Mutares AG publishes Annual Report 2018
- Group sales of EUR 865.1 million and operating result of EUR 4.5 million (Adjusted EBITDA) confirmed
- Dividend proposal as announced at EUR 1.00 per share (previous year: EUR 1.00)
- Positive development of Donges Group
- Planned change of legal form to a partnership limited by shares
- Positive outlook for 2019 with at least three further transactions
Munich, April 16, 2019 – Mutares AG (ISIN: DE000A2NB650), an investor focused on the takeover of companies in special situations, published its annual report for 2018. The year under review was marked by the further strategic development of the Group, the first IPO of a portfolio company and the achievement of important milestones in the repositioning of strategic add-ons and portfolio companies that were newly acquired in the previous year. The Management Board and Supervisory Board will propose a dividend of EUR 1.00 per share to the Annual General Meeting on May 23, 2019 to enable shareholders to participate in the company’s success.
Positive consolidated result for the year, increased cash and cash equivalents and further enhanced equity ratio
With the published audited Group figures 2018, Mutares supplements the forecast of the figures communicated on April 08, 2019. In the year under review, the investments of the Munich-based investment group generated sales of EUR 865.1 million (previous year: EUR 899.7 million). The operating result (EBITDA) of the Mutares Group amounted to EUR 49.1 million in 2018 (previous year: EUR 67.1 million). Adjusted EBITDA increased extraordinarily to EUR 4.5 million (previous year: EUR -27.9 million). On the basis of the investments continued as of December 31, 2018, sales of EUR 784.3 million (previous year: EUR 612.0 million) and Adjusted EBITDA of EUR 14.5 million (previous year: EUR -7.3 million) were generated. As of the 2018 balance sheet date, the Group’s cash and cash equivalents amounted to EUR 108.1 million (previous year: EUR 98.9 million) and the Group’s equity ratio was around 33% (previous year: 25%).
Group key figures:
| EUR million | FY 2018 | FY 2017 |
| Group sales | 865.1 | 899.7 |
| Group EBITDA | 49.1 | 67.1 |
| Income from bargain purchases | -32.3 | -87.3 |
| Restructuring and other non-recurring expenses | 28.6 | 23.2 |
| Deconsolidation effects | -40.9 | -30.9 |
| Adjusted EBITDA | 4.5 | -27.9 |
| Consolidated net income | 12.0 | 43.9 |
| Earnings per share (in EUR) 1) | 0.96 | 2.85 |
| As at Dec. 31, 2018 | As at Dec. 31, 2018 | |
| Balance sheet total | 630.8 | 672.8 |
| of which: cash and cash equivalents | 108.1 | 98.9 |
| of which: equity | 208.1 | 165.5 |
| Equity ratio | 33% | 25% |
1) Diluted and undiluted.
2018 was a formative year for M&A
Mutares has reached key milestones for the further strategic development and transaction capability in the past fiscal year: With the IPO of STS Group AG, Mutares has made the regulated capital market a potential, further exit channel for its portfolio companies. The Mutares office in Milan, which opened in 2017, successfully completed its first transaction with the acquisition of the add-on STF for the Balcke-Duerr Group. With its first acquisition in the UK, Mutares acquired a new platform investment, Gemini Rail Group, and at the same time opened an office in London to be present in the UK with a local M&A team.
Favorable operating progress
Due to the strategic acquisitions made by STS Group AG in previous years, the Automotive segment represented again the largest portfolio segment with sales of EUR 437.0 million (previous year: EUR 344.1 million). Due to the good development of the add-on acquisitions of STS Group, the segment’s adjusted EBITDA increased by 22% to EUR 17.6 million (previous year: EUR 14.4 million). In the previous year, the group succeeded in winning a strategically relevant first order in the promising e-mobility market as well as a new customer in the North American commercial vehicle market, thus expanding its global presence.
The companies in the Engineering & Technology segment generated revenues of EUR 191.9 million in fiscal 2018 (previous year: EUR 213.2 million). At the same time, they achieved extraordinarily improved profitability with an increase in Adjusted EBITDA of EUR 18.2 million to EUR +1.8 million (previous year: EUR -16.4 million). The main driver for this was the successful turnaround of the Balcke-Duerr Group. After the takeover by Mutares in November 2017, the Donges Group successfully completed its turnaround in the fourth quarter of 2018. In 2018, the segment was again significantly influenced by transactions, including the acquisitions of Kalzip (Add-On for Donges Group) and Gemini Rail Group (new platform investment).
The Construction & Infrastructure segment posted a pleasing 19% increase in sales to EUR 77.7 million (previous year: EUR 65.1 million). Driven by sales growth and a significant improvement in profitability at Eupec and the sale of BSL in the fourth quarter of 2018, adjusted EBITDA improved significantly by EUR 5.2 million to EUR +0.2 million (previous year:
EUR -5.0 million).
