annual report 2014/15 - Schumag Aktiengesellschaft2 Schumag overview 2014/15 2013/14 2012/13 2011/12...

annual report2014/15

2

Schumag overview

2014/15 2013/14 2012/13 2011/12 2010/11

Orders receivedForeign share

eur mill.%

48,459,8

51,860,8

45,562,4

53,962,4

61,758,8

SalesForeign share

eur mill.%

49,761,8

49,461,5

48,861,4

57,462,1

59,261,0

Total operating performance eur mill. 52,9 50,3 49,2 60,2 64,5

Income from operations before depreciation (EBITDA)

eur mill. 5,2 5,5 3,0 2,4 2,2

Income from operations (EBIT) eur mill. 3,3 3,3 0,5 -0,3 -0,6

Income before taxes (EBT) eur mill. 2,3 1,9 -1,1 -2,4 -2,2

Property, plant and equipment (30-9)

eur mill. 15,7 17,0 18,2 19,6 20,5

Shareholders' equity (30-9)

eur mill. 7,4 6,5 6,5 8,2 13,4

Investments in property, plant and equipment

eur mill. 0,9 0,7 0,9 1,4 2,4

Depreciation of property, plant and equipment

eur mill. 1,7 2,0 2,2 2,2 2,4

Cash-flow from operating activities eur mill. 2,3 2,9 2,6 1,0 -1,6

Personnel expenses eur mill. 28,4 25,8 26,6 27,6 25,9

Number of employees incl. temporary workers (30-9)

625 631 643 709 735

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contentS

This Annual Report 2014/15 is a translation of the original Schumag Geschäftsbericht 2014/15 prepared in the german language. Please note, that only the german original version is definitive and recognized as authentic. The english translation is provided for convinience only. The company disclaims responsibility for any misunderstanding or misinterpretation due to this translation. In case of any inconsistency or divergence in the english translation, the german original version shall prevail.

LETTEr TO ThE ShArEhOLDErS 4

rEPOrT OF ThE SuPErvISOry BOArD 6

COrPOrATE gOvErNANCE rEPOrT 12

DECLArATION OF COmPLIANCE 16

grOuP mANAgEmENT rEPOrT 20

general information on the group 20

report on economic position 22

macroeconomic and sector-specific general conditions 22

course of business 23

overall statement on the business situation 25

earnings position 26

Financial situation 28

assets situation 30

performance indicators 31

information to be provided by law 32

compensation report 32

information relevant to the takeover 34

Declaration on the management of the company 36

report of the Board of executive Directors on relations with affiliated companies 36

Subsequent events 37

report on opportunities and risks 37

outlook 44

CONSOLIDATED FINANCIAL STATEmENTS 46

contents consolidated financial statements 46

consolidated statement of financial position 48

consolidated statement of income 49

consolidated statement of comprehensive income 49

consolidated statement of changes in equity 50

consolidated statement of cash flows 51

notes to consolidated financial statements 52

INDEPENDENT AuDITOrS' rEPOrT 111

rESPONSIBILITy STATEmENT 112

Dear Shareholders,

Fiscal year 2014/15 was once again a challenge to our company. From macroeconomic perspective the previous

reporting period was changeable. While the first half of the fiscal year was still under the influence of the ongoing

recovery of global economy, the second half of the fiscal year was clearly impressed by the general economic

conditions as well as uncertainties concerning the Asian market and the strong development of the US Dollar. On

the whole, we were able to further strengthen the cooperation with our customers despite of the more difficult

market conditions. The restructuring measures initiated in the previous years show noticeable effects, so that

improvements compared to the previous year are recognisable.

Incoming orders decreased by 7% in the year under review and stayed at a regular level throughout the year. In

the period under review sales remained almost unchanged with an increase by 1%. Due to various machine failures

the demand of our customers was partly not fulfilled within the specified time. We are still making intensive

efforts to establish preventive service systems for the machines. In the year under review we have performed

disproportionately many maintenance work to increase process stability and useful life of the equipment. Never-

theless, the existing machinery is one of our biggest challenges. The total operating performance increased by 5%

during the period under review. The initiated measures for productivity increase are showing effect now.

The Group result before taxes amounting to EUR 1.9 million improved by EUR 0.4 million compared to the previous

year. The improved result is basically due to the implemented measures for productivity increase as well as

further cost savings in financing and other expenses. Despite of costs due to non-recurring effects we were able to

keep income from operations on a constant level.

The company continues to be in a not simple situation. Further restructuring measures are required. We will reach

our target of “achieving profitable growth in the future” if we consistently pursue the approach initiated in the

last few months. We have defined an additional programme of measures for this purpose which is currently being

implemented. Speed of implementation is limited because we are only able to use successively generated liquidity

surpluses.

1. Focus on core competenciesThe expenses of the subsidiary „BR Energy GmbH“ were reduced to a minimum. The operating activities were not

pursued. The company is in the process of winding up. In future, we will increasingly pursue the development of

additional market niches apart from the concentration on our core business and our know-how in this area.

We were able to further strengthen our customer relations and to create potential for the future. Our rating among

major customers has continued to improve, so that we are able to work on new projects deepened.

2. restructuringWe have to optimize our portfolio, to change or discontinue remaining loss fields and less profitable articles so

that these no longer have a permanent effect on our result. After elimination of articles in the previous years,

further adjustments were also made in the year under review with the consent of our customers.

4 letter to the Shareholders

letter to the ShareholDerS

Furthermore the sustainability of savings relating to internal costs and buying has to be secured. Our project

management must increase flexibility in order to meet the consistently high requirements of our customers. Other

expenses increased slightly in fiscal year 2014/15 by EUR 0.4 million which is mainly due to higher maintenance

expenses. The aged machinery is a big challenge for the future. Due to limited funds investments for moderniza-

tion and replacement can only be executed on a low level. In the year under review targeted investments for the

modernization of our machinery took place. We will also in future have to invest in further automation to remain

attractive in the market and not to loose the connection. In the area of sales we are in the meantime closer to our

customers in order to be able to profit more quickly from changes in the market. In addition, we are making efforts

to reduce our high dependency on the automotive industry and to drive forward the transition from a component

manufacturer to a system/sub-system supplier. To exploit the existing business opportunities within the near

future we are still missing the necessary funds.

3. FinancingDue to the specific corporate situation financing remains one of our primary duties. The cooperation with the fac-

toring partner obtained in the previous year is positive and could be further expanded. In the reporting period the

sale-and-lease-back contract, which began in the year 2010, has been completed according to plan. The provided

securities were released completely. Thereby the real property of Schumag is again totally unencumbered.

Dear shareholders,

I kindly request you to continue to place your confidence in our company. In spite of all restrictions we are on a

good way to achieve sustainable stability. Thank you for your previous trust and the support to the restructuring

of Schumag.

At this point my special thanks go to our employees as well as to their representatives in the relevant committees

who continue to stand by their company in difficult times.

Aachen, February 2016

The Board of Executive Directors

Dr. Johannes Ohlinger

5Schumag ag

Dear Shareholders,

Due to further restructuring measures, the current position of our company has clearly improved in fiscal year

2014/2015. The liquidity situation has been further stabilized but continues to be one of our greatest challenge.

The measures initiated by the Board of Executive Directors for further cost reduction and for productivity increase

noticeably show their effects and were decisive for the business success in fiscal year 2014/2015. The expected

improvement of the overall situation has materialized with non-recurring effects having a negative effect on the

result. Further measures such as in particular those for productivity increase have been initiated and are in the

process of implementation. This is to be consistently continued.

In the year under review changes in the composition of the shareholder representatives on the Supervisory Board

were recorded; the continuous monitoring of the management by the Board of Executive Directors was fully

ensured.

Overview of the activities of the Supervisory BoardIn fiscal year 2014/2015 the Supervisory Board exercised the duties for which it is responsible according to the

law, the articles of association and the rules of internal procedure. We regularly advised the Board of Executive

Directors with regard to the management of the company and supervised its activities. The standards for our

supervision were in particular the lawfulness, correctness, purposefulness and efficiency of the management by

the Board of Executive Directors as well as the efficiency of risk management. The Supervisory Board was directly

involved in decisions of essential significance for the company. In the period under review, the Board of Executive

Directors has informed us on a regular basis, both in writing and verbally, in a timely and comprehensive manner.

The focus was on the liquidity, revenue and financial situation, the corporate planning (namely investment,

personnel and financial planning), the course of business, strategic development as well as the current situation of

the company and the Group, the risk situation and the risk management as well as the financial reports involving

periods under twelve months (i.e. semi-annual and interim reports). Based on the reports we have intensively

looked into the situation and development of the company and the Group as well as the business transactions in

fiscal year 2014/2015.

Where the course of business deviated from the plans these deviations were explained to us in detail. The

strategic alignment of the company was coordinated with us by the Board of Executive Directors. Transactions of

essential significance to the company were discussed by us in detail on the basis of the reports submitted to us

by the Board of Executive Directors. We reviewed the reports submitted to us for plausibility and discussed them

with the Board where necessary. In addition, we requested supplementary information from the Board of Exe-

cutive Directors. The Supervisory Board has considered the legality and regularity of the company management,

the effectiveness of the internal control system and of the internal audit system, the capability of the company

organization and its economic efficiency as given.

After thorough examination, the Supervisory Board decided on the resolutions proposed by the Board of Executive

Directors.

66 report of the Supervisory Board

report oF the SuperviSory BoarD

meetings A total of four meetings of the Supervisory Board took place in fiscal year 2014/2015 (on October 2, 2014 and on

January 29, April 29 and September 11, 2015).

If necessary, the Supervisory Board passed resolutions by written consent in lieu of a meeting.

Apart from the meetings of the Supervisory Board, the Chairman of the Supervisory Board also had regular

contact with the Board of Executive Directors. He informed himself about the current business development and

essential transactions as well as the strategic business alignment.

Focal topics of the Supervisory Board meetings in fiscal year 2014/2015The activities of the Supervisory Board in the reporting year 2014/2015 included, apart from the current mo-

nitoring of the business development and planning, also particular measures which required the consent of the

Supervisory Board as well as the measures for the stabilization and improvement of the financing of the company

and the Group.

At the meeting on October 2, 2014 we mainly dealt with the economic key data of the company, the liquidity

situation as well as the preparation of the annual financial statements for fiscal year 2013/2014. As regards the

liquidity situation, the focus was on the future financing structure. Furthermore the Board of Executive Directors

presented the strategic planning and, taking that as a basis, the 3-year plan. Moreover, the current status of the

damage and insurance claims asserted by the company for violations of duties by executive bodies and of existing

legal disputes was discussed in general. In addition, the contract of employment of Dr. Ohlinger as a member of the

Board of Executive Directors was extended by two years until December 31, 2017; accordingly, the Supervisory

Board decided to once again appoint Dr. Ohlinger as member of the Board of Executive Directors until and inclu-

ding December 31, 2017 – terminating the appointment so far limited until December 31, 2015. That measure was

justified by the special circumstance that personnel continuity should be ensured on the top management level of

the company in due time with regard to the restructuring measures still in progress and taking into account that

Dr. Ohlinger is the only member of the Board of Executive Directors.

The annual financial statements, the consolidated statements and the dependency report for fiscal year

2013/2014, the report of the Supervisory Board for fiscal year 2013/2014 as well as the agenda for the general

meeting on April 30, 2015 were the main topics at the meeting on January 29, 2015. As recommended by the

audit committee, the annual financial statements and consolidated financial statements for fiscal year 2013/2014

prepared by the Board of Executive Directors were approved by the Supervisory Board. Before passing a resoluti-

on on the proposal to the general meeting regarding the election of the auditor, the Supervisory Board has verified

his independence and discussed the terms of the assignment. Furthermore the focus was mainly on the economic

key data and on the liquidity situation of the company.

At the meeting on April 29, 2015 we again mainly dealt with the economic key data of the company and discussed

how to further approach the damage and insurance claims asserted by the company for violations of duties by

executive bodies.

77Schumag ag

At the meeting on September 11, 2015 we dealt with the economic key data of the company, the liquidity situa-

tion and the corporate planning. The strategic plan prepared by the Board of Executive Directors and the 3-year

plan based on that were intensely debated. In accordance with the newly issued statutory provisions, the Supervi-

sory Board also dealt with the proportion of women in management positions, specifying the target figures for the

proportion of women in the Supervisory Board and in the Board of Executive Directors.

CommitteesFor an efficient exercise of its duties the Supervisory Board formed a personnel committee and as well as an audit

committee.

In the period under review the personnel committee consisted of the members Mr. Ralf Marbaise, Mr. Ekkehard

Brzoska and Mr. Jürgen Milion. During the meetings held by it, the committee dealt with matters concerning the

Board of Executive Directors.

In the reporting period the audit committee consisted of the members Mr. Ekkehard Brzoska, Mr. Jürgen Milion and

Mr. Hans-Georg Kierdorf (until January 29, 2015) and Mr. Ralf Marbaise (from September 11, 2015). During the

meeting held by it to prepare for the balance sheet meeting, the committee discussed the documentation of the

annual financial statements (including dependency report) for fiscal year 2013/2014. These were reviewed and

the approval of these financial statements was recommended.

Corporate governance and Declaration of ComplianceIn fiscal year 2014/2015 the Supervisory Board regularly dealt with Corporate Governance of the company. In this

process, it also reviewed the efficiency of its work, in particular the frequency of its meetings, their preparation

and holding as well as the provision of information. The current Declaration of Compliance of January 2016 was

approved by the Supervisory Board and publication of this Declaration of Compliance was released by the Board

of Executive Directors in accordance with the 2nd sentence of § 161 of the Stock Corporation Act. The Declaration

of Compliance is published on the website of the company. Schumag Aktiengesellschaft largely complies with the

recommendations of the German Corporate Governance Code in the version of May 5, 2015. The Report on Corpo-

rate Governance and the declaration on corporate management for fiscal year 2014/15 to which reference is made

here were discussed at the meeting on January 27, 2016 and decided by the Supervisory Board.

Annual and Consolidated Financial Statements The annual financial statements as September 30, 2015, the management reports for the stock corporation and for

the Group for fiscal year 2014/2015 (each including the explanatory report on the details according to § 289 (4)

and/or § 315 (4) of the Commercial Code) prepared by the Board of Executive Directors as well as the accounting

and the risk management system were reviewed by the auditors and/or Group auditors KPMG AG Wirtschaftsprü-

fungsgesellschaft, Düsseldorf, elected at the general meeting on April 30, 2015 and were each provided with the

unqualified audit certificate. Furthermore the auditors determined that the Board of Executive Directors had taken

all suitable measures which it was obligated to take according to § 91 (2) of the German Stock Corporation Act. It

has in particular established an adequate information and monitoring system which meets the requirements of

the company and appears to be useful according to its concept and actual handling to detect developments which

threaten the continued existence of the company in good time.


The annual financial statements and the consolidated financial statements, the management report and the Group

management report were forwarded in their final version to all members of the Supervisory Board on January 12,

2016. The corresponding audit reports of the auditors were presented to all members of the Supervisory Board

also on January 12, 2016. The focus of the audit was placed in particular on the examination of proper accounting,

the efficiency of the internal control and risk management systems as well as the forecasts contained in the

respective reports. At the meeting of the audit committee on January 27, 2016 the representatives of the auditor

explained in detail the content of the respective audit report on the annual financial statements and consolidated

financial statements of Schumag Aktiengesellschaft and also presented the essential results of the audit of the

annual and consolidated financial statements as well as the management reports. On this occasion the committee

discussed and considered the presented documents and reports with the representatives of the auditor and with

the Board of Executive Directors. Special subjects of the discussions with the auditor and the Board of Executive

Directors were individual questions concerning balance sheet values and valuation according to the going concern

approach as well as the main audit points and the internal control system. At the balance sheet meeting of the Su-

pervisory Board on January 27, 2016 the results of its own examination were presented. The signed audit reports

provided with the audit certificates of the auditor were available. Representatives of the auditor also attended this

meeting and discussed the reports with the Board of Executive Directors and the Supervisory Board before resolu-

tions were passed on the approval of the financial statements and the available report of the Supervisory Board

The reports of the auditor were approved by the Supervisory Board. The final result of the Supervisory Board‘s

own examination which had been prepared by its audit committee fully corresponds to the result of the auditor’s

result. The Supervisory Board does not see any reason to raise objections to the submitted annual financial state-

ments and reports.

On January 27, 2016 the Supervisory Board approved the annual financial statements as well as the consolidated

financial statements of SCHUMAG Aktiengesellschaft for fiscal year 2014/2015. The annual financial statements

of SCHUMAG Aktiengesellschaft have therefore been adopted in accordance with § 172 of the German Stock Corpo-

ration Act.

Dependency reportThe report of the Board of Executive Directors on relations with affiliated companies prepared in accordance with

§ 312 of the German Stock Corporation Act (Dependency Report) was also reviewed by the auditors and provided

with the following unqualified audit certificate:

„After our dutiful review and assessment we confirm that

1. the actual details of the report are correct and

2. that the consideration received by the company in connection with the legal transactions mentioned

in the report was not inadequately high“

The dependency report as well as the corresponding audit report were also forwarded to the Supervisory Board

on January 12, 2016. The documents were discussed by the audit committee with the auditors and the Board of

Executive Directors at the meeting of the audit committee on January 27, 2016. At the balance sheet meeting of

the Supervisory Board on January 27, 2016 the results of its own examination were presented. The reports were

9Schumag ag

jointly discussed between the auditors, the Supervisory Board and the Board of Executive Directors. After the final

result of its own examination the Supervisory Board does not raise any objections to the final declaration of the

Board of Executive Directors included in the dependency report on the adequacy of consideration received by the

company in legal transactions with affiliated companies during the period under review and about the absence

of other reportable measures. The Supervisory Board agreed to the result of the examination of the dependency

report by the auditor.

Composition of Supervisory Board and Board of Executive Directors In fiscal year 2014/2015, the composition of the Supervisory Board has undergone the following changes:

The following persons resigned from their office as members of the Supervisory Board: Mr. Martin Kienböck with

effect from December 4, 2014 and Mr. Hans-Georg Kierdorf with effect from January 29, 2015. We thank both of

them for their constructive cooperation.

By order of Aachen District Court of February 3, 2015, Mr. Miaocheng Guo was appointed member of the

Supervisory Board with effect from February 7, 2015 for the resigning member, Mr. Martin Kienböck.

The judicial appointment remained in force until the date of the general meeting on April 30, 2015.

At the general meeting on April 30, 2015, Mr. Miaocheng Guo (for the resigning Mr. Martin Kienböck) and

Ms. Yun Guo (for the resigning Mr. Hans-Georg Kierdorf) were appointed members of the Supervisory Board

in a by-election.

There were no changes in the composition of the Board of Executive Directors.

The Supervisory Board would in particular like to thank all employees as well as the employee representatives

for their once again highly committed service as well as their cooperation in the interest of SCHUMAG Aktienge-

sellschaft.

Aachen, January 27, 2016

The Supervisory Board

Ralf Marbaise

Chairman of the Supervisory Board


11Schumag ag

Corporate governance at SChumAgThe Board of Executive Directors and the Supervisory Board of SCHUMAG Aktiengesellschaft (“SCHUMAG”) declare

their support for good Corporate Governance inside and outside the Group. The general legal conditions of Corpo-

rate Governance are laid down in the German stock corporation law. Based on § 161 of the Stock Corporation Act

(AktG) the Board of Executive Directors and the Supervisory Board of a company quoted on the stock exchange

are required to provide an annual declaration as to whether or not and to which extent the recommendations of

the „Government Commission for the German Corporate Governance Code“ published in the official part of the

Federal Gazette were complied with (relating to the past) and will be complied with (relating to the future) in the

German Corporate Governance Code (the „Code“). The companies may deviate from it but are obligated in this

case to disclose this annually and to provide the reasons for the deviations („comply or explain“). This enables

the companies to take the needs of the specific branch of business or of the specific company into account. A

deviation from a recommendation of the Code for which good reasons are provided may be in the interest of good

corporate management. The German Corporate Governance Code is revised by the Government Commission at

regular intervals and is also adjusted to international developments. It provides essential legal regulations for the

management and supervision of German companies quoted on the stock exchange and includes internationally

and nationally accepted standards of good and responsible corporate management. Apart from stating the current

best practice of corporate management the Code also aims at making the German Corporate Governance System

transparent and comprehensible and wants to generally promote the confidence of international and national

investors, customers, employees and the public in the management and supervision of German companies quoted

on the stock exchange. The joint Declaration of Compliance published by the Board of Executive Directors and the

Supervisory Board according to § 161 of the German Stock Corporation Act once again documents that we comply

with the recommendations of the German Corporate Governance Code in the version of May 5, 2015 with just a

few exceptions. Deviations are justified and/or explained in each case. The current Declaration of Compliance of

January 2016 is an integral part of the declaration on corporate management and is also attached to this report.

This declaration is published on the homepage of our company in the section of Investor Relations / Corporate Go-

vernance where according to item 3.10 of the Code the previous Declarations of Compliance of the last five years

are also available.

general meetingAfter an invitation had been sent in due form and within the specified time the general meeting for fiscal year

2013/2014 took place at our offices in Aachen on April 30, 2015. In accordance with the German Corporate Go-

vernance Code the reports and documents required by law were not only displayed for inspection and sent to the

shareholders at their request but were also published on the homepage of SCHUMAG along with the agenda.

