Balda Q1-Report 2012/2013
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    Balda Q1-Report 2012/2013 Balda Q1-Report 2012/2013 Document Transcript

    • Quarterly Report I 2012/2013Balda on the Path to Profitable GrowthOperations stabilised in the first quarter of 2012/2013 EBITDA of €0.9 million and balanced consolidated EBIT in the first three months Consolidated earnings after taxes of €6.8 million thanks to positive financial results Medical segment partially catches up on order delays from previous year Electronic Products segment with nearly balanced EBIT, restructuring almost completed Group revenues at €13.9 million 10% under value in the reference quarter Unchanged outlook for Balda Group for full year 2012/2013, but economic downturn as gro- wing uncertainty factorCONTENTKey Figures of Balda Group 2 Interim Management Report 5Notes to the changed structure 3 Selected explanatory notes 12Balda Share and Investor Relations 4 Tables 16
    • Key Figures of Balda Group Key Figures of Balda Group in € million 1.7.-30.9.2012 1.7.-30.9.2011 Group revenues 13.9 15.4 Medical 8.1 7.9 Electronic Products 5.8 7.5 Central Services 0 0 Total output 14.1 15.9 EBITDA 0.9 -0.1 EBITDA margin* (percent) 6.4 -0.8 EBIT Group 0 -1.0 EBITDA margin* (percent) 0 -6.5 Financial result 6.6 -3.7 Earnings before income tax 6.6 -4.8 Group result** 6.8 -3.7 Earnings per share (€) 0.12 -0.22 in € million 30.9.2012 30.6.2012 Balance sheet total 473.9 473.4 Shareholders’ Equity 454.1 450.5 Equity ratio (percent) 95.8 95.2 Share price (€) 4.98 4.80 Market value 293.3 282.7 Employees (number) 1,185 1,273 * based on total output ** continued business divisions2
    • Short profile Balda GroupShort profile Balda GroupTechnologies | Quality | Outstanding productsBalda is a provider of premium quality plastics for the medical and electronics industries. The company is characterized by first-class engineering, high quality products and fast, flexible and tailor-made services for its customers.Together with its operating divisions Balda Medical and Balda Electronic Products, Balda is active internationally and has pro-duction facilities in Germany and Malaysia. Balda Medical, with its headquarters in Germany, develops and produces high quali-ty plastic solutions for medical, pharmaceutical and diagnostic applications. Balda Electronic Products, headquartered inMalaysia, manufactures innovative plastic systems for the communication and entertainment industries. The companys successis based on the use of state-of-the-art, cost-effective technologies, and a close and trusting relationship with the customer.The long-term strategy of Balda is focused on sustainable growth, a growing presence abroad, a continuous increase in corporatevalue, generation of added value for business partners and attractive returns on investment for shareholders.Notes on the Structure of the Quarterly ReportThe annual general meeting of Balda AG on 11 May 2012 resolved to change the balance sheet reference date of the compa-ny from 31 December to 30 June. This resulted, for the period from 1 January to 30 June 2012, in a short financial year. Thisquarterly report of 30 September 2012 therefore corresponds with the first quarter of the financial year 2012/2013. As refe-rence values for the income statement, the statement of comprehensive income, the cash flow statement and the statementof equity changes, the period from 1 July to 30 September 2011 was used, which corresponded with the third quarter of thefinancial year 2011. This allowed a genuine period comparison. The consolidated balance sheet as at 30 June 2012 presentsthe reference values for the balance sheet as at 30 September 2012.In the interim report at hand, the information listed for the first quarter 2012/2013 are consistent with the values of the publicreport for the third quarter 2011 of the continued operations. Thus, the values of the income statement are comparable up tothe earnings of the continued operations. However, the on 1 December 2011 sold MobileCom segment is in the comparableperiod still partly included in the figures of the cash flow statement, the Group total income statement and changes to share-holder’s equity. The figures compared are therefore only partly comparable with the figures of the period under review. 3
    • Balda Share and Investor Relations Balda-Share and Investor Relations Despite the less than rosy global macroeconomic developments, the international stock markets showed a surprisingly friendly third quarter 2012. Notwithstanding this, the rising prices were less the result of good business figures, but rather a result of the liquidity measures of the most important central banks. The U.S. Federal Reserve, the European Central Bank (ECB) and the Bank of Japan all eased their monetary policy in the course of the third quarter. The European stock markets benefited dispropor- tionately from this, since on the basis of monetary policy measures, a collapse of the European Monetary Union was considered by investors as increasingly unlikely. The generous provision of liquidity, amongst other factors, offers a generally positive environ- ment for rising stock markets. Risk factors include the still unresolved government debt crisis in Europe, the tense budget situa- tion in the USA leading up to the Presidential elections, and the rather subdued global economic outlook for 2013. Source: Metzler Asset Management Balda AG’s shares started with a jump over the mark of 5 euros and with high sales into the new financial year, after the Xetra closing price had been at €4.80 on 29 June. On 2 July 2012, the quarter’s highest price of €5.37 was reached. In the following period, the price hovered around the 5-euro mark. On 20 September 2012, the date on which the figures and dividend proposal for the short financial year 2012 were announced, at share sales of 2 million units the price fell to €4.57 and thus to the lowest level in the quarter. The closing price on 28 September, the last trading day in the report period, was €4.98. This represented a capital gain of some 4% for the period July to September. The reference index SDax on which Balda AG’s shares are listed, showed quite volatile development in the same period and also gained some 4%, closing on 28 September with 5,004.13 points (29 June 2012: 4,804.29 points). Share price Balda AG July to September 2012 in euro 5.35 5.25 5.15 5.05 4.95 4.85 4.75 July August September Shares in TPK Holding listed on the Taiwan Stock Exchange, on which Balda still holds about 7.1 million shares, reported a gain in the third quarter of almost 3%, to 384.50 Taiwanese dollars (as at 28 September 2012), after a closing price of 374.00 Taiwanese dollars at the end of June 2012. The lowest rate in the quarter was reached on 25 July with 310.50 Taiwanese dollars. The stock reached the highest price on 14 September at 444.50 Taiwanese dollars.4
