CREDITREFORM BILANZRATING 2013 Broetje-Automation GmbH Stahlstr. 1-5 26215 Wiefelstede Information panel Neuss, Accounting system: HGB Creditreform number: 2370054885 Financial statement: Single account Commercial reg. number: HRB120338 Analysis period: 2013/2012/2011/2010 Employees: 335 Balance sheet date: 2013-09-30 Auditors: Business sector: Deloitte & Touche GmbH, Düsseldorf 33200 / Installation of industrial machinery and equipment Ratingmodel version: 2.1
Contents Page 1. Balance Sheet Rating Results 5 2. Qualitative Credit-standing Data 5 3. Rating Notations 6 4. Probabilities of Default 6 5. Structured Financial Statements 7 6. Key Ratio Analysis 11 7. Sensitivity Analysis 12 8. Cash Flow Statement 13 9. Comparative Analyses (business sector & overall economy) 14 9.1 Asset structure 14 9.2 Capital structure 15 9.3 Financial structure 16 9.4 Profitability 17 9.5 Liquidity 19 10. Appendix 20 11. General Terms of Business 24 Contact Phone: 0 21 31 / 109-4900 email: bilanzrating@creditrefom-rating.de Internet: www.creditreform-rating.de Creditreform Rating AG Hellersbergstraße 11 41460 Neuss Page 2 of 24
List of tables Page Tab. 1: Profit commision statement 7 Tab. 2: Assets 8 Tab. 3: Liability side of the balance sheet (Part I) 9 Tab. 4: Liability side of the balance sheet (Part II) 10 Tab. 5: Financial ratios of the company 11 Tab. 6: Cash flow statement of the company 13 Page 3 of 24
List of figures Page Fig. 1: Development of balance sheet reliability 5 Fig. 2: Reliability checking 5 Fig. 3: Description of rating classes 6 Fig. 4: Probabilities of default 6 Fig. 5: Sensitivity analysis I 12 Fig. 6: Sensitivity analysis II 12 Fig. 7: Ratio of fixed assets to total assets (%) 14 Fig. 8: Liquidity ration fixed assets (%) 14 Fig. 9: Equity ratio (%) 15 Fig. 10: Debt to equity ratio 15 Fig. 11: Cash flow to gross performance (%) 16 Fig. 12: Dynamic debt clearance period (years) 16 Fig. 13: Return of assets (%) 17 Fig. 14: Sales profitability (%) 17 Fig. 15: Personnel expenditure ratio (%) 18 Fig. 16: Material expenditure ratio (%) 18 Fig. 17: Liquidity 1st degree (%) 19 Fig. 18: Liquidity 3rd degree (%) 19 Page 4 of 24
1. Balance Sheet Rating Results Within the framework of the insolvency-diagnostic appraisal of financial statements by Creditreform Rating AG, the balance sheet rating established for the company Broetje-Automation GmbH is as follows: Rating class PD*(%) Fig. 1: Development of balance sheet reliability 2010 CR2 0,11 2011 CR1 0,07 2012 CR2 0,09 2013 CR4 0,24 This rating grade classifies a company as extreme positive with a good creditworthiness. The company has a good capability to pay all financial covenants. The insolvency risk of the company is very low. *Probability of Default 2. Qualitative Credit-standing Data After negative cross-checking with the Creditreform corporate database, the result for the company under consideration is as follows: At the end of the last quarter, Creditreform had no negative credit-standing data on the company under consideration. Fig. 2: Reliability checking The result shown is based on the last-quarter Creditreform credit-standing data available at the time of the balance sheet rating procedure. Page 5 of 24
3. Rating Notations A total of 19 rating classes have been defined for Creditreform balance sheet rating. These can be summarised in nine main classes. Fig. 3: Description of rating classes 4. Probabilities of Default One-year probabilities of default are drawn directly from the rating model. The following chart shows the average one-year probabilities of default (in %) for the different rating classes. One-year probabilities of default Probabilities of default in % Fig. 4: Probabilities of default Balance sheet rating class Page 6 of 24
