Segment reporting follows internal reporting according to the management approach.
In the Gerresheimer Group, the Management Board of Gerresheimer AG, as the chief operating decision maker, allocates resources to the operating segments and assesses their performance. The reportable segments and regions as well as the performance data shown are consistent with the internal management and reporting system.
The Gerresheimer Group is managed through strategic business units organized as divisions. These are aggregated into reporting segments based on the economic characteristics of their businesses.
With the start of the financial year 2014, Gerresheimer realigned its three divisions. The organization was geared more closely to customer needs while businesses with similar technologies were pooled.
Plastics & Devices
The Plastics & Devices Division encompasses complex customer-specific system solutions for easy and safe drug administration. These include insulin pens, inhalers and prefillable syringes. Also included are diagnostics and medical technology products, such as skin-prick aids and test systems as well as pharmaceutical plastic containers for liquid and solid medicines with closure and safety systems.
We develop complex systems and system components made of plastic on a project basis. Our target market here is made up of customers in the pharma industry, diagnostics and medical technology. We provide tailored services for these customers, spanning every link in the Medical Systems value chain. Our Medical Plastic Systems products range from inhalers for the treatment of respiratory diseases to lancets and insulin pen systems for diabetics, as well as an extensive array of test systems and disposable products for laboratory and molecular diagnostics.
120 CO N S O L I DAT E D F I N A N C I A L S TAT E M E N T S Gerresheimer AG A N N UA L R E P O R T 2 015
› Notes to the Consolidated Financial Statements
› Other Notes
The Plastics & Devices Division also includes plastic system packaging for use with liquid and solid medications. Our broad range of high-quality primary drug packaging products includes application and dosage systems, such as eyedroppers and nasal spray vials, as well as special containers for tablets and powders. The range also includes tamper-evident multifunctional closure systems, childproof and senior-friendly applications, and integrated moisture absorbers under the Duma® brand name.
In Centor, we additionally have the leading producer of plastic packag- ing and closures for oral prescription medication in the North American end-consumer market. A feature of the US market for prescription medica- tion is the pour-and-count system. The precise amount of oral medication stated in a prescription is specially packaged for each patient in a plastic container. Centor has a strong product portfolio for this purpose, including the 1-Clic® and Screw-Loc® product lines, which are the two leading forms of plastic packaging in the USA. Centor supplies national and regional pharmacy chains, supermarkets and wholesalers.
Primary Packaging Glass
The Primary Packaging Glass Division produces glass primary packaging products for drugs and cosmetics. This includes pharma jars, ampoules, injection vials, cartridges, perfume flacons and cream jars, plus special glass containers for the food and drinks industry.
Our range for the pharmaceutical industry covers a wide selection of glass primary packaging products. Moulded glass products meet market and customer needs with a diverse range of injection, dropper and syrup bottles. We also produce high-quality specialty products such as ampoules, vials and cartridges from borosilicate glass tubing. On this basis, we offer a virtually end-to-end range of pharmaceutical packaging in flint and amber glass. Our product portfolio for the cosmetics industry encompasses high-quality glass packaging such as vials and glass containers for perfumes, deodorants, skin-care and wellness products. We process clear, colored and opal glass. All shaping, coloring, printing and exclusive finishing technologies are available to us for this purpose.
For the food and beverage industry, we supply both standard and custom miniature and other sizes of bottles and glass containers for products such as spirit miniatures. Our products include a range of variations such as amber, flint, colored and opal glass, diverse shape variants and numerous finishing options.
Life Science Research
The Life Science Research Division produces laboratory glassware and other systems specialized for research, development and analytics. We also supply general laboratory ware.
The product portfolio ranges from standard items for wet chemistry, such as volumetric flasks, beakers, Erlenmeyer flasks and vials for laboratory analytics, to more complex products such as distillation and filtration systems as well as components for precision lasers. We additionally produce a wide array of application-specific variants to meet custom requirements. The effects of services of Gerresheimer AG, consolidation measures and inter-segment reconciliations are presented in the segment reporting as “Head office/consolidation”. The measurement principles for segment reporting are based on the IFRSs applied in the consolidated financial statements.
Segmental performance is assessed and calculated according to the fol- lowing criteria:
› Intra-Group revenues are measured on an arm’s length basis. There were no revenues with key accounts amounting to more than 10% of Gerresheimer Group revenues neither for the financial year 2015 nor for the prior year.
› Adjusted EBITDA is not defined in IFRS but represent key performance indicators for the Gerresheimer Group. Adjusted EBITDA is net income be- fore income taxes, financial result, amortization of fair value adjustments, depreciation and amortization, impairments, restructuring expenses and one-off income and expenses.
› Net working capital is defined as inventories, trade receivables and pre- payments less prepayments received and trade payables.
› Operating cash flow is a key performance indicator comprising adjusted EBITDA plus changes in net working capital at constant exchange rates plus capital expenditures less added finance leases.
› Capital expenditures comprise all additions to intangible assets and property, plant and equipment measured at cost.