    • Quarterly Report I 2012/2013Interim Report as at 30 September 20121. Overall Economic DevelopmentThe trends of the global economy have not changed fundamentally in the third quarter of 2012. The generally expected world-wide economic downturn has by now set in, with the threat of a global recession being viewed by experts as minimal. TheInternational Monetary Fund (IMF) warned once again in its study ‘World Economic Outlook’ in October that the debt crisis inEurope must be taken hold of by controlled institutional reforms, thus creating new confidence in the capital and financialmarkets and investing industry. The danger of a severe deceleration of global growth is alarmingly high, it said.The IMF lowered the forecast for worldwide growth in 2012, in contrast to the prognosis of July, by 0.2 percentage points to3.3%, and at 3.6% for 2013 (previously: + 3.9%). For the euro zone, the IMF predicts a decline in economic performance in2012 by 0.4%. The Germany economy shows an unchanged positive trend with a predicted growth of 0.9%.Another significant uncertainty factor is still the economic development in China, as the importance of this national economyto the global economy continues to grow. In the third quarter of 2012, China recorded a growth decline for the seventh conse-cutive quarter. It is, however, expected that the Chinese economy will continue to receive massive injections of supportthrough government programs.The Munich-based ifo Institute sees the German economy increasingly burdened by the euro crisis. For example, the ifo Busi-ness Climate Index for commercial industry retreated once again in September 2012. This was the fifth consecutive decline.Accordingly, the companies interviewed are once again less content with their current business situation, with a more pessimi-stic view of the future.The federal government, however, points out in its so-called autumn projection that the German economy continues to be ro-bust, which is expressed in such ways as a slightly positive development in employment and private purchasing power as wellas in a stable export situation. For 2012, it raised expectations for growth in gross domestic product slightly to 0.8%, while re-ducing its forecast for 2013 significantly to + 1.0% (previously + 1.6%).Sources: International Monetary Fund (IMF): World Economic Outlook, October 2012 update ‘Konjunkturaussichten in China bessern sich’, FAZ of 19 October 2012 Ifo-Institut, Munich: Press release ‘Ifo Geschäftsklima Deutschland’, September 2012 Federal Ministry of Economics: Press release of 17 October 20122. Industry Situation2.1. MedicalFundamental trends such as global population growth, improved access to medical care for many people in developing andemerging countries, the growing self-treatment of patients with drugs (OTC) and increasing life expectancy continue withoutchange to be growth impetus for the manufacturers of medical-technological products across economic cycles.This will result in the reduced growth in developed countries being compensated by the clearly increasing demand in emer-ging countries. Global growth prognoses for the sub-markets pharmaceuticals, diagnostics and medical technology fluctuatebetween 4% and 14% per year, depending on the sector and source. The markets are showing extreme stability and continu-ous growth.On the German market, the generally good prospects are being clouded by radical cost-cutting moves in health care, whichfurther reinforce the current investment congestion particularly in the inpatient area. So the industry association Spectaris ex-pects a growth deceleration for the 2012 calendar year domestically in comparison with the previous year. 5
    • Quarterly Report I 2012/2013 2.2. Electronic Products Even though the long-term growth prospects for global markets in consumer electronics continue to be very good, in the se- cond half of the calendar year 2012 an increased globally experienced economic downturn will continue to dampen demand. Already at the end of the second quarter of the short financial year 2012 (April to June), the market research company Niel- sen observed that consumers worldwide were displaying greater caution in their expenditures. Important determinants were li- sted as the government debt crisis in the euro area and the slowing growth dynamic in such important countries as China and India. In Western Europe, the market for electronic appliances developed positively in the second quarter, though it was unable to offset the declines of the first quarter. For the first half of calendar year 2012, therefore, according to GfK TEMAX a minus of 0.8% was booked. Development in the individual market segments was quite varied. The market for entertainment electronics showed a drop for the first half year by 9.1%, to €18.3 billion. While, for example, the demand in Germany turned out to be very good, France, Spain and Greece showed significant declines. The further development of the Western European markets for technology products, with a view to the euro crisis and its consequences, was called uncertain. (Source: GfK TEMAX, We- stern Europe, Press information of 30 August 2012). 3. Business Development in the First Quarter 2012/2013 3.1. Overall Assessment In the period July to September 2012, as a whole the Balda Group developed in line with its expectations. Operational busi- ness stabilized considerably: The Medical segment was able to recover part of the customer orders that had been delayed in the short financial year 2012 and clearly operate in the black again. In the Electronic Products segment, the adjustment of cost structures to the decreased business volumes as well as the margin improvement resulted in positive effects. The Central Services segment (primarily the activities of Balda Holding) already benefited markedly from the slimming of the group struc- ture implemented in the course of the year, and also from general cost savings. All in all, Balda shows consolidated revenues for the first quarter 2012/2013 of €13.9 million, a drop of 10.0% compared to the figure in the third quarter of calendar year 2011. Earnings before interest and taxes (EBIT) showed a black zero after a mi- nus of €1.0 million in the reference period. Thanks to a positive financial result, the quarterly profit after taxes was €6.8 mil- lion. The comparable result of continued business operations in the reference quarter 2011 was minus €3.7 million. For the total year 2012/2013, the Board adheres to its previous statements. A prerequisite for achieving these goals is that the global macroeconomic downturn not lead to a clear decrease in demand for Balda products, particularly in the economi- cally sensitive Electronic Products segment. 