5. Structured Financial Statements Structured Income Statement 2010 2011 2012 2013 Sales 28.925,41 63.460,23 150.915,41 57.427,03 Changes in inventories (+/-) 14.792,50 52.585,87-59.090,57-243,45 Other own work capitalized 0,00 0,00 0,00 0,00 Gross performance 43.717,90 116.046,09 91.824,84 57.183,58 Cost of materials purchased 17.360,04 61.193,80 35.237,61 20.720,31 Cost of purchased services 7.567,24 23.305,50 14.782,53 7.039,62 Gross profit 18.790,62 31.546,79 41.804,70 29.423,65 Other operating income 4.126,57 3.335,81 3.632,96 4.281,14 non-periodic income 2.433,00 1.795,00 1.479,00 2.203,00 non-operating 329,00 185,00 216,00 347,00 non-periodic 2.433,00 1.795,00 1.479,00 2.203,00 appreciation 0,00 0,00 0,00 0,00 Wages and salaries 13.080,51 15.538,31 16.075,86 17.188,50 CEO salary 0,00 0,00 0,00 0,00 Social security, pensions and support 2.648,49 2.860,67 2.629,18 2.588,07 Depreciation and amortization, incl. amortization of 970,80 1.026,45 1.004,59 3.156,09 goodwill Other operating expenses 9.959,50 14.476,10 15.680,14 14.266,99 non-operating expenses 0,00 0,00 0,00 0,00 non-operating 0,00 0,00 0,00 0,00 non-periodic 0,00 0,00 0,00 0,00 allocation to special items 0,00 0,00 0,00 0,00 Earnings from operating activities -3.742,11 981,06 10.047,89-3.494,86 Net income from participating interests 457,06 3.639,11 2.142,34 1.447,40 Net income from other securities 0,00 0,00 0,00 0,00 Other interest etc. income 230,45 795,71 355,15 150,11 Write-downs on financial assets 0,00 0,00 0,00 0,00 Other interest etc. expenditure 0,05 144,65 143,25 117,05 Net investment / interest income 687,46 4.290,17 2.354,25 1.480,46 Result from ordinary business activities -3.054,65 5.271,23 12.402,14-2.014,40 Extraordinary income 0,00 0,00 0,00 0,00 Extraordinary expense 0,00 208,11 0,00 0,00 Extraordinary result 0,00-208,11 0,00 0,00 Total result -3.054,65 5.063,13 12.402,14-2.014,40 Taxes on income and earnings -9,12 547,91 3.525,46 12,79 Other taxes 3,99 3,44 2,36 4,31 Annual profit / loss -3.049,51 4.511,77 8.874,32-2.031,50 Profit and loss transfer 0,00 0,00 0,00 0,00 Annual profit / loss after transfer -3.049,51 4.511,77 8.874,32-2.031,50 2010 2011 2012 2013 Employees: 271 321 302 335 Tab. 1: Profit commision statement Page 7 of 24
Structured assets 2010 2011 2012 2013 Commercial licenses, industrial property rights etc. 613,49 710,67 1.565,07 1.523,40 Advances paid on intangible assets 0,00 0,00 0,00 0,00 Other intangible assets 0,00 0,00 0,00 0,00 Adjusted intangible assets 613,49 710,67 1.565,07 1.523,40 Land, buildings 0,00 0,00 0,00 0,00 Technical equipment, machinery 890,08 669,97 517,48 517,97 Other equipment, fixtures and fittings 865,59 796,64 850,10 629,73 Advances paid, assets under construction 0,00 0,00 0,00 0,00 Other fixed assets 0,00 0,00 0,00 0,00 Correcting items for reclassification of 0,00 0,00 0,00 0,00 IAS(IFRS)/US-GAAP items (FA) Fixed assets 1.755,67 1.466,61 1.367,57 1.147,70 Interests in affiliated companies 2.255,46 2.255,46 3.529,59 6.160,63 Loans to affiliated and associated companies as well as to 0,00 0,00 0,00 0,00 companies in which participating interests are held Participating interests 0,00 0,00 0,00 0,00 Investment securities 0,00 0,00 0,00 0,00 Other loans and financial assets 0,00 0,00 0,00 0,00 Financial assets 2.255,46 2.255,46 3.529,59 6.160,63 TOTAL FIXED ASSETS 4.624,62 4.432,74 6.462,24 8.831,73 Raw materials and consumables 924,10 1.096,20 1.679,30 1.554,80 Finished and unfinished products and goods for resale 35.738,82 88.324,69 29.234,12 27.389,88 demonstration car 0,00 0,00 0,00 0,00 Advance payments 7.719,25 715,07 2.446,00 3.616,33 Other inventories 0,00 0,00 0,00 0,00 Inventories 44.382,17 90.135,95 33.359,41 32.561,01 Trade receivables with remaining period < 1 year 1.151,84 8.105,09 11.170,44 4.263,73 Receivables from affiliated and associated companies as 5.631,05 3.715,38 1.516,68 2.411,27 well as from companies in which participating interests are held with remaining period < 1 year Other receivables and current assets with remaining 3.014,32 2.149,42 9.693,49 5.277,08 period < 1 year Marketable securities 0,00 0,00 0,00 0,00 other securities 0,00 0,00 0,00 0,00 Cash and cash equivalents 496,61 964,66 14.700,34 6.317,31 Accruals (without discount) 125,13 171,23 583,02 264,40 Correcting items for reclassification of 0,00 0,00 0,00 0,00 IAS(IFRS)/US-GAAP items (current assets) Current (short-term) assets 10.418,95 15.105,78 37.663,97 18.533,79 Trade Receivables with remaining period > 1 year 0,00 0,00 0,00 0,00 Receivables from affiliated and associated companies as 0,00 0,00 0,00 500,00 well as from companies in which participating interests are held with remaining period > 1 year Other assets with remaining period > 1 year 0,00 0,00 68,00 49,00 Medium-term current assets 0,00 0,00 68,00 549,00 TOTAL CURRENT ASSETS 54.801,11 105.241,74 71.091,38 51.643,80 Adjusted balance sheet total ASSETS 59.425,73 109.674,48 77.553,62 60.475,52 Tab. 2: Assets Page 8 of 24
