank can be shown with currently available external credit ratings. The table below shows the amounts of cash at bank divided into categories of credit ratings. The applicable credit ratings are the ratings at or near 31 December Cash and cash equivalent (Moody's rating) A-Aaa 38,552 28,940 Ba-Baa 25,281 22,508 Credit rating not available 19,673 42,493 83,506 93,941 (c) Liquidity risk Cash flow forecasting is performed in the operating entities of the Group and on aggregated level. The Group s corporate finance function monitors rolling forecasts of the Group s liquidity requirements to ensure it has sufficient cash to meet operational needs while maintaining sufficient headroom on its undrawn committed borrowing facilities (note 14) at all times so that the Group does not breach borrowing limitations or covenants (where applicable) on any of its borrowing facilities. Such forecasting takes into consideration the Group s debt financing plans, covenant compliance, and external regulatory or legal requirements. The table below analyses the Group s financial liabilities and derivative financial liabilities into relevant maturity groupings based on the remaining period at the balance sheet date to the contractual maturity date. The amounts disclosed in the table are the contractual undiscounted cash flows. Balances due within 12 months equal their carrying balances as the impact of discounting is not significant. 32

80 3.2 Capital risk management Less than 1 year 1-5 years Over 5 years At 31 December 2014 Borrowings , Trade and other payables 175, At 31 December 2013 Borrowings 1, , Paying leg derivative financial instruments Trade and other payables 175, The Group s objectives when managing capital are to safeguard the Group s ability to continue as a going concern in order to provide returns for shareholders and benefits for other stakeholders and to maintain an optimal capital structure to reduce the cost of capital. The Company has a Leverage and a Cash flow covenant relating to its Super Senior Revolving Credit Facility ( SSRCF ). The Leverage is calculated by dividing the adjusted debt by the adjusted EBITDA (12 month rolling), and the Cashflow cover is calculated by dividing the adjusted cash flow by the adjusted debt service. In case of breach of the covenant conditions, all or part of the utilisations, together with accrued interest, may become immediately due and payable, and may limit new utilisations. The ratios should stay within the ranges below: 2014 Leverage < 5.5 Cashflow cover > 1.1 As at 31 December 2014, the Group meets the above covenants and access to the facility. The senior secured notes issued are also subject to covenant conditions. These conditions limit the debt of the consolidated group and the consolidated non-guarantor group. The relevant ratios to be monitored are the Consolidated Fixed Charge Coverage Ratio and the Consolidated Non-Guarantor Leverage Ratio. The Consolidated Fixed Charge Coverage Ratio is calculated as the ratio of consolidated EBITDA to consolidated interest expense. The Consolidated Non-Guarantor Leverage Ratio is calculated as the ratio of the outstanding non-guarantor debt to consolidated non-guarantor EBITDA. These ratios prohibit the incurrence of debt (other than certain permitted debt ), unless: (i) on a pro forma basis, the Consolidated Fixed Charge Coverage Ratio at the time of incurrence, and after giving effect to the incurrence, of such debt is greater than 3.00 to 1.00 with respect to any incurrence of debt on or prior to 31 March 2013, and 3.25 to 1.00 thereafter; and (ii) if the debt is incurred by a non-guarantor subsidiary of the Issuer, on a pro forma basis, the Consolidated Non-Guarantor Leverage Ratio at the time of incurrence, and after giving effect to the incurrence, of such debt is less than 0.50 to 1.0; Permitted debt definition in the notes document includes among others, a Super Senior Revolving Credit Facility ( SSRCF ) of USD 30 million and a general debt basket of USD 25million, which can be incurred irrespective of covenant compliances. These ratios are to be satisfied in the event of debt incurrence except permitted debt. As at 31 December 2014, the Group does not meet the Consolidated Fixed Charge Coverage Ratio and consequently ensures no additional debt incurrence, outside of the permitted debt, is contracted. This does not generate any other consequences related to the access and use of the senior secured notes. Management keeps a strong control on group cash planning and forecasting process and we are confident to be able to operate the 2015 business plan with the cash available within the Group. 33

81 3.3 Fair value estimation Financial instruments carried on the balance sheet date include cash, trade receivables, trade payables and borrowings. The carrying amounts of these financial assets and liabilities (excluding the senior secured notes included in borrowings, note 14) are estimated to approximate their fair values. For financial instruments that are measured in the balance sheet at fair value (note 10), the following levels of fair value measurement hierarchy has been recognised: Quoted prices (unadjusted) in active markets for identical assets or liabilities (level 1). Inputs other than quoted prices included within level 1 that are observable for the asset or liability, either directly (that is, as prices) or indirectly (that is, derived from prices) (level 2). Inputs for the asset or liability that are not based on observable market data (that is, unobservable inputs) (level 3). The fair value of financial instruments traded in active markets is based on quoted market prices at the balance sheet date. A market is regarded as active if quoted prices are readily and regularly available from an exchange, dealer, broker, industry group, pricing service, or regulatory agency, and those prices represent actual and regularly occurring market transactions on an arm s length basis. The quoted market price used for financial assets held by the Group is the current bid price. These instruments are included in level 1. The fair value of financial instruments that are not traded in an active market (for example, over-the-counter derivative financial instruments) is determined by using valuation techniques. These valuation techniques maximise the use of observable market data where it is available and rely as little as possible on entity specific estimates. If all significant inputs required to fair value an instrument are observable, the instrument is included in level 2. Specific valuation techniques used to value financial instruments include: The fair value of forward foreign exchange contracts is determined using forward exchange rates at the balance sheet date, with the resulting value discounted back to present value. Other techniques, such as discounted cash flow analysis, are used to determine fair value. If one or more of the significant inputs is not based on observable market data, the instrument is included in level 3. The financial instruments measured in the balance sheet at fair value are limited to the derivative financial instruments. The derivative financial instruments comprise of foreign exchange derivative financial instruments (note 10). The fair value of the foreign exchange derivative financial instruments is determined using forward exchange rates at the balance sheet date, with the resulting value discounted back to present value. These valuation techniques classify as level Critical accounting estimates and judgments Estimates and judgments are continually evaluated and are based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances. The Group makes estimates and assumptions concerning the future. The resulting accounting estimates will, by definition, seldom be equal to the related actual results. The estimates and assumptions that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year as well as critical judgments in applying the Group s accounting policies are discussed below. (a) Income taxes General The Group is subject to income taxes in numerous jurisdictions. Significant judgment is required in determining the worldwide provision for withholding and income taxes. There are many transactions and calculations for which the ultimate tax determination is uncertain. The Group recognises liabilities for anticipated tax audit issues based on estimates of whether additional taxes will be due. Where the final tax outcome of these matters is different from the amounts that were initially recorded, such differences will impact the current and deferred income tax assets and liabilities in the period in which such determination is made. 34

