MEDION AG, Essen Separate Financial Statements For the Year ended December 31, 2011
72 5.3 Combined Management Report of MEDION Group and MEDION AG 5.3.8 Additional Disclosures for MEDION AG in Accordance with the German Commercial Code (HGB) The management report of MEDION AG and the Group management report for fiscal year 2011 have been combined pursuant to Sections 315 (3) and 298 (3) of the German Commercial Code (HGB). The financial statements of MEDION AG prepared in accordance with HGB and the combined management report are published at the same time in the electronic version of the German Federal Gazette. Financial performance of MEDION AG in accordance with HGB million % million % million 2011 2010 +/- Sales 1,423.8 100.0 1,632.0 100.0-208.2 Cost of materials -1,247.3-87.6-1,451.7-89.0 204.4 Gross earnings 176.5 12.4 180.3 11.0-3.8 Personnel expenses -28.2-2.0-27.7-1.7-0.5 Other expenses and income -121.0-8.5-124.0-7.6 3.0 Depreciation/amortization -3.6-0.3-4.2-0.3 0.6 EBIT 23.7 1.6 24.4 1.4-0.7 Financial result 5.4 0.4 1.4 0.1 4.0 EBT 29.1 2.0 25.8 1.5 3.3 Taxes -3.4-0.2-4.5-0.3 1.1 Net income MEDION AG 25.7 1.8 21.3 1.2 4.4 In fiscal 2011, MEDION AG recognized sales of 1,423.8 million (previous year: 1,632.0 million, reflecting a decrease of 208.2 million (-12.8%).
73 5.3 Combined Management Report of MEDION Group and MEDION AG However, despite the anticipated increase in price pressure in 2011, MEDION AG increased its gross margin from 11.0% to 12.4%. Despite the decline in sales, gross earnings of 176.5 million were only slightly lower than the previous year s figure of 180.3 million. Personnel expenses of MEDION AG in accordance with HGB 2011 2010 Total personnel expense in thousand 28,222 27,641 Average number of employees 468 466 Personnel expense per employee in 60,303 59,315 Number of employees as of the balance sheet date 469 473 Personnel expenses at MEDION AG were 28.2 million in 2011, exceeding the previous year s level of 27.7 million by +2.1%. There was for the most part no change in the average number of employees of MEDION AG. A reduction in the number of employees in Service and Administration was offset by an increase in Sales.
74 5.3 Combined Management Report of MEDION Group and MEDION AG Other operating expenses/income of MEDION AG in accordance with HGB million million 2011 2010 million +/- Other operating expenses Selling expenses -103.1-111.3 8.2 for marketing -41.7-38.5-3.2 for customer service -37.4-48.2 10.8 for miscellaneous -24.0-24.6 0.6 Administrative expenses -17.7-13.0-4.7 Operating expenses -2.7-2.5-0.2 Other -2.4-2.0-0.4-125.9-128.8 2.9 Other operating income 4.9 4.8 0.1 Other operating expenses, net -121.0-124.0 3.0
75 5.3 Combined Management Report of MEDION Group and MEDION AG Other operating expenses and income at MEDION AG decreased slightly from 124.0 million to 121.0 million. While the decreased expenses for customer service as a portion of selling expenses reflects the development of business volume, marketing expenses were increased for the purpose of expanding our online activities and launching new products. The increase in administrative expenses by 4.7 million to 17.7 million (previous year: 13.0 million) is primarily the result of expenses in connection with the acquisition of MEDION shares by Lenovo. Divestments caused depreciation and amortization to decrease by 0.6 million to 3.6 million in the period under review (previous year: 4.2 million). Operating and office equipment accounted for depreciation of 1.4 million. Despite a 12.8% decline in sales, MEDION achieved EBIT of 23.7 million in 2011, which is only slightly (-2.9%) lower than the 2010 figure of 24.4 million. The financial result includes 3.4 million in investment income from dividends of the subsidiaries. MEDION AG received no dividends in 2010. Furthermore, the financial result in 2010 included interest expenses from expected interest on back tax payments of 0.7 million. Due to minimum taxation regulations in Germany, MEDION AG incurred an effective income tax expense of 3.3 million in 2011, the same amount as in 2010 despite the existing tax loss carryforwards of MEDION AG. The reduction in the tax rate overall is due on the one hand to the receipt of tax-exempt dividends in 2011; on the other hand, the tax expenses in 2010 included 1.1 million in tax liabilities for prior years as a result of a tax audit for the years 2003 to 2006. Net income of MEDION AG for the year 2011 thus increased by 4.4 million to 25.7 million (previous year: 21.3 million). The Management and Supervisory Boards will propose a dividend of 0.21 for each dividend-entitled share.