Structured Shareholders Equity and Liabilities 2010 2011 2012 2013 Nominal capital, capital account I 1.031,00 1.031,00 1.031,00 1.031,00 + Capital account 0,00 0,00 0,00 0,00 - Subscribed (called) capital unpaid 0,00 0,00 0,00 0,00 + Capital reserves 165,88 165,88 165,88 165,88 + Revenue reserves / partnerships reserves 10.157,99 5.157,99 5.157,99 5.157,99 memo item: correction by BilMoG 0,00 0,00 0,00 0,00 - Start-up/business expansion and equity acquisition 0,00 0,00 0,00 0,00 expenses - Goodwill 0,00 0,00 0,00 988,36 - Self-generated intangible assets 0,00 0,00 0,00 0,00 - Amounts owed by shareholders 56.930,00 46.957,00 1.093,00 1.369,00 - Other correcting items for reclassification of 0,00 0,00 0,00 0,00 IAS(IFRS)/US-GAAP items (equity) - Discount 0,00 0,00 0,00 0,00 - Active deferred taxes 0,00 0,00 0,00 0,00 + Passive deferred taxes 0,00 0,00 0,00 0,00 + Grants (incl. grants to cover building costs) 0,00 0,00 0,00 0,00 + Expenditure reserves 0,00 0,00 0,00 0,00 + 50% special item with reserve character 0,00 0,00 0,00 0,00 + Balancing item to consolidated balance sheet 0,00 0,00 0,00 0,00 + Amounts payable to shareholders with equity character 0,00 0,00 0,00 0,00 (subordination) + Profit participation rights capital 0,00 0,00 0,00 0,00 + Minority interests in equity 0,00 0,00 0,00 0,00 + Other equity 0,00 0,00 0,00 0,00 + Profit carryforward / - loss carryforward 4.090,78 1.041,27 2.553,04 11.427,36 + Annual profit / - annual loss -3.049,51 4.511,77 8.874,32-2.031,50 + Balance sheet profit / - balance sheet loss 0,00 0,00 0,00 0,00 - Own Shares 0,00 0,00 0,00 0,00 - Adjustment item for equity capital 0,00 0,00 0,00 0,00 Adjusted equity -44.533,86-35.049,09 16.689,23 13.393,37 Pension provisions and similar long-term provisions 1.036,93 1.255,24 1.336,72 1.215,16 memo item: allocation of liability insurance 0,00 0,00 0,00 0,00 Non-subordinated amounts payable to shareholders 0,00 0,00 0,00 0,00 Loans payable in > 5 years 0,00 0,00 0,00 0,00 Amounts owed to banks, with remaining period > 5 years 0,00 0,00 0,00 0,00 Trade accounts payable with remaining period > 5 years 0,00 0,00 0,00 0,00 Amounts payable to affiliated and associated companies 0,00 0,00 0,00 0,00 as well as to companies in which participating interests are held with remaining period > 1 year 1/3 grants to cover building costs 0,00 0,00 0,00 0,00 Other liabilities and tax liabilities with remaining period > 5 0,00 0,00 0,00 0,00 years Long-term outside capital 1.036,93 1.255,24 1.336,72 1.215,16 Tab. 3: Liability side of the balance sheet (Part I) Page 9 of 24
Structured Shareholders Equity and Liabilities 2010 2011 2012 2013 `50% special item with reserve character 0,00 0,00 0,00 0,00 Amounts payable to shareholders in 1 to 5 years 0,00 0,00 0,00 0,00 Loans payable in 1 to 5 years 0,00 0,00 0,00 0,00 Amounts payable to banks in 1 to 5 years 0,00 0,00 0,00 0,00 Trade accounts payable in 1 to 5 years 0,00 0,00 0,00 0,00 Amounts payable to affiliated and associated companies 0,00 0,00 0,00 0,00 as well as to companies in which participating interests are held with remaining period 1 to 5 years Bills payable in 1 to 5 years 0,00 0,00 0,00 0,00 Advance payments received with remaining period 1 to 5 0,00 0,00 0,00 0,00 years Other liabilities and tax liabilities payable in 1 to 5 years 0,00 0,00 0,00 0,00 Medium-term outside capital 0,00 0,00 0,00 0,00 Provisions for taxes and other provisions 13.203,72 15.573,14 17.551,86 12.659,84 Amounts payable to shareholders in < 1 year 3.067,37 2.143,00 0,00 0,00 Loans payable in < 1 year 0,00 0,00 0,00 0,00 Amounts payable to banks in < 1 year 0,00 0,00 0,00 0,00 Advance payments received with remaining period < 1 83.247,97 117.514,94 39.695,43 31.603,03 year Trade accounts payable in < 1 year 1.161,72 6.670,51 1.819,02 1.191,81 Bills payable in < 1 year 0,00 0,00 0,00 0,00 Amounts payable to affiliated and associated companies 138,81 581,77 133,86 157,29 as well as to companies in which participating interests are held with remaining period < 1 year Sum to be