The resolutions on the items of the agenda of the general meeting and/or the respective voting results were publis-

hed on our homepage within seven days of the meeting according to §130 (6) of the German Stock Corporation Act.

12 corporate governance report

corporate governance report

management and Control StructureAccording to the German Stock Corporation Act SCHUMAG has a dual management and control structure with the

executive bodies of a Board of Executive Directors and a Supervisory Board.

With regard to the medium-sized organizational structure of SCHUMAG - in particular after the sale of the me-

chanical engineering division and the personnel adjustments in precision engineering - the Board of Executive

Directors consisted of only one person in fiscal year 2014/2015. The member of the Board of Executive Directors

who managed the company in fiscal year 2014/2015 according to the articles is mentioned below.

The Supervisory Board supervises the management of the Board of Executive Directors. It consists of six members.

According to the One-Third Participation Act two thirds of the members are shareholders and one third are emplo-

yees. The election of the shareholders represented on the Supervisory Board takes place at the general meeting.

The representatives of the employees are elected according to the provisions of the One-Third Participation Act.

The cooperation of these executive bodies is ruled by the articles of the company decided by the general meeting,

the rules of internal procedure of the Supervisory Board and of the Board of Executive Directors and by the deci-

sions of these executive bodies within the scope of the relevant legal provisions. This also includes determinations

about the facts to be reported by the Board of Executive Directors to the Supervisory Board and the extent of

reporting as well as the type of transactions of the Board of Executive Directors which require the consent of the

Supervisory Board.

Board of Executive Directors In fiscal year 2014/2015 the Board of Executive Directors of SCHUMAG consisted of the following member:

The emoluments of the Board of Executive Directors include the fixed remuneration payable on a monthly basis

and variable remuneration components.

The remuneration of the Board of Executive Directors for fiscal year 2014/2015 is shown in the overview below:

name Function entry resignation

Dr. Johannes ohlinger Sole director of the Board September 1, 2012 -

name Fixed remuneration variable remuneration total emoluments

eur eur eur

Dr. Johannes ohlinger 540.000,00 94.000,00 634.000,00

Total 540.000,00 94.000,00 634.000,00

13Schumag ag

Supervisory Board The report of the Supervisory Board included in the Annual Report 2014/2015 describes the focus of activi-

ties and the committees formed by this corporate body. The members of the Supervisory Board in fiscal year

2014/2015 as well as their individual remuneration determined by the articles are shown in the following table:

Transparency

Information to the shareholders of SCHUMAG and to the public is not only provided in the form of the statutory

publications and via the legally required communication channels. We use in particular the homepage of the

company for this purpose (www.schumag.de) where a wide range of information about SCHUMAG is published.

On this site all ad-hoc messages and the publications of notices about voting right shares received by us as well

as reportable securities transactions, the respective financial reports of the company, declarations on corporate

management and Corporate Governance Reports of the company as well as a finance calendar with all essential

dates are also available in the section of Investor Relations.

The Annual Report 2014/2015 is also made available in English on our homepage.

name compensation out-of-pocket expenses total

eur eur eur

ekkehard Brzoska 7.158,09 0,00 7.158,09

miaocheng guo (from February 7, 2015) 4.632,87 0,00 4.632,87

yun guo (from april 30, 2015) 2.982,54 0,00 2.982,54

martin Kienböck (to December 4, 2014) 1.272,55 0,00 1.272,55

hans-georg Kierdorf (to January 29, 2015)(deputy chairman of the Supervisory Board) 3.549,22 0,00 3.549,22

peter Koschel 7.158,09 538,35 7.696,44

ralf marbaise(chairman of the Supervisory Board) 14.316,18 2.951,33 17.267,51

Jürgen milion 7.158,09 81,68 7.239,77

Total 48.227,63 3.571,36 51.798,99

14 corporate governance report

Details on the holding of company shares by members of the Board of Executive Directors and the Supervisory BoardAs of September 30, 2015 Mr. Miaocheng Guo, as member of the Supervisory Board, indirectly held 2,183,164

individual shares corresponding to 54.6% of the shares issued by SCHUMAG. Mr. Peter Koschel, as member of the

Supervisory Board, indirectly held 1,090,705 individual shares corresponding to 27.3% of the shares issued by

SCHUMAG. The – possibly indirect – (total) shareholdings of members of the Supervisory Board amounts to a total

of 3,273,869 individual shares and thus exceeds 1% of the shares issued by SCHUMAG. As of September 30, 2015

the Board of Executive Directors did not hold any shares issued by SCHUMAG.

risk management, Accounting, AuditingAt SCHUMAG a risk management system for the early detection of essential risks is in place. It is described in more

detail in the Group Management Report.

In fiscal year 2014/2015 the accounting for the Schumag companies included in the consolidated financial

statements was for the tenth time prepared according to the International Financial Reporting Standards (IFRS).

The annual financial statements of SCHUMAG for fiscal year 2014/15 were prepared and continue to be prepared

according to the provisions of the German Commercial Code and the Stock Corporation Act.

For fiscal year 2014/15 the Supervisory Board instructed the auditors KPMG AG Wirtschaftsprüfungsgesellschaft,

Düsseldorf, who had been chosen by the general meeting on April 30, 2015. The declaration of independence of

the auditors was available to the Supervisory Board.

Aachen, January 2016

SCHUMAG Aktiengesellschaft

For the Supervisory Board The Board of Executive Directors

Ralf Marbaise Dr. Johannes Ohlinger

(Chairman)

15Schumag ag

The Board of Executive Directors and the Supervisory Board of a German joint-stock company which is listed on

the stock exchange are required according to § 161 of the Stock Corporation Act to declare once a year whether

or not the company has complied and continues to comply with the German Corporate Governance Code or which

recommendations of the Code were or are not followed and why not.

We declare according to §161 of the German Stock Corporation Act that since the last Declaration of Compliance of

January 2015 SCHUMAG Aktiengesellschaft („SCHUMAG“) has complied with the recommendations of the German

Corporate Governance Code („Code“) in the version of June 24, 2014 („Code 2014“) until the announcement of the

new version of the Code in the Federal Gazette on June 12, 2015 as well as the recommendations of the Code in

the version of May 5, 2015 („Code 2015“) from the time of its announcement in the Federal Gazette on June 12,

2015 and that it will comply in future with the recommendations of the Code 2015 with the following exceptions:

According to item 3.8 (2) of the Code a deductible of at least 10% of the damage up to at least 1 ½ times the

amount of the fixed annual remuneration of the board member should be agreed when taking out a D&O liability

insurance for the Board of Executive Directors. According to item 3.8 (3) a corresponding deductible should be

agreed in a D&O liability insurance for the Supervisory Board. A deductible for the Supervisory Board, as it is usu-

al practice with the majority of German companies, has so far not been agreed at SCHUMAG and will not be agreed

in future because the company holds the view that the agreement of such a deductible would have no behaviour-

controlling effect on the members of this executive body nor would it be suitable for motivation purposes.

According to the 1st sentence of item 4.2.1 of the Code the Board of Executive Directors should consist of several

persons and have one chairman or spokesman. With regard to the fact that SCHUMAG has the organizational struc-

ture of a medium-sized company the Executive Board consisted and will also in future consist of only one person.

In view of the difficult economic situation of the company this is also indicated for cost reasons alone.

According to item 4.2.3 (6) of the Code the chairman of the Supervisory Board is to inform the general meeting

about the basic elements of the emolument system and its changes. This has not been done and will not be done in

future because the basic elements of the emolument system have already been described in detail in the compen-

sation report included in the management report.

16 Declaration of compliance

Declaration oF compliance concerningthe german corporate governance coDe

According to the 1st and 2nd sentence of item 4.2.5 (3) the Code now recommends that in the compensation report

for fiscal years starting after December 31, 2013 certain emolument details should be provided for each member

of the Board of Executive Directors and that the model tables included in the Code should be used for providing

this information. Our company to which this recommendation applied for the first time for the fiscal year starting

on October 1, 2014 did not and will not follow this because the representations in the Notes to the annual and

consolidated financial statements appear to be sufficient and commensurate from the aspect of usefulness of the

information, also with regard to the fact that the Board of Executive Directors of our company currently consists

of only one person.

According to item 5.3.3 of the Code the Supervisory Board is supposed to form a nomination committee which

consists exclusively of representatives of the shareholders and proposes suitable candidates to the Supervisory

Board for its election proposals to the general meeting. This has not been done in the past and is not considered to

be done in future because the resolutions of the Supervisory Board on proposals for the election of Supervisory

Board members by the general meeting only require the majority of the votes of the four shareholders repre-

sented in the Supervisory Board anyway as stipulated in the §124 (3), sentence 5, 1st sub-clause, of the German

Stock Corporation Act.

According to the 1st sentence of item 5.4.1 (2) of the Code the Supervisory Board shall indicate concrete goals for

its composition which (with consideration of the specific corporate situation) are to take the international activi-

ties of the company, potential conflicts of interest, the number of independent members of the Supervisory Board,

an age limit for members of the Supervisory Board, and according to the Code 2015 now also a standard limit for

the period of membership in the Supervisory Board as well as diversity into consideration (according to the 2nd

sentence of item 5.4.1 (2) also in particular an appropriate participation of women). According to the 1st sentence

of item 5.4.1 (3) of the Code the proposals of the Supervisory Board to the relevant election boards should take

these goals into consideration and according to the 2nd sentence of item 5.4.1 (3) of the Code the goals of the

Supervisory Board and the status of their implementation are to be published in the Report on Corporate Gover-

nance. These recommendations were not followed in the past and will not be followed in future. The Supervisory

Board is of the opinion that a commitment to goals concerning its composition in terms of the Code and their

publication involve restrictions which are not appropriate compared to other criteria for proposals for the election

of Supervisory Board members and it would like to decide individually on proposals concerning its composition in

the respective concrete situation. Compliance with the new obligations of the law concerning the determination of

a target figure for the share of women in the Supervisory Board remains unaffected by the above (§ 111 (5) of the

German Stock Corporation Act in conjunction with the 1st sentence of § 25 (1) of the Introductory Act to the Stock

Corporation Act as well as § 289a (2), No. 4 of the German Commercial Code in conjunction with Art. 73 of the In-

troductory Act to the Commercial Code in the version of the law concerning the equal participation of women and

men in management positions in the private industry and in civil service of April 24, 2015, Federal Law Gazette I,

p. 642 et seq.).

According to item 5.4.1 (5) to (7) of the Code 2015 (previously item 5.4.1 (4) to (6) of the Code 2014) the Supervi-

sory Board shall, in its election proposals to the general meeting (for the election of shareholders to the Supervi-

sory Board), disclose the personal and business relations of each candidate with the enterprise, with the executive

bodies of the company and with a shareholder holding a material interest in the company (i.e. directly or indirectly

17Schumag ag

holding more than 10% of the voting shares), and this disclosure should be limited to those circumstance which, in

the appraisal of the Supervisory Board, a shareholder judging objectively would consider relevant to his election

decision. This recommendation has not been and will not be followed because in the opinion of the Board of

Executive Directors and the Supervisory Board the contents and extent of the requirements laid down in the Code

have not been sufficiently determined in this respect. In order to ensure the desired legal security of the election

of Supervisory Board members the company exclusively follows statutory disclosure requirements with regard to

its proposals to the general meeting of candidates to be elected to the Supervisory Board. In addition, it discloses

relations with related parties in the annual report in accordance with statutory requirements.

According to the 3rd sentence of item 5.4.3 of the Code the names of the candidates proposed to take the chair

of the Supervisory Board are to be disclosed to the shareholders. The names of the candidates proposed to take

the chair of the Supervisory Board are not and will also in future not be disclosed because the Supervisory Board

does not consider it practicable to vote at the general meeting for or against a candidate with regard to a potential

office as chairman in the elections to the Supervisory Board.

According to the 2nd sentence of item 5.4.6 (1) of the Code the chairmanship and the deputy chairmanship on the

Supervisory Board as well as the chairmanship and membership in committees shall be taken into consideration

for the emoluments of the Supervisory Board. Up to now, the articles of association of SCHUMAG only provide

for fixed remuneration components for members of the Supervisory Board and although the emoluments for

chairmanship and deputy chairmanship on the Supervisory Board are graded higher, the chairmanship and/or

membership in committees is not taken into consideration. This ruling is to be maintained for the time being with

regard to the organizational structure of the company.

According to the 1st sentence of item 5.5.3 of the Code the Supervisory Board should provide information in its re-

port to the general meeting about conflicts of interest which have occurred and how they were treated. As before,

SCHUMAG does not follow this recommendation and will not do so in future and will, as a rule, give priority to the

principle of confidentiality of the deliberations of the Supervisory Board (see also the 2nd sentence of §116 of the

German Stock Corporation Act and the 2nd sentence of item 3.5 (1) of the Code).

According to the 4th sentence of item 7.1.2 of the Code the consolidated financial statements should be available

to the public within 90 days of the end of the fiscal year and the interim reports within 45 days of the end of the

reporting period. This recommendation has not been and will not be followed for organizational reasons but the

company continues to aim at a timely publication.

Aachen, January 2016

Schumag Aktiengesellschaft

The Supervisory Board The Board of Executive Directors

18 Declaration of compliance

19Schumag ag

general inFormation on the group

Business model, targets and strategiesSchumag Aktiengesellschaft (Schumag AG) based in Aachen, Germany, is the parent company of the Schumag

Group. Subsidiaries of Schumag AG are Schumag Romania S.R.L. based in Timisoara, Chisoda, Romania, and BR

Energy GmbH (formerly Schumag BR Energy GmbH) based in Aachen, Germany.

The company now operates only in the segment of precision engineering. This comprises the production of high-

precision parts of steel. These are manufactured as per customer drawings in large numbers, even in the millions

range. Our performance spectrum extends far beyond the production of precision and standard parts. Due to our

special know-how we are in a position to offer specific production processes to our customers. This has led to our

long and excellent experience in equipment construction. A decisive factor for the sustained development of our

company is our close contact to customers and our comprehensive knowledge of the corresponding target markets

(Europe and America). According to our philosophy it is a basic prerequisite for success to identify technical

developments and offer comprehensive solutions on a timely basis. During more than 180 years of company

history Schumag has developed into an enterprise whose manufacturing know-how is still trend-setting in many

technologies.

The employees of Schumag distinguish themselves in particular by their high identification with the company and

their commitment to its targets. The structure of the workforce is characterized by the high qualification of our

employees. This results in the superior quality of our products which leads to our strong position in the market.

To meet future market requirement it is absolutely necessary to develop into a system and/or sub-system supplier.

Especially the Asian market with its continuing growth in the automotive area will increasingly determine the

structure of demand.

Steering systemSchumag AG has a steering system in place in order to be able to react adequately and in due time to changes of

the market, the environment and internal conditions.

Reporting and flow of information are essential elements of the steering system. Based on this system the Board

of Executive Directors is permanently informed about relevant key figures. Deviations from the target can thereby

be directly identified and discussed as soon as possible.

Our most significant performance indicators are the total operating performance, the EBIT and the liquidity ratio I.

The total operating performance is an indicator of our operating efficiency and is analysed by means of monthly

target-actual comparisons.

20 group management report

group management report

KonzernlageBericht

The EBIT figure facilitates a comparison of the operating profit of individual months. For our operational control

we take the EBIT according to the commercial accounting of Schumag AG as a basis. Essential deviations from the

EBIT under IFRS shown in the group accounting are to be found in the different assessment of fixed assets. We

regard these differences as inessential for current operational control.

The liquidity ratio I (ratio of cash & cash equivalent to current liabilities) is used to monitor the coverage of current

liabilities since our actions continue to be intensely focussed on liquidity.

In addition revenue as well as orders received and orders on hand are essential control variables.

research and developmentResearch activities are of minor significance in our line of business but will be relevant in future due to market

requirements.

The focus of development at Schumag is on the automation and rationalization of series processes. At the same

time we try to continuously improve process stability. We are currently working on the further development of

our own production machines which are supposed to be operating fully and/or partly automatically in future.

Further production units could be fully automated in the reporting period.

QualityThe analytical tools for continuous monitoring and for representation of the quality and productivity status are

continuously developed. The daily evaluations as well as the control loops observed have led to an improved

quality awareness among our employees and to an increase in productivity

At our measuring centre we have combined the areas of the measuring room and of test and measuring equip-

ment. The entire measuring centre is fully air-conditioned. We have thereby created the conditions to provide with

our measuring technology the ever increasing accuracies required by the market. This applies not only to the tests

carried out during production (especially form and position) but also to the area of the manufacture and calibrati-

on of measuring and test equipment

At the end of 2014 the quality management system according to ISO 9001:2008 and ISO TS 16949:2009 as well

as the integrated environmental management system according to ISO 14001:2004 + Cor 1:2009 were reviewed

within the scope of an audit and our existing certificates were successfully confirmed. In addition our management

system was extended by the requirement of an energy management system according to ISO 50001:2011 and was

successfully certified. Our Romanian subsidiary Schumag Romania S.R.L. has also been successfully re-certified

according to ISO 9001:2008 since April 2013.

KonzernlageBericht

21Schumag ag

report on economic poSition

macroeconomic and sector-specific general conditionsIn 2014 the global economy experienced a positive development with a growth rate (GDP) of 3.3%. After the

decelerated growth in the summer term of 2014 the global economy gained momentum again. With a 1.0% growth

in the fourth quarter of 2014 the global industrial production increased twice as much as in the two previous

quarters. The positive impulses came from the industrial states, in particular the USA and Japan. This contrasted

with weakening dynamics in the emerging nations.

In the first quarter of 2015 the global industrial production remained at the same level as in the previous quarter.

At a rate of 0.6% the global GDP increased to a lesser extent than forecast. The temporary setback in growth in the

USA caused by special influences was not fully compensated for by the recovery of economic activity in the Euro

zone. During the second quarter of 2015 increasing economic uncertainties in China affected the growth of the

global economy. The global industrial production slightly increased again not until towards the end of the second

quarter of 2015. In total, the global economy increased moderately and to a lesser extent than expected during

the first half of 2015 with a growth rate of 2.9%. Even at the beginning of the third quarter of 2015 the prospects

in some of the most important countries and regions of the global economy, particularly in China, were marked

by low dynamics. In October the IMF adjusted downwards its forecast for the global economic growth for 2015 to

3.1% and for 2016 to 3.6%.

After the stagnation of economic activity during the summer the German economy recorded a growth of GNP by

0.7% in the final quarter of 2014. In terms of the whole year 2014, the macroeconomic performance also develo-

ped slightly positive with a growth of 1.6%.

In the first quarter of 2015 the expansion of the economy was carried by the domestic demand. Especially the

robust development in the labour market, the declining crude oil prices and the positive real income development

had a favourable effect on the GNP which rose by 0.3%. In the further course of the year 2015 the moderate

but steady upswing of the German economy continued with a GNP growth rate of 0.4%. After a restrained first

quarter, the industrial production increased noticeably in the second quarter of 2015. This was stimulated by an

exchange-rate-related increase of foreign orders. During the autumn quarter of 2015 German economic activity

also continued its moderately upward development. In spite of the fact that in terms of the whole year the indus-

trial production rather moved sideways and that there was a weak development in the large emerging nations the

Federal Government forecasts a growth of GNP of 1.7% for 2015 and 1.8% for 2016.

Important markets for Schumag are the commercial vehicles market, the passenger car market as well as the

medical technology market.

The global market for passenger cars recorded a growth compared to 2014. The global production of passenger

cars in 2014 rose by 3.7% to 77.3 million cars. A growth driver was China with a 13.2% growth as well as Germany

with 6.1%, but also in the USA the production was expanded by 5.1%. The upward trend moderately continued

during the course of 2015. Upon the end of the third quarter of 2015, 5.5% more cars than in the same period of

the preceding year were licensed in Germany but production was increased only slightly by 2.1%.


The national commercial vehicles market developed in the same way. After a positive increase of registrations

of new vehicles and of production in 2014 the marked expanded to a lesser extent in the first three quarters of

2015. Compared to the previous year, in 2015 2.2% more commercial vehicles were licensed after the first nine

months and 2.5% more commercial vehicles were produced than in the same period of 2014. On the whole, the

market lost momentum in the 3rd quarter of 2015. The situation in the Euro zone presents itself as follows: After a

growth of 7.6% of newly registered vehicles in 2014 the market expanded in 2015 by 12.2% after nine months as

compared to the previous year.

The German medical technology sector recorded a growth of 2.3% in 2014 although in the second half of the year

a downturn of growth set in. Against this background, a stagnating market is expected for 2015 on the basis of

this trend.

Course of business

Due to the fact that, as in the previous years, no orders were received and no revenues were realized in the divisi-

on of plant engineering the operating activities in this segment were not pursued, also due to a lack of funds. The

key data therefore include only the figures from the area of precision engineering.

Precision engineeringIncoming orders in the period under review decreased by 7%. While we were able in the first half of the fiscal year

to eliminate further lossy articles from our product range, the general economic conditions as well as uncertainties

concerning the Asian market and the strong development of the US Dollar contributed particularly to a reduction

of incoming orders in the second half of the year. Compared to the previous year, sales remained almost constant

with a slight increase by 1%. In the last quarter of the period under review the decreased order inflow also

affected sales. Furthermore, we added a minor amount of new products to our production range. The permanent

establishment of new products as well as the resulting sales increases can often be measured only after another

12 to 24 months. Orders on hand decreased by 5%.