3.2. Significant Events in the First Quarter of 2012/2013 Proposed Dividend for the Short Financial Year 2012 On 20 September 2012, Balda AG announced that the Board of Directors and the Supervisory Board recommend to the an- nual general meeting on 7 November 2012 the payment of a dividend of 2.00 euros per share for the short financial year 2012 (1 January to 30 June 2012). This would make €117.8 million available for dividend distribution. The dividend proposal was made due to the high proceeds deriving from the sale of shares in the touchscreen manufacturer TPK Holding received in the short financial year.6
    • Quarterly Report I 2012/20134. Revenues and Earnings DevelopmentGroup revenues in the first three months of financial year 2012/2013 were €13.9 mil- Group revenueslion, this being 10.0% below the figure of the third quarter of the calendar year 2011 in millions of euros 15.4(€15.4 million). The decrease is attributable to the development in the Electronic Pro-ducts segment, in which due to the economic situation, demand remained under expec- 15 13.9tations in the report quarter. On the other hand, the revenues of Balda Medical in thesame period increased slightly. 10Other operating income of €1.1 million is due primarily to currency effects from the valu- 5ation of claims and liabilities (reference period: €0.8 million). In the report quarter, partof the delayed order demand from the 2012 short financial year was delivered by BaldaMedical. This is reflected in the changes in stocks of finished and unfinished products by 0minus €0.9 million. After consideration of these stock changes, total output reached 1.7.-30.9. 1.7.-30.9. 2012 2011€14.1 million (reference period: €15.9 million).The material expenses decreased from €8.4 million to €6.4 million (minus 24.3%). Material expensesThe expenses of materials ratio reduced during the reference period from 55.8% to in millions of euros49.2%, on the one hand due to the lower sales volume in the Electronic Products seg-ment and on the other hand as a result of the changed product mix in the Medical seg- 10 8.4ment. Here, the share of more material-intensive tool and system revenues was higher inthe reference quarter 2011, while a higher number of article revenues were recorded in 6.4the quarter under review. 5Although personnel expenses decreased from €4.4 million to €4.1 million, this was no-netheless disproportionate to the revenue decline. The personnel expenses ratio increa-sed to 29.0% (reference period: 27.3%); the increase was the result of higher personnel 0requirements in the Electronic Products segment in relation to revenue. 1.7.-30.9. 1.7.-30.9. 2012 2011Other operating costs decreased from €3.3 million to €2.7 million. Here there were ab-ove all savings through process optimisation in the Electronic Products segment, as wellas through the streamlining of group structures in the Central Services segment.The Group reports earnings before interest, taxes, depreciation and amortisation(EBITDA) of €0.9 million (reference period: minus €0.1 million). Thus both operatingsegments achieved positive values.After depreciations, there was a balanced earnings before interest and taxes (EBIT) after EBITa negative EBIT of €1.0 million in the reference period 2011. in millions of eurosThe financial result reached €6.6 million (reference period: minus €3.7 million). In addi- 0.5 0.03tion to interest income from the high cash balances of the Group, there were, above all, 0positive valuation effects from the conversion of foreign currency items.For the first quarter this resulted in earnings before taxes (EBT) of €6.6 million (refe- -0.5rence period: minus €4.8 million). For continuing operations, earnings after taxes impro- -1.0ved from €6.8 million to minus €3.7 in the period July to September 2011. -1.0 -1.5 1.7.-30.9. 1.7.-30.9. 2012 2011 7
    • Quarterly Report I 2012/2013 The Group result also amounted to €6.8 million. The value of the reference period (mi- Group result nus €13.1 million) includes the earnings from the discontinued business MobileCom. in millions of euros The overall result shows earnings per share (on a diluted and undiluted basis) of €0.12 20 (reference period: minus €0.22). 10 6.8 5. Development of the Segments 0 5.1. Medical Segment -10 Revenues of segment rose in the first quarter 2012/2013 by 2.0% to €8.1 million (refe- rence period: €7.9 million). Balda Medical was able to recover part of the orders that had -13.1 -20 been delayed by customers in the short financial year, thus decreasing inventories and, 1.7.-30.9. 1.7.-30.9. overall, operating once again clearly in the black. The EBITDA was at €1.1 million after 2012 2011 €0.8 million in the reference period 2011. 5.2. Electronic Products segment For the first three months of the financial year 2012/2013, Balda Electronic Products showed revenues of €5.8 million. With a sharp decline of 22.6% versus the reference period (€7.5 million) the commencing general economic downturn made its mark, leading to a demand below expectations in the report quarter. Nonetheless Electronic Products managed to keep its EBITDA stable at €0.3 million. The segment benefited from significant efficiency increases and cost-cutting in the context of restructuring. Furthermore, initial margin improvements took effect, following on from the completion of non-cost covering or- ders from 2011. 5.3. Central Services Segment In the calendar year 2012, Balda aligned and streamlined the structures of the group and Balda AG as the holding company, as these were overly complex and costly given the business volume. Of particular significance was the closing of Balda USA because this entity was primarily responsible for providing sales support and undertaking market observation activities for the MobileCom segment, which was divested in 2011. The streamlining and saving of other expenses (e.g. use of service provi- ders) led, in the Central Services segment, to an improvement in the EBITDA in the first three months of 2012/13, to minus €0.4 million after minus €1.4 million in the same period in 2011. Because of the positive financial result, the EBT was at €6.1 million (reference period 2011: minus €5.3 million). 