distributed in dividends 0,00 0,00 0,00 0,00 Other liabilities and tax liabilities with remaining period < 1 2.103,06 984,66 327,49 255,03 year Accrued expense 0,00 0,30 0,00 0,00 Short-term outside capital 102.922,66 143.468,33 59.527,67 45.867,00 TOTAL OUTSIDE CAPITAL 103.959,59 144.723,57 60.864,39 47.082,15 Adjusted balance sheet total LIABILITIES 59.425,73 109.674,48 77.553,62 60.475,52 Contingent liabilities 2010 2011 2012 2013 Bills payable 0,00 0,00 0,00 0,00 Other contingent liabilities 0,00 0,00 0,00 0,00 Hire / Leasing liabilities 1.657,00 2.978,00 2.975,00 2.928,00 Other financial commitments 0,00 0,00 0,00 0,00 Pension obligations not carried 0,00 0,00 0,00 0,00 Asset history 2010 2011 2012 2013 Carrying value at beginning of year under review 11.243,48 12.060,92 12.145,27 15.036,02 Additions in year under review 1.150,31 928,37 3.034,60 6.963,21 Retirements in year under review 332,88 844,02 143,85 2.442,99 Write-ups in year under review 0,00 0,00 0,00 0,00 Re-postings in year under review 0,00 0,00 0,00 0,00 Write-downs in year under review 970,79 1.026,45 1.004,59 1.197,21 Cumulative depreciation 7.436,30 7.712,53 8.573,78 9.736,15 Carrying value at end of year under review 4.624,62 4.432,74 6.462,24 9.820,09 Tab. 4: Liability side of the balance sheet (Part II) Page 10 of 24
6. Key Ratio Analysis Asset structure 2010 2011 2012 2013 BS* Fixed to total assets ratio (%) 7,78 4,04 8,33 14,60 13,23 Turnover of assets 0,49 0,58 1,95 0,95 1,88 Turnover period (days) 424,16 386,85 149,34 209,49 51,17 Liquidity ratio fixed assets (%) -940,55-762,37 278,94 165,41 183,89 Cash ratio (%) 0,84 0,88 18,96 10,45 9,34 Customer target (days) 14,53 46,62 27,02 27,10 41,39 Capital structure 2010 2011 2012 2013 BS* Equity ratio (%) -74,94-31,96 21,52 22,15 20,59 Debt to equity ratio -- -- 3,65 3,52 2,89 Ratio short-term outside to total capital (%) 173,20 130,81 76,76 75,84 64,41 Ratio long-term outside to total capital (%) 1,74 1,14 1,72 2,01 4,12 Capital tied up (%) 7,27 1,55 0,22 0,44 3,72 Capital tie up period (days) 14,66 38,37 4,40 7,58 19,63 Outside capital structure (%) 5,61 24,52 8,59 7,70 31,06 Liabilities ratio (%) 174,94 131,96 78,48 77,85 79,41 Ratio of trade accounts payable (%) -4,88-85,08 4,80 4,13 10,07 Provisions ratio (%) 23,96 15,34 24,36 22,94 9,85 Supplier target (days) 17,01 28,81 13,27 15,67 39,53 Financial strength 2010 2011 2012 2013 BS* Cash Flow (absolute) -4.521,78 4.169,63 8.481,39-1.199,97 -- Cash flow to gross performance (%) -10,34 3,59 9,24-2,10 4,67 Cash flow to effective debt (%) -22,98 16,07 42,77-8,41 18,43 Cash Flow ROI (%) -7,61 3,80 10,94-1,98 10,53 Dynamic debt clearance period (years) -- 23,89 4,50 39,43 4,71 Debt sustainability (%) -2,44 1,84 18,51-0,65 15,14 Profitability 2010 2011 2012 2013 BS* Return on Investment (%) -5,14 4,81 15,99-3,33 8,72 Income to equity ratio (%) -- -12,87 53,17-15,17 11,95 Return on capital employed (%) -5,13 4,25 11,63-3,17 7,73 Gross earnings ratio (%) 64,96 49,71 27,70 51,24 48,33 Percentage return on sales (%) -12,94 1,32 6,56-6,29 3,61 EBIT Interest Coverage -77.268,35 6,78 70,14-29,86 6,78 EBITDA Interest Coverage -57.222,96 13,88 77,15-2,89 9,09 Payroll expenditure ratio (%) 35,98 15,85 20,37 34,58 27,83 Materials expenditure ratio (%) 57,02 72,82 54,47 48,55 51,84 Cost Income Ratio (%) 156,08 177,26 55,26 105,27 95,13 Turnover per employee (absolute) 106,74 197,70 499,72 171,42 -- Interest expenditure to outside capital (%) 0,00 0,53 0,68 0,76 2,04 Liquidity 2010 2011 2012 2013 BS* 1st degree liquidity (%) 0,48 0,67 24,69 13,77 12,39 2 st degree liquidity (%) 10,12 10,53 63,27 40,41 62,18 3rd degree liquidity (%) 53,24 73,36 119,43 112,59 117,98 Net Working Capital (absolute) -48.121,54-38.226,59 11.563,71 5.776,80 -- 1st degree liquidity (%) extended 0,48 0,67 24,15 13,42 8,54 Tab. 5: Financial ratios of the company Nominal key ratios are stated in. *BS = business sector Page 11 of 24
