INTERIM REPORT H1 2019

AUTOMOTIVE TECHNOLOGY SEGMENT REPORTS DROP IN SALES AND EARNINGS Sales in the Automotive Technology segment decreased by EUR 13.1 million, or 6.7%, to...

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INTERIM REPORT H1 2019 ­I NDUS HOLDING AG

HIGHLIGHTS in EUR million

H1 2019

H1 2018

Sales

876.5

844.7

EBITDA

109.5

109.4

66.5

76.2

7.6

9.0

Group net income for the year (earnings after taxes)

37.7

43.7

Operating cash flow

24.4

-22.4

Cash flow from operating activities

13.9

-33.5

Cash flow from investing activities

-18.9

-28.2

Cash flow from financing activities

-4.8

27.9

JUNE 30, 2019

DEC. 31, 2018

1,857.5

1,720.0

707.2

709.8

38.1

41.3

Net debt

612.9

482.8

Cash and cash equivalents

100.0

109.6

46

45

EBIT EBIT margin (in %)

CONTENTS p. 1

p. 2

p. 12

p. 29

Total assets Equity Equity ratio in %

Investments (as of the reporting date)

01 – L ET TER TO THE ­S HAREHOLDERS 02 – I NTERIM MANAGEMENT REPORT   03 – C ONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS   04 – C ONTACT | FINANCIAL CALENDAR | IMPRINT

— Further increase in sales — Construction/Infrastructure segment on track to achieve record results — Automotive Technology segment significantly affected — Acquisition of MESUTRONIC in June — Planned sale of a minority interest in the second half of the year

SHARE PRICE PERFORMANCE OF THE INDUS SHARE JANUARY TO JULY 2019 EXCL. DIVIDENDS

(indexed, in %)

25 20 15 10 5 0 -5 -10 -15 12/31/18 Source: Bloomberg

2/28/19

4/30/19

6/30/19 ­I NDUS Holding AG 

DAX Price Index 

7/31/19 SDAX Price Index

1

INTERIM REPORT — L e t t e r t o t h e S­ h a r e h o l d e r s

LETTER TO THE ­SHAREHOLDERS DE A R SH A REHOLDER S,

The INDUS Group once again achieved growth in sales in the first half of the year. Developments in the Construction/­Infra­ structure segment, which is on course to achieve record results in terms of both sales and income in 2019, are parti­cularly encouraging. The situation in the Automotive Technology segment has been exacerbated: the earnings position of the Group as a whole is under pressure due to a sustained drop in sales coupled with considerable repositioning expenses. In what was, in part, a difficult economic environment, INDUS increased its Group sales by 3.8% in a year-on-year comparison in the first six months of 2019 to EUR 876.5 million. Almost three quarters of this growth was generated organically. The Engineering and Construction/Infrastructure segments achieved strong sales increases with rates in excess of 10%. In contrast, the Automotive Technology segment was hit by a drop in sales of almost 6.7%. This slump is now affecting not only series suppliers, but also companies in pre- and post-series production. At EUR 66.5 million, consolidated EBIT is down by 12.7% on the previous year, mainly due to the fact that the Automotive Technology segment’s contribution to EBIT was EUR 9.4 million lower. The share of the INDUS portfolio attributable to Automotive Technology is shrinking and – in terms of sales – the segment is now only the fourth-largest in the Group. This is due primarily to the fact that the Group is achieving further growth in the defined growth industries. The Construction/Infrastructure segment showed encouraging development, with an 11.0% increase in sales resulting in a much higher increase in EBIT (20.9%). This is a record level. The fact that the bottom-line figure for the Engineering segment was not higher despite the marked increase in sales is due to key major projects that are associated with slightly weaker margins. Developments in the Medical Engineering/Life Science segment are positive. This segment generated EBIT growth of 8.3% on the back of a 4.9% increase in sales. Sales in the Metals Technology segment are on a slight downward trajectory and the EBIT margin is roughly on a par with the previous quarter at 7.6%. In general, the current overall international environment, with the tariff and currency war between the United States and China, the political uncertainty in the Middle East, as well as Brexit and a lack of unity within the EU, are putting pressure on parts of the INDUS Group’s business. We have those areas that are in our sphere of influence under control. We are on track with our repositioning projects. This makes

the systematic implementation of our PARKOUR strategy all the more important. On the acquisition side, we were able to report the successful conclusion of an agreement to purchase MESUTRONIC GmbH back in May. MESUTRONIC, a specialist for f­ oreign body detection in the measuring technology and control engineering sector, an industry of the future, joins our ­Engineering segment. We are currently pursuing a number of other interesting acquisition projects at both subsidiary and sub-subsidiary level. The sale of a minority interest in the Automotive Technology segment to the majority shareholder, which was announced in July, will have a very positive impact on income for 2019 as a whole, resulting in an EBIT contribution of EUR 16.5 million. The transaction will result in an inflow of liquidity totaling around EUR 27.5 million into the Group, further strengthening its cash flow development for the year as a whole, which is already looking positive. On the operational side of things, we do not expect to see any improvement in the environment for the Automotive Technology segment in the second half of the year either. In the Engineering and Metals Technology segments, a number of companies will see their economic situation deteriorate further. We are responding to the situation across the Group by making further improvements to our cost structures and continuing with our initiatives to achieve operational excellence. We are also making sure that considerable efforts are made to forge ahead with key future and innovation projects. We are confident about developments in the Construction/Infrastructure segment, which is heading for a record year, and the Medical Engineering/Life Science segment in general. As things stand at the moment and based on a stable sales forecast, we now expect the Group to achieve operating income (EBIT) in a range of between EUR 152 million and EUR 158 million for the year as a whole, as opposed to the range of between EUR 156 million and EUR 162 million in the previous forecast.

Bergisch Gladbach, August 2019

Dr. Johannes Schmidt

Dr. Jörn Großmann

Axel Meyer

Rudolf Weichert

2

INDUS In t er im Rep or t — H1 2019

INTERIM MANAGEMENT ­R EPORT PERFORMANCE OF THE INDUS GROUP IN THE FIRST HALF OF 2019 INDUS HOLDING AG CONSOLIDATED STATEMENT OF INCOME 

(in EUR million) DIFFERENCE

H1 2019

H1 2018

ABSOLUTE

IN %

876.5

844.7

31.8

3.8

Other operating income

5.4

5.5

-0.1

-1.8

Own work capitalized

2.8

2.1

0.7

33.3

Changes in inventories

-0.6

29.7

-30.3

<-100

884.1

882.0

2.1

0.2

Cost of materials

-406.3

-407.2

0.9

0.2

Personnel expenses

-263.1

-252.2

-10.9

-4.3

Other operating expenses

-105.2

-113.2

8.0

7.1

EBITDA

109.5

109.4

0.1

0.1

Depreciation/amortization

-43.0

-33.2

-9.8

-29.5

Operating income (EBIT)

66.5

76.2

-9.7

-12.7

Financial income

-8.4

-9.2

0.8

8.7

Earnings before taxes (EBT)

58.1

67.0

-8.9

-13.3

-20.4

-23.3

2.9

12.4

37.7

43.7

-6.0

-13.7

0.4

0.6

-0.2

-33.3

37.3

43.1

-5.8

-13.5

Sales

Overall performance

Taxes

Earnings after taxes   of which attributable to non-controlling shareholders   of which attributable to INDUS shareholders

3

INTERIM REPORT — I n t e r i m M a n a g e m e n t R­ e p o r t

The business of the INDUS Group as a whole showed somewhat subdued development in the first half of the year overall: although the Group increased its sales by 3.8% in a year-on-year comparison in the first six months of 2019, operating income (EBIT) fell by 12.6%, due in particular to the difficult situation in the Automotive Technology segment. The Group was able to report a successful acquisition in the Engineering segment in May.

FURTHER INCREASE IN SALES In the first half of 2019, the INDUS portfolio companies increased their sales by EUR 31.8 million (3.8%) to EUR 876.5 million, as they benefited from an economic environment that was generally stable. In the Automotive Technology and Metals Technology segments, however, sales are on a marked/slight downward trajectory respectively due to economic factors. The organic increase in sales achieved by the INDUS Group came to 2.8% and is largely attributable to the Construction/Infrastructure and Engineering segments. The change in inventories fell from EUR 29.7 million to EUR -0.6 million due to increased working capital management within the INDUS Group. The cost-of-materials ratio dropped from 48.2% to 46.4%. The personnel expense ratio remained virtually unchanged at 30.0% (previous year: 29.9%). Depreciation and amortization increased by 29.5% to EUR -43.0 million in total. The increase is mainly due to the new lease accounting rule IFRS 16 and, to a lesser extent, to the increase in investments in fixed assets in recent years. In line with the increase in depreciation/amortization due to right-of-use assets from lease contracts totaling EUR 8.0 million that were capitalized for the first time, other operating expenses fell by EUR 9.2 million due to the new lease accounting regulations.

