130
Miba in Motion Annual Report 2010-2011
Mibain Motion
Annual Report 2010-2011
2010-11 2009-10 2008-09
Income Statement (in million EUR)
Sales 437.2 311.8 374.6
Part of sales outside Austria in % 92.8 91.6 91.9
EBIT 54.5 16.4 34.5
EBT 53.3 15.5 30.9
Earnings after taxes 42.2 12.3 20.8
Balance Sheet (in million EUR)
Balance sheet total 452.6 343.9 341.0
Non-current assets 221.8 178.3 192.9
Liabilities 204.1 137.1 143.6
Group equity 248.5 206.8 197.4
Group equity as % of total capital 54.9 60.1 57.9
Cash Flow and Investments (in million EUR)
Cash flow from operations 65.8 48.1 51.6
Investments (excluding financial investments) 34.6 19.5 43.1
Depreciation and amortization 30.5 29.2 28.8
Employees
Employees, yearly average 3,064 2,613 2,855
Personnel costs (in million EUR) 130.9 108.8 121.7
Stock Exchange Data (in EUR)
Earnings per share 33.99 9.93 16.49
Dividend per share 7.0 2.5 3.0
Dividend yield in % 3.3 3.1 4.3
Share quotation at closingof business year (01/31) 210.0 81.0 70.0
Key Figures 2010-2011
1
Miba
Vision 2015 2
Global Network 4
Highlights 2010-2011 6
Success Story 8
Preface by the Chief Executive Officer 12
Management Board Interview 14
Supervisory Board 20
Management Report 23
Investor Relations 24
Business Development 26
General Economic Setting 26
Performance Analysis and Balance Sheet 28
Changes in the Corporate Structure 31
Information as Required Under Section 243a of the Austrian Business Enterprise Code (UGB) 32
Risk Report 33
Company 37
Research & Development 37
Employees 40
Corporate Social Responsibility 42
Product Portfolio 44
Miba Sinter Group 46
Miba Bearing Group 48
Miba Friction Group 50
New Technologies Group 52
Outlook 54
Corporate Governance Report 56
Financial Statements 2010-2011 63
Report of the Supervisory Board 113
Credits 126
Financial Calender 127
Contents
2
2015Miba
Technology Leadership
Lifelong LearningEntrepreneurship
Passion for Success
Our Mission: Innovation in Motion – Miba technology enables resource-efficient mobility.
Miba is an international group producing high-performance and technologically demanding power train components. We support our customers worldwide, from development to implementation of individual solutions. Miba technology and our wealth of experience make motor vehicles, trains, ships, aircraft and power plants more efficient, more powerful and more environmentally friendly.
Our Vision: No power train without Miba technology.
We ensure our competitive edge by investing approximately six percent of sales in research and development and in training and education. Our profitable core business growth enables us to build up a new business area in future-oriented key technologies.
3
Lifelong Learning
Our strategy: Global No. 1 in economically attractive and technologically demanding market segments.
We are an owner-oriented listed company with a presence in the world’s economic growth centers. All our actions are based on our commitment to financial independence, social responsibility and sustainability. Our four divisions focus on attractive niches, in which we continue to constantly strengthen our worldwide number 1 position. Our outstanding employees are the engine of our success. We constantly improve our processes and strive for business excellence.
Miba | Vision 2015
4
Global Network12 New Sites
Miba Bearings US LLCMcConnelsville, OH, USAMiba Bearing Group
Miba HydraMechanica Corp.Sterling Heights, MI, USAMiba Friction Group
ABM Advanced Bearing Materials LLCGreensburg, IN, USAMiba Bearing Group
NEW Miba Sinter USA LLCMcConnelsville, OH, USAMiba Sinter Group
NEW Miba Bearings Sales Corp.McConnelsville, OH, USASales Office, Miba Bearing Group
NEW EBG LLCMiddletown, PA, USASales Office, New Technologies Group
NEW EBG Resistors LLCMiddletown, PA, USASales Office, New Technologies Group
NEW Teer Coatings Ltd.Droitwich, United KingdomMiba Coating Group
Miba France SARLParis, FranceSales Office, Miba Sinter Group
Miba Deutschland GmbHStuttgart, GermanySales Office, Miba Sinter Group
Miba Italia S.r.l.Turin, ItalySales Office, Miba Sinter Group
Mahle Metal Leve Miba Sinterizados Ltda.São Paulo, BrazilMiba Sinter Group
5
Miba Gleitlager GmbHLaakirchen, AustriaMiba Bearing Group
Miba Sinter Austria GmbHVorchdorf, AustriaMiba Sinter Group
Miba Frictec GmbHRoitham, AustriaMiba Friction Group
Miba Automation Systems GmbHLaakirchen, AustriaNew Technologies Group
High Tech Coatings GmbHVorchdorf, AustriaMiba Coating Group
NEW EBG GmbHKirchbach, AustriaNew Technologies Group
NEW DAU GmbH & Co KGLigist, AustriaNew Technologies Group
Miba Sinter Slovakia s.r.o.Dolný Kubín, SlovakiaMiba Sinter Group
Miba Steeltec s.r.o.Vráble, SlovakiaMiba Friction Group
NEW EBG d.o.o.Šentjernej, SloveniaNew Technologies Group
Miba Precision Components (China) Co. Ltd.Suzhou, ChinaMiba Sinter Group,Miba Bearing Group
NEW Miba Coatings Trading (Suzhou) Ltd.Suzhou, ChinaSales Office, Miba Coating Group
NEW EBG Shenzen Ltd.Shenzhen, ChinaNew Technologies Group
Miba Far East PTE Ltd.SingaporeSales Office, Miba Bearing Group
NEW Miba Drivetec India Pvt. Ltd.Pune, IndiaMiba Friction Group
NEW Maxtech Sintered Product Pvt. Ltd.Pune, IndiaMiba Sinter Group
An overview of the affiliated companies can be found on pages 124 and 125.
Miba | Global Network
6
03 05 06 09
2010-2011
March 2010Miba acquires British coatings specialist Teer Coatings.
May 20101,894 employees partici-pate in the international Miba Employee Survey.
June 2010Miba opens a new sinter plant and a new production line for high-performance engine bearings in USA. September 2010
Miba takes over EBG and DAU, Styrian manufac-turers of power electronic components, and thereby enters into the new tech-nology field of energy.
Miba takes over the friction business for off-highway applications from Hoerbiger. Thus, Miba Friction Group grows by more than half.
Highlights
7
10 12 01 02
2010-2011
January 2011With the friction materials plant Miba Drivetec India, Miba takes over its first production site in the growth market of India.
February 2011Miba establishes a new division, the NewTechnologies Group. Norbert Schrüfer assumes Chief Executive Officer position.
As CEO of Miba Friction Group, F. Peter Mitterbauer is newly appointed to the Management Board of Miba Group.
Miba Sinter Group invests in a joint venture with an Indian manufacturer of sintered components.
October 2010Miba accepts 30 new apprentices and reaches a peak level for the Group of 154 trainees.
Miba | Highlights 2010-2011
8
This quote from Socrates applies to Miba perhaps more than any other company. Our high precision products move vehicles and machinery all over the world. For more than 80 years, Miba itself has not stood still for a single moment, and has always pursued its ambitious vision: No power train without Miba technology.
The Miba Story: From repair shop to global group The roots of our success in the global market lie in the Upper Austrian municipality of Laakirchen: Franz Mitterbauer established his repair shop here in 1927. He started producing bearings after World War II, and in doing so, laid the cornerstone for the company we know today. Then in the 1950s, the pace began to soar: Mitterbauer became supplier to major Austrian engine manufacturers and began its foreign exports business under the “Miba” brand name. The production of sintered components was added in 1962. The mid-70s ushered in the arrival of the friction materials business and in 1986, the Company was listed on the Vienna Stock Exchange.
Starting in the 1990s, Miba embarked on an expansionary course in its core segments. Since then, things are moving in rapid succession, with the opening of one branch office following the next. Today, Miba proudly boasts 20 locations on three continents and it is a coveted strategic development partner in the international engine and automotive industry. A remarkable balancing act has succeeded in the process: Despite its expansion throughout the globe, Miba remained and continues to be an Austrian company to this date and, same as before, the majority shareholdings remain in family hands. The majority of the approximately 3,300 employees work at the Austrian locations. The second largest production site after Austria is Slovakia, including two plants in Dolný Kubín and Vráble.
Managing the booming success – signs point to continued growth The USA, China, India and Brazil represent important markets outside of Europe. “We are anyplace where growth happens and the customer needs our technology,” explains Peter Mitterbauer, Chairman of the
Miba in Motion
“Let him that would move the world first move himself.”
Success Story
9
Management Board of Miba Group. Recently, more than EUR 22 million were invested in the McConnelsville location in the USA. The newly built Miba Sinter USA produces approximately four million parts for energy-efficient passenger car engines and transmissions each year. The lead-free high-performance engine bearings made at its sister plant, Miba Bearings US, will be used in a new generation of truck engines.In September 2010, Miba took over the friction business for off-highway applications of its competitor, Hoerbiger. This turned Miba Friction Group into the market leader in friction materials for off-highway applications in Europe and put it in the number two position worldwide. And it brought 200 new jobs to the locations in Roitham (Austria) and Vráble (Slovakia). In January 2011, Miba took over its first production site in India. Miba Drivetec India in Pune produces friction materials and is now a part of the Miba Friction Group. A joint venture ensued one month later with an Indian manufacturer of sintered components. The entry into India is one example of Miba’s strategy, says Peter Mitterbauer: “We are entering into a growth market through a local production site. By doing so, we are supporting major global customers who already build power trains there or who plan to in the future.”
A solid financial structure, with a sustainably high equity ratio of over 50 percent, makes this possible. Even in the economically challenging 2009-2010 business year, the development and expansion of new locations in strategically significant markets was financed through the Company’s own capital resources. Successfully, too: Miba emerged from the crisis stronger and more streamlined; it grew through company acquisitions, preserved jobs, created new ones and used market opportunities. Beside the automotive industry – which contributes roughly 40 percent to the business – Miba supplies several other industries. This wide mix helps to balance out order fluctuations in individual divisions.
Innovation in Motion – competitive edge through technology Miba’s “silent champions” are in demand throughout the world: They make vehicles, trains, ships, air-craft and power plants more efficient, safer and more environmentally friendly.
Miba in Motion
Miba | Success Story
10
Technology leadership does not come about by accident: Approximately 170 employees are researching and developing the power trains of the future. A good five percent of Group sales flow back into research and development as well as training and continuing education. Over the last five years, an average 18 patent applications were filed each year in order to safeguard the development output.
Products and business areas are being added continuously. One example is the complete take-over of the English coatings specialist, Teer Coatings Ltd., in 2010. The friction-reducing and wear-resistant coat-ings enhance the portfolio of Miba Coating Group, which refines functional surfaces. Miba is furthermore getting a head start in the key technologies of the future. The recently formed New Technologies Group is responsible for the development of future-oriented technologies and business areas. “Our strategy is clearly focused on the future. We want to grow both in the core segments as well as in new fields of technology,” explains Mitterbauer.
By taking over EBG and DAU, the Styrian manufacturers of power electronic components, in 2010, Miba entered into a new field with major potential: Energy. High-performance components for power electronics are a key to more efficient power trains and the use of renewable energies like wind power. The wind industry, as an example, shows the diversity of perspectives: Miba Frictec develops a friction lining for wind turbines. Miba Gleitlager has filed patent applications for the power train of wind gearboxes and wind turbine generators. And the mobile machinery of Miba Automation Systems make taller concrete towers possible to build, thereby improving the degree of efficiency of wind turbines.
Miba spirit – it‘s the people that matter Miba bears responsibility for many people. Two-thirds of all “Mibarians” work in Austria and Slovakia; the Company is a major employer and economic factor in these regions. One-third of the Austrian employees started out with an apprenticeship at the Company. Since its founding more than 80 years ago, more than 1,200 apprentices have been trained. With 118 production and electronics technicians in training, Austria reached its peak level in 2010. Miba is training 36 young people in Slovakia as well. In order to promote apprentices, Miba works jointly with vocational schools and it facilitates international exchange.
The “Miba Spirit” is an important factor to success: “Our employees distinguish themselves through lifelong learning, passion for success and entrepreneurship. We foster this through several initiatives,” explains Mitterbauer. Almost 1,900 employees participated in the global employee survey in 2010. Im-provement ideas are also requested at Miba: As a goal in its Vision 2015, Miba is seeking two improve-
11
The vision for the future is clear. Whether driving the car, cruising on a ship or flying on an airplane: Technology from Miba is always on board.
ment suggestions per employee per year. Currently, more than 3,000 ideas are being implemented over the year.
The Company’s dedication equally benefits disadvantaged persons. Miba promotes charitable organiza-tions and educational projects such as the CONCORDIA initiative, spearheaded by Father Sporschill, to help the street children of Romania.
Taking responsibility – protecting the environmentMiba’s technology makes vehicles and power plants not only more efficient, but also more environmentally friendly. The high-tech products contribute to the lowering of fuel consumption and greenhouse gas emissions. In production, Miba emphasizes environmentally friendly materials and the efficient use of raw materials, so that residues and waste materials are kept to an absolute minimum.
The goal that was set for 2015 – to increase resource efficiency by five percent – has already been achieved. In the past year, Miba Sinter Austria reduced the waste materials from its sinter production by a quarter, or 309 tons. Another focal point is on the reduction of greenhouse gas emissions. Together with other regional operations, Miba in Vorchdorf, Austria, is using energy from wood chips. Each year, the biomass heating plant saves the equivalent CO2 exhaust of 300 cars.
To reach this goal by 2015, the Company will remain in motion. Around the clock and around the globe.
Miba | Success Story
12
Miba is looking back on an eventful 2010-2011 business year that was marked by tremendous growth. After a turbulent year of crisis in 2009, the Miba Group succeeded in getting a powerful start in the new business year. By the first quarter, sales and earnings returned to pre-crisis levels. Miba benefitted from the rapid recovery in our target markets and showed an encouraging increase in demand. Our corporate strategy has once again proven its value in these economically challenging times: We are focused on technology leadership, competitive cost structures and a solid financial basis. Miba’s goal is profitable growth. Despite the challenging competitive environment, we successfully posted substantial gains in market share in our core segments. In combination with the strategic acquisitions transacted in the past year, we have strengthened our international position in a sustainable manner.
Our employees are the engine of our growth. By the end of the 2010-2011 business year, Miba had just under 3,300 workers in its employ, which represents 680 more jobs than at the start of the year. As a strong and responsible employer, we are not only permanently investing in the continued development of our staff, we are also implementing countless internal measures, such as for health promotion. Our team is working at full steam on one vision: No power train without Miba technology.
Miba increased its 2010-2011 consolidated sales by 40 percent over the prior year, to EUR 437.2 million. The majority of the growth originates from our core businesses bearings, sintered components and fric-tion materials. Acquisitions also contributed to growth in sales. In April 2010, Miba took over the British coatings specialist Teer Coatings; in September, the Styrian power electronics manufacturers EBG and DAU. Also in September, Miba integrated the friction business for off-highway applications from Hoerbiger, followed by the takeover of Miba Drivetec India in January 2011. The former Hoerbiger friction materials plant is now Miba’s first production site in the growth market of India. This signifies that Miba is growing both in its core segments and in new technology fields as well.
This growth in sales is reflected in earnings before interest and taxes, which we were able to increase markedly compared to the prior year. Miba possesses great financial strength and these investments are consistently financed from cashflow. The solid financing structure with an equity ratio of nearly 55 percent and our long-term vision are the decisive factors to success. Our focus on research and development and steadfast efforts on behalf of our customers contribute to our taking one step closer to the ambitious goals that represent Miba’s Vision 2015.
Miba stands with its customers throughout the world and supports them as best as possible through local production capacity and technological know-how. Europe remains our largest target market. For over
Ladies and Gentlemen,
dear Shareholders.
PrefaceChief Executive Officer
by the
13
20 years, we have continuously pursued our internationalization strategy and today we are also present in several countries beyond Europe: USA, China, India and Brazil are important growth markets for us.
In the summer of 2010, we opened a new sinter plant and a production line for high-performance engine bearings in McConnelsville, Ohio, USA. Driven by increasing fuel prices and stricter environmental regu-lations, the demand for energy-efficient vehicles is also rising in North America. Our range of technologies for resource-efficient mobility is therefore more in demand than ever. Miba products contribute to the substantial reduction of fuel consumption and CO2 emissions in vehicles.
Since January 2011, we have had our first Company-owned production site for friction materials in the growth market of India with Miba Drivetec India and, since February, an investment in an Indian producer of sintered components.
The entrance into the new product and technology field, power electronics, bolsters Miba on its path to growth. The promising field of energy production, transport and conversion represents an optimal expan-sion of our endeavors to date. With the recently established division “New Technologies Group” we are bundling all activities, strengthening our technology leadership and actively investing in the development of new markets.
Miba is on the move and much is in motion within Miba. We have emerged from the crisis even stronger and we are moving forward at full speed. I wish to thank our employees for their performance and their passion for success. I am also grateful to our customers, shareholders and all partners for the confidence that they have shown us and for the outstanding collaboration.
Ladies and Gentlemen,
Chief Executive Officer
Miba | Preface by the Chief Executive Officer
14
on profitable growth,innovative strength and future markets
Miba Management Board
15
In the past business year, much has moved within Miba. In an interview, Miba’s Management Board assesses the positive results and provides an overview of the focal points in 2011-2012.
Miba Management Board
16
What were the focal points of the 2010-2011 business year?Peter Mitterbauer: Miba grew both in its core business and in new technology fields. We made robust invest-ments in the development and expansion of our inter national network of companies. At the same time, it was still important to manage the tremendous boom while satisfying all customer requests. Miba has performed excellent work. For the past business year, the Management Board had additionally established three special focal points: quality, flexibility and employee healthcare. We have taken important steps with all issues, and will take along the challenges ahead in the new business year.
Are you satisfied with Miba’s progress? F. Peter Mitterbauer: In our Vision 2015, we made profitable growth a goal for ourselves. In spite of the crisis, we are well on our way. For the existing divisions, we have set ambitious growth goals and we also intend to tap into new business areas. It is our strategy to become global No. 1 in economically attractive and technologically demanding market segments.
DI DDr. h. c.Peter Mitterbauer,CEO and CFOMiba GroupBorn in 1942, married with 2 children1969: Joined Miba, head of sales, head of various affiliated companiesSince 1973: Member of the Management Boardof Miba AGSince 1986: Chairman of the Management Board of Miba AG
“We have used the opportunities on the markets and consistently pursued our path to growth.”
Peter Mitterbauer, CEO Miba Group
17
What are the plans for Miba’s new division? Norbert Schrüfer: New Technologies Group is a new pil-lar of Miba. We planned a new division in our Vision 2015 and have now entered into the energy sector. Energy pro-duction, transportation, conversion and, of course, energy efficiency: Miba can contribute much here. We are im-proving the energy efficiency of our customer’s drives, engines and power trains already today. With the new business area, we are now entering into new fields of application, such as electrical engineering.
How much has Miba invested in its innovative strength? Harald Neubert: In the prior year, just under EUR 35 million were invested in equipment. We opened a new sinter plant and new production line for high-performance engine bearings in the USA in the summer of 2010. A large part of the investment flowed into the expansion of both Slovakian locations. In Austria, we made robust investments in capacity expansion and modernization. For our research and development activities, we spent just under EUR 23 million.
Dr.-Ing. Norbert Schrüfer,CEONew Technologies GroupBorn in 1959, married with 2 children1991: Joined Gildemeister Drehmaschinen GmbH as Production Manager1996: Joined Miba Gleitlager AG as COO 2001: CEO Miba Bearing Group,joined ManagementBoard of Miba AG2004: CEO Miba Sinter Group 2008: CEO Miba Friction GroupSince 2011: CEO New Technologies Group
Miba | Management Board Interview
18
The employees are the key to Miba’s success. Where were the focal points? Wolfgang Litzlbauer: Beside the ongoing investment in train-ing and continuing education, we put a special premium on the health of our employees. A comprehensive health initiative contributed to sharpening our awareness of healthy eating, exercise and periods of rest. In the process, we rely on the active involvement of the employees. They are the experts in optimizing their job stations, work processes and work environment. In health circles, diversified teams developed improvement measures and are gradually implementing them.
Miba pursues a high standard of quality. What contribution do Business Excellence and the Zero-Defect Philosophy make? Harald Neubert: Business Excellence is the strategic linchpin of our constant efforts for high business quality. Our goal is to optimize all Miba processes and to implement a Zero-Defect Philosophy on an on-going basis. We have formulated uniform quality standards for the entire Group. It is important not only to observe the production areas, but all business processes. Zero Defect is not an initiative that applies to a brief period of time, but a manner of thinking instead that we want to firmly anchor at Miba – just like Business Excellence. In this way, we can remain competitive over the long term.
What would you like to have achieved by the end of this business year? F. Peter Mitterbauer: By taking over the friction business from Hoerbiger, Miba Friction Group is grow-ing substantially. In the off-highway area, we became the market leader in Europe through this takeover and number two worldwide. The Friction Group grew by more than half and positioned itself in the world’s growth markets. The successful integration of the Hoerbiger business with the most minimal effects on our customers possible will demand all of our strength over the coming months. But I am convinced that we can master this task.
Dr. Wolfgang Litzlbauer,CEO Miba Bearing GroupBorn in 1969, married with 1 child 1994: Joined Miba AG as assistant to the Management Board1996: Miba Gleitlager GmbH, aftermarket, head of sales for the NAFTA region1999: Mahle Metal Leve Miba Sinterizados Ltda., Brazil, commercial managing directorSince 2004: CEO Miba Bearing Group, joined Management Board of Miba AG
19
What challenges lie ahead in the future?Peter Mitterbauer: It’s about flexibility, speed and technological competence. We are still confronted with short-term customer call-offs, and it’s also going to stay that way. This demands a high degree of flexibility from the Company and its employees. We need more comprehensive solutions, so that we can respond flexibly to the requirements of the market and our customers. This is the only way we can secure our jobs.
Norbert Schrüfer: The development paths of alternative drive trains will continue to be highly diverse. Environmental and climate protection are important drivers of develop-ment work, with the goal of reducing emissions and fuel consumption. One challenge of the future lies in producing energy from renewable resources: wind power, photovoltaics and solar energy. This power first has to be fed into our networks, and to do so, it must be transport-ready. For this purpose, intelligent electronics are needed.
Wolfgang Litzlbauer: Growth markets like China and India are increasingly gaining in significance. China has supplanted the USA as the largest car market in the world. In 2010, just over 17 million new cars were sold there – in the USA, it was something more than eleven million. The world’s largest manufacturer of agricultural-use vehicles is based in India; the truck market there also shows enormous potential. The time is now for us to put our strength and our potential on solid ground in these growth markets.
