Explanatory notes on the consolidated statement of financial position

Assets

(1) Intangible assets

The following tables show the development and breakdown of intangible assets.

kEUR	Concessions, industrial property rights and similar rights and assets, and licenses to such rights and assets	Internally intangible assets	Advances paid	Total
Cost
01/01/2019	41,243	13,288	235	54,765
Changes in scope of consolidation	-7,956	0	0	-7,956
Currency differences	369	0	1	370
Additions	879	1,381	106	2,366
Disposals	-1,742	-2,730	0	-4,472
Reclassifications	320	-159	-161	0
31/12/2019	33,113	11,780	180	45,074
Accumulated amortization
01/01/2019	31,658	8,910	50	40,617
Changes in scope of consolidation	-2,185	0	0	-2,185
Currency differences	120	0	0	120
Additions	2,598	1,518	1	4,117
Disposals	-1,654	-2,730	0	-4,384
Reclassifications	0	0	0	0
31/12/2019	30,537	7,698	51	38,286
Carrying amount
31/12/2019	2,576	4,082	129	6,787

kEUR	Concessions, industrial property rights and similar rights and assets, and licenses to such rights and assets	Internally intangible assets	Advances paid	Gesamt
Cost
01/01/2018	33,271	12,106	1,144	46,521
Changes in scope of consolidation	7,288	285	50	7,623
Currency differences	-102	0	-2	-104
Additions	663	1,495	334	2,493
Disposals	-98	-598	-1,133	-1,829
Reclassifications	220	0	-159	62
31/12/2018	41,243	13,288	235	54,765
Accumulated amortization
01/01/2018	27,457	5,264	133	32,854
Changes in scope of consolidation	-158	186	0	28
Currency differences	11	0	-2	10
Additions	4,536	4,166	0	8,702
Disposals	-98	-388	-82	-569
Reclassifications	49	0	1	50
Adjustment	-139	-318	0	-458
31/12/2018	31,658	8,910	50	40,617
Carrying amount
31/12/2018	9,585	4,378	185	14,148

Intangible assets include licenses, computer software, technologies, development projects, websites, trademarks and customer relationships. The internally generated intangible assets are primarily capitalized development costs of the Group companies.

(2) Right-of-use Assets

Regarding Right-of-use Assets that stem from leases, separate information can be found in the section on the initial application of IFRS 16.

kEUR	Right-of-use Assets
Cost
01/01/2019	0
Changes in scope of consolidation	0
Currency differences	4
Additions	19,315
Disposals	-53
Reclassifications	1,779
31/12/2019	21,046
Accumulated amortization
01/01/2019	0
Changes in scope of consolidation	0
Currency differences	-1
Additions	3,834
Disposals	-20
Reclassifications	0
31/12/2019	3,813
Carrying amount
31/12/2019	17,232

kEUR	Right-of-use Assets
Cost
01/01/2018	0
Changes in scope of consolidation	0
Currency differences	0
Additions	0
Disposals	0
Reclassifications	0
31/12/2018	0
Accumulated amortization
01/01/2018	0
Changes in scope of consolidation	0
Currency differences	0
Additions	0
Disposals	0
Reclassifications	0
Adjustment	0
31/12/2018	0
Carrying amount
31/12/2018	0

(3) Goodwill

The disclosed goodwill figures break down in detail as follows:

kEUR	Goodwill	Total
Cost
01/01/2019	68,838	68,838
Changes in scope of consolidation	-6,039	-6,039
Currency differences	259	259
Additions	0	0
Disposals	0	0
Reclassifications	0	0
31/12/2019	63,058	63,058
Accumulated amortization
01/01/2019	19,424	19,424
Changes in scope of consolidation	-5,512	-5,512
Currency differences	231	231
Additions	2,676	2,676
Disposals	0	0
Reclassifications	0	0
31/12/2019	16,819	16,819
Carrying amount
31/12/2019	46,239	46,239

kEUR	Goodwill	Gesamt
Cost
01/01/2018	63,057	63,057
Changes in scope of consolidation	5,894	5,894
Currency differences	-114	-114
Additions	0	0
Disposals	0	0
Reclassifications	0	0
31/12/2018	68,838	68,838
Accumulated amortization
01/01/2018	9,966	9,966
Changes in scope of consolidation	0	0
Currency differences	53	53
Additions	9,405	9,405
Disposals	0	0
Reclassifications	0	0
31/12/2018	19,424	19,424
Carrying amount
31/12/2018	49,413	49,413