› Non-current assets do not include financial instruments, deferred tax as- sets, post-employment benefits or rights arising from insurance contracts. In the following the used key performance indicators to assess the perfor- mance of the divisions of Gerresheimer AG and additional key indicators by regions are shown:
121
CO N S O L I DAT E D F I N A N C I A L S TAT E M E N T S
› Notes to the Consolidated Financial Statements
› Other Notes
By division
in EUR k Plastics & Devices Primary Packaging Glass Life Science Research Head office/consolidation Group
2015 2014 2015 2014 2015 2014 2015 2014 2015 2014 Segment revenues 645,311 598,756 650,986 622,255 100,732 87,321 – – 1,397,029 1,308,332 Intra-Group revenues -631 -987 -19,166 -17,328 – -1 – – -19,797 -18,316 Revenues with third parties 644,680 597,769 631,820 604,927 100,732 87,320 – – 1,377,232 1,290,016 Adjusted EBITDA 141,582 126,101 143,669 133,963 15,267 12,362 -22,626 -19,041 277,892 253,385 Depreciation and amortization -38,233 -36,105 -45,857 -49,383 -1,729 -1,532 -440 -469 -86,259 -87,489 Adjusted EBITA 103,349 89,996 97,812 84,580 13,538 10,830 -23,066 -19,510 191,633 165,896 Net working capital 100,566 94,849 90,327 113,809 26,734 26,755 -3,929 -2,357 213,698 233,056 Operating cash flow1) 110,500 47,394 70,313 65,168 18,388 10,674 -22,162 -19,660 177,039 103,576 Capital expenditure 36,009 63,459 86,968 60,411 1,716 2,055 1,106 674 125,799 126,599 Employees (average for the year) 4,513 4,462 5,542 5,862 788 796 101 104 10,944 11,224
1) Operating cash flow: Adjusted EBITDA plus or minus change in net working capital less capital expenditure.
Key indicators by region By region1)
in EUR k Europe Germany Americas Emerging markets Other regions Group
2015 2014 2015 2014 2015 2014 2015 2014 2015 2014 2015 2014 Revenues by target region2) 471,781 466,990 324,854 311,874 322,397 261,711 224,172 217,069 34,028 32,372 1,377,232 1,290,016 Revenues by region of origin3) 157,680 269,144 707,949 538,008 311,977 269,405 199,626 213,459 – – 1,377,232 1,290,016 Non-current assets 149,354 172,173 615,722 648,828 896,964 135,416 200,864 184,185 – – 1,862,904 1,140,602 Employees (average for the year) 1,899 1,880 3,457 3,474 1,478 1,553 4,110 4,317 – – 10,944 11,224
1) See Note (8) for an explanatory note on the regions. 2) Revenues by location of customer registered office. 3) Revenues by location of supplier registered office.
Reconciliation from Adjusted EBITA of the divisions to net income before taxes of the Group is shown in the following table:
in EUR k 2015 2014
Adjusted segment EBITA 214,700 185,406 Head office/consolidation -23,067 -19,510
Adjusted Group EBITA 191,633 165,896
Sale glass tubing business1) 52,175 –
Acquisition Centor -11,565 – Portfolio optimization -15,879 -16,988 One-off expenses and income -500 -1,519 Amortization of fair value adjustments -22,293 -17,493
Result of operations 193,571 129,896
Net finance expense -34,558 -30,547
Net income before income taxes 159,013 99,349
1) Includes impairment losses of fair value adjustments of the Kimble/Kontes brand name
EUR 15,682k.
Segment data by division
(38) Auditor Fees
The auditor of the individual and consolidated financial statements of Gerresheimer AG is Deloitte & Touche GmbH Wirtschaftsprüfungsgesellschaft, Duesseldorf, Germany. The audit opinion is signed by Marion Lammers (since the financial year 2015) and Holger Grünewald (since the financial year 2013). Holger Grünewald is deemed to be the auditor in charge in accordance with section 24a para 2 BS WP/vBP (“Berufssatzung der Wirtschaftsprüfer und vereidigten Buchprüfer”) for Gerresheimer AG.
Deloitte & Touche GmbH Wirtschaftsprüfungsgesellschaft, Duesseldorf, Germany, has been the auditor for Gerresheimer AG since 2009.
The following fees have been recognized as expense for services provided by Deloitte & Touche GmbH Wirtschaftsprüfungsgesellschaft:
in EUR k 2015 2014
Financial statements auditing 614 515 Other assurance services 8 17 Tax advisory services 5 7
Other services 10 8
122 CO N S O L I DAT E D F I N A N C I A L S TAT E M E N T S Gerresheimer AG A N N UA L R E P O R T 2 015
› Notes to the Consolidated Financial Statements
› Other Notes
(39) Related Party Disclosures
In the course of our operating activities, we conduct business with legal enti- ties and individuals who are able to exert influence on Gerresheimer AG or its subsidiaries or are controlled or significantly influenced by Gerresheimer AG or its subsidiaries.