DI F. Peter Mitterbauer, MBA,CEO Miba Friction GroupBorn in 1975, married2001: Joined Webasto AG as product manager2003: Joined Stölzle Oberglas GmbH as sales manager Asia Pacific2006: Joined Miba Sinter Group, business development leader Asia (China)2008: Joined Miba Friction Group as managing director, sales & marketingSince 2011: CEO Miba Friction Group, joined Management Board of Miba AG
Dr.-Ing. Harald Neubert,CEO Miba Sinter GroupBorn in 1956, married with 3 children1988: Joined Krebsöge GmbH as quality and plant manager1996: Joined Sintermetall-werk Lübeck GmbH as managing director1998: Joined GKN Sinter Metals, most recently Presi-dent Asian Pacific and South American Operations (APSA)2007: Joined Miba Sinter Group as CTO and CEOSince 2009: Member of the Management Board of Miba AG
Miba | Management Board Interview
20
Dr. Theresa Jordis (Chairwoman of Supervisory Board), independent, commercial attorney, Dorda Brugger Jordis Rechtsanwälte GmbH, first elected on July 9, 1993; Chairwoman of the Supervisory Board of Miba AG since 2005, with term ending at the 2013 Annual General Meeting; member of the Audit Committee; member of the Compensation Committee
Positions on other supervisory boards: Mitterbauer Beteiligungs-AG (Chair), Wolford AG (Chair), Erste Group Bank AG (Deputy Chair), Austrian Airlines AG, Prinzhorn Holding GmbH (Chair)
Dipl. Bw. Alfred Heinzel (Deputy Chairman), independent, CEO of Heinzel Holding GmbH, first elected on July 4, 2003; Deputy Chairman of the Supervisory Board of Miba AG since 2005, with term ending at the 2013 Annual General Meeting; member of the Audit Committee
Positions on other supervisory boards: Mitterbauer Beteiligungs-AG, Allianz Elementar Versicherungs AG, Verbund AG (formerly Österreichische Elektrizitätswirtschafts AG), Wilfried Heinzel AG, Zellstoff Pöls AG, Europapier AG, Biocel Paskov AS (Czech Republic), Estonian Cell AS, General Council of the National Bank of Austria (OeNB)
Dr. Robert Büchelhofer, independent, former member of the Board of Management of Volkswagen AG, first elected on July 4, 2003; member of the Supervisory Board of Miba AG, with term ending at the 2011 Annual General Meeting
Positions on other supervisory boards: Mitterbauer Beteiligungs-AG, Polytec Holding AG, Swarco Holding AG, M-Tech Technologie und Beteiligungs AG
Supervisory Boardof Miba AG
Elected members
21
Dkfm. Dr. Wolfgang C. Berndt, independent, former President & CEO Global Fabric & Homecare, The Procter & Gamble Company, first elected on June 27, 2008, member of the Supervisory Board of Miba AG, with term ending at the 2014 Annual General Meeting; member of the Compensation Committee
Positions on other supervisory boards: Mitterbauer Beteiligungs-AG, Lloyds Banking Group PLC, Lloyds TSB Bank PLC, Bank of Scotland PLC, HBOS PLC (all until May 2010), Cadbury PLC (until April 2010), GfK AG, OMV AG (since Mai 2010), BAST AG (since September 2010))
Hermann AignerMember of the Supervisory Board of Miba AG since 1994, member of the Audit Committee since 2009
Johann ForstnerMember of the Supervisory Board of Miba AG since 2009, member of the Compensation Committee
of Miba AG
Delegated members
Miba | Supervisory Board
22
23
Management Report
24
The positive development of Miba AG in the 2010-2011 business year is also reflected in the performance of the Miba share. Though the Miba share evolved analogously to the reference index – the Wiener Börse WBI – until June 2010, it detached itself thereafter and consistently increased. Starting at the lowest price for the year of EUR 83.00, it reached its peak level on December 22, 2010, at EUR 219.90. At year end, the Miba share‘s final share price closed at EUR 210.00. The Miba share enjoys an attractive rating with a price-earnings ratio of 6.37 (as of January 31, 2011). Earnings per share for the business year just ended totaled EUR 33.99, which represents a sharp increase over the prior year.
Share buyback plan
On June 19, 2009, the Annual General Meeting authorized the Company to purchase company shares totaling up to ten percent of share capital through December 31, 2011, in accordance with section 65 (1) 8 of Austrian Stock Corporation Act (Aktiengesetz).
In the past business year, 152 shares were repurchased under the share buyback plan. An up-to-date overview of the current share buyback plan is available to all interested parties at the Company website www.miba.com. As of the balance sheet date (January 31, 2011), a total of 66,381 shares had been repurchased (previous year: 66,229). The average purchase price was EUR 121.63 per share. This repre-sents about 5.1 percent of share capital.
Miba’s share capital totals EUR 9.5 million and is divided into 1.3 million no-par-value shares. The no-par-value shares are broken down into 870,000 common shares, 130,000 preferred shares (Issue A) and 300,000 preferred shares (Issue B). The preferred Issue A shares do not carry any voting rights but are convertible to common shares upon relinquishment of preferential rights. The preferred Issue B shares do not carry voting rights and are not convertible to common shares. Mitterbauer Beteiligungs-Aktiengesellschaft holds 76.92 percent of the shares. As of the balance sheet date, institutional and private investors held 17.98 percent. Miba AG holds 5.10 percent of the share capital in the form of treasury stock.
Dividend for 2010-2011
The Management Board of Miba AG will propose a dividend of EUR 7.00 per common and preferred share to the General Meeting on July 1, 2011. Since the rate prevailing on the reporting date (January 31, 2011) was EUR 210.00, this represents a dividend yield of 3.3 percent. The dividends equal to EUR 7.00 per share correspond to a payout ratio (projected dividend payment divided by earnings after taxes (EAT)) of 20.5 percent and thus are within the long-term average ratio. Through this, Miba is providing its share-holders with continuity in its dividend payment policy and a desirable return on invested capital.
The Miba Share
Excellent Performance in the 2010-2011 Business Year
Detailed informationon the Miba share can be found at www.miba.com.
25
The Miba Share
Development of the Miba share during the business year 2010-2011
ISIN: AT0000734835 Stock exchange: Vienna Stock Exchange, Standard Market Auction Securities ID: MBV Class of share: preferred stock Number of shares: 300,000
Index: WBIQuotation as of February 1, 2010 = 100%
Miba share WB index
Management Report | Investor Relations
280%
260%
240%
220%
200%
180%
160%
140%
120%
100%
80%
02/0
1/10
03/0
1/10
04/0
1/10
05/0
1/10
06/0
1/10
07/0
1/10
08/0
1/10
09/0
1/10
10/0
1/10
11/0
1/10
12/0
1/10
01/0
1/11
01/3
1/11
26
The year 2010 as a whole, but particular in the second half of the year, was marked by tremendous market growth. Emerging markets like China and India continued to grow in spite of the global recession, and even Europe and the USA were once again able to enjoy positive growth rates over the past year. For Miba, the global upturn signified a sharp rise in demand that was reflected in all segments through the end of the year.
The International Monetary Fund (IMF) calculated a global economic growth rate of five percent for 2010, following negative growth of –0.6 percent in the year before. In the European Union, gross domestic product grew by 1.8 percent; in the USA, it even reached 2.8 percent. Growth in China soared once again by 10.3 percent. India kept close pace, posting a 9.7 percent rise.
The IMF is forecasting continued international economic growth for 2011, albeit at a somewhat slower pace, but nevertheless in a positive direction.
Growth by sector
Following the turbulent 2009, automotive production in the past year expanded at a healthy rate. World-wide almost 73 million vehicles and light trucks (LCVs) were produced. That exceeds the 2009 level by 21 percent. In Europe, production rose by just under 15 percent; registration figures nevertheless indi-cate that private consumption is still lagging. In 2010, almost five percent fewer vehicles were registered than the year before, while vehicle disposal premiums supported sales. In North America, the automo-tive business cycle showed clear signs of picking up. Production of passenger cars and light trucks rose by 36 percent, to 11.7 million units. In China, 32 percent more cars and LCVs were produced in 2010 than in the year before.
Even the truck market evolved at a dynamic pace. In the past business year in the EU, about 50 percent more trucks were built than even in 2009. China once again headed the list of the largest producers of commercial vehicles in 2010, followed by Japan, India and Brazil.
Demand for new ships recovered noticeably. This uptick gives momentum for a positive investment climate in individual market segments. Still, the shipbuilding market is characterized by uncertainty. The demand for bulk carriers increased the most strongly, which is primarily driven by the immense raw materials requirements in China. China has evolved into the world’s largest ship builder, thanks to mas-sive capacity expansion, and it now holds a market share of almost 35 percent.
The international demand for construction equipment at the start of 2010 remained reserved, due to the continuing reduced level of construction activity. In western industrialized nations, the construction business
General Economic Setting
Miba profits from global upturn
27Management Report | Business Development
cycle diminished once again over the course of the year; however, in BRIC countries it rose by a total of just under 14 percent. An important driver of this was growth in China and the associated need for con-struction equipment.
The market for wind energy is continuing to grow, according to statements by the Global Wind Energy Council. Global capacity today reached 194.4 gigawatts – 22 percent more than 2009. At the same time, the newly installed capacity declined this year to 35.8 gigawatts compared to 38.6 gigawatts in 2009. Of decisive importance to this were the drop off in orders during the recession, which is now reflected in these low rates. For the first time, more capacity was installed in the emerging markets in Asia and Latin America than in the OECD countries.
The resultsof the individual Miba divisions can be found starting on page 46.
28
Sales and earnings position
Miba, a strategic partner in the international engine and automotive industry, continued its growth strategy consistently in the preceding business year. The Company emerged from the crisis stronger and it used the opportunities in its markets. Miba grew both in its core segments and in its new technology fields, and it was able to manage the economic upturn well.
In the 2010-2011 business year, the Miba Group achieved record sales amounting to EUR 437.2 million. This corresponds to an increase of EUR 125.4 million, or 40.2 percent over the prior year. Of this growth, 34 percent originated from the core businesses of sintered components, engine bearings and friction materials. Another six percent (approximately EUR 19.1 million) is attributed to new acquisitions that for the first time were fully consolidated in the preceding business year.
Miba divisions
The majority of the growth originates from our core businesses sintered components, engine bearings and friction materials. Miba Sinter Group posted sales of EUR 173.4 million in the past business year, which is equivalent to 39.7 percent of Group sales. That makes it the largest division in the Miba Group. Miba Bearing Group generated sales of EUR 159.7 million. This corresponds to 36.5 percent of Group sales. The sales volume of Miba Friction Group in the past business year totaled EUR 74.9 million and contributed 17.1 percent to Group sales. This is the first time reporting on the New Technologies Group division, which, along with the companies EBG and DAU acquired in the past year, are all part of Miba Automation Systems. Until now, Miba Automation Systems was reported in the Miba Bearing Group division; the past year’s figures were adjusted accordingly. The New Technologies Group generated sales of EUR 20.6 million or 4.7 percent of total sales volume. The remaining EUR 8.6 million are attributed to Miba Coating Group.
Miba operates 20 production sites on three continents and is thus close to its customers in the world’s most important business centers. The growth in sales over the past year can be distributed equally over Miba’s three main target markets. Europe continues to be the largest market of the Miba Group. The Group realized 62 percent of sales there. The North American Free Trade zone (NAFTA), especially the USA, accounts for 17 percent of sales, unchanged from the previous year. In the growth markets of the Far East, Miba achieved 16 percent of Group sales.
Consolidated earnings before interest and taxes (EBIT) could also be increased substantially in the past year. The clear strategic positioning on technologically demanding products and the consistent and sus-
Performance Analysis and Balance Sheet
Growth in all divisions
Sales volumeby division
Miba Friction Group 17.1%
New Technologies Group 4.7%
Miba Coating Group 2.0%
Miba Sinter Group 39.7% Miba
Bearing Group 36.5%
29
tained implementation of cost reduction measures during the 2009 crisis year made this possible. EBIT could be increased to EUR 54.5 million (previous year: EUR 16.4 million). The EBIT margin of the past business year, in the amount of 12.5 percent, was therefore substantially in the upper area in an industry comparison. Earnings before interest, taxes, depreciation and amortization (EBITDA) totaled EUR 85.0 million in the past year.
Consolidated earnings before taxes (EBT) in the amount of EUR 53.3 million could likewise be markedly increased in comparison to the previous year (EUR 15.5 million). After deduction of taxes from income and earnings in the amount of EUR 11.1 million, consolidated earnings after taxes (EAT) equaled EUR 42.2 million (previous year: EUR 12.3 million).
Financial position The balance sheet total rose in the past business year from EUR 343.9 million to EUR 452.6 million, due to the acquisitions conducted, among other reasons. Non-current assets rose by EUR 43.5 million or 24.4 percent to EUR 221.8 million, where the proportion of purchased companies in the increase equals EUR 38.0 million. The share of non-current assets in total assets changed only to a minor degree, from 51.8 percent to 49.0 percent. The asset coverage ratio (ratio of equity to total fixed assets) also declined negligibly, only from 120.0 to 113.8 percent.
Investments in intangible assets and property, plant and equipment totaled EUR 34.6 million (previous year EUR 19.5 million). Approximately 41 percent of investments made served the further expansion of the Slovakian plants and above all were limited through the takeover of the friction business activities of Hoerbiger Poland by Miba Steeltec s.r.o. Approximately 27 percent or EUR 9.3 million funded the con-tinued expansion of Austria-based operations. Around 24 percent were invested in the sites in the USA, with the remaining eight percent going to the site in China.
The rise in current assets, from EUR 165.6 million to EUR 230.8 million, is attributed to multiple factors. Both inventories as well as trade receivables rose proportionately to sales, from EUR 114.8 million to EUR 164.1 million. New acquisitions contributed to this rise by EUR 13.4 million.
Performance Analysis and Balance Sheet
Sales volume according to markets
NAFTA17%
Asia16%
Others5%
Europe62%
Management Report | Business Development
30
The sustainable strengthening of Company liquidity continues to be in the Management Board’s focus. Cash and cash equivalents expanded from EUR 50.8 million in the prior business year to EUR 66.7 million as of the balance sheet date (January 31, 2011).The net cash already reported in the previous year in the amount of EUR 7.1 million was more than doubled and comes to EUR 15.3 million.
Group equity, including non-controlling interests, increased by 20.1 percent or EUR 41.7 million to EUR 248.5 million (previous year: EUR 206.8 million). Treasury stock valued at EUR 8.1 million was included directly in equity (previous year: EUR 8.1 million). Consolidated earnings after taxes (EAT) equal to EUR 42.2 million and the currency translation gains reported directly in equity totaling EUR 2.1 million were compensated by dividend payments in the amount of EUR 3.1 million as well as actuarial losses reported directly in equity totaling EUR 2.0 million.
The equity ratio is 54.9 percent, reflecting the sound capital and financial structure of the Miba Group.
Cash flow from operations equals EUR 65.8 million and thereby was able to be increased by EUR 17.8 million, or 37.0 percent, over the previous year. This increase can basically be attributed to better earnings. With the reported cash flow from operations, the Miba Group was once again able to finance its investments fully through the Company’s own capital resources. Free cash flow (cash flow from operations, less cash flow from investment activities, taking into account the acquisition of newly consolidated companies) equaled EUR 6.6 million in the past business year, or 1.5 percent, of sales.
EUR million 2010-11 2009-10
Sales 437.2 311.8
EBT 53.3 15.5
Cash flow from operations 65.8 48.1
Equity 248.5 206.8
Equity ratio in % 54.9 60.1
31
Changes in the Corporate Structure
The 23rd Annual General Meeting of Miba AG on June 19, 2009, passed a resolution authorizing the Management Board, under section 65 (1) 8 and section 65 (1a) and (1b) of the Austrian Stock Corporation Act (AktG), to purchase Company shares (preferred Category B shares) totaling no more than 10 percent of the Company’s share capital until December 31, 2011. The Management Board of Miba AG resolved on July 19, 2010, to implement a new share buyback program for 30,000 preferred Category B shares. Through this share buyback program, 152 units of Company-held shares were repurchased by January 31, 2011. As of the balance sheet date January 31, 2011, Miba AG holds 66,381 of its own shares (previous year: 66,229).
n On the reporting date of March 30, 2010, Miba Coatings Trading (Suzhou) Ltd., Suzhou, China, was established.
n On March 31, 2010, Miba acquired the remaining share interest in the English firm of Teer Coatings
Ltd., Droitwich, UK, totaling 75.1 percent. Teer Coatings Ltd. is one of the world’s technology leaders in the area of PVD coatings. This investment enables Miba to expand its expertise and product portfolio in the highly specialized surface coating segment.
n Miba Bearings Sales Corporation, Ohio, USA, was established on May 10, 2010.
n On the reporting date of May 31, 2010, the Company sold a portion equal to 24.8 percent of the share capital in High Tech Coatings GmbH.
n Miba Energy Holding GmbH, Laakirchen, Austria, was established on August 7, 2010, and Miba Energy Holding GmbH & Co KG, Laakirchen, Austria, was established on August 28, 2010.
n On the reporting date of September 1, 2010, Miba took over Styrian manufacturers of power electronics components, EBG Elektronische Bauelemente GmbH and DAU GmbH & Co. KG, together with their foreign and domestic investments. By acquiring these companies, Miba expanded its competence and product portfolio in promising technologies.
n Miba Energy Holding LLC, Ohio, USA, was established on September 17, 2010.
n On January 1, 2011, Miba took over the friction business for off-highway applications from Hoerbiger and, on January 4, 2011, acquired Miba Drivetec India Pvt. Ltd. (formerly Hoerbiger Drive Technology India Pvt. Ltd.), Pune, India.
n On February 1, 2011, Miba acquired a 70 percent share interest in both EBG LLC, Pennsylvania, USA, and in EGB Resistors LLC, Pennsylvania, USA.
n Also on the reporting date of February 1, 2011, DI Franz Peter Mitterbauer, MBA, was appointed to the Management Board of Miba AG.
n On the reporting date of February 21, 2011, Miba took over a 26 percent share in Maxtech Sintered Product Pvt. Ltd., Pune, India.
Management Report | Business Development
An overviewof all Miba sites can be found on page 4.
32
Section 243a (1) UGBThe share capital of Miba AG totals EUR 9,500,000. The share capital is divided into 1,300,000 no-par-value shares. This total includes 870,000 common shares (66.92 percent of share capital), 130,000 non-voting preferred shares convertible to common shares by relinquishment of preferential rights (ten percent of share capital) and 300,000 non-voting, nonconvertible preferred shares (23.08 percent of share capital). A stock certificate having a nominal amount of EUR 7.27 shall be considered the stock certificate for one no-par-value share. Each voting share shall entitle the holder to one vote at the General Meeting. As of January 31, 2011, Miba AG held treasury stock totaling 66,381 shares (previous year: 66,229).
Section 243a (2) UGBMiba AG is not aware of any limitations or restrictions on voting rights and their transfer, including limitations based on agreements between shareholders, other than those relating to preferred shares.
Section 243a (3) UGBAs of January 31, 2011, Mitterbauer Beteiligungs-AG had a 76.92 percent directly held interest in Miba AG. The Miba shares in free float totaled 17.98 percent. As of the balance sheet date, Miba AG held treasury stock totaling 5.1 percent of share capital.
Section 243a (4) UGBThere are no Miba shares with special rights of control.
Section 243a (5) UGBThere are no employee profit-sharing plans in the Miba Group.
Section 243a (6) UGBThere are no provisions in the Articles of Incorporation that go beyond the legal regulations governing either nomination and appointment of members of the Management Board and Supervisory Board or amendments to the Articles of Incorporation.
Section 243a (7) UGBAs of January 31, 2011, the Management Board of Miba AG possessed no authority beyond the scope of law to issue or buy back shares of Miba AG.
Section 243a (8) UGBThe 76.92 percent interest held by Mitterbauer Beteiligungs-AG precludes any change in control based on shares in free float.
Section 243a (9) UGBBecause of the preceding paragraph, no compensation agreements exist between Miba AG and the members of its Management Board and Supervisory Board relating to public takeover bids.
BranchesNo branches were maintained in the period under review.
Information as Required Under Section 243a
of the Austrian Business Enterprise Code (UGB)
33
As an international company, Miba serves different industrial markets and customers and is exposed to general and industry-specific risks in the course of its daily operations.
We handle these risks with the help of existing risk management solutions and their corresponding risk management instruments. The main task is the early detection of emerging risks, in order to introduce countermeasures swiftly and effectively. The Management Board bears the entire responsibility for risk management. It is briefed on the risk situation at regular intervals by Corporate Controlling. Risk management is further integrated into the management structure via the planning system, and detailed reporting and information systems based on appropriately assigned competencies.
Significant risks and uncertainties
The following have been identified as significant risks for Miba (partial list):
Economic risks
Following the general economic crisis of 2009, the 2010-2011 business year shows every sign of an up- turn for Miba. The intensive collaboration with the Miba Group’s strategic development partners and custom-ers is gaining increasing importance, given their demands for flexibility and short-term responsiveness. The decisions made during economically turbulent times, such as the ever continuing orientation toward high technology and strengthening of internal research and development, are showing their results through the run-up to new products and applications. Miba is well-equipped to handle further growth. Last minute customer order call-offs continue to require a high degree of organizational flexibility, so that we can respond to these requirements commensurately.
Competitive and portfolio risks
Miba pursues a long-term strategy that facilitates a marked reduction in its dependence on individual industries through the expansion of the product portfolio. With the take over of the Styrian manufacturer of power electronics components, Miba entered into the new and highly promising technology field of energy. The new division – the New Technologies Group – taps into and develops new business areas for Miba.
Risk Report
Management Report | Risk Report
34
Product and quality risks
Miba practices standard, consistent quality management on a Group-wide basis, which is embedded in the Group’s Business Excellence and Zero-Defect initiatives. Despite systematic and efficient design, liability cases cannot be ruled out entirely. The remaining risk, which can lead to financial losses and damage the Company’s image, is covered by insurance policies.
Human resources risks
A consistent human resources development and a performance-oriented remuneration system are critical tools to retain qualified and motivated employees in the Group. Internal programs to foster and promote top performers, such as the Miba Management Academy, Miba Leadership Academy or the Miba apprenticeship program, ensure the preservation and enhancement of our employee’s expertise. Improvement potential is also cultivated from an employee survey, conducted periodically. In order to satisfy changed market conditions, flexible organizational structures are needed as are the corresponding work schedule models.
Financial risks
Preserving the Company’s liquidity and creditworthiness have always been of central importance within the Group. This strategy has proven to be greatly beneficial over the years. The risk of bad debt losses is basically hedged by means of credit insurance. In order to limit and control interest rate and currency risks, we are using both conventional forward transactions as well as derivatives. Major foreign currency risk in the Group is essentially limited to the euro/US dollar exchange rate.
Risk of damage
The assets of the individual companies are insured through uniform group policies. In addition, Miba also covers exposure that may occur from business interruptions that follow natural disasters. In addition to this coverage, Group-wide liability and transportation insurance policies provide adequate protection against any remaining risk exposure.
35
Overall risk
The Miba Group’s identified risks are manageable and are being appropriately hedged. Current analysis confirms that the continued existence of the Company is not at risk.
Essential characteristics of the accounting-related internal control and risk management system
In accordance with section 82 of the Austrian Stock Corporation Act (AktG), the Management Board is responsible for the establishment and development of an internal control and risk management system for the financial reporting process, appropriate to the Company’s requirements.
General principles
The following statements apply equally to the individual financial statements and the Consolidated Financial Statements of Miba AG.
Miba’s accounting-related internal control and risk management system serves to ensure proper and reliable financial reporting.
The internationally recognized COSO control model (COSO = Committee of Sponsoring Organizationsof the Treadway Commission) is used for the documentation, analysis and design of the internal controlsystem. Key processes and their control activities are thereby initially identified and documented. The effectiveness of control activities is evaluated within the scope of the documentation process.
Building on this, the selection of the essential processes to be documented and updated, as well as the extent of internal review necessary, are determined each year on the basis of qualitative criteria and quantitative aspects of materiality.
The review of selected processes and controls is carried out through internal as well as external auditing. As part of the external audit, Miba management relies on financial statements reviewed by independent auditors.
The Management Board and the Audit Committee created by the Supervisory Board are regularly informed about the accounting-related internal control and risk management system. Once a year, a Group-wide risk management and ICS report is brought before these bodies. In the event that considerable controlling weaknesses or significant effects of these weaknesses on the Consolidated Financial Statements are identified, these problems are presented in the Group report.
Management Report | Risk Report
36
Organization of financial reporting
The Corporate Finance department at the Laakirchen site, which reports directly to the Management Board, is responsible for the Consolidated Financial Statements of the Miba Group. In Laakirchen, the individual companies are combined, consolidation measures are carried out and the Consolidated Financial Statements are processed for external reporting by the central Corporate Finance department with use of established consolidation software.
Consistent Group-wide requirements such as binding statement deadlines, signature requirements, regulations about separation of functions, etc., are issued centrally by the holding company. Those responsible at local sites implement these requirements in a decentralized manner. Compliance with these regulations is monitored by responsible parties at local sites, by Holding through the audit and by external auditors in the course of auditing the financial statements of individual companies.
The Consolidated Financial Statements of the Miba Group are prepared in compliance with the IFRSs and interpretations of the International Financial Reporting Interpretations Committee (IFRIC) which have been accepted by the European Commission for incorporation into EU law by the end of the reporting period and are considered mandatory as of the reporting date. Employees entrusted with the application and implementation of currently valid IFRSs attend IFRS training sessions and updates over the course of the year in order to ensure financial reporting that conforms to IFRSs.
All significant consolidated Group entities prepare their individual financial statements within the centrally maintained “Group SAP” in accordance with uniform organizational requirements. The automated as well as manual requirements and controls thus integrated Group-wide ensure that transactions are recorded and documented in a complete, timely, correct and accrued basis, beginning at the level of the individual company.
In order to guarantee the complete reporting of material financial statement items, an ongoing exchange of information with the relevant departments takes place. When necessary, external experts are consulted in order to avoid faulty estimations.
The Management Board, Supervisory Board and management are responsible for Company-wide oversight of financial reporting. Control measures range from the review of the periodic income and financial reports made available monthly and quarterly by Controlling and Corporate Finance to the critical evaluation by the Management Board and the Supervisory Board of documents intended for publication.
37
Miba’s technology leadership creates the basis for the Company’s profitable growth. Working in close collaboration with its customers, Miba develops technologically demanding power train components. The ongoing product innovations are prepared and enhanced by selective advanced technological develop-ments. Miba secures its competitive edge through substantial investments in research activities.