6. Asset Situation With €473.9 million, the balance sheet total of the Balda Group was virtually on the same Balance sheet total level on the reference date 30 September 2012 as at the end of the short financial year in millions of euros 2012 (€473.4 million). In long-term assets (€27.5 million after €27.7 million), in refe- rence period comparison there were only marginal changes. 600 473.9 473.4 Within current assets, which in total at €446.5 million also remained virtually unchanged 400 (30 June 2012: €445.6 million), there was a clear decrease in ‘other current assets’ by €218.6 million. At the end of the short financial year, in this position there were still 200 claims from the sale in June 2012 of a stake in TPK Holdings and from dividend claims against TPK that went to the Group as cash in the report period. The claims against TPK reported as at 30 June 2012 from the issue of free shares were reclassified with the re- 0 ceipt of these shares in July 2012 to the position ”long-term assets classified as held for 30.9.2012 30.6.2012 sale”. The value of €170.9 million reported at 30 September 2012 comprised almost ex- clusively claims against banks (€168.0 million). This involved the cash from the sale of shares in TPK in February 2012 being invested in promissory notes.8
    • Quarterly Report I 2012/2013The cash increased through the cash inflows during the report quarter from the sale of TPK shares at the end of June 2012and from the TPK dividends of €17.8 million as at 30 June 2012 to €183.5 million as at the end of September.Inventories dropped in reference period comparison by €0.5 million to €12.9 million, above all through the demand for post-poned orders in the Balda Medical segment.The item ‘Long-term assets classified for sale’ comprises the market value of the balance of TPK shares (€72.5 million). Sub-ject to the clarification of tax questions, the Board intends the prompt sale of the shares.On the liabilities side, as at 30 September 2012 the Group shows equity capital of €454.1 million (30 June 2012: €450.5 mil-lion). Thus the equity ratio on reference date comparison rose by 0.6 percentage points to 95.8%. Long-term liabilities amoun-ted to €2.3 million (30 June 2012: €2.6 million). Current liabilities decreased in total by €2.8 million to €17.5 million, due pri-marily to the reduction in liabilities toward suppliers at Balda Electronic Products. The Balda Group still showed no significantbank borrowings as at 30 September 2012.7. Financial Position7.1. InvestmentsIn the first quarter of the current financial year, the Balda Group invested in continued operations €0.4 million in tangible andintangible assets (reference period: €0.2 million).The minimal investments in the Medical and Electronic Products segments equalled, together, €0.1 million (reference period2011: €0.2 million). This essentially involved replacement investments. Investments in the Central Services segment(€0.3 million) were primarily expenditures for the optimization of IT structures.7.2. Cash FlowAt the end of the first quarter 2012/2013, the financial resources of the Balda Group came to €183.5 million (30 June 2012:€17.8 million). Responsible for the significant increase was the cash flow from investment, with payments from the partial saleof TPK shares (€153.7 million), the cash dividends received from TPK (€9.3 million), and the repayment received on the loanin connection with the 2011 sale of the MobileCom segment (€4.5 million ). Through the increase in working capital, the cashflow from current operating activities showed a cash outflow of €1.4 million (last year’s reference period: outflow of €5.1 mil-lion). The cash outflow from financing activities was €0.1 million (last year’s reference period: Cash Inflow of €0.6 million).With the current solvency, the Balda Group is able to realize its planned projects under its own steam.8. EmployeesThe number of employees in the Balda Group was 1,185 as at 30 September 2012. This Number of employeesis 88 persons or 6.9% fewer than at the end of the short financial year 2012 (1,273 em-ployees). The decrease is due primarily to the reduction of temporary employees in Ma-laysia, who had been taken on additionally in the first half year 2012 for the rapid reduc- 1,500 1,273 1,185tion of unprofitable orders. 1,000In the Medical segment, on the quarterly reference date the number of employees were200 (30 June 2012: 209). The Electronic Products segment had 975 employees as at 500the end of September, 78 fewer than at the end of June. Of these, 493 people were tem-porary employees (30 June 2012: 540 employees). The figure for permanent employees,however, also decreased as a consequence of the restructuring to 482 people, after ha- 0ving been 513 people as at the end of June 2012. 30.9.2012 30.6.2012 9
    • Quarterly Report I 2012/2013 In the Central Services segment 10 persons were employed as at 30 September 2012, one person less than at the end of June 2012. 9. Supplementary Report After the reference date 30 September 2012, no events of great significance for the assets, earnings and financial position of the Group occurred. 10. Risk Report The consolidated accounts as at 30 June 2012 include a detailed description of the risk management in the Balda Group as well as a description and valuation of all significant risks. In the first quarter of 2012/2013, the risk profile of the Group did not change significantly. In this respect reference is made to the risk report in the consolidated accounts as at 30 June 2012, which is published in the Annual Report and on the internet site of the company. In addition reference is made to the following risk: Thus far in the course of the calendar year 2012, the Electronic Products segment has completed a number of restructuring measures, in order to rapidly achieve a turnaround in earnings and sustainably return to profitability. The restructuring is in- deed virtually complete, but the segment must strategically reposition itself in the strongly competitive market for entertain- ment and communication electronics, in order to grow and achieve the necessary profitability according to the group pro- gramme for growth and value increase. This strategic repositioning is taking place in an increasingly challenging economic environment. The downturn in the global economy that is ever more noticeably tangible is having its effect particularly in consumer-oriented sectors in which the custo- mers of Balda Electronic Products are active. Accordingly, the demand and revenue developments of the segment have been below expectations thus far in the course of the financial year 2012/2013. The Board must closely monitor and assess further developments in Electronic Products, to determine whether the new positio- ning of the segment is also possible under the current market conditions during a suitable period and at acceptable costs. 