Neways Witnessed Year of Transition in 2015; Revenue Up 21%

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Shareholders’ Equity and Solvency

The company’s shareholders’ equity increased to € 70.6 million in 2015, from € 66.0 million in 2014.

The company’s solvency rate (guaranteed equity as a percentage of total equity) stood at 42.6% at year-end 2015. Adjusted for the deferred tax asset and intangible assets, solvency came in at 35.9%, meeting the banks’ solvency requirement of 32.5%.

Net Debt

At year-end 2015, Neways had a net debt of € 31.5 million, an improvement on the € 34.8 million debt at year-end 2014. Neways paid off a total of € 8.3 million in loans last year. € 3.6 million of this financed from the operational cash flow, while the remaining € 4.7 million was financed through the use of the company’s current account facility. At year-end 2015, Neways had used € 12.4 million of the existing current account facility of € 35.0 million. The interest-bearing short-term debts, including the current account credit facility stood at € 21.9 million at year-end 2015.

Working Capital and Net Cash Flows

In the year under review, the working capital (inventories plus receivables less trade payables and other payable items) rose to € 59.4 million (2014: € 53.5 million) due to the postponement of deliveries by clients and increased activity levels towards the end of the year.

Inventories, measured in days of sales, stood at 81 days at year-end 2015 (2014: 76 days). Neways is specifically monitoring the relatively low turnover rate of BuS Group to improve the turnover rate through tighter inventory management.

The number of days sales outstanding (DSO) stood at 36 days at year-end 2015 (2014: 36 days). Neways conducts strict receivables management and uses a supplier finance programme for several major clients, which encourages fast payments. Neways’ total provision for debtors stood at € 0.8 million at year-end 2015 (2014: € 1.1 million).

Net cash flow came in at € 2.9 million in 2015 (2014: € - 32.5 million). The negative cash flow in 2014 was due to the acquisition of BuS Group and the utilisation of the reorganisation provision set aside in 2014 for the closure of the NEK production facility in Kassel. Cash flows returned to a normal level in 2015.

Investments and Returns on Investments

Total investments in tangible and intangible fixed assets amounted to € 4.5 million in 2015, compared with € 8.7 million in 2014. In addition, the company made further investments in ERP-LN, the new ERP-platform for Neways.

Operational Highlights

A New Foundation

In 2015, Neways launched the improvement programme ‘Up to the next level’. This programme will enable the Neways organisation to respond more effectively to its continuously changing environment. This requires flexibility and adaptability and it is also essential if Neways is to maintain its healthy market position in the long term.

Improvement Operational Performance Operating Companies

In recent years, Neways has intensified the cooperation between its operating companies in all the regions where Neways is active. The focus is largely on improving the quality and boosting the innovative potential through more intensive cooperation and the sharing of in-house expertise and experience. The support of well-aligned and standardised processes, plus an efficient supply chain, will help us to continue to improve our joint operational performance. To achieve this, Neways has rolled out Lean Leadership Model methods at the various operating companies. In December 2015, Neways announced that it was taking far-reaching measures at the operating companies NME and NCWS. The aim of these measures is to effect a rapid improvement in the operational performance and customer-focus of these two organisations in particular.

Improvement Of Capacity Utilisation

Improving the capacity utilisation across the entire group was once again a major priority at Neways in 2015. The short-term peaks and troughs in demand from clients that have dominated the EMS market for the past several years are an additional challenge for Neways. Neways was able to deal with these fluctuations more effectively last year due to a better spread of business across the various sectors, cooperation between its operating companies and the use of fewer temporary staff.

Asian Operations

In Asia, Neways is primarily active in the production of series on assignment from Western European operations of OEMs. In 2015, we saw another clear increase of ‘Local for Local’ contracts. At year-end 2015, Neways decided to relocate the business operations of one of its two operating companies in China, as the turnover development of the NME activities failed to meet our expectations. Following an automation drive, the activities are being largely relocated to Neways Micro Electronics plant in Echt. The remaining activities are being covered by Neways Wuxi Electronics in China.

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