In-house R&D operations are complemented by collaboration with universities and other research institu-tions. Miba researches materials and processes for the production of components for more efficient and alternative power trains. Advances and new trends in the area of energy production, conversion and consumption create future opportunities for Miba. Although this applies to the existing divisions, it particularly applies to the newly established New Technologies Group.
In the 2010-2011 business year, Miba invested a total of EUR 22.6 million in R&D. This represents a research ratio of approximately five percent of total sales volume. On a Group-wide level, a total of 167 employees worked in this area; the center of technological activities were located at the Austrian site. The results of development are protected through new patent applications. In the preceding business year, Miba submitted 17 new patent applications. Currently, Miba Group holds 166 valid patents. Accord-ing to the Austrian Patent Office’s innovation rankings, Miba was among the ten most innovative compa-nies in Austria in 2008.
Modules for fuel-efficient engines
A focal point of Miba Sinter Group in 2010-2011 was the development of low-noise gear drives for use in new low-consumption gasoline and diesel engines. Another focus was on the continued development of synchronization modules for use in new manual and double-clutch transmissions as well as all-wheel-drive applications. These modules make for more comfortable shifting and reduce the vehicles’ fuel consumption.
Miba Sinter Group continued to expand its technology leadership in engine and transmission components. When it comes to promising new developments, international engine and transmission manufacturers rely on Miba’s development expertise. The R&D teams are working intensively on the basic developments for sintered components and modules that are used in electric and hybrid vehicles. This also promotes the application of sintered technology with new power train designs.
Technologies for Resource-Efficient Mobility
Research & Development
Management Report | Company
Miba technologyboosts the competitive edge of its customers.
Further details on Miba Sinter Group can be found on page 46.
38
Innovative engine bearing solutions
Miba Bearing Group focused its R&D activities in 2010-2011 on the further development of existing materials and advance development of the new generation of materials for the truck sector. The Group also refined the surface technology for high-performance engine bearings in dual-material technology. The R&D team moved ahead with the basic development for the next generation of triple-material bearings for medium-speed large-size engines. The success of their efforts signifies an important step toward more robust bearings with the strongest performance characteristics.
The development partners of Miba Bearing Group – among them some of the most renowned engine and vehicle manufacturers in the world – benefit from the swift and targeted R&D work. The higher load-bearing capacity and lower operating risk of the new generations of bearings facilitate compliance with new environmental regulations.
The potential applications for engine bearing technology extend beyond its use in combustion engines. The area of wind power plants in particular shows major potential for the use of engine bearings in their transmissions and rotor bearings. One demonstration project, which aimed at equipping the transmission of a wind turbine engine exclusively with Miba engine bearings, was successfully completed.
Heavy-duty friction linings for wind turbines and vehicles
One focus of the R&D activities of Miba Friction Group in 2010-2011 was the development of a new friction material for the brakes on wind turbines. The material will display higher power density while lowering the complexity of the brake system. In addition to this, the R&D team is engineering a new shoe brake pad that should soon provide for diminished noise pollution from rail traffic systems. In the construction equipment area, Miba Friction Group engineered a fiber composite friction material for brakes with higher energy density that substantially boosts the power range of the brake systems. A new fiber composite friction material for transmission coupling of buses enables an optimized shifting profile for reduced fuel consumption and elevated driving comfort.
Components for power electronics
A new area in the spectrum of Miba R&D endeavors is power electronics. EBG and DAU are innovative specialists in passive electronic components, such as high-power resistors and thermal solutions for power electronics.
Further details on New Technologies Group can be found on page 52.
Further detailson Miba Bearing Group can be found on page 48.
Further details on Miba Friction Group can be found on page 50.
39
In the area of cooling systems, research and development focused on liquid coolers that are soldered in a vacuum. EBG developed customized components with an emphasis on high-voltage and high-power resistors. The Company also put particular emphasis in the area of special alloys for high-pulse load components.
Intelligent coatings
Miba Coating Group intensified its R&D efforts in the area of functional component coatings. Depending on the application, it offers optimal coating solutions for efficient power trains in vehicles. The ongoing developments under the title “Smart Coatings” are concerned with three functionalities: friction mini-mization in the drive train, corrosion and wear protective coatings for turbocharger components and adaptive coatings in the gearwheel drive. In the area of hard material coatings (PVD coatings), projects are underway on promising applications like energy storage technologies, fuel cells and photovoltaics.
Management Report | Company
40
The employees are the engine of our success. Through their hard work, innovative drive and commitment to quality and service they make a powerful contribution to Miba’s growth. In 2010-2011, the Miba Group employed an annual average of 3,064 employees at 20 sites worldwide. In the preceding year, this figure was 2,613 employees. On the balance sheet date of January 31, 2011, the number of employees was 3,298 (compared to 2,620 as of January 31, 2010). This build-up of personnel is the result, on the one hand, of the recent expansion of capacity following the crisis and, on the other hand, from company acquisitions. Through the takeover of Teer Coatings in April 2010 and the purchase of EBG and DAU, Styrian manufacturers of power electronics components, the personnel figures were augmented by a total of 195 employees. In addition, the Company employed an annual average of 206 temporary staff. Personnel expenditures in the past business year, at EUR 130.9 million, were approximately 20 percent above that of the previous year (EUR 108.8 million).
About nine percent of Miba’s employees are college or university graduates, and more than 20 percent are women. The average Miba employee is 37 years old and has been with the Company for about nine years. More than half of the employees work at Miba’s sites in Austria.
Miba is an attractive and reliable employer that offers appealing career opportunities even to its youngest employees with a professional apprentice education. In the past business year, 27 young people have started their apprenticeship as production or electronics technicians at the Miba Academy in Laakirchen. Miba is also training young people in Slovakia. As of the January 31, 2011, reporting date, the Miba Group counted a total 154 youth in training: 118 apprentices working at the Austrian sites and 36 in Slovakia.
Human capital activities
One focus of human capital work in the past business year is in attending to the upturn. Between January 2010 and January 2011, 678 employees were hired – that means intensive recruiting and inte-gration efforts at all sites. The continued development of employees is paramount to keeping one step ahead of the competition. For this reason, the Company pursues the core value of lifelong learning and fosters its employees in the development of their professional and personal competencies. Beside the comprehensive range of training and continuing education programs for all employees, in the 2010-2011 business year, the Human Capital Development area was tasked foremost with manager development at all levels of the Company. This allows Miba to ensure that internal candidates for promotion to key posi-tions are well-prepared and that adequate management capacities are developed for new projects and challenges. In the prior year, the Company spent approximately EUR 1.2 million on training and continuing education measures for employees.
Employees
Cultivate and Challenge
Miba employees worldwide as of January 31, 2011:
China 189
USA349
England56
Singapore31
India29
Austria1,778 Slovakia
866
41
Miba believes in fostering an environment of partnership and confidence among all employees. Thus the opinions of the staff and their active involvement in the processes of change are of major significance. Every two years, Miba employees throughout the world are asked to provide their feedback on the Company through the Miba employee survey. In the early summer of 2010, roughly two-thirds of all Mibarians evaluated criteria like work conditions, management and communication. Since that time, improvement projects that were broached through the employee survey have been running at all sites. An information platform for production employees at Laakirchen has already been successfully imple-mented. The continuing education platform in the Miba educational program was also expanded, based on specific demand. In Slovakia, emphasis was placed on team development, and the staff has organized joint sports activities, for example.
Outlook
The challenges of the human capital work in 2011-2012 lie in the response to the continued strong growth of the Miba Group. In this respect, particular importance is assigned to the successful integration of the newly acquired companies. To achieve the ambitious goals of Miba 2015, the Company needs talented individuals who shape growth and drive it forward. The systematic positioning of Miba as an attractive employer plays a key role in the race to draw the best minds to the Company.
Management Report | Company
Further informationon careers at Miba can be found at www.miba.com.
42
To Miba, Corporate Social Responsibility (CSR) means that striving for business success goes hand in hand with environmentally sound conduct and conscientiousness toward our employees and society. Sustainable action in all areas is part and parcel of our corporate strategy. Since the founding of the Company more than 80 years ago, it has always been Miba’s mission to pursue its work in a way that can also benefit the generations to come.
In the fall of 2010, the second comprehensive Miba Corporate Social Responsibility Report was made public. Every two years, Miba publishes in this report key ecological and social figures, and reports on its endeavors in the areas of environment, society and employees.
All activities and initiatives in the area of Corporate Social Responsibility are geared toward the goals established in the Miba 2015 vision. CSR creates added value for Miba and its surroundings, and is an essential pillar for all operational duties and tasks.
Responsibility for the region and environment
We provide economic impetus through our investments and taxes. Through our technology leadership we make a vital contribution to our customers’ ability to innovate and remain competitive. As a partner to the international engine and automotive industry, we play a big role in making mobility more environmen-tally friendly. We develop high-tech components for more efficient combustion engines that emit less CO2. We place the greatest emphasis on the constant optimization of our use of resources and energy, and the use of environmentally friendly materials in production. The acquisition of EBG and DAU and the founding of the New Technologies Group are hallmarks for Miba’s entry into the market for energy transmission systems. Resistors and coolers from Miba create the condition for the expansion and development of an efficient network infrastructure, which represents the basis for an even stronger share of decentralized, renewable energy production.
Focus on health
For the 2010-2011 business year, the Management Board of Miba identified three focal points: quality, flexibility and health. The focus of CSR activities was in the area of health. As a responsible employer, Miba promotes the health of its employees and invests in a modern and safe work environment. In addition to numerous activities on health promotion, a health program specially developed for our appren-tices is also intended to foster awareness in the next Miba Generation for its own health. Since the past business year, Miba apprentices in Austria in each class level complete a two-day educational module on health. Through this, they learn how they can develop, maintain and strengthen their mental, emotional and social fitness – and fitness for the labor market – on a sustainable basis.
Corporate Social Responsibility
Corporate Responsibility and Sustainability
The latest CSR Report from Miba can be found at www.miba.com.
43
Support for charitable projects
Miba assumes community and social responsibility on a worldwide basis not only as an employer, it also supports charitable organizations and projects. Instead of giving Christmas gifts to customers and partners, Miba supported a Slovakia-based children’s relief organization in 2010. Miba and the Children of Slovakia Foundation facilitated the participation of 500 Slovakian children from the surroundings of the Slovakian Miba sites in school and recreational activities, for the development of their personal strengths and social abilities. Miba also supports the CONCORDIA social projects of Fr. Georg Sporschill in Romania. Many street children there can find a home at CONCORDIA and the opportunity to lead an independent life. Miba is committed to the development of carpentry workshops for Romanian children.
Management Report | Company
44
Miba is an international group producing high-performance and technologically demanding power train components. We support our customers worldwide from development to implementation of individual solutions. Miba technology enables resource-efficient mobility.
Miba sintered components
Sintered components are high-precision, high-strength components used in car engines, trans-missions, steering systems, brakes and shock absorbers. Miba is the technology leader in the pro-duction of a wide range of sintered components. The key advantage of Miba sintered components is that they reduce weight due to their complex design and precisely tailored density. This creates significant potential for increasing efficiency and reducing fuel consumption.
Miba engine bearings
Engine bearings are crucial components that significantly affect engine function and service life. They are used in diesel and gas engines in ships, heavy-duty vehicles, locomotives and power stations. They minimize friction during operation and protect the engine from damage and break-down. In the medium-speed diesel engine seg-ment, Miba’s products make it the global market and technology leader. The bearings produced by Miba Bearing Group withstand higher ignition pressures, thus increasing engine efficiency.
Miba Product Portfolio
45
Miba friction materials
Friction materials are the decisive performance elements in vehicle clutches and brakes, optimiz-ing speed and power. They are used in tractors, trucks, construction machinery, cars, high-speed trains, motorcycles, airplanes and wind power stations. Miba Friction Group components reduce weight and transmission size.
Miba power electronics components
Resistors are among the Miba power electronics components. They are used in the conversion and transmission of energy. Miba resistors are found, for instance, in the high-voltage electronics of modern medical equipment or in the power electronics of frequency converters for wind turbines. Heat sinks and heat pipes are other power electronics components. They protect electronic components from overheating and are used, for instance, in drive train control units, electric motors and wind turbines.
Miba coatings
Miba develops customized coating solutions. The Company’s technologies include low-friction coatings for functional surfaces, electroplated overlays and PVD coatings. These coatings ensure maximum service life and optimum functionality.
Miba special machinery
The special machinery enables high-precision and swift mechanical production of small to very large components. Miba Automation Systems is leading in engine bearing technology, robotics and auto-mation as well as stationary and mobile special machinery. Apart from power electronics, the core segment, special machinery is also part of the New Technologies Group.
Management Report | Product Portfolio
46
Miba Sinter Group can look back on a successful year. The volume of orders booked rose sharply and plant capacity utilization was and remains extremely high. In the preceding year, 13.8 million passenger cars and LCVs (Light Commercial Vehicles) were registered in Europe. This signifies five percent less than in 2009, when vehicle sales were boosted substantially through the “vehicle disposal premiums”. By contrast, automotive production increased by twelve percent, to over 17 million passenger cars. This is caused by a time-lag effect from the vehicle disposal premiums as well as the major success, especially of German manufacturers, in the export markets.
With just under 73 million cars and light trucks, even international production surpassed pre-crisis levels. In the USA, production increased by 36 percent; in China, 32 percent more cars and LCVs were produced in 2010 than in the preceding year.
Through its consistent focus on technology leadership, Miba Sinter Group enjoyed above-average profits from the upturn. A series of new projects and serial production runs additionally led to a clear gain in sales for Miba Sinter Group. In the past year, Miba Sinter Group generated EUR 173.4 million in sales, making it the largest Miba division. Compared to the prior year, this corresponds to an increase of EUR 48.2 million or 38.5 percent. The overall growth in sales can be attributed to organic growth.
The measures implemented during the international financial crisis added to the long-term security and sustained increase in profitability. Earnings before interest and taxes (EBIT) improved from EUR 7.3 to EUR 23.3 million. This corresponds to an EBIT margin of 13.4 percent.
The focus of investment activities for the preceding year in Miba Sinter Group were in the development
Miba Sinter Group
Marked Gain in Sales
47
of new capacities. The total investment volume of the division stood at EUR 14.6 million (previous year: EUR 11.2 million). A majority of investments served the continued expansion of the Slovakian site, which celebrates its 20th anniversary in 2011.
Another major project was the establishment of the sinter plant that opened in June 2010 in McConnelsville, Ohio, USA. Miba Sinter USA produces approximately four million parts for energy-efficient passenger car engines and transmissions each year. The use of our most modern technologies enables our customers to realize a noticeable reduction in fuel consumption and exhaust emissions. Miba Sinter USA meanwhile has grown to over 40 employees; additional jobs are also being planned.
Investments totaling EUR 3.5 million went to the Vorchdorf site, primarily for the modernization of pro-duction facilities. One focal point of the R&D activities in the 2010-2011 business year was the development of low-noise gear drives for use in new low-consumption gasoline and diesel engines. Another focus was on the continued development of synchronization units for use in new energy-efficient manual and double-clutch transmissions as well as all-wheel-drive applications. Beyond this, the Group advanced the development of applications in hybrid and electric vehicles. This also secures the introduction of sinter technology in promising power train designs.
Securing capacities
The volume of incoming orders continues to show a tendency to increase; on-time customer delivery takes top priority. Dispatching orders on an increasingly short-term notice and the ever increasing customer needs are adding to the complexity of planning. Miba Sinter Group is currently working worldwide on expanding capacities and optimizing the use of existing facilities.
2010-11 2009-10
Sales in EUR million 173.4 125.7
Investments in EUR million 14.6 11.2
Number of employees, yearly average 1,170 1,037
Management Report | Divisions
48
Having achieved a new revenue record in the 2010-2011 business year, Miba Bearing Group attained a strong position within international competition. All market segments of Miba Bearing Group have recovered and demand is increasing, so that current efforts are aimed intensively at capacity development. Specifically in the area of truck bearings and bearings for fast-running high-performance engines, the call volumes are substantially above those of pre-crisis levels. The locomotive area is likewise showing considerable recovery trends. Even the sharply declining ship construction area appears to be gradually gaining ground.
Miba Bearing Group generated sales of EUR 159.7 million in the past business year. In comparison to the prior year (EUR 125.3 million), the group was able to achieve a 27.5 percent growth in sales. At this level, it contributed 36.5 percent of Miba Group’s total sales. The earnings before interest and taxes (EBIT) generated in the past business year increased from EUR 14.2 million to EUR 26.4 million. Thus, Miba Bearing Group posted an EBIT margin equal to 16.5 percent (previous year: 11.3 percent).
At EUR 9.0 million, investments rose above the previous year’s level (EUR 7.4 million) Approximately 46 percent of the total volume was invested at the Laakirchen site in the expansion of existing manufac-turing capacities.
In addition, the entire order fulfillment process of Miba Gleitlager was optimized and the Supply Chain Management area was formally embedded in the organization. The value creation process – from the procurement of the raw materials to the delivery of the finished product – is now planned and controlled in one continuous process.
Approximately 40 percent of total investment volume was placed in the Miba Bearings US site in McConnelsville, Ohio, USA. A new production line for high-performance engine bearings was launched there in June 2010. Early on, Miba recognized the market requirement for high-performance and environ-mentally friendly engine bearings for truck engines. These lead-free engine bearings are being used in a new, high-performance generation of truck engines.
The remaining investments amounting to approximately 14 percent, or EUR 1.3 million, are aimed toward the development of additional production capacities at the Chinese site in Suzhou.
Miba Bearing Group focused its research endeavors in 2010-2011 on the further development of existing materials and advance development of the new generation of materials. In the area of surface technology, the emphasis of development was placed on high-performance engine bearings in dual-material technology and in developing the fundamentals for the next generation of triple-material engine bearings. The success of these efforts signifies an important step toward more robust bearings with the strongest performance characteristics.
Miba Bearing Group
Strong Positioning in International Competition
49
Engine bearing technology should also be able to find uses beyond the field of combustion engines. Especially in the area of wind turbine systems, which shows major potential for bearings in their transmissions and rotor bearings. One project, the goal of which was to achieve the first transmission equipped exclusively by Miba engine bearings, was successfully completed.
The higher load-bearing capacity and lower operating risk of the new generations of bearings facilitate compliance with new environmental regulations. At the beginning of the business year, Miba engine bearings earned the “Supplier Quality Excellence Process” certificate from the world’s largest construction equipment manufacturer, Caterpillar. With this distinction, Miba Gleitlager achieved the position of a strategic supplier for Caterpillar. Miba supplies Caterpillar both with engine bearings for crankshaft drives of various engine series as well as the friction linings for construction equipment.
Utilizing the upturn
The core markets of Miba Bearing Group have recovered; the level of orders has sharply increased. The entire organization – after tremendous effort over the past year – has succeeded in managing this upturn. It is now important to continue to make the requisite capacities available for the increasing customer call-off orders. For this purpose, Miba needs a high degree of flexibility, steady processes and the strong motivation of its employees. Great attention continues to be given to the quality of the products and to a healthy and inspirational work environment for the entire staff.
2010-11 2009-10
Sales in EUR million 159.7 125.3
Investments in EUR million 9.0 7.4
Number of employees, yearly average 998 999
Management Report | Divisions
50
Miba Friction Group’s markets were struck the hardest by the global recession, but they are now on the road to recovery. In particular, the target markets for oil-lubricated sintered, fiber composite and carbon linings have gained considerably. Even the call-off volumes of clutch segments are moving at a high level. Miba Friction Group is growing through the relocation of the friction business for off-highway applications from Hoerbiger to all sites. A new plant in the growth market of India – Miba Drivetec India – is strengthening the global network of Miba Friction Group.
This division contributes 17.1 percent of total Miba sales. Miba Friction Group sales for the prior business year totaled EUR 74.9 million, an increase of EUR 24.4 million or 48.4 percent over the same period the previous year.
Based on the diversity of measures to increase efficiency and reduce costs in the 2009-2010 business year as well as the efforts to increase productivity in 2010-2011, earnings before taxes and interest (EBIT) returned to positive levels and equaled EUR 2.5 million, following EUR –6.5 million in the prior year.
The Friction Group’s investments expanded considerably, from EUR 2.1 million to EUR 11.8 million. This growth of investments was significantly influenced by the recent absorption of equipment and systems of the Polish Hoerbiger sites by Miba Steeltec, Vráble, Slovakia.
Miba Frictec in Roitham is the R&D competency center of Miba Friction Group. Over the past year, roughly EUR 3.0 million was invested at this site, primarily in the further expansion of research facilities.
Miba Friction Group
New Site in Growth Market of India
51
One focus of the R&D activities of Miba Friction Group in 2010-2011 was the development of a new friction material for the brakes on wind turbines. The material will display higher power density while lowering the complexity of the brake system. In addition to this, the R&D team engineered a new shoe brake pad that should soon provide for diminished noise pollution from rail traffic systems. In the con-struction equipment area, Miba Friction Group engineered a fiber composite friction material for brakes with higher energy density that substantially boosts the power range of the brake systems. A new fiber composite friction material for transmission couplings of buses enables an optimized shifting profile for reduced fuel consumption and elevated driving comfort.
Miba Friction Group concentrates on growth
Miba Friction Group is working intensively on the integration of the friction business from Hoerbiger. In the current business year, equipment and systems will be relocated, based on strategic considerations, to the sites in Austria, Slovakia and the USA. All plants of the Miba Friction Group benefit from strong growth. Miba Friction Group is positioned globally and is represented in the most important growth centers of the world, with local production and technological competence.
2010-11 2009-10
Sales in EUR million 74.9 50.5
Investments in EUR million 11.8 2.1
Number of employees, yearly average 575 456
Management Report | Divisions
52
Miba is pursuing its strategy to be the global No. 1 in economically attractive and technologically demand-ing market segments. In the Miba 2015 vision statement, the Miba Group set ambitious growth targets for itself. Stated goals include profitable growth in the core business and the development of a new business area.
In September 2010, a new division became a reality. With the takeover of the Styrian manufacturers of power electronics components, EBG and DAU, Miba stepped into a new technology and product field. Both companies are specialists in passive electronic components, such as resistors and cooling systems for power electronics. EBG and DAU have roughly 140 employees working at the sites in Kirchbach and Ligist. Through this acquisition, Miba has entered into the promising technology field of energy. Today already, Miba products improve energy efficiency of power trains, engines and drive trains and contribute to lower fuel consumption and CO2 emissions.
Beside EBG and DAU, Miba Automation Systems also belongs to the new division.
Heat sinks for power transmission systems
DAU produces heat sinks and heat pipes for power electronics that are used in stationary converters and power transmission systems. Research and development focused primarily on the engineering of liquid coolers that are soldered in a vacuum, which necessitated investment in a specialized vacuum soldering apparatus.
New Technologies Group
Promising Technology Field: Energy
53
High-power resistors for industrial applications
EBG produces high-voltage and high-power resistors that can be used in industrial electronic switches as safety, balance and bleeder resistors. Components from EBG are an important part of any form of drive technology and frequency conversion technology, as well as in measuring equipment. In the area of research and development, particular focus was placed on the field of high-pulse load components and special alloys.
Mobile machining equipment
Miba Automation Systems, based in Laakirchen, develops special machinery and successfully concentrates on a market niche. It develops, designs and builds special machinery as well as mobile machining centers for highly accurate machining of large components. Our unique selling position in Europe brings us an encouragingly high order volume and a good level of capacity utilization.
The business figures presented in the following pertain to New Technologies Group, a division being reported for the first time. They contain data on the entire preceding financial year of Miba Automation Systems as well as the figures for the Styrian companies since initial consolidation on September 1, 2010.
Sales of New Technologies Group in the reporting period equaled EUR 20.6 million. With sales at this level, the group was able to generate earnings before interest and taxes (EBIT) equal to EUR 0.8 million. A total of EUR 0.8 million was invested in this division.
New Technologies Group bolsters Miba’s technology leadership and cultivates new business areas for the Miba Group.
2010-11 2009-10
Sales in EUR million 20.6 6.9
Investments in EUR million 0.8 0.1
Number of employees, yearly average 164 30
Management Report | Divisions
54
The year 2010 was an eventful and successful year for Miba, notable for the rapid increase in demand and the intensive pace of growth. This upward trend in the global economy continued at the beginning of 2011. The International Monetary Fund (IMF) anticipated a total gain of 4.4 percent for the world economy in 2011. Included among the driving forces of this phenomenon were again the emerging national econo-mies such as China, India and Brazil. Even in the USA, the economy grew at an unexpected powerful rate. Still, the rise in raw material and energy prices could have a dampening effect on the economic cycle. However, the large national debt of a few European nations and political intransigence in North Africa and the Middle East impede long-term planning and forecasting.