11. Forecast and Outlook 11.1. Strategic Outlook The unchanged primary objective of the Board is to direct the Balda Group toward growth and value increase. With this objec- tive, the business volume shall in the medium term be brought to a scale of €150 to €200 million, with an operative profitabi- lity (referred to EBITDA) of at least 15%. The Board sees said scale as a prerequisite for achieving the dividend payment capacity of Balda AG without dipping into the corporate substance, and for restoring a sufficient relevance of the company in the capital market. Thanks to the strong share- holders’ equity basis and high liquidity, the prospects are excellent for achieving these goals. Specifically, the following aspects are focal: • Fastest possible realisation of profitability in operations; • Further implementation of the defined buy-and-build strategy in the Medical segment with the goal of rapidly boosting re- venues in the segment over the mark of €100 million and being listed as ‘first choice system supplier’ by all major health- care companies as strategic supplier;10
    • Quarterly Report I 2012/2013• Strengthening the core competencies of the Group, particularly the top-quality processing of products in the field of plastic injection moulding, and integrating plastic solutions with electronic components and systems;• Value and tax-optimised sale of the remaining shares of the Balda Group in TPK Holding;• Further simplification of the Group structure and corresponding cost reductions.In the Balda Medical segment, on the one hand the defined growth strategy aims to a stronger globalization, in order to meetthe requirements of the existing usually internationally operating customers and to attract new ones. This is contingent uponphysical proximity to customers on the part of production as well as marketing activities in all significant economic areas. Thefocus of Balda is first on North America and Western Europe.On the other hand, the buy-and-build strategy will also lead to expansion of the range of services of Balda Medical in that at-tractive new segments of the healthcare market will be opened up. Prerequisite for this is that synergies can be reached inproduction and revenues with the existing activities of the segment. In the medium term, Balda Medical also plans the optimi-sation of production structures through the establishment of capacity in more cost-effective countries, for example in EasternEurope. This will allow concentration at the Bad Oeynhausen location on automatable, high-volume and technically sophistica-ted products.With the assistance of a specialised M&A advisor, the Board has identified a number of potential target companies and hasbeen carrying on numerous discussions since spring. Balda is currently at an advanced stage in negotiations with several po-tential acquisition candidates in North America and Western Europe that would lead to strategic reinforcements according tothe above stated criteria. The Board is confident that these negotiations will lead to first results soon.The restructuring of operational business is almost complete in the Electronic Products segment. Then numerous changes inmanagement personnel, internal processes, quality assurance and marketing were successfully undertaken and strict costcontrol was commenced. In the foreground, now, we see the strategic repositioning of the segment in promising niche mar-kets of the entertainment and communication electronics industry, in which through new, proprietary products, Balda canachieve higher margins than in its present role as pure contract manufacturer of ‘commodities’. Detailed planning in this re-gard has not yet been completed.The repositioning must take place in a globally increasingly challenging economic environment. In the course of the financialyear thus far, Electronic Products has sensed a clear reticence on the part of customers in their ordering behaviour, so thatthe order development as at the end of October 2012 was below expectations.As reported, the Board will decide, on the basis of the results of the fourth quarter of the 2012 calendar year and the anticipa-ted further development, whether the necessary continued development of the segment is also possible under these adversemarket conditions within a reasonable time. Accordingly, a decision must be made at this time concerning the next steps inElectronic Products.In the Central Services segment, the Board will examine further possibilities for simplifying the structures within the Groupand thus arriving at additional cost reductions. 11
    • Quarterly Report I 2012/2013 11.2.Financial Forecast The Board is retaining the targets for the year 2012/13. Insofar as the overall economic framework conditions, particularly for the Electronic Products segment, do not continue to worsen, the Board will continue to strive in the 2012/2013 financial year on the basis of the current portfolio, that is without acquisitions or disinvestments, toward • achieving Group revenues approximately at the level of the 2011 financial year • with an appromixately balanced Group EBIT. Consolidated earnings before and after taxes wll be positively influenced by interest earnings, meaning that positive figures are expected. These could increase due to income from the potential sale of the remaining shares in TPK Holding. Bad Oeynhausen, 5. November 2012 The Board Dominik Müser (Chairman) James Lim (Member) Selected explanatory notes General explanations The headquarters of Balda Aktiengesellschaft is located in Bad Oeynhausen, Germany. The interim report as of 30 September 2012 was prepared in compliance with the International Financial Reporting Standards (IFRS), as they are to be applied within the European Union (EU). The accounting methods applied are in accordance with the EU regulations for the accounting of consolidated financial statements. All