Annual Report 2015 - MEGATECH Industries · Annual Report 2015 | Page 3 Contents MEGATECH Annual...

Annual Report 2015

Annual Report 2015 | Page 3

Contents

MEGATECH Annual Report Page 6 Highlights of 2015 Page 8 Interview with the Management Board of MEGATECH Page 12

Worldwide locations of the MEGATECH Group Page 18 Overview of MEGATECH’s products Page 24

Parts produced for MEGATECH’s Tier 1-Clients Page 26 Report of the Supervisory Board Page 28 Consolidated Financial Statements as of 31/12/2015 Page 31 Management Report Page 95 Auditor’s Report Page 107 Imprint Page 109


MEGATECH Industries Hlinsko manufactures the upper and lower rear door cover as well as the sill panel for the Audi Q7.


Annual Report 2015 | Page 5Annual Report 2015 | Page 5

Sill panel for Audi Q7


2015 also presented significant operational chal-lenges, including 32 SOPs (“Start of Production”) – an enormous level of operational complexity –

and the launch of new machines and processes.

In the case of our Hlinsko plant, the high volume of new projects required a complete overhaul of the plant’s production layout and a separation of the Tier 1 and Tier 2 business. Despite these headwinds,

our dedicated local plant teams managed to suc-cessfully launch these projects with technologies new to MEGATECH.

All plants achieved positive financial results, three of which achieved outstanding financial and ope-rational performance: Orense, Marinha Grande and Jablonec. In addition, our group-wide focus on continuous improvement and lean manage-ment provided significant efficiency gains, contri-buting to our stable returns.

We are pleased to announce MEGATECH Industries AG’s highest order intake since 2009. Our excellent customer relationships and strategy of being a so-lution provider have borne fruit. These orders are both follow-up contracts for existing models – un-derscoring the reliability of our serial production – and orders generated for entirely new models. New orders generated in 2015 will pave the way for sustainable growth in the years to come.

SETTING THE COURSE FOR FUTURE GROWTH

2015 saw us continue our successful trajectory, achieving stable returns while generating the highest order

intake to date

Our order intakeis a direct result

of our strong andtrusting relationshipswith our customers.


Operating at full capacity and outgrowing our capacity

All our plants are currently operating at or near full capacity. This is why we laid the groundwork for our first greenfield investment with MEGATECH In-dustries Brno. The region around Brno is an attrac-tive location as it is close to our customers and is known for its skilled workforce specialized in the automotive industry. The plant, with a production area of 10,000 m2, will produce rear door covers, cowl tops, and pillar covers for our customers. Construction began in 2015, and the plant will be fully operational in summer 2016.

We are also outgrowing the sites of our Spanish Tech Center and Sales Office and the Romanian Tech Center. Both moved to larger sites in early 2015. We also opened a new sales office close to Paris to be even closer to customers such as PSA, Faurecia, Valeo, Plastic Omnium, and Renault.

This continued success would not have been pos-sible without the excellent team effort from our more than 1,400 employees. On behalf of the Exe-cutive Board, I would like to thank our entire team for its tremendous dedication and hard work over the past 12 months.

Ambitious goals for the future

Our goal is strong, profi-table and sustainable growth for MEGATECH Industries. We aim to pursue this strategy acti-vely and assertively in the coming years. The road ahead will certainly not be easy – the eco-nomy, our competition and our customers will demand much from us. However, with our strong order intake, stable operations, and solid finances, we are well-positioned to face these challenges.

Sincerely,

Maximilian Gessler CEO Member of the Executive Board

Our overridinggoal is sustainablegrowth – a strategywe aim to pursueactively in the coming years.

MAXIMILIAN GESSLERMember of the Executive Board of MEGATECH Industries AG


MEGATECH INDUSTRIES AG (Austria)

Over the past year, MEGATECH Industries AG conti-nued on its successful trajectory, delivering stable returns and profits for the entire group. All operating plants finished with a profit after tax.

Financially, 2015 allowed us to welcome new finan-cing partners in Spain and the Czech Republic and to reduce financing costs thanks to better ratings. All our necessary investments for new projects and inf-rastructure were successfully financed with reputab-le banks.

In Vienna, we further strengthened our team, welco-ming the next generation of the owning family. With a background in automotive consulting, Claudia Gessler will lead strategic initiatives and support our growth strategy.

During 2015, we also implemented decisive measu-res for our corporate strategy. Under the heading “PP:M – Pole Position MEGATECH,” we clearly de-fined our mission statement and how to achieve our goals. We strive to provide our customers with the solutions, with the ultimate aim of becoming the preferred global supplier for our excellent partners. Our strategy is supported by our strong team, who we invite to share in the responsibility and live the entrepreneurial spirit.

We want to become our staff’s preferred employer. We can achieve this by motivating our employees, bringing out their talents and providing an exciting, team-oriented work atmosphere. During the past year, the executive board has taken measures to strengthen our position by launching initiatives such as “Employee of the Month” and other teambuilding activities.

Team spirit will only be cultivated by living and bre-athing our corporate identity, which we have further promoted by launching personalized corporate work jackets. Sponsorship of groups such as VfL Wolfs-burg, endurance series GT drivers and the ice-

hockey team HC Hlinsko allows us to engage in both internal and external promotion through events dear to our hearts.

MEGATECH Industries Czech Republic

In February, we celebrated MEGATECH Industries Czech Republic’s fifth anniversary of being a mem-ber of the MEGATECH Group.

MEGATECH Industries Hlinsko began with develop-ment of the first MEGATECH Excellence System mo-del line. The plant was also named one of Schneider Electric’s top ten suppliers. Due to the high volume of new projects launching in Hlinsko in 2016, the plant’s production layout received a complete over-haul. As a result, production of Tier 1 projects for various OEMs was separated from production of Tier 2 business and non-automotive business. Several new machines and technologies were also launched. Despite these extraordinary challenges for the ma-nagement team and employees at the Hlinsko plant, financial performance was stable and overall results were clearly positive.

MEGATECH Industries Jablonec expanded its pro-duction sites, launched new machines and moderni-zed various work areas to facilitate and streamline processes. The continuous transformation of our plant in Jablonec has also been recognized by our customers. We are proud to receive an “A” rating in Skoda’s 2015 audit.

THE HIGHLIGHTS OF 2015

MEGATECH Industries Brno


We also started construction of our first greenfield investment, the MEGATECH Industries Brno plant, which will open in summer 2016.

MEGATECH Industries Peninsula Iberica

2015 was an important year for MEGATECH Indust-ries Orense, which continued its journey towards operational excellence with the implementation of lean management in all departments. The plant par-ticularly focused on improving operations, mana-ging quality, and reducing costs.

MEGATECH Industries Amurrio implemented a cont-inuous improvement plan to increase performance in all departments and foster cross-functional colla-boration and team work. The plant put particular emphasis on strengthening the importance of quali-ty in its production processes.

Thanks to our MEGAWATT program, both the Amur-rio and Orense plants were able to generate a large number of great suggestions on how to improve daily operations. The MEGAWATT program invites all employees to submit innovative ideas. The best are then evaluated, implemented, and awarded a prize.

A major highlight for our Portuguese plant MEGA-TECH Industries Marinha Grande was the successful industrialization of the parts produced for its new customer, Renault. The excellent handling of the Renault Mégane project is thanks to the effective co-operation and strong commitment of the entire team.

The financial performance and profitability of MEGA-TECH Industries Orense and MEGATECH Industries Marinha Grande were again outstanding. These re-sults reflect the excellent work of the local manage-ment teams.

MEGATECH Industries Tech Center and Sales

In 2015, the Technical Center developed the largest number of projects in its history, thanks to the high order intake generated by our sales team. This in-crease in development work resulted in hiring addi-tional staff and eventually outgrowing the previous

Tech Center site. Hence, the Tech Center moved to a larger office within the AIC (Automotive Intelligence Center), a value generation center for the automoti-ve industry in the Basque region of Spain.

The move also allowed us to participate in many events such as the Toyota Basque Suppliers Day in Spain and the Jaguar Land Rover Basque Automotive Suppliers Day in the UK.

In addition to the team in Bilbao, first satellite offices in Munich and Bielefeld and Paris were opened to provide a development and sales team close to our customers, allowing for close interaction and fast alignment.

Associated partner company MEGATECH Industries Brazil

In light of the collapse of the Brazilian economy and the subsequent drop in automotive production, our associated partner company MEGATECH Industries Brazil faced another year of difficult economic con-ditions. Nonetheless, the plant managed to secure new order intakes from the OEMs Renault Brazil and VW Brazil as well as Tier 1 suppliers Faurecia and SMP.

MEGATECH Industries Brazil persisted by rigid cost management, securing new credit lines and strin-gent control of daily cash flow. The plant also recei-ved important internal refurbishment and organized numerous corporate responsibility campaigns.

Working towards continuous improvement


Our Spanish plant MEGATECH Industries Amurrio produces the lower, intermediate, and upper cover of the A- and B-pillar, the B-pillar slider and bracket, as well as the rear header and sill panel for Bentley’s Bentayga.


Annual Report 2015 | Page 11Annual Report 2015 | Page 11

Interior upper B-pillar coverfor Bentley Bentayga


MANAGEMENT BOARD

DR. MAXIMILIAN GESSLER has been a member of the executive board since November 26, 2009, and is responsible for the areas of strategy, sales, development, communi-cations, and business development.

DKFM. RAINER DIECK was appointed member of the executive board on April 1, 2013, and is responsible for the areas of HR, finance, accounting, controlling, IT, purchasing, as well as M&A.

Let’s begin with a brief summary of the business year 2015 from a management point of view…

MAXIMILIAN GESSLER: The year 2015 was as suc-cessful as 2014 and we achieved good results, with a net profit. Order intake and processing were very positive, we were able to make significant impro-vements in many areas and have become more competitive.

RAINER DIECK: We achieved positive results in all our plants. If we take out the one-time ef-fect relating to the refinancing programme succeeded in 2014 the Group Net Result of 2015 was even slightly better than 2014.

We were able to make significant improvements in many areas and have become more competitive.


A GLOBAL PRESENCE IS THE NO. 1 PRIORITY FOR US

Maximilian GESSLER and Rainer DIECK discuss the past business year, current

trends and the company’s future growth.

Did you continue on the intensive investment track of the previous years?

RAINER DIECK: Investment volume increased in 2015 because of several project launches and pre-parations for this year’s launches. We will continue to invest at this level as we are facing a very high order intake with new models to be launched until 2018.

Where there any changes in the financing structure?

RAINER DIECK: Our financing has evolved with our business. At present, we are turning the 2014 refinancing loans into a syndicated structure. All projects have been fully financed with local finan-cial institutions in the respective country of each plant. However, our goal is to obtain financing at the Group level in order to become more flexible through different cash pooling models.

Which new developments did you see in IT and reporting in 2015?

RAINER DIECK: We updated the SAP system to the latest version at our Spanish subsidiary in 2015 and installed a so-called Business Intelligence System, a

controlling tool that provides details about the pro-fit margin of each individual part. The system will be able to provide such information for each plant, country, project, component or group of compo-nents. A considerable part of our server structure was also moved to the cloud as a data protection measure for the entire Group.

Is the company also growing in terms of employees?

MAXIMILIAN GESSLER: We are a good, stable em-ployer. Our staff increased by 60 employees last year although it is not easy to hire qualified staff in countries with virtually no unemployment such as the Czech Republic.

Which were the most important model launches in terms of turnover for MEGATECH?

MAXIMILIAN GESSLER: The big volume models launched last year were the Audi Q7, Volkswagen T6, SEAT Ibiza and Leon, Renault Mégane as well as the Bentley Bentayga. We spent significant time and efforts to prepare for upcoming launches in 2016, these include the VW Tiguan, BMW 5-Series, MINI Countryman, Audi Q2, SEAT Ateca, Skoda Kodiak, Porsche Boxter and Cayman, Citroën C4 Picasso, Peugeot Expert as well as the Peugeot 3008 and 5008 among others.

Can you give us more detailed information on the excellent order intake until 2018?

MAXIMILIAN GESSLER: We received a large order for models manufactured by the Volkswagen Group for the Spanish and Portuguese markets. Orders were also received from the PSA Group, Renault Brazil as well as Tier 1 suppliers such as Faurecia, Plastic Omnium and SMP. These orders required us to add capacity and expand significantly. Expansion plans will be finished by the summer of this year and we will operate at full capacity until 2025.

How is the continued trend toward lightweight construction affecting your production techno-logies?

MAXIMILIAN GESSLER: A variety of new technolo-gies allows plastic components to be made up to 10


to 15 percent lighter than with traditional injection technology. We have already begun serial produc-tion of the first such order. Natural fibres are also an option, as they are usually lighter than plastic. However certain plastic properties such as malle-ability and cycle times are difficult to imitate with other materials.

RAINER DIECK: Another trend is the use of plastics to replace high-strength materials, such as alumi-nium. Glass fibre reinforced plastic will be used in vehicle construction in the future and has already replaced metal in seat construction.

There is also a new plant within the MEGATECH structure…

MAXIMILIAN GESSLER: We were in the fortunate position that all our existing plants are operating at full capacity – there was no room for additio-nal production. As a result, we took the decision to build a new plant in Brno in mid-2015. The plant will be operative in the second quarter of this year with start of production in summer. We decided on this particular location based on our good experience

in the Czech Republic. As a university city, Brno offers a skilled workforce in the au-tomotive industry. It is also well located in the auto-motive cluster, close to our main customers.

What is your future outlook for MEGATECH?

RAINER DIECK: We have reached the limit of what can be achieved through organic growth. Thus, the next step must be growth by acquisition. This is at the top of our agenda, also from our customers’ perspective. We often hear the term global supplier, meaning the importance of having a global presen-ce as an automotive supplier.

MAXIMILIAN GESSLER: More and more models are being built at two or three locations worldwide and OEMs want the same supplier at these places. They want the exact same parts. This is the direction we are heading and we are prepared to take this challenge.


We have reached the limit of what can be achieved through organic growth. Thus, the next step must be growth by acquisition.

MEGATECH Industries Hlinkso also manu-factures the interior upper A-pillar cover with and without textile for the T6 pro-duced by Volkswagen Commercial Vehicles.

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5. MEGATECH Industries Amurrio, S.L.

Spain

The facility in the Basque country employs around 230 people. It has a broad produc-tion spectrum and manufac-tures various parts for a mani-fold of notable customers.

4. MEGATECH Industries Brno s.r.o.

Czech Republic

The plant in Brno located close to our customers is the youngest factory of the MEGA TECH Group. It will ma-nufacture rear door covers, cowl tops and pillar covers once it is operational in the summer of 2016.

2. MEGATECH Industries Hlinsko s.r.o.

Czech Republic

In the Czech city of Hlinsko, around 540 employees are working in the swiftly expan-ding, newly equipped plant of the MEGATECH Group. Visible vehicle interior parts, technical parts for the air conditioning and ventilation system, headlight reflectors, and electronic components are produced here.

6. MEGATECH Industries Orense, S.L.

Spain

130 employees work in the most modern facility of the group. The factory tests the majority of new processes and specializes in the produc-tion of sophisticated, visible interior and technical parts.

7. MEGATECH Industries Marinha Grande, Lda. Portugal

Marinha Grande is one of the most important tool design building regions in Europe. The strongly expanding facili-ty with around 70 employees had to first be brought to the newest automotive standard after its acquisition in 2011. It now focuses exclusively on the automotive business.

3. MEGATECH Industries Jablonec s.r.o.

Czech Republic

Around 240 people are em-ployed in the glass and jewelry production city in the north of the Czech Republic. The plant was renovated from 2010 to 2012 to meet the newest in-dustrial standard and has sin-ce then produced visible ve-hicle interior parts and wheel covers exclusively for OEMs. The history of the factory goes back to the 19th century.

1. MEGATECH Industries AG

Austria

All strings of the MEGA-TECH world merge in Vien-na’s fourth municipal district. Apart from the CEO and CFO, 10 other employees work in the company headquarters where they are in charge of strategic planning, marketing, and controlling.

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2

7

6 85

3 2 41

11

10

THE WORLD OF MEGATECHThe worldwide locations of the MEGATECH Group at a glance: all plants, all R&D centers, and all sales offices in Europe and overseas.


