Notes to the income statement

(29) Revenue

The following tables show revenue by segment:

2019	Process Technologies	Environmental Technologies	Evolving Technologies	Non-Core Business	Reconciliation	Total
Total segment revenues	73,377	127,637	136,213	89,806	-1,546	425,488
Intercompany sales	54	4	1,296	199	-1,552	0
Revenue with external customers	73,323	127,633	134,918	89,608	6	425,488
Timing of revenue recognition
At a certain time	54,443	74,818	47,990	42,813	6	220,070
Over a period of time	18,880	52,815	86,927	46,795	0	205,418

2018	Process Technologies	Environmental Technologies	Evolving Technologies	Non-Core Business	Reconciliation	Total
Total segment revenues	53,653	110,601	115,000	127,706	-2,074	404,885
Intercompany sales	616	2	1,465	204	-2,287	0
Revenue with external customers	53,037	110,599	113,535	127,502	213	404,885
Timing of revenue recognition
At a certain time	43,673	71,431	38,575	43,476	213	197,368
Over a period of time	9,363	39,168	74,960	84,026	0	207,517

The following tables show revenue by geographic market:

in kEUR	2019	2018
Germany	156,689	149,643
EU	116,352	99,198
North America	71,569	62,515
China	9,405	39,806
Rest of the world	71,472	53,723
Total	425,488	404,885

(30) Other operating income

in kEUR	2019	2018
Income from the release of provisions	3,623	1,389
Income from the reduction of value adjustments	1,090	683
Income from the intended use of personnel-related liabilities	751	924
Income from currency differences	668	534
Income from the disposal of property, plant and equipment	185	96
Income from damages	141	296
Income from written-off receivables	0	30
Income from deconsolidations	0	2,863
Other	4,665	1,806
Total	11,123	8,621

The “Other” item in the amount of kEUR 4,665 (previous year: kEUR 1,806) includes write-ups of kEUR 2,600. They involve the reversal of an impairment loss in connection with the property on Kesselbachstrasse in Bermatingen. The “Other” item also includes, for example, remunerations in kind of kEUR 739 (previous year: kEUR 693).

(31) Cost of materials

in kEUR	2019	2018
Cost of goods purchased	154,679	176,400
Cost of services purchased	48,026	63,823
Total	202,705	240,224

(32) Personnel expenses

in kEUR	2019	2018
Salaries and wages	118,078	105,444
Social security contributions	21,047	19,466
- of which expenses for pensions and benefits	1,177	603
Total	139,125	124,909

In the 2019 fiscal year, wages and salaries include expenses arising in connection with the closure of IWM Automation Bodensee GmbH. This includes the following itemized expenses: kEUR 4,277 for severance payments, kEUR 2,761 for the transfer company for employees, and kEUR 500 for so-called value time. In the previous year, personnel expenses included severance payments of kEUR 171.

Average number of employees excluding trainees	2019	2018
Wage-earners	645	656
Salaried employees	1,170	1,116
Total	1,815	1,772

(33) Depreciation, amortization and write-downs

in kEUR	2019	2018
On intangible assets	7,949	8,261
On other property, plant and equipment	2,976	2,910
On goodwill	2,676	9,405
On buildings, leasehold improvements and outside facilities	1,307	1,249
On investment property	0	63
- in the above write-downs from purchase price allocations	3,864	12,761
Total	14,908	21,888

The depreciation on goodwill relates to a special write-down of the goodwill of IWM Automation GmbH.

Write-downs on intangible assets include special write-downs of kEUR 208 (previous year: kEUR 1,508).

The conversion of the subsequent measurement of investment properties from the amortized cost model to the fair value model occurred during the 2019 fiscal year.

(34) Other operating expenses

in kEUR	2019	2018 (adjusted)	2018
Legal and consultancy fees	10,209	10,148	10,148
Travel expenses	6,850	6,771	6,771
Warranty expenses	5,205	2,313	2,313
Outbound freight expenses	4,232	4,442	4,442
Maintenance expenses	4,314	2,954	2,954
Personnel expenses (incl. training)	3,942	2,915	2,915
Postage, telephone and IT expenses	2,859	3,100	3,100
Sales commissions	1,937	2,796	2,796
Advertising expenses	1,792	2,187	2,187
Utility expenses	1,680	1,778	1,778
Trade fair expenses	1,606	1,286	1,286
Insurance expenses	1,446	1,464	1,464
Expenses from currency effects	1,249	765	765
Packaging material	1,153	1,335	1,335
Expenses for individual and general bad-debt allowances	988	1,208	1,208
Tools	877	771	771
Other miscellaneous expenses	19,105	22,763	18,784
Total	69,444	68,996	65,017

Other operating expenses increased by kEUR 4,427 (adjusted: kEUR 448) to kEUR TEUR 69,444 (previous year: kEUR 65,017, previous year (adjusted): kEUR 68,996). The change resulted primarily from an increase in expenses for warranties by kEUR 2,892 and an increase in expenses for maintenance by kEUR 1,360.

Miscellaneous other operating expenses in 2018 (adjusted) include a valuation allowance of kEUR 3,979 for the clawback of a drawn guarantee credit from a customer project of the former Group company Finnah Packtec GmbH (previously NSM Pactec GmbH). The correction was made in accordance with IAS 8.

