1. Quarterly Report I 2012/2013
Balda on the Path to Profitable Growth
Operations 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 factor
CONTENT
Key Figures of Balda Group 2 Interim Management Report 5
Notes to the changed structure 3 Selected explanatory notes 12
Balda Share and Investor Relations 4 Tables 16
2. 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 divisions
2
3. Short profile Balda Group
Short profile Balda Group
Technologies | Quality | Outstanding products
Balda 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 in
Malaysia, manufactures innovative plastic systems for the communication and entertainment industries. The company's success
is 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 corporate
value, generation of added value for business partners and attractive returns on investment for shareholders.
Notes on the Structure of the Quarterly Report
The 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. This
quarterly 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 statement
of equity changes, the period from 1 July to 30 September 2011 was used, which corresponded with the third quarter of the
financial year 2011. This allowed a genuine period comparison. The consolidated balance sheet as at 30 June 2012 presents
the 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 public
report for the third quarter 2011 of the continued operations. Thus, the values of the income statement are comparable up to
the earnings of the continued operations. However, the on 1 December 2011 sold MobileCom segment is in the comparable
period 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
4. 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
5. Quarterly Report I 2012/2013
Interim Report as at 30 September 2012
1. Overall Economic Development
The 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. The
International Monetary Fund (IMF) warned once again in its study ‘World Economic Outlook’ in October that the debt crisis in
Europe must be taken hold of by controlled institutional reforms, thus creating new confidence in the capital and financial
markets 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 to
3.3%, and at 3.6% for 2013 (previously: + 3.9%). For the euro zone, the IMF predicts a decline in economic performance in
2012 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 economy
to 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 support
through 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 well
as 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 2012
2. Industry Situation
2.1. Medical
Fundamental trends such as global population growth, improved access to medical care for many people in developing and
emerging countries, the growing self-treatment of patients with drugs (OTC) and increasing life expectancy continue without
change 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 fluctuate
between 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, which
further 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
6. 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
7. Quarterly Report I 2012/2013
4. Revenues and Earnings Development
Group revenues in the first three months of financial year 2012/2013 were €13.9 mil- Group revenues
lion, 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 13.9
tations in the report quarter. On the other hand, the revenues of Balda Medical in the
same period increased slightly. 10
Other operating income of €1.1 million is due primarily to currency effects from the valu-
5
ation of claims and liabilities (reference period: €0.8 million). In the report quarter, part
of the delayed order demand from the 2012 short financial year was delivered by Balda
Medical. This is reflected in the changes in stocks of finished and unfinished products by 0
minus €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 expenses
The expenses of materials ratio reduced during the reference period from 55.8% to in millions of euros
49.2%, 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 8.4
ment. Here, the share of more material-intensive tool and system revenues was higher in
the reference quarter 2011, while a higher number of article revenues were recorded in 6.4
the quarter under review. 5
Although 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 0
requirements in the Electronic Products segment in relation to revenue. 1.7.-30.9. 1.7.-30.9.
2012 2011
Other 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 well
as 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 operating
segments achieved positive values.
After depreciations, there was a balanced earnings before interest and taxes (EBIT) after EBIT
a negative EBIT of €1.0 million in the reference period 2011. in millions of euros
The financial result reached €6.6 million (reference period: minus €3.7 million). In addi- 0.5 0.03
tion to interest income from the high cash balances of the Group, there were, above all,
0
positive 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- -0.5
rence period: minus €4.8 million). For continuing operations, earnings after taxes impro-
-1.0
ved 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
8. 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
9. Quarterly Report I 2012/2013
The cash increased through the cash inflows during the report quarter from the sale of TPK shares at the end of June 2012
and 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 significant
bank borrowings as at 30 September 2012.
7. Financial Position
7.1. Investments
In the first quarter of the current financial year, the Balda Group invested in continued operations €0.4 million in tangible and
intangible assets (reference period: €0.2 million).
The minimal investments in the Medical and Electronic Products segments equalled, together, €0.1 million (reference period
2011: €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 Flow
At 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 sale
of TPK shares (€153.7 million), the cash dividends received from TPK (€9.3 million), and the repayment received on the loan
in connection with the 2011 sale of the MobileCom segment (€4.5 million ). Through the increase in working capital, the cash
flow 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. Employees
The number of employees in the Balda Group was 1,185 as at 30 September 2012. This Number of employees
is 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
1,185
tion of unprofitable orders.