Miba is benefiting greatly from the global upturn. The volume of orders booked in all divisions continues to evolve extremely well. The capacity utilization at Miba plants is commensurately high.
Miba has a presence in the growth markets of the USA, China, India and Brazil, and is further expanding its global network. Since the beginning of the year, Miba Friction Group possessed its own production site in India for the first time and Miba Sinter Group acquired a 26-percent share in an Indian manufacturer of sintered components. India is considered one of the most promising markets for cars, trucks and tractors.
In the future as well, Miba will pursue its strategy to be the global No. 1 in economically attractive and technologically demanding market segments. We ensure our competitive edge by investing approxi-mately six percent of sales in research and development and in training and education. Our profitable core business growth enables us to build up a new business area in future-oriented key technologies. New Technologies Group will make an important contribution to the increase in sales and earnings, and to the strengthening of Miba’s technology leadership.
We intend to rise to the challenges that lay ahead of us on this path: client requests on short notice; a high degree of job flexibility; forward-looking technology developments. Protecting the environment and climate continue to be important motivators of our development work. The goal is to reduce emissions and fuel consumption.
Miba is well-equipped for the future. All our actions are based on our commitment to financial independ-ence, social responsibility and sustainability. Our equity ratio consistently lies above 50 percent; we finance investments traditionally from cash flow and thus by our own means. For the ongoing business year, growth-oriented investments of more than EUR 50 million are planned. Of this, more than EUR 30 million will be funneled into modernization and the expansion of space and capacity at the Austrian sites in Laakirchen, Vorchdorf, Roitham, Ligist and Kirchbach.
Outlook
Development of the Global Network
An overview of all Miba sites can be found on page 4.
55
The long-term success of Miba entails the commitment of its employees and their personal development. The Company is working consistently on being an attractive employer. In doing so, Miba relies on an open corporate culture with transparent management principles, a healthy and inspiring work environ-ment and opportunities for each individual to attain further development. As a reliable and responsible employer, Miba offers perspectives in an internationally successful group of companies and draws moti-vated talent to its ranks.
Miba is looking toward the year 2011 with optimism. We work in a strong team on our common goal: No power train without Miba technology.
Events after the balance sheet date
On February 1, 2011, Miba acquired a 70 percent share interest in the sales companies of EBG LLC, Pennsylvania, USA, and in EBG Resistors LLC, Pennsylvania, USA. The companies sell the products made by EBG Elektronische Bauelemente GmbH in the USA.
Also on February 1, 2011, DI Franz Peter Mitterbauer, MBA, was appointed to the Management Board of Miba AG.
On February 21, 2011, Miba acquired a 26-percent share in Maxtech Sintered Product Pvt. Ltd. (MSPPL) in Pune, India.
Management Report | Outlook
56
In September 2002, the Austrian Working Group for Corporate Governance established the Code of Corporate Governance, a framework for transparent and responsible corporate management. The Miba Group strongly believes that carefully executed corporate governance plays a key role in strengthening shareholder and investor trust as well as that of the capital market.
These principles have long been a part of the Miba Group. Our vision, mission and strategy are sustain-able and oriented to the long term, and are communicated to all our shareholders.
Miba AG has been committed to the principles of the Code since it was introduced and has pledged to follow the Code. This acknowledgment is evaluated in accordance with legal provisions by an external auditor. The audited, evaluated questionnaire is available to all interested parties on the corporate homepage at www.miba.com.
The Austrian Code of Corporate Governance in the prevailing version can be retrieved on the Internet at www.corporate-governance.at. With the present report, Miba AG is meeting its legal obligation per section 243b of the Austrian Business Enterprise Code (UGB) to compile a corporate governance report.
The Company deviates from the following C Rules (comply or explain) of the Code, explained as follows:
n Rule 2 One share – one vote Miba’s share capital is divided into 1.3 million no-par-value shares, 130,000 of which are non-voting preferred shares convertible to common shares in return for relinquishment of preferential rights and 300,000 of which are non-voting preferred shares that are not convertible to common shares.
n Rule 18 Internal auditing Internal auditing is not established as a separate staff unit nor is it outsourced to an external firm or institution. Because of the size and structure of the company, these responsibilities are assumed by Controlling and Corporate Finance. Periodic reports are issued and ad hoc reporting is carried out where applicable by Controlling and Corporate Finance.
n Rule 26 External supervisory board memberships of the Management Board The Chairman of the Management Board holds six board memberships (two of them chairmanships) in corporations external to the Group.
n Rule 27 Fixed and performance-based compensation of the Management Board The compensation of the Management Board members responsible for operational areas includes a performance-linked component.
Corporate Governance Report
Further details on corporate governance at Miba can be found atwww.miba.com.
57
n Rules 31 and 51 Individual reporting of Management and Supervisory Board compensation Miba believes that individual reporting provides neither shareholders nor other Company stakeholders with relevant additional information. Furthermore, individual reporting does not lead to any additional economically relevant knowledge.
n Rule 34 Internal rules of procedure of the Supervisory Board Due to its size, the Supervisory Board does not have internal rules of procedure, but is required to comply with general responsibilities. The disclosure and reporting obligations of the Management Board are set out in the Internal Rules of Procedure of the Management Board.
n Rule 38 Procedure for the appointment of a Management Board member The appointment of a Management Board member is based on the professional and personal qualifi-cations of the candidate.
DI DDr. h. c. Peter Mitterbauer, born in 1942Chairman of the Management BoardManagement Board responsibilities: Accounting, Controlling, Human Capital, Investor Relations and Corporate CommunicationsFirst appointment: Chairman of the Management Board: October 20, 1986End of current term: January 31, 2013Supervisory board memberships in other domestic or international companies: Andritz AG, Oberbank AG, Österreichische Industrie Holding AG (Chair), Prinzhorn Holding GmbH, Rheinmetall AG, Teufelberger Holding AG, Österreichische Forschungsförderungsgesellschaft mbH
Dr.-Ing. Norbert Schrüfer, born in 1959Management Board responsibilities: New Technologies Group, Corporate Technology, IT, New Business Development and Corporate Social ResponsibilityFirst appointment: February 1, 2001End of current term: January 31, 2013Supervisory board memberships in other domestic or international companies: none
Management Report | Corporate Governance Report
Executive Bodies of the Company
The Management Board
58
Dr. Wolfgang Litzlbauer, born in 1969Management Board responsibilities: Bearing Group and Coating Group, Corporate Marketing and Corporate PurchasingFirst appointment: June 15, 2004End of current term: January 31, 2013Supervisory board memberships in other domestic or international companies: none
Dr.-Ing. Harald Neubert, born in 1956Management Board responsibilities: Sinter Group, Business Excellence and Zero Defect.First appointment: February 1, 2009End of current term: January 31, 2012Supervisory board memberships in other domestic or international companies: none
DI Franz Peter Mitterbauer, MBA, born in 1975Management Board responsibilities: Friction GroupFirst appointment February 1, 2011End of current term: January 31, 2014Supervisory board memberships in other domestic or international companies: none
The Supervisory Board of Miba AG consists of four shareholders’ representatives and two representa-tives of the employee council:
Shareholders’ representatives
Dr. Theresa Jordis, born in 1949Chairwoman of the Supervisory BoardIndependentFirst appointment: July 9, 1993End of current term: Date of the Annual General Meeting which deals with the granting of discharge for the 2012-2013 business yearSupervisory board memberships in other listed domestic or international companies: Wolford AG (Chair), Erste Group Bank AG
Supervisory Board
59
Dipl. Bw. Alfred Heinzel, born in 1947Deputy ChairmanIndependentFirst appointment: July 4, 2003End of current term: Date of the Annual General Meeting which deals with the granting of discharge for the 2012-2013 business yearSupervisory board memberships in other listed domestic or international companies: Verbund AG (formerly Österreichische Elektrizitätswirtschafts AG)
Dr. Robert Büchelhofer, born in 1942IndependentFirst appointment: July 4, 2003End of current term: Date of the Annual General Meeting which deals with the granting of discharge for the 2012-2013 business yearSupervisory board memberships in other listed domestic or international companies: Polytec Holding AG, M-Tech Technologie und Beteiligungs AG
Dkfm. Dr. Wolfgang C. Berndt, born in 1942IndependentFirst appointment: July 27, 2008End of current term: Date of the Annual General Meeting which deals with the granting of discharge for the 2012-2013 business year.Supervisory board memberships in other listed domestic or international companies: Lloyds Banking Group PLC, Lloyds TSB Bank PLC, Bank of Scotland PLC, HBOS PLC (all until May 2010), Cadbury PLC (until April 2010), GfK AG, OMV AG (as of May 2010)
Independence of Supervisory Board members
The members of the Supervisory Board determined their criteria for independence with reference to the guidelines of the Austrian Code of Corporate Governance. The Supervisory Board of Miba AG identifies the following criteria:
A member of the Supervisory Board shall only be considered independent when he/she does not have any business or personal relationship to the Company or its Management Board which would present a material conflict of interest and could therefore influence the behavior of the Supervisory Board member. No member shall hold a business relationship with the Company or any of its subsidiaries of a significant proportion for the Supervisory Board member, nor shall any member have maintained such a relationship in recent years. This also applies to business relationships with companies in which the Supervisory Board member has a substantial business interest. No member of the Supervisory Board shall have been an auditor of the Company or a shareholder or employee of the auditing firm during the last three years. No Supervisory Board member shall be a member of the Management Board of another company in which a member of the Company’s Management Board is a member of the Supervisory Board.
Management Report | Corporate Governance Report
60
All members of the Supervisory Board shall fulfill the criteria for independence set out by the Supervisory Board as well as the criteria of C Rule 54.
Delegated by the Employee Council
Hermann Aigner, born in 1954First appointment: May 19, 1994
Johann Forstner, born in 1964First appointment: December 17, 2009
The Management Board of Miba AG holds monthly Management Board meetings dealing with topics rel-evant to the Group as a whole as well as topics relevant to particular divisions.
Supervisory Board committees
The Supervisory Board of Miba AG established an Audit Committee, which held two meetings during the 2010-2011 business year on the financial statements and Consolidated Financial Statements for the 2009-2010 business year, the review of the internal control system, the implementation of risk management and matters related to the Miba Group audit. The members of the Audit Committee are: Dr. Theresa Jordis (Chair), Dipl. Bw. Alfred Heinzel (Deputy Chair, Financial Expert) and Hermann Aigner.
The Compensation Committee of the Supervisory Board of Miba AG held three meetings during the 2010-2011 business year and dealt with matters including the appointment of a new Management Board and issues related to succession planning. Members of the Compensation Committee are: Dr. Theresa Jordis (Chair), Dr. Wolfgang C. Berndt and Johann Forstner.
The Supervisory Board of Miba AG held five meetings during the 2010-2011 business year. These meetings focused on the oversight of business development in the Miba Group, strategic goals and special agenda items such as acquisitions of companies and other business dealings subject to approval.
Functioning of the Management Board and Supervisory Board
61
The goal of the compensation system for Management Board members is to adequately compensate Management Board members based on their scope of activities and responsibilities, and in line with domestic and international compensation standards. A significant part of this compensation varies based on the Company’s results. The annual bonus is a variable cash payment, the amount of which is deter-mined on the basis of individual objectives and results-based targets. Regarding the composition of the earnings of the Management Board of fixed and variable components, please refer to the Notes to the Consolidated Financial Statements.
Management Board members have individual pension arrangements; the Company pays defined amounts to the Management Board members. The Chairman of the Board has an additional “old” pen-sion plan, which provides a fixed value-protected pension. All members of the Management Board, with the exception of the Chairman, are entitled to severance payments in accordance with the relevant legal provisions upon the conclusion of their duties if this also represents a termination of contract.
Miba AG holds a directors’ and officers’ liability insurance policy (D & O liability); the costs are borne by the Company. This policy costs approximately EUR 8,000 per year. The total compensation of the Supervisory Board is determined annually by the General Meeting, whereby the distribution of compen-sation to individual members of the Supervisory Board is carried out by the Board itself.
The legal firm Dorda Brugger Jordis Rechtsanwälte GmbH, whose managing partner, Dr. Theresa Jordis, is a member of the Supervisory Board of Miba AG, advises the Company in legal matters; the fee paid for these legal services is customary for the market and invoiced on a time and material basis.
Promotion of Women in the Management Board, Supervisory Board and Executive Positions
Miba promotes the development of women in leadership positions for all functions, specifically by intensifying the involvement of women in internal executive management training programs.
Laakirchen, April 2011
The Management Board of Miba AG
DI DDr. h. c. Peter MitterbauerDr.-Ing. Norbert Schrüfer Dr. Wolfgang Litzlbauer Dr.-Ing. Harald Neubert DI Franz Peter Mitterbauer, MBA
Management Report | Corporate Governance Report
Compensation of Management Board and Supervisory Board
62
63
Financial Statements
64
Consolidated Income Statement for the 2010-2011 Business Year Including Comparison with the Previous Year’s Figures
2010-11 2009-10 Note TEUR TEUR
1. Sales revenue (1) 437,156 311,756
2. Changes in inventory of finished goods and work in progress 6,915 –5,635
3. Internally produced and capitalized assets 6,108 4,284
4. Operating result 450,178 310,405
5. Other operating income (2) 15,786 7,965
6. Cost of materials and other purchased manufacturing services (3) –183,526 –121,013
7. Personnel costs (4) –130,852 –108,786
8. Other operating expenses (5) –66,619 –42,949
9. Earnings before interest, taxes, depreciation and amortization (EBITDA) 84,967 45,623
10. Scheduled depreciation and amortization (6) –30,485 –27,754
11. Earnings before interest, taxes and amortization of goodwill (EBITA) 54,482 17,868
12. Amortization of goodwill (6) 0 –1,472
13. Earnings before interest and taxes (EBIT) 54,482 16,397
14. Income and losses from investments in associated companies 1,350 1,481
15. Net interest income (7) –2,481 –2,520
16. Other financial results (8) –34 153
17. Financial results –1,164 –886
18. Earnings before taxes (EBT) 53,318 15,511
19. Income taxes (10) –11,092 –3,220
20. Earnings after taxes (EAT) 42,226 12,290
Attributable to non-controlling interests 298 41
Attributable to parent company shareholders 41,928 12,249
Weighted average number of shares issued (shares) 1,233,619 1,233,771
Earnings per share in EUR 33.99 9.93
Diluted earnings per share in EUR = undiluted earnings per share in EUR 33.99 9.93
Planned or paid dividend per share in EUR 7.00 2.50
65
Consolidated Statement of Recognized Income and Expenses for the 2010-2011 Business Year Including Comparison with the Previous Year’s Figures
2010-11 2009-10 TEUR TEUR
Earnings after taxes (EAT) 42,226 12,290
Unrealized gains (+) or losses (–) from foreign currency translation 2,147 –1,776
Actuarial losses/gains –1,948 3,404
Cash flow hedge 1,135 0
Deferred taxes resulting from other earnings 491 –851
Total other earnings 1,825 776
Total of all recognized income and expenses 44,052 13,067
Attributable to:Shareholders of Miba AG 43,740 13,020
Non-controlling interests 312 47
Financial Statements 2010-2011 | Consolidated Statement of Recognized Income and Expenses
66
Consolidated Balance Sheet as of January 31, 2011, Including Comparison with the Previous Year’s Figures
1/31/11 1/31/10Assets Note TEUR TEUR
A. Non-current assets:
I. Intangible assets (11) 46,111 15,409
II. Property, plant and equipment (12) 159,110 144,071
III. Investments in associated companies (13) 8,543 7,971
IV. Other financial investments (13) 4,536 4,825
V. Deferred tax assets (14) 3,524 6,038
221,825 178,315
B. Current assets:
I. Inventories (15) 66,869 46,403
II. Trade and other receivables (16) 97,237 68,399
III. Cash and cash equivalents (17) 66,691 50,814
230,798 165,616
452,622 343,931
67
1/31/11 1/31/10Liabilities Note TEUR TEUR
A. Group equity:
I. Share capital (18) 9,500 9,500
II. Capital reserves (19) 18,089 18,089
III. Retained earnings (20) 227,776 186,911
IV. Treasury stock –8,074 –8,060
V. Non-controlling interests 1,161 347
248,452 206,787
B. Non-current liabilities:
I. Provisions for severance payments and pensions (21) 17,223 15,006
II. Provision for deferred taxes (14) 6,977 668
III. Interest-bearing liabilities (22) 43,954 31,849
IV. Other non-current liabilities (23) 19,884 11,560
88,038 59,082
C. Current liabilities:
I. Current provisions (24) 26,534 19,707
II. Provision for taxes (24) 12,751 8,141
III. Trade payables (25) 44,852 25,075
IV. Current portion of interest-bearing liabilities (26) 7,397 11,860
V. Other current liabilities (27) 19,686 13,280
VI. Income tax liabilities (27) 4,911 0
116,132 78,062
452,622 343,931
Financial Statements 2010-2011 | Consolidated Balance Sheet
68
Statement of Changes in Group Equity for the 2010-2011 Business Year
Currency Non- Capital translation Retained Hedging Treasury Miba AG controlling Share capital reserves differences earnings provision stock shareholders interests Total TEUR TEUR TEUR TEUR TEUR TEUR TEUR TEUR TEUR
Balance as of February 1, 2009 9,500 18,089 –7,578 185,131 0 –8,060 197,082 338 197,421
Recognized income and expenses 0 0 –1,776 14,796 0 0 13,020 47 13,067
Dividend payments 0 0 0 –3,701 0 0 –3,701 0 –3,700
Changes in non-controlling interests 0 0 0 38 0 0 38 –38 0
Balance of January 31, 2010 =Balance of Feburary 1, 2010 9,500 18,089 –9,354 196,264 0 –8,060 206,438 347 206,787
Balance of February 1, 2010 9,500 18,089 –9,354 196,264 0 –8,060 206,438 347 206,787
Total comprehensive income 0 0 2,147 40,458 1,135 0 43,740 312 44,052
Dividend payments 0 0 0 –3,084 0 0 –3,084 0 –3,084
Changes in treasury stock 0 0 0 0 0 –14 –14 0 –14
Changes in non-controlling interests 0 0 0 209 0 0 209 425 635
Changes in non-controlling interests per IAS 32 0 0 0 0 0 0 0 77 77
Balance as of January 31, 2011 9,500 18,089 –7,206 233,847 1,135 –8,074 247,290 1,161 248,452
69
Currency Non- Capital translation Retained Hedging Treasury Miba AG controlling Share capital reserves differences earnings provision stock shareholders interests Total TEUR TEUR TEUR TEUR TEUR TEUR TEUR TEUR TEUR
Balance as of February 1, 2009 9,500 18,089 –7,578 185,131 0 –8,060 197,082 338 197,421
Recognized income and expenses 0 0 –1,776 14,796 0 0 13,020 47 13,067
Dividend payments 0 0 0 –3,701 0 0 –3,701 0 –3,700
Changes in non-controlling interests 0 0 0 38 0 0 38 –38 0
Balance of January 31, 2010 =Balance of Feburary 1, 2010 9,500 18,089 –9,354 196,264 0 –8,060 206,438 347 206,787
Balance of February 1, 2010 9,500 18,089 –9,354 196,264 0 –8,060 206,438 347 206,787
Total comprehensive income 0 0 2,147 40,458 1,135 0 43,740 312 44,052
Dividend payments 0 0 0 –3,084 0 0 –3,084 0 –3,084
Changes in treasury stock 0 0 0 0 0 –14 –14 0 –14
Changes in non-controlling interests 0 0 0 209 0 0 209 425 635
Changes in non-controlling interests per IAS 32 0 0 0 0 0 0 0 77 77
Balance as of January 31, 2011 9,500 18,089 –7,206 233,847 1,135 –8,074 247,290 1,161 248,452
Financial Statements 2010-2011 | Group Equity
70
Consolidated Cash Flow Statement for the 2010-2011 Business Year Including Comparison with the Previous Year’s Figures
2010-11 2009-10 In rounded numbers TEUR TEUR
1. Consolidated cash flow from operations
Earnings before taxes (EBT) 53,318 15,511
+ (–) Depreciation and amortization of (and additions to) assets and at-equity changes 29,686 27,766
– (+) Changes in non-current provisions –169 –316
– (+) Gains (losses) from the disposal of assets –416 –60
= Consolidated cash flow from earnings 82,420 42,901
– (+) Increase (decrease) in inventories and prepaid expenses –13,504 12,628
– (+) Increase (decrease) in trade receivables, other receivables and intragroup receivables –20,819 –3,942
+ (–) Increase (decrease) in trade payables, intragroup liabilities and other liabilities 18,190 660
+ (–) Increase (decrease) in current provisions and deferred tax liabilities 2,675 –1,290
+ Dividends from investments in associated companies 866 853
– (+) Foreign currency translation and other changes –1,777 –377
– Taxes paid –2,234 –3,363
–16,602 5,169
= Consolidated cash flow from operations 65,818 48,070
71
2010-11 2009-10 In rounded numbers TEUR TEUR
2. Consolidated cash flow from investment activities
– Investments in tangible and intangible assets –34,555 –19,537
– Investments in financial assets (excluding equity investments) –195 –520
– Acquisition of equity investments 0 –365
– Acquisition of subsidiaries, less available cash resources –26,027 0
+ (–) Gains (losses) from the disposal of assets 416 60
+ Carrying amount of disposed assets 1,099 2,713
= Consolidated cash flow from investment activities –59,262 –17,649
3. Consolidated cash flow from financing activities
– Dividend of parent company –3,084 –3,701
+ Payments from limited partners of non-controlling interests 5,100 0
– Repayment of loans and other long-term credit from credit institutions –4,361 –5,066
+ Taking out of loans and other long-term credit from credit institutions 11,209 4,929
– Purchase of treasury stock –14 0
= Consolidated cash flow from financing activities 8,850 –3,838
+ (–) Consolidated cash flow from operations 65,818 48,070
+ (–) Consolidated cash flow from investment activities –59,262 –17,649
+ (–) Consolidated cash flow from financing activities 8,850 –3,838
= Change in cash and cash equivalents and consolidated marketable securities 15,406 26,583
+ (–) Currency translation differences due to changes in exchange rates 471 –361
+ Opening balance of cash and cash equivalents 50,814 24,592
= Closing balance of cash and cash equivalents 66,691 50,814
Financial Statements 2010-2011 | Consolidated Cash Flow Statement
72
Notes to the Consolidated Financial Statements of Miba AG, Laakirchen, Austria, for the 2010-2011 Business Year
A. General disclosures
Miba AG (hereinafter “Miba” or “Miba Group”) is a group based in Austria with international operations. The Miba Group’s business endeavors focus on the following product segments: engine bearings (Bearing), sintered components (Sinter), friction materials (Friction) and passive electronic components (New Technologies). The Group’s head office is located at Dr.-Mitterbauer-Str. 3, 4663 Laakirchen, Austria. The Company is registered under record no. FN 107386 x at the local Austrian court (Landes- als Handelsgericht Wels).
The Company is included in the group of fully consolidated companies of Mitterbauer Beteiligungs-Aktiengesellschaft, Laakirchen, Austria.
These Consolidated Financial Statements of Miba AG for the 2010-2011 business year (February 1, 2010, to January 31, 2011) were prepared on the basis of section 245a of the Austrian Business Enterprise Code (UGB) in accordance with the International Financial Reporting Standards (IFRSs) applicable as of the balance sheet date and the interpretations of the International Financial Reporting Interpretation Committee (IFRIC), as adopted by the European Union (EU), under the supervision of the Management Board.
For the purpose of clarity, all monetary figures are shown in thousands of euros (TEUR).
73
Changes to accounting standards
The IASB approved the following changes to existing IFRSs and adopted a few new IFRICs that also have already been adopted by the EU Commission, and which must be applied for the first time, in the Consolidated Financial Statements dated January 31, 2011.
IAS 27 Consolidated and Separate Financial Statements (amended)
IAS 32 Amendments regarding Classification of Rights Issues
IAS 39 Amendment regarding Embedded Derivatives
IFRS 2 Amendments regarding Group Cash-settled Share-based Payment Transactions
IFRS 3 Business Combinations (revised)
IFRIC 12 Service Concession Arrangements
IFRIC 15 Agreements for the Construction of Real Estate
IFRIC 16 Hedges of a Net Investment in a Foreign Operation
IFRIC 17 Distributions of Non-cash Assets to Owners
IFRIC 18 Transfers of Assets from Customers
Amendments to various IFRSs resulting from the 2009 improvement process.