82 Deferred income taxes The Group recognises deferred tax assets arising from unused tax losses or tax credits only to the extent that the relevant fiscal unity has sufficient taxable temporary differences or there is convincing other evidence that sufficient taxable profit will be available against which the unused tax losses or unused tax credits can be utilised by the applicable fiscal unity. (b) Impairment of assets For the purpose of assessing impairment, assets are grouped at the lowest levels for which there are separately identifiable cash flows (cash-generating units). Intangible fixed assets that are not subject to amortisation are tested annually for impairment. For the Group, goodwill and most of trade-marks are not subject to amortisation. There is no foreseeable limit on the period of time over which the trade-marks are expected to contribute to the cash flows of the Group. Management is committed to continue to invest for the long term in the entities where the trademarks are used. Assets that are subject to amortisation or depreciation are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. Trade receivables are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. (c) Fair value of derivative financial instruments The fair value of financial instruments that are not traded in an active market is determined by using valuation techniques. The management uses its judgment to select a variety of methods and make assumptions that are mainly based on market conditions existing at each balance sheet date. The Group has used discounted cash flow analysis for the derivative financial instruments that are not traded in active markets. (d) Warranty provision By their nature, provisions are dependent upon estimates and assessments whether the criteria for recognition have been met, including estimates as to the outcome and the amount of the potential cost of resolution. Provisions are recognised by a charge against the profit and loss account when it is probable that a liability has been incurred and the amount of such liability can be reasonably estimated. The warranty provision is recorded based on the estimated costs expected to arise from the current warranties in respect of goods delivered. If the actual outcome differs from the current assumptions and estimates, revisions to the estimated provisions would be required, which could impact the Group s financial position and results from operations. (e) Pension benefits The present value of the pension obligations depends on a number of factors that are determined on an actuarial basis using a number of assumptions. The assumptions used in determining the net cost (income) for pensions include the discount rate. Any changes in these assumptions will impact the carrying amount of pension obligations. The group determines the appropriate discount rate at the end of each year. This is the interest rate that should be used to determine the present value of estimated future cash outflows expected to be required to settle the pension obligations. In determining the appropriate discount rate, the group considers the interest rates of high-quality corporate bonds that are denominated in the currency in which the benefits will be paid and that have terms to maturity approximating the terms of the related pension obligation. Other key assumptions for pension obligations are based in part on current market conditions. Additional information is disclosed in note

83 5. Segment reporting Hyva markets and distributes components that are developed and produced by manufacturing facilities across the world. Hyva's organisation is predominantly organised by geographical area (by source), with regional management reporting to the CEO. The main regions are: China India Other Asia EMEA Americas The geographical areas are active in the following product segments: Hydraulics: Telescopic front-end cylinders, a wide range of under body three way cylinders and wet kits Cranes: Fixed mounted and rolling truck cranes Tippers: Asia: mainly tipper building in India. EMEA: tipper sales & tipper mounting, mainly the Netherlands Other: other products including hook- and skip-loaders, compactors and refuse collection bodies The Group s segment performance is predominantly evaluated based on revenues and earnings before interest, taxes, depreciation and amortisation (Normalised EBITDA) based on the full calendar year. Net finance costs and income tax are managed on a centralised basis, and are not allocated between operating segments for the purpose of providing segment performance information to the Chief Operating Decision Maker. Therefore, net finance costs and income tax are not included in the segment analysis below. Total assets, total liabilities and additions to non-current assets do not form part of the information regularly provided to the Chief Operating Decision Maker. Therefore, no segment information is included. The Group does not have interests in associates and joint ventures accounted for by the equity method. There are no material non-cash items other than depreciation and amortisation. Revenues between segments are carried out at arm's length. The revenues (to external customers) are measured in a manner consistent with that manner in the statement of comprehensive income. The segment performance information can be shown as follows: 2014 China India Other Asia EMEA Americas Adjustments Total Revenues from external customers 173,270 92,579 39, ,029 64, ,237 Intersegment revenues 21,450 10,175 1,562 7,535 1,345-42,067 - Total segment revenues 194, ,754 40, ,564 66,296-42, ,237 EBITDA 39,915 10,874 4,512 5,257 8,257-68,815 Depreciation -7,287 Amortisation -19,520 Other operating costs -3,512 Operating profit consolidated statement of comprehensive income 38, China India Other Asia EMEA Americas Adjustments Total Revenues from external customers 197,791 79,824 39, ,206 70, ,575 Intersegment revenues 20,829 10,552 1,745 12, ,283 - Total segment revenues 218,620 90,376 41, ,882 70,606-46, ,575 EBITDA 54,368 9,430 2,869 1,211 5,540-73,418 Depreciation -8,021 Amortisation -20,336 Other operating costs -7,943 Operating profit consolidated statement of comprehensive income 37,118 36

84 The Group's revenue from external customers in respect of its principal products and services can be shown as follows: Hydraulics 341, ,641 Cranes 83,750 79,956 Tippers 64,081 54,450 Others 124, , , ,575 There are no material other Product Lines (> 10% of external revenues) which would require disclosure under IFRS 8. The Group's revenue from external customers in respect of its country of domicile and all foreign countries can be shown as follows: Country of domicile - The Netherlands 31,499 22,153 China 171, ,615 India 92,579 80,007 Brazil 45,239 50,773 Germany 30,175 27,013 United Kingdom 29,693 21,696 Others 212, , , ,575 There are no material other individual countries (> 10% of external revenues) which would require disclosure under IFRS 8. There are no material dependencies on or concentrations of individual customers which would require disclosure under IFRS 8 (individual customers > 10% of consolidated revenues). 37

85 6. Property, plant and equipment Land & buildings Machinery & equipment Total Balance at 1 January ,963 29,343 43,306 Arising on acquisition Additions 2,515 6,642 9,157 Disposals -2, ,416 Re-classification Depreciation charge (note 20) -2,296-5,725-8,021 Exchange differences ,453 Balance at 31 December ,058 29,312 40,370 Cost 15,112 40,186 55,298 Accumulated depreciation -4,054-10,874-14,928 Balance at 31 December ,058 29,312 40,370 Balance at 1 January ,058 29,312 40,370 Additions 1,661 5,228 6,889 Disposals -1, ,535 Transfers Depreciation charge (note 20) -1,071-6,216-7,287 Exchange differences ,501-2,143 Balance at 31 December ,565 26,729 36,294 Cost 12,470 39,775 52,245 Accumulated depreciation -2,905-13,046-15,951 Balance at 31 December ,565 26,729 36,294 Land and buildings includes a cost at 31 December 2014 of USD 4,895 (2013: 5,655) and a net book value at 31 December 2014 of USD 2,632 (2013: 2,877) in respect of buildings where the Group is lessee under finance leases. Machinery and equipment includes a cost at 31 December 2014 of USD 378 (2013: 362) and a net book value at 31 December 2014 of USD 62 (2013: 52) where the Group is lessee under finance leases. Of the additions to Land & buildings and Machinery & equipment in 2014, USD 30 (2013: 22) were acquired under finance leases. Please also refer to note 14 for further details on the finance lease contracts. The gross carrying amount of property, plant and equipment in the course of construction as per 31 December 2014 is USD 1,520 (2013: 1,891). Of the total depreciation, USD 5,531 (2013: 5,403) and USD 1,756 (2013: 2,618) were included in cost of goods sold and administrative expenses respectively. 38

86 7. Intangible fixed assets Goodwill Software Customer lists Trademarks Patents Other Total Balance at 1 January , , ,634 10, ,893 Additions Re-classification Amortisation and impairment charge (note 20) , ,336 Exchange differences 4, ,446 2, ,681 Balance at 31 December , , ,046 9, ,605 Cost 235,291 2, , ,406 11, ,122 Accumulated amortisation and impairment - -1,342-50, , ,517 Balance at 31 December , , ,046 9, ,605 Balance at 1 January , , ,046 9, ,605 Additions Amortisation and impairment charge (note 20) , ,520 Exchange differences -8, ,088-11, ,880 Balance at 31 December , , ,156 8, ,196 Cost 226,777 2, , ,516 11,248 1, ,192 Accumulated amortisation and impairment - -1,869-68, , ,996 Balance at 31 December , , ,156 8, ,196 The goodwill is related to the acquisition of Hyva Holding B.V. (and its subsidiaries) on 13 April The software mainly comprises the investments in enterprise resource planning software. The estimated useful life of the intangible fixed assets is as follows: Goodwill: indefinite Software: 3-5 years Customer lists: years Trademarks: 10 years to indefinite Patented technology years Research and development During the financial year the Group has expensed USD 3,902 (2013: 4,065) research and development costs to the statement of comprehensive income. Impairment testing of goodwill and indefinite life intangible assets During the financial year, the Group assessed the recoverable amount of goodwill and indefinite life intangible assets, and determined that goodwill and indefinite life intangible assets was not impaired. The recoverable amount of the relevant (groups of) cash-generating units was assessed by reference to value in use. A pre-tax discount factor of 14.9% to 22.8% per annum was applied in the value in use model for all (groups of) cash-generating units. The goodwill and indefinite life intangible assets has been allocated for impairment testing purposes to the following (groups of) cash-generating units: - China - India - Other Asia - EMEA (Europe, Russia, Middle East and Africa) - Americas 39

