MIFA expands Management Board and announces prospective net loss for 2013
- Hans-Peter Barth appointed Management Board member for Finance and Administration
- Prospective FY 2013 net loss of EUR 15 million
- Letter of intent signed with HERO Cycles concerning EUR 15 million investment in MIFA, far-reaching strategic partnership planned
The Supervisory Board of MIFA Mitteldeutsche Fahrradwerke AG (WKN share: A0B95Y, ISIN share: DE000A0B95Y8) has expanded the Management Board, today, Thursday, by appointing Mr. Hans-Peter Barth with immediate effect, and initially until the year-end, as Management Board member with responsibility for Finance and Administration. Mr. Barth is a certified accountant and has held past management board functions at auditing and consulting companies. Until further notice, Mr. Barth will also carry out the functions of hitherto sole Management Board member Peter Wicht. Mr. Wicht is currently unavailable to the company due to illness.
MIFA Mitteldeutsche Fahrradwerke AG has incurred a prospective net loss for the year of around EUR 15 million on the basis of the preparation of the annual financial statements according to German Commercial Code (HGB) accounting standards. This net loss for the year is mainly attributable to a failure to meet sales revenue expectations during the 2013 financial year. Inventory positions were incorrectly booked in connection with the launch of a new accounting system in the second quarter 2013. The cost of materials was understated accordingly in the quarterly financial statements for the second and third quarters of 2013. As MIFA does not conduct inventory-taking during the course of the year, the company failed to identify the erroneous bookings until the preparation of the annual financial statements.
MIFA's Supervisory Board will intensively investigate the matter and its specific effects on the consolidated financial statements, drawing upon external experts if required. The preparation of the 2013 separate financial statements for the parent company and the consolidated financial statements for 2013 will be delayed accordingly. As a consequence, the financial statements will not be published on 15 April 2014 (as was planned), but instead not until June prospectively.
Potential effects on MIFA's financing will also be investigated as part of auditing the annual financial statements. As far as the corporate bond that was issued in 2013 and existing bank credit facilities are concerned, it cannot be excluded that one or several of the financial covenants included in the bond and credit facility terms cannot be complied with in the 2013 financial year. This might result in a special right of cancellation for the respective investors. If this were to occur, the company plans to convene a bondholders' meeting to coordinate a corresponding amendment to the bond terms. The company would also examine other refinancing options in such an instance.
MIFA has made significant progress with its planned strategic partnership with Indian company HERO Cycles Ltd. ("HERO"). Today, MIFA has signed a letter of intent with HERO that comprises a EUR 15 million investment by HERO. Further details relating to the transaction are subject to final due diligence, and to agreements where the parties are in advanced negotiations. Besides an equity investment, the strategic partnership includes an extensive cooperation venture between MIFA and HERO in the purchasing and product purchasing areas, especially in the case of electric bikes and motors. Legally-binding agreements with HERO are expected within the next few weeks.
MIFA expects to break even at the after-tax level in the first quarter of 2014. It will not be possible for the company to issue a reliable guidance concerning the full 2014 financial year until the preparation of the annual financial statements has been completed.The company has sufficient liquidity for its operating business.
MIFA-Bike Gesellschaft mbH
MIFA Mitteldeutsche Fahrradwerke AG, headquartered in Sangerhausen (Saxony-Anhalt), is Germany's largest manufacturer of bicycles in terms of sales. The company offers a comprehensive range of bicycle models spanning entry price through to premium end. The components included in bicycle production are sourced from renowned suppliers and assembled at the company's sole production site in Sangerhausen, Germany. Business in this context focuses on product-related order production for major retail chains and OEM (Original Equipment Manufacturer) customers. E-bikes have also been manufactured since 2011. MIFA produces e-bikes for automotive manufacturer smart, manufactures for the Deutsche Post bicycle fleet, and supplies communal lending systems with multi-user vehicles, among other customers. In 2012, MIFA acquired Berlin-based e-bike manufacturer Grace and Bavaria-based cult bicycle forging company Steppenwolf, thereby intensifying its sales activities via specialist dealers. MIFA sells its bicycles predominately on its domestic German market. Further sales markets are located mainly in Western Europe. Both the operating business and administration and logistics are managed at the company's sole production location in Sangerhausen.
MIFA sold around 546,000 bicycles in 2012 (previous year: around 644,000). The company generated EUR 111.3 million of sales revenue, up 10.7 % compared with the previous year (EUR 100.5 million). E-bikes represented 30.0 % of total revenue (previous year: 12.5 %). On this revenue base, the company achieved operating profit (EBIT) adjusted for acquisition effects of EUR 2.9 million (previous year: EUR 4.6 million), and correspondingly adjusted net income stood at EUR 1.1 million (previous year: EUR 2.0 million). MIFA has been a listed company since May 2004. Its shares are traded in the Prime Standard of the Regulated Market of the Frankfurt Stock Exchange. MIFA's corporate bond is listed in the Entry Standard for bonds on the Frankfurt Stock Exchange.