Key figures 2014/15 2013/14 change

eur mill. eur mill. eur mill. %

orders received 48,4 51,8 -3,4 -7

revenue 49,7 49,4 0,3 1

total operating performance 52,8 50,2 2,6 5

orders on hand (as of 30-9) 26,9 28,2 -1,3 -5

23Schumag ag

Compared to the previous year, sales and/or the increased total operating performance were realised with the same

number of personnel. Within the scope of restructuring, capacities were adjusted mainly in the administrative area.

In total, the company‘s average own workforce remained almost unchanged from October 2014 to September 2015.

In fiscal year 2014/15 the collective wage agreement to secure the production site („Standortsicherungstarifver-

trag“) which had been concluded in September 2013 continued to be in force.

Plant engineeringAs already mentioned above no orders were received and no revenues were realized in the division of plant engi-

neering in the two previous years.

Safeguarding of liquidityThe safeguarding of the pre-financing required for our production continues to be one of our primary duties. In the

period under review further positive liquidity effects were reached in particular due to the improvement of the

operating result. In addition, the existing third-party loan was extended by 2 years in June 2015. According to the

contract, the sale-and-lease-back transaction expired in the year under review, the stock of machinery was bought

back and is now owned by us again. The land charge provided as security was released so that our real property is

currently unencumbered.


Overall statement on the business situation

The improvement of the result situation expected by the company for the fiscal year 2014/15 materialized

partially. Basically due to results from the noticeable productivity increases obtained by various measures the

operational development in the year under review was satisfactory. By an efficient cost management we were also

able to keep overheads on a constant level. In contrast, special effects within the scope of personnel adjustments

strained our result.

The improvement of the result led to a further improvement of the return on equity, furthermore the capital ratio

increased from 16 % to 18 %.

The increase in total capital is in particular marked by the buildup of inventories as well as the increase in share-

holders’ equity. Financial balance existed at all times throughout the past fiscal year and liquidity was improved

by a total of EUR 1.1 million.

In summary, it is to be stated that the measures which had partly already been initiated in previous years showed

further positive effects in the operating area during the current fiscal year 2014/15. Special effects in connection

with personnel adjustments burdened the result of the reporting year. In total, the economic situation has eased

slightly but we have to continue to work consistently on a further improvement in all areas of the company.

The obstacle of an obsolete IT structure needs to be overcome.

Key figures 2014/15 2013/14 change

% % % points

return on sales 3,3 2,6 0,7

return on equity 21,9 20,6 1,3

working capital [eur mill.] 13,1 10,4 2,7

25Schumag ag

Earnings position

Total operating performanceWith slightly increased revenues the total operating performance was increased by 5%, in particular due to

noticeable productivity increases.

material and personnelThe reduction in the cost of materials in relation to the total operating performance by 1 percentage point is

largely due to increased inhouse production as well as to energy savings due to the installation of a unit-type

cogeneration station.

Although the average number of our own regular workforce was decreased compared to the previous year from

625 to 622 employees the rate of personnel expenses increased by 3 percentage point. This is not only due to

the increase in pay rates effective from April 2015 but in particular also to the special effects within the scope of

personnel adjustment measures. After the waiver of the year-end bonus in 2013 and 2014 the year under review

was burdened again by the year-end expenses.

The total rate of materials expenses and personnel expenses increased from 79 % to 81 %. Adjusted by special

effects the total rate amounts to 79 %.

2014/15 2013/14 change

eur mill. % eur mill. % eur mill. %

revenue 49,7 94 49,4 98 +0,3 +1

total operating performance 52,8 100 50,2 100 +2,6 +5

materials expenses -14,0 -27 -14,0 -28 0,0 0

personnel expenses -28,4 -54 -25,8 -51 -2,6 -10

Depreciation / amortization -1,8 -3 -2,2 -4 +0,4 +18

other expenses -5,3 -10 -4,9 -10 -0,4 -8

EBIT 3,3 6 3,3 7 0,0 0

Financial result -1,0 -2 -1,4 -3 +0,4 +29

Income before taxes 2,3 4 1,9 4 +0,4 +21


resultIn spite of productivity increase the EBIT remain constant on the level of the previous year (EUR +3.3 million).

In particular this is due to the non-recurring effects within the scope of personnel restructuring measures (EUR

-0.9 million) as well as to the expenses for the year-end bonus to be included again (EUR -0.7 million). By the

decrease of interest expenses the income before taxes was improved by EUR 0.4 million to EUR +2.3 million.

In the segment of precision engineering the result before taxes improved by EUR 0.4 million to EUR +2.5 million.

The result continued to be disproportionately burdened in particular by general administrative overheads in

connection with financing (sale-and-lease-back of machinery) and by the expenses resulting from the listing on

the stock exchange.

The result of the segment of plant engineering amounted to EUR -0.2 million as in the previous year and includes

only the negative contribution to operating income from BR Energy GmbH.

The result of other segments amounts also as in the previous year to EUR 0.0 million.

27Schumag ag

Financial situationThe financial management of the Schumag Group is centrally organized at Schumag AG and covers all Group com-

panies. All cash-flow-oriented aspects of the business activities are taken into consideration in this connection.

The aim is to secure sufficient liquidity and to reduce financial risks arising from changes in exchange rates,

interest rates and raw material prices.

The financial situation was further stabilized in fiscal year 2014/15 in particular by the improvement of the opera-

tive result as well as a strict liquidity management. We were able at all times to meet our payment obligations. The

liquidity ratio I increased from 38.7 % to 56.2 %.

To optimize our financing structure, off-balance-sheet forms of financing in the form of leasing transactions have

been used since fiscal year 2004/05. As of September 30, 2015 the leasing transactions still amount to a total

volume of EUR 0.4 million (previous year EUR 0.5 million).

For the major part liabilities are EUR based and short-term as well as without interest.

group cash-Flow Statement (short presentation) 2014/15 2013/14 change

eur mill. eur mill. eur mill.

net income 1,6 1,3 +0,3

Depreciation/amortization 1,8 2,2 -0,4

change in net current assets -0,4 0,0 -0,4

change in other items -0,7 -0,6 -0,1

Cash-flow from operating activities 2,3 2,9 -0,6

expenses for intangible assets and property, plant and equipment -0,9 -0,5 -0,4

proceeds from the disposal of property, plant and equipment 0,6 0,1 0,5

Cash-flow from investing activity -0,3 -0,4 +0,1

raising of financial liabilities for financing leasing 0,0 0,5 -0,5

redemption of financial obligations -0,7 -1,3 +0,6

outgoing payments -0,2 -0,3 +0,1

Cash-flow from financing activity -0,9 -1,1 +0,2

Changes in cash and cash equivalents affecting liquidity 1,1 1,4 -0,3

cash and cash equivalents at the start of the reporting period 2,0 0,6 +1,4

Cash and cash equivalents at the end of the reporting period 3,1 2,0 +1,1


Compared to the previous year, the cash flow from current operations has decreased by EUR 0.6 million to EUR 2.3

million. The cash effect from factoring amounted to EUR -1.1 million due to settlement effects as of the balance

sheet date.

Expenses for investments amounting to EUR 0.9 million refer in particular to targeted expenses for technical plants

and machinery (EUR 0.6 million). Proceeds from disposal of property, plant and equipment includes in particular

the reimbursement of the purchase price of a machine whose purchase was reversed.

Within the scope of our financing activities liabilities from financing leases (sale-and-lease-back) were fully redu-

ced by EUR 0.7 million. As part of the settlement of the contract Schumag bought back the relevant stock of machi-

nery in June 2015 and is now again their legal owner. In the year under review financial liabilities decreased by a

total of EUR 0.9 million and amount to EUR 1.4 million as of September 30, 2015. Liabilities to banks amounting to

EUR 0.4 million which are included in this amount refer to the overdraft facility of Schumag Romania.

29Schumag ag

Assets situation

30-9-2015 30-9-2014 change

eur mill. % eur mill. % eur mill. %

assets

Long-term assets

intangible assets and property, plant and equipment 15,8 39 17,2 44 -1,4 -8

investment property 4,1 10 4,1 11 0,0 0

Deferred taxes 0,2 0 0,1 0 +0,1 +100

other assets 1,6 4 1,9 5 -0,3 -16

21,7 54 23,3 60 -1,6 -7

Short-term assets

inventories 10,0 25 8,8 23 +1,2 +14

trade accounts receivable 3,5 9 2,0 5 +1,5 +75

other assets 2,0 5 2,7 7 -0,7 -26

liquid funds 3,1 8 2,0 5 +1,1 +55

18,6 46 15,5 40 +3,1 +20

40,3 100 38,8 100 +1,5 +4

Shareholders‘ equity and liabilities

Shareholders' equity 7,4 18 6,1 16 +1,3 +21

Long-term liabilities

pension provisions 22,8 57 22,9 59 -0,1 -0

other provisions and liabilities 1,4 3 0,4 1 +1,0 >+100

24,2 60 23,3 60 +0,9 +4

Short-term liabilities

provisions and accrued liabilities 1,8 4 1,7 4 +0,1 +6

trade accounts payable 1,8 4 1,7 4 +0,1 +6

other liabilities 5,1 13 6,0 15 -0,9 -15

8,7 22 9,4 24 -0,7 -7

40,3 100 38,8 100 +1,5 +4


Intangible assets and property, plant and equipment decreased by EUR 1.4 million at a depreciation volume of

EUR 1.8 million. Investments amounting to a total of EUR 0.9 million mainly referred to new technical plants and

machinery for the division of precision engineering (EUR 0.6 million).

After inventories had been clearly reduced in previous years to improve liquidity a targeted buildup of inventories

by EUR 1.2 million took place in the year under review in order to improve our readiness for delivery to specific

customers.

In particular due to settlement effects from factoring as of the balance sheet date trade receivables increased by

EUR 1.5 million.

The shareholders‘ equity of the Schumag Group increased due to the positive result after taxes (EUR +1.6 million)

by a total of EUR 1.3 million to EUR 7.4 million which is due to the other result not affecting net income (EUR -0.3

million). The capital ratio increased from 16 % to 18 %.

The effect arising from the change of actuarial assumptions with regard to pension provisions which is directly set

off against shareholders‘ equity without affecting net income amounts to EUR +0.5 million.

The remaining provisions and liabilities decreased slightly by a total of EUR 0.2 million.

Performance indicatorsWith regard to the analysis of the course of business and the situation of the company we report below on the

most significant performance indicators used for the internal control of the company.

The total operating performance clearly improved by EUR 2.6 million and the internal targets were reached.

Machine downtime was reduced as compared to the previous year. We continue to work on an increase in produc-

tivity and on a minimization of downtime by means of preventive maintenance and repair.

Due to the non-recurring effects within the scope of personnel restructuring measures not contained in the plan-

ning (EUR = 0.9 million) EBIT remain constant on the level of the previous year. In this respect, our expectations

have only partially fulfilled

Key figures prognosis 2014/15 actual 2014/15 target achievement 2014/15

total operating performance 50,0 – 51,0 eur mill. 52,8 eur mill. achieved

eBit > 3,3 eur mill. 3,3 eur mill. limited achieved

equidity ratio (30-9) > 38,7 % 56,2 % achieved

31Schumag ag

The liquidity ratio I increased from 38.7 % to 56.2 %. Improvements as compared to our internal planning were re-

corded with regard to both liquid funds and current liabilities. This is also due to the fact that the third-party loan

was extended by 2 years and is no longer shown as a current liability in the year under review. Adjusted by this

effect, the liquidity ratio I amounts to 47.6 %. The liquidity ratio I according to commercial accounting of Schumag

AG increased from 60.2 % to 162.1 % and/or adjusted to 106.4 %.

inFormation to Be proviDeD By law

Compensation reportThe compensation report outlines the principles applied to the fixing of the remuneration of the Board of Execu-

tive Directors and the Supervisory Board of Schumag AG.

The personnel committee of the Supervisory Board is in charge of the fixing of the remuneration of the Board of

Executive Directors pursuant to the internal rules of the Supervisory Board. For this purpose it takes the size and

structure of the company as a basis with consideration of the economic and financial situation of Schumag AG as

well as the remuneration paid at comparable companies.

The remuneration of the Board of Executive Directors is basically composed of fixed and variable elements. For

special performance the personnel committee may grant bonuses as part of the variable share of the remunerati-

on. The fixed remuneration is usually paid as a monthly salary. The variable remuneration depends on the Group‘s

operative income before tax. Payment is usually effected in the month in which the Supervisory Board approves

the consolidated annual financial statements. If a special compensation is granted, payment will be made by agree-

ment with the Supervisory Board.

An integral part of the remuneration of the Board of Executive Directors are also the direct pension commitments.

These are individually agreed with the members of the Board of Executive Directors.

No further benefits are promised in case of termination of the office as member of the Board of Executive Direc-

tors. However, severance payment may result from an individually agreed termination agreement. According to

the recommendations of the German Corporate Governance Code severance payments are limited to two annual

salaries.


The remuneration of the Board of Executive Directors is shown in the overview below:

Pension commitments to members of the Board of Executive Directors as of September 30, 2015 according to IFRS

amount to EUR 574,235.00 (previous year EUR 265,904.00). In return for the advance of pension commitments

Dr. Ohlinger waived personal claims to Schumag AG.

Emoluments of former members of the Board of Executive Directors or their survivors amounted to

EUR 706,862.40 (previous year EUR 680,918.07).

Pension commitments to former members of the Board of Executive Directors and their survivors according to

IFRS amount to EUR 10,543,622.00 (previous year EUR 10,500,517.00).

According to § 14 of the Articles each member of the Supervisory Board is granted a compensation per fiscal year

amounting to EUR 7,158.09 which is payable at the end of the fiscal year. The chairman receives twice the amount,

his deputy 1.5 times the amount. The compensation is granted in proportion to the term of office of the respective

member of the Supervisory Board. In addition, the members of the Supervisory Board are entitled to reimburse-

ment of expenses incurred in connection with the exercise of their office.

remunerations 2014/15 Dr. ohlinger total

eur eur

Fixed remuneration 540.000,00 540.000,00

variable remuneration 94.000,00 94.000,00

remuneration of the Board of Executive Directors (total) 634.000,00 634.000,00

remunerations 2013/14 Dr. ohlinger total

eur eur

Fixed remuneration 540.000,00 540.000,00

variable remuneration 54.000,00 54.000,00

remuneration of the Board of Executive Directors (total) 594.000,00 594.000,00

33Schumag ag

The remuneration of the Supervisory Board is shown in the overview below:

The members of the Supervisory Board and of the Board of Executive Directors are listed in item 30 of the Notes.

Information relevant to the takeoverThe details required according to § 315 (4), No. 1 to 9 of the German Commercial Code are listed below:

The subscribed capital of Schumag AG as of September 30, 2015 amounts to EUR 10,225,837.62 and is divided

into 4,000,000 individual share certificates payable to bearer. The shares of Schumag AG are listed for trade under

ISIN DE0007216707 (WKN 721670) in the regulated market (General Standard) of the Frankfurt/Main stock ex-

change; furthermore they are traded in the regulated unofficial market at the stock exchanges of Düsseldorf, Ber-

lin, Hamburg and Stuttgart and via the electronic trading system XETRA. The company has only one class of shares

and all shares grant the same rights and/or obligations. Each individual share entitles to one vote at the general

meeting. Further rights and obligations arising from the shares in the company are governed by the provisions of

the German Stock Corporation Act.

The details required according to § 315 (4), No. 3 of the German Commercial Code are mentioned in item 32 of the

Notes.

Based on a share sales contract of July 16, 2010 own shares purchased by the company in October 2009 within

the scope of a share buyback programme in a total number of 333,526, corresponding to 8.34% of the share capi-

tal were purchased by Mr. Norbert Thelen as the trustee of the company‘s employees. In his capacity as a trustee

Mr. Norbert Thelen exercises the control and voting rights for the employees.

According to § 6 (1) of the Articles of the company the Board of Executive Directors consists of either one or seve-

ral members. According to the Articles and pursuant to § 84 of the German Stock Corporation Act the members of

2014/15 2013/14

Fixedremuneration

eur

out-of-pocket expenses

eur

totalremuneration

eur

Fixedremuneration

eur

out-of-pocket expenses

eur

totalremuneration

eur

ekkehard Brzoska 7.158,09 0,00 7.158,09 7.158,09 0,00 7.158,09

miaocheng guo 4.632,87 0,00 4.632,87 0,00 0,00 0,00

yun guo 2.982,54 0,00 2.982,54 0,00 0,00 0,00

martin Kienböck 1.272,55 0,00 1.272,55 7.158,09 345,60 7.503,69

hans-georg Kierdorf 3.549,22 0,00 3.549,22 10.737,14 0,00 10.737,14

peter Koschel 7.158,09 538,35 7.696,44 7.158,09 2.646,79 9.804,88

ralf marbaise 14.316,18 2.951,33 17.267,51 14.316,18 2.135,44 16.451,62

Jürgen milion 7.158,09 81,68 7.239,77 7.158,09 70,00 7.228,09

48.227,63 3.571,36 51.798,99 53.685,68 5.197,83 58.883,51


the Board of Executive Directors are appointed and dismissed by the Supervisory Board. The appointment

may be effected for a maximum period of five years. This maximum period is to be taken into consideration also

in the event of a repeated appointment or extension of the term of office. Dismissal of members of the Board of

Executive Directors is allowed only for an important reason. In other respects reference is made with regard to

the appointment and dismissal of members of the Board of Executive Directors to the regulations provided in

§ 84, § 85 of the German Stock Corporation Act as well as to § 6 of the Articles of the company. The Articles do

not deviate from the aforementioned legal provisions, however.

Amendments to the Articles are always subject to a resolution of the general meeting which, pursuant to § 133 (1)

of the German Stock Corporation Act, is to be passed with a simple majority of votes and additionally according

to § 18 (3) of the Articles of the company in conjunction with § 179 (1) and (2) of the German Stock Corporation

Act with the simple majority of the capital represented at the voting unless other rulings are mandatory according

to legal regulations or the Articles. According to the law it is imperative that a resolution at the general meeting

is to be passed with a majority of three quarters of the share capital represented at the voting with regard to all

amendments to the Articles referring to the object of the company (§ 179 (2), sentence 2 of the German Stock

Corporation Act), the issue of preference shares without voting right (§ 182 (1), sentence 2 of the German Stock

Corporation Act), capital increases with exclusion of subscription right (§ 186 (3) of the German Stock Corporation

Act), the creation of conditional capital (§193 (1) of the German Stock Corporation Act), the creation of authorized

capital (§ 202 (2) of the German Stock Corporation Act) - possibly with authorisation to exclude the subscription

right (§ 203 (2), sentence 2 in conjunction with § 186 (3) of the German Stock Corporation Act) -, the regular or

simplified reduction of capital (§ 222 (1), sentence 2 and/or § 229 (3) of the German Stock Corporation Act) or

a change in the legal form (§ 233 (2) and/or § 240 (1) of the Law Regulating Transformation of Companies). The

Supervisory Board is authorized according to § 12 of the Articles to effect changes of the Articles which refer only

to the wording.

According to the resolution of the general meeting on April 30, 2015 the Board of Executive Directors is autho-

rized upon consent of the Supervisory Board to increase the share capital of the company during the period from

March 1, 2016 to April 29, 2020 issuing new individual shares certificates made out to bearer against cash and/or

by using receivables due from the company as contributions in kind, either once or several times by up to a maxi-

mum of EUR 2,556,459.41 (authorized capital 2015). The new shares participate in the profits from the start of

the fiscal year in which they were issued. On principle, the shareholders have a statutory subscription right to the

new shares issued by the company. In this respect the Board of Executive Directors is authorized, subject to the

consent of the Supervisory Board, to decide an exclusion of the statutory subscription right of the shareholders,

in fact for fractional amounts resulting from the subscription ratio and for capital increases up to an amount of

EUR 511,291.89 in total, using receivables due from the company as contributions in kind.

In the event of a takeover bid directed towards shares issued by the company which are admitted to the trade

in an organized market the general statutory duties and powers exist for the Board of Executive Directors. If a

takeover bid was received, the Board of Executive Directors and the Supervisory Board would have to make and

publish a well-founded statement on the takeover bid in accordance with § 27 of the German Securities Acquisition

and Takeover Act to put the shareholders in a position to decide on the bid based on their knowledge of the state

of affairs. According to § 33 of the German Securities Acquisition and Takeover Act the Board of Executive Direc-

35Schumag ag

tors would furthermore not be allowed after the announcement of a takeover bid to undertake any acts outside

the ordinary business which might prevent the success of the bid unless it was authorised to do so by the general

meeting or unless the Supervisory Board had given its consent to this or unless the search for a competitive bid

was concerned. The decisions of the Board of Executive Directors and of the Supervisory Board are to be geared

to the benefit of the company, its employees and shareholders. As of the balance sheet date the Articles did not

include any arrangements in the sense of § 33a to § 33c of the German Securities Acquisition and Takeover Act

(European Prohibition on Frustrating Action, European Breakthrough Rule, Reservation of Reciprocity).