10. MEGATECH Industries Deutschland

GmbH Germany

The 17 employees in Germa-ny are in charge of project handling and distribution for all German customers. Their duties encompass both the technical support of the facilities of MEGATECH’s customers. Proximity to the customers is key, hence we have offices in Munich and Bielefeld.

12. MEGATECH Industries India Private

Ltd., India

To also be present on the booming Asian market, ME-GATECH established a repre-sentative office in the Indian metropolis Pune, center of the Indian automobile indus-try in 2012.

8. MEGATECH Industries Technical Center, A.I.E., Spain

The MEGATECH Group’s Tech Center is located near Bil-bao. Around 85 employees develop products and tools according to customer or-ders. Beyond that, they focus on fundamental research and new materials.

13. MEGATECH Brasil Componentes Automotivos Ltda., Brazil

MEGATECH has been present

in Brazil since 1979. The facility in Curitiba engages around 110

employees and has a broad product range. In an additional sales office in Sao Paulo, em-ployees tend to customers di-rectly on-site. MEGATECH In-dustries Brazil (MIBR) was sold and deconsolidated in 2014.

9. SC MEGATECH Engineering Center S.R.L

Romania

The CAD-development for the products of the entire MEGATECH Group takes pla-ce in the Romanian capital of Bucharest. The eleven emplo-yees also work with all simula-tion programs required in the development process.

12

9


11. MEGATECH Sales Office

France

Three employees are in charge of project handling and distribution for French customers of the MEGATECH Group.

Seat drawer for VW Fox


Our associated partner company MEGATECH Brasil Componentes Automotivos produces the seat drawer for the VW Fox.


Our associated partner company MEGATECH Brasil Componentes Automotivos manufactures dash-board parts and the side shelf in the trunk for Renault Brazil’s Duster.

Side shelf in trunk for Renault Duster

Dashboard parts for Renault Oroch


Furthermore, MEGATECH Brasil Com-ponentes Automotivos produces dash-board parts and components for the interior trunk cover for Renault Brazil’s Oroch.

Upper and lower steering wheel cover for Renault Master


Similarly, the Brazilian plant ma-nufacturers the upper and lower steering wheel cover as well as the cover of the side view mirror for Renault Brazil’s Master.


PARTS PRODUCED FOR OUR TIER 1-CLIENTSThe Megatech Group and its associated partner company MEGATECH Brasil Componentes Auto-motivos also produce a wide range of interior and exterior plastic components for Tier 1 customers such as Automotive Lighting, Faurecia, and Samvardhana Motherson Peguform (SMP).

Bumper components for VW Cross Fox

Bumper components for VW Golf 7

Bumper components for Renault Oroch

Front bumper components for Renault Sandero RS

Additionally, MEGATECH Brasil Componentes Automotivos manu-facturers numerous bumper com-ponents of the Renault Oroch, Re-nault Sandero RS, VW Cross Fox, and VW Golf 7 for the Tier 1 sup-plier SMP.

Rear bumper components for Renault Sandero RS


Outer strip for Renault Captur

Cover panel for Honda Civic

Fog reflector for Audi A4

Light reflector for Mercedes Benz C & G Class

Moreover, MEGATECH Indust-ries Hlinsko produces the outer strip of the Renault Captur for Automotive Lighting.

Our associated partner company MEGATECH Brasil Compo-nentes Automotivos produces the bracket of the Renault Sandero and Oroch for Tier 1 supplier Faurecia.

Bracket for for Renault Sandero and Oroch


MEGATECH Industries Hlinkso manufactures the cover panel of the Honda Civic for Auto-motive Lighting.

The Czech plant further manufactures the fog reflector of the Audi A4 for Automotive Lighting.

MEGATECH Industries Hlinsko also produces the light reflector of the Mercedes Benz C- and G-class for Auto-motive Lighting.


DR. GEORG FLANDORFER was elected chairman of the supervisory board of MEGA-TECH Industries AG on November 14, 2011. He is a former member of the executive board of Volkswagen AG.

SUPERVISORY BOARD

MAG. ULRIKE GESSLER-WOLFINGER is a notary in Vienna. She has been a member of the supervisory board of MEGATECH Industries AG since November 26, 2009.

MAG. HERBERT HOUF was elected into the supervisory board of MEGATECH Industries AG on February 24, 2012. He is its deputy of the supervisory board and member of the examination board. Mag. Houf works as financial auditor and tax consultant in Vienna.

MATTHIAS ÜBEL, BA, MBA was elected into the supervisory board of MEGATECH Industries AG on April 4, 2013. He is member of the executive board of Endurance Capital AG in Munich.

The office term of Dr. Georg Flandorfer ends at the end of the general assembly that decides about the outcome of the annual statements of 2016.

The executive board of MEGATECH Industries AG has informed the members of the supervisory board regularly, promptly, and comprehensively, both in written and oral form about the situation, the course of business, the financial situation of the company as well as the subsidiaries of the enterprise.

In the financial year 2015 five supervisory board meetings were held, in all of which all members of the supervisory board were participants.

Within these supervisory board meetings and beyond, there is an open communication between management and directorate.

The supervisory board is thereby always able to make well-grounded reviews of the business practices in the enterprise and to support the exe-cutive board with fundamental decisions.

The supervisory board is aware of its incumbent duties according to law, statute, and bylaws, con-sidering the relevant appointments. Provided that it is required, the supervisory board has made de-cisions in a written procedure.

PwC Wirtschaftsprüfungs GmbH has undertaken the examination of the commercial law’s annual fi-nancial statement of December 31, 2015, according to the established legal regulations of the §§ 268 ff. Austrian commercial law, as well as a voluntary exam of the IFRS consolidated financial statement of December 31, 2015, according to the international standards on Auditing (ISA).

After its conclusion, the examination gave no reason for complaint. The annual auditor has thereby con-

firmed that the annual account of the MEGATECH Industries AG including the situation report from its management board as well as the consolidated fi-nancial statement along with the group manage-ment report of the managing board of the MEGA-TECH Industries Group according to IFRS correspond with the legal regulations.

Considering proper bookkeeping, they convey a faithful image of the financial, asset, and profit situ-ation of the company its subsidiaries.

The supervisory board agrees with the situation re-port of the executive board and approved the annual accounts of 2015 of MEGATECH Industries AG. The annual financial statement is thereby determined.

Furthermore the supervisory board proposes orde-ring the PwC Wirtschaftsprüfungs GmbH auditing companies to the annual general meeting of the business year 2016 as annual auditor of MEGATECH Industries AG.

The supervisory board express great recognition and thanks to the executive board and all em ployees for their high achievements and great dedication in the financial year of 2015.

Vienna, April 25, 2016

Dr. Georg Flandorfer

Report of the supervisory board of MEGATECH Industries AG for the financial year 2015


Consolidated Financial Statements as of 31/12/2015


I. Consolidated income statement

in kEUR Note 2015 2014

Revenue 5 125,942 124,451

Changes in inventories of finished goods and work in progress 819 -457

Capitalisation of development costs 17 4,467 3,215Raw materials and consumables used 6 -82,506 -83,198Employee benefit expenses 7 -27,398 -26,004Other income 8 1,375 2,051Other expenses 9 -12,709 -9,530EBITDA before non-recurring items 9,990 10,528Non-recurring items 10 -257 -753EBITDA after non-recurring items 9,733 9,775Depreciation and amortisation 11 -5,701 -5,223Operating result (EBIT) 4,032 4,552Interest income 12 320 328Interest costs 12 -1,877 -1,975Other financial income 13 315 2,281Other financial costs 13 -58 -245Financial result -1,300 389Result before tax 2,732 4,941Income tax expense 14 -734 -507Result after tax continued operations 1.998 4.434Discontinued operations 15 150 -2,413Result for the year 2,148 2,021

in kEUR 2015 2014

Result attributable to:

Owner of the parent 2,148 2,021

Result for the year 2,148 2,021


II. Consolidated statement of comprehensive income

in kEUR 2015 2014

Result for the year 2,148 2,021

Other comprehensive income for the year:Items that will not be reclassified to profit or lossRemeasurements of employment benefit obligations 0 4

0 4

Items that may be subsequently reclassified to profit or loss

Currency translation differences 156 -8156 -8

Comprehensive income for the year continued operations 156 -4

Comprehensive income for the year discontinued operations 0 209

Other comprehensive income for the year, net of tax 156 205Total comprehensive income for the year 2,304 2,226

in kEUR 2015 2014

Total comprehensive income attributable to:

Owner of the parent 2,304 2,226

Total comprehensive income for the year 2,304 2,226

Items in the statement above are disclosed net of tax. The income tax relating to each component of other comprehensive income is disclosed in note 14.2.


in kEUR Note 31/12/2015 31/12/2014

AssetsNon-current assetsProperty, plant and equipment 16 44,004 41,276Intangible assets 17 20,711 18,174Deferred tax assets 14 986 707Available-for-sale financial assets 18 60 60Non-current other receivables 22 8,816 11,955

74,577 72,172Current assetsInventories 20 19,260 10,757Trade receivables 21 12,007 10,723Other receivables 22 8,140 4,783Cash and cash equivalents 23 2,193 1,881

41,600 28,144Total assets 116,177 100,316

III. Consolidated balance sheet


in kEUR Note 31/12/2015 31/12/2014

Equity and liabilitiesEquityRegistered capital 24 7,050 7,050Other reserves 24 34,900 34,900Currency translation differences 797 641Retained earnings -603 -2,751

42,144 39,840Non-current liabilitiesNon-current financial liabilities 25 14,657 13,683Government grants 28 1,243 1,317Non-current employee benefits 29 407 392Non-current other provisions 30 426 744Derivative financial instruments 19 58 0Other non-current liabilities 27 1,144 1,544Deferred tax liabilities 14 2,743 2,960

20,678 20,640Current liabilitiesCurrent financial liabilities 25 18,591 12,343Trade payables 26 26,059 20,888Other payables 27 8,109 5,947Government grants 28 0 22Current provisions 30 596 636

53,355 39,836Total liabilities 74,033 60,476Total equity and liabilities 116,177 100,316


IV. Consolidated statement of changes in equity

in kEUR

Regi

ster

ed

capi

tal

Oth

er

rese

rves

Curr

ency

tr

ansl

atio

n di

ffer

ence

s

Reta

ined

ea

rnin

gs

Tota

l eq

uity

December 31, 2013 7,050 41,948 440 -11,824 37,614

Result for the year 0 0 0 2,021 2,021

Remeasurements of employment benefit obligations 0 0 0 4 4

Currency translation differences 0 0 201 0 201Total comprehensive income 0 0 201 2,025 2,226

Reclassification 0 -7,048 0 7,048 0

December 31, 2014 7,050 34,900 641 -2,751 39,840

Result for the year 0 0 0 2,148 2,148Currency translation differences 0 0 156 0 156Total comprehensive income 0 0 156 2,148 2,304

December 31, 2015 7,050 34,900 797 -603 42,144


V. Consolidated statement of cash flows

in kEUR 2015 2014

EBIT 4,032 4,552Depreciation and amortisation 5,701 5,223 Change in inventory -8,411 -3 Change in trade receivables -1,077 8,593 Change in trade payables 4,937 -4,259 Change in other current assets/liabilities 845 -1.047Change in working capital -3,706 3,284Change in provisions -11 -388Government grants -97 -40Gain (-) / loss (+) from disposal of assets -544 38Interest received 232 22Interest paid -490 -283Taxes paid -788 -1,139

Cash flow from operating activities continued operations 4,329 11,269

Cash flow from operation activities discontinued operations 0 -712

Total cash flow from operating activities 4,329 10,557

Investments in property, plant and equipment -3,879 -2,435Investments in intangible assets -4,890 -4,365Proceeds from disposal of fixed assets 2,251 93Repayment of loans from related parties 72 0

Cash flow from investing activities continued operations -6,446 -6,707

Cash flow from investing activities discontinued operations 0 -954

Total cash flow from investing activities -6,446 -7,661

Free Cash flow -2,117 2,896


Cash and free overdrafts includes cash and cash equivalents and bank overdrafts not used at the end of the year (see note 23).

in kEUR 2015 2014

Repayment of bank loans -9,639 -22,812Proceeds from new loans 10,213 25,992Repayment of other financing -390 0Proceeds from other financing 96 21Changes in bank overdrafts and recourse factoring 4,120 -9,384Finance lease -554 -307Interest paid for long-term financing -1,387 -1,386Currency differences -44 -83

Cash flow from financing activities continued operations 2,415 -7,959

Cash flow from financing activities discontinued operations 0 760

Total cash flow from financing activities 2,415 -7,199

Total cash flow 298 -4,303

Cash and cash equivalents at beginning of the year 1,881 6,335

Currency differences 14 -28Total cash flow 298 -4,303Disposed cash and cash equivalents 0 -123Cash and cash equivalents at end of the year 2,193 1,881

Cash and free overdrafts 4,465 2,381


VI. Notes to the consolidated financial statement

1 General information

Megatech Industries AG (‘the company’) is located in Taubstummengasse 13/9, 1040 Vienna, Austria, and is registered under the commercial registry number FN 337381z at the Vienna Commercial Court. The company is owned to the extent of 99.3% by Megatech Industries S.L., Amurrio, Spain. Ultimate parent is Megatech Industries Aktiengesellschaft, Vaduz, Liechtenstein, registered under commercial registry number FL-0002.482.867-7. Ultimate controlling party is Mr. Maximilian Gessler. Megatech Industries Aktiengesellschaft, Vaduz, prepares the consolidated financial statements for the largest group of companies. This group report is disclosed at the commercial register Liechtenstein.

Megatech Industries AG (‘the company’) and its subsidiaries (together, ‘the group’) develop, manufacture, assemble and supply interior and exterior plastic components for the global automotive industry. Production sites are located in Spain, Portugal and the Czech Republic, complemented by sales companies in France and Germany. The group owns two Tech Centers, one in Spain and one in Romania, for the design and development of products.


Consolidated companies are as follows:

*) The plant in Brno is under construction and will start production in 2016

The consolidated financial statements as at December 31, 2015 were prepared by the managing directors and released for issue on the date when this report was signed. The entity financial statements of the parent company, which have been included in the consolidated financial statements after transition to the applicable accounting standards, will be presented to the Supervisory Board for review and approval.

The consolidated financial statements were prepared in EUR. Unless stated otherwise, all amounts are shown in thousands of euro (kEUR). All figures presented are rounded, so minor discrepancies may arise in the addition of these amounts.

Company Place of business

Country Share in capital

Acitivities

Megatech Industries AG Vienna Austria HoldingMegatech Industries Peninsula Iberica S.L. Boroa Spain 100,0% HoldingMegatech Industries Amurrio, S.L. Amurrio Spain 100,0% ProductionMegatech Industries Orense S.L. Orense Spain 100,0% Production

Megatech Perfect Plastics Marinha Grande Ltda.

Marinha Grande Portugal 100,0% Production

Megatech Industries Czech Rpublic s.r.o. Prague Czech Republic 100,0% Holding

Megatech Industries Hlinsko s.r.o. Hlinsko Czech Republic 100,0% Production

Megatech Industries Jablonec s.r.o. Jablonec Czech Republic 100,0% Production

Megatech Industries Brno s.r.o. Prague Czech Republic 100,0% Production *)

Megatech Industries Intellectual Property S.L.U Amurrio Spain 100,0% Engineering

Megatech Industries Technical Center A.I.E. Amurrio Spain 100,0% EngineeringSC Megatech Engineering Center S.r.l. Bucharest Romania 100,0% EngineeringMegatech Industries Deutschland GmbH Wolfsburg Germany 100,0% Sales

Megatech Industries France SAS Vélizy- Villacoublay France 100,0% Sales

Megatech Automotive GmbH Vienna Austria 100,0% DormantMegatech Industries India PL Pune India 100,0% Dormant


2 Summary of significant accounting policies

The principal accounting policies applied in the preparation of these consolidated financial statements are set out below. These policies have been consistently applied to all the years presented, unless stated otherwise.

2.1 Basis of preparation

The consolidated financial statements of the group have been prepared in accordance with the International Financial Reporting Standards and IFRIC interpretations as adopted by the EU. The consolidated financial statements have been prepared under the historical cost convention, as modified by the revaluation of available-for-sale financial assets, and financial assets and financial liabilities (including derivative instruments) at fair value through profit or loss.

