1 FINANCIAL REPORT H HIGH SPEED BY PASSION 02_Key Figures 03_Group Status Report 05_Consolidated Financial Statements 10_Notes 11_Declaration of the Legal Representatives
2 02 PANKL KEY FIGURES EARNING RATIONS 2010¹ H H Change Revenues in k 89, , ,685 70, ,803 87,089 23% EBITDA in k 12,066 15,226 19,980 9,317 17,473 14,562 56% EBIT in k 3,798 7,023 10,382 3,951 6,150 8, % Earnings before taxes (EBT) in k 2,598 5,587 8,118 2,596 2,850 7, % Earnings after taxes in k 2,943 4,460 5,942 2,272 2,493 5, % EBITDA margin 13% 14% 16% 13% 12% 17% EBIT margin 4% 7% 8% 6% 4% 10% BALANCE SHEET RATIOS 2010¹ H H Change Total assets in k 117, , , , , ,577 12% Net working capital in k 33,434 38,415 40,437 47,191 53,018 58,817 25% Capital employed in k 92,201 96, , , , ,886 14% Shareholders equity in k 64,421 64,381 69,611 68,847 68,336 73,243 6% Equity in % of total assets 55% 54% 46% 43% 40% 41% Net debt in k 28,507 32,037 46,819 58,741 68,231 72,643 24% Gearing 44% 50% 67% 85% 100% 99% CASH FLOW AND CAPEX 2010¹ H H Change Cash flow from operating activities in k 13,031 10,041 13,627 1,189 (403) 6, % Free cash flow in k 8,063 3,806 (12,165) (8,610) (17,913) (3,825) (56%) Tangible fixed assets in k 5,646 7,425 25,467 9,883 18,394 11,014 11% EMPLOYEES 2010¹ H H Change Employees per due date ,142 1,177 1,230 1,258 7% STOCK EXCHANGE RATIOS 2010¹ H H Change Share price per due date (XETRA) in % Number of shares issued m share % Number of treasury shares share 73, , % Market capitalisation in m % Earnings per share in % Book value per share in % 1 In the fiscal year 2009/2010, the resolution was passed to change the balance sheet date from 30 September to 31 December. To allow better comparability, the company also shows the figures for the period from 1 January 2010 to 31 December Since 2011 fiscal year comprises the period from 1 January to 31 December.
3 INTERIM GROUP STATUS REPORT 03 n Revenues growth of 23% in the first half of 2014 n EBIT more than doubled to 8.6m n Earnings per share increased from 0.68 to 1.50 REVENUES AND EARNINGS In the first half of fiscal year 2014, Pankl Group was able to achieve major improvements of all profitability ratios compared to the same period last year. Revenues increased by 22.8% from 70.9m to 87.1m. Both segments contributed to this positive development. In the first and second quarter engine and drivetrain components recorded the strongest gains, which was due to the new Formula 1 rules. Earnings before interest, tax, depreciation and amortisation (EBITDA) increased by 56.3% from 9.3m in the first half of 2013 to 14.6m in H EBIT more than doubled compared to the same period last year. It increased from 4.0m or 5.6% of revenues in H to 8.6m or 9.8% of revenues, a new half-year record result for the Pankl Group in absolute terms. This excep tional earnings development was mainly due to the favourable revenues growth in the F1 business and a good development of the aerospace business. In the first half of 2014, the net financial result slightly deteriorated from 1.4m to 1.5m. Earnings after tax improved from 2.3m to 5.4m. Earnings per share which are attributable to the shareholders of Pankl Racing Systems AG also more than doubled from 0.68 to RACING/HIGH PERFORMANCE SEGMENT In the first six months of the fiscal year 2014, Racing/ High Performance segment revenues increased by 23.7% from 59.3m to 73.4m. This growth was mainly due to the introduction of the new F1 V6 turbo engines. During the same period last year, the rule changes caused revenues to decline earlier than usual. In the first half of 2014 the rule changes caused significant growth due to the ongoing development work. Revenues were also positively impacted by the new high performance projects. The implementation of various efficiency improvements and a more favourable product mix led also to improvements in profitability. Operating earnings (EBIT) more than doubled and amounted to 7.0m or 9.6% of revenues (H1 2013: 3.3m or 5.5% of revenues). REVENUES BY REGION 2014 VERSUS % Other 6% Other 4% Asia 5% Asia 9% France 24% USA 10% France 27% USA 10% Italy H % Italy H % Austria 21% Germany 15% Austria 17% Germany 14% Great Britain 11% Great Britain