values stated are in million euros (€ million), unless noted otherwise. The financial statements of the companies included in the consolidated financial statements are based on uniform accoun- ting and valuation principles that comply with the IFRS. Scope of consolidation The consolidated financial statements of the first three months of the financial year 2012/13 included, alongside Balda AG, four domestic and seven foreign subsidiaries within the scope of full consolidation. Information about the accounting and valuation methods The interim consolidated financial statements as of 30 September 2012 were prepared for the interim reporting taking into ac- count the International Financial Reporting Standards (IFRS), as they are to be applied within the EU. In accordance with the regulations of IAS 34, a condensed report compared to the consolidated financial statements as of 30 June 2012 was selec- ted. The interim consolidated financial statements were prepared applying the same accounting, valuation and consolidation methods as in the consolidated financial statements for the 2012 short fiscal year and comply with the IAS 34 regulations (in- terim reporting). The principles and methods of the estimates for the interim report have not changed compared to the previous periods (IAS 34,16 (d)). A detailed account of the accounting, consolidation and valuation methods is given in the notes of the annual fi- nancial statements as of 30 June 2012. The exercising of options included in the IFRS is also addressed here.12
    • Quarterly Report I 2012/2013The figures from the period 1 July to 30 September 2011 are applied as reference values for the income statement, the grouptotal income statement, the cash flow statement and the statement of changes to shareholders’ equity; this equated to thethird quarter of the 2011 financial year. This facilitates a true period-based comparison due to the seasonal fluctuations. Thegroup balance sheet as at 30 June 2012 provides comparable values for the balance sheet as at 30 September 2012. Other-wise, we refer to our notes on the structure of the quarterly report, page 3.The exchange rates taken as basis for the currency translation related to 1.00 euro developed as follows: Average spot-exchange rate on reference date Average exchange rates 30 September 30 June 1 July – 30 SeptemberCurrencies ISO Code 2012 2012 2012 2011US-Dollar USD 1,2855 1,2577 1,2505 1,4059Chinese Renminbi CNY 8,1234 7,9365 - 9,1224Malaysian Ringgit MYR 3,9032 4,0145 3,8896 4,2477Segment reportingThe segment reporting (see table in the appendix) is prepared in accordance with the same principles as in the 2012 (short fi-scal year) annual financial statements.The Electronic Products, Medical and Central Services segments require reporting. In the Medical segment the Group manu-factures complex plastic products for the medical sector. The Electronic Products segment has been focusing on the develop-ment and production of electronic products since the realignment. The Central Services segment provides financing and sup-plies strategic guidelines and support as part of the usual holding functions.The values of the MobileCom segment, which has been sold in the financial year 2011, are no longer part of segment repor-ting in the current interim report.The total output comprises other operating income and changes in inventories of finished and unfinished goods, in addition torevenues. The development of revenues and the earnings situation of the individual Group segments are presented in detail in"Business development" (see page 8.f.).Cash flow statementWith regards to the explanations on the cash flow statement we refer to the information on cash flow provided under point position in this interim report.Balance sheet structureThe balance sheet total for the Balda Group as at 30 September 2012 of €473.9 million reflected the level per the referencebalance sheet date 30 June 2012 (€473.4 million).On the assets side, long-term assets remained constant at approx. 27 million euros. The current assets also exhibited nochange in value in comparison to the reference value as at 30 June 2012, again standing at around €446 million. The figuresmerely show movement between the balance sheet items. The respective sums were reclassified from the item “Other currentassets” into the cash funds (€167.5 million) and into the item “long-term assets classified as held for sale” (€52.4 million)(see explanations under point 6., asset situation).With regards to the current assets, stock fell as at 30 September 2012 to €12.9 million (reference date 2012: €13.4 million).The decline is attributable to the delayed call-off orders.The cash funds recorded exhibited a significant increase of €165.7 million as at the end of the period under review, taking thetotal to €183.5 million, principally as a result of the aforementioned effect. 13
    • Quarterly Report I 2012/2013 The item long-term assets classified as held for sale developed in the first quarter of 2012/13 as follows: in KEUR As of 30 June 2012 17,895 Accrual due to receipt of new TPK shares 46,777 Change in fair value on the basis of the share price development 9,000 Currency differences -1,216 As of 30 September 2012 72,456 The Balda Group recorded a rise in shareholders’ equity to €454.1 million as of the end of the period under review after €450.5 million as of the reference date 30 June 2012. The increase is primarily attributable to the earnings in the period (plus €6.8 million), as well as increased reserves from the adjustment item for the market valuation of the TPK shares (€3.7 million). Exchange rate differences had a contrasting effect on the shareholders’ equity (€6.9 million). Income statement The Balda Group generated revenues of €13.9 million in the first quarter of 2012/13 compared to €15.4 million in the compa- rable period. This equates to a fall of €1.5 million or 10.0%. The business performance including the earnings position of the individual segments is presented in the interim report on page 7 ff. The Balda Group’s total output amounted to €14.1 million in the first quarter after €15.9 million in the comparable period. In particular an amended product mix in the Medical segment and the improved processes in Malaysia led to a lower materi- als expense ratio of 49.2% (reference period: 55.8%). Optimization measures in the area of fixed costs facilitated a reduction in the other operating costs incurred for the Electronic Products segment of €0.6 million, taking this figure to €2.7 million. During the first quarter of 2012/13 it was possible to achieve balanced operating income (EBIT) (reference period: minus 1.0 million euros). Due to the positive financial results the earnings before income tax (EBT) stood at plus 6.6 million euros and was therefore considerably higher than the figure for the previous year of minus 4.8 million euros. The Group’s earnings in the first quarter totaled 6.8 million euros. The comparable value was minus 3.7 million euros taking into account the earnings of the discontinued business area MobileCom (minus 9.4 million euros). Based on 58.891 million shares, a profit of 0.115 euros per share was generated from the net income of the comparable con- tinued business divisions. In the previous year the profit per share was minus 0.062 euros based on 58.891 million shares. Related parties Alongside the companies included in the consolidated financial statements, there are companies and persons, as well as per- sons in key positions of management that are related to the Balda Group according to IAS 24. In the period under review there were no business relations with these persons or companies excepting the remuneration payments to the Board of Directors and the Supervisory Board. Other financial obligations Other financial obligations, consisting mainly of letting and leasing obligations as well as purchase commitments for material investments, amounted to 0.2 million euros as of 30 March of the current financial year.14
    • Quarterly Report I 2012/2013Events after the reference dateNo significant events occurred after the reference date, which had an influence on the assets, financial and earnings situation.Details on the preparation of the interim reportThe consolidated balance sheet, the group total income statement, the cash flow statements, the segment reports, the state-ment of changes to shareholders’ equity, the interim management report and the condensed notes prepared as of 30 Septem-ber 2012 have not been audited or subjected to an auditing review. They were prepared for this interim report.Statements relating to the future contain fundamental uncertainties. This interim report contains statements, which also relateto the future development of Balda AG. These statements are based on both assumptions and estimates. Although the Boardof Directors is convinced that these forward-looking statements are realistic, they cannot be guaranteed. The assumptionscontain risks and uncertainties, which may result in the actual events deviating from the expected events.Responsibility statementTo be best of our knowledge, and in accordance with the applicable reporting principles for interim financial reporting, the in-terim consolidated financial statements give a true and fair view of the asset, financial and result situation of the Group, andthe interim management report of the Group includes a fair review of the development and performance of the business andthe position of the Group, together with a description of the significant opportunities and risks associated with the expecteddevelopment of the Group for the remaining months of the financial year.Bad Oeynhausen, 5 November 2012The Board of DirectorsDominik Müser James Lim 15
    • Quarterly Financial Statements I 2012/2013 16
    • Balance Sheet Group – Assets Balda Group – Balance Sheet as of 30 September 2012 – Assets in KEUR 30 September 2012 30 June 2012 A. Long-term assets I. Tangible assets 23,080 23,427 II. Goodwill 2 2 III. Intangible assets 496 372 IV. Deferred taxes 3,901 3,947 Long-term assets 27,479 27,748 B. Current assets I. Inventories 12,930 13,426 II. Trade accounts receivable 6,412 6,495 III. Other current assets 170,864 389,479 IV. Tax liabilities 321 572 V. Cash and cash equivalents 183,480 17,776 VI. Long-term assets classified as held for sale 72,456 17,895 Current assets 446,463 445,643 Total assets 473,942 473,39117
    • Balance Sheet Group – Total Liabilities and Shareholders’ EquityBalda Group – Balance Sheet as of 30 September 2012 – Total Liabilities and Shareholders’ Equityin KEUR 30 September 2012 30 June 2012A. Shareholders’ equity I. Subscribed share capital 58,891 58,891 II. Reserves 48,261 51,423 III. Net profit 346,914 340,137 1. Earnings 6,777 250,725 2. Retained earnings 340,137 89,412 Total shareholders’ equity 454,066 450,451B. Long-term liabilities I. Long-term finance lease obligations 111 137 II. Deferred taxes 2,131 2,345 III. Long-term provisions 98 98 Long-term liabilities 2,340 2,580C. Current liabilities I. Trade accounts payable 5,853 7,323 II. Other current liabilities 2,488 2,862 III. Advance payments received 6,053 6,749 IV. Short-term debts and current portion of long-term debts 9 137 V. Current portion of finance lease obligation 19 14 VI. Tax liabilities 2,639 2,654 VII. Short-term provisions 475 621 Current liabilities 17,536 20,360Total liabilities and shareholders’ equity 473,942 473,391 18
    • Income Statement / Group-Total-Income-Statement Balda Group – Income Statement – 1 July to 30 September 2012 2011 KEUR KEUR Revenues 13,890 15,425 Other operating income 1,111 796 Changes in inventories of finished goods and work in progress -883 -273 Total output 14,118 15,948 Material expenses 6,399 8,449 Material expenses rate in % 49.2% 1 55.8% 1 Personnel expenses 4,101 4,355 Ratio of personnel expenses in % 29.0% 27.3% Depreciations 878 912 Other operating expenses 2,709 3,273 Operating income 31 -1,041 Interest result 839 117 Other financial result 5,773 -3,847 Earnings before income tax 6,643 -4,771 Income tax 134 1,115 Earnings – continued operations 6,777 -3,656 Earnings discontinued operations 0 -9,405 Quarterly Group result 6,777 -13,061 Quarterly Group result added to: Shareholders of Balda AG 6,777 -13,061 thereof from continued operations 6,777 -3,656 thereof from discontinued operations 0 -9,405 Earnings per Share: Average number of shares – undiluted (per thousand) 58,891 58,891 Earnings per share – undiluted (EUR) 0.115 -0.222 Average number of shares – diluted (per thousand) 58,891 58,891 Earnings per share – diluted (EUR) 0.115 -0.222 Group-Total-Income-Statement – 1 July to 30 September in KEUR 2012 2011 1. Quarterly Group result 6,777 -13,061 2. Other result -3,162 -221,724 2.1. Discrepancy contribution from currency conversion -6,872 6,027 2.2. Change in fair value of financial assets held for sale 3,710 -224,981 2.3. Attributable income taxes 0 -2,770 3. Total result of the period 3,615 -234,785 Total result of the period attributable to: Shareholders of Balda AG 3,615 -234,785 Minority interests 0 0 (1) related to revenues and changes in inventory of finished and unfinished products19