In comparison to the reporting on January 31, 2010, the following essential changes resulted from the first-time application of the aforementioned standards and interpretations:
IFRS 3 and IAS 27 Business Combinations Project Phase II revised the regulations for capital consolidation. The following changes have been made: the option of measuring non-controlling interests at fair value (the full goodwill method) was standardized, transaction costs must be recognized in the income statement, goodwill cannot be adjusted to account for retroactive reappraisal of a purchase price, and previously owned shares are reappraised in the income statements in the case of step acquisitions. The changes to IAS 27 further-more established that transactions by which a parent company changes its investment ratio in a subsidiary without relinquishing its controlling interest must be reported on the balance sheet as a change in equity with no effect on net income. Changes have also been instituted for IAS 28 Investments in Associates.
The initial application of the other IFRSs and IFRICs enumerated had negligible effects on the Consolidated Financial Statements of Miba AG as of January 31, 2011, since these changes applied only in isolated cases. There were no changes to the accounting policies used.
Financial Statements 2010-2011 | Notes to the Consolidated Financial Statements
74
Future changes to accounting standards
The IASB and the IFRIC have approved additional standards and interpretations that are, however, not yetobligatory in the 2010-2011 business year or have not yet been incorporated into EU law. They include the following standards and interpretations:
Applicable Applicable to business years to business years beginning on or after beginning on or after the date specified the date specified (according to (according to IASB) EU endorsement)
IAS 24 Related Party Disclosures (amended) 1/1/11 1/1/11
IFRS 7 Disclosures – Transfers of Financial Assets 7/1/ 11 not yet adopted
IFRS 9 Financial Instruments 1/1/13 not yet adopted
IAS 12 Deferred Tax: Recovery of Underlying Assets 1/1/12 not yet adopted
IFRIC 14 Amendment regarding Voluntary Prepaid Contributions 1/1/11 1/1/11
IFRIC 19 Extinguishing financial liabilities with equity instruments 7/1/10 7/1/10
Amendments to various IFRSs 7/1/10 or 7/1/10 oras the result of IASB’s annual improvement process 1/1/11 1/1/11
The effects of the above amendments on Miba’s Consolidated Financial Statements are currently under review. No early application of the new standards and interpretations is planned.
B. Principles of consolidation
1. Scope of consolidation and balance sheet date An overview of the significant companies included in the Miba AG Group and details regarding their consolidation can be found in Appendix 3 to the Notes.
The balance sheet date for all companies included in the Consolidated Financial Statements is January 31 of every year. There are eight exceptions, for which no interim accounts were prepared (balance sheet date in these cases: December 31 of every year). The different balance sheet dates are required by law in some cases.
The consolidated group was established according to the principles of IAS 27 (Consolidated and Separate Financial Statements). Accordingly, the consolidated entity includes 16 Austrian subsidiaries (previous year: 10) and 16 foreign subsidiaries (previous year: 11) in which Miba Aktiengesellschaft holds, directly or indirectly, the majority of voting rights. The four non-consolidated subsidiaries (previous year: four) and the three (previous year: 0) associated companies are immaterial, even as a collective total.
On March 30, 2010, Miba Coatings Trading (Suzhou) Ltd., Suzhou, China, was established. High Tech Coatings GmbH holds 100 percent of Miba Coatings Trading (Suzhou) Ltd.
On March 31, 2010, Miba acquired the remaining shares (75.1 percent) in Teer Coatings Ltd. in Droitwich, United Kingdom.
75
Miba Bearings Sales Corporation, McConnelsville, Ohio, USA, was established on May 10, 2010.
On the reporting date of May 31, 2010, the Company sold an interest equal to 24.8 percent of the share capital in High Tech Coatings GmbH.
Miba Energy Holding GmbH, Laakirchen, Austria, was established on August 7, 2010. Miba AG owns 100 percent of the shares in Miba Energy Holding GmbH.
Miba Energy Holding GmbH & Co. KG, Laakirchen, Austria, was established on August 28, 2010. Miba Energy Holding GmbH holds a 49 percent interest in Miba Energy Holding GmbH & Co. KG. Due to Miba Energy Holding GmbH’s controlling interest in Miba Energy Holding GmbH & Co. KG, this company was fully consolidated in accordance with IAS 27.13.
On September 1, 2010, Miba Energy Holding GmbH & Co. KG acquired 100 percent of the shares in EBG Elektronische Bauelemente GmbH, Laakirchen, Austria, which in turn owns 100 percent of the shares in DAU GmbH, Laakirchen, Austria, and 100 percent of the shares in Dau GmbH & Co. KG, Laakirchen, Austria. DAU GmbH & Co. KG holds a 75 percent share in EBG & DAU Kühlerentwicklung GmbH, Laakirchen, Austria.
Furthermore, EBG Elektronische Bauelemente GmbH holds a 49 percent share in EBG d.o.o., Šentjernej, Slovenia. With the exception of EBG d.o.o., which is included in the Consolidated Financial Statements as an associated company and which is accounted for using the equity method, all of the companies enumerated above were fully consolidated.
Miba Energy Holding LLC, McConnelsville, Ohio, USA, was established on September 17, 2010.
On January 4, 2011, Hoerbiger Drive Technology India Pvt. Ltd., Pune, India, was acquired and the company was renamed Miba Drivetec India Pvt. Ltd., Pune, India. Miba Friction Holding GmbH holds a 99.9 percent share; Miba Frictec GmbH holds the remaining 0.01 percent share.
Both aforementioned companies were fully consolidated.
Financial Statements 2010-2011 | Notes to the Consolidated Financial Statements
76
Acquisitions
Teer Coatings Ltd., Droitwich, United KingdomOn March 31, 2010, Miba acquired the remaining shares (75.1 percent) in Teer Coatings Ltd. of Droitwich, United Kingdom. This company is one of the world’s technology leaders in the area of PVD coatings. Through the acquisition of Teer Coatings, Miba is expanding its expertise and portfolio in the area of highly specialized surface coatings.
EBG-DAU companiesOn September 1, 2010, Miba took over the Styrian companies EBG and DAU. EBG is a specialist in passive electronic components. Located in Kirchbach, Austria, the company develops and produces high-precision high-voltage resistors and high-power resistors. DAU, located in Ligist, Austria is an internationally recognized development partner and supplier of thermal test solutions, such as air coolers, liquid coolers and heat pipes. The acquisition of these companies enables Miba to expand its product portfolio and reinforce its expertise in promising technologies.
Miba Drivetec India Pvt. Ltd., Pune, IndiaOn January 4, 2011, Hoerbiger Drive Technology India Pvt. Ltd., Pune, India, was acquired and the company was renamed Miba Drivetec India Pvt. Ltd., Pune, India. Miba is broadening its global network through Miba Drivetec India Pvt. Ltd., Pune, India, which is also bringing Miba nearer to its customers in the growth market of India.
The following table presents the foreign companies on the basis of the transaction rate.
The estimated fair value of the material assets and liabilities acquired can be illustrated as follows:
77
Miba Teer Drivetec Coatings EBG-DAU- India Pvt.TEUR Ltd. companies Ltd. Total
Non-current assets:
Intangible assets 3,082 27,856 4,634 35,573
Property, plant and equipment 1,521 2,408 686 4,615
Other non-current assets 0 174 4 177
4,604 30,438 5,324 40,366
Current assets:
Inventories 436 4,841 724 6,001
Receivables 889 3,974 651 5,514
Cash and cash equivalents 1,143 3,187 0 4,329
2,468 12,001 1,375 15,844
Non-current liabilities:
Non-current interest-bearing liabilities –423 0 0 –423
Provisions –950 –7,437 –1,539 –9,926
–1,374 –7,437 –1,539 –10,349
Current liabilities:
Provisions 0 –494 –10 –505
Liabilities –887 –2,547 –1,150 –4,583
–887 –3,041 –1,160 –5,087
Net assets 4,811 31,962 4,000 40,773
In these Consolidated Financial Statements, companies consolidated for the first time contributed TEUR 19,279 to sales revenues and TEUR 1,106 to consolidated EBIT. If the company acquisitions and the attendant initial consolidation had transpired on February 1, 2010, then consolidated sales would have equaled TEUR 459,547 and consolidated EBIT would have been TEUR 57,350. The additional costs of acquisitions came to TEUR 866, and they were reported under other operating expenses, with an effect on net income.
In allocating the purchase price, beside the minimum purchase prices, performance-based shares were taken into account on the basis of the future business performance of the acquired divisions. The performance-based shares are scheduled for payment in 2011, 2012 and 2013.
The acquisition costs of these acquisitions totaled TEUR 40,773; of this figure, TEUR 30,356 was disbursed in the 2010-2011 business year. The Company acquired cash and cash equivalents amounting to TEUR 4,329.
2. Consolidation methodsIn accordance with IFRS 3, the acquired subsidiaries are reported in the balance sheet using the acquisition method. According to this method, the acquisition costs are offset against the pro rata remeasured equity of the subsidiary. The provisional purchase prices due are included in the acquisition costs. The transaction
Financial Statements 2010-2011 | Notes to the Consolidated Financial Statements
78
costs of the acquisition are recognized as expenses. Any remaining differences in the assets are capitalized as goodwill, subjected to an annual impairment test and only amortized in the event of unscheduled impairments. Subsequent to repeated audit of the amounts stated, any differences in liabilities under first-time consolidation are reported as affecting net income on the Consolidated Income Statement for the year in which they occur.
Minority interests in shareholders’ equity and the operating result of companies under control of the parent company are shown in the Consolidated Financial Statements as part of shareholders’ equity, in accordance with the provisions of IAS 27.
Intragroup receivables and liabilities, expenses and income as well as intragroup profits are consolidated unless they are immaterial.
For the associated companies included according to the equity method, the same capital consolidation principles apply as with subsidiaries, except for the non-controlling interests in Miba Energy Holding GmbH & Co. KG.
For companies that are recognized using the equity method, interim results are not eliminated because of their relative insignificance to financial position and financial performance.
Changes in the investment rate that cause no loss of control over the subsidiary are treated like transactions with the equity owners of the Group.
The required tax deferrals are made for consolidation procedures that affect net income.
3. Foreign currency translationTranslation of the currency of foreign financial statements is handled in accordance with IAS 21 based on the concept of functional currency. This is their respective national currency for all companies, since these companies operate independently from a financial, economic and organizational perspective.
Assets and liabilities are therefore translated at the average currency exchange rate on the balance sheet date (closing rate). Income and expenses are translated at the average exchange rates for the year (except for depreciation and amortization).
Currency translation differences between the closing rate used for the Consolidated Balance Sheet and the average rate used for the Consolidated Income Statement are netted against consolidated reserves.
The translation difference resulting from the revaluation of equity as compared with first-time consolidation is also recognized directly in consolidated reserves.
In the 2010-2011 business year, reporting date translation differences of TEUR 2,147 (previous year: TEUR –1,776) were recognized directly in Group equity.
79
Average Closing rate annual rateCurrency in EUR 1/31/11 1/31/10 2010-11 2009-10
Brazilian Real on 12/31/ 0.45300 0.40230 0.43072 0.36353
British Pound 1.16560 1.15330 1.17018 1.12689
Chinese Yuan on 12/31/ 0.11450 0.10590 0.11166 0.10483
Indian Rupee 0.01605 – 0.01661 –
Singapore Dollar 0.57240 0.51290 0.56107 0.49409
US Dollar 0.73510 0.72160 0.75902 0.71500
C. Accounting and measurement principles
The financial statements of all consolidated companies were prepared in accordance with uniform accounting and measurement principles. In the case of companies that are consolidated according to the equity method, adjustment to the uniform Group measurement guidelines is carried out for material items.
1. Non-current assetsIntangible assets are measured, according to IAS 38, at acquisition cost minus scheduled straight-line amortization (useful life of 3 to 15 years). According to IAS 38.54, research expenses are not capitalized. Company development costs do not meet all criteria required by IAS 38.57 and are therefore not capital-ized either. During the 2010-2011 business year, research and development costs of EUR 22.6 million (previous year: EUR 18.7 million) were charged as expenses.
For goodwill, an impairment test is carried out as defined in IAS 36. This is done at least once a year and whenever internal or external indicators signify an impairment.
In order to determine whether a depreciation based on a decrease in value is required, any cash-generating units (CGU) that will profit from the anticipated synergy potential of the company merger are allocated to goodwill. In Miba AG Group, the legally independent company units each form a CGU.
If the carrying amount exceeds the value in use as determined using the discounted cash flow method (DCF), based on future financial planning forecast by the Board of Management, a corresponding depreciation is taken. Later reversal of an impairment loss is not permitted.
The discount interest rate used in the DCF calculation corresponds to the interest rate that reflects the current market assessments of the interest rate effect as well as the specific risks to which the assets are subjected. For the preceding business year, a discount rate of 6.9 percent was used (previous year: 7.5 percent).
Based on the impairment tests performed during the business year, unscheduled goodwill impairment amounting to TEUR 0 (previous year: TEUR 1,472) was recorded. All impairments in the previous year pertained to the Friction segment.
In accordance with IAS 16, property, plant and equipment are valued at acquisition or production cost, less scheduled straight-line depreciation or at the fair value, whichever is lower. There were no borrowing costs incurred for property, plant and equipment manufactured or acquired over a longer period of time.
Financial Statements 2010-2011 | Notes to the Consolidated Financial Statements
80
If there are any indications of impairment of assets, unscheduled depreciation on the lower attributable value is required. If the reasons for the unscheduled depreciation cease to exist, the asset value will be restated accordingly.
In the case of self-produced assets, the cost comprises not only the cost directly related to the units of production but also the pro rata fixed and variable production overheads. These also include the pro rata costs for retirement benefit plans and voluntary benefits.
The scheduled straight-line depreciation is based primarily on the following depreciation rates:
Asset group Depreciation rate
Buildings 3.0–10.0%
Plant and equipment 10.0–25.0%
Other furniture and fixtures, tools and office equipment 10.0–25.0%
Pursuant to IAS 17, leased property, plant and equipment, for which essentially all risks and benefits ari-sing from the ownership of an asset are conveyed to the lessee (finance leases) must be capitalized at their attributable fair value or at the present value of the minimum future lease rates, whichever is lower.
The items surrendered under all other lease agreements are treated like items leased under operating leases and are therefore attributed to the lessor.
During the 2010-2011 business year, investment allowances or grants totaling TEUR 72 were reported as liability items (previous year: TEUR 87). These will be reversed in accordance with the useful life of the asset and pertain solely to property, plant and equipment.
During the 2010-2011 business year, government grants and subsidies amounting to TEUR 4,376 (previous year: TEUR 4,206) were received for research and development activities and for job creation programs and were reported as income. Reporting occurs when there is sufficient certainty that the related requirements are met and the funding granted.
The associated companies included in the Consolidated Financial Statements reported, on their respective reporting dates, assets totaling TEUR 48,880 (previous year: TEUR 35,247), liabilities totaling TEUR 25,839 (previous year: TEUR 13,838), sales revenues totaling TEUR 73,095 (previous year: 52,317), and a combined net income of TEUR 2,255 (previous year: TEUR 4,973).
Investments in affiliated companies, unless consolidated, are reported under other financial investments at the lower of cost or fair value.
Long-term securities are reported at their acquisition cost as of the date recognized and are measured in subsequent periods using actual adjusted values. Changes in fair value are recognized as affecting net income and are included in the Consolidated Income Statement.
Deferred taxes reflect temporary measurement differences between the balance sheet under IFRS and the tax accounts of the individual companies, as well as consolidation measures, through which temporary taxable differences may arise. Tax deferral is determined using the balance sheet liability method in accordance with IAS 12. Deferred tax assets on losses carried forward were formed if it is probable that they will be utilized within a reasonable period.
81
2. Current assetsInventories are measured at their acquisition or production cost, or at the net recoverable price, whichever is lower on the balance sheet date. In general, allowances for limited usability are included. Utilization is basically determined by means of the sliding average price method.
The cost of conversion includes all directly attributable expenses plus pro rata variable and fixed production overheads. These also include the pro rata costs for company retirement benefit plans and voluntary benefits. Interest on borrowed capital is not capitalized.
Trade receivables, loans and other financial liabilities and assets are classified as “Loans and Receivables” and are reported in the balance sheet at amortized cost using the effective interest method, if applicable. If there is any doubt about collectability, receivables are recognized at the lower recoverable value. The conclusion of a bankruptcy proceeding leads to the write-off of the relevant receivable. Valuation allowances are taken using a valuation allowance account. For other financial assets, the positive fair values of derivatives classified as held for trading are also recognized.
Tax receivables are netted against tax liabilities if they involve the same tax authority and if the company is entitled and intends to offset.
3. Non-current liabilitiesThe Group’s Austrian companies recognize appropriate provisions for future compensation obligations, since Austrian law requires employers to pay employees a one-time severance payment upon termination by the employer or upon retirement. The amount of the severance payment is based on years of service and the respective income at the time of termination or retirement.
For employees whose employment started after January 1, 2003, this obligation is transferred to a contribution-based system. The law requires that an amount totaling 1.53 percent of gross salary be paid into an employee benefit fund. These contributions are recorded as personnel costs.
Provisions for severance payments and service bonuses are determined as of the balance sheet date according to the projected unit credit method at an assumed interest rate of 5.00 percent per year (previous year: 5.25 percent) and including a salary increase of 2.50 percent per year for salaried employees (previous year: 2.50 percent) and 2.50 percent per year for hourly employees (previous year: 2.50 percent). The assumed pension age is the earliest possible age for the (preliminary) retirement pension as defined by the 2004 Pension Reform (2003 Budget Accompanying Act) and under consideration of the transitional regulations. A company-specific allowance for fluctuations was stated.
The calculation bases for the AVÖ-P08 GEM pension insurance plan (previous year: AVÖ-P08 GEM) were used to calculate the provisions.
Provisions for pensions are only required for the Austrian companies. These are calculated based on recognized actuarial principles using the projected unit credit method at an assumed interest rate of 5.00 percent p.a. (previous year: 5.25 percent) and a 1.00 to 1.50 percent salary adjustment rate (previous year: 1.5 percent), 0 percent for fixed pension commitments. A fluctuation allowance was not applied.
Financial Statements 2010-2011 | Notes to the Consolidated Financial Statements
82
The calculation bases for the AVÖ-P08 ANG pension insurance plan (previous year: AVÖ-P08 ANG) were used to calculate the provisions.
As of the 2005-2006 business year, any actuarial gains or losses resulting from changes in actuarial assumptions (demographic and financial assumptions) are reported uniformly, in accordance with the provisions of IAS 19.93A, as part of other earnings in the Statement of Recognized Income and Expenses for the year in which they occurred.
Contribution-based pension obligations have been assumed by two foreign subsidiaries. In these cases, the employer is making contributions to external funds. The contributions to the funds represent expenses for the current period. Expenses reported in the 2010-2011 business year total TEUR 694 (previous year: TEUR 576).
4. ProvisionsProvisions are reported under non-current or current liabilities, and include all legal or constructive obligations toward third parties that resulted from past events and that can be identified by the time the balance sheet is prepared, provided these obligations will likely lead to a future outflow of resources, and they can be determined reliably. They are reported at the most probable value based on careful examination.
5. Financial assets and liabilitiesPursuant to IAS 39, financial assets and liabilities are classified upon initial recognition either as “held for trading,” “loans and receivables,” “available for sale” or as “hedging”. Unless associated companies (as defined by IAS 28) or consolidated subsidiaries (as defined by IAS 27) are involved, financial assets are recognized on the balance sheet in accordance with IAS 39 and measured either at cost or at fair value, depending on classification.
Investments in non-consolidated companies are always included in the available-for-sale category. They are measured at their acquisition costs on the date they are first reported. As no active markets for these investments exist and fair values cannot be reliably determined, financial assets are recognized at cost. Value fluctuations of financial assets in the available-for-sale category are recognized as part of the revalu-ation reserve (revaluation surplus) and are not included in the income statement. Deferred taxes are also recognized if they are material. Amounts recognized on the balance sheet are not included in net profit or loss for the period until the date of disposal or in the event of a material and permanent impairment in the corresponding financial assets.
Investment securities are reported at their acquisition cost at the time they are recognized, and then in subsequent periods are measured at current fair values. Changes in fair value are recognized as affecting net income and are included in the Consolidated Income Statement. No company in the Miba Group cur-rently holds any held-to-maturity investments.
Interest-bearing loans, trade payables and other financial liabilities are recognized as financial liabilities at amortized cost, which may be calculated using the effective interest method, if applicable. Liabilities arising from finance leases must always be recognized as liabilities at the present value of the future leasing rates.
The negative fair values of derivatives that are classified as held for trading and that fail to meet the criteria of IAS 39 for hedging are also reported under “Other liabilities”, among other items.
83
If the derivative is incorporated into a designated hedging relationship pursuant to IAS 39, then the provisions for the accounting of hedging measures (hedge accounting) are applied per IAS 39. At the Miba Group, future payment streams from scheduled transactions deemed to have a high probability of closing are hedged against fluctuations by means of cash flow hedges. The effective portion of the change in value of the hedging instrument is stated in equity (hedging provision) as having no effect on net income, until reporting of the results from the underlying hedged transaction; the ineffective portion of the hedging instrument’s change in value is reported as affecting net income. They are reversed with an effect on net income in correlation to the proceeds realized.
The fair values of the financial assets and liabilities generally correspond to the market prices on the balance sheet date. If prices in active markets are not immediately available, they are calculated – unless they are only of minor importance – by using recognized actuarial valuation models and current market parameters (especially interest rates, exchange rates and credit ratings of contracting parties). The cash flows of financial instruments are discounted to the balance sheet date for this purpose.
All financial assets and liabilities are measured as of the settlement date. The financial assets and liabilities are derecognized when the rights to payment from this investment have expired or have been transferred, and Miba has essentially transferred all the risks and rewards incidental to ownership of the asset.
6. Recognition of revenueRevenue from the sale of products and goods is recognized at the time the risks and benefits are transferred to the buyer.
Revenues from long-term construction contracts are recognized in accordance with IAS 11 on the basis of the stage of completion of the contract activity. The percentage of completion is determined by the ratio between the contract cost incurred by the balance sheet date and the estimated total contract cost.
Interest income is recognized in proportion to time based on the effective interest rate of the asset. Dividend income is reported at the time the legal claim arises.
7. Estimates and uncertainties in discretionary evaluations and assumptionsTo a certain degree, the Consolidated Financial Statements must rely on estimates and assumptions that impact the stated assets and liabilities, the disclosure of other liabilities on the balance sheet date and the recognition of income and expenses for the reporting period. The amounts that actually result in the future may differ from these estimates. The principle of presenting a “true and fair view” has also been unconditionally followed when using estimates.
Furthermore, the preparation of the Consolidated Financial Statements requires the assessment of future developments. The valuation of existing capital commitments for benefits, for example, requires assumptions regarding discount rates, retirement age, life expectancy, and future salary and pension increases.
Intangible assets and property, plant and equipment are amortized/depreciated on a straight-line basis over the estimated useful life of the asset.
Furthermore, estimated allowances for usability are used in the measurement of inventories.
Financial Statements 2010-2011 | Notes to the Consolidated Financial Statements
84
D. Notes to the Consolidated Income Statement and the Consolidated Balance Sheet
The Consolidated Income Statement is presented using the nature of expense method.
(1) Sales revenueSales revenue for the 2010-2011 business year includes revenues from contract manufacturing totaling TEUR 442 (previous year: TEUR 750).
For a breakdown of sales revenue by product and region, please refer to segment reporting.
(2) Other operating income
TEUR 2010-11 2009-10
Income from disposal of and additions to assets,excluding financial investments 436 81
Income from the reversal of provisions 940 869
Realized exchange gains 722 257
Unrealized exchange gains 1,976 121
Government grants and subsidies 4,376 4,206
Other income 7,336 2,431
Total 15,786 7,965
(3) Cost of materials and other purchased manufacturing services
TEUR 2010-11 2009-10
Cost of materials 134,748 87,592
Cost of other purchased manufacturing services 48,778 33,421
Total 183,526 121,013
85
(4) Personnel costs
TEUR 2010-11 2009-10
Wages 56,293 44,902
Salaries 44,960 37,857
Expenses for severance payments and contributions to company employee benefit funds 1,280 1,986
Expenses for retirement benefits 897 726
Expenses for statutory social security and payroll-related taxes and mandatory contributions 23,973 20,699
Other social benefits 3,449 2,615
Total 130,852 108,786
During the 2010-2011 business year, a total of TEUR 433 (previous year: TEUR 379) was paid into the employee benefit fund.
(5) Other operating expenses
TEUR 2010-11 2009-10
Taxes other than income taxes 734 592
Repair, maintenance and service agreements 10,454 7,956
Freight and storage 8,073 5,945
Temporary personnel 9,349 2,181
Advisory services 7,436 4,751
Rent and leasing 4,150 3,848
Insurance 2,245 3,883
Travel expenses 3,103 2,230
Commissions 2,110 1,695
Office expenses, mail and telephone 1,740 1,002
Training 1,417 937
Warranty 2,003 535
Liability fees and commissions 492 474
Contributions 319 361
Promotional and representational expenses 723 540
HR recruitment advertising 360 147
Unrealized exchange losses 221 713
Realized exchange losses 979 219
Losses from the disposal of assets (excluding financial investments) 20 21
Other 10,691 4,919
Total 66,619 42,949
Auditor fees and expenses in the 2010-2011 business year totaled TEUR 204 (previous year: TEUR 180), of which TEUR 170 (previous year: TEUR 141) covered the auditing of the Consolidated Financial Statements (including the financial statements of affiliated companies) and TEUR 34 (previous year: TEUR 39) was applied to other consulting services.
