Net assets

Overview of the DEUTZ Group’s assets      
  31 Dec 2014 31 Dec 2013 Change
€ million      
Non-current assets 625.8 627.4 –1.6
Current assets 523.0 493.2 29.8
Assets classified as held for sale 0.4 0.4
Total assets 1,149.2 1,121.0 28.2
Equity 511.0 504.7 6.3
Non-current liabilities 322.7 292.5 30.2
Current liabilities 315.5 323.8 8.3
Total equity and liabilities 1,149.2 1,121.0 28.2
Working capital (€ million) 196.2 172.3 23.9
Working capital ratio at the balance sheet date (%) 12.8 11.9 0.9
Working capital ratio (average, %) 13.3 12.0 1.3
Equity ratio (%) 44.5 45.0 –0.5
Working capital: inventories plus trade receivables minus trade payables.
Equity ratio: equity / total equity and liabilities

Non-current assets

Non-current assets of the DEUTZ Group totalled €625.8 million as at 31 December 2014 (31 December 2013: €627.4 million). This slight decrease was primarily attributable to the change in property, plant and equipment and intangible assets. Because the production launch of the new engines for the EU Stage IV/US Tier 4 emissions standards had been completed, we reduced our investing activities in this area as planned. The additions to property, plant and equipment amounting to €37.0 million and to intangible assets amounting to €29.6 million were offset by higher depreciation charges of €51.6 million and higher amortisation charges of €55.9 million. In addition to higher depreciation and amortisation expenses, changes in market forecasts and adverse economic developments in key markets made it necessary to recognise impairment losses on property, plant and equipment (€2.1 million) and intangible assets (€9.2 million).

Current assets

Current assets were also higher than at the end of 2013, having risen by €29.8 million to €523.0 million (31 December 2013: €493.2 million). This year-on-year change was mainly attributable to higher cash and cash equivalents at the year end.

Working capital

Working capital as at 31 December 2014 amounted to €196.2 million (31 December 2013: €172.3 million). The year-on-year increase of €23.9 million was mainly caused by higher levels of inventories and lower trade payables, while trade receivables were also lower. In association with this change in working capital, there was also an increase in the working capital ratio, i.e. the ratio of working capital (inventories plus trade receivables less trade payables) to revenue. As at the balance sheet date, this ratio was 12.8 per cent compared with 11.9 per cent as at 31 December 2013. The average working capital ratio, i.e. the ratio of average working capital at the four quarterly reporting dates to the revenue for twelve months, had also deteriorated year on year. It was 12.0 per cent in 2013 but 13.3 per cent in 2014, although this was a slight improvement on the 14.0 per cent that we had expected at the beginning of the year. This rise was related to the changes to the emissions standard in Europe and the United States.

DEUTZ Group: Balance sheet structure

Chart: DEUTZ Group: Balance sheet structure

Unrecognised intangible DEUTZ assets

In addition to the assets recognised on the balance sheet, DEUTZ has further assets that are not recognised. The DEUTZ brand is synonymous with highly sophisticated technology, quality and reliability and the Company has been a firmly established player in the equipment manufacturing and operating industry for more than 150 years. DEUTZ also enjoys long-standing valuable relationships with customers; it has entered into long-term cooperation agreements, particularly with its key customers.

Equity ratio

As at 31 December 2014, equity stood at €511.0 million (31 December 2013: €504.7 million). The main reasons for the increase of €6.3 million were the level of net income in the reporting year and positive effects of translating our subsidiaries’ financial statements that are prepared in foreign currencies. However, these effects were partly offset by expenses resulting from lower discount rates used in the measurement of pension liabilities and the payment of the dividend for 2013. At the end of 2014, the equity ratio was 44.5 per cent (31 December 2013: 45.0 per cent) and matched the target specified at the start of the year of above 40.0 per cent).

Non-current liabilities

Non-current liabilities at 31 December 2014 had risen to €322.7 million (31 December 2013: €292.5 million). The increase of €30.2 million was largely attributable to higher provisions for pensions and other post-retirement benefits due to the fall in discount rates, the unexpected rise in provisions for warranty costs and the recognition of restructuring provisions relating to our decision to optimise our network of sites. The decline in financial liabilities partly offset this increase. Loan repayments due in the coming months were reclassified from non-current to current.

Current liabilities

In contrast, current liabilities declined by €8.3 million to €315.5 million (31 December 2013: €323.8 million). A sharp fall in trade payables was the main reason for this decrease, but it was partly offset by the unexpected increase in provisions for warranty costs.

As at 31 December 2014, total assets amounted to €1,149.2 million, a year-on-year increase of €28.2 million (31 December 2013: €1,121.0 million).