Combined Management Report of MEDION Group and MEDION AG 76 5.3 Balance sheet structure of MEDION AG in accordance with HGB million % million % million % Dec. 31, 2011 Dec. 31, 2010 +/- Fixed assets 35.1 4.8 37.2 5.5-2.1-5.6 Total fixed assets 35.1 4.8 37.2 5.5-2.1-5.6 Inventories 208.7 28.6 199.3 29.5 9.4 4.7 Trade accounts receivable 235.4 32.2 262.0 38.8-26.6-10.2 Cash and cash equivalents 139.5 19.1 91.7 13.6 47.8 52.1 Other assets 112.2 15.4 85.8 12.7 26.4 30.8 thereof: term deposits 67.9 9.3 30.0 4.3 37.9 126.3 Total current assets 695.8 95.2 638.8 94.5 57.0 8.9 Total assets 730.9 100.0 676.0 100.0 54.9 8.1 Shareholders equity 379.1 51.9 363.0 53.7 16.1 4.4 Non-current liabilities 2.8 0.4 2.5 0.4 0.3 12.0 Tax provisions 0.0 0.0 2.2 0.3-2.2-98.2 Other provisions 142.3 19.5 158.5 23.4-16.2-10.2 Trade payables 192.3 26.3 140.2 20.8 52.1 37.2 Other current liabilities 14.4 2.0 9.6 1.4 4.8 50.0 Total current liabilities 349.0 47.8 310.5 45.9 38.5 12.4 Total shareholders equity and liabilities 730.9 100.0 676.0 100.0 54.9 8.1 Compared with the previous year, the total assets of MEDION AG increased by 54.9 million (+8.1%) to 730.9 million (previous year: 676.0 million). The lower amount of funds tied up in inventories and trade receivables totaling 17.2 million was offset by increased trade payables of 52.1 million. This is reflected in correspondingly higher cash and cash equivalents. Apart from the increase in cash and cash equivalents by 47.8 million to 139.5 million, medium-term cash investments increased by 37.9 million to 67.9 million. The equity-to-assets ratio decreased from 53.7% in the previous year to 51.9%.
Combined Management Report of MEDION Group and MEDION AG 77 5.3 Abridged cash flow statement of MEDION AG in accordance with HGB million million million % 2011 2010 +/- Net income 25.7 21.3 4.4 20.7 Depreciation, amortization and other non-cash expenses and income 3.9 4.0-0.1-2.5 Gross cash flow 29.6 25.3 4.3 17.0 Changes in net current assets 60.5-79.1 139.6 >100.0 Changes in other provisions -18.4-29.0 10.6 >100.0 Cash flow from operating activities 71.7-82.8 154.5 >100.0 Cash used for investing activities -1.5-3.6 2.1 58.3 Free cash flow 70.2-86.4 156.6 >100.0 Cash used for financing activities -9.6-8.3-1.3-15.7 Change in cash and cash equivalents 60.6-94.7 155.3 >-100.0 Cash and cash equivalents at the beginning of the period 126.7 221.4-94.7-42.8 Cash and cash equivalents at the end of the period 187.3 126.7 60.6 47.8 Consistent with the lower amount of funds tied up in working capital and the higher net income for the year, cash flow from operating activities increased to 71.7 million. While cash outflow from investing activities decreased slightly, cash outflow from financing activities increased due to a higher dividend distributed in 2011 for 2010, ( 0.23 per share; dividend distributed in 2010 for 2009: 0.20 per share). Overall, MEDION AG saw a net increase of 60.6 million in cash and cash equivalents to end the year at 187.3 million.