7. Sensitivity Analysis As well as conducting an overall insolvency-diagnostic appraisal, it is appropriate to analyze the significance of the four balance sheet analysis areas asset structure, capital structure, financial strength and earnings power in terms of their impact on probability of default. The following diagrams show only the year-on-year change for each area; the other three areas, ceteris paribus, are considered unchanged. On no account should the change in the overall result be seen here as the sum of all changes. Fig. 5: Sensitivity analysis I Within the framework of th sensitivity analysis, the probability of default in fiscal 2013 was 178,66 % higher than in the prior year, which signals a deterioration of balance sheet credit-worthiness overall. Fig. 6: Sensitivity analysis II Within the framework of th sensitivity analysis, the probability of default in fiscal 2012 was 17,65 % higher than in the prior year, which signals a deterioration of balance sheet credit-worthiness overall. Page 12 of 24
8. Cash Flow Statement I. Operating activities 2010 2011 2012 2013 Annual profit / - annual loss -3.049,51 4.511,77 8.874,32-2.031,50 +/- Total depreciation and appreciation 970,80 1.026,45 1.004,59 3.156,09 + Changes in pension provisions and similar long-term -10,07 218,31 81,48-121,56 provisions (incl. allocation of liability insurance) Cash flow from ordinary business activities -2.088,78 5.756,53 9.960,39 1.003,03 - other non-operating revenues 2.433,00 1.795,00 1.479,00 2.203,00 + Change of special reserve 0,00 0,00 0,00 0,00 - extraordinary result 0,00-208,11 0,00 0,00 Cash flow from total business activities/cash Flow (absolut) -4.521,78 4.169,63 8.481,39-1.199,97 Increase / decrease in 2010 2011 2012 2013 inventories -21.537,17-45.753,78 56.776,54 798,40 trade receivables 7.581,16-6.953,26-3.065,35 6.906,71 receivables from participation -3.274,05 1.915,67 2.198,70-1.394,58 other assets -31.436,45 10.791,80 37.840,14 4.478,03 accounts payable 247,72 5.508,79-4.851,49-627,20 liabilities from participation -29,19 442,96-447,91 23,42 short-term provisions -2.888,28 2.369,42 1.978,72-4.892,03 other equity and liabilities 51.186,03 33.148,87-78.476,98-8.164,87 Cash flow from operating activities -2.239,00 7.226,99 21.912,77-1.869,08 II. Investing activities 2010 2011 2012 2013 Intangible assets -247,49-97,18-854,41-946,69 Fixed assets -896,46-737,39-905,56-2.936,22 financial assets -0,46 0,00-1.274,13-2.631,03 Cash flow from investing activities -1.144,42-834,58-3.034,09-6.513,94 III. Financing activities 2010 2011 2012 2013 from capital increase -0,35-5.000,00-3.000,00 0,00 bank loans 0,00 0,00 0,00 0,00 shareholders loan 3.067,37-924,37-2.143,00 0,00 bonds issues 0,00 0,00 0,00 0,00 Cash flow financing activities 3.067,02-5.924,37-5.143,00 0,00 Cash Flow 2010 2011 2012 2013 Cash flow from operating activities -2.239,00 7.226,99 21.912,77-1.869,08 Cash flow from investing activities -1.144,42-834,58-3.034,09-6.513,94 cash flow from financing activities 3.067,02-5.924,37-5.143,00 0,00 Total Cash Flow (I+II+III) -316,39 468,05 13.735,68-8.383,02 Net cash available 2010 2011 2012 2013 Net Increase (+)/Decrease (-) in Cash and Cash -316,39 468,05 13.735,68-8.383,02 Equivalents Net Increase (-)/Decrease (+) in liabilities to banks 0,00 0,00 0,00 0,00 Cash and cash equivalents, end of year -316,39 468,05 13.735,68-8.383,02 Tab. 6: Cash flow statement of the company Note: Amounts shown in the Cash Flow Statement are stated in the reporting currency. Page 13 of 24
9. Comparative Analyses (business sector & overall economy) 9.1 Analysis area: Asset structure Company 4,04 8,33 14,60 Sector 13,23 13,23 13,23 Overall economy 27,93 27,93 27,93 Fig. 7: Ratio of fixed assets to total assets (%) The fixed to total assets ratio shows how much of a company s total adjusted asset volume relates to fixed assets. It is used as an indicator of the company s flexibility in adapting to capacity utilization fluctuations. The lower the ratio of fixed to total assets, the more flexible the company is considered to be. A company s key ratios always need to be considered in relation to the ratios of the relevant business sector. Company -762,37 278,94 165,41 Sector 183,89 183,89 183,89 Overall economy 108,49 108,49 108,49 Fig. 8: Liquidity ration fixed assets (%) The liquidity ratio of the fixed assets shows how much of a company s fixed asset volume is financed by long-term capital in this case by equity and long-term outside capital. Given the golden rule that long-term assets require long-term finance, the liquidity ratio of fixed assets indicates the solidity of fixed asset financing. Page 14 of 24