Declaration on the management of the company The declaration on the management of the company according to § 289a of the German Commercial Code is publis-

hed on our website (www.schumag.de) under Investor Relations / Corporate Governance.

report of the Board of Executive Directors on relations with affiliated companies(Dependency report according to § 312 of the german Stock Corporation Act)A separate report has been prepared on the relations with affiliated companies pursuant to § 312 of the German

Stock Corporation Act. This report states among other things that no reportable measures existed which Schumag

AG initiated or omitted at the instigation of or in the interest of Meibah International GmbH, Munich as well as Mr.

Miaocheng Guo, China, or the companies affiliated with these.

The report closes with the following declaration:

„The Board of Executive Directors of Schumag Aktiengesellschaft, Aachen, declares that according to the circum-

stances of which the company was aware at the time when the legal transactions were carried out the company

always received reasonable compensation for each legal transaction.“


SuBSeQuent eventS

In October 2015 a new collective wage agreement to secure the production site („Standortsicherungstarifvertrag“)

with a retroactive term from October 1, 2015 until September 30, 2019 was concluded. Apart from the continu-

ation of the 37.5-hour week without wage adjustment the agreement also included the continued waiver of the

increase in pay rates of 4.3 % from May 2012. It was agreed that the company will catch up on the increase in pay

rates in 3 steps beginning from October 1, 2017. Just like the waiver of the year-end and holiday bonus for

2 years, this is a waiver subject to a condition subsequent.

In other respects there were no events of particular significance after the balance sheet date.

report on opportunitieS anD riSKS

Features of the internal control and risk management systemThe group-wide internal control and risk management system of Schumag is an integrated system which supports

management decisions for the safeguarding of the efficiency and profitability of business activities, for the early

identification of risks, for the adequacy and reliability of internal and external accounting and for compliance with

the legal regulations which are relevant to the company.

The risk management system was revised in fiscal year 2012/13 and continues to be composed of a large number

of components which are embedded in the operational and organizational structure of the company. The reliability

of this system is ensured by compliance with restrictive guidelines and the continuous monitoring of processes. By

incorporation of the risk management system in the reporting system as well as regular communication between

decision-makers an early detection of risks and the corresponding countermeasures are facilitated.

Our risk management manual describes the process of risk prevention. The systematic approach to risk manage-

ment creates an awareness towards an open dealing with risk-relevant data and their clear documentation and

forms the basis for entrepreneurial decisions, for the quality of planning, the efficiency of reporting on controlling

and the optimum use of company resources.

Our department heads and area managers are in charge of the identification of risks, their assessment and control

as well as their communication. Coordination is up to our risk manager. The assessment of our risks is carried out

by means of the risk expectation value. This value results from the qualification of potential effects of the risk in

connection with their probability of occurrence. The risk expectation value is classified as follows:

Low: up to and including EUR 0.1 million

Mean: from EUR 0.1 million up to and including EUR 0.2 million

High: from EUR 0.2 million

37Schumag ag

The aim is to point out early the different types of risks to the persons in charge at as many hierarchy levels of the

company as possible and to use the risk defence and control instruments developed within the scope of our risk

management in due time.

The business processes are subject to controls which are to make risks controllable. The measures and rules refer

to instructions for the separation of duties, signing regulations, restriction of signing authorization for payments to

a small number of persons (four-eyes principle), measures for IT security, etc.

Apart from this, our control and risk management system is assessed within the scope of the statutory audit of

the annual financial statements in so far as this is significant for the provision of an accurate picture of the assets,

financial and earnings position of Schumag.

This report on opportunities and risks analyses and describes the essential opportunities and risks of Schumag AG

and its subsidiaries which were identifiable until the end of the period under review.

Opportunities and risks relating to economic performance

Sales marketSchumag mainly operates in the markets for commercial vehicles and medical technology. Sales market risks occur

in different forms here. While the demand in the medical technology market remains at a relatively constant level

the commercial vehicle sector is decisively influenced by the overall situation in the global economy.

An essential share of our production in precision engineering will continue to be expected in the area of com-

ponent manufacture for diesel engines. Despite the current discussions regarding the observance of limit values

within the diesel exhaust scandal in our estimation this key technology will set the tone for the time being. We

are currently unable to assess in concrete terms when new and/or different driving technologies will replace the

current ones.

The permanently rising need for savings as well as the link-up to alternative driving technologies lead to a conti-

nuously increasing complexity of customer requirements. We are capable of facing this challenge because we see

a competitive and technology advantage in many of the products manufactured by us. We also try to utilize these

advantages by extending our offered range. We are in permanent discussions about this with our customers.

The structure of our offered range is consistently developed. Our customers are increasingly advised on production

technology and this cooperation leads to a technical improvement of the manufactured components.

With regard to the dependency on the automotive industry as well as some major customers, we see a concentra-

tion of risks.

As in previous years, the contract award of international, dollar-based projects was impaired by the EUR/USD

exchange rate relation.

Konzernlagebericht Konzernlagebericht 38 group management report

It is a typical feature of sales market risks that they have a decisive influence on the assets, financial and earnings

position of the company. We face the still existing risks arising from the uncertain development of the global

economy by an extension of our international market presence for the motor truck supply industry. In addition, we

are developing new sales strategies to achieve growth in the non-automotive sector. By increasing diversification

we expect not only to reduce sales market risks but also to develop new sales opportunities.

Due to the uncertainties with regard to future effects of the financial, economic and government debt crisis there

are no consistent forecasts for the development of foreign demand in the markets relevant to our company. There

is a continued latent risk of further reductions in sales. In addition, there is still a risk of sales-market-based losses

due to external factors such as the once again aggravating economic and financial crisis or the realignment of

customer buying behaviour.

We aim at a permanent extension of our production basis in order to meet the continuously increasing require-

ments of our customers. More than 180 years of experience in precision engineering are proof of our flexibility. In

future we will continue to concentrate on our core competencies.

Furthermore, our many years of experience allow us to offer equipment designs to our customers (in terms of

ideal solutions). We will also in future provide options to manufacture sophisticated high-tech components.

Within the scope of our corporate philosophy we deal with various process developments, also outside the

automotive sector. In addition, we intend to enforce further process developments and to establish ourselves in

existing market niches by an extension and intensification of our internal training activities.

The risk of major fluctuations in our order receipt and sales forecast is given due to the unstable demand behavior

of consumers as a result of the current emission problems in the diesel segment.

It has also become obvious that the change of owners has been positively accepted by our customers. With the

new majority shareholder we now have the chance to secure existing sales markets and open up new ones. It is also

in our customers‘ interest to extend our business relations in China with the support of the majority shareholder.

We classed the risk expectation value on the whole as „high“.

Schumag agSchumag ag 39Schumag ag

Procurement market

Procurement market risks are essentially divided into schedule, quantity and price risks. Especially in the steel

processing industry there has been a situation for several years that the emerging nations exert a considerable

influence on the above mentioned risks due to their demand behaviour. A particular feature of the company‘s risk

profile results from the fact that a large number of raw materials (in particular special alloys) can be exclusively

procured from only one or very few manufacturers.

It is hardly possible to quantify the procurement risks because these are in the end determined by the fact

whether or not a promised production can be carried out according to the requirements in terms of quantity, qua-

lity, price and delivery date. In the past fiscal year we had no significant procurement problems with regard to the

completion of our production orders. Since the demand behaviour of our customers from the automotive industry

tends to change at short notice it is hardly possible to derive from this a long-term requirements planning for our

procurement activities.

The risk structure as well as the different forms of risks have not significantly changed compared to the previous

year. There is a continuing trend to conclude framework contracts with suppliers which aim at the procurement

of the required materials on a just-in-time basis. This results in both chances (less capital being tied up) and risks

(increased dependency on suppliers).

By means of long-term purchasing contracts and active inventory management we continue to counteract price

increases and risks relating to scheduled delivery dates. Based on the specifications provided by our customers we

purchase our raw materials to a significant extent from certain suppliers. This does not lead to any dependencies

which might threaten the continued existence of the company.

There is a continued tendency that our customers enter into direct price negotiations with our raw material sup-

pliers. This results in a reduction of risks with regard to uncontrolled price increases.

Apart from this, a trend can be identified that our purchase orders concentrate on less and less suppliers. The

resulting bundling effect leads to clearly increased ordering volumes in individual cases which are increasingly

difficult to cover by a trade credit insurance which again leads to shorter times allowed for payment with our

suppliers.

We have classed the risk expectation value as „mean“.

Konzernlagebericht Konzernlagebericht Konzernlagebericht Konzernlagebericht Konzernlagebericht 40 group management report

Opportunities and risks arising from management and organization

ComplianceThe company is exposed to the general risk that statutory regulations and guidelines applicable within the scope

of its business activity are not complied with. We counteract this risk by means of compliance guidelines for our

employees. To implement a more restrictive handling of the internal control and risk management system an

adjustment of organisational arrangements took place in fiscal year 2012/13.

Internal examinations in fiscal year 2012/13 revealed signs that in the past members of executive bodies failed to

comply with regulations of the internal control and risk management system. At the same time interrogations by

investigating authorities took place within the scope of pending preliminary proceedings. The Board of Executive

Directors therefore initiated investigations to disclose any breach of duty by members of executive bodies with

regard to § 93 of the German Stock Corporation Act. Since we are very interested to clear up the events of the

past we are closely cooperating with the investigating authorities for the clarification of the underlying facts and

circumstances although the investigations are not directed at the company itself.

External law offices have been instructed to carry out internal investigations and to provide clarification. Since the

investigations have currently not been fully completed the Board of Executive Directors does not yet have suffici-

ent information to issue a final comment on the matter. Final judgements by the courts are currently not available.

Any opportunities and risks arising from the respective facts and circumstances such as damage claims or tax risks

to be included in the balance sheet have so far not been determined in sufficiently concrete terms.

We classed the risk expectation value as „high“.

Infrastructure risksIT risks have an increasing strategic significance due to the progressing automation in administration as well as

in production. Planning, control as well as communication are hardly conceivable without functioning IT systems.

A total failure of IT systems can in the worst case lead to an entire standstill of operations and would therefore

threaten our existence.

With regard to the introduction of the company-wide ERP software of SAP to replace old systems which was in-

terrupted in spring 2010 there is a risk due to the long interruption that the implementation costs are higher than

planned.

To cover the event of IT failure an emergency and contingency programme has already been worked out in previ-

ous fiscal years. To prevent unauthorized data access, firewall systems and virus scanners are used.

The risk structure has largely remained unchanged compared to the previous year. By the gradual abolishment of

the old systems we hope to achieve a clear reduction of this form of risk.

Schumag agSchumag agSSSchumagchumagchumag agagag 41Schumag ag

Again, in fiscal year 2014/15 operational capacity limits were sometimes reached. In addition, machine failures

due to the age of the machinery led to non-scheduled interruptions. This leads to high maintenance/repair ex-

penses and downtime. In spite of a improved liquidity situation the company is unable to invest in new modern

machinery to the required extent and the required structural adjustments can be initiated only to a limited extent.

We are currently making intensive efforts to work out preventive maintenance plans.

The current and future challenge is to facilitate additional rationalization potential by information technology and

at the same time to master the necessary adjustments in terms of security as well as financially.


Konzernlagebericht Konzernlagebericht Konzernlagebericht Konzernlagebericht Konzernlagebericht 42 group management report

Financial opportunities and risks

FinanceThe company is faced with a variety of financial risks and opportunities. These can be identified both in the opera-

tive business and in financing issues.

A financial imbalance may in the most unfavourable case lead to insolvency. The cause of this may be insufficient

internal financing and/or failure to obtain the required external financing.

Financial risks in the operative area are basically caused by fluctuations in interest rates, currencies and in the

purchase prices for raw materials and other materials. Due to short-term money investments within the scope of

our liquidity reserves during the period there are no essential risks caused by changes in interest rates. To prevent

exchange rate risks, any business transacted in foreign currency is at the same time hedged with higher volumes.

Short-term liquidity risks arising from fluctuations in payment flows are identified early by a rolling liquidity plan-

ning system. To control default risks Schumag pursues a consistent accounts receivable management. By the use of

actual factoring a major share of the default risk - which is attenuated by the credit standing of our customers - is

transferred to the factoring company.

We observe the development of our financial situation on the basis of short, medium and long-term forecasts.

Information about this is provided on a current basis within the scope of the reporting of our risk manager. Due

to the small volume of available liquidity essential revenue reductions and/or cost increases may lead to a distur-

bance of the financial balance.

By the clear improvement of the earnings position, the optimization of our working capital as well as the raising of

a third-party loan we have been able to maintain our financial balance. Our liquidity situation has currently eased.

In the event of a deterioration of the order situation and thus also of the financial situation there continues to be

the risk that the required additional external financing may not be available in due time. We continue to look for

new financing options.


External opportunities and risks

Water protection zonesIn the reporting period, the proceedings were still not finalized which have been going on for several years concer-

ning the reclassification of local water protection zones according to which the existing machinery of Schumag is

subject to preservation of the status quo and which threaten Schumag with extensive requirements in connection

with new investments and with regard to the use of existing industrial areas. With an extensive waste water and

precipitation water concept the company makes allowance for future water management changes.

We classed the risk expectation value on the whole as „mean“.


Insolvency receivablesWith regard to the receivables of Schumag AG due from its former parent company Babcock Borsig AG i.I. a full

valuation allowance was made in previous years for expected uncollectibility. Based on the reporting of the insol-

vency administrator a write-up amounting to EUR 1.5 million was made in fiscal year 2012/13. According to the

current interim report of the insolvency administrator risks continue to exist with regard to the time of payment

receipt and potential reductions of the insolvency dividend. Allowances were made for these risks by taking risk

deductions into account in the valuation. On the other hand, there are opportunities arising from a further potenti-

al improvement of the insolvency dividend. Compared to the previous year, we do not see any essential change in

the risk profile.

We classed the risk expectation value on the whole as „low“.

Court proceedingsRisks arising from court proceedings include those risks which due to completed or expected court proceedings

may have effects on the assets, financial and earnings position of the company.

We classed the risk expectation value on the whole as „low“.

outlooK

This Group Management Report includes details and forecasts which refer to the future development of Schumag.

The forecasts reflect estimations made on the basis of all information available to us at this time. If the assump-

tions on which the forecasts are based fail to materialize or if the risks occur which we mentioned in the risk

report, the actual results may deviate from the currently expected results.

After the operative activities of our subsidiary BR Energy GmbH have been discontinued for the most part due to

missing business success the division of plant engineering is currently in the process of winding up. The following

details therefore refer only to the division of precision engineering.

In spite of having realized a large number of restructuring measures and in spite of our strong position in the

market due to our technological unique selling proposition in the area of low manufacturing tolerances and our

considerable reputation in the market the company continues to be in a not simple situation. On the way to a

stabilization of our company we have reached important sub-goals. As already mentioned we will have to concen-

trate increasingly on our core competencies and further extend these in future.

The financial resources of our company as well as the machinery in need of renovation represent risks. A notice-

able reduction of these risks could be reached here if Schumag entered into a regulated financing scheme with the

support of the new strategic investor.

Konzernlagebericht Konzernlagebericht 44 group management report

The influence of the further development of pension accruals on the result before taxes and on equity due to the

continued policy of low interest rates is very difficult to assess.

In spite of current uncertainties in the Asian market, the strong development of the US Dollar as well as the ex-

haust gas problems with diesel vehicles we nevertheless expect that sales revenue will remain almost unchanged.

The adjusted economic figures of the Federal Government as well as the continuing uncertainties at the beginning

of the 3rd quarter of 2015 support our assumption. According to the current status we expect a sales revenue bet-

ween EUR 50 million and EUR 51 million for fiscal year 2015/16. The total operating performance for fiscal year

2015/16 is expected to be in the same range.

The implementation of various measures has relieved the liquidity situation in the year under review; however,

for a sustainable stabilization a continuation of our strict liquidity management will be required. Based on the

underlying premises which include clearly higher investments than in previous years we expect the liquidity

development to remain at a relatively constant level. As of September 30, 2016 we expect a liquidity ratio I on the

adjusted level of the previous year.

Further measures for productivity increase have been initiated and are in the process of implementation. In

addition, it will be important to stabilize overheads at the low level of fiscal year 2014/15 with long-term effect.

Taking the scenario as a basis which is most likely to occur, we expect to reach a considerable improvement of

EBIT due to the improvement of cost structures at an almost unchanged total operating performance for fiscal year

2015/16. The estimation refers to the EBIT control variable determined according to commercial law principles as

well as to the EBIT figure shown in our group financial statements prepared according to the principles of IFRS.

Aachen, December 30, 2015





Konzernlagebericht Konzernlagebericht 464646

contentS conSoliDateD Financial StatementS

CONSOLIDATED STATEmENT OF FINANCIAL POSITION 48

CONSOLIDATED STATEmENT OF INCOmE 49

CONSOLIDATED STATEmENT OF COmPrEhENSIvE INCOmE 49

CONSOLIDATED STATEmENT OF ChANgES IN EQuITy 50

CONSOLIDATED STATEmENT OF CASh FLOWS 51

NOTES TO CONSOLIDATED FINANCIAL STATEmENTS 52

1. information on the company 52

2. accounting standards 52

3. acquisitions / Divestitures 65

4. Segment reporting 65

5. other operating income 68

6. personnel expenses 69

7. other operating expenses 70

8. Financial result 71

9. income taxes 72

10. earnings per share 75

11. intangible assets 76

12. property, plant and equipment 78

13. investment property 81

14. inventories 82

15. trade accounts receivable 82

16. other financial assets 83

17. other non-financial assets 84

18. cash and cash equivalents 85

19. Shareholders' equity 85

20. pension provisions 88

21. other provisions 93

22. Financial debts 94

23. trade accounts payable 96

24. other financial liabilities 96

25. other non-financial liabilities 97

26. contingent liabilities and other financial commitments 98

27. Financial instruments 99

28. leasing 102

29. related parties 104

30. remuneration of the Board of executive Directors and the Supervisory Board 106

31. Services of the auditor 108

32. Details of existing shareholdings 108

33. list of shareholdings 110

34. Declaration according to § 161 of the german Stock corporation act 110

35. additional information to the consolidated statement of cash flows 110

36. Subsequent events 110

w

47

Konzernlagebericht

explained in notes 30-9-2015 30-9-2014

teur teur

assets

Long-term assets

intangible assets (11) 70 174

property, plant and equipment (12) 15.725 17.012

investment property (13) 4.112 4.112

Deferred tax assets (9) 247 130

other financial assets (16) 1.575 1.822

other non-financial assets (17) 5 12

21.734 23.262

Short-term assets

inventories (14) 10.044 8.847

trade accounts receivable (15) 3.499 2.038

current income tax assets 25 59

other financial assets (16) 1.719 2.448

other non-financial assets (17) 238 166

cash and cash equivalents (18) 3.099 1.993

18.624 15.551

Total assets 40.358 38.813

Shareholders‘ equity and liabilities

Shareholders' equity (19)

capital subscribed 10.226 10.226

generated shareholders' equity -2.791 -4.083

Equity attributable to owners of the company 7.435 6.143

Long-term liabilities

pension provisions (20) 22.833 22.883

other long-term provisions (21) 9 15

Deferred tax liabilities (9) 0 17

Financial liabilities (22) 1.000 35

other financial liabilities (24) 408 286

24.250 23.236

Short-term liabilities

Short-term provisions (21) 1.831 1.749

current income tax liabilities (9) 888 239

Financial liabilities (22) 439 2.289

trade accounts payable (23) 1.812 1.665

other financial liabilities (24) 3.276 3.094

other non-financial liabilities (25) 427 398

8.673 9.434

Total shareholders‘ equity and liabilities 40.358 38.813

conSoliDateD Statement oF Financial poSition

Konzernlagebericht 48

conSoliDateD Financial StatementS

consolidated Financial Statements

Schumag agSchumag ag

explained in notes 2014/15 2013/14

teur teur

Net profit/loss 1.627 1.266

profits resulting from asset ceiling (20) 2 134

remeasurement of the net defined benefit liability for pension plans (20) -500 -2.972

Deferred taxes (9) 162 966

Items that will never be reclassified to profit or loss -336 -1.872

Foreign operations - foreign currency translation differences (19) 1 12

Items that are or may be reclassified to profit or loss 1 12

Other comprehensive income -335 -1.860

Total comprehensive income, attributable to owners of the company 1.292 -594

explained in notes 2014/15 2013/14

teur teur

revenue (4) 49.741 49.398

changes in inventories 1.114 -994

other own work capitalized 3 25

other operating income (5) 1.993 1.822

Total operating performance 52.851 50.251

materials expenses -13.990 -14.041

personnel expenses (6) -28.413 -25.785

Depreciation / amortization (11-13) -1.842 -2.183

other operating expenses (7) -5.289 -4.924

Income from operations 3.317 3.318

Finance income 10 0

Finance expenses -1.025 -1.390

Financial result (8) -1.015 -1.390

Income before taxes 2.302 1.928

income taxes (9) -675 -662

Net profit/loss, attributable to owners of the company 1.627 1.266

Earnings per share (Eur) (10) 0,41 0,32

both non-diluted and diluted

conSoliDateD Statement oF comprehenSive income

conSoliDateD Statement oF income

SSSchumagchumagchumag agagag 49Schumag ag

Konzernlagebericht

conSoliDateD Statement oF changeS in eQuity

Konzernlagebericht 50

generated shareholders´ equity

Subscribedcapital

teur

currencytranslation

teur

retainedearnings

teur

group accumulated

deficit

teur

Share-holdersequity

teur

Balance as of 1-10-2013 10.226 -1 6.095 -9.583 6.737

net profit 0 0 0 1.266 1.266

other comprehensive income 0 12 -1.872 0 -1.860

Total comprehensive income 0 12 -1.872 1.266 -594

Balance as of 30-9-2014 10.226 11 4.223 -8.317 6.143

Balance as of 1-10-2014 10.226 11 4.223 -8.317 6.143

net profit 0 0 0 1.627 1.627

other comprehensive income 0 1 -336 0 -335

Total comprehensive income 0 1 -336 1.627 1.292

Balance as of 30-9-2015 10.226 12 3.887 -6.690 7.435

the consolidated statement of changes in equity is discussed in detail in note 19 of the consilidated financial statements.

consolidated Financial Statements


2014/15 2013/14

teur teur

net profit/loss 1.627 1.266

Depreciation/amortization 1.842 2.183

changes in pension provisions -1.128 -1.421

other payment affecting gain/loss 535 538

result from disposals of long-term assets -109 -14

changes in deferred taxes 28 425

changes in inventories -1.197 895

changes in trade accounts receivable -1.502 345

changes in other assets 999 4

changes in trade account payable 147 -520

changes in other liabilities and provisions1) 1.132 -698

payments for social compensation plan -42 -131

Cash-flow from operating activities 2.332 2.872

payments related to intangible assets -12 -21

payments related to property, plant and equipment -890 -468

proceeds from the disposal of property, plant and equipment 557 43

Cash-flow from investing activities -345 -446

proceeds from acceptance of financial liabilities 0 516

repayment of financial liabilities -711 -1.336

repayment of liabilities from finance leases (other) -174 -247

Cash-flow from financing activities -885 -1.067

Changes in cash and cash equivalents affecting liquidity 1.102 1.359

changes in cash and cash equivalents due to foreign exchange rate movements 4 -4

cash and cash equivalents at the beginning of the reporting period 1.993 638

Cash and cash equivalents at the end of the reporting period 3.099 1.993

outgoing payments for interests 434 587

incoming payments from interests 10 0

outgoing payments for taxes on income 11 53

incoming payments from taxes on income 46 23

the consolidated statement of cash flows is discussed in detail in note 35 of the consolidated financial statements. 1) without payments for social compensation plan

conSoliDateD Statement oF caSh-FlowS

52

1. inFormation on the companySchumag Aktiengesellschaft (Schumag AG) is a listed corporation based in Nerscheider Weg 170, 52076 Aachen

which is registered at the Aachen District Court under registration number HRB 3189. The fiscal year includes

the period from October 1 to September 30 of the following year. The consolidated financial statements for the

fiscal year from October 1, 2014 to September 30, 2015 were released for disclosure to the supervisory board on

December 30, 2015 by a resolution of the Board of Executive Directors.