The Wood & Paper segment’s companies generated sales of EUR 124.9 million in the reporting period (previous year: EUR 178.8 million), mainly due to the deconsolidation of Zanders in the middle of last year. Adjusted EBITDA of EUR -7.0 million was significantly more negative than in the previous year (EUR -3.9 million). This was mainly due to the development of Zanders, which was deconsolidated in June 2018.
At EUR 33.8 million, sales in the Consumer Goods & Logistics segment in fiscal year 2018 were significantly lower than in the previous-year period (EUR 98.6 million). This is due in particular to the sale of Grosbill in 2017 and the deconsolidation of Artmadis in the first half of 2018. Operative segment earnings (Adjusted EBITDA) improved extraordinarily by EUR 8.5 million to EUR -1.5 million (previous year: EUR -10.0 million).
New and improved portfolio segmentation
As previously announced, the five portfolio segments will be combined into three segments: Automotive & Mobility, Engineering & Technology and Goods & Services. By this change, Mutares’ transaction focus will be clarified and the business models of the individual investments in the portfolio will be better aligned. With the publication of the 2018 Annual Report, this will be the last time that reporting will be based on the previous five segments. Based on the new segment structure, the reported results for fiscal year 2018 are as follows:
Key figures 2018 according to new segment structure:
| EUR million | Sales | Adjusted EBITDA |
| Automotive & Mobility | 437.0 | 17.6 |
| Engineering & Technology | 206.1 | 4.2 |
| Goods & Services | 141.2 | -0.8 |
| Other (deconsolidated investments, corporate & consolidation) | 80.8 | -16.5 |
| Total | 865.1 | 4.5 |
Net asset value of the portfolio
The portfolio was valued using a discounted cash flow model, taking into account the budgets of the individual investments for the current and the following two years (2019 to 2021). The NAV is calculated as the sum of the segment valuations (assets less the market value of liabilities plus net financial resources) with a company-specific WACC of 6% – 11% (average: 9%) and a uniform conservative growth rate of 0.5%. For the calculation of the NAV, only the sum-of-the-parts value of the individual segments is taken into account, i.e. transaction activity, turnaround expertise and the brand strength of Mutares are not included in the following calculation:
| Previous segment structure | NAV as at Dec. 31, 2018 (in EUR million) |
| Automotive | 56.2 |
| Engineering & Technology |
86.3 |
| Construction & Infrastructure | 25.1 |
| Wood & Paper |
13.7 |
| Consumer Goods & Logistics | 0.4 |
| Net financial resources of Mutares AG | 21.2 |
|
Total NAV per share |
202.9 13.32 |
| New segment structure | NAV as at Dec. 31, 2018 (in EUR million) |
| Automotive & Mobility | 56.2 |
| Engineering & Technology |
104.5 |
| Goods & Services | 21.0 |
| Net financial resources of Mutares AG | 21.2 |
|
Total
NAV per share |
202.9
13.32 |
Notes on the NAV in Q4/2018:
- STS Group AG was valued as of December 31, 2018, on the basis of the stock market price (XETRA) and the stake held by Mutares AG
- Engineering & Technology segment: increase in NAV reflects the positive development of Donges Group
Invitation to Annual General Meeting; proposed change of legal form and dividend
Together with the Supervisory Board, the Executive Board has resolved to propose to this year’s Annual General Meeting that the Company be converted into a partnership limited by shares (Kommanditgesellschaft auf Aktien, KGaA). The proposed change of legal form is intended to secure the continuation of the Mutares Group’s long-term growth strategy. The transformation of legal form into a SE & Co. KGaA creates the structural prerequisites for maintaining the decisive competitive advantage of the bodies’ ability to act and make decisions quickly in the future as well.
The proposed change of legal form does not affect the legal and economic identity of Mutares. The share capital of the Company will remain unchanged as will the number of no-par value shares issued. The shareholders will hold the same number of no-par value shares in KGaA as before the transformation of legal form in Mutares AG. The shares of the future Mutares SE & Co. KGaA will be admitted to stock exchange trading as before. The previous ISIN DE000A2NB650 and GSIN A2NB65 will remain unchanged. A detailed description of the legal and economic consequences of the change of the legal form and the future participation of the shareholders can be found in the conversion report prepared by the Executive Board, which is available at www.mutares.de/investor-relations.
In addition, the Management Board and the Supervisory Board plan to allow the shareholders of Mutares AG to participate appropriately in the success of Mutares again this year. As in the previous year, a dividend of EUR 1.00 per share will therefore be proposed to this year’s Annual General Meeting. Based on the current Mutares share price, this corresponds to a dividend yield of around 10%.
Outlook 2019: Three further transactions and sales of more than EUR 1 billion expected
For the current year 2019, in addition to the already completed two strategic acquisitions of Donges Group, the Management Board of Mutares expects at least three further transactions and is aiming for Group-wide sales of more than EUR 1 billion for the Mutares Group as well as an attractive level of dividend capacity.
Conference call today at 2:00 pm (CEST)
A webcast conference call will be held today at 2:00 pm (CEST) in English for analysts, investors and press representatives. Registrations can be sent by e-mail to [email protected]. The webcast presentation is available for download at www.mutares.de/investor-relations.