    • Cash flowBalda Group – Cash flow – 1 July to 30 Septemberin KEUR 3-Month Report 3-Month Report 01.07.2012 - 01.07.2011 - 30.09.2012 30.09.2011 Net loss/income before income tax and financing costs – continued operations 31 -1,041+/- Net loss/income before income tax and financing costs – discontinued operations 0 -7,921+ Income from interest 110 301- Interest payments -10 -493+/- Payments on tax on income and earnings -21 -879+/- Depreciations/write-ups on long-term assets 878 4,909+/- Other non-cash affecting expenses and earnings -55 507+/- Increase/decrease in tax refund and tax liabilities 283 -274+/- Increase/decrease in provisions -146 -24+/- Increase/decrease in inventories, trade accounts receivable and other assets not itemised within investment or financing activities 26 3,942+/- Increase/decrease in accounts payable and other liabilities not itemised within investment or financing activities -2,540 -4,086= Cash flow from operating activities -1,444 -5,059 thereof discontinued operations 0 -2,822 Cash flow from investing activities- Payments in intangible and tangible assets affecting payment 1 -251 -1,223+/- Cash inflow from repayment of loans 4,500 0+ Cash inflow from the sale of TPK shares 153,719 0- Cash inflow from dividens 9,333 0= Cash flow from investing activities 167,301 -1,223 thereof discontinued operations 0 -735 Cash flow from financing activities- Affecting payment change of liabilities against banks -128 707- Affecting payment change of financial leasing liabilities -21 -66= Cash flow from financing activities -149 641 thereof discontinued operations 0 597+/- Change in cash and cash equivalents affecting payment 165,708 -5,641+ Cash and cash equivalents at the beginning of the fiscal year 17,776 42,340+/- Impact of exchange rate differences on cash held in foreign currencies -4 2,013= Cash and cash equivalents at the end of the reporting period – Group 183,480 38,712 Cash and cash equivalents at the end of 1. quarter – discontinued operations 0 2,937 Cash and cash equivalents at the end of the reporting period – continued operations 183,480 35,775 Total financial resources at the end of the reporting periods Cash funds 183,480 38,7121) Expenditures relate to some extent to the previous years 20
    • Segment Reporting Balda Group – Segment Reporting as of 30.09.2012 Quarterly result as of 30.9.2012 (1.7.-30.9.) in KEUR Electronic Products Medical Revenues external 5,794 8,096 Revenues internal 0 0 Revenues total 5,794 8,096 Change from previous year -22.6% 2.0% Total output 1 6,058 7,541 Change from previous year -21.2% -4.4% EBIT -67 554 in % of total output -1.1% 7.3% EBT -16 520 in % of total output -0.3% 6.9% Investments 39 48 Segment assets (1)/(2) 21,562 27,537 Number of employees as 30.09. (3) 975 200 Quarterly result as of 30.9.2011 (1.7.-30.9.) in KEUR Electronic Products Medical Revenues external 7,485 7,940 Revenues internal 4 0 Revenues total 7,489 7,940 Total output 7,691 7,889 EBIT -74 475 in % of total output -1.0% 6.0% EBT -31 408 in % of total output -0.4% 5.2% Investments 8 178 Segment assets (1)/(2) 35,245 19,246 Number of employees as 30.09. (3) 869 218 (1) Segment assets = long-term assets plus current assets excluding deferred tax assets and tax refunds. In the previous year these were the assets of continuing operations, excluding the sold MobileCom segment. (2) Segment assets for "Central Services" contains 72.5 million euros (same date: 394.4 million euros) to the shareholding value of TPK. (3) Number of employees at balance sheet date = including temporary employees, temporary workers and apprentices only continued operations. (4) The amounts shown in the reconciliation concern allocations to discontinued operations. (5) The inter-segment adjustments relate to the revenues obtained between the segments and intercompany receivables.21
    • Segment Reporting Sum operativeCentral Services segments Transition (4) Intersegment Adjustment (5) Group 0 13,890 0 0 13,890 0 0 0 0 0 0 13,890 0 0 13,890 -100.0% -11.2% -10.0% 1,238 14,837 0 -719 14,118 -31.8% -14.7% -11.5% -456 31 0 0 31 -36.8% 0.2% 6,138 6,643 0 0 6,643 495.8% 47.1% 258 345 0 0 345 446,289 495,388 0 -25,670 469,718 10 1,185 0 0 1,185 Sum operativeCentral Services segments Transition (4) Intersegment Adjustment (5) Group 0 15,425 0 0 15,425 210 214 18 -232 0 210 15,639 18 -232 15,425 1,814 17,394 -345 -1,103 15,946 -1,594 -1,193 153 0 -1,041 -87.9% -6.5% -5,282 -4,905 134 0 -4,771 -291.2% -29.9% 26 212 0 0 212 577,270 631,761 -5,691 -5,343 620,727 20 1,107 0 0 1,107 22
    • Changes to Shareholders’ Equity Balda Group - Changes to shareholders’ equity for the period 1 July to 30 September Subscribed Capital Revenue in KEUR share capital reserves reserves Balance on 01.07.2011 58,891 34,555 1,881 Result of the reporting period - - - Other result - - - Total result 0 0 0 Balance on 30.09.2011 58,891 34,555 1,881 Balance on 01.07.2012 58,891 34,555 1,881 Result of the reporting period - - - Other result - - - Total result 0 0 0 Balance on 30.09.2012 58,891 34,555 1,88123
    • Changes to Shareholders’ EquityDeferred item of the market value of Currency Retained Total share- AfS instruments reserves earnings holders’ equity 562,717 21,414 169,501 848,959 - - -13,061 -13,061 -227,751 6,027 - -221,724 -227,751 6,027 -13,061 -234,785 334,966 27,441 156,440 614,174 681 14,306 340,137 450,451 - - 6,777 6,777 3,710 -6,872 - -3,162 3,710 -6,872 6,777 3,615 4,391 7,434 346,914 454,066 24
    • Shareholding of the Bodies Shareholding of the Bodies as of 30 September 2012 30.09.12 30.06.12 Change Share Capital 58,890,636 58,890,636 0 R. Mohr 1 - 0 - D. Müser 0 0 0 J. Lim 0 0 0 Management Board Total 0 0 0 A. Chen 0 0 0 K. Kai 0 0 0 Dr. M. Naschke 23,000 23,000 0 Supervisory Board Total 23,000 23,000 0 Executive Body Total 23,000 23,000 0 in % of share capital 0.04 0.04 1) Departed on 1 January 201225
    • ContactInvestor Relations ContactFrank Elsner Kommunikation für Unternehmen GmbHFrank Elsner / Frank PaschenKirchstr. 15a49492 WesterkappelnTelefon: +49 (0)54 04 – 91 92 0Fax: +49 (0)54 04 – 91 92 29Mail: office@elsner-kommunikation.dePhotographyBalda AGThe Quarterly Report is available in German and English and can be downloaded on the Internet at 26
    • Balda Aktiengesellschaft • Bergkirchener Str. 228 • D-32549 Bad OeynhausenTelefon +49 (0)5734 922-0 • Fax +49 (0)5734 922-2604 • • E-Mail