87 The carrying amount of goodwill and indefinite life intangible assets (i.e. trademarks) were allocated to the (groups of) cash-generating units as follows: Goodwill Trademarks Goodwill Trademarks China 190, , , ,014 India 8,000 19,366 8,166 19,768 Other Asia 1, , EMEA 21,304 32,659 24,218 37,098 Americas 4,543 8,226 5,102 9, , , , ,046 The recoverable amount of the (groups of) cash-generating units is determined based on a value in use calculation which uses cash flow projections based on financial budgets approved by the directors covering a five-year period. The pre-tax discount rates per annum per (groups of) cash-generating units are as follows: China 15.4% 15.1% India 22.8% 22.7% Other Asia 16.9% 15.5% EMEA 14.9% 13.5% Americas 20.5% 19.3% For each of the CGUs with significant amount of goodwill and indefinite life intangible assets, the key assumptions used in the value-in-use calculations are further described below. Generally speaking, the revenue forecast as well as margin developments are based on past performance and management s expectation of (1) market/industry dynamics, (2) Hyva s future new product launch development as well as (3) country and product mix evolution. The revenues in the China CGU are expected to increase on average for the five year forecast period by almost 20% per year mainly on account of increase in our capital equipment lines of business, especially waste-related products. The actual gross margin is expected to increase on average for the five year forecast period by about 13% per year and reflect the product mix towards more capital equipment products assumed during the forecast period. Regarding the EMEA CGU, revenues are forecasted to increase on average during the five year period by about 10% per year. The actual gross margin will increase on average during the five year forecast period by about 15% per year, driven by various margin improvements including country and product mix, continued savings opportunities as well as better utilisation of our manufacturing facilities. In the China CGU, the recoverable amount calculated based on value in use exceeds the current carrying value by USD 24,395. An annual sales volume growth rate of 18%, a gross margin decrease by 7%, annual average operating costs increase by 5%, a long term growth rate to 2%, or a rise in pre-tax discount rate to 15.96% would, all changes taken in isolation, result in the recoverable amount being equal to the carrying amount. Cash flow projections during the budget period are based on the same expected gross margins during the budget period and the raw materials price inflation during the budget period. The cash flows beyond the five-year period have been extrapolated using a steady per annum growth rate which are the projected long-term average growth rates as follows: China 2.7% 3.0% India 4.0% 4.9% Other Asia 2.5% 2.7% EMEA 1.7% 2.0% Americas 4.3% 3.3% 40

88 A sensitivity analysis shows that the conclusions of the impairment test do not change when the discount factor would increase by 0.5%. A sensitivity analysis shows that the conclusions of the impairment test do not change for any of the cashgenerating units when the growth rate decreases to nil except for CGU China. A nil growth rate would lead to an impairment of USD 54 million. 8. Inventories Raw materials 35,306 35,263 Work in progress 9,366 7,152 Finished goods 46,249 49,606 90,921 92,021 The cost of inventories recognised as expense and included in cost of sales amounted to USD 392,563 (2013: 385,032). During 2014 a write-down of USD 1,730 (2013: 2,526) has been recorded in the statement of comprehensive income. Inventories carried at net realisable value amount to USD 641 (2013: 3,010). 9. Trade and other receivables Trade receivables 119, ,334 Less: provision for impairment of trade receivables -4,819-5,827 Trade receivables - net 115, ,507 Receivables from intermediate holding companies 1, Other taxes and social contributions 8,918 8,378 Prepaid expenses 3,039 2,520 Other receivables and accrued income 7,899 7, , ,723 The average credit period on sales of goods at the end of the year is 68 days (2013: 68 days). No interest is charged on the trade receivables. The Group has provided fully for all receivables that are deemed to be unrecoverable. This assessment is done on an individual debtor basis by each of the operating companies in the Group. As of 31 December 2014, trade receivables of USD 24,809 (2013: 22,168) were past due but not impaired as there has not been a significant change in credit quality and the amounts are still considered recoverable. The ageing analysis of these trade receivables is as follows: Up to 3 months 17,022 14,846 3 to 6 months 4,413 2,415 Over 6 months 3,374 4,907 24,809 22,168 As of 31 December 2014, trade receivables of USD 6,731 (2013: 6,736) were (partly) impaired. The amount of the provision is USD 4,819 (2013: 5,827). The ageing of these receivables is as follows: Up to 6 months 1,990 1,599 6 to 12 months Over 12 months 3,750 4,687 6,731 6,736 41

89 Movements on the provision for impairment of trade receivables are as follows: In determining the recoverability of a trade receivable, the Group considers any change in the credit quality of the trade receivable from the date credit was initially granted up to the reporting date. The concentration of credit risk is limited due to the customer base being large and unrelated. Accordingly, the directors believe that there is no further credit provision required in excess of the provision for impairment. The other classes of receivables within trade and other receivables do not contain impaired assets. The carrying amounts of the Group s trade and other receivables are denominated in the following currencies: Considering the short average term before settlement management is of the opinion that there is no material difference between the fair value of trade and other receivables and the current carrying amount. 10. Derivative financial instruments Opening balance 5,827 5,410 Provision for receivables impairment 773 1,253 Receivables written off during the year as uncollectible Exchange differences Unused amounts reversed Closing balance 4,819 5,827 Euro 33,566 40,881 Chinese Yuan Renminbi 38,640 33,136 Indian Rupee 25,656 18,569 Brazilian Real 13,034 14,526 Polish Zloty 2,861 4,440 Russian Ruble 1,667 3,138 UK pounds 4,536 3,508 Moroccan Dirham 1,820 2,247 Malaysian Ringgit 2,385 1,855 Thai Bhat 2,208 3,057 Australian Dollar 1,123 1,423 Other 8,707 5, , ,723 Non-current Asset Foreign exchange derivative financial instruments - - Liability Foreign exchange derivative financial instruments - 31 Net liability Current Asset Foreign exchange derivative financial instruments - - Liability Foreign exchange derivative financial instruments - - Net liability Total net liability

90 The fair value of foreign currency forward contracts is calculated as the present value of the estimated future cash flows. The full fair value of the derivative financial instruments is classified as current asset or liability (note 2.8). 11. Cash and cash equivalents Cash (equivalents) at bank and on hand 83,506 93,941 All cash and bank balances, including pledged balances (note 14), are available on demand. The cash equivalent includes cheques and bank drafts for an amount of USD 26,827 (2013: 50,609). These cheques are subject to an insignificant risk of change in value which can be illustrated by the fact that all cheques could be cashed and no cheques had to be paid back during the reporting period. 12. Equity attributable to the owners of the parent Share capital Authorised share capital (amounts x EUR 1) The authorised share capital amounts to EUR 90,000 and consists of 90,000 (2013: 90,000) ordinary shares of EUR Issued share capital (amounts x EUR 1) The issued share capital of the Company consists of 18,001 (2013: 18,001) ordinary shares of EUR Pledge on the shares The senior secured notes as well as related credit facilities are secured by a pledge on the shares of Hyva Global B.V., Hyva Holding B.V., Hyva Group B.V., Hyva Securities B.V., Hyva International B.V., Kennis Service Drachten B.V., Hyva Transporttechnik GmbH, Hyva do Brasil Hidraulica Ltda, Hyva Germany GmbH, Georg Hydraulik GmbH, Hyva Belgium N.V., Hyva Italia S.r.l. and Amco Veba S.r.l.. Share premium The share premium has been created by contributions from shareholders exceeding the nominal value of the issued common shares. The total contribution exceeding the nominal value of the issued shares is USD 452,717 of which an amount of USD 349,883 was contributed in cash. Legal reserves Exchange differences relating to the translation from the functional currencies of the Group s foreign subsidiaries into USD are brought to account by entries made directly to the foreign currency translation reserve. The income tax relating to this component of other comprehensive income is nil. The components of the legal reserves at year-end are specified below: Translation reserve -44,630-6,567 Remeasurements reserve -1, ,147-6,671 The movements of translation reserve during the year are specified below: Opening balance -6,567-9,877 Currency translation differences -38,063 3,310 Closing balance -44,630-6,567 43