Goodwill fell during the financial year to kEUR 46,239 (previous year: kEUR 49,413). The decline resulted in part from writing down the goodwill of IWM Automation GmbH in the amount of kEUR 2,676 as well as from the transitional consolidation of MAX Automation (Shanghai) Co. Ltd. in the amount of kEUR 506. There is also an increase of kEUR 7 resulting from currency translation in the Environmental Technology subgroup.

in kEUR	31/12/2019	31/12/2018
Goodwill	46,239	49,413
Process Technologies	6,163	6,163
- thereof bdtronic group	6,163	6,163
Evolving Technologies	29,512	29,512
- thereof NSM Magnettechnik	12,124	12,124
- thereof MA micro automation GmbH	11,661	11,661
- thereof iNDAT Robotics GmbH	3,463	3,463
- thereof Mess- und Regeltechnik Jücker GmbH	1,403	1,403
- thereof AIM Micro Systems GmbH	861	861
Environmental Technologies	6,399	6,392
- thereof Vecoplan group	6,399	6,392
None-Core	4,165	7,346
- thereof ELWEMA Automotive GmbH	4,165	4,165
- thereof IWM Automation group	0	2,676
- thereof MAX Automation (Shanghai) Co. Ltd.	0	505

(4) Property, plant and equipment

For land and buildings, the MAX Group has been using the revaluation model of IAS 16 since the 2019 fiscal year. The reason for the change to the revaluation model is that the MAX Group intentionally makes adjustments for the effects of inflation when recognizing assets with a very long useful life. The effects of inflation can cause the replacement cost of this property, plant and equipment to be significantly higher than the historical acquisition or production cost reduced by write-downs. Therefore, the revaluation model has a capital preservation function.

Revaluation is not restricted to acquisition or production cost as an upper limit. Excesses over acquisition or production cost occur above all with land since it is normally not subject to the erosion of economic life. The revaluation is done at fair value, which is performed for land and buildings by calculating their income value. Independent appraisers assess the income value. The income approach involves a model with input factors which are based on unobservable market data. The revaluation is performed at intervals of five years.

As a result of the application of the revaluation model, the carrying amount of land and buildings increased by kEUR 12,999.

kEUR	Land and buildings	Technical equipment and machinery	Other equipment, operating and office equipment	Assets under construction	Prepayments made	Total
Cost
01/01/2019	46,807	19,560	21,170	100	42	87,679
Change in the scope of consolidation	-365	-206	-369	0	-44	-984
Currency differences	62	21	69	0	2	154
Additions	93	1,602	2,996	1,487	0	6,177
Additions from revaluation	2,187	0	0	0	0	2,187
Disposals	-2	-2,428	-561	-30	0	-3,021
Disposals from revaluation	-6,852	0	0	0	0	-6,852
Reclassifications	-2,550	0	0	0	0	-2,550
31/12/2019	39,380	18,549	23,305	1,557	0	82,791
Accumulated depreciation
01/01/2019	21,649	15,505	15,686	0	0	52,839
Change in the scope of consolidation	-100	-84	-221	0	0	-405
Currency differences	26	14	46	0	0	86
Additions	1,346	1,016	1,921	0	0	4,283
Disposals	0	-2,183	-504	0	0	-2,687
Disposals from revaluation	-17,664	0	0	0	0	-17,664
Reclassifications	0	0	0	0	0	0
31/12/2019	5,257	14,269	16,927	0	0	36,453
Carrying amount
31/12/2019	34,123	4,280	6,378	1,557	0	46,338