Financial Statements 2010-2011 | Notes to the Consolidated Financial Statements
86
(6) Depreciation and amortization
TEUR 2010-11 2009-10
Scheduled amortization: intangible assets 5,589 2,937
Scheduled depreciation: property, plant and equipment 24,896 24,818
Impairment of goodwill 0 1,472
Total 30,485 29,226
(7) Net interest income
TEUR 2010-11 2009-10
Other interest and similar interest income 425 346Thereof affiliated companies 4 4
Income from other securities 94 57
Interest and similar interest expense –1,763 –1,461Thereof affiliated companies –5 –34
Interest on social capital –1,237 –1,462
Total –2,481 –2,520Thereof affiliated companies –1 –30
(8) Other financial results
TEUR 2010-11 2009-10
Income from the disposal of financial investments 5 317
Income from additions to financial assets 0 32
Expenses for financial investments –39 –196
Total –34 153
(9) Net result from financial instrumentsThe net result from financial instruments by class or valuation category in the 2010–2011 and 2009–2010 business years in accordance with IAS 39 is broken down as follows:
From subsequent measurement2010-11 business year From At ValuationTEUR interest Fair Value allowance Total
Loans and Receivables 425 0 –133 292
Financial assets at fair value through profit or loss 94 –39 0 55
Financial liabilities at amortized cost –1,763 0 0 –1,763
Total –1,244 –39 –133 –1,416
87
From subsequent measurement2009-10 business year From at ValuationTEUR interest fair value allowance Total
Loans and receivables 346 0 –583 –237
Financial assets at fair value through profit or loss 57 32 0 89
Financial liabilities at amortized cost –1,461 0 0 –1,461
Total –1,058 32 –583 –1,609
The interest from financial instruments is reported in the financial results. The valuation allowances on receivables are reported under other operating expenses.
(10) Income taxes
TEUR 2010-11 2009-10
Expenses for current taxes 11,186 2,292Thereof non-recurrent taxes 17 0
Changes in deferred taxes –94 928
Total 11,092 3,220
The difference between the calculated income tax expenses (earnings before taxes multiplied by the Austrian tax rate of 25 percent) and the income tax expenses for the 2010-2011 business year according to the Consolidated Income Statement is explained by the following:
TEUR 2010-11 2009-10
Earnings before taxes 53,318 15,511
Thereof 25% (previous year: 25%) calculated income tax expenses 13,330 3,878
Effect of foreign tax rates –1,231 –325
Tax credits or payment of back taxes for previous periods 17 0
Deferred taxes from consolidation –182 –343
Other items –841 11
Income tax expenses for the period 11,092 3,220
Consolidated tax rate in % 20.80 20.76
Financial Statements 2010-2011 | Notes to the Consolidated Financial Statements
88
(11) Intangible assetsA detailed breakdown and overview of the changes in intangible assets is presented in the section entitled “Consolidated Statement of Changes to Fixed Assets” (Appendix 1 to the Notes).
Changes in goodwill can be illustrated as follows:
TEUR 1/31/11 1/31/10
Opening balance 6,240 8,103
Currency translation differences 117 –391
Impairment expense 0 –1,472
Closing balance 6,357 6,240
The reported goodwill concerns the Bearing segment. Intangible assets essentially include customer relationships and technologies. The most significant addition in the 2010-2011 business year in the amount of TEUR 27,660 applies to intangible assets from the acquisition of the EBG-DAU companies. Scheduled amortization covers a maximum of ten years.
(12) Property, plant and equipmentA detailed breakdown and overview of the changes in intangible assets is presented in the section entitled “Consolidated Statement of Changes to Fixed Assets” (Appendix 1 to the Notes).
According to IAS 17, finance leases are recorded under property, plant and equipment:
TEUR 1/31/11 1/31/10
Acquisition costs 14,173 14,173
Depreciation (accumulated) –4,063 –3,262
Carrying amount 10,110 10,911
Obligations resulting from financial lease agreements as of January 31, 2011, and January 31, 2010, can be depicted as follows:
Present value Minimum lease of minimum lease payments paymentsTEUR 1/31/11 1/31/10 1/31/11 1/31/10
With a remaining term of up to one year 1,064 1,408 845 1,161
With a remaining term between one and five years 4,184 4,181 3,549 3,454
With a remaining term of more than five years 4,197 5,245 3,978 4,897
9,445 10,834 8,372 9,512
minus:
Future financing costs –1,073 –1,322
Present value of minimum lease payments 8,372 9,512 8,372 9,512
recognized as:
- current lease liabilities 845 1,161
- non-current lease liabilities 7,527 8,351
89
In the 2010-2011 business year, the use of property, plant and equipment not shown on the balance sheet resulted in expenses totaling TEUR 3,632 (previous year: TEUR 3,512).
Commitments based on lease and rental agreements for buildings and equipment for future years are shown below:
TEUR 1/31/11 1/31/10
Term of up to one year 3,413 3,438
Term between one and five years 10,341 9,511
Term of more than five years 9,839 12,531
Commitments to purchase items of property, plant and equipment totaled TEUR 8,126 as of January 31, 2011 (previous year: TEUR 4,398).
Property, plant and equipment totaling TEUR 8,566 was pledged as collateral for liabilities (previous year: TEUR 3,421). There are no restraints on disposal rights.
(13) Shares in associated companies and other financial investmentsEquity developed as follows:
TEUR 2010-11 2009-10
Balance as of February 1 7,971 6,302
Acquisition Teer Coatings Ltd. 0 365
Disposal of Teer Coatings Ltd. –397 0
Acquisition EBG d.o.o. 180 0
Pro rata net income 1,350 1,491
Foreign currency translation (no effect on profit or loss) 306 501
Foreign currency translation (with effect on profit or loss) 53 164
Distribution –919 –853
Balance as of January 31 8,543 7,971Thereof goodwill 1,356 1,356
Other financial investments comprise the following:
TEUR 2010-11 2009-10
Investments in affiliated companies 261 261
Loans to third parties 2,107 2,364
Investment securities (book-entry securities) 2,169 2,201
Total 4,536 4,825
Financial Statements 2010-2011 | Notes to the Consolidated Financial Statements
90
(14) Deferred taxesThe differences in amounts recognized for tax purposes and in the IFRS consolidated balance sheet are the result of the following differences and/or have the following effect on deferred taxes:
1/31/11 1/31/10TEUR Asset Liability Asset Liability
Total balances
Assets
Fixed assets 4,420 13,733 5,175 5,466
Inventories 1,193 0 1,113 0
Other assets 69 77 590 89
Equity and liabilities
Untaxed reserves 0 562 0 201
Provisions 1,102 31 851 221
Other equity and liabilities 474 147 262 167
Subtotal 7,258 14,551 7,992 6,145
Losses carried forward 3,056 0 2,944 0
Valuation allowances for deferred tax assets –880 0 –902 0
Deferred tax assets/liabilities 9,435 14.551 10,034 6,145
Consolidation
Fixed assets 719 0 588 0
Elimination of intercompany profits 275 0 286 0
Others 671 0 608 0
Balance –7,575 –7,575 –5,477 –5,477
Deferred taxes 3,524 6,977 6,038 668
Deferred taxes in the amount of TEUR 491 (previous year: TEUR –851) were reported in the 2010-2011 business year in other earnings in the Statement of Recognized Income and Expenses, and exclusively affect actuarial profits or losses.
In accordance with IAS 12.39, no deferred taxes for differences resulting from investments in subsidiaries were reported on the Consolidated Balance Sheet.
Due to improved capacity utilization, deferred tax liabilities amounting to TEUR 1,650 (previous year: TEUR 1,809) were recognized despite tax losses in the past.
91
(15) InventoriesInventories comprise the following categories:
TEUR 1/31/11 1/31/10
Raw and auxiliary materials and supplies 20,981 12,907
Semi-finished products 20,675 14,225
Finished products 25,155 19,182
Advance payments made on inventories 58 89
Total 66,869 46,403
The inventories include accumulated write-downs totaling TEUR 7,737 (previous year: TEUR 5,596). The write-down amount in the current year is reported in the Consolidated Income Statement under cost of materials.
(16) Trade and other receivables
TEUR 1/31/11 1/31/10
Trade receivables 83,026 59,030
Receivables from contract manufacturing (PoC) 442 750
Advance payments received on receivables from contract manufacturing –417 –530
Receivables from affiliated companies 5 11
Other receivables and assets 13,446 8,695
Prepaid expenses 735 444
Total 97,237 68,399Thereof financial receivables 87,433 60,302
All trade and other receivables reported as of January 31, 2011, and January 31, 2010, were classified as falling due within one year.
Financial Statements 2010-2011 | Notes to the Consolidated Financial Statements
92
Contract manufacturing
TEUR 1/31/11 1/31/10
For all orders not invoiced as of the balance sheet date:
Contract revenue reported as sales revenue 442 750
Contract costs incurred by the balance sheet date 356 536
Profits (losses) accrued by the balance sheet date 86 214
Advance and partial payments received 417 530
The carrying amounts for trade and contract manufacturing receivables as of January 31, 2011, and January 31, 2010, are as follows:
Portion of which is nei- Portion of which is unimpaired ther impaired and past due in the following periods nor past due between between Carrying amount on reporting less than 60 and 180 and more thanTEUR 1/31/11 date 60 days 180 days 360 days 360 days
Trade and contract manufacturingreceivables 83,051 69,598 10,378 2,135 700 399
Portion of which is nei- Portion of which is unimpaired ther impaired and past due in the following periods nor past due between between Carrying amount on reporting less than 60 and 180 and more thanTEUR 1/31/10 date 60 days 180 days 360 days 360 days
Trade and contract manufacturingreceivables 59,250 48,431 8,144 1,849 596 230
With regard to the balance of trade and contract manufacturing receivables that are neither impaired nor past due, there are no indications as of the reporting date that the debtor entities will not meet their payment obligations.
With regard to loans and other financial receivables, there were no defaults or delays in payment norany significant impairments as of the balance sheet date.
The valuation allowances for trade receivables experienced the following changes in the 2010-2011 and 2009-2010 business years:
TEUR 2010-11 2009-10
Balance as of February 1 1,642 1,059
Reversal or utilization –437 –325
Additions 631 908
Balance as of January 31 1,836 1,642
In the 2010-2011 business year, the expenses for complete write-offs of trade receivables totaled TEUR 3 (previous year: TEUR 33).
93
(17) Cash and cash equivalentsThis item essentially includes cash on hand and bank balances, as well as short-term marketable securities available for sale.
As of the balance sheet date, there were no restraints on the disposal of the amounts included in this item.
(18) Share capitalThe share capital of Miba AG totaled TEUR 9,500 as of January 31, 2011. It comprises 1,300,000 no-par-value shares. The total includes 870,000 common shares, 130,000 non-voting convertible preferred shares (Issue A) and 300,000 non-voting non-convertible preferred shares (Issue B).
The Miba Aktiengesellschaft Issue B preferred share is listed on the “Standard Auction Market” of the Vienna Stock Exchange (Wiener Börse).
Treasury stock
On June 19, 2009, the 23rd Annual General Meeting authorized the Company to purchase Company shares without a specific purpose through December 31, 2011 – excluding the trading of Company shares – with the intention of acquiring treasury stock at a minimum value of EUR 50.00 and at a maximum value of EUR 200.00. Furthermore, the General Meeting granted authorization, for a period of five years from the date of resolution, to realize the shares thus acquired for the purpose of issuing shares as a counter-performance for the acquisition of companies, factories, partial factories or participations in one or more corporations within or outside of Austria, with the approval of the Supervisory Board, by means other than stock markets or public offerings, except for the subscription rights of the shareholders.
In its meeting on August 1, 2009, the Management Board of Miba AG resolved to make use of the General Meeting’s authorization for the repurchase of Company shares and to purchase up to 30,000 Miba Category B preferred shares on the stock market.
As of the balance sheet date (January 31, 2011), a total of 66,381 shares had been repurchased (previous year: 66,229). The average purchase price was EUR 121.63 per share. This represents about 5.1 percent of share capital.
In the 2010-2011 business year, the Company repurchased 152 of its own shares (previous year: 0) under the share buyback program.
As of the reporting date, no authorization of the General Meeting was granted for the corresponding disposal of treasury stock.
Financial Statements 2010-2011 | Notes to the Consolidated Financial Statements
94
(19) Capital reservesThe capital reserves consist solely of appropriated reserves (premium reserves) and, as in the previous business year, total TEUR 18,089.
(20) Retained earningsThe recognition of actuarial gains and losses, including deferred taxes on those amounts, resulted in a cumulative decrease in capital reserves of TEUR 1,471 (previous year: increase of TEUR 2,553). An increase in capital reserves in the amount of TEUR 1,135 resulted from the recognition of the hedging provision.
(21) Provisions for severance payments and pensions
Severance payment provisions
TEUR 1/31/11 1/31/10
Present value of severance obligations defined benefit obligations, DBO) = opening balance 14,128 17,812
Change in the scope of consolidation 4 0
Current service cost 725 971
Interest cost 746 936
Severance payments –1,002 –1,968
Actuarial gains/losses 1,744 –3,623
Present value of severance obligations (DBO) = closing balance 16,345 14,128
The following table shows the actuarial gains and losses resulting from experience-based adjustments:
TEUR 1/31/11 1/31/10 1/31/09
Present value of severance obligations (DBO) = closing balance 16,345 14,128 17,812
Experience-based adjustments (+) gain/(–) loss –1,282 1,078 536
The payments of severance obligations for the 2011-2012 business year are projected to equal TEUR 217.
Provisions for pensions
TEUR 1/31/11 1/31/10
Present value of pension obligations (DBO) = opening balance 7,006 7,133
Interest cost 361 342
Pension benefits paid out –502 –497
Actuarial losses/gains 199 27
Present value of pension obligations (DBO) = closing balance 7,065 7,006
Value of fund assets (reinsurance) –6,186 –6,128
Provisions for pensions 878 878
95
The following table shows the actuarial gains and losses resulting from adjustments based on experience:
TEUR 1/31/11 1/31/10 1/31/09
Present value of severance obligations (DBO) = closing balance 7,065 7,006 7,133
Experience-based adjustments (+) gain/(-) loss –39 –27 224
The projected payments from pension obligations for the 2011-2012 business year equal TEUR 505.
(22) Interest-bearing liabilitiesThis item includes all interest-bearing liabilities with a remaining term of more than one year. Details are taken from the financial liabilities table in Note 30 on financial instruments, financial risk management and capital management.
TEUR 1/31/11 1/31/10
Liabilities to banks 42,460 29,857Thereof with a remaining term of more than five years 563 0
Liabilities from loans extended by non-banking entities 1,494 1,992Thereof with a remaining term of more than five years 0 0
Total 43,954 31,849Thereof with a remaining term of more than five years 563 0
(23) Other non-current liabilitiesThis item includes other non-current liabilities falling due after more than one year.
TEUR 1/31/11 1/31/10
Provisions for service bonuses 3,307 3,082Thereof with a remaining term of more than five years 3,307 3,082
Other non-current obligations 6,358 0Thereof with a remaining term of more than five years 0 0
Thereof with a remaining term of more than five years 0 40Advance payments received on orders 0 0
Liabilities from finance leases 7,527 8,351Thereof with a remaining term of more than five years 3,978 4,897
Other non-current liabilities 2,620 0Thereof with a remaining term of more than five years 0 0
Investment allowances or grants 72 87Thereof with a remaining term of more than five years 0 0
Total 19,884 11,560Thereof with a remaining term of more than five years 7,285 7,979Thereof financial liabilities 10,147 8,351
Financial Statements 2010-2011 | Notes to the Consolidated Financial Statements
96
(24) Changes in provisions
Currency Change in the Balance as of translation scope of Balance as of TEUR 2/1/11 differences consolidation Utilization Reversal Addition 1/31/2011
Provisions for pensionsand severance payments 15,006 11 414 856 14 2,662 17,223
Deferred taxes 668 64 174 668 0 6,739 6,977
Non-current provisions 15,674 75 588 1,524 14 9,401 24,200
Other personnel provisions 11,312 35 404 11,245 181 13,639 13,965
Other provisions 8,394 17 404 4,211 940 8,905 12,569
Current provisions 19,707 52 808 15,456 1,121 22,544 26,534
Provision for taxes 8,141 49 15 5,725 271 10,541 12,751
Total provisions 43,521 176 1,411 22,704 1,406 42,487 63,485
The funding of non-current provisions results from the pending share of the purchase price for the acquisition of the EBG-DAU companies.
Similarly, the increase in current provisions is essentially attributable to the share of the purchase price for the acquisition that is pending payment.
(25) Trade payables
TEUR 1/31/11 1/31/10
Trade payables to third parties 42,650 24,365
Liabilities to affiliated companies 2,202 710
Total 44,852 25,075
(26) Current portion of interest-bearing liabilitiesThis item comprises all interest-bearing liabilities falling due in less than one year. Details are taken from the financial liabilities table in Note 30 on financial instruments, financial risk management and capital management.
TEUR 1/31/11 1/31/10
Liabilities to banks 6,477 11,228
Liabilities to affiliated companies 25 244
Liabilities from loans extended by non-banking entities 895 387
Total 7,397 11,860
97
(27) Other current liabilities and income tax liabilities
TEUR 1/31/11 1/31/10
Advance payments received on orders 1,349 1,203
Liabilities from finance leases 845 1,161
Other liabilities 7,183 5,500
Other liabilities to affiliated companies 5,023 0
Other tax liabilities 2,238 3,027
Other liabilities from social security obligations 2,706 2,031
Deferred income 341 358
Total 19,686 13,280Thereof financial liabilities 6,334 2,612
Other liabilities to affiliated companies affect the reclassification of the non-controlling interests in Miba Energy Holding GmbH & Co. KG. Pursuant to IAS 32.18b, partnership shares must be reported under borrowed capital.
TEUR 1/31/11 1/31/10
Income tax liabilities 4,911 0
(28) Other obligations and risksExisting contingencies exist to the extent indicated below:
TEUR 1/31/11 1/31/10
Guarantees 2,981 6,358
This item essentially relates to the construction of the new building in Vorchdorf, Austria, for High Tech Coatings GmbH (based in Laakirchen, Austria), for which a guarantee was given to the lessor in the amount of EUR 2.47 million (previous year: EUR 2.59 million).
There are no other obligations or risks other than those duly reported in these Consolidated Financial Statements or listed in the Notes.
Financial Statements 2010-2011 | Notes to the Consolidated Financial Statements
98
E. Other disclosures
(29) Consolidated Cash Flow StatementThe Consolidated Cash Flow Statement was prepared using the indirect method. Cash and cash equivalents are comprised solely of cash on hand, checks, bank balances and marketable securities. Interest received in the amount of TEUR 425 (previous year: TEUR 346) and interest paid in the amount of TEUR 1,763 (previous year: TEUR 1,461) are attributed to operating activities. Dividend payments are reported under financing activities. The effects of currency translation and changes in the scope of consolidation are eliminated under the applicable items in each of the three segments.
(30) Financial instruments, financial risk management and capital management
Carrying amounts, fair values and recognition based on measurement categoriesThe carrying amounts, fair values and recognition of financial assets (financial instruments classified as assets) as of January 31, 2011, and January 31, 2010, are divided into classes and measurement categories per IAS 39, and can be illustrated as follows:
Recognition per IAS 39 Measurement At At fair value At fair value category Carrying amounts Fair value Acquisition amortized not through throughTEUR per IAS 39 1/31/11 1/31/10 1/31/11 1/31/10 cost cost profit or loss profit or loss
Cash and cash Loans andequivalents receivables 66,691 50,814 66,691 50,814 – ✔ – –
Investments inaffiliatedcompanies (not Availableconsolidated for sale 261 261 261 261 ✔ – – –
Loans andLoans receivables 2,107 2,364 2,107 2,364 – ✔ – –
Trade Loans andreceivables receivables 83,474 59,791 83,474 59,791 – ✔ – –
Other financial Loans andreceivables receivables 2,824 511 2,824 511 – ✔ – –
At fair valueSecurities through profit(held for or loss (fairtrading) value option) 2,169 2,201 2,169 2,201 – – – ✔
Derivatives with hedgingrelationship Hedging 1,135 0 1,135 0 – – ✔ –
Total 158,661 115,942 158,660 115,942
99
Cash and cash equivalents, trade receivables and other financial receivables generally have short residual terms or fall due within the short term. Therefore, their carrying amounts as of the balance sheet date correspond approximately to the fair value. The fair value of loans, if material, corresponds to the present value of the payments associated with the assets based on the current market inputs.
The financial assets in the available-for-sale category include unlisted equity instruments for which the fair value could not be reliably determined and which were recognized at cost as totaling TEUR 261 (previous year: TEUR 261).
The carrying amounts of the financial assets represent the maximum credit risk as of the balance sheet date.
The carrying amounts, fair values and recognition of financial liabilities (financial instruments classified as liabilities) as of January 31, 2011, and January 31, 2010, are divided into classes and measurement categories per IAS 39 and IAS 17, and are illustrated in the following table:
Recognition per IAS 39 Measurement At At fair value At fair value category Carrying amounts Fair value amortized not through through RecognitionTEUR per IAS 39 1/31/11 1/31/10 1/31/11 1/31/10 cost profit or loss profit or loss per IAS 17
Financial liabilitiesInterest-bearing measured at liabilities amortized cost 51,352 43,708 51,438 43,900 ✔ – – –
Liabilities from Notfinance leases applicable 8,372 9,512 8,372 9,512 – – – ✔
Financial liabilities measured atTrade payables amortized cost 44,852 25,075 44,852 25,075 ✔ – – –
Financial liabilitiesOther financial measured atliabilities amortized cost 5,489 1,451 5,489 1,451 ✔ – – –
Derivatives with At fair valuenegative market through profitvalue and no hed- or loss (heldging relationship for trading) 53 0 53 0 – – ✔ –
Total 110,119 79,746 110,205 79,938
Trade payables and other financial liabilities fall due within short time periods; the values shown on the balance sheet represent the approximate fair values.
Financial Statements 2010-2011 | Notes to the Consolidated Financial Statements
100
Determination of fair value
The fair value of securities (held for trading) is based on current prices and represents the fair value on the reporting date.
The fair values of interest-bearing liabilities are determined, if material, as present values of the payments associated with the debts based on currently observable market parameters (yield curves, exchange rates and credit ratings of contracting partners).
The market prices determined by banks on the reporting date are used to measure derivatives. If no market prices are used, the fair value is calculated using recognized financial models. The recognized fair values correspond in each case to the amount for which an asset could be exchanged or a liability settled between knowledgeable, willing parties in an arm’s length transaction.
The table provided below presents the financial instruments which undergo subsequent measurement at fair value. They are classified at Levels 1 through 3 depending on the extent to which fair value is observable:
Level 1: Market prices for identical financial assets and liabilities listed on active markets.
Level 2: Fair values determined using listed prices or valuation methods; parameters essential to determining value are based on observable market data.
Level 3: Fair values resulting from models in which parameters essential to determining value are based on non-observable data.
Liabilities stated at fair value on January 31, 2011:
TEUR Level 1 Level 2 Level 3 Total
Copper forward transaction (not hedged) 54 0 0 54
Financial assets measured at fair value on January 31, 2011:
TEUR Level 1 Level 2 Level 3 Total
Securities 2,169 0 0 2,169
Investments in affiliated companies and subsidiaries 1) 0 0 261 261
Raw materials forward contract (hedged) 1,135 0 0 1,135
Cash and cash equivalents 66,691 0 0 66,691
69,995 0 261 70,256
1) Investments in affiliated companies and subsidiaries with a carrying amount of TEUR 261 (previous year: TEUR 261) are measured in accordance with IAS 39 at amortized cost less impairment as market values could not be reliably determined.
101
Financial assets measured at fair value on January 31, 2010:
TEUR Level 1 Level 2 Level 3 Total
Securities 2,201 0 0 2,201
Investments in affiliated companies and subsidiaries 1) 0 0 261 261
Cash and cash equivalents 50,814 0 0 50,814
53,015 0 261 53,276
1) Investments in affiliated companies and subsidiaries with a carrying amount of TEUR 261 (previous year: TEUR 261) are measured in accordance with IAS 39 at amortized cost less impairment as market values could not be reliably determined.