The Schumag Group with its companies Schumag AG, Aachen, and Schumag Romania S.R.L., Timisoara, Chisoda/

Romania, operates in the sector of precision engineering. Due to the fact that, as in the previous years, no orders

were received and no revenues were realized in the division of plant engineering in which the subsidiary

BR Energy GmbH (formerly Schumag BR Energy GmbH) operated the operating activities in this segment were not

pursued, also due to a lack of funds.

2. accounting StanDarDS2.1 BasesThe consolidated financial statements were prepared on the going concern basis. The consolidated financial state-

ments of Schumag AG were prepared according to the regulations of the International Financial Reporting Stan-

dards (IFRS) effective on the balance sheet date as applicable in the European Union and additionally according to

the commercial rules applicable according to § 315a (1) of the Commercial Code. In this connection, all mandatory

IFRS recognized by the European Union were taken into account. On principle, the financial statements are prepa-

red on the basis of historical acquisition and production cost unless current values according to IFRS 1 were stated

at the time of conversion to IFRS. In application of IAS 1 the balance sheet is divided into non-current and current

assets and liabilities. Current assets and liabilities are those which are due and payable within one year. According

to IAS 1.56 deferred taxes are shown as non-current assets and liabilities. The income statement is structured

according to the total-expenditure format. The currency of the financial statements is the Euro, all amounts are

indicated in thousand euros (TEUR) according to commercial rounding unless they are stated differently. Deviations

from the non-rounded amounts may result. To improve clarity individual items are combined in the income state-

ment and in the balance sheet and are separately explained in the Notes.

noteS to conSoliDateD Financial StatementS

notes to consolidated Financial Statements

53

2.2 ConsolidationIn addition to Schumag AG all subsidiaries are included in the consolidated financial statements. The subsidiaries

are consolidated from the date on which control is obtained until the date when control ends. In connection with

first-time capital consolidation the acquisition cost of the participating interests is set off against the current

values of the acquired assets and liabilities including contingencies. A remaining difference on the assets side is

shown as goodwill. A remaining difference on the liabilities side is booked as income after re-examination. Assets

and liabilities of the included companies which are transferred to the consolidated financial statements are subject

to the below mentioned uniform accounting and valuation methods. All relations within the Group as well as

interim results from trade between the included companies are fully eliminated within the scope of consolidation.

The companies included in the consolidated financial statements are individually stated in Note 33. The annual

financial statements of BR Energy GmbH were prepared as of the balance sheet date of the parent company. For

Schumag Romania S.R.L. interim financial statements were available as of the balance sheet date.

2.3 Accounting and valuation methods

2.3.1 Foreign currency translation:

The functional currency of Schumag AG and of the domestic Group companies is the Euro. Transactions in foreign

currency are recorded at the exchange rate which is effective at the time of posting of the transaction. Assets and

liabilities in foreign currency are valued at the exchange rates effective on the balance sheet date. Translation

differences arising in this connection are recorded with effect on net income.

The foreign Group company prepares its annual financial statements in the currency in which it predominantly

transacts business as measured by its business operations, its transactions and its payment flows. Translation to

the Euro Group currency takes place according to the closing rate method. Except for shareholders‘ equity which is

translated at historical exchange rates, balance sheet items are translated to euros at the exchange rates effective

on the balance sheet date, expenses and income are translated at monthly average exchange rates. The resulting

translation differences are shown without effect on net income in a separate item under shareholders‘ equity.

The exchange rates of foreign currencies in the Group have developed as follows:

current rate on balance sheet date average rate

1 eur = 30-9-2015 30-9-2014 2014/15 2013/14

romania ron 4,42 4,41 4,44 4,47

Schumag ag

54

2.3.2 revenue recognition:

Revenues are always recorded if it is likely that the economic benefit will go to the Group and that the amount of

this benefit can be reliably determined. revenues from goods sales are recognized upon shipment of the products

and goods to customers as soon as the transfer of risks to buyer has taken place. In this connection potential

discounts or other price reductions are deducted. Potential risks arising from complaints about products and

goods and due to warranty are deferred. revenues from services are recorded in so far as the service has been

rendered. Income from interest is recognized pro rata temporis taking into account the outstanding receivables as

of the balance sheet date and the interest rates to be applied according to the effective interest method. rental

income from operating leases, in particular in connection with the property held as a financial investment is recor-

ded on a pro rata temporis basis for the term of the corresponding leases.

2.3.3 Borrowing costs:

Borrowing costs which can be directly assigned to the acquisition, construction or manufacture of qualifying assets

are capitalized as part of the acquisition and/or production cost of the respective asset. Qualifying assets are as-

sets which require a considerable period of time to be turned into the intended condition in which they are ready

for use or ready for sale. Such borrowing costs have so far not occurred. All other borrowing costs are recorded

with effect on net income in the period of their incurrence.

2.3.4 Earnings per share:

The calculation of earnings per share is based on the result after tax and the weighted number of common shares

issued on average. No dilution effects resulted in the shown reporting period.

2.3.5 government grants:

Government grants are recorded only if it is sufficiently certain that the connected conditions are met and that the

grants will be provided. Investment subsidies for the acquisition or construction of property, plant and equipment

reduce the acquisition or production cost of the respective assets. In subsequent periods a corresponding reduction

of scheduled depreciation will therefore take place. Other government grants or government assistance are set up

as deferred income and recognized as income over the underlying period or the expected life of the respective

asset.

2.3.6 Intangible assets:

Intangible assets with an indefinite useful life do not exist at the company. Intangible assets with a limited useful

life are valued at cost less regularly scheduled straight-line depreciation (amortization method). The useful life is

determined based on the period of the underlying contract and on the expected use of the intangible asset. De-

velopment cost is not capitalized, but is recorded with effect on net income in the period in which it was incurred

because at the Schumag Group the creation process cannot be divided into a research and a development phase.

The main reason for this is that the activities for the improvement of production and of the products are exclu-

sively of an iterative nature. This means that the activities are not geared to clearly definable new products or


55

production processes but that they deal with gradual and current improvements of always the same products and

production processes. The products made and the production processes remain basically unchanged. It is therefore

from a cost account point of view impossible to determine the development cost on an accrual basis. Goodwill is

not stated either.

2.3.7 Property, plant and equipment:

Property, plant and equipment are valued at acquisition or production cost less accumulated depreciation. The

production cost of self-constructed plants include beside direct costs, appropriate allocations of material and

manufacturing overheads and an appropriate share of general administrative costs for those areas involved in the

construction of the plants. Borrowing costs were not capitalized because no long-term manufacturing work is on

hand. The cost of general overhauls is capitalized with the plant provided that the criteria for capitalization are

fulfilled. Current maintenance and repair costs are immediately expensed with effect on net income. As a matter of

principle, property, plant and equipment are written off only upon disposal from the Group or if no more economic

benefit is expected from the continued use or sale of the asset.

Property, plant and equipment which are subject to wear and tear are depreciated on a scheduled straight-line

basis over their useful life. The following useful lives are taken as a basis here:

useful life of intangible assets 2014/15 2013/14

years years

Software 5 5

useful life of property, plant & equipment 2014/15 2013/14

years years

Buildings 7 – 50 7 – 50

lndustrial plants and machinery 4 – 20 4 – 20

working and office equipment and other facilities 3 – 23 3 – 23

Schumag ag

56

2.3.8 Investment property:

Investment property includes land and buildings which are used to obtain rental income and not for the company’s

own production purposes. At Schumag AG parts of the land and buildings held at the company’s headquarters in

Aachen are rented out and are held as a financial investment. The valuation of the included buildings at the time of

transfer was effected according to IAS 40 in conjunction with IAS 16.5. The investment property includes land and

buildings which are stated in the balance sheet at their acquisition or production cost less scheduled depreciation

over their useful life.

2.3.9 Impairment of value:

The book values of intangible assets, property, plant and equipment and of the property held as a financial invest-

ment are reviewed as of each balance sheet date. If there are signs for a impairment of value, an impairment test

will be carried out. Non-scheduled depreciation will be effected if the recoverable amount is lower than the book

value. If the reasons for the impairment of value no longer exist, the corresponding write-up will be effected up to

a maximum of the amortised cost (see Note 2.4.5)

2.3.10 Leasing:

Leasing contracts are classified as either financing or operating leases. Leasing agreements in which the Schumag

Group acting as a lessee bears all essential chances and risks connected with the ownership of an asset are treated

as financing leases. Assets used within a financing lease are recorded at the lower of the fair value of the leased

property or the present value of the minimum lease payments, depreciation then takes place over the estimated

useful life or the shorter period of the lease. All other leasing agreements in which the Schumag Group acts as a

lessee are classed as operating leases. In this case the lease payments to be made are expensed on a straight-line

basis over the term of the lease. Leasing agreements in which the Group is the lessor and in which it does not

transfer all essential chances and risks connected with the title to an asset to the lessee are classed as operating

leases. The leased asset remains on the Group balance sheet and is subject to scheduled depreciation. Revenue

recognition of the leasing payments received is effected on a straight-line basis over the term of the lease.

2.3.11 Income Taxes:

Actual income tax claims and income tax liabilities for the current period and earlier periods are assessed at the

amount in which a refund from the tax office and/or a payment to the tax office is expected. The calculation of

actual income taxes is effected on the basis of the tax rates and tax laws effective as of the balance sheet date in

those countries where the Schumag Group earns taxable income. Deferred tax assets are recorded for temporary

differences between the values assigned in the IFRS balance sheet and in the tax balance sheet of the consolidated

companies as well as for consolidation processes and tax loss carryforwards. Deferrals are set up in the amount of

the expected tax burden and/or tax relief in subsequent years. The underlying tax rates are indicated in Note 9.

Deferred tax assets are only included when it is sufficiently probable that the future tax reduction will be realized.

Deferred tax assets and deferred tax liabilities are offset if they relate to income taxes levied by the same tax

authority and if it is intended to offset the actual tax liabilities and refund claims on a net basis or to realize tax

claims and tax liabilities at the same time.

useful life of investment property 2014/15 2013/14

years years

Software 10 – 40 10 – 40


57

2.3.12 Inventories:

Inventories are carried at acquisition cost or production cost. If the market prices and/or the fair values based on

the net realizable values are lower, these values will be stated. The net realizable value corresponds to the sales

proceeds realizable in normal transaction less costs to sell which can be directly allocated to the respective asset.

Acquisition and production costs are determined on the basis of the first-in-first-out method (fifo). Production

costs include, direct costs as well as overhead cost of material and production at normal utilization of the produc-

tion plants provided that such costs are incurred in connection with the production process. General administration

costs are also included provided that they relate to the production process.

2.3.13 Pension provisions:

Pension provisions are determined by means of actuarial calculations based on the projected unit credit method

with consideration of expected future compensation and pension adjustments. Revaluations of the net liability ari-

sing from defined benefit pension plans as well as gains and losses from asset ceiling are set off against retained

earnings under other results without affecting income and are shown in the consolidated statement of comprehen-

sive income.

2.3.14 Other provisions:

Other provisions are set up when there is a present obligation as a result of a past event and when there is a prob-

able outflow of resources whose amount can be reliably estimated. The amount of the provision is the probable

amount required to settle the obligation. The probable amount to settle long-term obligations is discounted if the

effect of discounting is material. In this case, valuation of the provision is done at present value. Interest effects

are shown in the financial result.

Schumag ag

58

2.3.15 Financial instruments:

Financial instruments are contracts which give rise to a financial asset in one entity and to a financial liability

or equity instrument in another entity. The balancing of financial instruments in connection with a regular-way

purchase or sale is effected as of the date of performance, i.e. the date on which the asset is delivered.

Financial assets at Schumag are composed of credits granted and receivables as well as liquid funds. First-time

recognition of a financial asset is effected at the fair value plus transaction costs. Transaction costs incurred in con-

nection with the purchase of financial assets valued at fair value with effect on net income are directly recorded

with effect on net income. Subsequent valuation is effected according to the assignment of the financial assets to

one of the following categories under IAS 39 which are subject to different valuation principles:

Financial assets valued at fair value with effect on net income*

Financial assets to be held to maturity*

Loans and receivables

Financial assets available for sale*

Effective derivatives as hedging instruments *

* currently not relevant at the Schumag Group

In the category of „loans and receivables“ the trade accounts receivable, other financial assets as well as cash and

cash equivalents are recorded at the Schumag Group. They are valued at amortized cost.

If objective signs point to a substantial decrease in the value of these financial assets, an examination takes

place to determine if the carrying value exceeds the present value of the future cash-flows. If this is the case, a

valuation allowance amounting to the difference in value is made using a valuation adjustment account, and the

loss due to the decrease in value is recorded with effect on net income. The present value of the future cash-flows

is discounted at the original effective interest rate of the financial asset. If the reasons for the previous valuation

adjustments no longer exist, the corresponding write-ups are effected by adjustment of the valuation adjustment

account, but not in excess of amortized cost.

Financial assets are written off if the contractual rights to payments arising from the financial assets no longer

exist, if the receivables are classed as non-collectible and if all securities have been utilised or if financial assets

are transferred with all essential risks and chances. If a written-off receivable is later classed as collectible again

because of an event which occurs after the write-off, the corresponding amount is recognised as income. An objec-

tive signs of a decrease in value are temporary delays of payments which are not even eliminated after a demand

for payment to the debtor or which exist due to a legal dispute.


59

Financial liabilities at Schumag relate to financial debts, trade accounts payable and other financial liabilities.

Financial liabilities are assigned to the following categories:

Financial liabilities valued at fair value with effect on net income*

Financial liabilities valued at amortized cost

* currently not relevant at the Schumag Group

First-time recognition of the financial liability is effected at the fair value of the consideration received and/or at

the value of the means of payment received less any transaction costs incurred. Subsequent valuation is effected

at amortized cost for the category of „Financial liabilities valued at amortized cost“, otherwise they are valued at

the fair value. Financial liabilities are written off if the contractual liabilities have been paid, cancelled or if they

have expired.

The amortized cost of a financial asset or of a financial liability is the amount at which a financial asset or a

financial liability was valued at the first recording, less any redemption and any non-scheduled depreciation for

decreases in value or uncollectible accounts as well as plus or less the accumulated distribution of any difference

between the original amount and the amount repayable upon maturity (premium), which is distributed over the

term of the financial asset or financial liability using the effective interest method.

For short-term receivables and liabilities the amortized cost always corresponds to the nominal amount and/or the

repayment amount. The fair values shown in the balance sheet usually correspond to the market prices of the fi-

nancial assets and liabilities. If no fair values are directly available, these are calculated using recognized valuation

methods and current market parameters. The fair value option is not used at the Schumag Group.

Derivative financial instruments are shown at their current value. The control of financial risks (in particular

currency risks) by using derivative financial instruments is described in Note 27.

Schumag ag

Konzernlagebericht Konzernlagebericht Konzernlagebericht Konzernlagebericht Konzernlagebericht 60

2.3.16 Asset values from reinsurance cover:

Asset values from reinsurance cover are stated under other financial assets at their fair values determined accor-

ding to actuarial principles.

2.3.17 Segment reporting:

According to the so-called management approach, reporting by segment is geared to the internal organizational

and reporting structure of Schumag. The data on which internal control variables are based are derived from the

consolidated financial statements prepared according to IFRS.

2.4 Essential discretionary decisions, estimations and assumptions

In the preparation of the consolidated financial statements the Board of Executive Directors uses discretionary

decisions, estimations and assumptions that affect the reported amount of income, expenses, assets and debts as

well as the contingencies shown in the consolidated financial statements. The uncertainty connected with these

assumptions and estimations may lead to results, however, which, in future periods, call for considerable adjust-

ments of the carrying value of the assets or debts concerned. The assumptions made as of the balance sheet date

are of particular significance with regard to the following items:

2.4.1 Operating lease relationships - group as lessor:

Schumag has concluded a leasing contract for the industrial letting of real property. An analysis of the contractual

conditions showed that all relevant chances and risks connected with the ownership of the rented-out properties

remain with the Group. The contract is therefore shown in the balance sheet as an operating lease so that the let

property is recorded under real property held as a financial investment in accordance with IAS 40.

2.4.2 Income taxes:

Uncertainties exist with regard to the amount and time of accrual of future taxable profits. If the actual results de-

viate from the assumptions made and/or from future changes of such assumptions, it may be necessary to adjust

the already recorded tax revenue and tax expenses. Based on information available at the time of preparation

of the consolidated financial statements Schumag sets up provisions for potential effects of field tax audits. The

amount of such provisions is based on various factors such as e.g. the experience from earlier field tax audits and

different interpretations of the tax regulations by the taxable company and the tax authority in charge.

Deferred taxes are also stated for tax loss carryforwards. Their realization depends on the future taxable profits

of the respective company and on the tax regulations. If there are doubts about the realization of tax loss carry-

forwards, the corresponding valuation allowances are made for the deferred tax assets in individual cases. Based

on the transfer of more than 50% of the shares in June 2014 the losses brought forward until that date were fully

cancelled. It is expected that loss carryforwards of the German subsidiary accrued after this time will be no longer

usable in view of the shutdown of the plant engineering division. Therefore a full valuation allowance has been

made for the determined deferred tax assets.

2.4.3 Pension provisions:

The present value of pension obligations is determined by means of actuarial calculations. In this connection

the actuarial valuation is effected on the basis of various assumptions. This also includes the determination of

the discount rates as well as estimates of the future development of annuities and probabilities of death. Due to


Schumag agSchumag ag 61

the complexity of the valuation, of the underlying assumptions and their long-term character a defined benefit

pension obligation reacts extremely sensitive to changes in these assumptions. The assumptions made by Schumag

which are reviewed as of each balance sheet date are stated in Note 20.

2.4.4 Other provisions:

Other provisions also cover risks resulting from legal disputes and proceedings. In order to determine the amount

of the provisions, the facts relating to each case, the size of the claim, claims awarded in similar cases and inde-

pendent expert advice are considered along with assumptions regarding the probability of a successful claim and

the range of possible claims. The actual costs can deviate from these estimates.

2.4.5 Non-scheduled depreciation (impairments):

It is to be determined as of each balance sheet date whether or not there are signs for a potential decrease in the

value of intangible assets and of property, plant and equipment and in the value of real property held as a financi-

al investment. In addition, the Group determines as of each balance sheet date if there are signs for a decrease in

the value of financial assets.