Related parties include companies that are related parties of members of the Supervisory Board of Gerresheimer AG, non-consolidated companies and associates, and members of the Gerresheimer AG Supervisory Board and Management Board.
The table below shows transactions with related parties:
2015 2014 in EUR k Sale of goods and services Purchase of goods and services Trade receiv
ables payablesTrade
Sale of goods and services Purchase of goods and services Trade receivables Trade payables Company in relation to a member of the
Gerresheimer AG Supervisory Board 3,123 – 116 – 2,897 – 193 –
Associated companies – 2,931 – 93 – 1,950 – 210
3,123 2,931 116 93 2,897 1,950 193 210
The transactions carried out include the Vetter Pharma-Fertigungs GmbH & Co. KG, Ravensburg, Germany, which is related to a member of the Super- visory Board.
All transactions are conducted at market prices and on arm’s length terms. The shares in the associated company Beijing Gerresheimer Glass Co. Ltd., Huangcun, Beijing, China, were sold with effect from May 20, 2014.
123
CO N S O L I DAT E D F I N A N C I A L S TAT E M E N T S
› Notes to the Consolidated Financial Statements
› Other Notes
(40) Total Remuneration of the Members of the Supervisory Board and Management Board
Remuneration of the members of the Supervisory Board of Gerresheimer AG totaled EUR 1,111k in the financial year 2015 (prior year: EUR 1,086k). Remuneration of the active Management Board members during the financial year, made up of fixed salary (including fringe benefits), performance-linked bonuses and components with a long-term incentive effect, came to EUR 4,338k in the financial year 2015 (prior year: EUR 4,052k).
The fair value of the 2015 to 2018 tranches of Management Board stock appreciation rights (tranches 9 to 12) was EUR 3,354k as of the balance sheet date (prior year: tranches 8 to 11: EUR 799k). EUR 3,261k (prior year: EUR 863k tranches 4 to 9) was recognized as of the balance sheet date in expenses for additions to the provision for stock appreciation rights (tranches 5 to 12). For further details, please see note (31).
With effect from May 1, 2007, the pension obligations for active members of the Management Board were transferred to a pension fund. Benefits vesting since May 1, 2007 are generally processed through a provident fund. The present value of the defined benefit obligation for active members of the Management Board, before offset against plan assets, is EUR 6,584k (prior year: EUR 5,748k).
The present value of the defined benefit obligation for former members of management and their dependents, before offset against plan assets, is EUR 25,146k (prior year: EUR 26,977k). Regular payments for pensions and other benefits amounted to EUR 1,886k (prior year: EUR 2,005k). Further information on the remuneration of the members of the Manage- ment Board are provided in the Remuneration Report section of the Group Management Report.
(41) Corporate Governance
The term corporate governance relates to a company’s entire management and monitoring system, including its organization, business policies and guidelines as well as internal and external control mechanisms. The aim of good corporate governance is responsible and transparent corporate management and control geared to sustained value creation. This enhances the confidence of national and international investors, business partners, financial markets, employees and the public in the management and control of Gerresheimer AG. Gerresheimer AG is required as a listed company to state to what extent it complies with the recommendations of the German Corporate Governance Code and any recommendations it has not or will not comply with (“comply or explain”).
The Management Board and Supervisory Board of Gerresheimer AG most recently adopted the following declaration of compliance in accordance with section 161 of the German Stock Corporation Act (Aktiengesetzt/AktG) as follows on September 9, 2015:
Since its last declaration of September 9, 2014 Gerresheimer AG has complied with all recommendations of the “Government Commission on the German Corporate Governance Code” as amended on May 13, 2013. Gerresheimer AG will in future comply with all recommendations of the “Government Commis- sion on the German Corporate Governance Code” as amended on May 5, 2015 with exception of number 5.4.1 paragraph 2 clause 1 (The Supervi- sory Board has not defined a regular limit for length of membership on the Super visory Board). The declaration is available from the Company website (www.gerresheimer.com/en/investor-relations).
(42) Events after the Balance Sheet Date
No events have arisen since November 30, 2015 that are expected to have a material impact on the net assets, financial position or results of operations of the Gerresheimer Group or Gerresheimer AG.
The financial statements were prepared by the Management Board at its meeting on January 20, 2016, authorized for publication and will be submitted by the Audit Committee to the Supervisory Board for approval in its meeting on February 10, 2016.
Duesseldorf, Germany, January 20, 2016 The Management Board
124 R E S P O N S I B I L I T Y S TAT E M E N T Gerresheimer AG A N N UA L R E P O R T 2 015
To the best of our knowledge, and in accordance with the applicable reporting principles, the consolidated financial statements give a true and fair view of assets, liabilities, financial position and profit or loss of the Group, and the Group Combined Management Report includes a fair review of the development and performance of the business and the position of the Group, together with a description of the principal opportunities and risks associated with the expected development of the Group.
Duesseldorf, Germany, January 20, 2016
The Management Board
Uwe Röhrhoff Rainer Beaujean Andreas Schütte