1,000
In the Medical segment, on the quarterly reference date the number of employees were
200 (30 June 2012: 209). The Electronic Products segment had 975 employees as at
500
the 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- 0
ving been 513 people as at the end of June 2012. 30.9.2012 30.6.2012
9
10. 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
11. 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 meet
the requirements of the existing usually internationally operating customers and to attract new ones. This is contingent upon
physical proximity to customers on the part of production as well as marketing activities in all significant economic areas. The
focus 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 in
production 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 Eastern
Europe. 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 has
been 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 to
the 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 in
management personnel, internal processes, quality assurance and marketing were successfully undertaken and strict cost
control 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 can
achieve 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 financial
year thus far, Electronic Products has sensed a clear reticence on the part of customers in their ordering behaviour, so that
the 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 adverse
market conditions within a reasonable time. Accordingly, a decision must be made at this time concerning the next steps in
Electronic Products.
In the Central Services segment, the Board will examine further possibilities for simplifying the structures within the Group
and thus arriving at additional cost reductions.
11
12. 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
13. Quarterly Report I 2012/2013
The figures from the period 1 July to 30 September 2011 are applied as reference values for the income statement, the group
total income statement, the cash flow statement and the statement of changes to shareholders’ equity; this equated to the
third quarter of the 2011 financial year. This facilitates a true period-based comparison due to the seasonal fluctuations. The
group 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 September
Currencies ISO Code 2012 2012 2012 2011
US-Dollar USD 1,2855 1,2577 1,2505 1,4059
Chinese Renminbi CNY 8,1234 7,9365 - 9,1224
Malaysian Ringgit MYR 3,9032 4,0145 3,8896 4,2477
Segment reporting
The 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 to
revenues. 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 statement
With regards to the explanations on the cash flow statement we refer to the information on cash flow provided under point 7.
financial position in this interim report.
Balance sheet structure
The balance sheet total for the Balda Group as at 30 September 2012 of €473.9 million reflected the level per the reference
balance 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 no
change in value in comparison to the reference value as at 30 June 2012, again standing at around €446 million. The figures
merely show movement between the balance sheet items. The respective sums were reclassified from the item “Other current
assets” 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 the
total to €183.5 million, principally as a result of the aforementioned effect.
13
14. 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
15. Quarterly Report I 2012/2013
Events after the reference date
No 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 report
The 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 relate
to the future development of Balda AG. These statements are based on both assumptions and estimates. Although the Board
of Directors is convinced that these forward-looking statements are realistic, they cannot be guaranteed. The assumptions
contain risks and uncertainties, which may result in the actual events deviating from the expected events.
Responsibility statement
To 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, and
the interim management report of the Group includes a fair review of the development and performance of the business and
the position of the Group, together with a description of the significant opportunities and risks associated with the expected
development of the Group for the remaining months of the financial year.
Bad Oeynhausen, 5 November 2012
The Board of Directors
Dominik Müser James Lim
15
17. 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 473,942 473,391
17
18. Balance Sheet Group – Total Liabilities and Shareholders’ Equity
Balda Group – Balance Sheet as of 30 September 2012 – Total Liabilities and Shareholders’ Equity
in KEUR 30 September 2012 30 June 2012
A. 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 454,066 450,451
B. 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 2,580
C. 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 20,360
Total liabilities and shareholders’ equity 473,942 473,391
18
19. 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 products
19
20. Cash flow
Balda Group – Cash flow – 1 July to 30 September
in 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 38,712
1) Expenditures relate to some extent to the previous years
20
21. 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
23. 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 1,881
23
25. 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 2012
25
26. Contact
Investor Relations Contact
Frank Elsner Kommunikation für Unternehmen GmbH
Frank Elsner / Frank Paschen
Kirchstr. 15a
49492 Westerkappeln
Telefon: +49 (0)54 04 – 91 92 0
Fax: +49 (0)54 04 – 91 92 29
Mail: office@elsner-kommunikation.de
Photography
Balda AG
The Quarterly Report is available in German and English and can be downloaded on the Internet at www.balda.de.
26
27. Balda Aktiengesellschaft • Bergkirchener Str. 228 • D-32549 Bad Oeynhausen
Telefon +49 (0)5734 922-0 • Fax +49 (0)5734 922-2604 • www.balda.de • E-Mail info@balda.de