NEGATIVE TREND IN AUTOMOTIVE TECHNOLOGY PUTS PRESSURE ON CONSOLIDATED INCOME At EUR 66.5 million, operating income (EBIT) was down by EUR 9.6 million on the previous year’s figure. The EBIT margin came in at 7.6% (previous year: 9.0%). The reduction is due, in particular, to the Automotive Technology segment, where EBIT fell by EUR 9.4 million. Financial income includes net interest, income from shares measured according to the equity method and other financial income. The valuations of the interest rate swaps and minority interests are reported within other financial income. Financial income fell by EUR 0.7 million in total, due in particular to the valuation of minority interests.

At EUR 58.1 million, earnings before taxes (EBT) was lower than the previous year’s figure (EUR 67.0 million). Tax expenses came to EUR 20.4 million as against EUR 23.3 million in the previous year, pushing the tax ratio up slightly from 34.8% in the previous year to 35.1%. Before the interests attributable to non-controlling shareholders were deducted, net income for the period had fallen by EUR 6.0 million, to EUR 37.7 million (previous year: EUR 43.7 million). Earnings per share came to EUR 1.52 as against EUR 1.76 in the comparison period. During the first six months of 2019, the INDUS Group companies employed on average 10,710 employees (previous year: 10,579 employees).

ACQUISITION FOR THE ENGINEERING SEGMENT INDUS acquired MESUTRONIC Gerätebau GmbH, Kirchberg, with effect from May 27, 2019. The company operates in the measuring technology and control engineering sector, an industry of the future, and is one of the technology leaders in metal and foreign body detection in production processes. MESUTRONIC systems are used to protect production equipment from metal parts and other foreign bodies, for example in the plastics and textiles industries. They are also used for the inspection of products for the absence of metal and other contamination, e. g. in the food and pharmaceutical industries. High-precision sensors detect unwanted foreign bodies. Particularly dynamic sorting systems divert these foreign bodies from production processes without the latter having to be interrupted. Both discrete product flows, such as for packaged food, and continuous material flows, such as plastic granulate, can be inspected. MESUTRONIC delivers its systems to 50 countries worldwide and has its own service staff and spare parts service. The systems are produced exclusively at the company’s headquarters in Kirchberg im Wald, Bavaria. A separate sales and service subsidiary is operated in France. MESUTRONIC generated annual sales of over EUR 24 million in 2018 and employs some 200 people at locations in Germany and France. INDUS acquired 89.9% of the shares as part of a first step. The remaining shares will remain with the existing shareholders initially, although call/put options have been agreed.

4

INDUS In t er im Rep or t — H1 2019

SALE OF A MINORITY INTEREST

CONSTRUCTION/INFRASTRUC TURE

INDUS Holding AG signed a basic agreement regarding the sale of a minority interest held by an INDUS Group company to the majority shareholder on July 23, 2019. The basic agreement is still subject to the final form of the purchase agreement, the approval of the buyer’s Group Management Board and the consent of the anti-trust authorities. The transaction in the Automotive Technology segment is to be executed in the course of the third quarter of 2019. In the IFRS consolidated financial statements of INDUS Holding AG for the 2019 financial year, this transaction will result in other operating income of around EUR 16.5 million, which will lead to a corresponding contribution to EBIT in the Automotive Technology segment. The transaction will provide the INDUS Group with cash in the amount of EUR 27.5 million.

SEGMENT EARNINGS DRIVEN BY AIR-CONDITIONING DEVICES

SEGMENT ­R EPORTING INDUS Holding AG divides its investment portfolio into five segments: Construction/Infrastructure, Automotive Technology, Engineering, Medical Engineering/Life Science and Metals Technology. As of June 30, 2019, our investment portfolio encompassed 46 operating units.

Segment sales in the Construction/Infrastructure segment increased once again by EUR 18.9 million (11.0%) as against the same period of the previous year to EUR 190.9 million. Almost all companies in the segment contributed to the substantial growth in sales. Air-conditioning devices accounted for the largest share of growth. Operating income increased disproportionately to sales, namely by 20.9% to EUR 27.8 million (previous year: EUR 23.0 million). At 14.6%, the EBIT margin reached a very encouraging value. It outstripped the solid margin seen in the previous year (13.4%) by 1.2 percentage points. This increase was achieved thanks to a particularly strong second quarter of 2019. The improved segment earnings were due not only to the excellent results achieved with air-conditioning devices (including the acquisition in the previous year), but also to the results achieved by the other portfolio companies. All in all, the development seen in the Construction/Infrastructure segment is slightly ahead of expectations. The shortage of skilled workers remains a restrictive factor on growth. We expect to achieve the target margin of 13–15% for the year as a whole. The investments made in the segment related exclusively to fixed assets. At EUR 8.0 million, they were up on the previous year’s level (EUR 5.9 million). KEY FIGURES FOR CONSTRUCTION/INFRASTRUCTURE 

(in EUR million) DIFFERENCE

H1 2019

H1 2018

ABSOLUTE

IN %

190.9

172.0

18.9

11.0

EBITDA

34.6

27.9

6.7

24.0

Depreciation/ amortization

-6.8

-4.9

-1.9

-38.8

EBIT

27.8

23.0

4.8

20.9

EBIT margin in %

14.6

13.4

1.2 pp



8.0

5.9

2.1

35.6

1,855

1,773

82

4.6

Revenue with external third parties

Investments Employees

5

INTERIM REPORT — I n t e r i m M a n a g e m e n t R­ e p o r t

AUTOMOTIVE TECHNOLOGY

ENGINEERING

SEGMENT REPORTS DROP IN SALES AND EARNINGS

MESUTRONIC STRENGTHENS SEGMENT

Sales in the Automotive Technology segment decreased by EUR 13.1 million, or 6.7%, to EUR 183.4 million. This downward trend is due to weaker call-off figures at series suppliers and to what is now also a slowdown in demand at the other pre- and post-series companies. This reflects the impact of the global drop in sales in the automotive and automotive supply industry, which the sector now expects to come in at around 5% for 2019 as a whole.

Segment sales in Engineering showed an increase of EUR 25.2 million as against the previous year (+13.8%). Growth was driven, in particular, by the segment’s major plant engineering manufacturers. The order books at these portfolio companies are brimming and capacity utilization is assured for a period extending well into the coming years. Demand has since slowed considerably at a number of smaller companies in the segment.

At EUR -5.1 million, operating income (EBIT) was down considerably, namely by EUR 9.4 million, on the previous year’s value. The segment’s EBIT margin came to -2.8%, as against 2.2% in the previous year. This is due, in particular, to the declining sales in the segment referred to above. In addition to series suppliers, other companies in the segment are now also being affected by the difficult market situation and the mounting cost pressure in the automotive sector. Cost-cutting measures implemented in the meantime have also been unable to compensate for this pressure. The two familiar series suppliers undergoing repositioning have also been hit not only by the drop in call-off figures, but also by considerable repositioning expenses.

Operating earnings (EBIT) were up by EUR 0.2 million (0.9%) to EUR 22.8 million. A small number of less profitable large-scale projects meant that the increase in EBIT was disproportionately low in relation to revenue. As a result, the EBIT margin for the first half of 2019 was down on the previous year’s figure at 11.0% (12.4%). Projects that will make more substantial contributions to income again have been secured for the future.

We believe we will probably not be able to achieve the target margin of 3–5% for the year as a whole.

As far as the year as a whole is concerned, we expect we will just achieve the EBIT target range of 12–14%.

At EUR 7.9 million, investments were down by EUR 3.1 million on the same period of the previous year. In the previous year, investments included the acquisition of electronics specialist EE ELECTRONIC EQUIPMENT by the INDUS subsidiary AURORA.

The investments of EUR 3.8 million made during the reporting period relate to fixed assets and are down slightly on the previous year.

KEY FIGURES FOR AUTOMOTIVE TECHNOLOGY 

The portfolio company acquired at the end of May, MESUTRONIC, has been part of the Engineering segment since June 2019. MESUTRONIC ranks among the market leaders in metal and foreign body detection.