91 The movements of remeasurements reserve during the year are specified below: Opening balance Remeasurements -1, Closing balance -1, Retained earnings Opening balance -32,380-13,293 Result for the year -13,464-19,087 Closing balance -45,844-32, Non-controlling interests Opening balance Arising on acquisition Share in result Currency effects -5 - Closing balance Borrowings Non-current Bank borrowings and bond loans 370, ,266 Financial lease 683 1,193 Other loans 688 1, , ,723 Current Bank borrowings and bond loans Financial lease Other loans ,196 Total Bank borrowings and bond loans 370, ,555 Financial lease 838 1,513 Other loans 1,275 1, , ,919 Bank borrowings and bond loans The total bank borrowings and bond loans can be split as follows: Senior secured notes 370, ,002 Bank borrowings , ,555 44

92 The senior secured notes are denominated in USD and total an amount of 375 million. The interest rate is fixed at 8.625%, payable semi-annually on 24 March and 24 September. The maturity date of the loan is 24 March The senior secured notes are listed on the Singapore Exchange Securities Trading Limited (SGX-ST). The transaction costs incurred amounted to USD 18 million leading to net proceeds of the issuance of USD 357 million. The senior secured notes as well as related credit facilities are secured by a pledge on the shares of Hyva Global B.V., Hyva Holding B.V., Hyva Group B.V., Hyva Securities B.V., Hyva International B.V., Kennis Service Drachten B.V., Hyva Transporttechnik GmbH, Hyva do Brasil Hidraulica Ltda, Hyva Germany GmbH, Georg Hydraulik GmbH, Hyva Belgium N.V., Hyva Italia S.r.l. and Amco Veba S.r.l.. The senior secured notes are subject to covenants, for a further explanation on the covenants refer to note 3.2. The estimated fair value of the senior secured notes (including accrued interest) at year end 31 December 2014 is USD 362 million which is based on the unadjusted quoted median price. Bank borrowings contractually mature until 2015 and generally bear floating interest rates. The repayment obligations for the bank borrowings and bond loans are as follows: As the senior secured notes have fixed interest rates the exposure of the Group s borrowings to interest rate changes is not significant. The carrying amounts of the Group s borrowings are denominated in the following currencies: The Group has the following undrawn borrowing facilities: No later than 1 year Later than 1 year and no later than 2 years 370, ,266 Later than 2 years , ,555 US Dollar 370, ,002 Euro , ,555 Floating rate: - Expiring beyond one year The undrawn borrowing facility available to the Group by the end of 2014 is USD30,000 as the Group meets the SSRCF-related covenants. Finance leases The Group leases certain buildings and equipment by means of finance leases. The Group has a number of financial lease contracts with, amongst others, National Australia Bank, ITAU Bank, Sospita KG, Daimler Financial Services India Private Ltd and BMW Credit (Malaysia) Sdn Bhd. On these contracts no contingent rents are applicable. The majority of the contracts are related to lease of buildings used by the Group. All financial lease contracts are interest bearing, the interest varies between 2.40% and 10.39%. 45

93 Future minimum lease payments: No later than 1 year Later than 1 year and no later than 5 years 616 1,177 Later than 5 years Present value of future minimum lease payments 955 1,946 Interest payments: No later than 1 year Later than 1 year and no later than 5 years Later than 5 years 2 54 Present value of future minimum interest payments Financial lease liabilities: No later than 1 year Later than 1 year and no later than 5 years Later than 5 years Present value of financial lease liabilities 838 1,513 Lease liabilities are effectively secured by a pledge on the properties and equipment involved. For the carrying amounts of the assets involved reference is made to note 6. Since the interest rate on the financial lease liabilities is on average based on the market interest rate management is of the opinion that the fair value of the financial lease liabilities approximates the current carrying amount. 15. Deferred income tax The analysis of deferred tax assets and deferred tax liabilities is as follows: Deferred income tax assets - Deferred income tax assets to be recovered after more than 12 months 9,927 9,340 - Deferred income tax assets to be recovered within 12 months ,474 10,273 Deferred tax liabilities - Deferred tax liabilities to be recovered after more than 12 months 75,763 81,991 - Deferred tax liabilities to be recovered within 12 months 3,491 5,314 79,254 87,305 Net deferred tax liabilities -68,780-77,032 The gross movements on the deferred income tax account is as follows: Opening balance -77,032-81,413 - Income statement charge (note 23) 4,038 4,157 - Exchange differences 4, Closing balance -68,780-77,032 46

94 The movements in deferred income tax assets and liabilities during the year, without taking into consideration the offsetting of balances within the same tax jurisdiction, is as follows: Deferred tax assets Accelerated depreciation (in)tangible fixed assets Provisions Tax losses Valuation inventories and trade receivables Other Total At 1 January ,075 1,268 3,304 3,331 1,228 11,206 (Charged)/credited to the income statement -1,136 2,781-1,497-1, ,360 Exchange differences At 31 December ,033 4,101 1,919 2, ,273 At 1 January ,033 4,101 1,919 2, ,273 (Charged)/credited to the income statement Exchange differences At 31 December ,160 4,567 1,864 2, ,474 Deferred tax liabilities Customer lists and trademarks Tangible fixed assets Other Total At 1 January ,653 1, ,619 Charged/(credited) to the income statement -4, ,517 Exchange differences At 31 December , ,305 At 1 January , ,305 Charged/(credited) to the income statement -3, ,491 Exchange differences -4, ,560 At 31 December , ,254 The deferred tax assets and the deferred tax liabilities in the category Other include, amongst others, various differences as a result of prescribed foreign exchange rates as well as differences in timing of recognition of expenses. Deferred income tax assets are recognised for tax loss carry-forwards to the extent that the realisation of the related tax benefit through future taxable profits is probable. The probability is based on, amongst others, the budget for the coming years as well as the specific tax laws and regulations applicable in the respective tax jurisdictions. Deferred tax assets in respect of losses amounting to USD 1,864 (2013: 1,919) expire in the following years: Expiration in 2015 (2013: 2014) Expiration in (2013: ) Expiration after 2019 (2013: 2018) 1,498 1,592 1,864 1,919 The Group has unrecognised tax losses regarding some start-up companies and other subsidiaries for which the recognition criteria were not met, although management expects that a part of the unrecognised tax losses that expire can be recovered. These unrecognised tax losses expire in the following years: Expiration in 2015 (2013: 2014) Expiration in (2013: ) - - Expiration after 2019 (2013: 2018) 156, ,996 No expiration - 1, , ,997 47