kEUR	Land and buildings	Technical equipment and machinery	Other equipment, operating and office equipment	Assets under construction	Prepayments made	Total
Cost
01/01/2018	41,946	15,111	20,485	126	0	77,668
Change in the scope of consolidation	3,428	3,592	917	0	0	7,937
Currency differences	149	21	90	0	0	259
Additions	644	1,903	1,866	93	42	4,548
Disposals	562	-1,052	-2,239	-5	0	-2,734
Reclassifications	78	-15	51	-114	0	0
31/12/2018	46,807	19,560	21,170	100	42	87,679
Accumulated depreciation
01/01/2018	18,656	12,093	15,438	0	0	46,187
Change in the scope of consolidation	1,005	3,207	602	0	0	4,814
Currency differences	61	28	73	0	0	162
Additions	1,459	1,055	1,798	0	0	4,312
Disposals	566	-855	-2,193	0	0	-2,482
Reclassifications	0	-14	14	0	0	0
Adjustment	-98	-9	-47	0	0	-154
31/12/2018	21,649	15,505	15,686	0	0	52,839
Carrying amount
31/12/2018	25,158	4,055	5,484	100	42	34,840

(5) Investment property

Given the increased significance of recognizing investment property for the MAX Automation Group, the management of MAX Automation SE has decided to make a change in accounting policies by applying the fair value model to all investment property beginning in the 2019 fiscal year. In the view of management, the fair value model is the more relevant form of presenting a more accurate picture of the net assets, financial position and results of operations of the MAX Group. The calculation of fair value was done by means of the income approach, which involves a model with input factors that are based on unobservable market data.

The investment property item essentially includes the lease for the leased property on Kesselbachstrasse in Bermatingen. As a result of the closure of the operational business of IWM Automation Bodensee GmbH the property is no longer owner occupied and given the intention to lease it, it has been classified since 30 June 2019, as an investment property. Due to the transfer of the property to investment property, the adjustment to fair value in the amount of kEUR 2,828 occurred outside profit or loss via the revaluation reserve as well as in the amount of kEUR 2,600 in profit or loss as a reversal of an impairment loss in other operating income.

The period from 1 July 2019, to 31 December 2019, does not include any rental income from these objects in the statement of comprehensive income. The marketing of the areas had not yet been concluded as of 31 December 2019.

The adjustment to fair value did not affect the statement of comprehensive income during the fiscal year.

No adjustment was made to previous year's figures since the Dettenhausen property had already been recognized at its fair value as of 31 December 2018. The carrying amount corresponded to the fair value at that time.

The amount incurred for the maintenance of investment property during the fiscal year was kEUR 39 (previous year: kEUR 0). As shown in the following table, the development of investment properties conforms to the traditional presentation of an assets analysis due to the conversion to the fair value model for the first time during the fiscal year:

kEUR	Investment properties
01/01/2019	1,254
Changes in the scope of consolidation	0
Additions	0
Disposals	0
Transfer from owner-occupied property	3,372
Adjustment of the fair value through the revaluation reserve	2,828
31/12/2019	7,454

kEUR	Investment properties
01/01/2018	1,379
Changes in the scope of consolidation	0
Additions	62
Disposals	0
Transfer from owner-occupied property	0
Net gain (loss) from fair value adjustments	63
31/12/2018	1,254

(6) Equity accounted investments

On 30 April 2019, the transitional consolidation from full consolidation to equity method accounting occurred for MAX Automation (Asia Pacific) Co. Ltd., Hong Kong, in which MAX Automation SE has a 51% equity interest. The transitional consolidation did not have any effect on earnings. MAX Automation (Asia Pacific) Co. Ltd., Hong Kong in turn has a 100% holding in MAX Automation (Shanghai) Co., Ltd. The transition to the equity method occurred in accordance with the provisions of IFRS 10 due to the loss of control over the company.

With notarial certification as of June 26, 2019, the shares in the associated company ESSERT GmbH, Ubstadt-Weiher were sold. The closing occurred on 30 June 2019. Previously, MAX Automation SE held 44.5% of the shares in the company, which was included in the consolidated financial statements using the equity method.

The net profit for the period of associated companies accounted for using the equity method in the 2019 fiscal year amounted to kEUR -411. Of this amount for the period until 30 June 2019, kEUR -332 applied to ESSERT GmbH, Ubstadt-Weiher and kEUR -78 applied to MAX Automation (Asia Pacific) Co. Ltd., Hong Kong, whose investment carrying amount using the equity method was kEUR 0 as of 31 December 2019.