179 10.1 Separate Financial Statements of MEDION AG Income Statement in thousand 2011 2010 1. Sales 1,423,848 1,632,023 2. Other operating income 4,875 4,780 3. Cost of materials a) Cost of goods purchased 1,230,361 1,432,868 b) Cost of services purchased 16,976 18,832 1,247,337 1,451,700 4. Personnel expenses a) Wages and salaries 24,327 24,047 b) Social security contributions and pension expenses 3,895 3,594 28,222 27,641 5. Depreciation/amortization on intangible assets and property, plant and equipment 3,598 4,227 6. Other operating expenses 125,897 128,719 7. Income from equity investments 3,359 0 8. Other interest and similar income 3,813 3,925 9. Impairment losses on financial assets and securities held as current assets 85 74 10. Interest and similar expenses 1,645 2,418 11. Profit from ordinary activities 29,111 25,949 12. Extraordinary expenses 0 170 13. Extraordinary result 0-170 14. Taxes on income (thereof deferred taxes: -22 thousand; 2010: -95 thousand) 3,229 4,288 15. Other taxes 158 164 3,387 4,452 16. Net income 25,724 21,327 17. Net income brought forward from prior years 21,327 25,125 18. Dividends paid 10,277 8,922 19. Allocation to other revenue reserves 11,050 16,203 20. Unappropriated retained earnings 25,724 21,327
Separate Financial Statements of MEDION AG 180 10.2 Balance Sheet Assets in thousand Dec. 31, 2011 Dec. 31, 2010 A. Fixed assets I. Intangible assets 1. Industrial rights 678 850 2. Software 1,692 2,233 3. Payments on account 506 0 2,876 3,083 II. Tangible assets 1. Land and buildings 24,740 25,402 2. Other equipment, operating and office equipment 3,242 4,518 3. Payments on account and construction in progress 342 342 28,324 30,262 III. Financial assets Shares in affiliated companies 3,906 3,906 35,106 37,251 B. Current assets I. Inventories Goods and merchandise 208,666 199,349 II. Receivables and other assets 1. Trade accounts receivable 235,427 261,255 2. Receivables due from affiliated companies 8,658 721 3. Other assets 64,573 49,263 308,658 311,239 III. Securities Other securities 37,875 34,910 IV. Cash on hand, bank balances and checks 139,481 91,742 694,680 637,240 C. Prepaid expenses 769 1,118 D. Deferred taxes 365 343 730,920 675,952
Separate Financial Statements of MEDION AG 181 10.2 Balance Sheet Shareholders equity in thousand Dec. 31, 2011 Dec. 31, 2010 A. Shareholders equity I. Subscribed capital 1. Issued capital 48,418 48,418 2. Nominal amount of treasury shares -3,737-3,806 - thereof common shares: 48,418 thousand - Authorized capital: 24,000 thousand (2010: 24,000 thousand) 44,681 44,612 II. Capital reserves 138,726 138,488 III. Retained earnings Other revenue reserves 169,988 158,561 IV. Unappropriated retained earnings 25,724 21,327 379,119 362,988 B. Provisions 1. Pension provisions 2,801 2,488 2. Tax provisions 44 2,220 3. Other provisions 142,273 158,507 145,118 163,215 C. Liabilities 1. Trade accounts payable 178,634 137,347 2. Liabilities due to affiliated companies 13,649 3,607 3. Other liabilities 12,456 8,130 204,739 149,084 D. Deferred income 1,944 665 730,920 675,952