The preparation of financial statements in conformity with IFRS requires the use of certain critical accounting estimates. It also requires management to exercise its judgement in the process of applying the group’s accounting policies. The areas involving a higher degree of judgement or complexity, or areas where assumptions and estimates are significant to the consolidated financial statements are disclosed in note 4.

2.1.1 Changes in accounting policy and disclosures

2.1.1.1 New standards, amendments and interpretations adopted by the group

The group has applied the standards and amendments mentioned below for the first time for their annual reporting period commencing January 1, 2015. The adoption of these amendments did not have any impact on the current period or any prior period and is not likely to affect future periods.

Annual Improvements to IFRSs – 2010-2012 Cycle and 2011-2013 Cycle IFRS 1 – confirms that first-time adopters of AASs can adopt standards that are not yet mandatory,

but do not have to do so. IFRS 2 – clarifies the definition of ‘vesting condition’ and now distinguishes between ‘performance

condition’ and ‘service condition’. IFRS 3 – clarifies that an obligation to pay contingent consideration is classified as financial

liability or equity under the principles in IAS 32 and that all non-equity contingent consideration (financial and non-financial) is measured at fair value at each reporting date.

IFRS 3 – clarifies that IFRS 3 does not apply to the accounting for the formation of any joint arrangement.

IFRS 8 – requires disclosure of the judgements made by management in aggregating operating segments and clarifies that a reconciliation of segment assets must only be disclosed if segment assets are reported.

IFRS 13 – confirms that short-term receivables and payables can continue to be measured at invoice amounts if the impact of discounting is immaterial.

IFRS 13 – clarifies that the portfolio exception in IFRS 13 (measuring the fair value of a group of financial assets and financial liabilities on a net basis) applies to all contracts within the scope of IAS 39 or IFRS 9.

IAS 16 and IAS 38 – clarifies how the gross carrying amount and accumulated depreciation are treated where an entity measures its assets at revalued amounts.


IAS 24 – where an entity receives management personnel services from a third party (a management entity), the fees paid for those services must be disclosed by the reporting entity, but not the compensation paid by the management entity to its employees or directors.

IAS 40 – clarifies that IAS 40 and IFRS 3 are not mutually exclusive when distinguishing between investment property and owner-occupied property determining whether the acquisition of an investment property is a business combination.

Defined Benefit Plans: Employee Contributions – Amendments to IAS 19The amendments clarify the accounting for defined benefit plans that require employees or third parties to contribute towards the cost of the benefits.

2.1.1.2 New standards and interpretations not yet adopted

A number of new standards and amendments to standards and interpretations are effective for annual periods beginning after January 1, 2016, and have not been applied in preparing these consolidated financial statements. None of these is expected to have a significant effect on the consolidated financial statements of the group, except the following set out below:

IFRS 9 ‘Financial Instruments’IFRS 9 addresses the classification, measurement and derecognition of financial assets and financial liabilities and introduces new rules for hedge accounting. In July 2014, the IASB made further changes to the classification and measurement rules and also introduced a new impairment model. These latest amendments now complete the new financial instruments standard.

Following the changes approved by the IASB in July 2014, the group does not expect any material impact from the new classification, measurement and derecognition rules on the group’s financial assets and financial liabilities.

IFRS 9 must be applied for financial years commencing on or after January 1, 2018. Expected date of adoption by the group is January 1, 2018. IFRS 15 ‘Revenue from Contracts with Customers’The IASB has issued a new standard for the recognition of revenue. This will replace IAS 18 which covers contracts for goods and services and IAS 11 which covers construction contracts. The new standard is based on the principle that revenue is recognised when control of a good or service transfers to a customer – so the notion of control replaces the existing notion of risks and rewards. The standard permits a modified retrospective approach for the adoption. Under this approach, entities will recognise transitional adjustments in retained earnings on the date of initial application (e.g. January 1, 2018), i.e. without restating the comparative period. They will only need to apply the new rules to contracts that are not completed as of the date of initial application.

At this stage, the group is not able to estimate the impact of the new rules on the group’s financial statements. The group will make more detailed assessments of the impact over the next twelve months.

IFRS 15 is mandatory for financial years commencing on or after January 1, 2018. Expected date of adoption by the group is January 1, 2018.


2.2 Consolidation

Subsidiaries are all entities (including structured entities) over which the group has control. The group controls an entity when the group is exposed to, or has rights to, variable returns from its involvement with the entity. Subsidiaries are fully consolidated from the date on which control is transferred to the group. They are deconsolidated from the date that control ceases. As per December 31, 2015 and December 31, 2014 the group has 100% of shares and voting rights of all subsidiaries included in the scope of consolidation.

The group uses the acquisition method to account for business combinations. The consideration transferred for the acquisition of a subsidiary is the fair value of the assets transferred, the liabilities incurred to the former owners of the acquiree and the equity interests issued by the group. The consideration transferred includes the fair value of any asset or liability resulting from a contingent consideration arrangement. Acquisition-related costs are expensed as incurred. Identifiable assets acquired and liabilities and contingent liabilities assumed in a business combination are measured initially at their fair value at the acquisition date. The group recognises any non-controlling interest in the acquiree on an acquisition-by-acquisition basis, either at fair value or at the non-controlling interest’s proportionate share of the recognised amounts of the acquiree’s identifiable net assets.

The excess of the consideration transferred, the amount of any non-controlling interest in the acquiree and the acquisition-date fair value of any previous equity interest in the acquiree over the fair value of the group’s share of the identifiable net assets acquired is recorded as goodwill. If this is less than the fair value of the net assets of the subsidiary acquired in the case of a bargain purchase, the difference is recognised in the income statement.

Transactions with non-controlling interests that do not result in loss of control are accounted for as equity transactions – that is, as transactions with the owners in their capacity as owners. The difference between the fair value of any consideration paid and the relevant share acquired of the carrying value of net assets of the subsidiary is recorded in equity. Gains or losses on disposals to non-controlling interests are also recorded in equity.

When the group ceases to have control any retained interest in the entity is remeasured to its fair value at the date when control is lost, with the change in carrying amount recognised in profit or

IFRS 16 ‘Leases’The IASB issued IFRS 16 in January 2016. IFRS 16 sets out the principles for the recognition, measurement, presentation and disclosure of leases for both parties to a contract, i.e. the customer (‘lessee’) and the supplier (‘lessor’). IFRS 16 eliminates the classification of leases as either operating leases or finance leases for a lessee. Instead all leases are treated in a similar way to finance leases applying IAS 17. Leases are ‘capitalised’ by recognising the present value of the lease payments and showing them either as lease assets (right-of-use assets) or together with property, plant and equipment. If lease payments are made over time, a company also recognises a financial liability representing its obligation to make future lease payments.

At this stage, the group is not able to estimate the impact of the new rules on the group’s financial statements. The group will make more detailed assessments of the impact over the next years.

IFRS 16 is mandatory for financial years commencing on or after January 1, 2019. Expected date of adoption by the group is January 1, 2019.


loss. The fair value is the initial carrying amount for the purposes of subsequently accounting for the retained interest as an associate, joint venture or financial asset. In addition, any amounts previously recognised in other comprehensive income in respect of that entity are accounted for as if the group had directly disposed of the related assets or liabilities. This may mean that amounts previously recognised in other comprehensive income are reclassified to profit or loss.

Inter-company transactions, balances and unrealised gains on transactions between group companies are eliminated. Unrealised losses are also eliminated. Accounting policies of subsidiaries have been changed where necessary to ensure consistency with the policies adopted by the group.

2.3 Foreign currency translation

2.3.1 Functional and presentation currency

Items included in the financial statements of each of the group’s entities are measured using the currency of the primary economic environment in which the entity operates (‘the functional currency’). The consolidated financial statements are presented in thousands of euro (kEUR), which is the group’s presentation currency.

2.3.2 Transactions and balances

Foreign currency transactions are translated into the functional currency using the exchange rates prevailing at the dates of the transactions or valuation where items are remeasured. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation at year-end exchange rates of monetary assets and liabilities denominated in foreign currencies are recognised in the income statement, except when deferred in other comprehensive income as qualifying cash flow hedges and qualifying net investment hedges.

Foreign exchange gains and losses that relate to borrowings and cash and cash equivalents are presented in the income statement under ‘other financial income’ or ‘other financial costs’. All other foreign exchange gains and losses are presented in the income statement under ‘other income’/ ‘other expenses’.

Changes in the fair value of monetary securities denominated in foreign currency classified as available-for-sale are determined on the basis of translation differences resulting from changes in the amortised cost of the security and other changes in the carrying amount of the security. Translation differences relating to changes in amortised cost are recognised in profit or loss, and other changes in carrying amount are recognised in other comprehensive income.

Translation differences in non-monetary financial assets and liabilities such as equities held at fair value through profit or loss are recognised in profit or loss as part of the fair value gain or loss. Translation differences in non-monetary financial assets such as equities classified as available-for-sale are included in other comprehensive income.

2.3.3 Group companies

The results and financial position of all the group entities (none of which has the currency of a hyper-inflationary economy) that have a functional currency different from the presentation currency are translated into the presentation currency as follows:


assets and liabilities for each balance sheet presented are translated at the closing rate at the date of that balance sheet;

income and expenses for each income statement are translated at average exchange rates (unless this average is not a reasonable approximation of the cumulative effect of the rates prevailing on the transaction dates, in which case income and expenses are translated at the rate on the dates of the transactions); and

all resulting exchange differences are recognised in other comprehensive income.

On consolidation, exchange differences arising from the translation of the net investment in foreign operations, and of borrowings and other currency instruments designated as hedges of such investments, are posted to other comprehensive income. When a foreign operation is partially disposed of or sold, exchange rate differences that were recorded in equity are recognised in the income statement as part of the gain or loss on sale.

Goodwill and fair value adjustments arising from the acquisition of a foreign entity are treated as assets and liabilities of the foreign entity and translated at the closing rate.

2.4 Property, plant and equipment

Land and buildings comprise mainly factories and offices. Property, plant and equipment is stated at historical cost less depreciation. Historical cost includes expenditure that is directly attributable to the acquisition of these items.

Subsequent costs are included in the asset’s carrying amount or recognised as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the group and the cost of the item can be measured reliably. The carrying amount of a replaced part is derecognised. All other repairs and maintenance are charged to the income statement during the financial period in which they are incurred.

Borrowing costs are only capitalised when they are directly attributable to the acquisition or production of a qualifying asset as part of the asset, all other borrowing costs are recognised as an expense in the period in which they occur.

Land is not depreciated. Depreciation on other assets is calculated using the straight-line method to allocate their cost to their residual value over their estimated useful lives, as follows:

Buildings 25-33 yearsMachinery 5-15 yearsForklifts 5 yearsVehicles 3-5 yearsFurniture, fittings and equipment 3-10 years

The residual values and useful lives of assets are reviewed, and adjusted if appropriate, at the end of each reporting period. An asset’s carrying amount is written down immediately to its recoverable amount if the carrying amount is greater than the estimated recoverable amount. Gains and losses on disposals are determined by comparing the proceeds with the carrying amount and are recognised under ‘other income’ or ‘other expenses’ in the income statement.


2.5 Intangible assets

2.5.1 Trademarks

Acquired trademark rights are capitalised on the basis of the costs incurred to acquire and bring to use those rights. These costs are amortised over their estimated useful lives of ten years, using the straight-line method.

2.5.2 Research and development cost

No intangible asset is recognised in the research phase. The expenditure is recognised as an expense when it is incurred. An intangible asset arising from development is only recognised if the company can demonstrate all of the following: the technical feasibility of completing the intangible asset so that it will be available for use or

sale; its intention to complete the intangible asset and use or sell it; its ability to use or sell the intangible asset; how the intangible asset will generate probable future economic benefits; the availability of adequate technical, financial and other resources to complete the development

and to use or sell the intangible asset; the ability to reliably measure the expenditure attributable to the intangible asset during its

development.

Directly attributable costs that are capitalised as part of the projects include employee costs, material costs, external costs and an appropriate portion of relevant overheads.

Development costs recognised are amortised on a straight-line basis over the project period related to the development costs, usually not exceeding six years.

2.5.3 Software licences

Acquired computer software licences are capitalised on the basis of the costs incurred to acquire and bring to use the specific software. These costs are amortised over their estimated useful lives of three to five years, using the straight-line method.

2.5.4 Contractual customer relationships

Contractual customer relationships acquired in a business combination are recognised at fair value at the acquisition date. The contractual customer relations have a finite useful life of 15 years and are carried at cost less accumulated amortisation. Amortisation is calculated using the straight-line method over the expected life of the customer relationship.

2.5.5 Patents

Self-developed patents whose fair value can be measured reliably are capitalised based either on an expert valuation or on the expected turnover which will be generated with the patent. Amortisation is calculated using the straight-line method to allocate the cost of patents over their estimated useful life. The useful life is based on the project time period for which the patents were developed usually not exceeding six years.


2.5.6 Borrowing costs for intangible assets

Borrowing costs for intangible assets are only capitalised when they are directly attributable to the acquisition or development of a qualifying asset as part of the asset, all other borrowing costs are recognised as an expense in the period in which they occur.

2.6 Impairment of non-financial assets

Assets that have an indefinite useful life – for example, goodwill or intangible assets not ready for use – are not subject to amortisation and are tested annually for impairment. Assets that are subject to amortisation are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. An impairment loss is recognised for the amount by which the asset’s carrying amount exceeds its recoverable amount. The recoverable amount is the higher of an asset’s fair value less costs to sell and value in use. For the purpose of assessing impairment, assets are grouped at the lowest levels for which there are separately identifiable cash flows (cash-generating units). Non-financial assets other than goodwill that suffered an impairment are reviewed for possible reversal of the impairment at each reporting date.

2.7 Financial assets

2.7.1 Classification

The group classifies its financial assets in the following categories: at fair value through profit or loss, loans and receivables, and available for sale. The classification depends on the purpose for which the financial assets were acquired. Management determines the classification of its financial assets at initial recognition.

Financial assets at fair value through profit or loss

Financial assets at fair value through profit or loss are financial assets held for trading. A financial asset is classified in this category if acquired principally for the purpose of selling in the short term. Derivatives are also categorised as held for trading unless they are designated as hedges. Assets in this category are classified as current assets if expected to be settled within 12 months; otherwise, they are classified as non-current.

Loans and receivables

Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. They are included in current assets, except for maturities greater than 12 months after the end of the reporting period. These are classified as non-current assets. The group’s loans and receivables comprise ‘trade receivables’, ‘other receivables’ and ‘cash and cash equivalents’ in the balance sheet.


Available-for-sale financial assets

Available-for-sale financial assets are non-derivatives that are either designated in this category or not classified in any of the other categories. They are included in non-current assets unless the investment matures or management intends to dispose of it within 12 months after the end of the reporting period.

2.7.2 Recognition and measurement

Regular purchases and sales of financial assets are recognised on the trade date – the date on which the group commits to purchase or sell the asset. Investments are initially recognised at fair value plus transaction costs for all financial assets not carried at fair value through profit or loss. Financial assets are derecognised when the rights to receive cash flows from the investments have expired or have been transferred and the group has substantially transferred all risks and rewards of ownership. Available-for-sale financial assets and financial assets at fair value through profit or loss are subsequently carried at fair value. Loans and receivables are subsequently carried at amortised cost using the effective interest method. Financial assets carried at fair value through profit or loss are initially recognised at fair value, any transaction costs are expensed in the income statement.

When securities classified as available-for-sale are sold or impaired, the accumulated fair value adjustments recognised in equity are included in the income statement as ‘gains and losses from investment securities’. Interest on available-for-sale securities calculated using the effective interest method is recognised in the income statement as part of interest income. Dividends on available-for-sale equity instruments are recognised in the income statement as part of other financial result when the group’s right to receive payments is established. Changes in fair value are recognised as gains and losses in comprehensive income.

2.7.3 Offsetting financial instruments

Financial assets and liabilities are offset and the net amount reported in the balance sheet when there is a legally enforceable right to offset the recognised amounts and there is an intention to settle on a net basis or realise the asset and settle the liability simultaneously. The legally enforceable right must not be contingent on future events and must be enforceable in the normal course of business and in the event of default, insolvency or bankruptcy of the company or the counterparty.

The group did not offset any amounts in 2015 and 2014.