(7) Other financial assets

Other long-term financial assets of kEUR TEUR 6,692 (previous year: kEUR 7,097) include two vendor loans amounting to kEUR 827 (previous year: kEUR 885) and a dormant holding of kEUR 800 (previous year: kEUR 800). Both the vendor loans and the dormant holding were created in 2016 in connection with the management buyout at altmayerBTD GmbH & Co. KG.

A tenant loan of kEUR 449 also exists (previous year: kEUR 338).

The increase in other long-term financial assets is primarily attributable to a vendor loan as well as a bridge loan of kEUR 4,589 to the former associated company ESSERT GmbH. Of this amount, kEUR 2,528 related to the vendor loan and kEUR 2,062 related to the bridge loan. With notarial certification as of 26 June 2019, the shares in the associated company ESSERT GmbH, Ubstadt-Weiher were sold. The closing occurred on 30 June 2019. Previously, MAX Automation SE held 44.5% of the shares in the company.

Other non-current financial assets include security deposits of kEUR 28 (previous year: kEUR 170).

(8) Deferred taxes

Deferred taxes are attributable to the following statement of financial position items as they arise:

in kEUR		31/12/2019		31/12/2018
		Deferred tax assets	Deferred tax liabilities	Deferred tax assets	Deferred tax liabilities
Long-term balance sheet items
A. Non-current assets		24,506	8,161	14,539	4,357
I. Intangible assets		167	1,862	194	3,544
II. Property, plant and equipment		225	6,241	204	755
III. Non-current financial assets		0	58	25	58
IV. Deferred tax assets for tax losses carried forward		24,114	0	14,116	0
B. Non-current liabilities		1,258	0	231	0
Short-term balance sheet items
C. Current assets		1,842	2,747	3,425	2,517
I. Inventories and trade payables		1,842	2,747	3,425	2,517
II. Current financial assets		0	0	0	0
D. Current liabilities		1,517	4	1,246	0
Subtotal		29,123	10,912	19,441	6,874
Value adjustments on losses carried forward		-12,655	0	-7,155	0
Netting		-6,085	0	-4,782	0
Total		10,383	10,912	7,504	6,874

The deferred tax assets and liabilities resulting from production orders were netted, as were deferred tax assets and liabilities within the Group entities.

Domestic trade tax losses of kEUR 11,597 (previous year: kEUR 4,808) were carried forward at the parent company of the Group with deferred tax assets of kEUR 1,568 (previous year: kEUR 688), and domestic corporation tax losses of kEUR 11,803 (previous year: kEUR 4,245) were carried forward with deferred tax assets of kEUR 1,868 (previous year: kEUR 672).

In addition, there are domestic trade tax loss carry-overs of kEUR 68,319 (previous year: kEUR 37,329), and corporate tax loss carry-overs of kEUR 70,114 (previous year: kEUR 38,477) with deferred tax assets totaling kEUR 19,685 (previous year: kEUR 10,765) with a write-down of kEUR 11,811 (previous year: kEUR 5,558). Foreign losses carried forward amount to kEUR 4,686 (previous year: kEUR 8,737) and the resulting deferred tax assets of kEUR 993 (previous year: kEUR 1,991) were written down by kEUR 845 (previous year: kEUR 1,596).

Minimum taxation must be observed in Germany when assessing the recoverability of the losses carried forward. Loss carry-forwards can be offset indefinitely against positive results in subsequent years up to kEUR 1,000, and beyond this up to 60%.

The recoverability of the deferred tax assets on loss carry-overs was reviewed and guaranteed with sufficient certainty.

Of the deferred tax assets on losses carried forward after value adjustments of kEUR 11,458, an amount of kEUR 7,634 (previous year: kEUR 4,782) is covered by deferred tax liabilities. Deferred tax assets on losses carried forward which are not covered by deferred tax liabilities, and in connection with which losses occurred in previous periods, amount to kEUR 3,824 (previous year: kEUR 896). Measures geared to the short-term exploitation of losses have been and will be put in place. In addition, an improvement in the operating results of the Group is expected.