95 No deferred tax has been recognised in respect of temporary differences associated with investments in subsidiaries where the Group is in a position to control the timing of the reversal of the temporary differences and it is probable that such differences will not reverse in the foreseeable future. There are no material unused tax credits. 16. Retirement benefit obligations and Share-based payments (a) Retirement Benefit Obligations A portion of the Dutch employees participate in an industry-wide pension scheme organised by the Pensioenfonds van de Metalektro. This scheme s benefits include, depending on the level of salary of the employee, a life-long pension (from age 67) and a next of kin (or survivor s) pension and is financed through average premiums. The pension scheme qualifies as a defined benefit plan but is treated as a defined contribution plan. It is not possible to calculate the present value of Hyva s pension liabilities and the value of its plan assets because the industry-wide pension scheme exposes the participating company to a number of risks that cannot be allocated to the participating company in a consistent and reliable manner. Based on the guidelines and principles of the industry-wide pension fund, the degree of cover amounts to 102.0% based on the principles applied by the pension fund at the end of 2014 (end of 2013: 103.8%). Hyva Group B.V., Hyva Belgium N.V., Amco Veba S.r.l. and F.lli Ferrari Corporation S.p.A. are the major entities that contribute to a defined benefit plan. The other entities, if applicable, contribute to a defined contribution plan or have a defined benefit plan that is not material. Balance sheet obligations for: - Pensions Defined Benefit Liability 4,962 3,711 - Pensions Defined Contribution ,975 3,893 The balance sheet obligation for defined contribution pension plans represents the payment obligation for unpaid contributions at year-end. Statement of comprehensive income charge for (note 21): - Pensions Defined Benefit Liability 1, Pensions Defined Contribution 2,403 2,740 3,766 3,256 Remeasurements of post employment defined benefit liability are recognised in OCI amounted to a loss of USD 1,413 (2013: gain of 216). Pension Defined Benefit Liability The amounts recognised in the balance sheet are determined as follows: Defined benefit liability 31,465 23,495 Fair value of plan assets -26,503-19,784 Deficit of funded plans 4,962 3,711 Liability in the balance sheet 4,962 3,711 The defined benefit liability, fair value of plan assets and the present value of the deficit of funded plans in the last 5 years are as follows: Defined benefit Deficit of liability Plan assets funded plans ,465 26,503 4, ,495 19,784 3, restated 22,120 18,196 3, restated 19,120 15,890 3, ,774 14,678 4,096 48

96 The movements in the defined benefit liability over the year is as follows: Present value Fair value of obligation of plan assets Total At 1 January ,120-18,196 3,924 Current service cost Interest expense/(income) Other movements , Remeasurements Employer contributions Employee contributions Benefits paid Transfers Currency differences 1, Other movements At 31 December ,495-19,784 3,711 At 1 January ,495-19,784 3,711 Current service cost Interest expense/(income) 1,297-1, Past service cost ,481-1,118 1,363 Remeasurements 9,516-8,103 1,413 9,516-8,103 1,413 Employer contributions Employee contributions Benefits paid Transfers Currency differences -3,794 3, At 31 December ,465-26,503 4,962 The plan assets consist of debt instruments (96%) and insured contracts (4%). The expected employer contributions for 2015 amount to USD 0.8 million. Of the total charge, USD 105 (2013: 92) and USD 1,258 (2013: 424) were included in cost of goods sold and administrative expenses respectively. Remeasurements of post-employment defined benefit liability are recognised in OCI amounted to a loss of USD 1,413 (2013: gain of 216). The actual return on plan assets cannot be determined, since the information was not available to the Company when preparing these financial statements. The significant actuarial assumptions used for the Netherlands were as follows: Discount rate 3.80% 3.80% Expected return on plan assets 3.80% 3.80% Future salary increases 2.00% 2.00% Price inflation 2.00% 2.00% 49

97 Assumptions regarding future mortality experience are set based on published statistics and experience in the Netherlands. The expected return on plan assets is based on the expected return for bonds with an average duration of 18 years. The significant actuarial assumptions used for Belgium were as follows: Discount rate 1.70% 3.00% Expected return on plan assets 1.70% 3.00% Future salary increases 3.00% 3.00% Price inflation 2.00% 2.00% Assumptions regarding future mortality experience are set based on published statistics and experience in Belgium. The significant actuarial assumptions used for Italy were as follows: Discount rate 1.49% 2.32% Future salary increases 4.00% 2.00% Future pension increases 4.00% 2.00% Price inflation 2.00% 2.00% Assumptions regarding future mortality experience are set based on published statistics and experience in Italy. The impact of changes in assumptions is not available. (b) Share-based payments Following the transaction with the current shareholders, a selected number of employees of Hyva Global B.V. and its subsidiaries were offered the opportunity to invest indirectly in the Company in April Based on the terms and conditions contained in the shareholder agreement, ordinary and preference shares were transferred by Hyva I to the foundation Stichting Administratiekantoor Hyva II, which issued depositary receipts over these ordinary and preference shares (the Depositary Receipts ). Under defined circumstances, the participating employees are obliged to sell and transfer the Depositary Receipts issued over ordinary shares. If a change in control event occurs, the participating employees are obliged to cooperate with the transfer or sale of the ordinary and preference share capital. The employees who initially invested indirectly in the Company in April 2011, have done so on the same terms and conditions as the other shareholders. As the price paid by the employees was the same as the price paid by the majority shareholders, the directors consider that the amounts paid by the employees for the shares represent the fair value of the ordinary and preference shares at that time. As the Company s shares are not listed, the directors need to estimate the fair value of these shares if and when employees subsequently acquire ordinary and preference shares. The fair market value of the Company on each grant date is estimated using a multiplier model based on earnings before interest, tax, depreciation and amortisation ( EBITDA"), where the multiple has been determined by the majority shareholders based on the market situation. Details of the number of share awards outstanding are as follows: Preference A B Preference A B shares shares shares shares shares shares Outstanding at the beginning of the year 12,597 7,482 37,418 12,050 7,156 35,792 Awarded during the year , ,603 Forfeited during the year -1,972-1,171-5, Outstanding at the closing of the year 11,392 6,766 33,839 12,597 7,482 37,418 50

98 17. Provisions for other liabilities and charges Warranty provision Other provisions Contingent consideration Total At 1 January , ,383 Arising on acquisition - - 1,016 1,016 Charged/(credited) to the income statement: - Additional provisions 6,374 2,226-8,600 - Unused amounts reversed Used during year -6,403-2, ,468 Exchange differences At 31 December ,211 1,107 1,016 7,334 At 1 January ,211 1,107 1,016 7,334 Charged/(credited) to the income statement: - Additional provisions 5, ,745 - Unused amounts reversed Used during year -4, ,878 Exchange differences At 31 December , ,227 Analysis of total provisions: Expected settlement after 12 months 2,758 2,123 Expected settlement within 12 months 4,469 5,211 7,227 7,334 The warranty provision represents the present value of the best estimate of the future outflow of economic benefits that will be required under the Group s warranty program. The estimate has been made on the basis of historical warranty trends and may vary as a result of new materials, altered manufacturing processes or other events affecting product quality. The other provisions include various individually non material provisions. 18. Trade and other payables Trade payables 112, ,920 Social security and other taxes 6,899 6,804 Deferred income 1,272 1,220 Accrued expenses 52,303 46,706 Other payables 3,229 2, , , Revenues Revenues consist predominantly of sales of goods. Other categories of revenues do not represent material amounts in 2014 and Segment revenues are included in note 5. 51

