Net assets

Overview of the DEUTZ Group’s assets      
  31 Dec 2015 31 Dec 2014 Change
€ million      
Non-current assets 589.6 625.8 –36.2
Current assets 498.1 523.0 –24.9
Assets classified as held for sale 0.4 0.4
Total assets 1,088.1 1,149.2 –61.1
       
Equity 495.6 511.0 –15.4
Non-current liabilities 280.8 322.7 –41.9
Current liabilities 311.7 315.5 –3.8
Total equity and liabilities 1,088.1 1,149.2 –61.1
       
Working capital (€ million) 183.6 196.2 –12.6
Working capital ratio (31 Dec, %) 14.7 12.8 1.9
Working capital ratio (average, %) 17.6 13.3 4.3
Equity ratio (%) 45.5 44.5 1.0
 
Working capital: inventories plus trade receivables less trade payables. Equity ratio: equity/total equity and liabilities.

DEUTZ Group: Balance sheet structure

Chart: DEUTZ Group: Balance sheet structure

Non-current assets

Non-current assets of the DEUTZ Group totalled €589.6 million as at 31 December 2015 (31 December 2014: €625.8 million). The decline of €36.2 million was largely due to the reduction in intangible assets. At €17.8 million, additions were much lower than depreciation and amortisation amounting to €45.9 million as a consequence of the new engines having gone into volume production. The market situation also made it necessary to recognise impairment losses on intangible assets of €7.4 million.

Current assets

Current assets were also lower than at the end of 2014, falling by €24.9 million to €498.1 million (31 December 2014: €523.0 million). This was mainly attributable to the volume-related decrease in trade receivables and other receivables and assets. The decrease in other receivables and assets primarily resulted from the derecognition of the outstanding contributions from non-controlling interests, which related to the AB Volvo Group’s shareholding in DEUTZ Engine (China) Co., Ltd. in Linyi, China. The outstanding obligations were cancelled as a result of the company being wound up.

Working capital

Working capital had dropped to €183.6 million as at 31 December 2015 (31 December 2014: €196.2 million). The main reason for this was the reduction in trade receivables caused by lower demand. Although there was a modest increase in inventories, they decreased slightly after adjustment for exchange rate effects. Trade payables were virtually unchanged. Despite the lower level of working capital, the working capital ratio 1) increased to 14.7 per cent as at 31 December 2015 due to the sharp fall in the volume of business (31 December 2014: 12.8 per cent). The average working capital ratio 2) also rose, reaching 17.6 per cent on the balance sheet date (31 December 2014: 13.3 per cent). Consequently, we were unable to achieve our forecast for an average working capital ratio of approximately 14 per cent, due mainly to the strong contraction in the volume of business.

Unrecognised intangible 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

As at 31 December 2015, equity had decreased to €495.6 million (31 December 2014: €511.0 million). This reduction of €15.4 million was predominantly caused by the change in non-controlling interests. Following the winding-up of DEUTZ Engine (China) Co., Ltd. in Linyi, China, €2.6 million of the capital that had already been injected by our joint venture partner, the AB Volvo Group, was repaid. The outstanding obligation of the AB Volvo Group to make a contribution to the joint venture’s issued capital was also cancelled. By contrast, there was an increase in the Group equity attributable to the shareholders of DEUTZ AG due, above all, to the level of net income and to the positive effects from the higher discount rates used in the measurement of provisions for pensions and other post-retirement benefits. Despite the decrease in equity, the equity ratio rose slightly, from 44.5 per cent as at 31 December 2014 to 45.5 per cent as at 31 December 2015, and was thus within the range that we had forecast at the start of the reporting year of well above 40 per cent.

Non-current liabilities

Non-current liabilities totalled €280.8 million as at 31 December 2015 (31 December 2014: €322.7 million). The decrease of €41.9 million was predominantly caused by the change in provisions for pensions and other post-retirement benefits. These provisions fell by €14.8 million compared with 31 December 2014, mainly due to higher discount rates. We also continued to lower our non-current financial debt, which amounted to €58.6 million as at 31 December 2015. This represented a year-on-year fall of €14.7 million (31 December 2014: €73.3 million). Other provisions also decreased, by €11.7 million, mainly due to a reduction in provisions for warranty costs.

Current liabilities

Current liabilities also decreased slightly over the reporting year, from €315.5 million as at 31 December 2014 to €311.7 million as at 31 December 2015. The decline of €3.8 million was largely attributable to the lower level of other provisions.

Total assets amounted to €1,088.1 million as at 31 December 2015 (31 December 2014: €1,149.2 million).

1) Working capital (inventories plus trade receivables less trade payables) as at the balance sheet date divided by revenue for the previous twelve months.
2) Average working capital (inventories plus trade receivables less trade payables) at the four quarterly reporting dates divided by revenue for the previous twelve months.