In the impairment tests to be carried out in the presence of signs for decreases in value the balance sheet carrying

values of the assets are compared with the recoverable amounts of the assets. The recoverable amount is the high-

er of the net realizable value and the value in use of the asset. The value in use is determined for each individual

asset and corresponds to the cash value of the expected cash flow. If no recoverable amount can be determined

at the level of the individual asset, the determination will be effected for cash generating units to which the

corresponding asset is assigned. For the definition of the cash generating units the segments are used (see Note 4).

For the determination of the value in use a pretax interest rate corresponding to market conditions is used. The

determinations are based on budget calculations and forecasts by the management which usually cover a planning

period of three years and include assumptions for short to medium-term market developments. Cash flow fore-

casts which exceed the detailed planning period are calculated on the basis of suitable growth rates.

The estimate of the cash flows and the assumptions are based on the information available as of the respective

balance sheet date and may deviate from actual developments. Assumptions and estimates refer, among other

things, to expected proceeds from product sales, to the recoverability of the asset, to the discount rate as well as

to material and energy prices.

A previously recorded impairment loss is reversed only if, since the inclusion of the last impairment loss, a change

has resulted in the assumptions used to determine the recoverable amount. The write-up is limited to the effect

that the carrying value of an asset must not exceed its recoverable amount nor the carrying value which would

have resulted after consideration of scheduled depreciation if no impairment loss had been recorded for the asset

in previous years.

Schumag ag

Konzernlagebericht Konzernlagebericht 62

2.5 Effects of new and changed accounting standards2.5.1 First-time application of IFrS as applicable in the European union

In fiscal year 2014/15 the following new and/or changed standards and interpretations were applied for the first

time. Their first-time application has no essential effects on the consolidated financial statements unless stated

otherwise

IFrS 10 “Consolidated Financial Statements” was published on May 12, 2011 and included in EU law on Decem-

ber 11, 2012 and is to be applied for the first time to fiscal years starting on or after January 1, 2014. IFRS 10

introduces a consistent consolidation model where the criterion of control is used as a basis for consolidation of

all associations. IFRS 10 partially replaces IAS 27 „Consolidated and separate financial statements“ and completely

replaces SIC 12 „Consolidation - special purpose entities“.

IFrS 11“Joint Arrangements” was published on May 12, 2011 and included in EU law on December 11, 2012 and

is to be applied for the first time to fiscal years starting on or after January 1, 2014. IFRS 11 lays down principles

for the accounting in which an entity exercises joint control of a joint venture or joint operation and replaces

IAS 31 „Interests in joint ventures“ and SIC 13 „Jointly Controlled Entities - Non-Monetary Contributions by

Venturers“.

IFrS 12 “Disclosures of Interests in Other Entities” was published on May 12, 2011 and included in EU law on

December 11, 2012 and is to be applied for the first time to fiscal years starting on or after January 1, 2014.

IFRS 12 combines, expands and replaces all disclosure requirements for subsidiaries, joint arrangements,

associated companies and not consolidated structured companies. Due to the new IFRS 12, IAS 27 and IAS 28

had to be replaced as well.

IAS 27 “Separate Financial Statements” was published on May 12, 2011 and included in EU law on December 11,

2012 and is to be applied for the first time to fiscal years starting on or after January 1, 2014. The amended

IAS 27 now focuses on accounting and notes of subsidiaries, joint arrangements and associated companies which

are relevant for financial statements according to IFRS.

IAS 28 “Investments in Associates and Joint Ventures” was published on May 12, 2011 and included in EU law on

December 11, 2012 and is to be applied for the first time to fiscal years starting on or after January 1, 2014. The

amended IAS 28 prescribes the accounting for investments in associated companies and sets out requirements for

the application of the equity method when accounting shares in associated companies and joint ventures.

Amendments to IAS 32“Offsetting Financial Assets and Financial Liabilities” were published on December 16,

2011 and included in EU law on December 13, 2012 and is to be applied for the first time to fiscal years starting

on or after January 1, 2014. The amendment clarifies the requirements for balancing financial assets and financial

liabilities and eliminates inconsistencies in current practice.

Amendments to IFrS 10, IFrS 11 and IFrS 12 “Consolidated Financial Statements, Joint Arrangements and

Disclosures of Interests in Other Entities - Transition Guidance” were published on June 28, 2012 and included in

EU law on April 4, 2013 and is to be applied for the first time to fiscal years starting on or after January 1, 2014.

The amendments clarify transition guidance and provide transition reliefs for the first-time-adoption of the above

mentioned standards.


Schumag agSchumag ag 63

Amendments to IFrS 10, IFrS 12 and IAS 27 “Investment Entities” were published on October 31, 2012 and

included in EU law on November 20, 2013 and is to be applied for the first time to fiscal years starting on or after

January 1, 2014. The amendments define investment entities as independent companies which are excluded from

the consolidation requirements in IFRS 10. Due to fair value accounting, the information benefit of the financial

reports shall be increased.

IFrIC 21 “Levies” was published on May 20, 2013 and included in EU law on June 13, 2014 and is to be applied for

the first time to fiscal years starting on or after June 17, 2014. The interpretation of IAS 37 “Provisions, Contin-

gent Liabilities and Contingent Assets” clarifies the accounting for levies, other than those in IAS 12, and clarifies

in particular when an entity has to record a liability.

Amendments to IAS 36 “Recoverable Amount Disclosures for Non-Financial Assets” were published on May 29,

2013 and included in EU law on December 19, 2013 and is to be applied for the first time to fiscal years starting

on or after January 1, 2014. The amendments affect the indication of information regarding the calculation of the

recoverable amount of asset relief measures if this amount is based on fair value less costs of sell.

Amendments to IAS 39 “Novation of Derivatives and Continuation of Hedge Accounting” were published on

June 27, 2013 and included in EU law on December 19, 2013 and is to be applied for the first time to fiscal years

starting on or after January 1, 2014. The amendment achieves that a change of a contracting party of a hedging

instrument to a central counterparty, as a result of law or regulation, does not end a hedging relationship if speci-

fic conditions are met.

2.5.2 Not yet considered IFrS

The effects on the consolidated financial statements of Schumag of the IFRS so far not applied in fiscal year

2014/15 and/or not recognized by the European Union were examined. As a matter of principle, Schumag does

not intend to apply these prematurely and assumes that the application of the new standards and/or the changed

standards as well as their interpretations already recognized by the European Union mentioned below will have

no essential effects on the consolidated financial statements unless indicated otherwise:

Amendments to IAS 19 “Defined Benefit Plans: Employee Contributions” were published on November 21, 2013

and included in EU law on December 17, 2014 and is to be applied for the first time to fiscal years starting on or

after February 1, 2015. The amendments allow to recognize contributions of employees or third parties to defined

benefit pension plans as a reduction of current service costs in the period in which servicing has been rendered if

contributions are independent from the number of service years.

Annual Improvements to IFrSs 2010-2012 Cycle were published on December 12, 2013 and included in EU law

on December 17, 2014 and is to be applied for the first time to fiscal years starting on or after February 1, 2015.

In context of collective changes, clarifications and smaller amendments to IFRS 2 „Share-based Payment“, IFRS 3

„Business Combinations“, IFRS 8 „Operating Segments“, IFRS 13 „Fair Value Measurement“, IAS 16 „ Property, Plant

and Equipment“, IAS 24 „Related Party Disclosures“ as well as IAS 38 „ Intangible Assets“ were published.

Annual Improvements to IFrSs 2011-2013 Cycle was published on December 12, 2013 and included in EU law

on December 18, 2014 and is to be applied for the first time to fiscal years starting on or after February 1, 2015.

In context of collective changes, clarifications and smaller amendments to IFRS 1 „First-time Adoption of IFRS“,

Schumag ag

64

IFRS 3 „Business Combinations“, IFRS 13 „Fair Value Measurement“ as well as IAS 40 „Investment Property“ were

published.

Amendments to IAS 16 und IAS 41 “Bearer Plants” were published on June 30, 2014 and included in EU law on

November 23, 2015 and is to be applied for the first time to fiscal years starting on or after January 1, 2016. The

amendments clarify that fruit-bearing plants are to be accounted as tangible assets as their utilization is comparable.

Amendments to IFrS 11 “Accounting for Acquisitions of Interests in Joint Operations” were published on May 6,

2014 and included in EU law on November 24, 2015 and is to be applied for the first time to fiscal years starting

on or after January 1, 2016. The amendments clarify that the acquisition of shares in a joint operation which con-

stitutes a business has to be accounted in application of IFRS 3. Additionally, all relevant requirements for notes

must be met.

Amendments to IAS 16 und IAS 38 “Clarification of Acceptable Methods of Depreciation and Amortisation” were

published on May 12, 2014 and included in EU law on December 2, 2015 and is to be applied for the first time to

fiscal years starting on or after January 1, 2016. The amendments provide further guidelines for determining an

acceptable method of depreciation. Revenue-based methods are not permitted for property, plant and equipment

and for intangible assets only permitted in exceptional cases.

Annual Improvements to IFrSs 2012-2014 Cycle were published on September 25, 2014 and included in EU law

on December 15, 2015 and is to be applied for the first time to fiscal years starting on or after January 1, 2016.

In context of collective changes, amendments to IFRS 5 „Non-current Assets Held for Sale and Discontinued Opera-

tions“, IFRS 7 „Financial Instruments: Disclosures“, IAS 19 “Employee Benefits” as well as IAS 34 “Interim Financial

Reporting” were made.

Amendments to IAS 1 “Disclosure Initiative” were published on December 18, 2014 and included in EU law on

December 18, 2015 and is to be applied for the first time to fiscal years starting on or after January 1, 2016. The

amendments mainly include clarifications regarding the judgment of the materiality of notes, the representation of

additional items on the balance sheet and the statement of comprehensive income, the structure of notes as well

as the representation of significant accounting policies.

Amendments to IAS 27 “Equity Method in Separate Financial Statements” were published on August 12, 2014 and

included in EU law on December 18, 2015 and is to be applied for the first time to fiscal years starting on or after

January 1, 2016. With the amendments the equity method is again allowed as accounting option for shares in

subsidiaries, joint ventures and associate companies in separate financial statements of an investor. The existing

options for a valuation of acquisition costs or according to IAS 39 / IFRS 9 will remain. Since 2005 using the equity

method for shares in separate financial statements (of parent company) has not been allowed according to IAS 27.


65

3. acQuiSitionS / DiveStitureS

In fiscal year 2014/15 no company acquisitions took place.

Acquisitions or divestitures are currently not planned. The discontinuation of the segment of plant engineering is

not yet classed as Discontinued Operations because the shutdown was not finished with final effect in fiscal year

2014/15.

4. Segment reportingFor corporate control purposes the Group is organized in segments according to products. Services are of secon-

dary significance. The allocation of assets and depreciation to segments is effected according to the economic

power. Assets which are shared by the segments are assigned according to their pro-rata use. Due to the internal

organizational and reporting structure the following segments result according to IFRS 8:

The segment of precision engineering produces high-precision automotive parts, components for precision

measuring and indicating equipment, precision axles for a wide range of household appliances, components for

medical and optical equipment, standard precision parts for injection moulding and pressure die-casting as well as

precision parts in small lot sizes manufactured according to the customers‘ drawings.

The discontinued segment of plant engineering included the production of components for the energy sector,

in particular for oil and gas supply systems as well as power plants and nuclear power stations.

Business activities which cannot be assigned to any other segment are shown under Other segments.

These currently include activities connected with the real property held as a financial investment (see Note 13).

Schumag ag

66

An amount of TEUR 19,970 (previous year TEUR 21,423) of the non-current assets is allotted to Germany, and

TEUR 1,764 (previous year TEUR 1,839) to Romania.

Segments 2014/15 (teur) precision engineering Systems engineering other segments group

revenue 49.741 0 0 49.741

total operating performance 51.522 0 1.329 52.851

income from operations 2.708 -106 715 3.317

income before taxes 2.491 -207 18 2.302

Finance income 10 0 0 10

Finance expenses -227 -101 -697 -1.025

Depreciation / amortization -1.842 0 0 -1.842

capital expenditure 902 0 0 902

long-term assets 17.621 1 4.112 21.734

average number of employees 622 0 0 622

Segments 2013/14 (teur) precision engineering Systems engineering other segments group

revenue 49.398 0 0 49.398

total operating performance 49.008 0 1.243 50.251

income from operations 2.735 -87 670 3.318

income before taxes 2.157 -188 -41 1.928

Finance income 0 0 0 0

Finance expenses -578 -101 -711 -1.390

Depreciation / amortization -2.182 -1 0 -2.183

capital expenditure 767 0 0 767

long-term assets 19.149 1 4.112 23.262

average number of employees 625 0 0 625


67

The following non-cash impairment losses are included in the consolidated statement of income and are fully

allocated to the segment of precision engineering:

As in previous year in fiscal year 2014/15 a minimum of 10% of Group revenues were realized with two customers

of the segment of precision engineering. Customer sales amounted to TEUR 7,995 (previous year 8,989) and

TEUR 6,321 (previous year TEUR 4,493).

An essential key figure for the control of the segments by the Board of Executive Directors as the main decision-

makers is the figure of income from operations.

An aggregation of segments did not take place.

Breakdown of revenues by regions

impairment losses 2014/15 2013/14

teur teur

on intangible assets and property, plant & equipment -100 -130

on accounts receivable and other assets -40 0

-140 -130

location 2014/15 2013/14

teur % teur %

germany 18.991 38,2 19.015 38,5

remaining eu countries 9.028 18,2 8.617 17,4

other europe 2.303 4,6 876 1,8

north america 14.375 28,9 16.263 32,9

latin america 3 0,0 0 0,0

asia 5.041 10,1 4.627 9,4

49.741 100,0 49.398 100,0

Schumag ag

68

5. other operating income

rental income includes in particular income from the letting of the investment property to SMS group.

Income from disposal of property, plant and equipment refers in particular to the rescission of a machine

purchase from fiscal year 2012/13.

Income from ChP allocation included the income from the levy according to the Combined Heat & Power Act

refunded by the grid operator due to the utilisation of a unit-type cogeneration station.

Income from the write-off of liabilities apply in main to commitments regarding early retirement arrangements.

Income from surrender values results from reinsurance contracts which do not represent qualified insurance

policies in terms of IAS 19.

Other income includes other grants, income from offsetting of costs as well as a large number of other items.

2014/15 2013/14

teur teur

rental income 1.246 1.197

income from the disposal of property, plant and equipment 116 33

income from chp allocation 113 0

Foreign currency gains 106 102

income from the write-off of liabilities 57 10

income from surrender values 50 48

other 305 432

1.993 1.822


69

6. perSonnel expenSeS

Contributions amounting to TEUR 1,835 (previous year TEUR 1,805) were paid to pension insurance institutes.

Average number of employees

2014/15 2013/14

teur teur

wages and salaries -23.687 -21.504

Social security contributions and retirement benefit expenses and welfare benefits -4.726 -4.281

thereof retirement benefit expenses -422 -105

-28.413 -25.785

2014/15 2013/14

hourly workers 510 506

Salaried employees 80 88

apprentices 32 31

622 625

Schumag ag

70

7. other operating expenSeS

Other expenses include further administration and selling expenses not related to certain contracts.

2014/15 2013/14

teur teur

maintenance -1.735 -1.184

consulting fees -347 -432

insurance costs -323 -384

it costs -261 -272

other services purchased -234 -212

leasing and rental costs -214 -240

Factoring -181 -262

Foreign currency losses -126 -106

other -1.868 -1.832

-5.289 -4.924


71

8. Financial reSult

Interest and similar expenses include financing costs for pension commitments amounting to TEUR -598 (previous

year -748) (see also Note 20).

Total interest income as well as total interest expense for financial assets or liabilities which are valued without

effect on income at the fair value break down as follows:

2014/15 2013/14

teur teur

other interest and similar income 10 0

Financial income 10 0

interest and similar expenses -1.025 -1.390

Financing expenses -1.025 -1.390

Financial result -1.015 -1.390

2014/15 2013/14

teur teur

total interest income 9 0

total interest expense -424 -644

Schumag ag

72

9. income taxeS

Effective from January 1, 2008, corporate income tax of 15% and thereon a solidarity surcharge of 5.5% is uni-

formly levied on distributed and retained earnings. In addition to corporate income tax, income generated in Ger-

many is subject to trade income tax. This varies as a function of the municipality in which the company is located.

The rate for Schumag AG as well as for BR Energy GmbH amounts to 16.625% (previous year 16.625%) so that for

both companies deferred taxes are included at 32.5% (previous year 32.5%).

Income generated by foreign Group companies is taxed at the income tax rates to be applied in the respective

countries of domicile. For foreign companies, deferred taxes are calculated using the following tax rates to be

applied in the individual countries of domicile:

Income taxes shown in the consolidated statement of income break down as follows:

2014/15 2013/14

teur teur

actual taxes

Schumag ag -647 -237

-647 -237

thereof for previous years 2 2

Deferred taxes

tax expenses -442 -625

tax income 414 200

-28 -425

Taxes shown in the consolidated statement of income -675 -662

2014/15 2013/14

% %

romania 16 16


73

The direct set-off of actuarial profits or losses against retained earnings results in deferred taxes recorded under

other comprehensive income amounting to TEUR 162 (previous year TEUR 966).

Deferred taxes result from the following temporary differences between the values assigned in the tax balance

sheet and the valuation of assets and liabilities according to IFRS:

Deferred tax expense Deferred tax income

2014/15 2013/14 2014/15 2013/14

teur teur teur teur

property, plant and equipment -12 -31 334 160

inventories and accounts receivable -45 -107 26 3

pension provisions -112 -173 0 0

other provisions and liabilities -273 -314 50 31

other 0 0 4 6

-442 -625 414 200

Deferred tax assets Deferred tax liabilities

30-9-2015 30-9-2014 30-9-2015 30-9-2014

teur teur teur teur

inventories and receivables 116 139 0 4

pension provisions 3.132 3.081 0 0

other provisions and liabilities 563 799 0 13

tax loss carryforwards 128 61 0 0

other 0 0 2 6

valuation allowance for deferred taxes -128 -61 0 0

thereof tax loss carryforwards -128 -61 0 0

gross value 3.860 4.056 3.613 3.943

netting -3.613 -3.926 -3.613 -3.926

Balance sheet value 247 130 0 17

Schumag ag

74

The assessment of the probability of a reversal of the differences in valuation and the use of tax loss carryfor-

wards are decisive for the assessment of the value of deferred tax assets. This depends on the accrual of future

taxable profits during the periods in which valuation differences are reversed and tax loss carryforwards can be

claimed. The option to use tax loss carryforwards may be cancelled in the event of a change in shareholders. Based

on experience and on the expected development of taxable income, it is assumed that the advantages of deferred

tax assets will be realized.

In Germany, tax losses can be carried forward for an indefinite period but can be set off against generated profits

only to a limited extent. In case of a change in shareholders tax loss carryforwards may be cancelled completely

or partially. Essential foreign tax loss carryforwards do not exist. As of September 30, 2015 valuation allowances

were made for domestic tax loss carryforwards amounting to TEUR 394 (previous year TEUR 186).

Tax reconciliationtThe income taxes resulting from the application of the tax rate of Schumag AG of 32.5 % (previous year 32.5 %) can

be reconciled to the reported income taxes as follows:

2014/15 2013/14

teur teur

Income before taxes 2.302 1.928

expected tax expense (tax rate of Schumag ag) -748 -627

tax effects from non-deductible expenses -15 -6

tax effect from deviating foreign tax rates 60 6

Deferred taxes due to tax loss carryforwards so far not taken into account 64 1

not stated and/or valuation allowance for deferred taxes -67 -54

other tax effects 31 18

reported tax -675 -662

Tax rate 29,3 % 34,3 %


75

10. earningS per Share

There were no dilution effects.

2014/15 2013/14

net profit/loss (in teur) 1.627 1.266

weighted number of shares issued on average 4.000.000 4.000.000

earnings per share according to iFrS (in eur) 0,41 0,32

Schumag ag

76

11. intangiBle aSSetS

Development 2014/15 Software

teur

Acquisition costs

Balance as of 1-10-2014 890

additions 12

Disposals 71


Amortization


additions scheduled 49

additions non-scheduled 67

Disposals 71


Net book value as of 30-9-2015 70

Development 2013/14 Software

teur

Acquisition costs

Balance as of 1-10-2013 1.092

additions 21

Disposals 223


Amortization


additions scheduled 96

additions non-scheduled 126

Disposals 223


Net book value as of 30-9-2014 174


77

Goodwill as well as self-constructed intangible assets are not available.

The stated non-scheduled depreciation refers to the item of depreciation in the consolidated statement of income.

In the division of precision engineering the expected useful value was deducted for depreciation.