99 20. Expenses by nature Cost of sales -452, ,943 Selling, general and administrative costs -99, ,235 Other operating expenses -23,032-28, , ,457 Changes in inventories of finished goods and work in progress 1,143-4,689 Raw materials and consumables used -393, , , ,032 Employee benefit expenses (note 21) -77,062-78,910 Depreciation charges (note 6) -7,287-8,021 Amortisation and impairment charges (note 7) -19,520-20,336 Operating lease payments -8,206-8,259 Other operating costs -70,103-72, , ,425 Total cost of sales, selling, general & administrative expenses and other operating expenses -574, ,457 Lease rentals amounting to USD 3,829 (2013: 2,553) and USD 4,377 (2013: 5,706) relating to the lease of machinery and property, respectively, are included in the statement of comprehensive income. The other operating costs include, amongst others, commission costs, guarantee costs, transportation expenses, operational lease expenses, tooling & other production supplies, travelling & representation costs, promotional costs, professional fees, utilities, office expenses, outside services, insurance, repair & maintenance costs, packing materials and impairment of trade receivables. 21. Employee benefit expenses Wages and Salaries -58,684-60,398 Social security costs -10,215-10,554 Pension costs - defined contribution plans (note 16) -2,403-2,740 Pension costs - defined benefit plans (note 16) -1, Other personnel expenses -4,397-4,702-77,062-78,910 The total number of employees is 2,152 (2013: 2,176), based on the year-end head count of Full Time Equivalents (FTE s) excluding temporary employees. The split of the total number of employees between regions is as follows: Netherlands EMEA (excluding the Netherlands) China India Other Asia Americas ,152 2,176 52

100 22. Interest income and costs and other finance income and expenses Interest income: - Interest on short-term bank deposits 1,130 1,465 - Other interest income ,145 1,478 Interest costs: - Bank borrowings, bond loans and financial leases -36,257-36,244 - Drafts discounting ,160 - Other interest costs ,086-38,416 Net interest costs -35,941-36,938 Other finance expenses - Fair value change derivative financial instruments Other foreign exchange losses - net -2,013-1,406 - Other - net ,413-1,813 Net finance costs -38,354-38, Income tax expense The tax on the Group s profit before tax differs from the amount that would arise using the domestic tax rates applicable to profits of the consolidated entities as follows: Current income tax -14,724-16,815 Deferred income tax (note 15) 4,038 4,157 Other taxes -3,032-4,876-13,718-17,534 Profit/(Loss) before tax 142-1,633 Tax calculated at domestic tax rates applicable to profits in the respective countries 1,439 3,739 Tax effect of: Income not subject to tax and expenses not deductible for tax purposes -1,738-3,194 Unused tax losses not recognised -9,921-11,875 Adjustment in respect of prior years ,328 Withholding taxes -3,032-4,876 Tax charge -13,718-17,534 The weighted average applicable tax rate was 23% (2013: 22%). The high weighted average applicable tax rate is due to the fact that tax losses and profits within the respective countries have different rates. The subsidiary in China qualifies as a high technology enterprise for the Chinese tax authorities, and as such, enjoys certain preferential tax treatment. The tax charge relating to components of other comprehensive income is nil (2013: nil). 53

101 24. Dividends per share No dividends were paid in 2014 and 2013 by Hyva Global B.V.. No dividend with respect to the year ended 31 December 2014 is proposed to the Annual General Meeting of Shareholders. 25. Statement of cash flows In the statement of cash flows the movements in working capital comprises: Working capital opening balance 57,757 71,448 Working capital for the year Inventories 90,921 92,021 Trade and other receivables 139, ,723 -/- Interest receivables Trade and other payables -175, ,630 -/- Interest payables 8,715 8,715 Working capital closing balance 62,739 57,757 Gross movement working capital -4,982 13,691 Currency effect working capital components -8,022-6,870 Changes in working capital -13,004 6,821 Non-cash transactions There were no material non-cash transactions during 2014 and Contingencies Hyva Global B.V. is part of a fiscal unity in the Netherlands for corporate income tax purposes and for that reason jointly and severally liable for the tax liabilities of the whole fiscal unity. The fiscal unity consists of the following entities: Hyva Global B.V., Hyva III B.V., Hyva Holding B.V., Hyva Group B.V., Hyva International B.V., Kennis Service Drachten B.V., Hyva Securities B.V. and Technamics B.V.. The Italian entities form a fiscal unity for corporate income tax purposes and for that reason these entities are all jointly and severally liable for the tax liabilities of the whole fiscal unity. The fiscal unity consists of the following entities: Hyva Italia S.r.l., Amco Veba S.r.l., F.lli Ferrari Corporation S.p.A and Tecnomet S.r.l.. The Group has contingent liabilities in respect of legal claims arising in the ordinary course of business. It is not anticipated that any material liabilities will arise from these contingent liabilities. As already reported in 2013, the Group has a contingent liability in respect of a number of excise duty claims in India. The maximum exposure is estimated at USD 1.3 million (2013: 1.7 million). The case has been disputed in the courts for a number of years. As in prior years, the Group has received confirmation that, should the court finally decide unfavourably and after exhaustion of all levels of appeal, the exposure will be guaranteed in full by its related customer. During 2014, no significant progress was made in respect of this case. It is not anticipated that any material liabilities will arise from the contingent liabilities other than those provided for (note 17). The senior secured notes together with the available credit facilities are secured by a pledge on certain of the Group s assets (note 14). 54

102 27. Commitments Capital commitments Capital expenditure contracted for at the balance sheet date but not yet incurred is as follows: Property, plant and equipment 2, , Operating lease commitments group company as lessee The Group leases various offices and warehouses under non-cancellable operating lease agreements. The leases have varying terms (between 0 and 19 years), escalation clauses and renewal rights. At 31 December 2014 the premises of Hyva Group B.V. is leased on operational basis. The Group also leases various plant and machinery under cancellable operating lease agreements. The Group is required to give six months notice for the termination of these agreements. The future aggregate minimum lease payments under non-cancellable operating leases are as follows: No later than 1 year 7,434 7,404 Later than 1 year and no later than 5 years 13,193 14,281 Later than 5 years 4,359 7,140 24,986 28,825 Bank Guarantees and Bills of Exchange Total bank guarantees and bills of exchange for third parties amount to USD 2,328 (2013: 1,477). 28. Related-party transactions Parties are considered to be related if one party has the ability to control the other party or exercise significant influence over the other party in making financial or operational decisions. The Company is managed by the directors. Each director has individual signing power. As a result, the Company has concluded the directors have significant influence over the Company. The Company did not enter into any significant transactions with the directors of the Company in the year ended 31 December 2014 and the year ended 31 December 2013 other than those disclosed elsewhere in these financial statements. The ultimate parent and ultimate controlling party of the Group is Hyva I B.V.. Except Hyva I B.V., none of the individual shareholders have control over the Company based on the current share ownership percentages. Funds advised and managed by Unitas ( Unitas Funds ) and NWS are the only shareholders which indirectly hold more than 20% of the share capital. Unitas Funds and NWS each indirectly hold 38% through a holding of 50% of the shares of Hyva I B.V.. As a result, the Company has concluded that Unitas Funds and NWS have significant influence over the Company and that no other shareholder has significant influence. For the costs involved in arranging the acquisition both Unitas Funds and NWS charged an equity arrangement fee. Since April 2011 Unitas Funds and NWS provide management services to the Group. All transactions are considered to be at arm s length. The Group did not enter into any significant transactions with Unitas Funds and NWS in the years 2014 and 2013 other than those disclosed elsewhere in these financial statements. 55

103 Transactions between the Company and its subsidiaries, which are related parties of the Company, have been eliminated on consolidation and are not disclosed in this note. Details of transactions between the Group and other related parties are discussed below. Key management compensation Key management personnel are defined as the members of the Board of Directors, the Executive Officers and the regional directors. There were no transactions with key management personnel of the Company, except for those relating to remuneration and shareholdings. There were no transactions in the years 2014 and 2013 with close family members of key management personnel or with any entities controlled by key management personnel. For the purposes of IAS 24 Related party disclosures, management below the level of key management personnel are not regarded as related parties. The compensation paid or payable to key management for employee services is shown below: Salaries and other short-term employee benefits 6,186 5,052 Post-employment benefits Termination benefits 223-6,707 5, Subsequent events There are no material events after the balance sheet date that provide evidence of conditions that existed at the end of the reporting period and no material events that should be disclosed here. 56