4 04 Interim Group Status Report for the First Half of 2014 AEROSPACE SEGMENT In the first half of 2014, Aerospace segment revenues increased by 17.6% from 11.7m to 13.8m. After the strong growth in the first quarter revenues increased by 30.4% momentum slowed in the second quarter with a revenues growth of 7.5%. The significant growth in the first half of the fiscal year was mainly due to an ongoing stable European aerospace business and a recovery in the US aerospace subsidiary despite a continuing weakness in the US military business. In the first half of 2014, operating earnings (EBIT) amounted to 1.1m or 7.8% of revenues compared to 1.1m or 9.1% of revenues in the same period last year. BALANCE SHEET AND FINANCIAL POSITION Total assets increased from 170.7m as of 31 December 2013 to 178.6m as of 30 June Capital expenditure, which was carried out during the reporting period and a seasonal increase in receivables caused the increase in total assets. Shareholders equity increased from 68.3m as of 31 December 2013 to 73.2m as of 30 June Net debt amounted to 72.6m resulting in a financial gearing of 99%. CASH FLOW In the first half of 2014, cash flow from results amounted to 11.5m, which compared to 7.6m in the same period last year. The positive cash flow from results compensated the increase of trade accounts receivable which was due to the strong growth in revenues for engine and drivetrain components. Cash flow from operating activities amounted to 6.9m versus 1.2m in the same period last year. Cash used for capital expenditure referred primarily to an increase in capacity for the fully automated forging press unit in Kapfenberg. These additional capacities will become operational in the second half of Taking into account the cash flow from financing activities of 4.4m results in cash and cash equivalents of 10.1m as of 30 June 2014 (31 December 2013: 9.5m; 30 June 2013: 10.4m). RISK REPORT The motor racing business is exposed to a high level of volatility also during the fiscal year. In the aerospace business more longer term planning is possible. We refer to the pages 30 and 31 of the Annual Report for the fiscal year 2013 for a more detailed description of the business risks of our group. OUTLOOK CEO Wolfgang Plasser: In the first half of the fiscal year 2014, we exceeded our own expectations in nearly all market segments. The second half of the fiscal year will be more challenging, also because of the seasonality of the business. We still expect to grow revenues for the whole fiscal year by at least 10%, but more likely by up to 15%. The new fully automated aluminium forging press unit will be in operation in the second half of This will mark the conclusion of our major three-year capex programme. SHARE PRICE DEVELOPMENT OF PANKL SHARE 01/07/ /06/ J A S O N D J F M A M J Pankl Racing Systems AG (Vienna) ATX Prime Index, indexed Prime Automobile (XETRA) Price Index, indexed
5 INTERIM CONSOLIDATED FINANCIAL STATEMENTS (ACC. TO IFRS) 05 CONSOLIDATED PROFIT AND LOSS ACCOUNT Q H Q H in k in % in k in % in k in % in k in % Revenues 40, , , , Cost of goods sold (30,013) (74.5) (63,053) (72.4) (25,568) (75.5) (52,380) (73.9) Gross profit 10, , , , Distribution expenses (2,394) (5.9) (4,888) (5.6) (2,540) (7.5) (4,897) (6.9) Administrative expenses (5,420) (13.5) (10,903) (12.5) (5,289) (15.6) (10,396) (14.7) Other operating income Other operating expenses (133) (0.3) (190) (0.2) (38) (0.1) (73) (0.1) Earnings before interest and taxes (EBIT) 2, , , Financial income (66) (0.2) Financial expenses (749) (1.8) (1,555) (1.8) (694) (2.0) (1,396) (2.0) Financial result (699) (1.7) (1,487) (1.7) (760) (2.2) (1,355) (1.9) Earnings before taxes (EBT) 1, , , Income taxes (303) (0.8) (1,667) (1.9) (324) (0.5) EARNINGS AFTER TAXES 1, , , Attributable to shareholders of parent company 1, , , Attributable to minorities (8) EARNINGS PER SHARE Undiluted = fully diluted earnings per share