KEY FIGURES FOR ENGINEERING 

DIFFERENCE

(in EUR million) DIFFERENCE

H1 2019 Revenue with external third parties

H1 2018

ABSOLUTE

IN %

183.4

196.5

-13.1

-6.7

8.7

15.7

-7.0

-44.6

-13.8

-11.4

-2.4

-21.1

EBIT

-5.1

4.3

-9.4

<-100

EBIT margin in %

-2.8

2.2

-5.0 pp



7.9

11.0

-3.1

-28.2

3,358

3,552

-194

-5.5

EBITDA Depreciation/ amortization

Investments Employees

(in EUR million)

H1 2019

H1 2018

ABSOLUTE

IN %

207.5

182.3

25.2

13.8

EBITDA

31.8

28.5

3.3

11.6

Depreciation/ amortization

-9.0

-5.9

-3.1

-52.5

EBIT

22.8

22.6

0.2

0.9

EBIT margin in %

11.0

12.4

-1.4 pp



3.8

4.4

-0.6

-13.6

2,073

1,981

92

4.6

Revenue with external third parties

Investments Employees

6

INDUS In t er im Rep or t — H1 2019

MEDICAL ENGINEERING/LIFE SCIENCE

METALS TECHNOLOGY

DISPROPORTIONATELY HIGH EARNINGS GROWTH

SALES DOWN SLIGHTLY

The Medical Engineering/Life Science segment reported sales of EUR 81.5 million in the first half of 2019, which corresponds to an increase of EUR 3.8 million (+4.9%). With the exception of the product group non-wovens, all of the segment’s product groups contributed to the growth in sales.

Sales in the Metals Technology segment dropped slightly by -1.2% (EUR -2.7 million) to EUR 213.6 million in the first half of 2019, mainly due to lower sales in the field of carbide tools and mining. This area had, however, achieved an exceptionally high level of sales in the comparison period.

At EUR 9.1 million, operating income (EBIT) was up by 8.3% on the previous year’s level (EUR +0.7 million). Orthotic devices and surgical stockings, as well as rehabilitation technology, contributed to this trend. One encouraging development was the fact that optical lenses and full optical devices increased their contribution to income considerably in a year-on-year comparison. The highly competitive product groups non-wovens and surgical kits were hit by a slight drop in EBIT. The segment’s EBIT margin came to 11.2% (previous year 10.8%), which is within the target range of 11–13% after only six months.

At EUR 16.3 million, operating income (EBIT) was down by EUR 6.2 million on the previous year’s value. This trend was attributable, once again, to the field of carbide tools and mining, in which the drop in sales described above combined with underutilization put pressure on income.

We expect the results achieved in the first half of the year to stabilize, making it possible to achieve the above mentioned EBIT target range for the year as a whole.

The EBIT margin was down on the previous year’s figure (10.4%) to 7.6%. It will be a challenge for the segment to achieve the target margin for the year as a whole of 8–10%. The investment volume in the first half of the year came to EUR 3.9 million, on a par with the previous year (EUR 3.9 million). KEY FIGURES FOR METALS TECHNOLOGY 

(in EUR million) DIFFERENCE

Investments stood at EUR 1.8 million, below the value seen in the previous year (EUR 3.2 million). KEY FIGURES FOR MEDICAL ENGINEERING/LIFE SCIENCE 

H1 2018

ABSOLUTE

IN %

Revenue with external third parties

81.5

77.7

3.8

4.9

EBITDA

13.7

11.9

1.8

15.1

Depreciation/ amortization

-4.6

-3.5

-1.1

-31.4

9.1

8.4

0.7

8.3

11.2

10.8

0.4 pp



1.8

3.2

-1.4

-43.8

1,711

1,662

49

2.9

EBIT EBIT margin in % Investments Employees

H1 2018

ABSOLUTE

IN %

213.6

216.3

-2.7

-1.2

(in EUR million) DIFFERENCE

H1 2019

H1 2019 Revenue with external third parties EBITDA

24.7

29.5

-4.8

-16.3

Depreciation/ amortization

-8.4

-7.0

-1.4

-20.0

EBIT

16.3

22.5

-6.2

-27.6

EBIT margin in %

7.6

10.4

-2.8 pp



Investments

3.9

3.9

0.0

0.0

1,676

1,575

101

6.4

Employees

7

INTERIM REPORT — I n t e r i m M a n a g e m e n t R­ e p o r t

FINANCIAL POSITION CONSOLIDATED STATEMENT OF CASH FLOWS, CONDENSED 

(in EUR million) DIFFERENCE

H1 2019

H1 2018

ABSOLUTE

IN %

24.4

-22.4

46.8

>100

-10.5

-11.1

0.6

5.4

13.9

-33.5

47.4

>100

-20.0

-28.9

8.9

30.8

1.1

0.7

0.4

57.1

Cash flow from investing activities

-18.9

-28.2

9.3

33.0

Dividend payment

-36.7

-36.7

0.0

0.0

Dividends paid to minority shareholders

-0.3

-0.3

0.0

0.0

Cash inflow from raising of loans

94.3

129.0

-34.7

-26.9

Cash outflow from the repayment of loans

-49.5

-47.7

-1.8

-3.8

Cash outflow from the repayment of lease liabilities

-10.2

-0.7

-9.5

<-100

Cash outflow from the repayment of contingent purchase price commitments

-2.4

-15.7

13.3

84.7

Cash flow from financing activities

-4.8

27.9

-32.7

<-100

Net changes in cash and cash equivalents

-9.8

-33.8

24.0

71.0

0.2

0.0

0.2



Cash and cash equivalents at the beginning of the period

109.6

135.9

-26.3

-19.4

Cash and cash equivalents at the end of the period

100.0

102.1

-2.1

-2.1

Operating cash flow Interest Cash flow from operating activities

Cash outflow for investment Cash inflow from the disposal of assets

Changes in cash and cash equivalents caused by currency exchange rates

8

INDUS In t er im Rep or t — H1 2019

STATEMENT OF CASH FLOWS: OPERATING CASH FLOW UP BY EUR 46.8 MILLION YEAR-ON-YEAR Based on earnings after taxes of EUR 37.7 million (previous year: EUR 43.7 million), the operating cash flow in the first half of 2019 was EUR 46.8 million higher than in the same period of the previous year, amounting to EUR 24.4 million. This is due, in particular, to much lower working capital growth as against the same period of the previous year. This development shows that the program launched by the holding company to reduce the level of working capital at the portfolio companies as part of its endeavors to promote operational excellence is starting to pay off. As far as the year as a whole is concerned, we still expect to see a drop in working capital. The changes in lease accounting also contributed EUR 10.2 million to the improvement in the operating cash flow, as lease payments previously included in the operating cash flow have been partly reclassified as cash outflows for the repayment of lease liabilities in the cash flow from financing activities item. All in all, cash flow from operating activities rose by EUR 47.4 million to EUR 13.9 million. The cash flow from investing activities came to EUR -18.9 million, compared with EUR -28.2 million in the previous year. By way of an agreement concluded on May 25, 2019, INDUS Holding AG acquired 89.9% of the shares in MESUTRONIC, which was consolidated for the first time in June 2019. The cash component of the total consideration, however, was not paid until July 2019. Taking into account the purchase price payment made in July 2019, the transaction will result in a total cash outflow of EUR 21.7 million in 2019. In the reporting period, investments in property, plant and equipment and intangible assets came to EUR 25.4 million, down slightly on the level seen in the first half of the previous year (EUR 27.1 million).

Cash inflow from the raising of loans fell by EUR 34.7 million to EUR 94.3 million. Due and in some cases contingent purchase price liabilities of EUR 2.4 million were also repaid in the first half (previous year: EUR 15.7 million). The initial application of IFRS 16 “Leases” and the associated changes in financial statement accounting mean that cash outflow from the repayment of lease liabilities has been shown in the cash flow from financing activities item since the start of this financial year. Cash flow from financing activities fell by EUR 32.7 million in total. As a result, cash and cash equivalents were below the high level of EUR 109.6 million seen at the end of 2018 at EUR 100.0 million, and slightly down against the value seen in the first half-year of the previous year.