The following amounts are shown in the consolidated statement of financial position:

in kEUR	31/12/2019	31/12/2018
Deferred tax assets:
- from deductible differences	5,009	5,325
- from tax losses carried forward	11,459	6,961
- Netting with deferred tax liabilities	-6,085	-4,782
Total deferred tax assets:	10,383	7,504
Deferred tax liabilities:
- from taxable temporary differences	10,912	6,874

Deferred tax liabilities on temporary differences in shares in subsidiaries of kEUR 1,409 (previous year: kEUR 1,128) were not recognized since it is not probable that they will reverse in the foreseeable future.

In the amount of kEUR 4,389 (previous year: kEUR 152 with a resulting increase in equity) deferred taxes were taken into account in the statement of financial position with a resulting decrease in equity, which applied directly to income and expense recognized in equity. Of this amount, kEUR 3,704 (previous year: kEUR 0) involved the revaluation of property, plant and equipment, kEUR 784 (previous year: kEUR 0) involved the change in use of property and kEUR 40 (previous year: kEUR 93) involved actuarial gains and losses from employee benefits with a resulting increase in equity, and kEUR 59 (previous year: kEUR 59) involved the delimitation of IPO expenses with a resulting increase in equity.

(9) Other non-current assets

Other non-current assets in the amount of kEUR 286 (previous year: kEUR 330) mainly consist of non-current trade receivables of kEUR 283 (previous year: kEUR 327).

(10) Inventories

in kEUR	31/12/2019	31/12/2018 (adjusted)	31/12/2018
Raw materials and supplies	20,086	19,007	19,007
Unfinished goods and services	22,843	55,029	57,723
Finished goods and services	7,333	7,062	7,062
Advance payments made	3,767	4,659	4,659
Inventories	54,029	85,757	88,451

Compared with the previous year, there was a change in inventories of finished goods and work in progress of kEUR -28,542 (previous year (adjusted): kEUR -754), which is reported in the statement of comprehensive income. Variances from the corresponding statement of financial position items result from exchange rate-related changes in the value of inventories of foreign Group companies.

The inventories include valuation allowances of kEUR 7,281 (previous year: kEUR 8,320).

(11) Contractual assets and trade receivables

in kEUR	31/12/2019	31/12/2019(adjusted)	31/12/2018
Contract assets	41,044	58,830	59,730
thereof receivables from construction contracts	165,966	159,855	160,756
thereof advances received for construction contracts	-124,922	-101,026	-101,026
Trade receivables	48,098	56,952	56,952
specific loss allowance	-2,629	-2,504	-2,504
expected credit losses	-125	-375	-375
Total	86,388	112,903	113,803

The decline in contractual assets and trade receivables was primarily attributable to the Group's withdrawal from the area of special-purpose machine construction for the automotive sector. For this reason, the companies IWM Automation GmbH and IWM Automation Bodensee GmbH are being closed. Accordingly, the operational business of these companies has already been reduced significantly.

The development of contractual assets is presented in detail below:

Contract assets	in kEUR
31/12/2018	59,730
Adjustments	-900
31/12/2018 (adjusted)	58,830
Transfers from contract assets to trade receivables	-37,164
Changes due to the adjustment of progress	24,848
Impairment of contract assets	-57
Changes due to deconsolidation	-5,470
31/12/2019	40,987

(12) Receivables from related parties

Receivables from related companies amounted to kEUR 0 (previous year: kEUR 19).

The previous year exclusively related to trade receivables due from ESSERT GmbH. Shares held in this company were sold in the 2019 fiscal year. Further details about this can be found in the section "Changes in the scope of consolidation."

(13) Prepayments and accrued income, and other current assets

in kEUR	31/12/2019	31/12/2018 (adjusted)	31/12/2018
Receivables towards tax authorities	7,106	6,090	6,090
Accruals and deferred income	1,691	1,765	1,765
Creditors with debit balances	356	487	487
Receivables from employees	239	192	192
Receivables from sales contracts	0	0	4,624
Other receivables	576	270	276
Total	9,968	8,804	13,434

Regarding the adjustment of receivables from purchase contracts, please refer to the section “Correction of errors.”

(14) Cash and cash equivalents

Cash and cash equivalents of kEUR 40,596 (previous year: kEUR 33,518) include cash in hand, checks and deposits with banks.

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