104 Company-only financial statements 57

105 Company-only statement of income Year ended 31 December (x USD 1,000) Note Net result on participations (income from subsidiaries 33 24,231 16,214 after taxes) Other result after taxation -37,695-35,301 Net result -13,464-19,087 58

106 Company-only balance sheet (Before appropriation of net result) As at 31 December (x USD 1,000) Note ASSETS Non-current assets Property, plant and equipment 31 1,186 - Intangible fixed assets Financial fixed assets 33 1,101,038 1,182,995 1,102,893 1,182,995 Current assets Receivables from group companies 13,555 17,333 Other receivables Cash and cash equivalents ,670 18,343 Total assets 1,116,563 1,201,338 EQUITY AND LIABILITIES Equity attributable to the owners of the parent Share capital Share premium , ,717 Legal reserves 34-46,147-6,671 Retained earnings 34-32,380-13,293 Unappropriated result 34-13,464-19,087 Total equity 360, ,691 LIABILITIES Non-current liabilities Borrowings , , , ,294 Current liabilities Trade payables Debt to group companies 13, Other current liabilities 9,323 9,396 Bank overdraft ,837 10,353 Total liabilities 755, ,647 Total equity and liabilities 1,116,563 1,201,338 59

107 Notes to the company-only financial statements for the year ended 31 December General 30.1 Basis of preparation The company-only financial statements are part of the 2014 financial statements of Hyva Global B.V.. Principles for valuation and determination of the result The financial statements of the Company have been prepared in accordance with Part 9, Book 2 of the Dutch Civil Code. In accordance with sub article 8 of article 362, Book 2 of the Dutch Civil Code, the company-only financial statements are prepared based on the accounting principles of recognition, measurement and determination of profit, as applied in the consolidated financial statements. As the financial data of the Company are included in the consolidated financial statements, the statement of comprehensive income in the company-only financial statements is presented in its condensed form (in accordance with article 402, Book 2 of the Dutch Civil Code). In case no other policies are mentioned, refer to the accounting policies as described in the accounting policies in the consolidated financial statements. For an appropriate interpretation, the company-only financial statements should be read in conjunction with the consolidated financial statements. All amounts are presented in USD and all values are rounded to the nearest thousand unless otherwise indicated. The Company prepared its consolidated financial statements in accordance with the International Financial Reporting Standards ( IFRS ) as adopted by the European Union Goodwill Goodwill relating to investments in consolidated subsidiaries is initially measured as the excess of the aggregate of the consideration transferred over the net fair value of the net identifiable assets acquired and liabilities and contingent liabilities assumed. If this consideration is lower than the fair value of the net assets of the subsidiary acquired, the difference is recognised in profit or loss. Presentation of goodwill is dependent on the structuring of the acquisition. Goodwill is presented separately in the company financial statements if this relates to an acquisition performed by the company itself. Goodwill is subsumed in the carrying amount of the net asset value (see note 30.3) if an investment in a subsidiary is acquired through the company s intermediate subsidiary. Goodwill impairment reviews are undertaken annually or more frequently if events or changes in circumstances indicate a potential impairment. The carrying value of goodwill is compared to the recoverable amount, which is the higher of value in use and the fair value less costs of disposal. Any impairment is recognised immediately as an expense and is not subsequently reversed. 60

108 30.3 Financial fixed assets Consolidated subsidiaries are all entities (including intermediate subsidiaries) over which the company has control. The company controls an entity when it is exposed, or has rights, to variable returns from its involvement with the subsidiary and has the ability to affect those returns through its power over the subsidiary. Subsidiaries are recognised from the date on which control is transferred to the company or its intermediate holding entities. They are derecognised from the date that control ceases. The company applies the acquisition method to account for acquiring subsidiaries, consistent with the approach identified in the consolidated financial statements. The consideration transferred for the acquisition of a subsidiary is the fair value of assets transferred by the company, liabilities incurred to the former owners of the acquiree and the equity interests issued by the company. The consideration transferred includes the fair value of any asset or liability resulting from a contingent consideration arrangement. Identifiable assets acquired and liabilities and contingent liabilities assumed in an acquisition are measured initially at their fair values at the acquisition date, and are subsumed in the net asset value of the investment in consolidated subsidiaries. Acquisition-related costs are expensed as incurred. Investments in consolidated subsidiaries Investments in consolidated subsidiaries are measured at net asset value. Net asset value is based on the measurement of assets, provisions and liabilities and determination of profit based on the principles applied in the consolidated financial statements. When an acquisition of an investment in a consolidated subsidiary is achieved in stages, any previously held equity interest is remeasured to fair value on the date of acquisition. The remeasurements against the book value is accounted for in the statement of income. When the company ceases to have control over a subsidiary, any retained interest is remeasured to its fair value, with the change in carrying amount to be accounted for in the statement of income. When parts of investments in consolidated subsidiaries are bought or sold, and such transaction does not result in the loss of control, the difference between the consideration paid or received and the carrying amount of the net assets acquired or sold, is directly recognised in equity. 31. Property, plant and equipment Land & buildings Machinery & Equipment Total Balance at 1 January Balance at 31 December Cost Accumulated depreciation Balance at 31 December Balance at 1 January Transfers 146 1,371 1,517 Depreciation charge Balance at 31 December ,054 1,186 Cost 146 1,371 1,517 Accumulated depreciation Balance at 31 December ,054 1,186 Depreciation of USD 331 (2013: nil) was included in administrative expenses. 61

109 32. Intangible fixed assets Software Total Balance at 1 January Balance at 31 December Cost - - Accumulated amortisation and impairment - - Balance at 31 December Balance at 1 January Transfers Amortisation charge Balance at 31 December Cost Accumulated amortisation and impairment Balance at 31 December The software mainly comprises the investments in enterprise resource planning software. The estimated useful life of the intangible fixed assets is as follows: Software: 3-5 years 33. Financial fixed assets The financial fixed assets consist of participation of Hyva Global B.V. in its 100% subsidiary Hyva Holding B.V., Hyva Asia Holdings Pte Ltd., Hyva Southern Africa (Pty) Ltd. and of long term loans to group companies. The breakdown is as follows: Subsidiaries 761, ,868 Loans to group companies 339, ,127 1,101,038 1,182,995 The participation of Hyva Global B.V. in its 100% subsidiary Hyva Holding B.V. movements over the year is as follows: Opening balance 796, ,440 Dividend received -19,224-76,090 Net result participations 24,231 16,214 Currency results on participations -40,766 4,304 Closing balance 761, ,868 Loans to group companies The borrowers are group companies that are part of the same fiscal unity as the Company. During 2014, the company received interest income of USD 2,504 (2013: 2,505) on loan to Hyva Securities B.V.. The loans to group companies are interest bearing at arms-length interest rate. 62

110 34. Equity attributable to the owners of the Company General The Company has applied Section 2:362 (8) of the Netherlands Civil Code, and therefore the reconciliation is maintained between the Group s equity and the Company s equity. For details of the movements in and components of equity, reference is made to the Statement of changes in equity and notes 12 and 13 of the consolidated financial statements. Share capital Authorised share capital (amounts x EUR 1) The authorised share capital amounts to EUR 90,000 and consists of 90,000 (2013: 90,000) ordinary shares of EUR Issued share capital (amounts x EUR 1) The issued share capital of the Company consists of 18,001 (2013: 18,001) ordinary shares of EUR Share premium The share premium has been created by contributions from shareholders exceeding the nominal value of the issued common shares. The total contribution exceeding the nominal value of the issued shares is USD 452,717 (2013: 452,717). Legal reserves Exchange differences relating to the translation from the functional currencies of the Company s foreign subsidiaries into USD are brought to account by entries made directly to the foreign currency translation reserve. The legal reserves are translation reserves and cannot be used for distribution of dividends. The movements during the year are specified below: Opening balance -6,671-10,197 Currency translation differences -38,063 3,310 Remeasurement -1, Closing balance -46,147-6,671 Retained earnings Opening balance -13,293 6,399 Appropriation of result -19,087-19,692 Closing balance -32,380-13,293 Unappropriated result Opening balance -19,087-19,692 Appropriation of result 19,087 19,692 Profit for the year -13,464-19,087 Closing balance -13,464-19,087 63