9.2 Analysis area: Capital structure Company -31,96 21,52 22,15 Sector 20,59 20,59 20,59 Overall economy 26,66 26,66 26,66 Fig. 9: Equity ratio (%) The ratio of equity to total capital is used as a measure of a company s susceptibility to crisis. It is generally the case that the higher the equity ratio is, the more solidly a company is financed. A high proportion of own resources in the total capital improves the company s liability basis, ensures a considerable degree of independence from outside capital grantors and eases the strain on liquidity. Company 0,00 3,65 3,52 Sector 2,89 2,89 2,89 Overall economy 1,61 1,61 1,61 Fig. 10: Debt to equity ratio Like the equity ratio, the debt to equity ratio is primarily a yardstick of risk for determining a company s susceptibility to crisis. It also indicates a company s dependence on external creditors. A low debt to equity ratio indicates a low financial management risk. However, the debt to equity ratio must not be considered in isolation because when the leverage effect is taken into account, a higher debt to equity ratio can, under certain circumstances, be deemed positive for reasons of earning power. Page 15 of 24
9.3 Analysis area: Financial strength Company 3,59 9,24-2,10 Sector 4,67 4,67 4,67 Overall economy 4,94 4,94 4,94 Fig. 11: Cash flow to gross performance (%) As an absolute value, cash flow conveys information on the reflux of capital from all company operations and is thus an indicator of a company s internal financing potential. To provide a full picture, the absolute value is set against gross performance. The higher the ratio of cash flow to gross performance, the greater the reflux of capital from sales available to the company for generating output. Company 23,89 4,50 39,43 Sector 4,71 4,71 4,71 Overall economy 3,61 3,61 3,61 Fig. 12: Dynamic debt clearance period (years) The key ratio "dynamic debt clearance period" is used as an indicator of a company s debt redemption capability. It indicates the (hypothetical) number of years the debt clearance period needed to repay the adjusted outside capital. The shorter the dynamic debt clearance period, the greater the company s financing scope. The indicator is also seen as a measure of the scope to contract further debt. Page 16 of 24
9.4 Analysis area: Profitability Company 4,25 11,63-3,17 Sector 7,73 7,73 7,73 Overall economy 6,62 6,62 6,62 Fig. 13: Return of assets (%) The key ratio return on capital employed indicates the yield on the total capital employed in a company (equity + outside capital). It is an indicator of the company s capability and efficiency in achieving sustained earnings with the available assets. Company 1,32 6,56-6,29 Sector 3,61 3,61 3,61 Overall economy 3,09 3,09 3,09 Fig. 14: Sales profitability (%) Percentage return on sales is another indicator of a company's profitability. The definition of the key ratio "percentage return on sales" used in this analysis indicates the percentage of sales revenues represented by the operating result less interest on outside capital. Care is taken here to ensure that the sales revenues in question result from the output of the company in its business sector and are not affected by non-operating and extraordinary activities. Page 17 of 24
Company 15,85 20,37 34,58 Sector 27,83 27,83 27,83 Overall economy 22,20 22,20 22,20 Fig. 15: Personnel expenditure ratio (%) The "payroll expenditure ratio" is a rough guide to the dependence of income on payroll costs. Payroll expenses normally have a fixed character. Adjustments to fluctuations in capacity utilization are thus not automatically or immediately possible. Moreover, the payroll expenditure ratio is also a measure of work productivity. In comparison to other companies operating in the same sector, a higher payroll intensity may be an indication of outdated production methods. Company 72,82 54,47 48,55 Sector 51,84 51,84 51,84 Overall economy 55,09 55,09 55,09 Fig. 16: Material expenditure ratio (%) The materials expenditure ratio shows total expenditure on materials as a percentage of gross performance. A high materials expenditure ratio is characteristic of a low depth of inhouse production because of the high proportion of materials purchased from outside sources. Furthermore, a high materials expenditure ratio tends to indicate greater flexibility of manufacturing operations and sales policy. On the down side is a high susceptibility to price fluctuations in the procurement market. Page 18 of 24