6 06 Interim Consolidated Financial Statements for the First Half of 2014 CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME Shareholders of parent company Minorities Total in k in k in k 01/01/ /06/2014 Earnings after taxes 4, ,423 Items which are never shown in the profit and loss account: Actuarial profits/losses from pension plans and similar schemes (14) 0 (14) Deferred taxes on actuarial profits/losses from pension plans and similar schemes Items which are or can be shown in the profit and loss account: Foreign exchange differences 452 (80) 372 Cash flow hedging reserves (156) 0 (156) Deferred taxes on the valuation of cash flow hedges Other results of the period 325 (80) 245 TOTAL COMPREHENSIVE INCOME 5, ,668 01/01/ /06/2013 Earnings after taxes 2, ,272 Items which are never shown in the profit and loss account: Actuarial profits/losses from pension plans and similar schemes (8) 0 (8) Deferred taxes on actuarial profits/losses from pension plans and similar schemes Items which are or can be shown in the profit and loss account: Foreign exchange differences (95) 1 (94) Cash flow hedging reserves Deferred taxes on the valuation of cash flow hedges (87) 0 (87) Other results of the period TOTAL COMPREHENSIVE INCOME 2, ,432
7 07 CONSOLIDATED BALANCE SHEET ASSETS 30/06/ /06/ /12/2013 in k in % in k in % in k in % LONG-TERM ASSETS Goodwill 11, , , Other intangible fixed assets 1, , , Tangible fixed assets 71, , , Other financial assets 1, , , Deferred tax assets 3, , , Total long-term assets 89, , , SHORT-TERM ASSETS Inventories 50, , , Trade accounts receivables 25, , , Other short-term receivables and assets 2, , , Cash and cash equivalents 10, , , Total short-term assets 88, , , TOTAL ASSETS 178, , , LIABILITIES 30/06/ /06/ /12/2013 in k in % in k in % in k in % SHAREHOLDERS EQUITY Share capital 3, , , Capital reserves 37, , , Reserves from retained earnings 27, , , Share of minorities 5, , , Total shareholders equity 73, , , LONG-TERM DEBT Bond 9, , Long-term loans 53, , , Long-term finance lease liabilities 1, , , Personnel related provisions 1, , , Long-term provisions Investment grants Deferred tax liabilities Total long-term debt 67, , , SHORT-TERM DEBT Short-term loans and short-term portion of long-term loans 17, , , Short-term finance lease liabilities Other short-term liabilities 11, , , Trade accounts payable 8, , , Short-term provisions Total short-term debt 37, , , Total debt 105, , , TOTAL EQUITY AND DEBT 178, , ,
8 08 Interim Consolidated Financial Statements for the First Half of 2014 CONSOLIDATED CASH FLOW STATEMENT Q H Q H in k in k in k in k Earnings after taxes 1,546 5, ,272 Depreciation, change of long-term provisions, profit/loss from sale of fixed assetsn 3,122 6,062 2,797 5,350 Cash flow from earnings 4,668 11,485 3,256 7,622 Change in other assets and receivables (268) (4,585) (1,415) (6,433) Cash flow from operating activities 4,400 6,900 1,841 1,189 Cash flow from investing activities (5,777) (10,725) (5,043) (9,799) Operating free cash flow (1,377) (3,825) (3,202) (8,610) Cash flow from financing activities 814 4,392 2,488 9,079 CHANGE OF CASH AND CASH EQUIVALENTS (563) 567 (714) 469 Cash and cash equivalents at the beginning of period 10,685 9,555 11,138 9,955 Cash and cash equivalents at the end of period 10,122 10,122 10,424 10,424 SCHEDULE OF CONSOLIDATED SHAREHOLDERS EQUITY Shareholders Reserves from retained earnings equity Reserve attributable to Shareholders Cash flow for foreign Other shareholders equity Share Capital hedging exchange retained of parent attributable capital reserves reserve differences earnings company to minorities Total in k in k in k in k in k in k in k in k H As at 31/12/2012 (= 01/01/2013) 3,150 37,784 (713) (5,680) 30,643 65,184 4,427 69,611 Earnings after taxes ,135 2, ,272 Results directly accounted for in equity (95) (6) Dividend payment (3,150) (3,150) (46) (3,196) AS AT 30/06/2013 3,150 37,784 (453) (5,775) 29,622 64,328 4,519 68,847 H As at 31/12/2013 (= 01/01/2014) 3,150 37,784 (469) (6,310) 29,610 63,765 4,571 68,336 Earnings after taxes ,710 4, ,423 Results directly accounted for in equity 0 0 (117) 452 (10) 325 (80) 245 Dividend payment (630) (630) (131) (761) AS AT 30/06/2014 3,150 37,784 (586) (5,858) 33,680 68,170 5,073 73,243