9

INTERIM REPORT — I n t e r i m M a n a g e m e n t R­ e p o r t

CONSOLIDATED STATEMENT OF FINANCIAL POSITION, CONDENSED 

(in EUR million) DIFFERENCE

JUNE 30, 2019

DEC. 31, 2018

ABSOLUTE

IN %

Non-current assets

1,048.9

968.5

80.4

8.3

  Fixed assets

1,035.9

955.2

80.7

8.4

13.0

13.3

-0.3

-2.3

Current assets

808.6

751.5

57.1

7.6

 Inventories

423.0

408.7

14.3

3.5

  Receivables and other assets

274.8

233.2

41.6

17.8

  Cash and cash equivalents

100.0

109.6

-9.6

-8.8

10.8

0.0

10.8



1,857.5

1,720.0

137.5

8.0

1,373.0

1,290.0

83.0

6.4

 Equity

707.2

709.8

-2.6

-0.4

 Borrowings

665.8

580.2

85.6

14.8

49.3

45.4

3.9

8.6

   of which payables and deferred taxes

616.5

534.8

81.7

15.3

Current liabilities

484.5

430.0

54.5

12.7

  of which provisions

84.9

73.6

11.3

15.4

  of which liabilities

399.6

356.4

43.2

12.1

1,857.5

1,720.0

137.5

8.0

ASSETS

  Receivables and other assets

  Non-current assets held for sale Total assets

EQUITY AND LIABILITIES Equity and non-current liabilities

  of which provisions

Total assets

10

INDUS In t er im Rep or t — H1 2019

STATEMENT OF FINANCIAL POSITION: ­ INCREASE IN TOTAL ASSETS DUE TO ADDITION OF ­M ESUTRONIC AND INITIAL APPLICATION OF IFRS 16 “LEASES” At EUR 1,857.5 million, the INDUS Group’s consolidated total assets were 8.0% higher than they were as of December 31, 2018. The increase in total assets is due, in particular, to the mandatory application of IFRS 16 “Leases” since January 1, 2019, and to the initial consolidation of the newly acquired company MESUTRONIC. As of June 30, 2019, right-of-use assets from leasing in the amount of EUR 86.6 million were reported. Working capital also increased slightly, mainly due to an increase in receivables (EUR +36.8 million). The

total amount of working capital as of June 30, 2019, came to EUR 532.8 million, which was 12.9% more than as of the end of 2018 (EUR 472.1 million). This increase in working capital is a planned seasonal factor and is down considerably on the figure of EUR 87.3 million seen in the same period of the previous year, coming to EUR 60.7 million in the first half of 2019. The equity ratio as of June 30, 2019, amounted to 38.1%, 3.2 percentage points below the equity ratio as of December 31, 2018 (41.3%). The initial recognition of lease liabilities is responsible for the drop in the ratio compared with the level seen at the end of 2018. Another factor is the dividend payment made in the first half of the year.

WORKING CAPITAL

(in EUR million) DIFFERENCE

JUNE 30, 2019

DEC. 31, 2018

ABSOLUTE

IN %

Inventories

423.0

408.7

14.3

3.5

Trade receivables

239.3

202.5

36.8

18.2

Trade payables

-72.7

-65.7

-7.0

-10.7

Advance payments received

-27.9

-37.3

9.4

25.2

Contract liabilities

-28.9

-36.1

7.2

19.9

Working capital

532.8

472.1

60.7

12.9

Net financial liabilities came to EUR 612.9 million as of June 30, 2019, up by EUR 130.1 million on December 31, 2018. The increase is due to higher financial liabilities (EUR +120.5

million). The main reason for the increase in financial liabilities is the first-time application of IFRS 16 “Leases” and the associated recognition of lease liabilities.

NET FINANCIAL LIABILITIES

(in EUR million) DIFFERENCE

JUNE 30, 2019

DEC. 31, 2018

ABSOLUTE

IN %

Non-current financial liabilities

543.7

465.9

77.8

16.7

Current financial liabilities

169.2

126.5

42.7

33.8

Cash and cash equivalents

-100.0

-109.6

9.6

8.8

612.9

482.8

130.1

26.9

Net financial liabilities

11

INTERIM REPORT — I n t e r i m M a n a g e m e n t R­ e p o r t

OPPORTUNITIES AND RISKS For the Opportunities and Risk Report of INDUS Holding AG, please consult the 2018 Annual Report. The company operates an efficient risk management system for early detection, comprehensive analysis, and the systematic h ­ andling of risks. The particulars of the risk management system and the significance of individual risks are explained in the Annual Report. Therein is stated that the company does not view itself exposed to any risks that might jeopardize its continued existence as a going concern.

OUTLOOK The INDUS portfolio companies are currently faced with a difficult economic environment. The manifold political risks, such as the trade conflict between the United States and China, the simmering conflict in the Middle East, the unrest caused by Brexit and the lack of unity among the EU states are putting significant pressure on the economic climate. The market recovery that participants were hoping to see a few months ago failed to materialize. This is compounded by the difficult situation in the automotive industry: the automotive crisis is now affecting more companies than just series suppliers. Portfolio companies pre- and post-series in the INDUS Automotive Technology segment are now also feeling the impact of the savings drive among OEMs. Vehicle manufacturers were unable to live up to the forecasts they released in the first quarter, with unit sales sliding further by as much as 7%. This had a direct impact on the supply sector. In spite of this environment, the INDUS Group was able to increase its sales slightly in the first six months of 2019. Growth was driven by three out of the five segments. The negative developments in the automotive industry left a clear mark on the INDUS Automotive Technology segment, putting considerable pressure on the Group’s result for the first half of the year. Looking ahead to the second half of the year, we still do not expect to see any recovery on the automotive market, meaning that no significant improvement in operating income in the Automotive Technology segment is on the cards. The

developments seen in the first six months will continue in the second half of the year. In addition, our repositioning projects are giving rise to further costs, putting additional pressure on margins. The fact that the repositioning projects are going to plan is encouraging. The sale of a minority interest in the Automotive Technology segment, which was announced back in July, will generate income of around EUR 16.5 million in the second half of the year, compensating for the drop in operating income in this segment. This minority interest was acquired for a limited period of time from the outset and we have been able to sell it based on attractive conditions. The Construction/Infrastructure segment is on track to achieve record results. It has shown very positive development throughout the last few years and is likely to continue to generate excellent margins. The Engineering segment is also on track in general. The segment’s order situation is good, although demand is starting to slow at some portfolio companies. Developments in the Medical Engineering/Life Science segment are also pointing in the right direction. A slight increase in sales translated into a much more marked improvement in the EBIT margin. The Metals Technology segment recently reported a slight dip in sales and a disproportionately pronounced drop in income. Segment earnings reflect the reluctance to invest. In order to boost the Group’s earnings base, the INDUS companies are continuing to work on improving their cost structures and on forging ahead with the initiatives to achieve operational excellence. At the same time, they are working at full tilt on future and innovation projects. INDUS is still planning to achieve sales of between EUR 1.72 billion and EUR 1.77 billion in 2019 as a whole. In the Automotive Technology segment, we expect to see slightly positive income thanks to the contribution to income made from the sale of the minority interest. The Metals Technology segment will be unable to match the high contribution to income that it made in the previous year. As a result, the other three segments will not manage to compensate for the effects in the Automotive Technology and Metals Technology segments in full. This has prompted us to make a slight downward correction to the income range for 2019 as a whole that we published in our previous forecast. We now expect our operating income (EBIT) for the year as a whole to fall in a range from EUR 152 million to EUR 158 million.