9.5 Analysis area: Liquidity Company 0,67 24,69 13,77 Sector 12,39 12,39 12,39 Overall economy 11,33 11,33 11,33 Fig. 17: Liquidity 1st degree (%) First degree liquidity indicates whether and to what extent short-term liabilities are covered by cash inventories in terms of volume and dates due. High cash inventories may conflict with the endeavour to maximize earnings but they give a company security from the point of view of liquidity. Company 73,36 119,43 112,59 Sector 117,98 117,98 117,98 Overall economy 122,39 122,39 122,39 Fig. 18: Liquidity 3rd degree (%) Third degree liquidity indicates whether and to what extent short-term liabilities are covered by current assets. High cash and monetizable asset inventories may conflict with the endeavour to maximize earnings but they give a company security from the point of view of liquidity. Page 19 of 24
10. Appendix Asset structure Definition Ratio of fixed assets to total assets (%) Asset turnover Turnover of inventories (days) total fixed assets adjusted balance sheet total sales revenues adjusted balance sheet total average inventories Sales revenues x 365 Liquidity ratio fixed assets (%) adjusted equity + long-term outside capital total fixed assets Cash ratio (%) cash and cash equivalents + other securities adjusted balance sheet total Customer target (days) trade receivables sales revenues x 365 Capital structure Definition Equity ratio (%) Revenues reserves ratio Debt to equity ratio Ratio short-term outside to total capital (%) Ratio long-term outside to total capital (%) adjusted equity adjusted balance sheet total revenues reserves adjusted balance sheet total total outside capital adjusted equity short-term outside capital adjusted balance sheet total long-term outside capital adjusted balance sheet total Short-term capital tied up (%) short-term amounts to banks + other short-term liabilities sales revenues Capital tie up period (days) bills payable + trade accounts payable sales revenues x 365 Outside capital structure (%) trade accounts payable + bills payable + liabilities payable to banks outside capital Ratio of accounts payable (%) Ratio of trade accounts payable (%) Supplier target (days) total outside capital adjusted balance sheet total trade accounts payable adjusted balance sheet total trade accounts payable merchandise purchased x 365 Page 20 of 24
Financial strength Cash flow (absolute) Definition annual profit/loss + depreciation and amortization including goodwill depreciation and amortization write-ups +/- change in long-term provisions extraordinary result + change in special terms aperiodic income Cash flow to gross performance (%) cash flow gross performance Cash flow to effective debt (%) cash flow + depreciations on financial assets short- and medium-term outside capital Cash Flow ROI (%) cash flow adjusted balance sheet total Dynamic debt clearance period (years) total outside capital pension provisions cash and cash equivalents cash flow Return on Investment (%) Debt sustainability (%) Revenues/Result from ordinary operations adjusted balance sheet total operating results + depreciation and amortization including goodwill depreciation and amortization + interest balance outside capital Profitability Definition Return on equity (%) annual profit adjusted equity Return of assets (%) Sales profitability (%) annual profit + interests and similar expenditures adjusted balance sheet total operating result interests and similar expenditures sales revenues Gross earnings ratio (%) gross earnings sales revenues EBIT interest coverage EBITDA interest coverage operating result interest paid (without offsetting against interest received operating result + depreciation and amortization including goodwill depreciation and amortization interest paid (without offsetting against interest received Personnel expenditure ratio (%) Material expenditure ratio (%) personnel expenditure gross performance material expenditure gross performance Cost income Ratio (%) Turnover per employee (absolute) Interest expenditure to outside capital (%) depreciation and amortization including goodwill depreciation and amortization + personnel expenditure + material expenditure + other operating expenses sales revenues + other operating income sales revenues average no. of employees interests and similar expenditures outside capital advances received Page 21 of 24