2.8 Impairment of financial assets

2.8.1 Assets carried at amortised cost

The group assesses at the end of each reporting period whether there is objective evidence that a financial asset or group of financial assets is impaired. A financial asset or a group of financial assets is impaired and impairment losses are incurred only if there is objective evidence of impairment as a result of one or more events that occurred after the initial recognition of the asset (a ‘loss event’) and that loss event (or events) has an impact on the estimated future cash flows of the financial asset or group of financial assets that can be reliably estimated.


The criteria that the group uses to determine that there is objective evidence of an impairment loss include: significant financial difficulty of the issuer or obligor; a breach of contract, such as default or delinquency in interest or principal payments; the group, for economic or legal reasons relating to the borrower’s financial difficulty, granting

to the borrower a concession that the lender would not otherwise consider; the probability that the borrower will enter bankruptcy or other financial reorganisation; the disappearance of an active market for that financial asset because of financial difficulties; or observable data indicating that there is a measurable decrease in the estimated future cash

flows from a portfolio of financial assets since the initial recognition of those assets, although the decrease cannot yet be identified with the individual financial assets in the portfolio, including adverse changes in the payment status of borrowers in the portfolio; and

national or local economic conditions that correlate with defaults on the assets in the portfolio.

For the loans and receivables category, the amount of the loss is measured as the difference between the asset’s carrying amount and the present value of estimated future cash flows (excluding future credit losses that have not been incurred) discounted at the financial asset’s original effective interest rate. The carrying amount of the asset is reduced and the amount of the loss is recognised in the income statement. If a loan or investment held to maturity has a variable interest rate, the discount rate for measuring any impairment loss is the current effective interest rate determined under the contract.

If, in a subsequent period, the amount of the impairment loss decreases and the decrease can be related objectively to an event occurring after the impairment was recognised (such as an improvement in the debtor’s credit rating), the reversal of the previously recognised impairment loss is recognised in the income statement.

2.8.2 Assets classified as available for sale

The group assesses at the end of each reporting period whether there is objective evidence that a financial asset or a group of financial assets is impaired. For debt securities, the group uses the criteria referred to under ‘assets carried at amortised cost’ above. In the case of equity investments classified as available for sale, a significant or prolonged decline in the fair value of the security below its cost is also evidence that the assets are impaired. If any such evidence exists for available-for-sale financial assets, the cumulative loss – measured as the difference between the acquisition cost and the current fair value, less any impairment loss on that financial asset previously recognised in profit or loss – is removed from equity and recognised in profit or loss. Impairment losses recognised in the consolidated income statement on equity instruments are not reversed through the consolidated income statement. If, in a subsequent period, the fair value of a debt instrument classified as available for sale increases and the increase can be objectively related to an event occurring after the impairment loss was recognised in profit or loss, the impairment loss is reversed through the consolidated income statement.


2.9 Derivative financial instruments

The group does not use hedge accounting pursuant to IAS 39, therefore all derivative financial instruments are classified at fair value through profit and loss. Changes in fair value are recognised as gains and losses in the income statement. Derivatives are initially recognised at fair value on the date a derivative contract is entered into and are subsequently remeasured at their fair value.

2.10 Inventories

Inventories are stated at the lower of cost and net realisable value. Cost is determined using the first-in, first-out (FIFO) method. The cost of finished goods and work in progress comprises direct material costs, direct production costs and production overheads (based on normal operating capacity). Net realisable value is the estimated selling price in the ordinary course of business, less applicable variable selling expenses.

2.11 Trade receivables

Trade receivables are amounts due from customers for merchandise and products sold or services performed in the ordinary course of business. If collection is expected in one year or less, they are classified as current assets. If not, they are presented as non-current assets.

Trade receivables are recognised initially at fair value and subsequently measured at amortised cost using the effective interest method, less provision for impairment.

2.12 Cash and cash equivalents

In the consolidated statement of cash flows, cash and cash equivalents includes cash in hand and deposits held at call with banks.

2.13 Registered capital

Registered capital is classified as equity.

2.14 Trade payables

Trade payables are obligations to pay for goods or services that have been acquired in the ordinary course of business from suppliers. Trade accounts payable are classified as current liabilities if payment is due within one year or less. If not, they are presented as non-current liabilities.

Trade payables are recognised initially at fair value and subsequently measured at amortised cost using the effective interest method.


2.15 Borrowings

Borrowings are recognised initially at fair value, net of transaction costs incurred. Borrowings are subsequently carried at amortised cost; any difference between the proceeds (net of transaction costs) and the redemption value is recognised in the income statement over the period of the financial liabilities using the effective interest method. Fees paid on the establishment of loan facilities are recognised as transaction costs of the loan.

Borrowings are removed from the balance sheet when the obligation specified in the contract is discharged, cancelled or expired. The difference between the carrying amount of a financial liability that has been extinguished or transferred to another party and the consideration paid, including any non-cash assets transferred or liabilities assumed, is recognised in profit or loss as other income or finance costs.

Borrowings are classified as current liabilities unless the group has an unconditional right to defer settlement of the liability for at least 12 months after the reporting period.

2.16 Current and deferred income tax

The tax expense for the period comprises current and deferred tax. Tax is recognised in the income statement, except to the extent that it relates to items recognised in other comprehensive income or directly in equity. In this case, the tax is also recognised in other comprehensive income or directly in equity, respectively.

The current income tax charge is calculated on the basis of the tax laws enacted or substantively enacted at the balance sheet date in the countries where the company and its subsidiaries operate and generate taxable income.

Deferred income tax is recognised, using the liability method, on temporary differences arising between the tax basis of assets and liabilities and their carrying amounts in the consolidated financial statements. Deferred income tax is determined using tax rates (and laws) that have been enacted or substantively enacted at the balance sheet date and are expected to apply when the related deferred income tax asset is realised or the deferred income tax liability is settled.

Deferred income tax assets are recognised only to the extent that it is probable that future taxable profit will be available against which the temporary differences can be utilised.

Deferred income tax is applied to temporary differences arising on investments in subsidiaries, except for deferred income tax liability where the timing of the reversal of the temporary difference is controlled by the group and it is probable that the temporary difference will not reverse in the foreseeable future.

Deferred income tax assets and liabilities are offset when there is a legally enforceable right to offset current tax assets against current tax liabilities and when the deferred income taxes assets and liabilities relate to income taxes levied by the same taxation authority on either the same taxable entity or different taxable entities where there is an intention to settle the balances on a net basis.


2.17 Employee benefits

2.17.1 Severance payments

Some group companies pay a severance donation in case of retirement after an uninterrupted period of service of five years to their employees. These benefits are classified as a defined benefit obligation and accounted for accordingly using the projected unit credit method. Actuarial gains and losses are recognised in other comprehensive income in the period incurred. Legal regulations in Austria require employers to make regular contributions equal to 1.53% of their monthly salary to a statutory termination benefit scheme for all employees who joined an Austrian company during or after 2003. The company has no further obligations. Claims by employees to severance payments are filed with the statutory severance payment scheme, while the regular contributions are treated similar to those for defined contribution plans and are included in ‘employee benefit expenses’. Interest costs are included in ‘interest costs’.

2.17.2 Anniversary payments

Some group companies pay an anniversary bonus to their employees after an uninterrupted period of service. These benefits are classified as a defined benefit obligation and accounted for accordingly using the projected unit credit method. Actuarial gains and losses are recognised in profit or loss in the period incurred. Interest costs are included in ‘interest costs’.

2.17.3 Bonus payments

The group recognises a liability and an expense for bonuses based on the expected bonus payments for the relevant year. The group recognises a provision where contractually obliged or where there is a past practice that has created a constructive obligation.

2.18 Provisions

Provisions for environmental restoration, legal claims, onerous contracts, etc. are recognised when:

the group has a present legal or constructive obligation as a result of past events; it is probable that an outflow of resources will be required to settle the obligation; and the amount has been reliably estimated.

Provisions are not recognised for future operating losses. Provisions are measured at the present value of the expenditures expected to be required to settle the obligation using a pre-tax rate that reflects current market assessments of the time value of money and the risks specific to the obligation. The increase in the provision due to the passage of time is recognised as an interest expense.

2.19 Government grants

Government grants relating to capital expenditure projects are treated as deferred income and released to the income statement over the expected useful lives of the assets for which the government grants are provided.


2.20 Revenue recognition

Revenue comprises the fair value of the consideration received or receivable for the sale of goods and services in the ordinary course of the group’s activities. Revenue is shown net of value-added tax, returns, rebates and discounts and after eliminating sales within the group. A sale is recognised when the significant risks and rewards of ownership have passed to the buyer. This is when title and insurance risk have passed to the customer and the goods have been delivered to a contractually agreed location.

Interest income is recognised using the effective interest method. When a loan and receivable is impaired, the group reduces the carrying amount to its recoverable amount, which is the estimated future cash flow discounted at the original effective interest rate of the instrument, and continues unwinding the discount as interest income. Interest income on impaired loans and receivables is recognised using the original effective interest rate.

2.21 Non-recurring items

Non-recurring items are those material items of financial performance that the group believes should be separately disclosed in the income statement to assist in the understanding of the underlying financial performance achieved by the group and its businesses. Such items are material by nature or affect the financial year’s results and require separate disclosure in accordance with IAS 1. Non-recurring items that relate to the operating performance of the group comprise restructuring costs.

2.22 Leases

Leases in which a significant portion of the risks and rewards of ownership are retained by the lessor are classified as operating leases. Payments made under operating leases (net of any incentives received from the lessor) are charged to the income statement on a straight-line basis over the period of the lease. The group leases certain equipment. Leases of equipment where the group bears substantially all the risks and rewards of ownership are classified as finance leases. Finance leases are capitalised at the lease’s commencement at the lower of the fair value of the leased equipment and the present value of the minimum lease payments. Each lease payment is divided between the liability and finance charges. The corresponding rental obligations, net of finance charges, are included in other non-current liabilities. The interest element of the finance cost is charged to the income statement over the lease period so as to produce a constant periodic rate of interest on the remaining balance of the liability for each period. The equipment acquired under finance leases is depreciated over the shorter of the useful life of the asset and the lease term.


3 Financial risk management

3.1 Financial risk factors

The group’s activities expose it to a variety of financial risks: market risk (including foreign exchange currency risk, fair value interest rate risk, cash flow interest rate risk and price risk), credit risk and liquidity risk. The group’s overall risk management programme focuses on the unpredictability of financial markets and seeks to minimise potential adverse effects on the group’s financial performance. If required, the group uses derivative financial instruments to hedge certain risk exposures. Risk management is carried out centrally by the group’s management.

The following sensitivity analyses are based on a change in an assumption while holding all other assumptions constant. In practice, this is unlikely to occur, and changes in some of the assumptions may be correlated. Nevertheless the group did not detect any material risk concentrations.

3.1.1 Market risk

Foreign exchange risk

The group operates internationally and is exposed to foreign exchange risk arising primarily from the Czech crown. Foreign exchange risk arises from future commercial transactions and bank loans in other currencies than the functional currency.

Management has set up a policy to require group companies to manage their foreign exchange risk against their functional currency with internal hedging as far as possible. Furthermore, developments in foreign currencies are passed on to customers with a certain time delay. Group management will coordinate any additional hedging that may be necessary.

The following exchange rates were used:

2015 2014

Average Closing Average ClosingCZK 27.2850 27.0230 27.5358 27.7350

Total foreign exchange gains in 2015 amounted to kEUR 425 (2014: kEUR -314 loss). There were no hedging instruments in place in 2015 and 2014, because loss is not cash effective and management decided not to use hedging instruments that cause high cash outflows upfront.

At December 31, 2015, if the exchange rate of the Czech crown had increased additionally by 5.0% with all other variables held constant, result before tax would have been kEUR -916 lower (2014: kEUR -907). There are no material risks in other currencies.


Cash flow and fair value interest rate risk

The group’s interest rate risk arises from non-current financial liabilities. Financial liabilities issued at variable rates expose the group to cash flow interest rate risk which is partially offset by cash held at variable rates. At the end of 2015 as well as 2014, almost all of the group’s financial liabilities were denominated in euros.

At December 31, 2015, if the EURIBOR had increased additionally by 0.5% points with all other variables held constant, result before tax would have been kEUR -111 lower (2014: kEUR -80). There are no material risks in any other underlying.

The exposure of the group’s financial liabilities to interest rate changes at the end of the year are as follows:

3.1.2 Credit risk

The group’s credit risk is mainly confined to the risk of customers defaulting on sales invoices raised. Any credit risk arising from cash deposits and derivative financial instruments is deemed to be insignificant on the basis that nearly all relevant counterparties are investment grade entities recognised by international credit-rating agencies. Each local entity is responsible for managing and analysing the credit risk for each of their new customers before standard payment and delivery terms and conditions are offered. Main customers of the group are the big automotive producers with regard to which credit risk is considered low. The maximum risk to the group is the carrying amount.

3.1.3 Commodity price risk

The group is exposed to commodity price risks as main raw materials can only be purchased on the spot markets and no commodity hedges are available. Price fluctuations can partly be passed on to customers, depending on the contractual relationship.

3.1.4 Liquidity risk

Liquidity risk is the risk that the group could experience difficulties in meeting its commitments to creditors as financial liabilities fall due for payment. The group manages its liquidity risk by using reasonable and retrospectively-assessed assumptions to forecast future cash-generating capabilities and working capital requirements of the businesses it operates and by maintaining sufficient reserves, committed borrowing facilities and other credit lines as appropriate.

Forecast liquidity represents the group’s expected cash inflows, principally generated from sales made to customers, less the group’s contractually-determined cash outflows, principally related to supplier payments and the repayment of borrowings, plus the payment of any interest accruing thereon.

in kEUR 31/12/2015 31/12/2014

Variable interest rate 22,558 15,150Fixed interest rate 10,690 10,876

33,248 26,026


The matching of these cash inflows and outflows rests on the expected ageing profiles of the underlying assets and liabilities. Current financial assets and financial liabilities are represented primarily by the group’s trade receivables and trade payables, respectively. The matching of the cash flows that result from trade receivables and trade payables takes place typically over a period of three to four months from recognition in the balance sheet and is managed to ensure the ongoing operating liquidity of the group. Financing cash outflows may be longer-term in nature. The group does not hold non-current financial assets to match against these commitments, but has invested significantly in non-current non-financial assets which generate the sustainable future cash inflows, net of future capital expenditure requirements, needed to service and repay the group’s financial liabilities.

The table below analyses the group’s non-derivative financial liabilities and net-settled derivative financial liabilities, dividing them into relevant maturity groups based on the remaining period at the balance sheet date to the contractual maturity date. Derivative financial liabilities are included in the analysis if their contractual maturities are essential for an understanding of the timing of the cash flows.

The amounts disclosed in the table are the contractual undiscounted cash flows.

in kEUR 0-3 months

3-12 months

1-2 years

2-5 years

> 5 years

as of December 31, 2015Financial liabilities (excl. bank overdrafts) 2,606 7,654 2,828 6,800 638Bank overdrafts 2,571 1,247 0 0 0Recourse factoring 2,669 1,681 0 0 0Finance lease 236 836 1,173 2,429 120Trade payables 22,710 3,349 0 0 0Other payables 7,110 1,054 422 1,211 0Other financing 2 82 838 1,388 0

in kEUR 0-3 months

3-12 months

1-2 years

2-5 years

> 5 years

as of December 31, 2014Financial liabilities (excl. bank overdrafts) 2,737 8,995 2,900 7,239 4,242Bank overdrafts 0 0 0 0 0Recourse factoring 1,056 36 0 0 0Finance lease 111 333 444 904 0Trade payables 20,764 124 0 0 0Other payables 4,797 1,025 422 1,211 0Other financing 2 7 9 4 0


3.2 Capital risk management

The group’s objectives when managing capital are to safeguard the group’s ability to continue as a going concern in order to provide returns for shareholders and benefits for other stakeholders and to maintain an optimum capital structure to reduce the cost of capital.

