Gelsenkirchen, 10 November 2010. At its meeting today, the Executive Board of Masterflex AG decided to sell the Mobility group, the last remaining non-core business activity of the Masterflex Group.
The sale of the Mobility group will complete the restructuring of the Group initiated in 2008 as part of the Group's long-term strategy to focus its activities on the core business High-Tech Hose Systems and to sell off activities not related to this. The Group is now actively seeking a buyer for the Mobility group and is already holding initial discussions for this purpose.
Write-downs will be incurred as a result of the reclassification of the business unit as 'held for sale'. For instance, a possible deconsolidation loss of up to EUR 3.5 million is expected, equivalent to roughly half of the loans extended to the companies in the Mobility unit and the work performed and still capitalised at Masterflex AG of approximately EUR 0.5 million.
These write-downs will not affect the liquidity situation of the Masterflex Group, but equity will decrease by the depreciation amounts specified. On the basis of commercial prudence, a negative impact on the balance sheet of Masterflex AG - adjusted and restructured following the parallel restructuring of the balance sheet equity and liabilities - should therefore be largely ruled out in future due to past effects.
Explanatory text: The high growth and diversification strategy of years following the IPO led to a high level of debt and considerable distortions of the balance sheet. In the 2008 financial year, the absolutely essential restructuring measures to refocus Masterflex AG's activities on the core business High-Tech Hose Systems were begun, as the debt burden in particular had by then grown to an overwhelming extent, even threatening the company's survival. In all years, hose business was a reliable and by far the biggest earnings driver in the Masterflex Group, consistently generating stable cash flows and attractive margins. Furthermore, the name Masterflex has stood for outstanding expertise in the entire High-Tech Hose Systems market for over twenty years.
With the deconsolidation of the Mobility unit, which has no synergies with the core business and whose performance has fallen significantly short of the expectations of the Executive Board of Masterflex AG, the restructuring initiated in 2008 will be completed by the end of the year.
The Executive Board will press ahead quickly with the sale process and will actively examine separate sales of individual Mobility equity investments and/or cooperations with partners as well as a complete sale of the Group. A current absence of sufficient market assessments and a lack of purchase offers make it difficult to judge the possible balance-sheet effects. Because the Mobility group is an internally established group of companies, no goodwill is capitalised here and the question of a revaluation therefore does not arise. However, the establishment and expansion of the business was pre-financed with loans in the past. In total, there are receivables of around EUR 5.0 million from various subsidiaries of the Mobility group. In addition, development expenses of roughly EUR 0.5 million were capitalised. In addition to inventories (around EUR 2.0 million), these are also countered by patents and a business model with high potential for expansion.