Liquidity ratios Definition Liquidity 1 st degree (%) Liquidity 2 nd degree (%) Liquidity 3 rd degree (%) cash short-term outside capital cash + short-term receivables short-term outside capital current assets short-term outside capital Net Working Capital (absolute) current assets short-term outside capital Page 22 of 24
Qualitative Information Creditreform business size and branch categories Definition The balance rating differentiates between 3 business size classes and within each class between 6 business branch categories to adjust the rating system to the particular features in size and branch. At this the following main branches and size classes are defined: Main branch categories: Branch 1 raw material production, chemical industry, power/energy supply Branch 2 metal working industry, engineering and vehicle construction Branch 3 other manufacturing business Branch 4 building industry Branch 5 trade Branch 6 services Business size categories: Small business Turnover: less than 1 mill. Euro medium-sized business Turnover: 1 mill. up to 50 mill. Euro Large-scale business Turnover: over 50 mill. Euro Optional the Creditreform Reliability Index may be included for the analysis. Page 23 of 24
11. General Terms of Business These terms of business apply to the preparation of a Creditreform balance sheet rating. The balance sheet rating result is based on the data received from the client (financial statement information). These data are treated in confidence by Creditreform Rating AG (CRA). CRA reserves the right to accept or subsequently refuse the assignment. The balance sheet rating is the result of an assessment of the company's credit-worthiness. The rating consists of the balance sheet rating report with a review of balance sheet credit-worthiness as well as sectoral information and data relating to the economy as a whole with an appropriate interpretation. The assignment for the preparation of a balance sheet rating commences with the commissioning of the assignment in writing by the client. CRA is not bound to observe specific deadlines. The balance sheet rating is prepared on the basis of a mathematical, statistical approach and offers no guarantee of accuracy. The indicative value of the balance sheet rating should be considered with this in mind. CRA is liable only for wrongful intent and/or gross negligence; any other liability is excluded. The transfer of data to and by CRA is entirely at the risk of the client. CRA is authorized to store and process data received from the client electronically. The same applies to data generated by CRA and forwarded to the client. CRA is not obliged to archive the data that is received for preparation of the rating and returned in the form of a result. The client is not authorized to sell the analyses to a third party without our written consent. The performance of CRA's contractual duties is complete when the rating is handed over. Terms of payment: full invoiced amount within 10 days of billing. CRA reserves the right to modify the rating in response to changes in the rating system and any consequent changes in the weighting of components as well as in the light of new information about the client. The client will be notified of any modification of the rating. No verbal agreements have been reached. Any modifications of this agreement must be made in writing. The same applies to any modification of the wording of this clause. If one or more regulations of this agreement are invalid in whole or in part, the validity of the remaining regulations of this agreement is not affected. An ineffective corresponding clause will be replaced by a clause which comes as close as possible to the purpose of the invalid regulation, the same applies in case of a loophole. The place of performance is Neuss. Page 24 of 24