Consistent with others in the industry, the group monitors capital on the basis of net debt/EBITDA before non-recurring items as well as the equity ratio. Net debt is calculated as total financial liabilities (including current and non-current financial liabilities as shown in the balance sheet) less cash and cash equivalents. Equity is calculated as equity as shown in the balance sheet.

in kEUR 31/12/2015 31/12/2014

Financial liabilities 33,248 26,026- Cash and cash equivalents -2,193 -1,881Net debt 31,055 24,145EBITDA before non recurring items 9,990 10,528Net debt/EBITDA before non recurring items 3.11 2.29

Net debt/EBITDA increased in 2015 mainly because of the increasing financial liabilities relating to investments for upcoming projects, while these new projects will have a positive impact on EBITDA the next years.

Although total equity increased in 2015, the equity ratio is lower than in prior year because of higher increases in total assets and total liabilities caused by high investments in property, plants and equipment, intangible assets as well as tools. These investments refer to upcoming projects starting in 2016 and later.

Based on contracts with banks, the group also puts focus on the tangible equity ratio. The tangible equity ratio is defined in the same way as the equity ratio but includes adjustments for intangible assets excluding capitalised development costs, deferred tax assets and receivables and payables from or to related parties.

in kEUR 31/12/2015 31/12/2014

Total equity 42,144 39,840Total assets 116,177 100,316Equity ratio 36.3% 39.7%


in kEUR 31/12/2015 31/12/2014

Total equity 42,144 39,840- Intangible assets excluding capitalised development costs -8,466 -9,534- Deferred tax assets -986 -707- Receivables from related parties -12,096 -12,217+ Payables to related parties 1,704 2,023Tangible equity 22,300 19,405

Total assets 116,177 100,316- Intangible assets excluding capitalised development costs -8,466 -9,534- Deferred tax assets -986 -707- Receivables from related parties -12,096 -12,217+ Payables to related parties 1,704 2,023Tangible assets 96,333 79,881

Tangible equity ratio 23.1% 24.3%

The calculation of tangible equity ratio defers from prior year reporting because the group agreed with the bank not to exclude capitalised development costs in the calculation.


3.3 Fair value estimation

The table below analyses financial instruments carried at fair value, by valuation method. The different levels have been defined as follows: Quoted prices (unadjusted) in active markets for identical assets or liabilities (level 1); Inputs other than quoted prices included under level 1 that are observable for the asset or

liability, either directly (that is, as prices) or indirectly (i.e., derived from prices) (level 2); Inputs for the asset or liability that are not based on observable market data (i.e., unobservable

inputs) (level 3).

The following table presents the group’s assets and liabilities that were measured at fair value at December 31, 2015:

The following table presents the group’s assets and liabilities that were measured at fair value at December 31, 2014:

in kEUR Level 2 Level 3 Total

AssetsFinancial assets at fair value through P&L

Trading derivatives 0 0 0Available-for-sale financial assets

Equity securities 0 60 60Total assets 0 60 60

LiabilitiesFinancial liabilities at fair value through P&L

Trading derivatives 0 0 0Total liabilities 0 0 0

in kEUR Level 2 Level 3 Total

AssetsAvailable-for-sale financial assets

Equity securities 0 60 60Total assets 0 60 60

LiabilitiesFinancial liabilities at fair value through P&L

Trading derivatives 58 0 58Total liabilities 58 0 58

No transfers between levels took place in 2015 and 2014.


The fair value of financial instruments that are not traded in an active market (for example, over-the-counter derivatives) is determined by using valuation techniques. These valuation techniques maximise the use of observable market data where it is available and rely as little as possible on entity-specific estimates. If all significant inputs required to measure an instrument at fair value are observable, the instrument is included in level 2.

If one or more of the significant inputs is not based on observable market data, the instrument is included in level 3.

See note 19 for total gains or losses from fair value valuation recognised in consolidated income statement. No gains or losses from fair value valuation is recognised in other comprehensive income.

4 Critical accounting estimates and judgements

Estimates and judgements are continually evaluated and are based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances.

The group makes estimates and assumptions concerning the future. The resulting accounting estimates will, by definition, seldom equal the related actual results. The estimates and assumptions that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year are addressed below.

4.1 Estimated residual values and useful economic lives

The carrying amounts of certain property, plant and equipment are sensitive to assumptions relating to projected residual values and useful economic lives, which determine the depreciable amount and the rate at which capital expenditure is depreciated. The group reassesses these assumptions at least annually or whenever there are indications that they require reassessment reviews. Estimated residual values are based on available secondary market prices as at the reporting date, unless these are estimated to be zero. Useful economic lives are based on the expected usage, wear and tear, technical or commercial obsolescence and legal limits on the usage of capital assets.

4.2 Employee benefits

At December 31, 2015, the employee benefits obligation (severance and anniversary payments) amounted to kEUR 407 (2014: kEUR 392) The group’s benefit scheme liabilities are sensitive to changes in various underlying actuarial assumptions set by management. These assumptions include the discount and inflation rates to apply to scheme liabilities, the mortality rates to apply to scheme members and the rates of increase of future salaries. Further details regarding the assumptions are set out in note 29.


7 Employee benefit expenses

in kEUR 2015 2014

Wages and salaries -20,681 -19,648Social security costs -6,069 -5,861Severance payment costs (note 29) -4 0Anniversary payment costs (note 29) -9 29Other employment costs -635 -524Total employee costs -27,398 -26,004

Number of employees (FTEs) as per December 31 1,328 1,104Average number of employees (FTEs) 1,313 1,214

5 Revenue

Other revenue mainly refers to sales of raw material to subcontractors.

in kEUR 2015 2014

Sale of parts 109,628 109,080Sale of tools 9,818 6,942Other revenue 6,496 8,429Total 125,942 124,451

6 Raw materials and consumables used

Raw materials and consumables used include kEUR -38 (2014: kEUR -221) for the write-down of inventories. It also includes kEUR 49 (2014: kEUR 110) for the reversal of write-down of inventories.

4.3 Deferred taxation

At December 31, 2015, the group recognised deferred tax assets on tax loss carry-forwards in an amount of kEUR 785 (2014: kEUR 818). If future taxable profits are 10% lower than the assumptions made at the balance sheet date, this would have a negative impact on the reported deferred tax assets on tax loss carry-forwards in an amount of kEUR 0 (2014: kEUR 0).


9 Other expenses

in kEUR 2015 2014

Temporary workers -4,215 -1,794Consultancy costs -2,787 -2,050Rents and similar costs -1,320 -1,056Travel expenses -1,288 -922Energy non-production -370 -340IT services -341 -335Telephone and internet costs -326 -264Insurance costs -281 -298Marketing -230 -177Repair and maintenance -185 -210Bank charges -95 -212Bad debts (incl. reversals) -41 -345Others -1,230 -1,527Total other expenses -12,709 -9,530

Consultancy costs include kEUR 1,079 (2014: kEUR 746) for capitalised development costs.

Bad debts include kEUR -60 (2014: kEUR -483) for the provision and write-off of bad debts and kEUR 19 (2014: kEUR 138) for the reversal of the provision for bad debts.

8 Other income

Other income mainly refers to cost compensations from customers and suppliers and recharging of energy costs to lessees.

in kEUR 2015 2014

Government grants 197 278Gains from disposal of assets 246 42Rents 97 93Other income 835 1,638Total other income 1,375 2,051


10 Non-recurring items

11 Depreciation and amortisation

in kEUR 2015 2014

Depreciation -3,365 -3,127Amortisation -2,163 -2,190

Impairment of property, plant, equipment and intangible assets -207 -34

Reversal of impairment 34 128Total -5,701 -5,223

in kEUR 2015 2014

Non-recurring costs -393 -753Non-recurring gains 136 0Total -257 -753

Non-recurring costs in 2015 mainly refer to the ongoing restructuring programme in Amurrio, Spain, and to non-operational legal claims. In 2014 non-recurring items mainly refer to the long-planned closing of the plant in Liberec, Czech Republic, and the restructuring programme in Amurrio, Spain.

Non-recurring gains refer to sale of land & building of the former plant in Liberec, Czech Republic.


The net foreign exchange result on financing activities was mainly caused by changes in the EUR/CZK exchange rate.

The 2014 non-recurring financial result refers to an agreement between Megatech Group, BAWAG P.S.K Bank für Arbeit und Wirtschaft und Österreichische Postsparkasse Aktiengesellschaft (BAWAG PSK AG)

13 Other financial result

in kEUR 2015 2014

Other financial resultNon-recurring financial result 0 2,281Income from net foreign exchange result on financing activities 315 0Other financial income 315 2,281

Costs from changes in fair value of financial instruments -58 0Costs from net foreign exchange result on financing activities 0 -245Other financial costs -58 -245Other financial result 257 2,036

12 Interest result

in kEUR 2015 2014

Interest resultInterest income from short-term bank deposits 65 22Interest income from related parties 255 306Interest income 320 328

Interest costs for bank borrowings -1,660 -1,532Interest costs for related parties -38 -72Other interest costs -179 -371Interest costs -1,877 -1,975

Interest result -1,557 -1,647


in kEUR 2015 2014

Current taxesCurrent tax on profits for the year -1,205 -1,388Adjustments in respect of prior years -5 -88Total current taxes -1,210 -1,476

Deferred taxes

Origination and reversal of temporary differences 363 906

Attributable to a change in the rate of domestic income tax rate 24 1

Adjustments in respect of prior years 89 62Total deferred taxes 476 969

Total tax charge -734 -507

14 Income tax expense

14.1 Total tax charge

and Česká Spořitelna, a.s. to refinance the loan contract to Megatech Group by BAWAG PSK AG. It includes the impact from the waiver from BAWAG PSK AG and the costs relating to this agreement.

Changes in the fair value of financial instruments were caused by the negative development of interest rate swaps (see note 19).


in kEUR 2015 2014

Profit before tax 2,732 4,941Tax calculated at domestic tax rates applicable to profits in the respective countries -626 -1,413

Tax effects of:- Expenses not deductible for tax purposes -12 -437- Gains not taxable 64 105- Utilisation of previously unrecognised tax losses 472 917

- Tax losses for which no deferred income tax asset was recognised -661 -96

- Re-measurement of deferred taxes – change of tax rate 24 1- Adjustments in respect of prior years 84 -26- Tax credits 0 442- Other -79 0Total tax charge -734 -507

The weighted average applicable tax rate was 22.9% (2014: 28.6%). It is changing from year to year because of fluctuating taxable profits and different tax rates in several countries.

In 2015, no gains or losses from taxes were included in other comprehensive income (2014: kEUR 0).

Tax on the group’s profit before tax differs from the theoretical amount that would arise using the weighted average tax rate applicable to profits of the consolidated entities as follows:


14.2 Deferred income tax

The analysis of deferred tax assets and deferred tax liabilities including offsetting of balances within the same tax jurisdiction is as follows:

in kEUR 31/12/2015 31/12/2014

Deferred tax assets

Deferred tax assets to be recovered after more than 12 months 647 343

Deferred tax assets to be recovered within 12 months 339 364Total deferred tax assets 986 707

Deferred tax liabilities

Deferred tax liabilities to be recovered after more than 12 months -2,699 -3,031

Deferred tax liabilities to be recovered within 12 months -44 71

Total deferred tax liabilities -2,743 -2,960

Net deferred tax -1,757 -2,253

The gross movement on the deferred income tax account is as follows:

in kEUR 2015 2014

Development of deferred income taxAt January 1 -2,253 -3,261Income statement charge 476 969Change in scope of consolidation 0 49Currency rate difference 20 -10At December 31 -1,757 -2,253


The movement in deferred income tax assets and liabilities, without taking into consideration the offsetting of balances within the same tax jurisdiction, is as follows:

in kEUR

Empl

oyee

be

nefit

s

Prov

isio

ns

Tax

loss

es

Oth

ers

Tota

l

December 31, 2013 32 128 990 1,103 2,253

Charged/(credited) to income statement -7 -19 81 737 792

Change in scope of consolidation 0 0 -247 -10 -257Currency difference 0 -1 -6 -13 -20December 31, 2014 25 108 818 1,817 2,768

Charged/(credited) to income statement 76 11 -44 -389 -346

Currency difference 1 3 11 30 45December 31, 2015 102 122 785 1,458 2,467

Deferred tax assets

in kEURFi

xed

asse

ts

Oth

ers

Tota

l

December 31, 2013 -5,393 -121 -5,514

Charged/(credited) to income statement 179 -2 177

Change in scope of consolidation 306 0 306Currency difference 9 1 10December 31, 2014 -4,899 -122 -5,021

Charged/(credited) to income statement 724 98 822

Currency difference -23 -2 -25December 31, 2015 -4,198 -26 -4,224

Deferred tax liabilties

Deferred income tax assets are recognised for tax losses carried forward to the extent that the realisation of the related tax benefit through future taxable profits is probable. No deferred tax assets for tax loss carry-forwards were recognised for entities where it currently does not appear likely that sufficient taxable income will be available against which the taxes loss carry-forwards can be utilised. The group did not recognise deferred income tax assets of kEUR 855 (2014: kEUR 653) in respect of


15 Discontinued operations

Because of the distressed market situation in Brazil, with a drop down of the whole automotive industry by around 40% compared to the prior year, in December 2014 the management of the group decided to sell the Brazilian entity and to exit the Brazilian market at least for the next few years.

As at December 31, 2014 the shares in Megatech Brasil Componentes Automotivos Ltda., Brazil, were sold to Megatech Industries Aktiengesellschaft, Vaduz, Liechtenstein (see note 35.2). As Megatech Group lost control over the Brazilian entity, this entity was deconsolidated.

In accordance with IFRS 5, the impact the deconsolidation of the Brazilian entity has on the consolidated income statement and consolidated statement of cash flows is reclassified and reported as result from discontinued operations.

An analysis of the result of discontinued operations and the result from the deconsolidation of the Brazilian entity is as follows:

in kEUR 2015 2014

Revenue 0 7,409Expenses 0 -9,965Result before tax from discontinued operations 0 -2,556Taxes on income from discontinued operations 0 905Result after tax from discontinued operations 0 -1,651

Disposed assets other than cash and cash equivalents 0 -4,326Disposed cash and cash equivalents 0 -123Disposed liabilities 0 5,266Provision for receivables from disposed entity 0 -950Take-over of costs 0 -200Provision for guarantees provided 0 -260Currency translation difference reclassified from OCI 0 -169Result from deconsolidation 0 -762

Reversal of provision 150 0Other result from deconsolidation 150 0

Total result from discontinued operations 150 -2,413

losses amounting to kEUR 3,534 (2014: kEUR 6,389). Total tax loss carried forward is kEUR 7,035 (2014: kEUR 11,155), of which kEUR 1,042 will expire in the next year (2014: kEUR 870), and kEUR 2,294 (2014: kEUR 4,999) will expire in the next two to five years.


16 Property, plant and equipment

in kEUR 2015 2014

Operating cash flows 0 -712Investing cash flows 0 -954Financing cash flows 0 760

The cash flow from discontinued operations is as follows:

in kEUR

Land

and

bu

ildin

g

Mac

hine

ry

and

ve

hicl

es

Mac

hine

ry

and

vehi

cles

fin

ance

le

ase

Furn

iture

an

d

equi

pmen

t

Tota

l

December 31, 2013 38,546 51,084 950 4,924 95,504Additions 37 1,370 1,807 595 3,809Disposals 0 -248 0 -24 -272

Change in scope of consolidation -2,458 -5,397 0 -482 -8,337

Transfers 931 -947 0 0 -16Currency difference -134 26 -24 11 -121December 31, 2014 36,922 45,888 2,733 5,024 90,567Additions 1,285 1,762 3,724 419 7,190Disposals -1,524 -870 0 -231 -2,625Currency difference 483 238 89 2 812December 31, 2015 37,166 47,018 6,546 5,214 95,944

Historic costs


Accumulated depreciation

in kEUR

Land

and

bu

ildin

g

Mac

hine

ry

and

ve

hicl

es

Mac

hine

ry

and

vehi

cles

fin

ance

le

ase

Furn

iture

an

d

equi

pmen

t

Tota

l

December 31, 2014 28,828 8,641 2,560 1,247 41,276December 31, 2015 28,251 8,679 6,098 976 44,004

Carrying amounts

The recoverable amount of impaired machinery is based on fair value (level 3) less cost to sell.

For additions in machinery and vehicles finance lease, the group paid kEUR 413 (2014: kEUR 433) for down-payments.