Schumag ag

78

12. property, plant anD eQuipment

Development 2014/15

land and buildings

teur

machinery and technical

equipment teur

Factory and office

equipmentteur

advance payments and constr. in progress

teurtotalteur

acquisition / production cost

Balance as of 1-10-2014 15.796 23.962 6.908 183 46.849

exchange differences -2 0 -1 0 -3

additions 4 579 292 15 890

Disposals 0 549 269 0 818

transfers 0 27 0 -27 0

Balance as of 30-9-2015 15.798 24.019 6.930 171 46.918

Depreciation

Balance as of 1-10-2014 3.591 20.454 5.636 156 29.837

exchange differences 0 1 0 0 1

additions scheduled 413 891 389 0 1.693

additions non-scheduled 0 33 0 0 33

Disposals 0 108 263 0 371

Balance as of 30-9-2015 4.004 21.271 5.762 156 31.193

Net book value as of 30-9-2015 11.794 2.748 1.168 15 15.725


79

Property, plant and equipment include 2 (previous year 5) leased production machines for the precision enginee-

ring division of which the beneficial ownership is to be assigned to the Group as the lessee.

Development 2013/14

land and buildings

teur

machinery and technical

equipment teur

Factory and office

equipmentteur

advance payments and constr. in progress

teurtotalteur


Balance as of 1-10-2013 15.758 23.979 6.920 235 46.892

exchange differences 15 1 7 0 23

additions 21 489 209 27 746

Disposals 0 584 228 0 812

transfers 2 77 0 -79 0

Balance as of 30-9-2014 15.796 23.962 6.908 183 46.849

Depreciation

Balance as of 1-10-2013 3.140 20.007 5.349 156 28.652

exchange differences 4 -2 4 0 6

additions scheduled 447 1.020 490 0 1.957

additions non-scheduled 0 4 0 0 4

Disposals 0 575 207 0 782

Balance as of 30-9-2014 3.591 20.454 5.636 156 29.837

Net book value as of 30-9-2014 12.205 3.508 1.272 27 17.012

Schumag ag

80

Acquisition cost and the net book value of the leased property, plant and equipment are stated below:

Property, plant and equipment of the precision engineering division sold in December 2010 within the scope of a sale-and-

lease-back transaction, especially production machines, were repurchased in June 2015 after execution of the leasing con-

tract. They were already continued to be stated under property, plant and equipment because in this case again the beneficial

ownership is to be assigned to the Group as the lessee.

The corresponding liabilities from financing leases are explained in Note 22.

Non-scheduled depreciation is stated in the consolidated statement of income in the item of depreciation / amortization.

30-9-2015 30-9-2014

acquisition cost teur

net book valueteur

acquisition costteur

net book valueteur

machinery and technical equipment 658 70 988 353

658 70 988 353


81

13. inveStment property

The investment property stems from a change of use of company real property in fiscal year 2008/09. Based on

an expert opinion dated October 30, 2014 a total fair value amounting to TEUR 4,454 was determined which is

above the stated acquisition and production cost and which takes the pro rata land use in relation to the built-upon

area into account. The value of the underlying expert opinion has been determined by an officially appointed and

certified expert (HypCert) using the income approach and assuming an interest rate of 7.80 %.

The letting of the property results in rental income amounting to TEUR 1,240 (previous year TEUR 1,194) as well

as directly attributable operating expenses of TEUR 606 (previous year TEUR 566) (see also Note 28).

Development 2014/15

teur


Balance as of 1-10-2014 4.804

Balance as of 30-9-2015 4.804

Depreciation



Net book value as of 30-9-2015 4.112

Development 2013/14

teur


Balance as of 1-10-2013 4.804

Balance as of 30-9-2014 4.804

Depreciation



Net book value as of 30-9-2014 4.112

Schumag ag

82

14. inventorieS

An amount of TEUR 1,269 (previous year 1,229) of inventories stated in the consolidated statement of financial

position is capitalized at the net disposal value.

In the reporting period, inventories amounting to TEUR 13,990 (previous year TEUR 14,041) were expensed.

Decreases in the value of inventories increased the cost of materials in the precision engineering division by

TEUR 251 (previous year TEUR 238).

15. traDe accountS receivaBleTrade accounts receivable are as follows:

Valuation allowances developed as follows:

30-9-2015 30-9-2014

teur teur

raw materials and factory supplies 1.706 1.623

work in progress 5.199 4.501

Finished goods 3.139 2.723

10.044 8.847

2014/15 2013/14

teur teur

Balance as of 1-10 109 108

addition with effect on net income 40 0

retransfer with effect on net income 0 -10

utilization without effect on net income 0 11


not declined in value

neither declined nor

overdue

teur

overdue up to 30

days

teur

overdue 31 to 60

days

teur

overdue 61 to 90

days

teur

overdue 91 to 180

days

teur

overdue 181 to 360

days

teur

overdue more than 360 days

teur

30-9-2015 3.499 3.293 113 68 8 10 7 0

30-9-2014 2.038 1.956 18 8 8 48 0 0

Book value

teur


83

16. other Financial aSSetS

Other financial assets are neither decreased in value nor are they past due.

receivables from affiliated companies are due from Hangzhou Meibah Precision Machinery Co., LTD., Tonglu

County, Hangzhou/China.

Composition of other assets:

receivables due from the former parent company include the insolvency claim to the former parent company

Babcock Borsig AG i.I. which was scheduled to the expected value in fiscal year 2012/13 and whose settlement is

to be estimated after more than one year

Asset values from reinsurance cover do not represent qualified insurance policies in terms of IAS 19.

receivables due from the factoring company are based on receivables sold as of the balance sheet date amoun-

ting to TEUR 4,074 (previous year TEUR 6,251).

30-9-2015 30-9-2014

teurthereof short-term

teur


teur

receivables from affiliated companies 64 64 2 2

other assets 3.230 1.655 4.268 2.446

3.294 1.719 4.270 2.448

30-9-2015 30-9-2014

teur teur

receivables due from former parent company 1.500 1.500

asset values reinsurance cover 563 592

receivables due from factoring company 487 1.517

Security deposits 332 321

pledged cash in banks 225 225

other 123 113

3.230 4.268

Schumag ag

84

Security deposits refer in particular to liabilities from leasing contracts as well as to securities in connection with

pending litigation.

Pledged cash in banks serves to secure individual bank guarantees.

Valuation allowances for other financial assets developed as follows:

17. other non-Financial aSSetS

Other non-financial assets are neither decreased in value nor are they past due.

Tax refund claims include in particular VAT refund claims.

2014/15 2013/14

teur teur


addition without effect on net income 0 13

utilization without effect on net income 0 -144


30-9-2015 30-9-2014


teur


teur

advances paid 2 2 1 1

accruals and deferrals 187 182 138 126

tax refund claims 54 54 39 39

243 238 178 166


85

18. caSh anD caSh eQuivalentS

19. ShareholDerS‘ eQuityThe shareholders‘ equity consists exclusively of the equity held by the owners of the parent company.

Subscribed capitalThe fully paid-in share capital of Schumag AG amounts to EUR 10,225,837.62 and is divided into 4,000,000 indivi-

dual share certificates. The shares are payable to bearer.

According to the resolution of the general meeting of April 30, 2015 the Board of Executive Directors is entitled

subject to the consent of the Supervisory Board to increase the share capital of the company during the period

from March 1, 2016 to April 29, 2020 by the issue of new individual share certificates payable to bearer either

against cash and/or by using amounts owed by the company as contributions in kind; this can be done either once

or several times but only by a maximum amount of EUR 2,556,459.41 (Authorized capital 2015). The option to

subscribe to new shares can be excluded, namely for fractional amounts and in case of capital increases up to a

total amount of EUR 511,291.89 using amounts owed by the company as contributions in kind.

generated shareholders‘ equityThe difference between the historical exchange rates at the time of acquisition and the rate used to translate equi-

ty of a company as of the balance sheet date is recorded separately in equity as currency translation and is shown

as affecting net income only upon the disposal of a company.

retained earnings include, apart from the effects of the changeover of the consolidated financial statements

from the German Commercial Code to IFRS as of October 1, 2004, the reassessment of the net liability from de-

fined benefit plans as well as other changes to be made under IFRS without affecting net income.

30-9-2015 30-9-2014

teur teur

cash in banks 3.088 1.981

cash on hand 11 12

3.099 1.993

Schumag ag

86

The set-off of the revaluation of the net liability from defined benefit plans and of the deferred taxes allotted to

this without affecting net income against retained earnings has developed as follows:

The group accumulated deficit includes accumulated group results as well as the withdrawal from the capital

reserve (TEUR 15,893) as well as from the statutory profit reserve (TEUR 511) made in fiscal year 2012/13.

Relevant for a dividend distribution to be decided by the shareholders’ meeting is the accumulated profits of

Schumag Aktiengesellschaft, Aachen, according to the Commercial Code.

Maßgeblich für eine durch die Gesellschafterversammlung zu beschließende Ausschüttung ist der handelsrecht-

liche Bilanzgewinn der Schumag Aktiengesellschaft, Aachen.

2014/15 2013/14

teur teur

Balance as of 1-10 -4.111 -2.105

revaluation of the net liability from defined benefit plans -500 -2.972

Deferred taxes 162 966

Change -338 -2.006

Balance as of 30-9 -4.449 -4.111

Maßgeblich für eine durch die Gesellschafterversammlung zu beschließende Ausschüttung ist der handelsrecht-

liche Bilanzgewinn der Schumag Aktiengesellschaft, Aachen.


87

Other comprehensive income

Capital managementThe most important aims of the capital management of Schumag AG are to secure the continued existence of the

company, to obtain a reasonable minimum interest on the capital employed, to obtain a high rating of its credit

standing and to create sufficient liquidity reserves. With consideration of all interested parties involved (sharehol-

ders, employees and other stakeholders) these aims are to be achieved in particular by a reduction of the cost of

capital, an optimization of the capital structure and the use of an effective risk management.

In the past fiscal year as well as during the period of preparation of the financial statements the capital manage-

ment furthermore concentrated on the maintenance of the required liquidity. This was in particular accomplished

by the targeted reduction of inventories as well as the further use of factoring.

In addition, we are looking for further financing options and discuss a large number of different forms of financing

which are to secure the continued need for capital.

The economic equity currently corresponds to the balance sheet equity. As of September 30, 2015 the capital ratio

increased from 16 % to 18 % in particular due to the positive result after taxes.

2014/15 attributable to the owners of the parent company

currency translationteur

retained earningsteur

totalteur

Foreign operations - foreign currency translation differences 1 0 1

profits resulting from asset ceiling 0 2 2

remeasurement of the net defined benefit liability for pension plans (after tax) 0 -338 -338

Other results after taxes 1 -336 -335

2013/14 attributable to the owners of the parent company

currency translationteur

retained earningsteur

totalteur

Foreign operations - foreign currency translation differences 12 0 12

profits resulting from asset ceiling 0 134 134

remeasurement of the net defined benefit liability for pension plans (after tax) 0 -2.006 -2.006

Other results after taxes 12 -1.872 -1.860

Schumag ag

88

20. penSion proviSionS

In addition to government pension schemes the employees of Schumag AG who joined the company before

January 1, 1994 are entitled to benefits based on the company pension benefit plan of January 1, 1994. Benefits

depend on years of service. In addition, special pension commitments exist for former and current members of the

Board of Executive Directors. Company pension commitments are financed by pension provisions. The valuation

using the projected unit credit method according to IAS 19 was carried out under the following assumptions:

Assumptions used to determine the defined benefit obligation (weighted average)

Pension commitments in Germany are determined with consideration of biometric accounting principles according

to the mortality tables ‚Richttafeln 2005 G‘ published by Prof. Dr. Klaus Heubeck. The projected increase of wages

and salaries is not reported due to the pension regulations. Sickness costs of employees are not stated.

The future pension entitlements partly compare with assets from insurance policies which - in so far as these are

classed as qualified insurance policies according to IAS 19 - are shown as pension assets (plan assets). Financing of

plan assets exists only for special covenants.

30-9-2015 30-9-2014

% %

interest rate 2,40 2,55

projected pension increase 1,75 1,75

Fluctuation 1,25 1,25


89

Development of the net liability from defined benefit plans

The net liability from defined benefit plans corresponds to the pension provisions stated in the consolidated

statement of financial position.

Composition of the revaluation of the net liability from defined benefit plans

Since the introduction of the direct offsetting of the revaluation of the net liability from defined benefit plans

against retained earnings according to IAS 19.93A actuarial losses in a total amount of TEUR 6,591 (previous year

TEUR 6,091) were recorded in the other comprehensive income without taking deferred taxes into consideration.

2014/15 2013/14

teur teur

present value of future pension entitlements as of 1-10 24.155 21.790

current service cost 203 68

past service cost 175 0

interest expense 598 748

revaluation of the net liability from defined benefit plans 500 2.972

pension benefits paid -1.441 -1.423

Present value of future pension entitlements as of 30-9 24.190 24.155

Fair value of plan assets as of 1-10 -1.272 -1.054

expected income from plan assets -18 -19

employer's contributions -65 -65

effects from asset ceiling -2 -134

Fair value of plan assets as of 30-9 -1.357 -1.272

Net liability from defined benefit plans 22.833 22.883

2014/15 2013/14

teur teur

losses (+) from change in financial assumptions 432 2.650

losses (+) /gains (-) based on experience-related adjustments 68 322

500 2.972

Schumag ag

90

Composition of net pension expenses

In the consolidated statement of income the net interest expenses are shown in the financial results, and the cur-

rent service cost is recorded in personnel expenses.

Pension obligations are determined on the basis of actuarial expert opinions. Risks exist with regard to the amount

of pension obligations, especially due to changes in the valuation assumptions applied such as the interest rate for

accounting purposes, the projected pension benefits and the mortality tables. The following sensitivity reflection

shows which effects potential changes in the valuation assumptions in a reasonable approach would have had at

the balance sheet date on the defined benefit obligations while being based on the same premises.

2014/15 2013/14

teur teur

current service cost -203 -68

past service cost -175 0

net interest expense -580 -729

Net pension expenses -958 -797


91

Sensitivity reflection

Apart from an increase in pension obligations, changes in the valuation assumptions may also lead to higher net

pension expenses and pension payments even compared to previous expectations.

30-9-2015 Defined benefit obligation change

teur teur %

Balance sheet value 24.190 – –

actuarial interest + 0,50% 22.800 -1.390 -5,7

actuarial interest - 0,50% 25.734 1.544 6,4

projected pension increase + 0,25% 24.668 478 2,0

projected pension increase - 0,25% 23.732 -458 -1,9

life expectancy + 1 year 25.219 1.029 4,3

30-9-2014 Defined benefit obligation change

teur teur %

Balance sheet value 24.155 – –

actuarial interest + 0,50% 22.760 -1.395 -5,8

actuarial interest - 0,50% 25.703 1.548 6,4

projected pension increase + 0,25% 24.753 598 2,5

projected pension increase - 0,25% 23.580 -575 -2,4

life expectancy + 1 year 25.159 1.004 4,2

Schumag ag

92

Breakdown of defined benefit obligations into groups of persons entitled to benefits

All pension commitments are non-lapsable. The weighted average term of defined benefit obligation amounts as in

previous year to 13 years.

Payments expected to be made for fiscal year 2015/16 with regard to the pension commitments granted as of

September 30, 2015 amount to TEUR 1,433. The payments are currently fully financed from the operating cash-

flow.

Plan assets are basically externally financed. In the next fiscal year the employer‘s contributions to plan assets for

existing contracts are expected to amount to TEUR 65. If the actual income from plan assets from the insurance

policies was lower than previously assumed, the net liability arising from defined benefit plans would increase. In

addition, future pension payments for special commitments would in this case have to be partly financed from the

operating cash-flow.

The issue of a comfort letter in favour of the employees transferred to SMS Meer within the disposal of the

mechanical engineering division with regard to the transferred pension claims results in contingent liabilities for

Schumag AG. We assess the probability of claims being made on the basis of the comfort letter as low due to the

current credit standing of the purchaser of the mechanical engineering division. We are not aware of any indica-

tors which would call for a different assessment.

Defined benefit obligation 30-9-2015 30-9-2014

teur % teur %

active claimants 3.370 13,9 3.003 12,4

retired claimants with rested benefits 3.208 13,3 3.048 12,6

pensioners 17.612 72,8 18.104 75,0

24.190 100,0 24.155 100,0


93

21. other proviSionS

Provisions for orders comprise contingent losses and warranties. Valuation is effected on the basis of empirical

values.

Provisions for legal commitments include the expected litigation costs for a lawsuit in which Schumag was sued

for the payment of fees from a terminated consultancy agreement.

Other provisions include in particular provisions for annual financial statements cost.

provisions for orders provisions for legal commitments other total

teur teur teur teur

Balance as of 30-9-2014 1.557 13 194 1.764

additions 1.528 117 136 1.781

utilization -1.557 -2 -146 -1.705

Balance as of 30-9-2015 1.528 128 184 1.840

thereof short-term 1.528 128 175 1.831

thereof long-term 0 0 9 9

Schumag ag

94

22. Financial DeBtS

Financial debts are composed as follows:

Liabilities to banks include the utilisation of a overdraft facility of Schumag Romania for an unlimited period for a

maximum of TEUR 500 at an interest rate of 1-month-Euribor plus 2.7 %. It is secured by a land charge amounting

to TEUR 650. The collateral takers are entitled to realize the existing securities after setting a reasonable time-

limit if an important reason exists for this, in particular if Schumag fails to meet its due obligations from the credit

agreements.

Liabilities from financing leases (sale-and-lease-back) resulted from the sale-and-lease-back transaction carried

out in December 2010 with regard to the sold property, plant and equipment of the precision engineering division

(see Note 12). Schumag has repurchased the sold property, plant and equipment in June 2015 after execution of

the leasing contract and is now again their legal owner. The land charge amounting to TEUR 1,000 provided as

security for liabilities from financing leases (sale-and-lease-back) was released. Minimum leasing rate according to

the short-term leasing liability of TEUR 688 amounted to TEUR 727 and the interest share accordingly to TEUR 39.

30-9-2015 30-9-2014

teur

thereofshort-term

teur

teur

thereofshort-term

teur

liabilities to banks 404 404 427 427

liabilities from finance leases (Sale-and-lease-back) 0 0 688 688

liabilities from finance leases (other) 35 35 209 174

other loans 1.000 0 1.000 1.000

1.439 439 2.324 2.289


95

Liabilities from financing leases (others)

Liabilities from financing leases (others) result from 2 plants (previous year 5) within the property, plant and

equipment which constitute beneficial ownership within the scope of a financing lease (see Note 12).

Other loans include a granted third-party loan for a total of TEUR 1,000 with a originally term until June 30, 2015.

It was extended until June 30, 2017. The interest on this loan is 2 % above the base rate but amounts to a mini-

mum of 5.0 % p.a. The transfer of ownership of machinery legally owned by Schumag AG serves as security. The

book value of this machinery as of September 30, 2015 amounts to TEUR 2,480 (previous year TEUR 1,630).

maturities of financial debts

The aims and methods of financial risk management are described in Note 27.

30-9-2015

less than 1 yearteur

1 to 5 years teur

totalteur

mininum leasing rate 36 0 36

interest share 1 0 1

leasing liability 35 0 35

30-9-2014


1 to 5 years teur

totalteur

mininum leasing rate 184 36 220

interest share 10 1 11

leasing liability 174 35 209

Schumag ag

30-9-2015 30-9-2014

teur teur

up to 1 year 439 2.289

1 to 5 years 1.000 35

1.439 2.324

96

23. traDe accountS payaBle

As in the previous year, all trade accounts payable fall due within a period of less than one year.

24. other Financial liaBilitieS

Liabilities to personnel mainly include christmas bonuses, personnel costs for early retirement arrangements,

anniversary bonuses, severance pay as well as holiday bonuses

The liabilities arising from early retirement arrangements are secured by a bank guarantee in the amount of the

statutory obligation for insolvency insurance.

As of September 30, 2015 guarantee credit lines promised with binding effect were available to Schumag AG in an

amount of TEUR 750 (previous year TEUR 1,500). The utilisation of this credit line amounted as in previous year

to TEUR 500. To secure the granted guarantee credit lines pledged bank balances amounting to TEUR 75 (previous

year TEUR 225) serve as security.

30-9-2015 30-9-2014

teur

thereofshort-term

teur

teur

thereofshort-term

teur

liabilities to personnel 3.417 3.009 2.865 2.579

liabilities within the scope of social security 44 44 61 61

other liabilities 223 223 454 454

3.684 3.276 3.380 3.094


97

maturities of other financial liabilities

25. other non-Financial liaBilitieS

Tax liabilities mainly refer to wage tax and value added tax for the month of September.

30-9-2015


1 to 5 years teur

total teur

liabilities to personnel 3.009 408 3.417

liabilities within the scope of social security 44 0 44

other liabilities 223 0 223

3.276 408 3.684

30-9-2014


1 to 5 years teur

total teur

liabilities to personnel 2.579 286 2.865

liabilities within the scope of social security 61 0 61

other liabilities 454 0 454

3.094 286 3.380

30-9-2015 30-9-2014

teur

thereofshort-term

teur

teur

thereofshort-term

teur

tax liabilities 427 427 398 398

427 427 398 398

Schumag ag

98

26. contingent liaBilitieS anD other Financial commitmentS

Within the scope of the collective wage agreement to secure the production site which was concluded in Septem-

ber 2013 a waiver of year-end and holiday bonus for 2 years which is subject to a condition subsequent as well as

an increase of the collectively agreed wage by 4.3 % from May 2012 which amounts to a total volume of approx.