12

INDUS In t er im Rep or t — H1 2019

CONDENSED CONSOLIDATED INTERIM ­F INANCIAL STATEMENTS CONSOLIDATED STATEMENT OF INCOME FOR THE FIRST HALF OF 2019 in EUR ’000

NOTES

H1 2019

H1 2018

Q2 2019

Q2 2018

876,525

844,733

438,878

436,568

Other operating income

5,407

5,479

2,560

2,809

Own work capitalized

2,817

2,110

-3,617

983

Changes in inventories

-593

29,673

-7,006

10,671

REVENUE

Cost of materials

[5]

-406,276

-407,196

-190,093

-209,248

Personnel expenses

[6]

-263,122

-252,277

-133,336

-127,872

-43,056

-33,219

-21,688

-16,786

-105,238

-113,184

-52,793

-56,443

66,464

76,119

32,905

40,682

108

38

94

22

Interest expense

-7,635

-6,166

-3,919

-2,983

NET INTEREST

-7,527

-6,128

-3,825

-2,961

354

-62

147

16

-1,233

-2,906

-1,284

-962

-8,406

-9,096

-4,962

-3,907

58,058

67,023

27,943

36,775

-20,333

-23,303

-10,077

-13,005

37,725

43,720

17,866

23,770

450

579

370

485

37,275

43,141

17,496

23,285

1.52

1.76

0.72

0.95

Depreciation/amortization Other operating expenses

[7]

OPERATING INCOME (EBIT)

Interest income

Income from shares accounted for using the equity method Other financial income FINANCIAL INCOME

[8]

EARNINGS BEFORE TAXES (EBT)

Taxes

[9]

EARNINGS AFTER TAXES   of which attributable to non-controlling shareholders   of which attributable to INDUS shareholders

Earnings per share (basic and diluted) in EUR

[10]

13

INTERIM REPORT — C o n d e n s e d C o n s o l i d a t e d I n t e r i m ­F i n a n c i a l S t a t e m e n t s

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME FOR THE FIRST HALF OF 2019 in EUR ’000

H1 2019

H1 2018

Q2 2019

Q2 2018

EARNINGS AFTER TAXES

37,725

43,720

17,866

23,770

Actuarial gains/losses

-3,466

1,164

-1,426

178

1,209

-284

370

-37

-2,257

880

-1,056

141

352

22

-1,369

212

-1,812

-256

-465

-846

287

72

74

206

Items to be reclassified to profit or loss

-1,173

-162

-1,760

-428

OTHER COMPREHENSIVE INCOME

-3,430

718

-2,816

-287

TOTAL COMPREHENSIVE INCOME

34,295

44,438

15,050

23,483

450

579

370

485

34,235

43,859

14,680

22,998

Deferred taxes Items not to be reclassified to profit or loss

Currency conversion adjustment Change in the market values of hedging instruments (cash flow hedge) Deferred taxes

  of which attributable to non-controlling shareholders   of which attributable to INDUS shareholders

Income and expenses recognized directly in equity under other comprehensive income include actuarial gains from pensions and similar obligations amounting to EUR -3,466 thousand (previous year: EUR 1,164 thousand). These are mainly due to a 0.6 percentage point reduction in the interest rate for pension obligations.

Income from currency conversion is derived primarily from the converted financial statements of con-solidated international subsidiaries. The change in the market value of derivative financial instruments was the result of interest rate swaps transacted by the holding company to hedge against interest rate movements.

14

INDUS In t er im Rep or t — H1 2019

CONSOLIDATED STATEMENT OF FINANCIAL POSITION AS OF JUNE 30, 2019 in EUR ’000

NOTES

JUNE 30, 2019

DEC. 31, 2019

430,275

418,590

ASSETS Goodwill Right-of-use assets from leasing/rent

86,641

0

Other intangible assets

96,990

90,830

405,856

418,227

2,898

2,953

Financial investments

6,586

13,684

Shares accounted for using the equity method

6,680

10,970

Other non-current assets

3,201

3,126

Deferred taxes

9,778

10,127

1,048,905

968,507

Property, plant and equipment Investment property

Non-current assets

Inventories

[11]

423,016

408,693

Receivables

[12]

239,270

202,523

Other current assets

19,225

22,993

Current income taxes

16,257

7,655

100,004

109,647

10,804

0

Cash and cash equivalents Non-current assets held for sale

[13]

Current assets TOTAL ASSETS

808,576

751,511

1,857,481

1,720,018

EQUITY AND LIABILITIES Subscribed capital

63,571

63,571

Capital reserves

239,833

239,833

Other reserves

400,889

403,719

Equity held by INDUS shareholders

704,293

707,123

2,857

2,702

707,150

709,825

47,693

43,702

1,670

1,688

Non-controlling interests in the equity Equity

Pension provisions Other non-current provisions Non-current financial liabilities

[14]

543,680

465,886

Other non-current liabilities

[15]

28,781

27,731

Deferred taxes

43,965

41,172

Non-current liabilities

665,789

580,179

Other current provisions

84,939

73,576

169,201

126,520

72,709

65,659

148,195

150,825

9,498

13,434

Current financial liabilities

[14]

Trade payables Other current liabilities Current income taxes Current liabilities TOTAL ASSETS

[15]

484,542

430,014

1,857,481

1,720,018

15

INTERIM REPORT — C o n d e n s e d C o n s o l i d a t e d I n t e r i m ­F i n a n c i a l S t a t e m e n t s

CONSOLIDATED STATEMENT OF CHANGES IN EQUIT Y FROM JANUARY 1, 2019, TO JUNE 30, 2019 in EUR ’000

AS OF DEC. 31, 2017

SUBSCRIBED CAPITAL

CAPITAL RESERVE

RETAINED EARNINGS

OTHER RESERVES

EQUIT Y HELD BY INDUS SHAREHOLDERS

INTERESTS AT TRIBUTABLE TO NON-­ CONTROLLING SHAREHOLDERS

63,571

239,833

390,890

-23,381

670,913

2,900

673,813

43,141

579

43,720

Earnings after taxes

43,141

Other comprehensive income Total comprehensive income

43,141

Dividend payment

GROUP EQUIT Y

718

718

718

43,859

579

44,438

-36,675

-304

-36,979

-36,675

718

AS OF JUNE 30, 2018

63,571

239,833

397,356

-22,663

678,097

3,175

681,272

AS OF DEC. 31, 2018

63,571

239,833

424,785

-21,066

707,123

2,702

709,825

37,275

450

37,725

Earnings after taxes

37,275

Other comprehensive income Total comprehensive income

37,275

Dividend payment

AS OF JUNE 30, 2019

-3,430

-3,430

-3,430

33,845

450

34,295

-36,675

-295

-36,970

704,293

2,857

707,150

-36,675

63,571

239,833

425,385

Shares held by non-controlling shareholders mainly consist of minority interests in WEIGAND Bau GmbH and subsidiaries of the ROLKO Group. Where economic ownership of minority interests in limited partnerships and corporations

-24,496

-3,430

had, at the time of purchase, already been transferred under reciprocal option agreements, those interests are shown under “other liabilities”.

16

INDUS In t er im Rep or t — H1 2019

CONSOLIDATED STATEMENT OF CASH FLOWS FOR THE FIRST HALF OF 2019

in EUR ’000

H1 2019

H1 2018

Earnings after taxes

37,725

43,720

Depreciation/appreciation of non-current assets

43,056

33,219

Taxes

20,333

23,303

8,406

9,096

Other non-cash transactions

-1,736

649

Changes in provisions

13,859

8,668

Increase (-)/decrease (+) in inventories, receivables and other assets

-38,606

-101,540

Increase (+)/decrease (-) in trade payables and other equity and liabilities

-26,590

-14,459

Income taxes received/paid

-32,005

-25,076

Operating cash flow

24,442

-22,420

Interest paid

-10,635

-11,148

108

38

13,915

-33,530

-25,404

-27,123

-161

-203

  shares in fully consolidated companies

5,510

-1,626

Cash inflow from the disposal of other assets

1,100

728

Cash flow from investing activities

-18,955

-28,224

Dividend payment

-36,675

-36,675

-2,431

-15,693

-294

-304

Financial income

Interest received Cash flow from operating activities

Cash outflow from investments in   property, plant and equipment and intangible assets   financial investments

Cash outflow from the repayment of contingent purchase price commitments Dividends paid to minority shareholders Cash inflow from raising of loans

94,281

128,974

Cash outflow from the repayment of loans

-49,428

-47,714

Cash outflow from the repayment of lease liabilities

-10,225

-649

Cash flow from financing activities

-4,772

27,939

Net changes in cash and cash equivalents

-9,812

-33,815

169

19

Cash and cash equivalents at the beginning of the period

109,647

135,881

Cash and cash equivalents at the end of the period

100,004

102,085

Changes in cash and cash equivalents caused by currency exchange rates

17

INTERIM REPORT — C o n d e n s e d C o n s o l i d a t e d I n t e r i m ­F i n a n c i a l S t a t e m e n t s

NOTES BASIC PRINCIPLES OF THE CONSOLIDATED FINANCIAL STATEMENTS [1] GENERAL INFORMATION INDUS Holding AG, with registered office in Bergisch Gladbach, Germany, has prepared its condensed consolidated interim financial statements for the period from January 1, 2019, to June 30, 2019, in accordance with the International Financial Reporting Standards (IFRS), and their interpretation by the International Financial Reporting Standards Interpretations Committee (IFRS IC) as applicable in the European Union (EU). The consolidated financial statements are prepared in euros (EUR). Unless otherwise indicated, all amounts are stated in thousands of euros (EUR ’000). These interim financial statements have been prepared in accordance with IAS 34 in condensed form. The interim report has been neither audited nor subjected to perusal or review by an auditor. New obligatory standards are reported on separately in the section “Changes in Accounting Standards”. Otherwise, the same accounting methods have been applied as in the consolidated financial statements for the 2018 financial year, where they are described in detail. Since these interim financial statements do not provide the full scope of information found in the annual financial statements, these financial statements should be considered within the context of the last annual financial statements. In the Board of Management’s view, this quarterly report includes all usual current adjustments necessary for the proper presentation of the Group’s financial position and financial performance. The results achieved in the first half of 2019 do not necessarily predict future business performance.

