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MASTERFLEX – Technische Schläuche & Verbindungen
MASTERFLEX – Technische Schläuche & Verbindungen

Ad-hoc Release on preliminary figures

Preliminary figures for 2014: two of three targets achieved – correction of deferred tax assets as per IAS 8

 

Gelsenkirchen, 3th of March 2015 - In the 2014 financial year, Masterflex SE did not reach all of its targets on group level. On the basis of the preliminary figures, two of the three targets issued have been achieved:

  • Revenue growth, at 7.9% to € 62.5 million, is considerably higher than the growth of the global economy.
  • In addition, EBIT of € 6.3 million also exceeded the previous year’s figure of roughly € 0.2 million; the EBIT margin is in double-digits again at 10.1%.
  • Due to declining growth momentum in the last quarter, however, EBIT growth at 3.3% lagged behind revenue growth (7.9%). The target of stronger EBIT growth compared to revenue growth was therefore missed.

In addition, the tax audit of the financial years 2006 to 2011 determined that the calculation of deferred taxes was incorrect. To correct this error, Masterflex is applying IAS 8. Deferred tax assets totalling approximately € 2.8 million are to be reversed, thereof  € 1.9 million pertain to previous years. The net profit for 2014 amounts to approximately € 3.0 million.

NOTES:

On operating earnings: In the first three quarters of 2014, the Masterflex Group grew strongly. After Q3/2014, revenue growth was 8.9%. Momentum dropped in the last quarter, so revenue growth was only 4.6% in Q4. This is because of developments in Russia in particular, which also had first tangible negative effects for us in the last quarter, as well as teething problems in a major medical technology project that have since largely been solved. Therefore, the third growth target we set ourselves, to achieve stronger EBIT growth compared to revenue growth, was ultimately missed. Nonetheless, in the management’s point of view this changes nothing about the continuing good and profitable development of the Masterflex Group.

On the reversal of deferred tax assets: In 2009, a restructuring report commissioned by Masterflex SE due to the threat of financial difficulties confirmed the fundamental possibility of restructuring the Company. As a result, creditor banks waived some of their debt in line with the restructuring plan. This debt waiver of € 10.2 million led to a restructuring profit at Masterflex SE, the taxation of which the Company believes fell and falls under the criteria of tax-privileged restructuring profit according to the BMF circular dated 27 March 2003. However, at that time the existing tax losses unaffected by deduction and offsetting restrictions were not offset against the restructuring profit, so the deferred tax assets were calculated incorrectly in 2010.

During the ongoing tax audit for the years 2006 to 2011, it was indicated that, on recognition of the restructuring profit, it must first be offset as far as possible against losses and negative income of Masterflex SE. In addition to offsetting with losses of the current financial year, it must also be offset against losses carried forward and carried back. Therefore, deferred tax assets totalling €2.82 million were reversed in 2014, € 1.9 million of which relating to the previous years 2010 until 2013.

This past error will be corrected in accordance with IAS 8. For Masterflex SE, this means that loss carryforwards will be used up sooner than expected in Germany, and therefore that the outflow of funds for taxes will begin sooner than expected. However, depending on economic development, this will not have relevant effects until the years 2017 and onwards. The effects on 2015 and 2016 are marginal.

The figures are still subject to confirmation by the auditor and approval by the Supervisory Board. The final figures for the year will be presented by the Executive Board at the financials press conference in Düsseldorf on 30 March 2015.

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