The total amount of transfers 2014 (kEUR -16) refers to transfers between fixed assets and intangible assets (see also note 17).

in kEUR

Land

and

bu

ildin

g

Mac

hine

ry

and

ve

hicl

es

Mac

hine

ry

and

vehi

cles

fin

ance

le

ase

Furn

iture

an

d

equi

pmen

t

Tota

l

December 31, 2013 -7,986 -40,099 -53 -3,816 -51,954Depreciation -1,036 -1,623 -121 -347 -3,127Disposals 0 242 0 6 248

Change in scope of consolidation 793 4,312 0 388 5,493

Impairment 0 -34 0 0 -34Reversal of impairment 128 0 0 0 128Currency difference 7 -45 1 -8 -45December 31, 2014 -8,094 -37,247 -173 -3,777 -49,291Depreciation -1,026 -1,550 -268 -521 -3,365Disposals 312 566 0 60 938Reversal of impairment 0 34 0 0 34Currency difference -107 -142 -7 0 -256December 31, 2015 -8,915 -38,339 -448 -4,238 -51,940


17 Intangible assets

in kEUR

Dev

elop

men

t co

sts

Cust

omer

re

latio

nshi

ps

Trad

emar

ks

Oth

er

Tota

l

December 31, 2013 6,705 8,385 0 3,498 18,588Additions 4,186 0 3,540 179 7,905Disposals -92 0 0 6 -86

Change in scope of consolidation 0 0 0 -183 -183

Transfers 0 0 0 16 16Currency difference -9 0 0 -8 -17December 31, 2014 10,790 8,385 3,540 3,508 26,223Additions 4,754 0 0 136 4,890Disposals 0 0 0 -32 -32Currency difference 39 0 0 27 66December 31, 2015 15,583 8,385 3,540 3,639 31,147

Historic costs

in kEUR

Dev

elop

men

t co

sts

Cust

omer

re

latio

nshi

ps

Trad

emar

ks

Oth

er

Tota

lDecember 31, 2013 -1,138 -2,236 0 -2,628 -6,002Amortisation -1,012 -559 -354 -265 -2,190Disposals 0 0 0 -21 -21

Change in scope of consolidation 0 0 0 160 160

Currency difference 0 0 0 4 4December 31, 2014 -2,150 -2,795 -354 -2,750 -8,049Amortisation -981 -559 -354 -269 -2,163Disposals 0 0 0 2 2Impairment -207 0 0 0 -207Currency difference 0 0 0 -19 -19December 31, 2015 -3,338 -3,354 -708 -3,036 -10,436

Accumulated amortisation


in kEUR

Dev

elop

men

t co

sts

Cust

omer

re

latio

nshi

ps

Trad

emar

ks

Oth

er

Tota

l

December 31, 2014 8,640 5,590 3,186 758 18,174December 31, 2015 12,245 5,031 2,832 603 20,711

Carrying amounts

Other intangible assets mainly refer to software and patents.

Impairment of capitalised development costs refers to projects that are not used anymore. These projects have been fully impaired.

Additions to trademarks 2014 refer to a related party transaction with Megatech Industries S.L., Spain. The purchase price is partly offset (kEUR 1,610) with receivables from Megatech Industries S.L., Spain. The rest (kEUR 1,930) will be paid over the next five years (see also note 35.5).

The total amount of transfers 2014 (kEUR 16) refers to transfers between property, plant and equipment and intangible assets (see also note 16).

18 Financial instruments by category

2015 in kEUR

Loan

s an

d re

ceiv

able

s

at F

V

thro

ugh

P&

L

Avai

labl

e-

for-

sale

Tota

l

Financial assets available for sale 0 0 60 60Trade receivables 12,007 0 0 12,007Other receivables 16,956 0 0 16,956Cash and cash equivalents 2,193 0 0 2,193Total 31,156 0 60 31,216

Assets


2014 in kEUR

Loan

s an

d re

ceiv

able

s

at F

V

thro

ugh

P&

L

Avai

labl

e-

for-

sale

Tota

l

Financial assets available for sale 0 0 60 60Trade receivables 10,723 0 0 10,723Other receivables 16,738 0 0 16,738Cash and cash equivalents 1,881 0 0 1,881Total 29,342 0 60 29,402

Assets

2015 in kEUR

at F

V th

-ro

ugh

P&L

at

amor

tised

co

st

Tota

l

Financial liabilities excluding finance lease 0 28,764 28,764Financial lease liabilities 0 4,484 4,484Derivative financial instruments 58 0 58Trade payables 0 26,059 26,059Other payables excluding non-financial liabilities 0 2,557 2,557Total 58 61,864 61,922

Liabilities

2014 in kEUR

at F

V th

-ro

ugh

P&L

at

amor

tised

co

st

Tota

lFinancial liabilities 0 24,357 24,357Financial lease liabilities 0 1,669 1,669Derivative financial instruments 0 0 0

Trade payables 0 20,888 20,888Other payables excluding non-financial liabilities 0 2,591 2,591Total 0 49,505 49,505

Liabilities

19 Derivative financial instruments

The fair value of a derivative is classified as a non-current asset or liability if the remaining maturity of the derivative is more than 12 months; otherwise it is classified as a current asset or liability. Gains and losses resulting from derivative financial instruments are recognised in the income statement.


Impact from write-down of inventories and reversal of write-down of inventories is included in raw materials and consumables used.

No inventories were recorded at net realisable value on an inventory group basis in 2015 and 2014.

The item ‘reversal of write-down of inventories’ mainly refers to inventories written-down in the past that were sold or used in production in the year with higher amount than carrying amount.

in kEUR 31/12/2015 31/12/2014

Interest rate swapsNotional amount 6,357 0Fair value -58 0Total impact in consolidated income statement -58 0

20 Inventories

in kEUR 31/12/2015 31/12/2014

InventoriesRaw materials 3,003 3,161Unfinished goods 613 515Tools and moulds 13,330 4,952Finished goods 2,157 1,964Merchandise 157 165Total inventories 19,260 10,757

in kEUR 2015 2014

Impairment of inventoriesAt January 1 -562 -456Write-down of inventories -38 -221Use of provision for impairment of inventories 148 0Reversal of write-down of inventories 49 110Currency difference -9 5At December 31 -412 -562


in kEUR 31/12/2015 31/12/2014

Trade receivables 3rd party (gross) 13,517 12,205Trade receivables related parties (gross) 91 30Provision for impairment of trade receivables -1,601 -1,512Total 12,007 10,723

21 Trade receivables

The development of the provision for impairment of trade receivables is as follows:

in kEUR 2015 2014

At January 1 -1,512 -1,479Addition -60 -483Usage 5 291Reversal 19 138Change in scope of consolidation 0 16

Transfer to provision for impairment of other receivables -47 0

Currency difference -6 5At December 31 -1,601 -1,512

Provisions for impairment of trade receivables include kEUR 47 (2014: kEUR 0) for receivables from Megatech Brasil Componentes Automotivos Ltda., Brazil. The rest refers to receivables from 3rd parties.

Overdue trade receivables are as follows:

in kEUR

Rece

ivab

les

gros

s

Prov

isio

n fo

r ba

d de

bt

Rece

ivab

les

gros

s

Prov

isio

n fo

r ba

d de

bt

Not overdue 10,681 0 8,503 0Overdue <3m 1,106 -13 2,168 -21Overdue 3-6m 322 -89 62 -13Overdue >6m 1,499 -1,499 1,502 -1,478Total 13,608 -1,601 12,235 -1,512

31/12/2015 31/12/2014


The group has a number of independent customers who have no recent history of default. Taking the group’s customer structure into consideration, the credit risk can be evaluated as low.

The set-up and release of provisions for impaired receivables have been included in ‘other expenses’ in the income statement. Amounts charged to the allowance account are generally written off when there is no expectation to recover the respective receivables.

The carrying amounts of the trade receivables include receivables which are subject to a factoring arrangement. Under these arrangements, several group companies have transferred the relevant receivables to the factor in exchange for cash and are prevented from selling or pledging the receivables. At the end of the year, the receivable balances transferred amounted to kEUR 4,295 (2014: kEUR 1,044). However, the group has retained late payment and credit risk. The group therefore continues to recognise the transferred assets in their entirety in its balance sheet.

The total amount of trade receivables transferred and derecognised is kEUR 5,911 (2014: kEUR 5,590).All trade receivables are current receivables. The fair values are the same as the carrying amounts.

22 Other receivables

in kEUR 31/12/2015 31/12/2014

Non-current receivables related parties (gross) 8,790 11,955Current receivables related parties (gross) 3,262 1,182Other receivables 3rd party (gross) 4,904 4,551Provision for impairment of other receivables 0 -950Total 16,956 16,738

The development of the provision for impairment of other receivables is as follows:

in kEUR 31/12/2015 31/12/2014

At January 1 -950 0Addition 0 -950Usage 903 0

Transfer from provision for impairment of trade receivables 47 0

At December 31 0 -950


Overdue in other receivables are as follows:

in kEUR

Rece

ivab

les

gros

s

Prov

isio

n fo

r ba

d de

bt

Rece

ivab

les

gros

s

Prov

isio

n fo

r ba

d de

bt

Not overdue 16,956 0 17,589 -851Overdue <3m 0 0 47 -47Overdue 3-6m 0 0 0 0Overdue >6m 0 0 52 -52Total 16,956 0 17,688 -950

31/12/2015 31/12/2014

The fair values of receivables from related parties are based on cash flows discounted using a rate based on the borrowing rate of 3.75% (2014: 3.75%). The discount rate equals the refinancing rate of the group with banks. The fair value of non-current receivables from related parties is kEUR 8,345 (2014: kEUR 11,310). The valuation of the fair value is in accordance with the level 2 method (see note 3.3). Current receivable fair values equal the carrying amount.

All non-current receivables from related parties will be repaid within the next five years.

in kEUR 31/12/2015 31/12/2014

Cash in hand and bank accounts 1,943 1,881Cash restricted or pledged 250 0Cash and cash equivalents 2,193 1,881

23 Cash and cash equivalents

in kEUR 31/12/2015 31/12/2014

Cash and cash equivalents 2,193 1,881Free bank overdrafts 2,272 500Cash and free overdrafts 4,465 2,381

The fair values are the same as the carrying amounts.

Cash and free overdrafts are as follows:


24 Equity

24.1 Registered capital

The company increased the registered capital on November 11, 2010 by EUR 7,000,000 through a contribution in kind of 100% of the shares in Megatech Industries Amurrio S.L., Megatech Industries Orense S.L. and Megatech Engineering Center s.r.l. and 99.99% in Megatech Brasil Componentes Automotivos Ltda, granted by Megatech Industries S.L. in exchange for shares in the company. At year-end, the company had registered capital of EUR 7,050,000.

In total, Megatech Industries AG issued 70,500 no-par value shares. The registered capital is fully paid.

24.2 Other reserves

Other reserves resulted from changes in the scope of consolidation in 2010 amounting to kEUR 34,356 and from capital increases in subsidiaries of the group from related parties amounting to kEUR 7,592 (2014: kEUR 7,592).

In 2014 kEUR 7,048 was transferred to retained earnings to cover losses incurred in the past.

25 Financial liabilities

in kEUR 31/12/2015 31/12/2014

Non-currentBank loans 9,070 12,393Finance lease liabilities 3,534 1,277Other financing liabilities 2,053 13Total non-current 14,657 13,683

CurrentBank loans 9,553 10,899Bank overdrafts 3,778 0Recourse factoring 4,295 1,044Finance lease liabilities 950 392Other financing liabilities 15 8Total current 18,591 12,343

Total financial liabilities 33,248 26,026

Details of the exposure to risks arising from current and non-current financial liabilities are set out in notes 3.1.1 and 3.1.4.


25.1 Bank borrowings

25.1.1 Refinancing of BAWAG PSK AG loans 2014

In July 2014, the management of Megatech Group signed an agreement with Česká Spořitelna, a.s. for the refinancing of the total BAWAG PSK AG loan volume. One part of this refinancing agreement was that Megatech Group repays the instalment outstanding in December 2013 to BAWAG PSK AG. BAWAG PSK AG waived part of the outstanding loans in an amount of kEUR 2,627. Together with an additional one-time payment by Megatech entities to BAWAG PSK AG in an amount of kEUR 800 Megatech Group has a significant deleveraging in the Czech entities from kEUR 24,200 to kEUR 19,200. Megatech Industries AG acts as guarantor of these loans.

Together with the new refinancing terms and conditions the financial position of Megatech Group in the Czech Republic – and, therefore, also in the group – is significantly strengthened by substantially lower yearly instalments and interest payments for the loans which were refinanced.

25.1.2 Pledges and securities

The group has pledged certain assets as collateral against certain borrowings. The carrying amounts of these assets and the secured liabilities are as follows:

Bank loans from Megatech Industries Jablonec s.r.o., Czech Republic and Megatech Industries Hlinsko s.r.o, Czech Republic – in total kEUR 13,136 (2014: kEUR 14.219) – are secured by land and building, machinery, receivables and inventories of both Czech companies. In addition, Megatech Industries AG also pledged the shares in both Czech entities and also in Megatech Industries Intellectual Property S.L.U., Spain.

Bank loans in an amount of kEUR 1,087 (2014: kEUR 1.286) from Megatech Industries Amurrio S.L., Spain, and Megatech Industries Orense S.L., Spain, are secured by land and building of Megatech Industries Amurrio S.L., Spain.

Liabilities from recourse factoring – kEUR 4,295 (2014: kEUR 1.044) are secured by corresponding trade receivables.

in kEUR 31/12/2015 31/12/2014

Pledged land & building 18,314 20,664Pledged machinery 4,814 4,599Pledged trade receivables 8,117 5,203Pledged intangible assets 2,657 365Total amount of pledged assets 33,902 30,831

Amount of bank borrowings secured 18,520 16,755

Amount of bank borrowings unsecured 8,176 7,581


25.2 Finance lease liabilities

Lease liabilities are effectively secured as the rights to the leased asset revert to the lessor in the event of default.

in kEUR 31/12/2015 31/12/2014

Gross finance lease liabilities – minimum lease payments0-1 year 1,072 4441-5 years 3,602 1,348> 5 years 120 0

4,794 1,792Future finance charges on finance lease liabilities -310 -123Present value of finance lease liabilities 4,484 1,669

The present value of finance lease liabilities is as follows:

in kEUR 31/12/2015 31/12/2014

0-1 year 950 3921-5 years 3,415 1,277> 5 years 119 0Present value of finance lease liabilities 4,484 1,669

25.3 Fair value of financial liabilities

The carrying amounts and fair value of the non-current borrowings are as follows:

in kEUR 31/12/2015 31/12/2014

Financial liabilities non-currentCarrying amount 14,657 13,683Fair value 14,345 13,102

The fair value of current borrowings equals their carrying amount, as the impact of discounting is not significant. The fair values are based on discounted cash flows using a rate based on the borrowing rate of 3.75% (2014: 3.75%). The valuation of fair value is in accordance with the level 2 method (see note 3.3).


26 Trade payables

27 Other payables

Other non-current liabilities kEUR 1,144 (2014: kEUR 1,544) fully refer to liabilities to related parties.

Current other payables include as follows:

in kEUR 31/12/2015 31/12/2014

Payables VAT 3,028 1,454Payables income tax 1,006 685Payables to employees 971 879Accrued bonuses 619 899Payables social securities 614 581Current payables to related parties 527 479Other payables 1,344 970Total other payables 8,109 5,947

Other payables to related parties (non-current and current) include kEUR 1,530 (2014: kEUR 1,930) with regard to the purchase price of trademark rights from Megatech Industries S.L., Spain. This amount will be paid in the next four years. See also note 35.5.

The fair values of other payables to related parties are based on cash flows discounted using a rate based on the borrowing rate of 3.75% (2014: 3.75%). The discount rate equals the refinancing rate of the group with banks. The fair value of non-current other payables to related parties is kEUR 1,070 (2014: kEUR 1,488). The valuation of the fair value is in accordance with the level 2 method (see note 3.3). Current other payables fair values equal the carrying amount.