TEUR 7,000 were agreed. We are currently unable to determine with certainty the occurrence and time of the

condition subsequent and the resulting payments which are made as a function of reaching the specified balance

sheet ratio and which may also be effected in partial amounts.

Other financial commitments are stated at the value of the agreed future payments.

The commitments from long-term rental and leasing contracts have the following maturities:

Further details on operating leasing agreements are described in Note 28.

other financial commitments 30-9-2015 30-9-2014

teur teur

commitments relating to power supplies (own use) 520 160

commitments relating to long-term rental and leasing contracts 491 609

commitments relating to gas supplies (own use) 414 30

commitments relating to maintenance and service 307 184

commitments arising from orders already placed for investments 31 205

1.763 1.188

other financial commitments 30-9-2015 30-9-2014

teur teur

less than 1 year 204 211

1 to 5 years 287 398

491 609


99

27. Financial inStrumentS

Book values by category

The fair value of the financial instruments approximately corresponds to the book value.

Book value30-9-2015

loans and receivables


teur teur teur

trade accounts receivable 3.499 3.499 –

other financial assets 3.294 3.294 –

cash and cash equivalents 3.099 3.099 –

Financial assets 9.892 9.892 –

Financial debts (without financing leasing) 1.404 – 1.404

Financial debts from financing leasing 35 – 35

trade accounts payable 1.812 – 1.812

other financial liabilities 3.684 – 3.684

Financial liabilities 6.935 – 6.935

Book value30-9-2014

loans and receivables


teur teur teur

trade accounts receivable 2.038 2.038 –

other financial assets 4.270 4.270 –

cash and cash equivalents 1.993 1.993 –

Financial assets 8.301 8.301 –

Financial debts (without financing leasing) 1.427 – 1.427

Financial debts from financing leasing 897 – 897

trade accounts payable 1.665 – 1.665

other financial liabilities 3.380 – 3.380

Financial liabilities 7.369 – 7.369

Schumag ag

100

Net gains and losses arising from financial instruments

The net result from the category of „Loans and receivables“ essentially includes exchange gains arising from recei-

vables in foreign currencies as well as losses from valuation allowance of receivables.

The net result of the category of „Financial liabilities valued at amortized cost“ in particular includes exchange los-

ses and gains arising from payables in foreign currencies, income from the release of liabilities as well as expenses

from the accumulation of liabilities.

Derivative financial instrumentsThe derivative financial instruments used within the Group are covering transactions used in individual cases to

control the risks arising from currency fluctuations of individual receivables.

No derivative financial instruments were shown in the consolidated statement of financial position as of the cur-

rent and the previous year‘s balance sheet date.

Financial risk management The essential financial liabilities used by the Group - except for derivative financial instruments - include financial

debts, trade accounts payable and other financial liabilities. The main purpose of these financial liabilities is the

financing of the business activities of the Group. The Group disposes of trade accounts receivable and other finan-

cial assets as well as means of payment directly resulting from its business activity.

The Group is exposed to currency, default and liquidity risks. It is up to the Group management to control these

risks. Within the scope of corporate planning the management is permanently informed about potential and actual

financial risks.

Foreign currency risks: Changes in foreign exchange rates can lead to a decline in the value of financial instru-

ments. Foreign currency risks are especially prevalent in accounts payable and receivable that are not denomina-

ted in the local currency of the Schumag companies, or for future foreign currency transactions. To hedge exchange

rate risks, foreign exchange forward contracts are used in individual cases. Commodities futures and financial

derivatives are not used.

2014/15 2013/14

teur teur

loans and receivables 56 103

Financial liabilities valued at amortized cost -67 -106

-11 -3


101

Default risks: Default risks exist if the contracting parties fail to fulfil their contractual obligations. The book

value of all financial assets represents the maximum default risk of Schumag. Due to the global activities and the

diversified customer structure of Schumag as well as the use of real factoring there is no significant concentration

of default risk.

Liquidity risks: The solvency of the Schumag Group as well as its liquidity supply are monitored by a continuously

adjusted liquidity planning scheme.

Schumag ag

102

28. leaSing

Financing lease - Schumag as a lesseeIn this respect we refer to Note 22.

Financing lease - Schumag as a lessorSchumag does not appear as a lessor within the scope of financing leases.

Operating lease - Schumag as a lesseeOperating leases in which Schumag is the lessee only include the leasing of motor vehicles and usually run for

a fixed term of 36 months. In addition, a unit-type cogeneration station is leased from August 2014. The lease

contract includes a purchase option for the unit-type cogeneration station after expiry of the contract term of

48 months.

The obligations resulting from non-cancellable operating leases are due and payable as follows:

In the income from operations of fiscal year 2014/15 minimum leasing payments amounting to TEUR 169 (previ-

ous year TEUR 182) were recorded as expense.

Operating lease - Schumag as a lessorWithin the scope of operating leases Schumag essentially lets the investment property. Schumag AG received an

advance rent payment for the first five years of the rental agreement from SMS group amounting to TEUR 2,500

which is deferred on a straight-line basis for a period of 5 years as from December 1, 2008. The fixed rental period

amounts to a total of 10 years.

30-9-2015

less than 1 year teur

1 to 5 years teur

totalteur

nominal value of minimum leasing payments 160 274 434

30-9-2014

less than 1 year teur

1 to 5 years teur

totalteur

nominal value of minimum leasing payments 161 379 540


103

The future minimum leasing payments arising from non-cancellable operating leases fall due as follows:

30-9-2015


1 to 5 years teur

more than 5 years teur

totalteur

nominal value of minimum leasing payments 628 1.361 0 1.989

30.9.2014


1 to 5 years teur

more than 5 years teur

totalteur

nominal value of minimum leasing payments 628 1.989 0 2.617

Schumag ag

104

29. relateD partieS

Related parties of Schumag AG (not including members of executive bodies of the indicated companies as well as

further companies associated with these) for the periods under review are stated below:

As far as the shareholders are concerned reference is made to the information on voting rights held which is

provided in Note 32.

The board members are listed in Note 30.

Shareholders

meibah international gmbh (as from 23-6-2014)

miaocheng guo (as from 23-6-2014)

enprovalve p. Koschel unternehmensberatung ltd. (Birmingham/gB)

peter Koschel

norbert thelen

Board members (= members of the management in key positions)

Supervisory Board Schumag ag

Board of executive Directors Schumag ag

other

hangzhou meibah precision machinery co., ltd. (as of 23-6-2014)

enprovalve p. Koschel unternehmensberatung ltd. (Düsseldorf)


105

Transactions with related parties

Information on the remuneration of the board members is provided in the compensation report within the group

management report.

2014/15

Business relationsShareholders

teurBoard members

teurothersteur

remuneration of board members 0 686 0

accounts receivable 40 0 0

outstanding liabilities 2 3 0

2013/14

Business relationsShareholders

teurBoard members

teurothersteur

remuneration of board members 0 653 0

accounts receivable 19 0 0

outstanding liabilities 2 106 0

Schumag ag

106

30. remuneration oF the BoarD oF executive DirectorS anD the SuperviSory BoarD

Pension commitments to members of the Board of Executive Directors as of September 30, 2015 amount to

TEUR 574 (previous year TEUR 266). In return for the increase of his pension commitments Dr. Ohlinger waived

personal claims to Schumag AG.

Payments to former members of the Board of Executive Directors or their survivors amounted to TEUR 707 (previ-

ous year TEUR 681).

For pension commitments to former members of the Board of Executive Directors and their survivors an amount

of TEUR 10,544 (previous year TEUR 10,501) has been set aside.

In other respects reference is made to the compensation report within the management report of Schumag AG.

The members of the Supervisory Board and of the Board of Executive Directors of Schumag AG and their member-

ships in supervisory boards and other control panels are listed below:

Supervisory Boardralf marbaise, Aachen

Chairman

Chairman of the Works Council of Schumag Aktiengesellschaft, Aachen

no further memberships

hans-georg Kierdorf, Edinburgh/Great Britain (until January 29, 2015)

Deputy Chairman (until January 29, 2015)

Management Consultant

Further memberships

Kierdorf Immobilien- und Vermögensverwaltungs-GmbH, Cologne

(member of the Advisory Board)

2014/15 2013/14

teur teur

remuneration of the Board of Executive Directors 634 594

thereof fixed remuneration 540 540

thereof variable remuneration 94 54

remuneration of the Supervisory Board 52 59

thereof fixed remuneration 48 54

thereof out-of-pocket expenses 4 5


107

Ekkehard Brzoska, Mülheim/Ruhr

Self-employed merchant


miaocheng guo, Tonglu, province of Zhejiang, People‘s Republic of China (since February 7, 2015)

Managing director of Hangzhou Meibah Precision Machinery Co., Ltd.,

and of Hangzhou Maximum Real Estate Co., Ltd.,

both based in Tonglu, province of Zhejiang, People‘s Republic of China


yun guo, Tonglu, province of Zhejiang, People‘s Republic of China (since April 30, 2015)

Sales manager of Hangzhou Meibah Precision Machinery Co., Ltd., Tonglu, province of Zhejiang, People‘s Republic

of China and Managing director of Meibah International GmbH, Munich


martin Kienböck, Ratingen (until December 4, 2014)

Pensioner (former managing director of Balcke-Dürr GmbH, Ratingen)


Peter Koschel, Berlin

General Manager Enprovalve P. Koschel Unternehmensberatung Ltd.,

Birmingham/Great Britain


Jürgen milion, Alsdorf

Production Manager of Schumag Aktiengesellschaft, Aachen


Board of Executive DirectorsDr. Johannes Ohlinger, Zweibrücken/Pfalz

Graduate Economist

Memberships

Herz Jesu Missionare, Homburg/Saar (Member of the Board of Trustees of the Foundation)

Schumag ag

108

31. ServiceS oF the auDitor

The following fees for the audit services carried out and/or still to be carried out by KPMG AG Wirtschaftsprü-

fungsgesellschaft, Düsseldorf, were recorded as expense in the consolidated statement of income.

32. DetailS oF exiSting ShareholDingSEuro-IB Ltd., London, United Kingdom, informed our company according to § 21 (1) of the German Securities

Trading Act that its share in the voting rights of Schumag Aktiengesellschaft, Nerscheider Weg 170, 52076 Aachen,

Germany, on October 1, 2011 fell below the thresholds of 3 %, 5 %, 10 % and 15 % and amounted to 1.95 % (78,003

voting rights) on this date.

Mr. Alexander von Ungern-Sternberg, United Kingdom, informed our company according to § 21 (1) of the German

Securities Trading Act that his share in the voting rights of Schumag Aktiengesellschaft, Nerscheider Weg 170,

52076 Aachen, Germany, on October 1, 2011 fell below the thresholds of 3 %, 5 %, 10 % and 15 % and amounted

to 1.95 % on this date (78,003 voting rights) and that thereof 1.95 % (78,003 voting rights) are to be attributed to

him according to § 22 (1), sentence 1, No. 1 of the German Securities Trading Act.

Mr. Norbert Thelen, Germany, informed our company according to § 21 (1), sentence 1 of the German Securities

Trading Act that his share in the voting rights of Schumag Aktiengesellschaft, Nerscheider Weg 170, 52076

Aachen, Germany, on October 1, 2011 fell below the thresholds of 10 % and 15 % and that it amounts to 8.34 %

(333,526 voting rights) on this date.

Enprovalve P. Koschel Unternehmensberatung Ltd., Birmingham, United Kingdom, informed our company according

to § 21 (1) of the German Securities Trading Act that its share in the voting rights of Schumag AG, Nerscheider

Weg 170, 52076 Aachen, Germany, on June 21, 2013 fell below the thresholds of 30 % and 50 % of the voting

rights and amounted to 27.3 % (1,091,905 voting rights) on this date.

2014/15 2013/14

teur teur

audit services 110 112

other services 38 51

148 163


109

Mr. Peter Koschel, Germany, informed our company according to § 21 (1) of the German Securities Trading Act that

his share in the voting rights of Schumag Aktiengesellschaft, Nerscheider Weg 170, 52076 Aachen, Germany, on

June 21, 2013 fell below the thresholds of 30 % and 50 % of the voting rights and amounted to 27.3 % (1,091,905

voting rights) on this date and that thereof 27.3 % (1,091,905 voting rights) are to be attributed to him according

to § 22 (1), sentence 1, No. 1 of the German Securities Trading Act and that voting rights are attributed to him from

the following controlled company whose share in the voting rights of Schumag Aktiengesellschaft amounts to 3 %

or more:

Enprovalve P. Koschel Unternehmensberatung Ltd., Birmingham, United Kingdom.

Meibah International GmbH (formerly Blitz 14-69 GmbH), Munich, Germany, informed our company according to

§ 21 (1), sentence 1 of the German Securities Trading Act that its share in the voting rights of Schumag Aktienge-

sellschaft, Nerscheider Weg 170, 52076 Aachen, Germany, on June 23, 2014 exceeded the thresholds of 3 %, 5 %,

10 %, 15 %, 20 %, 25 %, 30 % and 50 % and amounted to 52.15 % (2,085,807 voting rights) on this date.

Mr. Miaocheng Guo, China, informed our company according to § 21 (1), sentence 1 of the German Securities Tra-

ding Act that his share in the voting rights of Schumag Aktiengesellschaft, Nerscheider Weg 170, 52076 Aachen,

Germany on June 23, 2014 exceeded the thresholds of 3 %, 5 %, 10 %, 15 %, 20 %, 25 %, 30 % and 50 % and amoun-

ted to 52.15 % (2,085,807 voting rights) on this date and that thereof 52.15 % (2,085,807 voting rights) are to

be attributed to him according to § 22 (1), sentence 1, No. 1 of the German Securities Trading Act and that voting

rights are attributed to him from the following controlled company whose share in the voting rights of Schumag

Aktiengesellschaft amounts to 3 % or more:

Meibah International GmbH, Munich, Germany.

According to the currently available information on voting rights the following parties are currently holding shares

in Schumag AG:

meibah international gmbh: 52,15 %

enprovalve p. Koschel unternehmensberatung ltd.: 27,30 %

norbert thelen (trustee workforce): 8,34 %

euro iB: 1,95 %

owned by diverse shareholders: 10,26 %

According to the announcement of Meibah International GmbH in the Federal Gazette of September 9, 2014 this

company obtained another 2.43 % of the voting rights of Schumag Aktiengesellschaft within the scope of the

public voluntary takeover bid so that its share in the voting rights now amounts to about 54.58 %. The amount of

shares owned by diverse shareholders therefore decreases to 7.83 %.

Schumag ag

110

33. liSt oF ShareholDingS

34. Declaration accorDing to § 161 oF the german StocK corporation act

In January 2015 the Board of Executive Directors and the Supervisory Board of Schumag AG issued the current

Declaration of Compliance concerning the German Corporate Governance Code according to § 161 of the German

Stock Corporation Act and made it permanently available to the public on the Internet at www.schumag.de.

35. aDDitional inFormation to the conSoliDateD Statement oF caSh FlowS

In fiscal year 2013/14 non-cash investment activities amounting to TEUR 278 were carried out within the scope of

fixed asset additions from financing leasing.

Incoming and outgoing payments for interest as well as for income taxes are to be allocated to the cash flow from

current operations.

Further details on the consolidated statement of cash flows are included in the section on the financial situation in

the Group Management Report.

36. SuBSeQuent eventS

In October 2015 a new collective wage agreement to secure the production site („Standortsicherungstarifvertrag“)

with a retroactive term from October 1, 2015 until September 30, 2019 was concluded. Apart from the continuation

of the 37.5-hour week without wage adjustment the agreement also included the continued waiver of the increase

in pay rates of 4.3 % from May 2012. Just like the waiver of the year-end and holiday bonus for 2 years, this is a

waiver subject to a condition subsequent.

In other respects there were no events of particular significance after the balance sheet date.





company and registered office Share Schumag ag nominal capital Shareholders´ equity1) net income after tax1)

Br energy gmbh, aachen 100% teur 100 teur 02) teur -207

Schumag romania S.r.l.,timisoara, chisoda/romania 100% tron 9.560 teur 1.4643) teur 1403)

1)acc. to the respective national law 2)deficit not covered by shareholders‘ equity: teur 3.777 3)Balance sheet date 31-12-2014


We have audited the consolidated financial statements prepared by Schumag Aktiengesellschaft, Aachen, comprising

the consolidated statement of financial position, consolidated statement of income, consolidated statement of com-

prehensive income, consolidated statement of changes in equity, consolidated statement of cash-flows and the notes

to the consolidated financial statements, as well as the group management report for the fiscal year from October 1,

2014 to September 30, 2015. The preparation of the consolidated financial statements and the group management

report in accordance with IFRSs as adopted by the EU, and the additional requirements of German commercial

law pursuant to Section 315a (1) of the German Commercial Code [HGB] are the responsibility of the company‘s

management. Our responsibility is to express an opinion on the consolidated financial statements and on the group

management report based on our audit.

We conducted our audit of the consolidated financial statements in accordance with Section 317 HGB and German

generally accepted standards for the audit of financial statements promulgated by the German Institute of Public

Auditors [IDW]. Those standards require that we plan and perform the audit such that misstatements materially

affecting the presentation of the net assets, financial position and results of operations in the consolidated financial

statements in accordance with the applicable financial reporting framework and in the group management report are

detected with reasonable assurance. Knowledge of the business activities and the economic and legal environment

of the Group and expectations as to possible misstatements are taken into account in the determination of audit

procedures. The effectiveness of the accounting-related internal control system and the evidence supporting the

disclosures in the consolidated financial statements and the group management report are examined primarily on

a test basis within the framework of the audit. The audit also includes assessing the annual financial statements of

those entities included in consolidation, the determination of entities to be included in consolidation, the accounting

and consolidation principles used and significant estimates made by management, as well as evaluating the overall

presentation of the consolidated financial statements and group management report. We believe that our audit provi-

des a reasonable basis for our opinion.

Our audit has not led to any reservations.

In our opinion, based on the findings of our audit, the consolidated financial statements comply with the IFRSs as ad-

opted by the EU, the additional requirements of German commercial law pursuant to Section 315a (1) HGB and give

a true and fair view of the net assets, financial position and results of operations of the group in accordance with

these requirements. The group management report is consistent with the consolidated financial statements and as

a whole provides a suitable view of the group‘s position and suitably presents the opportunities and risks of future

development.

Düsseldorf, January 12, 2016

KPMG AG

Wirtschaftsprüfungsgesellschaft

Kamping Schwarz

Wirtschaftsprüfer Wirtschaftsprüfer

[German Public Auditor] [German Public Auditor]

111Schumag ag

inDepenDent auDitorS’ report

Konzernlagebericht Konzernlagebericht

To the best of our knowledge, and in accordance with the applicable reporting principles, the consolidated financial

statements give a true and fair view of the assets, liabilities, financial position and profit and loss of the Group,

and the Group management report includes a fair review of the development and performance of the business and

the position of the Group, together with a description of the principal opportunities and risks associated with the

expected development of the Group.




Dr. Johannes Ohlin

Konzernlagebericht Konzernlagebericht Konzernlagebericht 112112 responsibility statement

reSponSiBility Statement

PrECISION ENgINEErINg

Automotive subsupplied parts high-precision components for

modern diesel injection systems, components for passenger cars, trucks and stationa-ry motors (e.g. pump-jet or common rail systems)

air mixing and petrol injection systems

Servo-steering and servo-brakes

automatic transmission

hydraulic high-pressure pumps

pressure reducing valves for hydraulic systems

variable cam control

electric motor shafts (fuel pumps, air-conditioning systems, servomotors, etc.)

Precision measuring and indicating instruments components for electricity, gas and water meters, etc.

household appliances precision axes for a wide range of household appliances

medical technologycomponents for medical and optical devices (e.g. microscopes, optical measuring devices, medication)

Precision standard parts for plastic injection moulding and diecasting

ejector pins and ejector sleeves

Sprue bushings and sprue puller bushings

guide bolts and guide bushes

centering units

parts for hotrunner systems

Drawing-compliant precison parts in small batches

hydraulic pistons and pressure relief valves

Shafts, axes and core pins for mechanical engineering

pistons, valve inserts and valve rods for hydraulic systems

Special parts made to drawings

Editor

SCHUMAG Aktiengesellschaft

Nerscheider Weg 170

D-52076 Aachen

Conception/Designs

[email protected] I Würselen

Photo

Carl Brunn I Aachen

Print

Druckerei Ralf Küster I Aachen

113Schumag ag

excerpt From the range oF proDuctS

SChumAg Aktiengesellschaft

P.O.B. 52 02 64 I D-52086 Aachen

Nerscheider Weg 170 I D-52076 Aachen

Telephone Switchboard +49 24 08 12-0

Fax Switchboard +49 24 08 12-218

Managing Board +49 24 08 12-211

Precision Parts +49 24 08 12-277

Standard Parts +49 24 08 12-285

E-mail Precision Parts [email protected]

Standard Parts [email protected]

Internet www.schumag.de

Schumag romania S.r.L.

Loc. Chisoda DN 59 Km 8 + 550 m stânga

307221 Chisoda / Timis

Romania

Telephone +40 2 56 27 39-66

Fax +40 2 56 27 39-62

E-mail [email protected]

annual report 2014/15 - Schumag Aktiengesellschaft2 Schumag overview 2014/15 2013/14 2012/13 2011/12...

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