(35) Financial result

in kEUR	2019	2018 (adjusted)	2018
Interest income	744	69	69
Depreciation on loans	-9,867	-1	-1
Other financial expenses	-4,538	0	0
Financial expense	-4,451	-4,081	-3,431
Interest result	-18,111	-4,013	-3,363

Write-downs on loans include the valuation allowance of kEUR 4,999 for a loan to equity investment MAX Automation (Asia Pacific) Co. Ltd. as well as the valuation allowance of kEUR 650 for a receivable from the sale of the former Group company Finnah Packtec GmbH (previously: NSM Packtec GmbH).

Other borrowing costs involve the utilization of a bank guarantee for MAX Automation (Shanghai) Co. Ltd. in the amount of kEUR 4,537.

Interest expense mainly comprises expenditure incurred for the syndicated loan. In addition, interest expense includes kEUR 382 interest in connection with lease liabilities.

The financial result includes expenses from the compounding of non-current provisions in the amount of kEUR 30 (previous year: kEUR 53) and income from the discounting of non-current provisions in the amount of kEUR 2 (previous year: kEUR 14).

The above financial results solely from the financial assets and financial liabilities which were not measured at fair value in profit or loss.

The following table shows the net gains or net losses on financial instruments included in the statement of comprehensive income which are not reported under net interest:

in kEUR	2019	2018
Financial assets and liabilities measured at fair value through profit and loss	55	-108
Loans, receivables and payables	-939	-1,043

The net profits or net losses on financial assets and liabilities assessed at fair value in profit or loss include not only the results from the market shift but also the current expenses and income with respect to these financial instruments.

In addition to current income/expenses, the net profits or net losses on loans, receivables and liabilities include write-ups and impairments on trade receivables, write-ups and impairments on contractual assets and income from the derecognition of trade payables.

(36) Income taxes

Earnings before income taxes amount to kEUR TEUR -34,323 (previous year: kEUR -42,760).

in kEUR	2019	2018
Current income taxes	-3,108	-2,530
Taxes relating to other periods	373	1,874
Deferred taxes	1,581	4,491
– thereof taxes from losses carried forward	-4,481	-3,545
Total	-1,154	3,835

The current and deferred taxes are calculated with reference to the income tax rates applicable in the respective country. The domestic income tax rates are changing primarily as a result of the allocation of the trade tax within the fiscal unity entities as well as adjustments to the assessment rates in the municipalities. The impact of changes in the tax rates were recognized in profit or loss in tax expense unless they involved items that were previously reported outside profit or loss. In the previous year, the change to the tax rate primarily involved a reduction in the U.S. federal tax rate from 34% to 21%.

The main statement of financial position items for deferred taxes are explained in section 8 “Deferred taxes.”

A provision was reversed in the previous year in view of the withdrawal without replacement of the circular issued by the Federal Ministry of Finance (Bundesministerium der Finanzen - BMF) in 2017 in relation to Section 8c of the German Corporation Tax Act (Körperschaftsteuergesetz - KStG). This is shown in the taxes relating to other periods.

The expected income tax expense is calculated by multiplying the annual result before income taxes by the Group income tax rate. This is derived from the tax rates of the companies included. The effective tax rate for 2019 has been significantly reduced due to various special items. Aside from write-downs on goodwill of kEUR 808 (previous year: kEUR 2,482), non-deductible business expenses include write-downs of kEUR 4,764 in connection with equity investments.

Further information on the deferred taxes can be found in section 7 "Deferred taxes".

The following table shows the reconciliation of the imputed income tax expense to the taxes on income and earnings recorded for the Group as a whole:

in kEUR	2019	2018
Earnings before taxes	-34,323	-47,390
Group income tax rate	30.19%	28.08%
Calculated income tax expense	-10,361	-13,307
Differences from tax rates	-14	347
Divergent tax burdens (country-specific features)	-234	34
Deductable income taxes	-132
Impairment of goodwill	808	2,482
Deviations in tax base (tax balance sheets)	-311	359
Tax-free income	-100	-49
Non-deductable expenses	5,060	1,654
Impairment / Non-recognition of deferred tax assets for losses carried forward	6,641	6,970
Usage of losses carried forward	-204	-227
Impairment / Non-recognition of deferred tax assets	74	-156
Taxes relating to other periods / Adjustment of prior years' deferred taxes	-288	-1,850
Non-recognition of deferred taxes related to IFRS 16	38
Taxes to be borne by third parties	-2	-10
Differences in current year's tax calculation	76	-19
Consolidation effects	115	-108
Others	-12	45
Income taxes	-1,154	3,835
Effective tax rate	-3.36 %	8.09 %

A management participation exists at a subsidiary of the MAX Group that in the legal view of the responsible tax office is typically to be qualified as a silent partnership. This evaluation does not lead to conclusive legal certainty since in the course of a business audit the judgment might be made that this management participation involves an atypical silent partnership. A different interpretation would cause the income tax fiscal unities to no longer be recognized. However, the MAX Group assumes that a different interpretation is unlikely to emerge in a business audit. A different interpretation would lead to higher income tax expense of approximately kEUR 760.

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