Analysis of contractual payments of interest and principal
The contractually stipulated (undiscounted) payments of interest and principal on primary financial liabilities and on derivative financial instruments at positive and negative fair value comprised the following categories as of January 31, 2011, and January 31, 2010:
Financial Statements 2010-2011 | Notes to the Consolidated Financial Statements
Carrying Cash flows Cash flows 2012-13 Cash flows amount 2011-12 to 2015-16 from 2016-17TEUR 1/31/11 Interest Principal Interest Principal Interest Principal
Primary financial liabilities
Interest-bearing liabilities 51,352 998 7,397 1,584 43,392 14 563
Liabilities from finance leases 8,372 219 845 635 3,549 219 3,978
Trade payables 44,852 0 44,852 0 0 0 0
Other financial liabilities 5,489 0 5,489 0 0 0 0
Total 110,066 1,217 58,584 2,219 46,941 233 4,541
Carrying Cash flows Cash flows 2011-12 Cash flows amount 2010-11 to 2014-15 from 2015-16TEUR 1/31/10 Interest Principal Interest Principal Interest Principal
Primary financial liabilities
Interest-bearing liabilities 43,708 793 11,860 1,439 31,849 0 0
Liabilities from finance leases 9,512 247 1,161 727 3,454 348 4,897
Trade payables 25,075 0 25,075 0 0 0 0
Other financial liabilities 1,451 0 1,451 0 0 0 0
Total 79,746 1,040 39,547 2,166 35,303 348 4,897
This general category includes all financial instruments in existence on the balance sheet date for which payments have already been contractually stipulated. Planned or budgeted figures for future new liabilities are not included. Amounts in foreign currencies were translated at the reporting rate. Variable interest payments on the financial instruments were determined on the basis of the interest rates last set before the balance sheet date. Financial liabilities that are repayable at any time are always assigned to the earliest time band.
102
Derivatives not subject to hedge accounting
Any derivatives that do not meet the prerequisites on the formation of hedging relationships per IAS 39 (Hedge Accounting) and that are classified in the “held for trading” category must be reported at fair value. In the case of positive market values, derivative financial instruments are shown under “Other receivables and assets”. In the case of negative market values, derivatives are shown under “Other liabilities”.
The market prices determined by banks on the reporting date are used to measure derivatives. If no market prices are used, the fair value is calculated using recognized financial models. The recognized fair values correspond in each case to the amount for which an asset could be exchanged or a liability settled between knowledgeable, willing parties in an arm’s length transaction.
A copper forward transaction was concluded during the business year, with cap and cash settlement denom inated in US dollars. The future purchases of the raw material copper were designated as the underlying transaction. The reason for pursuing the hedging measure is to convert variable procurement costs into fixed procurement costs.
Net losses amounting to TEUR 54 from the attributed fair value of the stated derivative financial instru-ments (excluding hedged derivatives) are reported as affecting net income in the Consolidated Income Statement.
On January 31, 2011, the Miba Group held derivative instruments with terms of a maximum 18 months, maturing at monthly intervals.
The portfolio of open derivatives as of January 31, 2011, and January 31, 2010, comprised the following:
2010-11 2009-10 Nominal Market value Nominal Market value amount Positive Negative amount Positive Negative 1/31/11 1/31/11 1/31/11 1/31/10 1/31/10 1/31/10 Currency (TUSD) TEUR TEUR (TUSD) TEUR TEUR
Raw materials price hedge (copper) USD 4,847 0 53 0 0 0
103Financial Statements 2010-2011 | Notes to the Consolidated Financial Statements
Hedged derivatives
Cash flow hedges to hedge the price risks tied to the future procurement of raw materials are being reported for the first time as of January 31, 2011. The future purchases of the raw material copper were designated as the underlying transaction for the copper forward contract, with cash settlement in US dollars. The reason for pursuing this hedging measure is to convert variable procurement costs of raw materials into fixed procurement costs.
The effective part of change to the attributed fair value of utilized derivative transactions is reported directly under cumulative changes to equity until the hedging relationship is reversed. The ineffective part from a hedge is immediately posted as affecting net income.
The attributed fair value of hedges as of January 31, 2011, in the amount of TEUR 1,135 is reported under “Other receivables”.
The market prices determined by banks on the reporting date are used to measure derivatives.
On January 31, 2011, the Miba Group held derivative instrumeents with terms of a maximum 17 months, maturing at monthly intervals.
The volume of hedged derivatives as of January 31, 2011, and January 31, 2010, can be illustrated as follows:
2010-11 2009-10 Nominal Market value Nominal Market value amount Positive Negative amount Positive Negative 1/31/11 1/31/11 1/31/11 1/31/10 1/31/10 1/31/10 Currency (TUSD) TEUR TEUR (TUSD) TEUR TEUR
Raw materials pricehedge (copper) USD 4,936 1,135 0 0 0 0
104
Financial risk management and capital management
As a global corporation, the Miba Group is exposed to certain general and industry-specific risks.
It is Miba’s corporate policy to closely monitor existing risk positions and market developments in order to identify emerging risks at an early stage and to take steps quickly to control them.
The annual evaluation of the companies in the Miba Group did not reveal any significant new or previously undetected risks. In addition, currently available information does not indicate any individual risks that could jeopardize the Company’s continued existence or adversely affect its financial position and financial performance.
Financial instruments play a key role in hedging against risks. According to IAS 32, financial instruments include primary financial instruments such as receivables and trade payables as well as financial receivables and financial liabilities. The carrying amount of the primary financial instruments presented in the Consolidated Balance Sheet corresponds essentially to the market value or the fair value.
a) Credit riskWith regard to assets, the amounts reported also represent the maximum credit risk or risk of default. In the case of receivables, the risk can be considered minor since the credit standing of new and existing clients is continuously reviewed and since no individual customer is liable for more than 4.5 percent (previous year: 7 percent) of total trade receivables. Furthermore, the credit risk is largely hedged by credit insurance and bankable forms of security (guarantees and letters of credit).
b) Interest rate riskAn interest rate risk stemming from fluctuations in the market interest rate primarily applies to receivables and liabilities having a term of more than one year. These terms are not of material significance in operations, but they can play a role for financial investments and financial liabilities.
For assets, an interest rate risk exists only for securities held as financial investments. Since these securities are held principally through investment funds and may be converted into cash at any time, the interest rate risk is not deemed to be material.
Most of the amounts due to credit institutions (bank loans, etc.) involve variable interest rates.
c) Currency riskCurrency risks affecting assets apply primarily to the US dollar (USD), and result from trade receivables from international clients. With regard to liabilities, there are no significant currency risks – with the exception of trade payables – since operations are financed by each individual Group company in its local currency.
Hedging is done through the natural process of closing out items, such as the balancing out of receivables in USD against trade payables in USD.
105Financial Statements 2010-2011 | Notes to the Consolidated Financial Statements
d) Liquidity riskThe purpose of liquidity hedging is to ensure the Group’s ability to meet its financial obligations at all times. Liquidity in the Miba Group is ensured by appropriate liquidity planning at the beginning of each year, by financial resources sufficient to cover a period of less than twelve months and by short-term credit lines.
e) Capital managementMiba AG is not subject to any statutory minimum capital requirements. The objective of the Miba Group is not only to continue to increase enterprise value but to maintain an appropriate capital structure.
Capital management is based on the equity ratio, which is the ratio of equity to the total assets shown on the Consolidated Balance Sheet (balance sheet total). Although there is no concrete numerical target, the Group equity ratio should not be below 40.0 percent:
2010-11 2009-10
Group equity (TEUR) 248,452 206,787
Consolidated balance sheet total (TEUR) 452,622 343,931
Group equity ratio (%) 54.9 60.1
f) Sensitivity analysesBases for the sensitivity analysesIn order to represent material market risks relating to financial instruments, IFRS 7 requires sensitivity analyses that show how profit or loss and Group equity would have been affected by hypothetical changes in relevant risk variables. The Miba Group is primarily exposed to foreign currency risk and interest rate risk. Appropriate sensitivity analyses were therefore conducted for these market risks.
The affected financial instrument holdings as of the balance sheet date were used as the basis for determining the effects caused by hypothetical changes in the risk variables. It was assumed that the particular risk on the balance sheet date essentially represents the risk during the business year.
The Austrian corporate income tax rate of 25 percent was used uniformly as the tax rate.
In the sensitivity analysis for interest rate risk, only the cash flow risk was considered since the fair value risk is not relevant because of the accounting and measurement policies used.
106
Sensitivity analysis for foreign currency riskIf the euro had risen in value by ten percent against the US dollar as of the balance sheet date, then earnings (after taxes) and Group equity would have differed by the amounts listed below.
1/31/11 1/31/10 Earnings EarningsTEUR (after taxes) (after taxes)
–954 –964
If the value of the euro had decreased by ten percent as of the balance sheet date against the US dollar, the effect on earnings (after taxes) and Group equity would have been the same as above, but with the sign (minus or plus) reversed.
In this analysis it was assumed that all other variables, particularly interest rates, remain constant. The sensitivity of Group equity was affected solely by earnings (after taxes) in the above analyses.
Sensitivity analysis for interest rate riskAn increase in the market interest rate of 100 basis points as of the balance sheet date would have increased earnings (after taxes) and Group equity by TEUR 277 (previous year: TEUR 173).
A decrease in the market interest rate of 100 basis points as of the balance sheet date would have had the same effect on earnings (after taxes) and Group equity, but with the sign (plus or minus) reversed.
In this analysis it was assumed that all other variables, particularly foreign exchange rates, remain constant. The sensitivity of Group equity was affected solely by earnings (after taxes).
(31) Segment reportingEffective January 1, 2009, segment reporting is conducted in accordance with the provisions of IFRS 8. IFRS 8 stipulates that segments be presented on the basis of internal reporting and that results be presented on the basis of internal reporting (management approach). Additional geographic information is structured according to the locations of Group companies.
The Group is divided into four main divisions as well as the segment “Other”. Classification by division reflects the Group’s internal organization and management structure. The divisions are as follows:
Miba Sinter GroupDevelopment and production of sintered components for engines and transmission components. Miba Sinter Group’s main products are gears, chain sprockets, belt pulleys, main bearing caps and components for variable camphasers and oil and water pumps.
Miba Bearing GroupDevelopment and production of engine bearing products such as half shells, bushings, thrust washers, engine bearing applications and surface technologies.
107Financial Statements 2010-2011 | Notes to the Consolidated Financial Statements
Miba Friction GroupDevelopment and production of clutches and brake components.
New Technologies GroupIn the 2010-2011 business year, we are reporting on New Technologies Group for the first time. Thissegment includes, on the one hand, the Styrian companies EGB and DAU, which were acquired duringthe reporting period; the companies specialize in the development and production of passive electroniccomponents. On the other hand, Miba Automation Systems (MAS) is also a part of this segment. MASconstructs and builds specialized eqipment and mobile machining centers. For the year under review, MAS was placed under the organizational and management structure of New Technologies Group (previous year: Miba Bearing Group), hence, it is being reported for the first time in the New Technologies Group division (previous year: the Bearing Group division). The previous year’s figures were adjusted accordingly.
The “Other” segment is comprised mainly of the development and sale of coatings, specifically polymer and lubricant coatings, electroplated overlays and PVD coatings.
The main performance control metric is EBIT.
The accounting and measurement principles of the reporting segments correspond to those of the Group.
Sales between the segments are transacted at market prices and are generally equivalent to the prices used in third party transactions.
The numerical presentation of segment reporting is given in Appendix 2 to the Notes.
(32) Events after the balance sheet date
Acquisition of minority shareholdings in Maxtech Sintered Product Pvt. Ltd., Pune, IndiaThrough an agreement dated January 19, 2011, and conveyance of ownership on February 21, 2011, (acquisition date), Miba acquired a 26-percent minority share in Maxtech Sintered Product Pvt. Ltd., Pune, India. For the 2011-2012 business year, the company is included in the Consolidated Financial Statements as an associated company accounted for using the equity method.
Acquisition of Hoerbiger friction businessMiba purchased the friction business for off-road applications of Hoerbiger drive technology onDecember 17, 2010. Ownership was conveyed in the 2011-2012 business year (acquisition date) through the gradual relocation of contractually defined assets from Hoerbiger in Schongau to the Miba sites.
Miba Friction Group thereby grew by more than half, which places it in an internationally leading market position in the off-highway segment and which reinforces Miba’s global presence in the strategic core segment of friction materials.
108
Acquisition of EGB LLC, USAOn February 1, 2011, Miba Energy Holding LLC, McConnelsville, Ohio, USA, purchased a 70-percent share in EBG Resistors LLC, Middletown, Pennsylvania, USA.
Furthermore, Miba Energy Holding LLC, McConnelsville, Ohio, USA, purchased a 70-percent share in EBG LLC, Middletown, Pennsylvania, USA. EBG LLC, Middletown, Pennsylvania, USA, holds 25-percent of the shares in EBG Shenzhen Ltd., Shenzhen, China.
The presentation is for foreign companies based on the transaction rate.
The preliminary estimated fair value of the material assets aquired and liabilities assumed can be illustrated as follows:
TEUR Hoerbiger EBG LLC Total
Non-current assets:
Goodwill 0 1,439 1,439
Intangible assets 18,981 2,262 21,243
Property, plant and equipment 8,624 14 8,639
Other non-current assets 0 29 29
27,606 3,743 31,349
Current assets:
Inventories 0 183 183
Receivables 0 780 780
Cash and cash equivalents 0 623 623
0 1,587 1,587
Non-current liabilities:
Non-current interest-bearing liabilities 0 –843 –843
Provisions –4,745 –707 –5,452
–4,745 –1,549 –6,294
Current liabilities:
Liabilities 0 –53 -53
Net assets 22,861 3,727 26,588
The reconciliation of carrying amounts to fair value which is depicted here was conducted in accordance with IFRS 3 on the basis of preliminary figures.
Under the purchase price allocation, performance-based shares were taken into account beside the minimum purchase prices, on the basis of the future results of acquired divisions. The performance-based shares are scheduled to be disbursed in 2013 and 2014.
Other events occurring after the balance sheet date which are relevant to the measurement at the balance sheet date, such as pending legal disputes or claims for damages, and any other obligations or anticipated losses to be reported or disclosed in accordance with IAS 10, are reflected in the Consolidated Financial Statements or are unknown.
109Financial Statements 2010-2011 | Notes to the Consolidated Financial Statements
(33) Business relations with related partiesFor legal and consulting services during the year under review, net fees to Dorda Brugger Jordis Rechtsanwälte GmbH totalling TEUR 388 (previous year: TEUR 98) were incurred. The Chairwoman of the Supervisory Board of Miba AG, Dr. Theresa Jordis, is a managing partner at the law offices of Dorda Brugger Jordis Rechtsanwälte GmbH.
On May 31, 2010, Miba AG sold 24.8 percent of its interest in High Tech Coatings GmbH to Dr. Maria Theresia Mitterbauer. The interest being sold corresponds to a capital contribution totaling TEUR 248 that had been fully contributed. The purchase price for the business shares was calculated on the basis of the expert opinion of Leitner & Leitner GmbH, commissioned by the Management Board of Miba AG, utilizing the discounted cash flow method. The purchase price has been paid in full.
All business relations with related parties (companies and individuals) and with companies consolidated at equity primarily involve service relationships and are the result of common foreign practices.
(34) Information on executive bodies and employeesDuring the 2010-2011 business year, there were the following changes in the number of employees:
1/31/11 1/31/10 Reporting date Average Reporting date Average
Non-salaried employees 2,368 2,171 1,835 1,816
Salaried employees 930 893 785 797
Total 3,298 3,064 2,620 2,613
Expenses for severance payments and contributions to company employee benefit funds and expenses for retirement benefits are broken down as follows:
2010-11 2009-10 Severance Severance payments and payments and payments to company Retirement payments to company RetirementTEUR benefit funds benefits benefit funds benefits
Management Board members, managing directors and executive employees 340 565 –47 412
Other employees 939 332 2,034 665
Total 1,280 897 1,986 1,077
The compensation system for Management Board members aims to adequately compensate them in accordance with their scope of activities and responsibilities and in line with domestic and international compensation packages. For the division Management Boards, a significant part of this compensation varies based on the company’s results. The annual bonus is a variable cash payment, the amount of which is determined on the basis of individual objectives and performance-based targets.
110
Management Board members have individual pension arrangements and the Company pays defined amounts to the Management Board members. The Chairman of the Board has an additional “old” pension plan, which provides a fixed value-protected pension. This obligation is covered through pension reinsurance.
Compensation of Management Board members totaled TEUR 1,485 in the 2010-2011 business year (previous year: TEUR 1,326), of which TEUR 491 (previous year: TEUR 488) were variable salary components. No compensation was granted to former Management Board members or their surviving dependents.
Expenses for retirement benefits were as follows:
2010-11 2009-10 TEUR TEUR
Management Board members 565 412
In the 2010-2011 business year, compensation totaling TEUR 75 (previous year: TEUR 75) was paid to the members of the Supervisory Board for their services.
Members of the Supervisory Board in the 2010-2011 business year:Dr. Theresa Jordis, Vienna, Austria (Chairwoman)Dipl.-Bw. Alfred Heinzel, Vorchdorf, Austria (Deputy Chairman)Dr. Robert Büchelhofer, Starnberg, GermanyDkfm. Dr. Wolfgang Berndt, Seewalchen am Attersee, AustriaJohann Forstner, Laakirchen, Austria (delegated by the employee council)Hermann Aigner, Vorchdorf, Austria (delegated by the employee council)
111Financial Statements 2010-2011 | Notes to the Consolidated Financial Statements
(35) Earnings per shareAccording to IAS 33 (Earnings Per Share), basic earnings per share are calculated by dividing the net profit or loss for the period (consolidated net income) that is attributable to common shareholders by the weighted number of common shares outstanding during the period. Since the preferred shares are subject to an unrestricted residual claim on the Company’s assets, they needed to be included in the number of shares:
2010-11 2009-10
Earnings after taxes TEUR 42,226 12,290
Net income attributable to common and preferred shareholders TEUR 41,928 12,249
Weighted average number of issued common and preferred shares shares 1,233,619 1,233,771
Basic earnings per share 1) EUR/share 33.99 9.93
Diluted earnings per share 1) EUR/share 33.99 9.93
1) for common and preferred shares
(36) Proposed distribution of profitsPursuant to the regulations of the Austrian Stock Corporation Act (AktG), the year-end financial statements of Miba AG as of January 31, 2011, which were prepared in accordance with Austrian reporting requirements, form the basis for the distribution of dividends. The net retained profit reported in the year-end financial statements is TEUR 24,788.
The Management Board proposed to pay a dividend of EUR 7.00 per share to preferred and common shareholders and to carry the remaining amount over to the next year.
Dividend distribution:
EUR
Preferred shareholders Issue A 910,000.00
Preferred shareholders Issue B 1,635,333.00
Common shareholders 6,090,000.00
Remaining amount to carry over 16,152,202.55
24,787,535.55
112
Release by the Management Board We confirm to the best of our knowledge that the Consolidated Financial Statements, which were prepared in accordance with authoritative accounting standards, present a true and fair view of the Group’s financial position and financial performance, and that the Consolidated Management Report presents the Group’s business developments, business results and overall situation such that it gives a true and fair view of the Group’s financial position and financial performance, and that the Consolidated Management Report describes the important risks and uncertainties to which the Group is exposed.
The Management Board of Miba AG released the Consolidated Financial Statements for submission to the Supervisory Board on May 11, 2011.
Laakirchen, May 11, 2011 The Management Board DI DDr. h. c. Peter Mitterbauer (Chairman) Dr.-Ing. Norbert Schrüfer Dr. Wolfgang Litzlbauer Dr.-Ing. Harald Neubert DI Franz Peter Mitterbauer, MBA
Appendix 1 to the Notes: Statement of Changes in Consolidated Fixed AssetsAppendix 2 to the Notes: Segment ReportingAppendix 3 to the Notes: Affiliated Companies
113Financial Statements 2010-2011 | Report of the Supervisory Board
Report of the Supervisory Board of Miba AG
In the 2010-2011 business year, the Supervisory Board performed the duties it is required to carry out under Austrian law and the Articles of Incorporation. The focus of the Board’s activities was the regular advising of the Management Board on key matters in the Company’s development. The Management Board provided the Supervisory Board with regular, timely and comprehensive information about all issues relating to business operations and development, including the risk situation and risk management system at Miba AG and the principle companies in the Miba Group. The consent of the Supervisory Board was obtained for those business matters that require such consent under the provisions of the Articles of Incorporation.
A total of five meetings of the Supervisory Board were held during the business year. No member of the Supervisory Board attended fewer than half of the meetings. In open and frank discussions at the meetings of the Supervisory Board, a consensus between the members of the Management Board and the Supervisory Board was found on essential matters, particularly the strategic direction of the Company. Current individual topics were also discussed regularly between the Management Board and the Chairwoman of the Supervisory Board.
In addition to the Audit Committee, which performs the duties required by law in connection with auditing and preparing the Annual Financial Statements for adoption, the proposal for distribution of profit, and the Management Report as well as the Consolidated Financial Statements and the Consolidated Management Report, to increase its efficiency, the Supervisory Board also formed a Compensation Committee from among its members, which is tasked with the content of the employment contracts of the Management Board members. The Audit Committee held two meetings during the year under review; the Compensation Committee held three meetings.
The Audit Committee also submitted a proposal on the selection of the auditor of the financial statements. The Annual Financial Statements, Management Report and Notes as well as the annual Consolidated Financial Statements, Consolidated Management Report and Notes were audited by KPMG Austria GmbH, Linz, Austria. On the basis of the final audit result, the auditors approved the documents without objection and issued an unqualified audit certificate.
Representatives of the auditing firm participated in the meeting of the Audit Committee and the meeting of the Supervisory Board on the Annual Financial Statements, and provided explanatory comments.After its own review, the Supervisory Board approved the results of the audit of the Annual Financial Statements and provided its approval of the dividend appropriation proposal prepared by the Manage-ment Board.
The Supervisory Board reviewed and approved the Annual Financial Statements, which are thereby considered adopted under section 96 (4) of the Austrian Stock Corporation Act. The Management Report,
114
Consolidated Financial Statements, Consolidated Management Report and Corporate Governance Report were approved following commensurate review.
The Supervisory Board would like to take this opportunity to acknowledge and to thank both the Management Board and the entire staff for their personal commitment and dedication they have shown during this challenging business year.
Laakirchen, May 2011
Dr. Theresa JordisChairwoman
115Financial Statements 2010-2011 | Audit Certificate
Audit Certificate(Independent Auditor’s Report)
Report on the Consolidated Financial Statements
We have audited the attached Consolidated Financial Statements of Miba Aktiengesellschaft, Laakirchen, Austria, for the business year from February 1, 2010, to January 31, 2011. These Consolidated Financial Statements comprise the Consolidated Balance Sheet dated January 31, 2011, the Consolidated Income Statement, the Statement of Recognized Income and Expenses, the Consolidated Cash Flow Statement and the Consolidated Statement of Changes in Equity for the business year ending January 31, 2011, as well as explanatory notes.
Responsibility of legal representatives for the Consolidated Financial Statements and for bookkeepingThe Company’s legal representatives are responsible for Group bookkeeping as well as preparing Conso-lidated Financial Statements that present a true and fair view of the Group’s financial position and finan-cial performance in accordance with the International Financial Reporting Standards (IFRSs) as adopted by the EU. These responsibilities include the following duties: designing, implementing and maintaining an internal control system relevant for the preparation of the Consolidated Financial Statements and the presentation of a true and fair view of the Group’s financial position and performance such that these Consolidated Financial Statements are free from material misrepresentations, whether due to either intentional or inadvertent errors; the selection and implementation of suitable accounting policies and measurement methods; the formulation of estimates deemed appropriate under the given general circumstances.
Responsibility of the auditor and nature and scope of the statutory auditOur responsibility is to give an opinion on these Consolidated Financial Statements based on our audit. We conducted our audit in accordance with the legal provisions valid in Austria and in compliance with the International Standards on Auditing (ISA) published by the International Auditing and Assurance Standards Board (IAASB) of the International Federation of Accountants (IFAC). These standards require that we comply with ethical requirements and plan and perform the audit in such a manner that we are able to evaluate with reasonable assurance whether the Consolidated Financial Statements are free from material misrepresentations.