9 09 SEGMENT REPORTING Racing/ High Performance Aerospace Others Total Translation Group in k in k in k in k in k in k H Segment revenues 73,416 13,771 3,082 90,269 (3,180) 87,089 thereof internal ,071 thereof external 73,324 13, Earnings before interest and taxes (EBIT) 7,014 1, , ,577 EBIT in % of segment revenues 9.6% 7.8% 15.7% 9.5% 9.8% Interest expenses (1,120) (306) (1,405) (2,831) 1,631 (1,200) Interest income 1 0 1,665 1,666 (1,631) 35 Total assets of segment 127,783 25,958 9, ,529 15, ,577 Segment liabilities 18,846 2,919 2,179 23,944 81, ,334 Segment capital expenditure 10, , ,178 Segment depreciation (5,067) (596) (322) (5,985) 0 (5,985) thereof exceptional H Segment revenues 59,330 11,712 2,366 73,408 (2,492) 70,916 thereof internal ,359 thereof external 59,202 11,707 7 Earnings before interest and taxes (EBIT) 3,279 1,068 (396) 3, ,951 EBIT in % of segment revenues 5.5% 9.1% (16.7%) 5.4% 5.6% Interest expenses (972) (319) (1,119) (2,410) 1,451 (959) Interest income 1 3 1,488 1,492 (1,451) 41 Total assets of segment 110,039 23,579 9, ,411 15, ,057 Segment liabilities 18,490 2,509 2,017 23,016 67,194 90,210 Segment capital expenditure 8,141 1, , ,151 Segment depreciation (4,610) (528) (228) (5,366) 0 (5,366) thereof exceptional
10 10 NOTES TO THE CONSOLIDATED INTERIM REPORT REPORTING RULES, ACCOUNTING AND VALUATION METHODS The interim accounts per 30 June 2014 were prepared in accordance with International Financial Reporting Standards (IFRS) as issued by the International Accounting Standards Board (IASB) and in accordance with inter pretations of the International Reporting Interpretations Committee (IFRIC) to the extent used in the EU and in accordance with the rules for interim reports in IAS 34. The same reporting rules and accounting and valuation methods were used as per 31 December For further infor mation please refer to our Annual Report per 31 December 2013, which served as the basis for these interim accounts. The business of the company is divided into the Racing/ High Performance segment (engine and drivetrain systems for motor racing and high performance vehicles), the Aerospace segment (drivetrain systems for the helicopter market) and the Others segment (holding and financing companies). This segmentation is consistent with the company s management information systems. SCOPE OF CONSOLIDATION The activities and the assets of Pankl Aerospace Innovations, LLC a 100% subsidiary of Pankl Aerospace Systems, Inc. were taken over by Pankl Aerospace Systems, Inc. The company was then liquidated. Otherwise, the scope of consolidation remained unchanged versus 31 December ESTIMATES For the preparation of the interim consolidated accounts, estimates and assumptions had to be used to a certain extent. This influences the balance sheet values of assets and liabilities, the stated values of contingent liabilities on the balance sheet date and expenses and income in the whole fiscal year. The eventual actual amounts may deviate from the estimates. SEASONALITY OF THE BUSINESS In the Racing/High Performance segment, seasonal fluctuations result from the fact that the most important racing series start their racing season in spring and end it in autumn. As a result, the first quarter of our fiscal year tends to be the strongest one. The Aerospace and the Others segments are less affected by seasonal fluctuations. NOTES TO THE CONSOLIDATED PROFIT AND LOSS ACCOUNT In the first six months of the fiscal year 2014, group revenues amounted to 87,089k (H1 2013: 70,916k), net profit after tax was 5,423k (H1 2013: 2,272k). On 30 June 2014 and on 30 June 2013, Pankl Racing Systems AG held no own shares. The average number of shares in issue amounted to 3,150,000. The net profit attributable to shareholders amounted to 4,710k (H1 2013: 2,135k). Earnings per share amounted to 1.50 (H1 2013: 0.68). NOTES TO THE CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME In the reporting period, foreign exchange differences, which were not booked through the profit and loss