111 35. Borrowings Non-current Bank borrowings 370, ,002 Loans from group companies 361, , , ,294 Current Bank borrowings - - Loans from group companies Total Bank borrowings 370, ,002 Loans from group companies 361, , , ,294 Bank borrowings and bond loans The total bank borrowings and bond loans can be split as follows: Senior secured notes 370, , , ,002 The senior secured notes are denominated in USD and total an amount of 375 million. The interest rate is fixed at 8.625%, payable semi-annually on 24 March and 24 September. The maturity date of the loan is 24 March The senior secured notes are listed on the Singapore Exchange Securities Trading Limited (SGX-ST). The senior secured notes as well as related credit facilities are secured by a pledge on the shares of Hyva Global B.V., Hyva Holding B.V., Hyva Group B.V., Hyva Securities B.V., Hyva International B.V., Kennis Service Drachten B.V., Hyva Transporttechnik GmbH, Hyva do Brasil Hidraulica Ltda, Hyva Germany GmbH, Georg Hydraulik GmbH, Hyva Belgium N.V., Hyva Italia S.r.l. and Amco Veba S.r.l.. The senior secured notes are subject to covenants, for a further explanation on the covenants we refer to note 3.2 of the consolidated financial statements. The repayment obligations for the bank borrowings and bond loans are as follows: No later than 1 year - - Later than 1 year and no later than 5 years 370, ,002 Later than 5 years , ,002 As the bank borrowings and bond loans have fixed interest rates the exposure of the Group s borrowings to interest rate changes is not significant. We refer to note 14 of the consolidated financial statements for further disclosures regarding the bank borrowings and bond loans. Loans from group companies The lenders are group companies that are part of the same fiscal unity as the Company. The loans from group companies are interest bearing at arms-length interest rate. 64

112 36. Number of employees The total number of employees is nil (2013: nil), based on the year-end head count in Full Time Equivalents (FTE s) excluding temporary employees. 37. Contingencies Hyva Global B.V. is part of a fiscal unity in the Netherlands for corporate income tax purposes and for that reason jointly and severally liable for the tax liabilities of the whole fiscal unity. The fiscal unity consists of the following entities: Hyva Global B.V., Hyva III B.V., Hyva Holding B.V., Hyva Group B.V., Hyva International B.V., Kennis Service Drachten B.V., Hyva Securities B.V. and Technamics B.V.. The Company has filed declarations of joint and several liability, in accordance with Section 403 of Book 2 of the Dutch Civil Code, for Hyva Holding B.V., Hyva Group B.V., Hyva International B.V. and Kennis Service Drachten B.V.. The senior secured notes together with the available credit facilities are secured by a pledge on certain of the Group s assets (note 14 of the consolidated financial statements). 38. Directors remuneration The directors remuneration includes periodically paid remuneration, such as salaries, holiday allowance and social premiums, remuneration to be paid after a certain term, such as pensions, allowances on termination of employment, profit sharing and bonus payments. No remuneration in their capacity of acting as directors were paid to the board of directors for the year ended 31 December 2014 (2013: nil). 39. Auditor s remuneration The fees listed below relate to the procedures applied to the Company and its consolidated group entities by PricewaterhouseCoopers Accountants N.V., the Netherlands, the external auditor as referred to in Section 1(1) of the Dutch Accounting Firms Oversight Act (Dutch acronym: Wta), as well as by other Dutch and foreign-based PricewaterhouseCoopers individual partnerships and legal entities, including their tax services and advisory groups: Financial statements audit fee Other assurance fees - 97 Tax fees ,115 65

113 40. Signing of the financial statements Amsterdam, 25 March 2015 Board of Directors Joep Hamers Eduard Johannes Hoogeboom Ajeet Kumar Singh Patrick Wai Hon Lam 66

114 Other Information 67

115 Statutory arrangement and proposed result appropriation Statutory arrangement concerning the appropriation of the profit According to article 20 of the Company s Articles of Association, the profit is at the disposal of the General Meeting of Shareholders, which can allocate the profit wholly or partly to the general or specific reserve funds. The Company can only make payments to the shareholders and other parties entitled to the distributable profit up to an amount which does not exceed the amount of the distributable part of the net assets. Proposed result appropriation for the financial year 2014 In accordance with the articles of association the net result is at the disposal of the General Meeting of Shareholders. The board of directors proposes that the net result will be added to the reserves. This proposal is not reflected yet in the accompanying financial statements. Subsequent events There are no material events after the balance sheet date that provide evidence of conditions that existed at the end of the reporting period and no other material events that should be disclosed here. 68

116 Independent auditor's report To: the general meeting of Hyva Global B.V. Report on the financial statements We have audited the accompanying financial statements 2014 of Hyva Global B.V., Amsterdam. The financial statements include the consolidated financial statements and the company financial statements. The consolidated financial statements comprise the consolidated balance sheet as at 31 December 2014, the consolidated statement of comprehensive income, changes in equity and cash flows for the year then ended and the notes, comprising a summary of significant accounting policies and other explanatory information. The company financial statements comprise the company-only balance sheet as at 31 December 2014, the company-only income statement for the year then ended and the notes, comprising a summary of accounting policies and other explanatory information. Board of directors responsibility The board of directors is responsible for the preparation and fair presentation of these financial statements in accordance with International Financial Reporting Standards as adopted by the European Union and with Part 9 of Book 2 of the Dutch Civil Code, and for the preparation of the directors report in accordance with Part 9 of Book 2 of the Dutch Civil Code. Furthermore, the board of directors is responsible for such internal control as it determines is necessary to enable the preparation of the financial statements that are free from material misstatement, whether due to fraud or error. Auditor s responsibility Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with Dutch law, including the Dutch Standards on Auditing. This requires that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the company s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the company s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by the board of directors, as well as evaluating the overall presentation of the financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion. Opinion with respect to the consolidated financial statements In our opinion, the consolidated financial statements give a true and fair view of the financial position of Hyva Global B.V. as at 31 December 2014, and of its result and its cash flows for the year then ended in accordance with International Financial Reporting Standards as adopted by the European Union and with Part 9 of Book 2 of the Dutch Civil Code. 69

117 Opinion with respect to the company financial statements In our opinion, the company financial statements give a true and fair view of the financial position of Hyva Global B.V. as at 31 December 2014, and of its result for the year then ended in accordance with Part 9 of Book 2 of the Dutch Civil Code. Emphasis of uncertainty with respect to the going concern assumption We draw attention to note 1 to the consolidated financial statements which indicates that the company will need to refinance the senior secured notes amounting USD 375 million that matures on 24 March 2016 and management is currently evaluating several available capital raising alternatives. This condition, along with other matters as set forth in note 1, indicate the existence of a material uncertainty which may cast significant doubt about the company s ability to continue as a going concern. Our opinion is not qualified in respect of this matter. Report on other legal and regulatory requirements Pursuant to the legal requirement under Section 2: 393 sub 5 at e and f of the Dutch Civil Code, we have no deficiencies to report as a result of our examination whether the directors report, to the extent we can assess, has been prepared in accordance with Part 9 of Book 2 of this Code, and whether the information as required under Section 2: 392 sub 1 at b-h has been annexed. Further we report that the directors report, to the extent we can assess, is consistent with the financial statements as required by Section 2: 391 sub 4 of the Dutch Civil Code. Amsterdam, 27 March 2015 PricewaterhouseCoopers Accountants N.V. Original has been signed by J. van Meijel RA 70