An audit involves the implementation of auditing procedures for the purpose of obtaining evidence with regard to the amounts and other disclosures in the Consolidated Financial Statements. The selection of auditing methods takes place according to the auditor’s best judgment, taking into consideration the auditor’s assessment of the risk of the occurrence of significant misrepresentations, whether on the basis of intended or inadvertent errors. In making this risk assessment, the auditor considers the internal control system that is relevant for the preparation of the Consolidated Financial Statements and the presentation of a true and fair view of the Group’s financial position and financial performance in order to select the auditing procedures suitable for the circumstances but not to give an opinion on the effect-iveness of the Group’s internal control system. The audit also includes an assessment of the accounting
116
and measurement methods used and of significant estimates made by legal representatives as well as an evaluation of the overall presentation of the Consolidated Financial Statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a reasonable basis for our audit opinion.
Audit opinionOur audit did not give rise to any objections. On the basis of the audit results, we are of the opinion that the Consolidated Financial Statements comply with applicable laws and regulations and present a true and fair view of the Group’s financial position as of January 31, 2011, as well as the Group’s financialperformance and the Group’s cash flows for the business year from February 1, 2010, to January 31, 2011, in accordance with the International Financial Reporting Standards (IFRSs) as adopted by the EU.
Statement on the Consolidated Management ReportApplicable laws and regulations require us to examine whether the Group Management Report is consistent with the Consolidated Financial Statements and whether other information given in the Consolidated Management Report correctly represents the Group’s position. This Audit Certificate must also include a statement on whether the Consolidated Management Report is consistent with the Consolidated Financial Statements and whether the information meets the requirements of section 243a of the Austrian Business Enterprise Code (UGB).
In our opinion, the Consolidated Management Report is consistent with the Consolidated Financial Statements. Information as required under section 243a of the Austrian Business Enterprise Code has been reported correctly.
Linz, May 11, 2011 KPMG Austria GmbH Wirtschaftsprüfungs- und Steuerberatungsgesellschaft Mag. Cäcilia Gruber Mag. Ernst Pichler Auditor Auditor
117Financial Statements 2010-2011 | Audit Certificate
118
Statement of Changes in Consolidated Fixed Assets as of January 31, 2011
Appendix 1/1 to the Notes
Currency Change in Currency Change in Depreciation, Balance on translation the scope of Reclass- Balance on Balance as of translation the scope of amortization & Balance as of Balance on Balance on 2/1/10 differences consolidation Additions Disposals ifications 1/31/11 2/1/10 differences consolidation Additions write-downs Disposals 1/31/11 1/31/11 1/31/10 TEUR TEUR TEUR TEUR TEUR TEUR TEUR TEUR TEUR TEUR TEUR TEUR TEUR TEUR TEUR TEUR
I. Intangible assets:
1. Patents and licenses 13,433 32 379 305 575 0 13,575 11,871 3 183 702 0 575 12,184 1,391 1,562
2. Customer relationships 20,482 383 35,500 0 0 0 56,366 12,875 241 0 4,887 0 0 18,002 38,364 7,607
3. Goodwill 6,488 121 207 0 0 0 6,817 248 5 207 0 0 0 460 6,357 6,240
40,404 537 36,087 305 575 0 76,758 24,994 249 390 5,589 0 575 30,646 46,111 15,409
II. Property, plant and equipment:
1. Land and buildings 67,490 519 3,669 1,833 462 1,468 74,516 28,287 96 1,519 2,638 0 454 32,086 42,431 39,203 Thereof land value 4,605 3 522 0 0 0 5,129 0 0 0 0 0 0 0 5,129 4,605
2. Plant and equipment 253,431 1,249 8,107 18,006 5,185 10,545 286,153 166,485 367 6,034 20,327 99 4,766 188,348 97,804 86,946
3. Other furniture and fixtures, tools and office equipment 27,017 149 1,511 1,408 2,232 137 27,991 20,236 108 1,144 1,931 0 2,194 21,226 6,765 6,782
4. Advance payments and fixed assets under construction 11,141 185 107 13,003 176 –12,150 12,109 0 0 0 0 0 0 0 12,109 11,141
359,079 2,103 13,393 34,250 8,056 0 400,769 215,008 571 8,697 24,896 99 7,414 241,660 159,110 144,071
III. Financial investments:
1. Investments in affiliated companies 261 0 0 0 0 0 261 0 0 0 0 0 0 0 261 261
2. Investments in associated companies 4,553 31 1,708 0 48 0 6,244 –3,418 19 1,874 0 732 44 –2,300 8,543 7,971
3. Loans 2,364 1 0 195 453 0 2,107 0 0 0 0 0 0 0 2,107 2,364
4. Investment securities (book-entry securities) 2,286 0 0 0 0 0 2,286 86 0 0 32 0 0 117 2,169 2,201
9,464 32 1,708 195 501 0 10,897 –3,332 19 1,874 32 732 44 –2,182 13,080 12,797
408,946 2,672 51,189 34,750 9,132 0 488,424 236,671 840 10,961 30,517 830 8,033 270,124 218,300 172,277
Acquisition and Production Costs
119
Currency Change in Currency Change in Depreciation, Balance on translation the scope of Reclass- Balance on Balance as of translation the scope of amortization & Balance as of Balance on Balance on 2/1/10 differences consolidation Additions Disposals ifications 1/31/11 2/1/10 differences consolidation Additions write-downs Disposals 1/31/11 1/31/11 1/31/10 TEUR TEUR TEUR TEUR TEUR TEUR TEUR TEUR TEUR TEUR TEUR TEUR TEUR TEUR TEUR TEUR
I. Intangible assets:
1. Patents and licenses 13,433 32 379 305 575 0 13,575 11,871 3 183 702 0 575 12,184 1,391 1,562
2. Customer relationships 20,482 383 35,500 0 0 0 56,366 12,875 241 0 4,887 0 0 18,002 38,364 7,607
3. Goodwill 6,488 121 207 0 0 0 6,817 248 5 207 0 0 0 460 6,357 6,240
40,404 537 36,087 305 575 0 76,758 24,994 249 390 5,589 0 575 30,646 46,111 15,409
II. Property, plant and equipment:
1. Land and buildings 67,490 519 3,669 1,833 462 1,468 74,516 28,287 96 1,519 2,638 0 454 32,086 42,431 39,203 Thereof land value 4,605 3 522 0 0 0 5,129 0 0 0 0 0 0 0 5,129 4,605
2. Plant and equipment 253,431 1,249 8,107 18,006 5,185 10,545 286,153 166,485 367 6,034 20,327 99 4,766 188,348 97,804 86,946
3. Other furniture and fixtures, tools and office equipment 27,017 149 1,511 1,408 2,232 137 27,991 20,236 108 1,144 1,931 0 2,194 21,226 6,765 6,782
4. Advance payments and fixed assets under construction 11,141 185 107 13,003 176 –12,150 12,109 0 0 0 0 0 0 0 12,109 11,141
359,079 2,103 13,393 34,250 8,056 0 400,769 215,008 571 8,697 24,896 99 7,414 241,660 159,110 144,071
III. Financial investments:
1. Investments in affiliated companies 261 0 0 0 0 0 261 0 0 0 0 0 0 0 261 261
2. Investments in associated companies 4,553 31 1,708 0 48 0 6,244 –3,418 19 1,874 0 732 44 –2,300 8,543 7,971
3. Loans 2,364 1 0 195 453 0 2,107 0 0 0 0 0 0 0 2,107 2,364
4. Investment securities (book-entry securities) 2,286 0 0 0 0 0 2,286 86 0 0 32 0 0 117 2,169 2,201
9,464 32 1,708 195 501 0 10,897 –3,332 19 1,874 32 732 44 –2,182 13,080 12,797
408,946 2,672 51,189 34,750 9,132 0 488,424 236,671 840 10,961 30,517 830 8,033 270,124 218,300 172,277
Accumulated Depreciation, Amortization and Write-downs Net Value
Financial Statements 2010-2011 | Statement of Changes in Consolidated Fixed Assets
120
Statement of Changes in Consolidated Fixed Assets as of January 31, 2010
Appendix 1/2 to the Notes
Currency Currency Depreciation, Balance on translation Reclass- Balance on Balance on translation amortization & Balance on Balance on Balance on 2/1/09 differences Additions Disposals ifications 1/31/10 2/1/09 differences Additions write-downs Disposals 1/31/10 1/31/10 1/31/09 TEUR TEUR TEUR TEUR TEUR TEUR TEUR TEUR TEUR TEUR TEUR TEUR TEUR TEUR
I. Intangible assets:
1. Patents and licenses 13,214 7 203 11 20 13,433 10,459 0 1,422 0 10 11,871 1,562 2,755
2. Customer relationships 22,052 –1,570 0 0 0 20,482 12,231 –871 1,515 0 0 12,875 7,607 9,821
3. Goodwill 9,803 –391 0 2,923 0 6,488 1,700 0 1,472 0 2,923 248 6,240 8,103
45,069 –1,954 203 2,934 20 40,404 24,390 -870 4,408 0 2,934 24,994 15,409 20,678
II. Property, plant and equipment:
1. Land and buildings 66,587 –142 498 28 576 67,490 25,923 –104 2,485 0 17 28,287 39,203 40,664 Thereof land value 4,610 –11 6 0 0 4,605 0 0 0 0 0 0 4,605 4,610
2. Plant and equipment 240,431 –1,060 4,672 2,985 12,374 253,431 148,096 –718 20,452 0 1,344 166,485 86,946 92,335
3. Other furniture and fixtures, tools and office equipment 27,035 -58 680 732 92 27,017 19,132 –50 1,882 0 729 20,236 6,782 7,903
4. Advance payments and fixed assets under construction 11,123 –361 13,484 44 –13,061 11,141 0 0 0 0 0 0 11,141 11,123
345,176 –1,621 19,334 3,788 –20 359,079 193,151 –871 24,818 0 2,090 215,008 144,071 152,024
III. Financial investments:
1. Investments in affiliated companies 450 0 21 211 0 261 0 0 0 0 0 0 261 450
2. Investments in companies 4,313 –126 365 0 0 4,553 –1,989 0 0 –1,428 0 –3,418 7,971 6,302
3. Loans 3,224 –55 0 804 0 2,364 0 0 0 0 0 0 2,364 3,224
4. Investment securities (book-entry securities) 1,787 0 499 0 0 2,286 117 0 0 –32 0 86 2,201 1,670
9,775 –181 885 1,015 0 9,464 –1,872 0 0 –1,460 0 –3,332 12,797 11,645
400,019 –3,756 20,422 7,737 0 408,946 215,670 –1,741 29,226 –1,460 5,024 236,671 172,277 184,348
Acquisition and Production Costs
121
Currency Currency Depreciation, Balance on translation Reclass- Balance on Balance on translation amortization & Balance on Balance on Balance on 2/1/09 differences Additions Disposals ifications 1/31/10 2/1/09 differences Additions write-downs Disposals 1/31/10 1/31/10 1/31/09 TEUR TEUR TEUR TEUR TEUR TEUR TEUR TEUR TEUR TEUR TEUR TEUR TEUR TEUR
I. Intangible assets:
1. Patents and licenses 13,214 7 203 11 20 13,433 10,459 0 1,422 0 10 11,871 1,562 2,755
2. Customer relationships 22,052 –1,570 0 0 0 20,482 12,231 –871 1,515 0 0 12,875 7,607 9,821
3. Goodwill 9,803 –391 0 2,923 0 6,488 1,700 0 1,472 0 2,923 248 6,240 8,103
45,069 –1,954 203 2,934 20 40,404 24,390 -870 4,408 0 2,934 24,994 15,409 20,678
II. Property, plant and equipment:
1. Land and buildings 66,587 –142 498 28 576 67,490 25,923 –104 2,485 0 17 28,287 39,203 40,664 Thereof land value 4,610 –11 6 0 0 4,605 0 0 0 0 0 0 4,605 4,610
2. Plant and equipment 240,431 –1,060 4,672 2,985 12,374 253,431 148,096 –718 20,452 0 1,344 166,485 86,946 92,335
3. Other furniture and fixtures, tools and office equipment 27,035 -58 680 732 92 27,017 19,132 –50 1,882 0 729 20,236 6,782 7,903
4. Advance payments and fixed assets under construction 11,123 –361 13,484 44 –13,061 11,141 0 0 0 0 0 0 11,141 11,123
345,176 –1,621 19,334 3,788 –20 359,079 193,151 –871 24,818 0 2,090 215,008 144,071 152,024
III. Financial investments:
1. Investments in affiliated companies 450 0 21 211 0 261 0 0 0 0 0 0 261 450
2. Investments in companies 4,313 –126 365 0 0 4,553 –1,989 0 0 –1,428 0 –3,418 7,971 6,302
3. Loans 3,224 –55 0 804 0 2,364 0 0 0 0 0 0 2,364 3,224
4. Investment securities (book-entry securities) 1,787 0 499 0 0 2,286 117 0 0 –32 0 86 2,201 1,670
9,775 –181 885 1,015 0 9,464 –1,872 0 0 –1,460 0 –3,332 12,797 11,645
400,019 –3,756 20,422 7,737 0 408,946 215,670 –1,741 29,226 –1,460 5,024 236,671 172,277 184,348
Accumulated Depreciation, Amortization and Write-downs Net Value
Financial Statements 2010-2011 | Statement of Changes in Consolidated Fixed Assets
122
Segment Reporting
Appendix 2 to the Notes
1. Division information
Sinter Bearing Friction New Technologies Other Consolidation Total Group TEUR 2010-11 2009-10 2010-11 2009-10 2010-11 2009-10 2010-11 2009-10 2010-11 2009-10 2010-11 2009-10 2010-11 2009-10
Sales revenues 174,088 125,736 160,072 126,071 75,973 51,121 25,493 13,927 21,191 15,603 –19,661 –20,701 437,156 311,756Thereof intercompany sales 693 504 407 814 1,030 612 4,875 7,038 12,655 11,733 –19,661 –20,701 0 0 External sales 173,395 125,232 159,665 125,257 74,943 50,509 20,618 6,889 8,535 3,870 0 0 437,156 311,756
EBITDA 35,244 19,701 35,670 23,540 7,409 –533 4,178 2,092 2,990 2,383 –524 –1,561 84,967 45,623
Depreciation, amortizationand write-downs 11,989 12,371 9,309 9,350 4,931 5,999 3,322 40 1,335 1,663 –402 –197 30,485 29,226
EBIT 23,255 7,330 26,361 14,191 2,478 –6,532 856 2,052 1,655 720 –122 –1,364 54,482 16,397Income from associates consolidated by equity method 1,315 1,491 28 –10 0 0 8 0 0 0 0 0 1,350 1,481
Assets 153,373 132,709 149,144 128,518 83,867 56,081 52,622 10,030 183,081 158,198 –169,463 –141,605 452,622 343,931Thereof equity interests in associated companies 6,687 5,962 1,669 1,643 0 0 188 0 0 0 0 0 8,543 7,606
Outside capital 85,363 82,272 54,416 49,850 68,206 42,306 45,608 6,096 19,098 14,673 –68,521 –58,053 204,170 137,144
Investments (excluding financial investments) 14,595 11,237 8,975 7,363 11,817 2,118 785 79 1,231 421 –2,847 –1,681 34,555 19,537
Other non-cash income and expenses 5,395 –754 7,610 3,803 2,604 1,404 2,853 822 1,718 37 0 0 20,180 4,490
Employees (average) 1,170 1,037 998 999 575 456 164 30 157 91 0 0 3,064 2,613
2. Information by geographic region
Austria EU excl. Austria Asia NAFTA Other Consolidation Total Group TEUR 2010-11 2009-10 2010-11 2009-10 2010-11 2009-10 2010-11 2009-10 2010-11 2009-10 2010-11 2009-10 2010-11 2009-10
External sales 31,568 26,096 241,422 169,542 71,548 51,753 75,421 53,113 17,196 11,252 0 0 437,156 311,756
Segment assets 401,223 303,408 83,285 58,027 53,997 37,160 80,920 61,768 0 0 166,804 116,431 452,622 343,931
Investments (excluding financial investments) 9,323 7,037 14,375 1,433 1,920 5,147 8,241 8,878 0 0 696 –2,958 34,555 19,537
123
1. Division information
Sinter Bearing Friction New Technologies Other Consolidation Total Group TEUR 2010-11 2009-10 2010-11 2009-10 2010-11 2009-10 2010-11 2009-10 2010-11 2009-10 2010-11 2009-10 2010-11 2009-10
Sales revenues 174,088 125,736 160,072 126,071 75,973 51,121 25,493 13,927 21,191 15,603 –19,661 –20,701 437,156 311,756Thereof intercompany sales 693 504 407 814 1,030 612 4,875 7,038 12,655 11,733 –19,661 –20,701 0 0 External sales 173,395 125,232 159,665 125,257 74,943 50,509 20,618 6,889 8,535 3,870 0 0 437,156 311,756
EBITDA 35,244 19,701 35,670 23,540 7,409 –533 4,178 2,092 2,990 2,383 –524 –1,561 84,967 45,623
Depreciation, amortizationand write-downs 11,989 12,371 9,309 9,350 4,931 5,999 3,322 40 1,335 1,663 –402 –197 30,485 29,226
EBIT 23,255 7,330 26,361 14,191 2,478 –6,532 856 2,052 1,655 720 –122 –1,364 54,482 16,397Income from associates consolidated by equity method 1,315 1,491 28 –10 0 0 8 0 0 0 0 0 1,350 1,481
Assets 153,373 132,709 149,144 128,518 83,867 56,081 52,622 10,030 183,081 158,198 –169,463 –141,605 452,622 343,931Thereof equity interests in associated companies 6,687 5,962 1,669 1,643 0 0 188 0 0 0 0 0 8,543 7,606
Outside capital 85,363 82,272 54,416 49,850 68,206 42,306 45,608 6,096 19,098 14,673 –68,521 –58,053 204,170 137,144
Investments (excluding financial investments) 14,595 11,237 8,975 7,363 11,817 2,118 785 79 1,231 421 –2,847 –1,681 34,555 19,537
Other non-cash income and expenses 5,395 –754 7,610 3,803 2,604 1,404 2,853 822 1,718 37 0 0 20,180 4,490
Employees (average) 1,170 1,037 998 999 575 456 164 30 157 91 0 0 3,064 2,613
2. Information by geographic region
Austria EU excl. Austria Asia NAFTA Other Consolidation Total Group TEUR 2010-11 2009-10 2010-11 2009-10 2010-11 2009-10 2010-11 2009-10 2010-11 2009-10 2010-11 2009-10 2010-11 2009-10
External sales 31,568 26,096 241,422 169,542 71,548 51,753 75,421 53,113 17,196 11,252 0 0 437,156 311,756
Segment assets 401,223 303,408 83,285 58,027 53,997 37,160 80,920 61,768 0 0 166,804 116,431 452,622 343,931
Investments (excluding financial investments) 9,323 7,037 14,375 1,433 1,920 5,147 8,241 8,878 0 0 696 –2,958 34,555 19,537
Financial Statements 2010-2011 | Segment Reporting
124
Affiliated Companies as of January 31, 2011
Appendix 3 to the Notes
Miba AG holds equity interests in 42 subsidiaries. Of these, seven subsidiaries are not consolidated (for reasons of materiality). The following list contains the parent company, the 32 consolidated subsidiaries, the three associated companies and the seven non-consolidated companies.
Direct and indirect equity Seat of the Nominal interests Type of Company company Country Currency capital % consolidation
Affiliated companies
Miba Aktiengesellschaft Laakirchen A TEUR 9,500 CC
Miba Bearing Group:
Miba Gleitlager GmbH Laakirchen A TEUR 8,750 100.0 CC
Miba Bearings US LLC McConnelsville, Ohio USA TUSD 29,000 100.0 CC
Miba Far East PTE Ltd. Singapur SG TSGD 1,075 100.0 CC
Miba Bearings Sales Corp. McConnelsville, Ohio USA TUSD 10 100.0 CC
Miba China Holding GmbH Laakirchen A TEUR 4,000 100.0 CC
Miba Precision Components Suzhou, (China) Co. Ltd. 1) Industrial Park CN TCNY 74,840 100.0 CC
Miba Sinter Group:
Miba Sinter Austria GmbH Laakirchen A TEUR 8,400 100.0 CC
Miba Sinter Slovakia s.r.o. Dolný Kubín SK TSKK 111,446 100.0 CC TEUR 3,699
Miba Sinter USA LLC McConnelsville, Ohio USA TUSD 12,000 100.0 CC
Miba Sinter Holding GmbH & Co KG Laakirchen A TEUR 110 100.0 CC
Miba Sinter Holding GmbH Laakirchen A TEUR 35 100.0 CC
CC = consolidated companies (subsidiaries)CE = associates accounted for in consolidated statements under the equity method1) Balance sheet date December 31, 20102) In liquidation since February 1, 2008
125Financial Statements 2010-2011 | Affiliated Companies
Direct and indirect equity Seat of the Nominal interests Type of Company company Country Currency capital % consolidation
Miba Friction Group:
Miba Friction Holding GmbH Laakirchen A TEUR 35 100.0 CC
Miba Frictec GmbH Laakirchen A TEUR 40 100.0 CC
Miba HydraMechanica Corp. Sterling Heights, Michigan USA TUSD 8,284 100.0 CC
Miba Frictec Holding Ltd. 2) Sheffield GB TGBP 6,400 100.0 CC
Miba Tyzack Ltd. 2) Sheffield GB TGBP 3,535 100.0 CC
Miba Steeltec s.r.o. Vráble SK TSKK 155,548 100.0 CC TEUR 5,163
Miba Drivetec India Pvt. Ltd. 1) Pune IN TINR 20,002 100.0 CC
New Technologies Group:
Miba Energy Holding GmbH Laakirchen A TEUR 35 100.0 CC
Miba Energy Holding GmbH & Co KG Laakirchen A TEUR 10 49.0 CC
EBG GmbH Laakirchen A TEUR 364 49.0 CC
DAU GmbH & Co KG Laakirchen A TEUR 291 49.0 CC
DAU GmbH Laakirchen A TEUR 36 49.0 CC
EBG & DAU GmbH Laakirchen A TEUR 40 36.75 CC
Miba Automation Systems GmbH Laakirchen A TEUR 45 100.0 CC
Miba Energy Holding LLC McConnelsville, Ohio USA TUSD 100 49.0 CC
Sonstige:
High Tech Coatings GmbH Laakirchen A TEUR 1,000 50.1 CC
Miba Coatings Trading Suzhou, (Suzhou) Ltd. 1) Industrial Park CN TCNY 349 50.1 CC
Teer Coatings Ltd. Droitwich GB TGBP 1 100.0 CC
Assoziierte Unternehmen:
Mahle Metal Leve Miba Sinterizados Ltda. 1) São Paulo BR TBRL 100 30.0 CE
ABM Advanced Bearing Greensburg, Materials LLC 1) Indiana USA TUSD 4,540 50.0 CE
EBG d.o.o. 1) Šentjernej SLO TEUR 13 24.01 CE
Nicht einbezogene Unternehmen:
Miba FRANCE SARL Paris FR TEUR 20 100.0 -
Miba Italia S.r.l. Turin IT TEUR 20 100.0 -
Miba Deutschland GmbH Stuttgart DE TEUR 26 100.0 -
Miba Kantinen GmbH 1) Laakirchen A TEUR 116 100.0 -
Dong Guang Art – Teer Coating Techn. Co. Ltd. 1) Hongkong CN THKD 1,500 35.0 -
Hangzhou Hui – Teer Surface Advanced Coatings Ltd. 1) Linan CN TCNY 10,321 41.0 -
Zhejiang Huijin – Teer Coatings Techn. Co. Ltd. 1) Linan CN TUSD 12,000 25.0 -
126
Credits
Publisher
Miba AktiengesellschaftDr.-Mitterbauer-Str. 34663 Laakirchen, Austria
Editorial Staff
Miba AktiengesellschaftDr.-Mitterbauer-Str. 34663 Laakirchen, Austria
Design
Grayling Austria GmbH, Vienna
Layout
graficde‘sign pürstinger, SalzburgErdgeschoss, Vienna
Photography
Florian Stöllinger, LinzChristian Schneider, SalzburgiStockphoto: page 43
Translation and Language Services
Austria Sprachendienst International, Vienna
Vorarlberger Verlagsanstalt GmbH, Dornbirn
Press Conference on the 2010-2011 Business Year, Vienna May 5, 2011
First Quarter Results for 2011-2012 June 10, 2011
25th Annual General Meeting, Laakirchen July 1, 2011
Ex Dividend Date July 11, 2011
Half-Year Results for 2011-2012 September 9, 2011
Third Quarter Results for 2011-2012 December 9, 2011
Financial Calendar 2011-2012
Miba AktiengesellschaftDr.-Mitterbauer-Str. 3, 4663 Laakirchen, AustriaTel.: +43/76 13/25 41-0, Fax: +43/76 13/25 41-21 72E-Mail: [email protected], www.miba.com Eva Almhofer-AmeringCorporate CommunicationsE-Mail: [email protected] Hannes MoserVice President Corporate FinanceE-Mail: [email protected] The Annual Report is available in German and English
