Business model

The Group’s business is divided into two segments: Technology and Services. The Technology segment generates 72 percent of consolidated revenue. In this business area technotrans develops and sells equipment and systems based on its core skills in liquid technology. technotrans pools its specialist knowledge in three technology business units (BU): cooling and temperature control (“temperature control” BU), filtering and separating (“fluid conditioning” BU), and spraying and pumping of liquids (“ink & fluid technology” BU). They are the result of intensive research and many years of experience. The focus is on customer-specific equipment and systems that technotrans develops as a leading systems supplier for performing essential functions as part of a specific application, therefore contributing towards optimising the overall quality and efficiency of the user’s processes.
The company is steadily broadening its product range in close collaboration with existing and potential customers, including many renowned industrial enterprises, with a view to opening up new application areas and sales markets in order to safeguard its long-term growth.

The Technology segment is complemented by the Services segment. A large range of services, for example the worldwide parts supply, as well as repair and installation services, completes the activities of technotrans. These also include providing customer support for the maintenance and operation of systems.
Other services in the Technical Documentation area also come under this segment. The subsidiaries gds GmbH, gds Sprachenwelt GmbH and Ovidius GmbH compile and translate primarily technical documentation and also market their self-developed software solutions that customers can use to create and manage documents.

Sales and Service now focus their worldwide activities on four subsidiary markets within the mechanical and plant engineering sector: the printing industry, the plastics processing industry, the laser and machine tool industry, and separately identified growth markets. The latter include medical technology and electric mobility.

technotrans has been an important supplier and reliable partner to the global printing industry for very many years. Since the financial crisis, the market for print products has now stabilised with a worldwide print volume in excess of € 400 billion annually. In terms of the technology involved, sheet-fed offset, flexographic and digital printing methods account for two-thirds of the print volume. technotrans offers customer-specific products and services for these, and supplies virtually all leading printing press manufacturers. Our market share here is well over 50 percent. The large installed base and the cyclical nature of the propensity to invest mean that – in addition to service business in the narrower sense – modernisation and retrofit business directly with end customers likewise generates a significant proportion of revenue. technotrans generates around 42 percent of consolidated revenue in the printing industry.

In the plastics industry, the second-largest source of revenue, technotrans has emerged as a high-performance partner for mould temperature control and machine cooling in both injection moulding and plastics extrusion, through GWK Gesellschaft Wärme Kältetechnik mbH (gwk). Temperature control and cooling have a huge influence on the quality of moulded parts and the economic efficiency of the production process.

Robust cooling technology that is ideally matched to the application is a prerequisite for a stable and economical production process in the laser and machine tool industry. For a number of years, technotrans has been serving this market with high-quality system solutions in the field of cooling, temperature control and filtering of liquids through its production companies Termotek GmbH and KLH Kältetechnik GmbH.

The significance of electric mobility is growing rapidly worldwide. For this growing market, technotrans supplies cooling systems for lithium-ion batteries for both mobile and stationary applications. The use of cooling and temperature control systems extends the operating life of high-performance batteries in electric vehicles and static energy storage devices. technotrans products are used for example in electric buses, trams and trains, in AGVs (automated guided vehicles) but also in battery charging points and in inverters for energy conversion. In medical and scanner technology, customers also call upon technotrans’ tailormade cooling solutions as integral components or as external, central overall concepts

The principal business processes encompass the development, assembly, testing and sale of equipment, along with all relevant services for major customers and their end users. technotrans’ chosen level of manufacturing penetration enables it to respond flexibly and cost-effectively to the requirements of customers. The most recent acquisition gwk in addition offers extra scope for value creation within the group.

The investment propensity of the target industries in which the technotrans Group is active regularly has a major impact on the group’s business performance. That propensity is in turn influenced by the present and anticipated economic situation. In view of its focus on the German mechanical and plant engineering sectors, cyclical fluctuations there have a marked influence on its business performance. The specific branching-out of business activities into high-growth industries such as the plastics industry, the laser industry as well as energy storage or medical technology help to further significantly reduce that correlation in future.

With the exception of the printing industry, the market in the other market segments where technotrans is active is served by a large number of suppliers. In those instances the competitive environment for technotrans is highly fragmented. A major success factor for technotrans therefore stems from its positioning as a systems supplier of complex, customer-specific solutions with its own global service network, unlike out-and-out components suppliers. technotrans is steadily consolidating its target position as market leader in its chosen niche markets. The market entry barriers for potential competitors are therefore for the most part high.

The research and development area is the basis for the group’s future success. Spending on such activities rose by 36 percent in the year under review of 2017, to € 7.5 million (previous year: € 5.5 million). gwk was a major factor in this change, because it was consolidated within the technotrans Group for the first time in autumn 2016. The R&D ratio (development spending in relation to consolidated revenue) of 3.7 percent overall was again at the level of the previous year (3.6 percent). If R&D spending is expressed in the usual way in relation to revenue for the Technology segment, the figures are as shown in the table.

As in previous years, technotrans fundamentally recognises development spending in the Income Statement. If the appropriate requirements are satisfied, development expenditure is booked as an intangible asset pursuant to IAS 38 and recognised as such on the balance sheet. The development expenditure recognised as an intangible asset of € 0.4 million (previous year: € 0.0 million) contrasted with depreciation and amortisation of € 0.4 million (previous year: € 0.4 million). The capitalisation ratio, in other words the ratio of development expenditure recognised as an intangible asset to R&D spending, is reported as 4.6 percent for 2017. Further explanatory notes are provided in the Notes to the Consolidated Financial Statements under the Notes to the Balance Sheet 3) "Intangible Assets”.

The Board of Management believes the level of development expenditure reached is necessary to actively provide the technology that substantiates the group’s process of transformation. For its research and development activities in the past financial year, technotrans concentrated above all on projects and methods that improve energy efficiency and save resources for customers. Meanwhile technotrans continues to build on its existing skills in the technology-oriented areas in order to permanently bolster its market position.

Procurement and supply chain management are very important for technotrans. Organic and non-organic growth as well as product diversification entail a raft of new requirements for the entire materials management side.
Alongside growth in business operations and the expansion of supplier management, optimisation concepts need to be put into practice in Procurement. Flexibility for the technotrans locations in conjunction with an expansion of the lead buyer principle remain the focus.

technotrans has implemented a continuous improvement process at all production locations. Programmes to boost productivity and efficiency are continuously being implemented, and potential improvements identified and gradually rolled out. Reducing interfaces in production processes, new production concepts, the adoption of shop floor management and optimised internal logistics concepts are some of the priority topics that we are focusing on at the locations. Lean concepts and internal supply chain management reflect the approach and objective. Because different products and product ranges are made at all locations, the challenge is to adopt appropriate optimisation concepts and generate mutual benefits by systematically sharing findings.

Quality, alongside economic efficiency, is a core value of technotrans products. We are continually improving quality management in order to supply customers with reliable equipment swiftly, often after only a short time in development. technotrans also regards itself as a quality leader within its field of competitors. With that in mind, multi-site management was introduced in 2016 to harmonise the methods and processes of different group locations while also reducing the burden of auditing work. The new quality management certificate to DIN/ISO 9001:2015 was also audited. The group benefits here from a strategic approach that also encompasses the subsidiaries. 2017 saw quality – expressed in terms of the rate of warranty cases – remain stable year on year at a consistently low level.