Preparation of consolidated financial statements is influenced by accounting and valuation principles and requires assumptions and estimates that have an impact on the recognized value of assets, liabilities, and contingent liabilities and on income and expenses. When estimates are made regarding the future, actual values may differ from the estimates. If the original basis for the estimates changes, the statement of the items in question is adjusted through profit and loss. [2] CHANGES IN ACCOUNTING STANDARDS All obligatory accounting standards in effect as of the 2019 financial year have been implemented in the interim financial statements at hand. IFRS 16 “Leases” is applicable from January 1, 2019. The new standard for lease accounting supersedes IAS 17. In accordance with IFRS 16, all lease arrangements are included in the statement of financial position. The classification of leases as finance leases or operating leases will no longer apply to lessees. A right to the use of an asset is recorded on the asset side, a financial liability on the liability side. The modified retrospective method will be applied for adjustments at INDUS. The new standard has a material effect on the financial position and financial performance of INDUS. Total assets will rise in line with intangible assets and financial liabilities. The leasing expenses formerly reported in other operating expenses will be reported under depreciation/amortization or interest expense. As of January 1, 2019, right-of-use assets and financial liabilities of EUR 81.2 million from operating leases were recognized for the first time. In addition, the previous finance lease assets have been reclassified, at their residual carrying amounts as of December 31, 2018, within the balance sheet item “rightof-use assets from leasing/rent” (formerly reported as tangible fixed assets). Operating income (EBIT) from January 1 to June 30, 2019, was relieved by EUR 1.2 million due to the application of the new leasing regulations. In the statement of cash flows, cash flow from financing activities was reduced by EUR 10.2 million, while cash flow from operat-

18

INDUS In t er im Rep or t — H1 2019

ing activities was increased by EUR 10.2 million. Application facilitation for IFRS 16 has been used. There are no other new standards or interpretations that affect the presentation of the financial position and financial performance of INDUS Holding AG in the consolidated financial statements. [3] CHANGE IN THE STRUCTURE OF THE STATEMENT OF INCOME With effect from this financial year, the previous item “financial income” has been renamed “other financial income” and is now reported under operating income (EBIT). Similarly, the “income from shares accounted for using the equity method” are also shown under operating income. Together with net interest, the three items make up the “financial income”. As a result of the change in presentation, the effect on income resulting from the subsequent valuation of purchase price commitments and from fair value changes in swaps is no longer shown under “interest expense”, but rather under the item “other financial income”. The change in presentation was made to reflect standard IFRS accounting practice. The figures for the previous year have been adjusted accordingly. The change in presentation results in operating income (EBIT) that is EUR 71 thousand lower for the H1 2018 period. There were also minor adjustments to segment reporting.

[4] BUSINESS COMBINATIONS ME SU T RONIC By way of an agreement concluded on May 25, 2019, INDUS Holding AG acquired 89.9% of the shares in MESUTRONIC Gerätebau GmbH, Kirchberg. MESUTRONIC operates in the measuring technology and control engineering sector, an industry of the future, and is one of the technology l­ eaders in metal and foreign body detection in production processes. MESUTRONIC will be assigned to the Engineering segment. The fair value of the total consideration amounted to EUR 31,523 thousand on the acquisition date. This comprises a cash component and a contingent purchase price payment of EUR 4,043 thousand, which was measured at fair value, and call/put options relating to the minority interests, as well as profit-sharing rights for the remaining minority shareholders. The cash component was paid in July 2019. The amount of the contingent purchase price liability resulting from the call/put options for the minority interests is calculated based on EBIT multiples and a forecast regarding future EBIT. Goodwill of EUR 11,568 thousand, determined in the course of the purchase price allocation, is not tax-deductible. The goodwill represents inseparable values such as the know-how of the workforce, positive earnings expectations for the future, and synergies resulting from development, production, sales and marketing.

19

INTERIM REPORT — C o n d e n s e d C o n s o l i d a t e d I n t e r i m ­F i n a n c i a l S t a t e m e n t s

In the purchase price allocation, the acquired assets and liabilities have been calculated as follows:

NOTES TO THE CONSOLIDATED STATEMENT OF INCOME

NEW ACQUISITION: MESUTRONIC

[5] COST OF MATERIALS

(in EUR ’000)

CARRYING AMOUNT AT TIME OF ACQUISITION

Goodwill

ADDITION TO ASSETS ADDED CONSOLI­ DUE TO DATED INITIAL STATEMENT OF CONSOLI­ FINANCIAL DATION POSITION

0

11,568

11,568

36

9,621

9,657

5,800

0

5,800

2

0

2

Inventories

3,473

341

3,814

Receivables

3,648

0

3,648

959

0

959

5,510

0

5,510

19,428

21,530

40,958

Other intangible assets Property, plant and equipment Financial investments

Other assets* Cash and cash equivalents Total assets

in EUR ’000

H1 2019

H1 2018

Raw materials, consumables and supplies, and purchased merchandise

-347,657

-344,580

-58,619

-62,616

-406,276

-407,196

in EUR ’000

H1 2019

H1 2018

Wages and salaries

-222,292

-213,961

-38,474

-36,050

-2,356

-2,266

-263,122

-252,277

H1 2019

H1 2018

Selling expenses

-43,496

-43,748

Operating expenses

-33,562

-40,638

Administrative expenses

-25,527

-24,897

-2,653

-3,901

-105,238

-113,184

Purchased services

Total

[6] PERSONNEL EXPENSES

Other provisions

1,477

0

1,477

Social security

Financial liabilities

3,106

0

3,106

Pensions

349

0

349

Other equity and liabilities**

1,554

2,949

4,503

Total liabilities

6,486

2,949

9,435

Trade payables

*  O ther assets: Other non-current assets, Other current assets, Deferred taxes, Current income taxes. ** O ther equity and liabilities: Other non-current liabilities, Other current liabilities, Deferred taxes, Current income taxes.

Total

[7] OTHER OPERATING EXPENSES

in EUR ’000

MESUTRONIC was consolidated for the first time in June 2019. MESUTRONIC contributed sales amounting to EUR 1,852 thousand to the INDUS result for the period from January 1, 2019, to June 30, 2019, and operating income (EBIT) of EUR -151 thousand. If MESUTRONIC had been consolidated as of January 1, 2019, revenue would have amounted to EUR 11,194 thousand and EBIT to EUR -58 thousand. Expenses affecting net income from the initial consolidation of MESUTRONIC reduced operating income by EUR 493 thousand. The incidental acquisition costs were recorded in the statement of income.

Other expenses

Total

20

INDUS In t er im Rep or t — H1 2019

NOTES TO THE CONSOLIDATED STATEMENT OF FINANCIAL POSITION

[8] FINANCIAL INCOME in EUR ’000

H1 2019

H1 2018

[11] INVENTORIES Interest and similar income

108

38

Interest and similar expenses

-7,635

-6,166

Net interest

-7,527

-6,128

Income from shares accounted for using the equity method

Market value of interest rate swaps

354

-62

2

7

-1,282

-3,046

47

133

Other financial income

-1,233

-2,906

Total

-8,406

-9,096

Minority interests Income from financial investments

in EUR ’000

JUNE 30, 2019

DEC. 31, 2019

Raw materials, consumables and supplies

150,270

149,227

Unfinished goods

117,238

113,263

Finished goods and goods for resale

125,047

127,785

30,461

18,418

423,016

408,693

JUNE 30, 2019

DEC. 31, 2019

Receivables from customers

217,272

189,909

Receivables from construction contracts

19,593

9,956

Receivables from associated companies

2,405

2,658

239,270

202,523

Advance payments

Total

[12] RECEIVABLES in EUR ’000

The item “minority interests” includes the effect on income from the subsequent valuation of the contingent purchase price liabilities (call/put options) of EUR 427 thousand (previous year: EUR -482 thousand) and earnings after taxes that external entities are entitled to from shares in limited partnerships and stock corporations with call/put options. The corresponding amounts are reported under “other financial income” for the first time.