28 Government grants

Some group companies obtained grants from public organisations for financing investments in property, plant and equipment. The group companies comply with all conditions set by the public organisations for the corresponding government grants.

in kEUR 31/12/2015 31/12/2014

Trade payables 3rd party 25,494 20,888Trade payables related parties 33 0Down payments received 3rd party 532 0Total trade payables 26,059 20,888


in kEUR 2015 2014

At January 1 1,339 1,379Additions 101 238Releases -197 -278At December 31 1,243 1,339

in kEUR 31/12/2015 31/12/2014

Government grants non-current 1,243 1.317Government grants current 0 22Total 1,243 1,339

29 Non-current employee benefits

29.1 Severance payments

Some group companies pay a severance donation in case of retirement after an uninterrupted period of service of 5 years to their employees.

in kEUR 2015 2014

Development of provisionsAt January 1 40 44Current service costs 4 4Curtailment 0 -4Interest costs 1 1Actuarial losses/(gains) 0 -4Benefits paid -2 -1Currency difference 1 0At December 31 44 40

Total costs/(gains) included in employee benefit expenses 4 0Total costs included in interest costs 1 1Total costs/(gains) included in income statement 5 1

Total costs/(gains) included in other comprehensive income 0 -4


The development of the provisions equals the development of the defined benefit obligations.

Actuarial losses and gains arise from changes in financial assumptions.

The sensitivity of the defined benefit obligation is as follows:

in kEUR 2015 2014

Increase in discount rate by 1.0% -4 -4Decrease in discount rate by 1.0% 5 5Increase in benefit levels by 0.5% 2 2

The above sensitivity analysis is based on a change in the assumption while holding all other assumptions constant.

29.2 Anniversary payments

Some group companies pay an anniversary bonus after an uninterrupted period of service.

in kEUR 2015 2014

Development of provisionsAt January 1 352 390Current service costs 9 12Curtailment 0 -13Interest costs 2 4Actuarial losses/(gains) 0 -28Benefits paid -2 -12Currency difference 2 -1At December 31 363 352

Total costs/(gains) included in employee benefit expenses 9 -29Total costs included in interest costs 2 4Total costs/(gains) included in income statement 11 -25

The development of the provision equals the development of the defined benefit obligations.

Actuarial losses and gains arise from changes in financial assumptions.


The sensitivity of the defined benefit obligation is as follows:

in kEUR 2015 2014

Increase in discount rate by 1.0% -34 -34Decrease in discount rate by 1.0% 39 39Increase in salaries by 1.0% 37 37Decrease in salaries by 1.0% -20 -20Increase in benefit levels by 0.5% 5 5

29.3 Non-current employee benefits (severance and anniversary payments)

Provisions for non-current employee benefits include the following actuarial assumptions:

2015 2014

Discount rate 2.0%-3.0% 2.0%-3.0%Salary increase 0.0%-2.0% 0.0%-2.0%Retirement age 65 years 65 yearsLabour turnover rate 15%-24% 15%-24%

Assumptions regarding future mortality expectations are made based on actuarial advice in accordance with published statistics.

The expected maturity analysis for the next ten years of undiscounted severance and anniversary payments are as follows:

Seve

ranc

e pa

ymen

t

Ann

iver

sary

pa

ymen

ts

Tota

l

2015 2014 2015 2014 2015 2014

<1 year 3 3 10 6 13 91-2 years 2 3 14 10 16 132-5 years 11 11 110 94 121 1055-10 years 17 16 252 238 269 254


30 Provisions

in kEUR

Envi

ronm

. re

stor

atio

n

Lega

l cl

aim

s

One

rous

Co

ntra

cts

Oth

ers

Tota

l

December 31, 2013 418 355 538 151 1,462

Charged/(credited) to the income statement

- Additions 0 59 196 460 715- Unused amounts reversed 0 0 -254 -32 -286Used during year -42 0 -278 -1 -321Change in scope of consolidation 0 -189 0 0 -189Currency difference -4 4 -2 1 -1December 31, 2014 372 229 200 579 1,380

Charged/(credited) to the income statement

- Additions 0 4 0 153 157- Unused amounts reversed 0 0 0 -294 -294Used during year -37 0 0 -200 -237Currency difference 10 0 6 0 16December 31, 2015 345 296 206 175 1,022

in kEUR

Envi

ronm

. re

stor

atio

n

Lega

l cl

aim

s

One

rous

Co

ntra

cts

Oth

ers

Tota

l

December 31, 2014Non-current provisions 318 229 133 64 744Current provisions 54 0 67 515 636Total Provisions 372 229 200 579 1,380


in kEUR

Envi

ronm

. re

stor

atio

n

Lega

l cl

aim

s

One

rous

Co

ntra

cts

Oth

ers

Tota

l

December 31, 2015Non-current provisions 289 0 137 0 426Current provisions 56 296 69 175 596Total Provisions 345 296 206 175 1,022

30.1 Environmental restoration

The buildings of one group company are located in an area where the soil is historically contaminated (due to production which took place in former times). A corresponding provision for future costs to restore the area is recognised based on an expert opinion.

30.2 Legal claims

The amount represents a provision for certain legal claims brought against the group by former employees and for certain legal claims brought against two subsidiaries by consultants. In the opinion of the managing directors, having taken appropriate legal advice, the outcome of these legal claims will not give rise to any significant loss beyond the amount provided for at December 31, 2015.

30.3 Onerous contracts

With regard to onerous supply contracts in some group companies a provision was recognised which will be consumed within the next years according to the obligations arising from the contracts with customers.

30.4 Other provisions

Reversal and useage of other provision in 2015 mainly refer to provision added in in 2014 referring to the disposal of Megatech Brasil Componentes Automotivos Ltda., Brazil. See note 35.2.

31 Contingent liabilities

At the balance sheet date, the group had no contingent liabilities as in the previous year.


32 Commitments

32.1 Capital commitments

Capital expenditure contracted for at the end of the reporting period but not yet incurred is as follows:

in kEUR 2015 2014

Property, plant and equipment 843 770Intangible assets 0 0Total 843 770

32.2 Operating lease commitments

The group also leases various machinery and cars under cancellable operating lease agreements. The group is required to give a three- to six-months notice for the termination of these agreements. The lease expenditure charged to the income statement during the year amounted to kEUR 77 (2014: kEUR 117).

The future aggregate minimum lease payments for non-cancellable operating lease are as follows:

in kEUR 2015 2014

<1 year 307 01 – 5 years 2,456 0> 5 years 3,377 0

The increase in future aggregate minimum lease payments for non-cancellable operating lease in 2015 is mainly caused by a new rental contract for the new plant in Brno, Czech Republic.


33 Cash flow and non-cash transactions

33.1 Bank loans and bank overdrafts 2014

Repayment of bank loans 2014 includes kEUR -15,269 cash outflow for the refinancing of loans vis-à-vis BAWAG PSK AG.

Proceeds from new loans 2014 include kEUR 19,200 cash inflow from Česká Spořitelna, a.s. referring to the refinancing of BAWAG PSK AG loans.

Bank overdrafts and recourse factoring 2014 includes kEUR -8,741 cash outflow for the refinancing of bank overdrafts vis-à-vis BAWAG PSK AG.

Proceed from new loans 2014 include kEUR 5,283 cash inflow from Česká Spořitelna, a.s. for a short-term loan, thereof kEUR 4,473 have already been repaid in 2014 and are included in repayment of bank loans

33.2 Non-cash transactions

In 2015 kEUR 400 (2014: kEUR 1,610) was offset between Megatech Group and Megatech Industries S.L., Spain. This transaction reduced the non-current and current receivables from related parties and also the non-current and current payables to related parties.

34 Business combinations and changes in scope of consolidation

No business combination took place in 2015 and 2014. In 2015 following subsidiaries have been incorporated: Megatech Industries Peninsula Iberica S.L., Boroa, Spain Megatech Industries Czech Rpublic s.r.o., Prague, Czech Republic Megatech Industries Brno s.r.o., Prague, Czech Republic Megatech Industries France SAS, Vélizy-Villacoublay, France

After the management’s decision to exit the South American market in 2014, Megatech Brasil Componentes Automotivos Ltda., Brazil, was sold and deconsolidated as at December 31, 2014. The impact from deconsolidation is included in the result from discontinued operations. See also note 15.


35 Related-party transactions

The group is controlled by Megatech Industries S.L. (incorporated in Spain) that owns 99.3% of the company’s registered capital. On December 31, 2014 the ultimate parent was EIB Beteiligungsgesellschaft mbH, Vienna. Because of a capital increase in Megatech Industries S.L. in first quarter 2015 the ultimate parent changed to Megatech Industries Aktiengesellschaft, Vaduz, Liechtenstein. The group’s ultimate controlling party was and is Mr. Maximilian Gessler.

35.1 Purchase of trademark rights 2014

As at January 1, 2014 Megatech Industries AG, Austria, purchased trademark rights mainly for the European Union from Megatech Industries S.L., Spain (controlling party). The rights transferred refer to the registered trademarks MEGATECH INDUSTRIES (CTM word trademark) and MEGATECH (CTM figurative trademark).

Valuation was done by an external auditor. According to the valuators sensitivity analysis, the value range is between kEUR 2,655 and kEUR 4,425. The purchase price was set at kEUR 3,540, of which kEUR 2,010 (kEUR 1,610 in 2014 and kEUR 400 in 2015) was offset against receivables from Megatech Industries S.L., Spain, the rest will be paid in four instalments between 2016 and 2019. Liabilities are charged with interest on an arm’s length basis.

35.2 Sale of Megatech Brasil Componentes Automotivos Ltda. 2014

As at December 31, 2014, the shares in Megatech Brasil Componentes Automotivos Ltda., Brazil, held by Megatech Industries AG, Austria, were sold to Megatech Industries Aktiengesellschaft, Vaduz, Liechtenstein (controlling party). As the group lost control this entity was deconsolidated.

The sales price of the shares in Megatech Brasil Componentes Automotivos Ltda., Brazil, is EUR 1.00. Megatech Industries AG, Austria, takes over the costs for the restructuring of the sold company in the amount of kEUR 200. The group included a provision in the same amount. If Megatech Industries Aktiengesellschaft, Vaduz, Liechtenstein, will gain any positive cash impacts from Megatech Brasil Componentes Automotivos Ltda., the buyer is obliged to pay 25% out of this impact to Megatech Industries AG, Austria, in an amount of up to kEUR 500.

Megatech Industries AG, Austria, guaranteed for a customer loan to Megatech Brasil Componentes Automotivos Ltda., Brazil, in amount of kBRL 1,000 in April 2014. In January 2015 Megatech Brasil Componentes Automotivos Ltda., Brazil, started with the repayment of the loan. On December 31, 2015 the outstanding amount was reduced to kBRL 332, so the provision referring to this guarantee was reduced to kEUR 110.

See note 15 for the information on the impact on the consolidated income statement from the deconsolidation of Megatech Brasil Componentes Automotivos Ltda., Brazil.


35.3 Services to / from related parties

All transactions were made on an arm’s length basis. Transactions with other related parties refer to companies related to members of the supervisory board.

in kEUR 2015 2014

With controlling partiesSale of consulting services 77 8Recharging of other costs 53 0Recharging of other costs -65 -21Interest income charged 255 306Interest costs charged -38 -72With other related partiesPurchase of consulting services 57 36

35.4 Receivables from related parties

Loans to related parties are charged with variable interest rates depending on the development of the EURIBOR 3M.

All receivables from related parties refer to controlling parties or its subsidiaries.

All provision for bad debts refers to receivables from Megatech Brasil Componentes Automotivos Ltda., Brazil. In 2015 kEUR 903 of these receivables were transferred to Megatech Industries Aktiengesellschaft, Liechtenstein to prepare for a debt/equity swap in Brazilian entity. The sales price of the receivables was EUR 1, carrying amount of the receivables was EUR 0.

in kEUR 2015 2014

Loans at January 1 13,073 13,552Loans advanced during year 170 0Loans repaid/compensated with payables -550 -1,672Sale of receivables from loans against related parties -903 0Change in scope of consolidation 0 887Interest charged 255 306Loans at December 31 12,045 13,073Trade and other receivables against related parties 98 94Total receivables against related parties 12,143 13,167Provision for bad debt -47 -950Carrying amount receivables against related parties 12,096 12,217


35.5 Payables to related parties

As at December 31, 2015, Megatech Group has outstanding payables of kEUR 1,704 (2014: kEUR 2,023) to related parties, of which kEUR 1,530 (2014: kEUR 1,930) refer to the purchase of trademark rights from Megatech Industries S.L., Spain in 2014. These payables will be paid in equal instalments over the next four years. Payables with regard to the purchase price of trademark rights are charged with interest on an arm’s length basis based on the EURIBOR 3M.

All payables to related parties refer to controlling parties.

Remaining payables refer to interest charged on open purchase price and recharged costs.

35.6 Key management compensation

Key management includes members of the Executive Board and the Supervisory Board. The compensation paid to key management for employee services is shown below:

in kEUR 2015 2014

Salaries and other short term benefits paid 848 586Bonus paid 558 209

thereof bonus accrued in prior years -548 -209Bonus accrued in current year 302 550Total 1,160 1,136


36 Events after the reporting date

No subsequent events took place before finalising this report.


Managing Directors

Dr. Maximilian Gessler Dipl.-Kfm. Rainer Dieck

Management Report 2015


1 Economic conditions & automotive markets

At the beginning of 2016, the world economy is continuing along a path of moderate growth. Solid growth of the advanced economies continues to be one of the key drivers of the global economy. But for the first time in five years, emerging markets might support the upward trend with their aggregate growth rate.

The economy of the European Monetary Union (EMU) is expected to achieve economic growth in the magnitude of 1.5 to 2.0%. The main drivers are expansive monetary policy measures, the comparatively weak euro, rising real incomes and support from low raw material prices. The effect of political events such as the refugee crisis or

the Ukraine conflict cannot be assessed at the beginning of 2016.

In total, global economic output in 2016 is unlikely to exceed a growth rate of 2.5 to 3.0%.

Global demand for cars in 2016 is expected to increase by between 3.0 to 4.0% from its high level in 2015. Growth rates in the traditional markets, the United States and Western Europe, will however be significantly lower than the growth of recent years. The Chinese market is expected to make the largest contribution to worldwide market growth.

2 Development of the Megatech Group

2.1 Highlights

Revenue increased slightly compared to 2014

EBITDA after non-recurring items kept stable (mEUR 9.7 after mEUR 9.8) despite high costs for upcoming projects

Best net result (Result of the year) in Megatech’s history

Start of production of visible interior and exterior parts for Audi Q7, Audi TT, and VW Caravelle and several projects for Tier-1 customers Automotive Lightning and Plastic Omnium

High focus on projects with SOP in 2016 and beginning 2017

Disposal of land & building in Liberec High order intake from VW Group, PSA

Group and Tier-1 suppliers Start with construction work for the new

plant in Brno, Czech Republic Start with construction work for expansion

of plants in Jablonec, Czech Republic, and Marinha Grande, Portugal

New sales office close to Paris


1 Economic conditions & automotive markets 2.2 Revenue and result

in kEUR 2015 2014

Revenue 125,942 124,451EBITDA before non-recurring items 9,990 10,528Operating result (EBIT) 4,032 4,552Interest result -1.557 -1,647Other financial result 257 2,036Result before tax 2,732 4,941Result for the year 2,148 2,021

While the sale of parts remained unchanged in 2015 – kEUR 109,628 after kEUR 109,080 in 2014 – sale of tools increased to kEUR 9,818 after kEUR 6,942 in 2014. Such fluctuations are normal in our tools business as the sale of tools is highly dependent on the start of the production of new products. As a high number of new projects are starting in 2016 with serial production, the sale of tools already increased in 2015. Other revenue (mainly sales to sub-contractors) is decreasing as Megatech wants to in-source as much as possible.

Ongoing improvements in production and purchases as well as the lower oil price led to a reduction of the rate of the raw materials and consumables used by 1.3 percentage points. In total, raw materials and consumables used decreased by 0.8% to kEUR 82,506. Total employee benefit expenses increased by 5.4% to kEUR 27,398. This increase was mainly caused by increasing costs related to upcoming projects.

As a result, EBITDA before non-recurring items was kEUR 9,990 after kEUR 10,528 in 2014.

Result from non-recurring items improved from kEUR -753 in 2014 to kEUR -257 in 2015. The non-recurring items 2015 mainly include the sale of land and building in Liberec, costs for the ongoing restructuring programme in Amurrio and non-operational legal claims. The non-recurring items in 2014 mainly refer to the long-planned closing of the plant in Liberec, Czech Republic, and further restructuring in Amurrio, Spain.