account, amounted to +372k (H1 2013: 94k) including the portion of minority shareholders and resulted from the USD and the GBP. The cash flow hedging reserve changed by 117k (H1 2013: +260k) for which deferred taxes of +39k (H1 2013: 87k) were accounted for. In the first half of k (H1 2013: 142k) were booked through the profit and loss account. NOTES TO THE CONSOLIDATED CASH FLOW STATEMENT In the first six months of the fiscal year, cash and cash equivalents increased by 567k (H1 2013: +469k). Cash flow from results amounted to 11,485k (H1 2013: 7,622k). Taking into account the movement of other assets and liabilities (cash outflow of 4,585k) and the cash flow from investing activities ( 10,725k), gives an operating free cash flow of 3,825k (H1 2013: 8,610k). NOTES TO THE CONSOLIDATED BALANCE SHEET As of 30 June 2014, the balance sheet total amounted to 178,577k (31 December 2013: 170,650k). This was due to the ongoing capital expenditure project in Pankl Schmiedetechnik and an increase in working capital by 7,927k. As of 30 June 2014, shareholders equity amounted to 41.0% of total assets (31 December 2013: 40.0%).
11 11 NOTES TO FINANCIAL INSTRUMENTS Book values of financial instruments correspond with fair values except for the following: Time values are calculated based on recurring valuations. In the first six months of 2014 and in the fiscal year 2013, there were no reclassifications within the level hierarchy. in k Book value Fair value Loans and bonds 30 Jun ,213 83, Dec ,932 79,000 The time value (fair value) of a financial instrument is based on quoted market prices for an identical financial instrument in an active market (step 1). If there are no quoted market prices available on active markets for the financial instrument, then the time value shall be based on valuation methods with the major parameters being derived from observed market data only (step 2). In any other event, the time value shall be derived from valuation methods with at least one parameter not being based on observed market data (step 3): in k Step 1 Step 2 Step 3 Total Derivatives with negative market value 30 Jun Dec IMPORTANT EVENTS AFTER THE INTERIM BALANCE SHEET DATE On 18 July 2014, CROSS Motorsport Systems GmbH transferred all its 1,610,477 shares of Pankl Racing Systems AG to its indirect parent company CROSS Industries AG. RELATED PARTY TRANSACTIONS Due to business relationships of Pankl Group with CROSS Industries AG and its subsidiaries, revenues were generated in the amount of 2,853k (H1 2013: 2,898k) during the reporting period. CROSS Industries AG invoiced Pankl Group for services in the amount of 240k (H1 2013: 455k) and Pierer Konzerngesellschaft mbh invoiced for services in the amount of 164k (H1 2013: 0k). DECLARATION OF THE LEGAL REPRESENTATIVES We confirm to our best knowledge that the group interim report, which was drawn up in accordance with the appropriate accounting rules, represents a true and fair view of the assets, the financial position and the profitability of the group. The group interim status report provides a true and fair view of the assets, the financial position and the profitability of the group with regards to the events that happened during the first six months of the fiscal year, their impact on the group interim financial statements and the risks and uncertainties for the remaining six months of the fiscal year. The presented interim financial report was neither subject of a full audit nor of a limited audit review by the auditor. Bruck upon Mur, on 22 August 2014 The Management Board of Pankl Racing Systems AG Wolfgang Plasser CEO Josef Faigle COO
12 FINANCIAL CALENDAR NOVEMBER 2014 Publication first three quarters results 2014 FEBRUARY 2015 Publication preliminary results for 2014 For further information on roadshow dates or investor conferences please visit our homepage FOR FURTHER INFORMATION Pankl Racing Systems AG Industriestrasse West Kapfenberg, Austria INVESTOR RELATIONS Brigitte Putz phone: fax: FURTHER INFORMATION ON PANKL SHARE Securities code (NM): ISIN code: AT Bloomberg symbol: PARS AV Reuters symbol: PARS.VI