Total

[9] TAXES [13] NON-CURRENT ASSETS HELD FOR SALE The income tax expense in the interim financial statements is calculated based on the assumptions currently used for tax planning purposes. [10] EARNINGS PER SHARE

in EUR ’000

H1 2019

H1 2018

Income attributable to INDUS shareholders

37,275

43,141

Weighted average shares outstanding (in thousands)

24,451

24,451

1.52

1.76

Earnings per share (in EUR)

The held-for-sale non-current assets relate to the planned sale of a minority interest to the majority shareholder. INDUS concluded the basic agreement on the sale to the majority shareholder on July 23, 2019. The basic agreement is still subject to the final form of the purchase agreement, the approval of the buyer’s Group Management Board and the consent of the anti-trust authorities. The transaction in the Automotive Technology segment is to be executed in the course of the third quarter of 2019.

21

INTERIM REPORT — C o n d e n s e d C o n s o l i d a t e d I n t e r i m ­F i n a n c i a l S t a t e m e n t s

[14] FINANCIAL LIABILITIES As a result of the mandatory application of IFRS 16 “Leases” from January 1, 2019, financial liabilities include approximately an additional EUR 72.2 million in lease liabilities as of June 30, 2019. in EUR ’000

Liabilities to banks

JUNE 30, 2019

CURRENT NON-CURRENT

DEC. 31, 2018

CURRENT NON-CURRENT

416,305

107,877

308,428

358,829

79,223

279,606

Liabilities from leasing

77,476

18,242

59,234

5,323

4,215

1,108

Promissory note loans

219,100

43,082

176,018

228,254

43,082

185,172

Total

712,881

169,201

543,680

592,406

126,520

465,886

[15] LIABILITIES The EUR 41,726 thousand in other liabilities (Dec. 31, 2018: EUR 41,789 thousand) includes contingent purchase price liabilities carried at fair value insofar as minority shareholders are able to tender their shares to INDUS by terminating the Articles of Incorporation or on the basis of option agreements.

22

INDUS In t er im Rep or t — H1 2019

OTHER DISCLOSURES [16] SEGMENT REPORTING SEGMENT INF ORM AT ION BY OPER AT ION F OR T HE FIR S T H A LF OF 2019 SEGMENT REPORT IN ACCORDANCE WITH IFRS 8 

(in EUR ’000)

CONSTRUCTION/ INFRA­ STRUCTURE

METALS TECHNOLOGY

TOTAL SEGMENTS

RECON­ CILIATION

CONSOLI­ DATED FINANCIAL STATEMENTS

AUTOMOTIVE TECHNOLOGY

190,916

183,424

207,493

81,537

213,569

876,939

-414

876,525

17,015

40,988

35,027

9,366

34,305

136,701

-136,701

0

207,931

224,412

242,520

90,903

247,874

1,013,640

-137,115

876,525

27,845

-5,075

22,805

9,122

16,332

71,029

-4,565

66,464

181

-18

191

0

0

354

0

354

Depreciation/amortization

-6,781

-13,798

-9,032

-4,575

-8,436

-42,622

-434

-43,056

Segment EBITDA

34,626

8,723

31,837

13,697

24,768

113,651

-4,131

109,520

8,000

7,872

-1,687

1,817

3,921

19,923

132

20,055

0

0

-5,510

0

0

-5,510

0

-5,510

MEDICAL ENGINEERING/ ENGINEERING LIFE SCIENCE

H1 2019 Revenue with external third parties Revenue with Group companies Revenue

Segment earnings (EBIT) Income from measurement according to the equity method

Investments  of which company acquisitions

23

INTERIM REPORT — C o n d e n s e d C o n s o l i d a t e d I n t e r i m ­F i n a n c i a l S t a t e m e n t s

SEGMENT REPORT IN ACCORDANCE WITH IFRS 8 

(in EUR ’000)

CONSTRUCTION/ INFRA­ STRUCTURE

AUTOMOTIVE TECHNOLOGY

172,004

196,502

182,320

15,918

38,992

187,922

METALS TECHNOLOGY

TOTAL SEGMENTS

RECON­ CILIATION

CONSOLI­ DATED FINANCIAL STATEMENTS

77,723

216,341

844,890

-157

844,733

29,479

9,141

27,316

120,846

-120,846

0

235,494

211,799

86,864

243,657

965,736

-121,003

844,733

22,988

4,284

22,509

8,382

22,524

80,687

-4,568

76,119

-18

-167

123

0

0

-62

0

-62

Depreciation/amortization

-4,909

-11,431

-5,930

-3,516

-7,031

-32,817

-402

-33,219

Segment EBITDA

27,897

15,715

28,439

11,898

29,555

113,504

-4,166

109,338

5,926

11,026

4,393

3,193

3,931

28,469

483

28,952

0

1,626

0

0

0

1,626

0

1,626

MEDICAL ENGINEERING/ ENGINEERING LIFE SCIENCE

H1 2018 Revenue with external third parties Revenue with Group companies Revenue

Segment earnings (EBIT) Income from measurement according to the equity method

Investments  of which company acquisitions

24

INDUS In t er im Rep or t — H1 2019

SEGMENT REPORT IN ACCORDANCE WITH IFRS 8 

(in EUR ’000)

CONSTRUCTION/ INFRA­ STRUCTURE

METALS TECHNOLOGY

TOTAL SEGMENTS

RECON­ CILIATION

CONSOLI­ DATED FINANCIAL STATEMENTS

AUTOMOTIVE TECHNOLOGY

104,357

90,638

98,190

40,614

105,308

439,107

-229

438,878

8,904

20,084

18,137

5,028

14,250

66,404

-66,404

0

113,261

110,722

116,327

45,642

119,558

505,511

-66,633

438,878

17,863

-5,266

9,965

5,278

7,689

35,529

-2,624

32,905

64

-37

120

0

0

147

207

354

Depreciation/amortization

-3,414

-6,888

-4,621

-2,302

-4,241

-21,466

-222

-21,688

Segment EBITDA

21,277

1,622

14,586

7,580

11,930

56,995

-2,402

54,593

3,076

5,614

-4,608

993

-3,934

1,141

33

1,174

0

0

-5,510

0

0

-5,510

0

-5,510

MEDICAL ENGINEERING/ ENGINEERING LIFE SCIENCE

Q2 2019 Revenue with external third parties Revenue with Group companies Revenue

Segment earnings (EBIT) Income from measurement according to the equity method

Investments  of which company acquisitions

25

INTERIM REPORT — C o n d e n s e d C o n s o l i d a t e d I n t e r i m ­F i n a n c i a l S t a t e m e n t s

SEGMENT REPORT IN ACCORDANCE WITH IFRS 8 

(in EUR ’000)

CONSTRUCTION/ INFRA­ STRUCTURE

AUTOMOTIVE TECHNOLOGY

95,126

98,389

93,491

8,783

20,375

103,909

METALS TECHNOLOGY

TOTAL SEGMENTS

RECON­ CILIATION

CONSOLI­ DATED FINANCIAL STATEMENTS

38,764

110,639

436,409

159

436,568

14,166

4,995

14,037

62,356

-62,356

0

118,764

107,657

43,759

124,676

498,765

-62,197

436,568

15,203

1,903

10,017

4,629

11,163

42,915

-2,223

40,692

-18

-178

88

0

0

-108

124

16

Depreciation/amortization

-2,626

-5,722

-2,908

-1,767

-3,559

-16,582

-204

-16,786

Segment EBITDA

17,829

7,625

12,925

6,396

14,722

59,497

-2,019

57,478

2,635

4,055

2,149

2,271

2,688

13,798

1,066

14,864

0

0

0

0

0

0

0

0

MEDICAL ENGINEERING/ ENGINEERING LIFE SCIENCE

Q2 2018 Revenue with external third parties Revenue with Group companies Revenue

Segment earnings (EBIT) Income from measurement according to the equity method

Investments  of which company acquisitions

The table below reconciles the total operating results of segment reporting with the earnings before taxes in the consolidated statement of income: RECONCILIATION 

(in EUR ’000) H1 2019

H1 2018

Q2 2019

Q2 2018

Segment earnings (EBIT)

71,029

80,758

35,529

42,986

Areas not allocated incl. holding company

-4,601

-4,568

-2,677

-2,237

36

0

53

14

Financial income

-8,406

-9,167

-4,962

-3,988

Earnings before taxes

58,058

67,023

27,943

36,775

Consolidations

The classification of segments corresponds without change to the current state of internal reporting. The segment information relates to continued operations. The companies are assigned to the segments based on their selling markets if the large majority of their range is sold in a particular market environment (Automotive Technology, Medical Engineer-

ing/Life Science). Otherwise they are classified by common features in their production structure (Construction/Infrastructure, Engineering, Metals Technology). The reconciliations contain the figures of the holding company, non-operating units not allocated to any segment, and

26

INDUS In t er im Rep or t — H1 2019

consolidations. See the explanation provided in the management report regarding the products and services that generate segment sales. The key control variable for the segments is operating income (EBIT) as defined in the consolidated financial statements. The information pertaining to the segments has been ascertained in compliance with the reporting and valuation methods that were applied in the preparation of the consolidated financial statements. Transfer prices between segments are based on arm’s-length prices to the extent that they can be established in a reliable manner and are otherwise determined on the basis of the cost-plus pricing method.