After the big improvement of operating result (EBIT) in 2014 (increase by kEUR 3,643 to kEUR 4,552), the group was not able to keep the EBIT stable due to higher amortisation and depreciation in 2015. EBIT in 2015 was kEUR 4,032.

Interest result in 2015 improved by 5.5% to kEUR -1,557 (2014: kEUR -1,647) although financing volumes are higher than in previous year.

The other financial result 2015 includes the impact from FX-exchange rates (mainly EUR/CZK) in the amount of kEUR 315 (2014: kEUR -245) and the impact from derivative financial instruments (interest swaps) in the amount of kEUR -58 (2014: kEUR 0). In 2014, an additional impact from the refinancing of bank loans was included (kEUR 2,281).

Due to the deconsolidation of the Brazilian entity in 2014, the result from discontinued operations was kEUR -2,413, including a provision for guarantee for a loan (kEUR 260). This provision was reduced in 2015, leading to positive result from discontinued operations in the amount of kEUR 150.

After the very good result in 2014, Megatech achieved the best net result in its history in 2015. The result for the year was kEUR 2,148 (2014: kEUR 2,021).


2.3.2 Working capital

2.3 Financial position

2.3.1 Net debt and gearing

High order intakes since the end of 2013 caused high investments in building, machinery, tools and for developments. These investments lead to significantly higher bank loans and finance

lease liabilities. As a positive impact from the new projects will be realised in the future, total equity did not increase that fast in 2015, ending up with an increase in gearing by 13.1 percentage points.

The development of working capital is highly influenced by the significant increase in tool inventories. In 2015, the tool inventories increased from kEUR 4,952 to kEUR 13,330. The tools business also significantly impacts the development of trade receivables and trade

payables. The increase in other receivables is mainly driven by reclassification of non-current receivables from related parties to current receivables and increases in receivables from VAT. The increase in other payables is mainly caused by an increase in payables from VAT.

in kEUR 2015 2014

Non-current financial liabilities 14,657 13,683Current financial liabilities 18,591 12,343

33,248 26,026Cash and cash equivalents -2,193 -1,881Net debt 31,055 24,145

Total equity 42,144 39,840Gearing (net debt / total equity) 73.7% 60.6%

in kEUR 2015 2014

Inventories 19,260 10,757Trade receivables 12,007 10,723Other receivables 8,140 4,783Trade payables -26,059 -20,888Other payables -8,109 -5,947Working capital 5,239 -572


2.3.3 Cash flow

2.4 Discontinued operations

in kEUR 2015 2014

Cash flow from operating activities 4,329 10,557Cash flow from investing activities -6,446 -7.661Cash flow from financing activities 2,415 -7,199Total cash flow 298 -4,303

Cash flow from operating activities includes the impact from the working capital of kEUR -3,706 (2014: kEUR 3,284). The impact from working capital mainly refers to the tool business (see note 2.3.2)

The cash flow from investing activities includes nearly kEUR 5,000 for capitalised development costs for projects starting in 2016-2018 and

kEUR 2,251 (2014: kEUR 93) positive impact from disposal of property, plant, equipment and intangible assets.

The positive cash flow from financing activities mainly refers to new bank loans and bank overdrafts to finance the investments in property, plant and equipment, development and tools for the new projects.

Because of the distressed market situation in Brazil, with a drop down of the whole automotive industry by around 40% compared to 2013, in 2014 the management of the group decided to sell the Brazilian entity and to exit the Brazilian market at least for the next few years.

As at December 31, 2014, the shares in Megatech Brasil Componentes Automotivos Ltda., Brazil, were sold to Megatech Industries Aktiengesellschaft, Vaduz, Liechtenstein. As Megatech Group lost control over the Brazilian entity, the entity was deconsolidated.

In accordance with IFRS 5, the impact from the Brazilian entity shown in the consolidated income statement and the consolidated cash flow statement is reclassified and reported as result from discontinued operations. In 2014, the result of discontinued operations was kEUR -2,413.

In 2015, a provision for a guarantee for a loan of the Brazilian entity was partly released. This led to positive result in discontinued operations (kEUR 150).


3 Research and development

Automotive manufacturers demand ever more economical, lighter and efficient vehicles. As such, innovation remains a key factor of competitiveness for automotive suppliers. Innovative product development combined with advances in production and process technology are a prerequisite to remain competitive and generate sustainable growth. Hence, Megatech places highest importance on its innovative efforts and R&D activities. In addition, it prides itself as beings a solution provider to its customers.

In 2015, Megatech chose to lead research projects according to three main development axes. The first axis focused on already initiated work on light weight technologies, with the study of hollow glass microspheres as a new filler for polymer composites and with a project proposal for thermoplastic composites. The second R&D axis has been dedicated to the development of sustainable plastic solutions, while the third research axis has been focused on the increase of its productive throughput, through the optimization of new injection technologies. These R&D lines respond to Megatech’s strategic orientation towards guaranteeing its competitiveness, through its ability to propose innovative products, manufactured using the most advanced processing technologies.

In 2015, Megatech has focused on an ambitious research proposal, dealing with the development of an entirely thermoplastic composite tailgate. Given changes in the industry, such a part would allow constant market share in the production of hatchback parts. Following the same light weighting line, Megatech also continued the exploration of hollow glass microspheres’ potential to produce light, strong, and aesthetical plastic parts, and now features a well-known range of glass bubbles containing composites in its materials portfolio.

In addition, Megatech has been working on the development of sustainable plastic solutions, based on the use of natural fibres mats. This project has the objective of combining plastic transformation technologies, such as thermoforming and back-injection moulding, to widen Megatech’s products catalogue with new sustainable and high value-added products.

Finally, the year 2015 has been dedicated to the increase of Megatech’s productive throughput, with the optimization of the cold gas-assisted injection moulding process. This process significantly reduces material usage and can be performed more economically on smaller presses and with faster cycle times.


4 Sustainability, health, environment

Megatech Group recognises its responsibility for humans and the environment along the entire value chain and is working for innovative solutions to create long-term benefits for employees, the environment and the group. Measures have therefore been taken to guarantee and continuously improve the health and safety of employees and neighbours and to ensure state-of-the art processes to protect the environment. A systematic risk analysis of processes is an

integral task of the Executive Board. Continuous internal audits and external audits performed by authorities and customers confirm the excellent results of these processes.

At the end of 2015, 1,328 employees worked for Megatech Group (2014: 1,104).

5 Risk report

The group’s activities expose it to a variety of financial risks: market risk (including foreign exchange price risk, currency risk, fair value interest rate risk, cash flow interest rate risk and price risk), credit risk and liquidity risk. The group’s overall risk management programme focuses

on the unpredictability of financial markets and seeks to minimise potential adverse effects on the group’s financial performance. The group uses derivative financial instruments to hedge certain risk exposures. Risk management is carried out centrally by the group management.


5.2 Credit risk

5.3 Commodity price risk

The group’s credit risk is mainly confined to the risk of customers defaulting on sales invoices raised. Any credit risk arising from cash deposits and derivative financial instruments is deemed to be insignificant on the basis that nearly all relevant counterparties are investment grade entities recognised by international credit-

rating agencies. Each local entity is responsible for managing and analysing the credit risk for each of their new customers before standard payment and delivery terms and conditions are offered. Main customers of the group are the big automotive producers with regard to which credit risk is considered low.

The group is exposed to commodity price risks as main raw materials can only be purchased on the spot markets and no commodity hedges are

available. Price fluctuations can partly be passed on to customers, depending on the contractual relationship.

5.1 Liquidity risk

The group manages its liquidity risk by using reasonable and retrospectively-assessed assumptions to forecast future cash-generating capabilities and working capital requirements of the businesses it operates and by maintaining sufficient reserves, committed borrowing facilities and other credit lines as appropriate.

Forecast liquidity represents the group’s expected cash inflows, principally generated from sales made to customers, less the group’s contractually-determined cash outflows, principally related to supplier payments and the repayment of borrowings, plus the payment of any interest accruing thereon. The matching of these cash inflows and outflows rests on the expected ageing profiles of the underlying assets and liabilities. Current financial assets and

financial liabilities are represented primarily by the group’s trade receivables and trade payables, respectively. The matching of the cash flows that result from trade receivables and trade payables takes place typically over a period of three to four months from recognition in the balance sheet and is managed to ensure the on-going operating liquidity of the group. Financing cash outflows may be longer-term in nature. The group does not hold non-current financial assets to match against these commitments, but has invested significantly in non-current non-financial assets which generate the sustainable future cash inflows, net of future capital expenditure requirements, needed to service and repay the group’s financial liabilities.


5.4 Foreign exchange risk

5.5 Interest rate risk

The group operates internationally and is exposed to foreign exchange risk arising primarily from the Czech crown. Foreign exchange risk arises from future commercial transactions and financing in foreign currencies.

Management has set up a policy to require group companies to manage their foreign exchange risk against their functional currency

with internal hedging as much as possible. Furthermore, developments in foreign currencies are passed on to customers with a certain time delay. Group management will coordinate any additional hedging that may be necessary.

By the end of 2015 (as well as 2014), the group’s financial liabilities were mainly denominated in euro.

The group’s interest rate risk arises from non-current financial liabilities. Financial liabilities issued at variable rates expose the group to cash

flow interest rate risk which is partially offset by cash held at variable rates.

6 Financial instruments

7 Branch offices

If required, the Megatech Group uses interest rate swaps to hedge against negative developments in interest rates.

At the end of 2015 the carrying amount of interest swaps was kEUR -58 (2014: kEUR 0).

The group does not have any branch offices.


8 Expected development

8.1 Short- and medium-term

The forecasts and statements made in this chapter are based on relevant analyses by renowned economic research institutes, international organizations and industry associations as well as on internal market analyses of our customers. These statements are based on information available in February 2016.

Our assessments for the year 2016 are based on the assumption of generally stable economic conditions and the expectation that the upward trend of the global economy and of worldwide demand for motor vehicles will continue.

After the successful operational turnaround in 2013, the Megatech Group is focused on strengthening its position as a reliable business partner to its customers and growing its business further. This is reflected in the high order intake of new projects, upcoming launches in 2016 and 2017 as well as the improved financing situation.

Group turnover is expected to grow by approximately 10% in 2016 and 20% in 2017. This growth is driven by the ramp up of new project launches, sale of tools for new project developments as well as new customers, including the BMW Group. Significant new project launches include: First half of 2016: Bentley Bentayga, VW

Tiguan, Porsche Boxter, Audi Q1, SEAT Ateca, Citroën C4 Picasso, Peugeot 3008 & 5008

Second half of 2016: Porsche Cayman, Citroën Jumpy & Peugeot Expert, Skoda Kodiak, BMW 5-Series, MINI Countryman

Expected growth is supported by a new, custom-built plant opening in July 2016 in Brno, Czech Republic. This plant, located conveniently close to Megatech’s customers in Central Europe, guarantees additional capacity and short ways of transportation.

In addition, the 2016 expansion of Marinha Grande, Portugal, will provide ample space for 6 new presses. The additional capacity will be utilized for new projects from PSA and the VW Group.

With the exception of the Amurrio plant (Spain), revenues of all plants are expected to grow in the short and medium term. In regional terms, major growth is expected in the Czech Republic, in particular the Hlinsko and the Brno plant.

With continuous improvement projects in all plants, Megatech is laying the foundation for positive lasting impact on earnings. Measures include sustained improvements in the cost structure, structural optimization and efficiency gains. The goal is to become faster, more flexible and more efficient – for the benefit of our customers.


In the long-term, Megatech will continue on its successful path as a Tier-1 supplier with roughly 25% of Tier-2 business and stable non-automotive business of 5%.

Sustainable success depends on a long-term strategic relationship with Megatech’s customers and external partners. Megatech has been named a strategic supplier by some of its customers. It will continue to strengthen this position by following the trend of accepting bigger order packages and setting up the structure to act globally.

While its focus is currently on the European market, Megatech plans to follow its customers to become a global supplier. In the upcoming years, important markets for expansion will be evaluated and structures to supply from these markets will be set-up. Potential collaborations will range from strategic partnerships to equity investments and a full takeover of existing companies in the respective markets rather than greenfield investments.

8.2 Long term expectations

In the first months of 2016, the result from serial production is improving in all sites compared to the first months of 2015. Impact from sale of

tools is significantly lower in first months 2016 as no material sale of tools took place yet.

8.3 Actual figures first months 2016


No subsequent events took place before finalising this report.

9 Subsequent events

This report contains forward-looking statements on the business development of Megatech Industries Group. The statements are based on assumptions relating to the development of the economic and legal environment in individual countries and economic regions, and in particular for the automotive industry, which we have made on basis of the information available to us and which we consider to be realistic at the time of preparing this report. The estimates given entail a degree of risk, and the actual developments may differ from those forecast. Consequently, any unexpected fall in demand or economic stagnation in our key sales markets Europe will have a corresponding impact on the development of our business. The same applies in the event of a significant shift in current exchange rates, mainly the Czech crown against the euro. In addition, expected business developments may vary if this report’s assessments of value-enhancing factors and risk develop in a way other than we are currently expecting.


Managing Directors

Dr. Maximilian Gessler Dipl.-Kfm. Rainer Dieck

Auditor’s Report

Report on the Consolidated Financial Statements

We have audited the accompanying consolidated financial statements of Megatech Industries AG, Vienna, which comprise the consolidated balance sheet as of December 31, 2015, the separate consolidated income statement, the consolidated statement of comprehensive income, the consolidated cash flow statement and the consolidated statement of changes in equity for the year then ended, and the notes to the consolidated financial statements. As provided under Section 275 (2) UGB (liability provision regarding the audit of financial statements of small and medium-sized companies), our responsibility and liability towards the Company and any third parties arising from the audit are limited to a total of EUR 2 million.

Management’s Responsibility for the Consolidated Financial Statements

Management is responsible for the preparation and fair presentation of the consolidated financial statements in accordance with the International Financial Reporting Standards (IFRSs) as adopted by the EU, and the additional require-ments under Section 245a UGB, and for such internal control as management determines is necessary to enable the preparation of consolidated financial statements that are free from material misstatement, whether du to fraud or error. Auditor’s Responsibility

Our responsibility is to express an opinion on these consolidated financial statements based on our audit. We conducted our audit in accordance with Austrian generally accepted auditing standards. Those standards require the application of the International Standards on Auditing according to which we are to comply with ethical requirements and to plan and perform the audit to obtain reasonable assurance whether the consolidated financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the consolidated financial statements. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the consolidated financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the Group’s preparation and fair presentation of the consolidated financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Group’s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

Opinion

Our audit did not give rise to any objections. In our opinion, the consolidated financial statements comply with legal requirements and give a true and fair view of the financial position of the Group as of December 31, 2015 and of its financial performance and its cash flows for the fiscal year then ended in accordance with the International Financial Reporting Standards (IFRSs) as adopted by the EU and the additional requirements under Section 245a UGB.



Comments on the Management Report for the Group

Pursuant to statutory provisions, the management report for the Group is to be audited as to whether it is consistent with the consolidated financial statements and as to whether the other disclosures are not misleading with respect to the Company’s position. The auditor’s report also has to contain a statement as to whether the management report for the Group is consistent with the consolidated financial statements.

In our opinion, the management report for the Group is consistent with the consolidated financial statements.


PwC Wirtschaftsprüfung GmbH

signed: Horst Bernegger

Austrian Certified Public Accountant

Disclosure, publication and duplication of the Consolidated Financial Statements together with the auditor’s report in a form differing from the version audited by us is not permitted. Reference to our audit may not be made without prior written permission from us.


Imprint

Media Owner (Publisher): MEGATECH Industries AGTaubstummengasse 13/91040 ViennaAustria

phone: +43 1 236 70 38 [email protected]

Concept and realization: Purtscher Relations PR GmbH, www.purtscherrelations.atFeinschliff GmbH

Chief Editor/Conception:Michaela Fritz, Carola Purtscher, Isabel Fitz

Art Direction and Graphics: Isabel Fitz

Photos:Kathi Bruder (Board)Miriam Höhne (Products)Audi AGVolkswagen AGBentley Motors LimitedGroupe RenaultMEGATECH Industries AG

Litho:Feinschliff GmbH

Print: Feinschliff GmbH

www.megatech-industries.com

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