SEGMENT INFORMATION BY REGION The breakdown of sales by region relates to our selling markets. Owing to the diversity of our foreign activities, a further breakdown by country would not be meaningful since no country other than Germany accounts for 10% of Group sales. Non-current assets, less deferred taxes and financial instruments, are based on the registered offices of the companies concerned. Further differentiation would not be useful since the majority of companies are based in Germany. Owing to INDUS’s diversification policy, there were no individual product or service groups and no individual customers that accounted for more than 10% of sales.

GROUP

GERMANY

EU

THIRD ­C OUNTRIES

H1 2019

876,525

452,744

188,538

235,243

Q2 2019

438,878

221,136

97,794

119,948

1,029,339

873,699

54,730

100,910

H1 2018

844,733

430,919

188,789

225,025

Q2 2018

436,568

220,647

99,812

116,109

941,570

801,157

51,185

89,228

in EUR ’000

Revenue with external third parties

Non-current assets, less deferred taxes and financial instruments June 30, 2019 Revenue with external third parties

Non-current assets, less deferred taxes and financial instruments Dec. 31, 2018

27

INTERIM REPORT — C o n d e n s e d C o n s o l i d a t e d I n t e r i m ­F i n a n c i a l S t a t e m e n t s

[17] I NFORMATION ON THE SIGNIFICANCE OF FINANCIAL INSTRUMENTS The table below shows the carrying amounts of the financial instruments. The fair value of a financial instrument is the price that would be paid in an orderly transaction between market participants for the sale of an asset or transfer of a liability on the measurement date. FINANCIAL INSTRUMENTS 

(in EUR ’000)

BALANCE SHEET VALUE

IFRS 9 NOT APPLICABLE

IFRS 9 FINANCIAL INSTRUMENTS

OF WHICH MEASURED AT FAIR VALUE

OF WHICH MEASURED AT AMORTIZED COST

6,586

0

6,586

2,476

4,110

Cash and cash equivalents

100,004

0

100,004

0

100,004

Receivables

239,270

19,593

219,677

0

219,677

Other assets

22,426

13,269

9,157

165

8,992

Financial instruments: Assets

368,286

32,862

335,424

2,641

332,783

Financial liabilities

712,881

0

712,881

0

712,881

Trade payables

72,709

0

72,709

0

72,709

Other liabilities

176,976

72,187

104,789

48,601

56,188

Financial instruments: Equity and Liabilities

962,566

72,187

890,379

48,601

841,778

BALANCE SHEET VALUE

IFRS 9 NOT APPLICABLE

IFRS 9 FINANCIAL INSTRUMENTS

OF WHICH MEASURED AT FAIR VALUE

OF WHICH MEASURED AT AMORTIZED COST

13,684

0

13,684

2,612

11,072

Cash and cash equivalents

109,647

0

109,647

0

109,647

Receivables

202,523

9,956

192,567

0

192,567

Other assets

26,119

14,380

11,739

404

11,335

Financial instruments: Assets

351,973

24,336

327,637

3,016

324,621

Financial liabilities

592,406

0

592,406

0

592,406

Trade payables

65,659

0

65,659

0

65,659

Other liabilities

178,556

90,449

88,107

46,854

41,253

Financial instruments: Equity and Liabilities

836,621

90,449

746,172

46,854

699,318

June 30, 2019 Financial investments

Dec. 31, 2018 Financial investments

28

INDUS In t er im Rep or t — H1 2019

Available-for-sale financial instruments are fundamentally long-term financial investments for which no pricing on an active market is available and the fair value of which cannot be reliably determined. These are carried at cost. FINANCIAL INSTRUMENTS BY BUSINESS MODEL PURSUANT TO IFRS 9 

(in EUR ’000)

JUNE 30, 2019

DEC. 31, 2018

Financial assets measured at fair value through profit and loss

165

404

Financial assets measured at cost

332,783

324,621

Financial assets recognized at fair value directly in equity

2,476

2,612

335,424

327,637

Financial liabilities measured at fair value through profit and loss

41,886

41,950

Financial liabilities measured at cost

841,778

699,318

6,715

4,904

890,379

746,172

Financial instruments: Assets

Derivatives with hedging relationship, hedge accounting Financial instruments: Equity and Liabilities

[19] APPROVAL FOR PUBLICATION The Board of Management of INDUS Holding AG approved these IFRS interim financial statements for publication on August 12, 2019. [20] RESPONSIBILITY STATEMENT We hereby certify, to the best of our knowledge, that in accordance with the applicable accounting principles for interim reporting, the consolidated interim financial statements give a true and fair view of the financial position and financial performance of the Group, and the interim Group 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 performance of the Group in the remainder of the financial year. Bergisch Gladbach, August 12, 2019 ­INDUS Holding AG The Board of Management

[18] EVENTS AF TER THE REPORTING DATE Dr. Johannes Schmidt

Dr. Jörn Großmann

Axel Meyer

Rudolf Weichert

A Group company of INDUS Holding AG in the Automotive Technology segment concluded a basic agreement on the sale of its 49% minority interest to the long-standing majority shareholder on July 23, 2019. The basic agreement is still subject to the final form of the purchase agreement, the approval of the buyer’s Group Management Board and the consent of the anti-trust authorities. The transaction is to be executed in the course of the third quarter of 2019. The transaction and the sale of the shares accounted for using the equity method will result in an inflow of liquidity totaling around EUR 27.5 million into the INDUS Group. Operating income (EBIT) in the Automotive Technology segment will amount to around EUR 16.5 million. The contribution to earnings after taxes amounts to around EUR 16.2 million.

CONTACT Mandy Lange Public Relations Phone: +49 (0)2204/40 00-31 Email: [email protected] Julia Pschribülla Investor Relations Phone: +49 (0)2204/40 00-66 Email: [email protected]

­I NDUS HOLDING AG Kölner Straße 32 51429 Bergisch Gladbach P.O. Box 10 03 53 51403 Bergisch Gladbach Phone: +49(0)2204/40 00-0 Fax: +49 (0)2204/40 00-20 Email: [email protected] www.indus.de

FINANCIAL CALENDAR DATE

EVENT

November 14, 2019

Interim report Q3 2019

Please visit www.indus.de/en/investor-relations/financial-calendar for updates on the INDUS financial calender.

IMPRINT RESPONSIBLE MEMBER OF THE BOARD OF MANAGEMENT Dr.-Ing. Johannes Schmidt

DATE OF PUBLISHING August 13, 2019

PUBLISHER ­INDUS Holding AG, Bergisch Gladbach

CONCEPT/DESIGN Berichtsmanufaktur GmbH, Hamburg

PRINT Gutenberg Beuys Feindruckerei GmbH, Langenhagen

This interim report is also available in German. Both the English and the German versions of the interim report can be downloaded at www.indus.de under investor relations, financial reports and presentations. Only the German version of the interim report is legally binding.

DISCL AIMER: This interim report contains forward-­ looking statements based on assump­t ions and estimates made by the Board of Management of INDUS Holding AG. Although the Board of Management is of the opinion that these assumptions and estimates are accurate, they are subject to certain risks and uncertainty. Actual future results may deviate substantially from these assumptions and estimates due to a variety of factors. These factors include changes in the general economic situation, the business, economic and competitive situation, foreign exchange and interest rates, and the legal setting. INDUS Holding AG shall not be held liable for the future development and actual future results being in line with the assumptions and estimates included in this interim report. Assumptions and estimates made in this interim report will not be updated.

W W W.INDUS.DE