Business News
Supervisory Board meeting of schlott gruppe AG for the adoption of financial statements
Monday 14. January 2008 - Confirmation of preliminary results for 2006/7 financial year Proposal to AGM of unchanged dividend of 1.00 per share Werner Reiser to step down from Management Board for personal reasons on expiry of contract
Adoption of 2006/7 financial statements. At today’s meeting the Supervisory Board of schlott gruppe AG approved the consolidated financial statements and annual accounts of the company, thereby adopting the financial statements for the annual period 2006/7. The preliminary results for the 2006/7 financial year (October to September), as announced on November 9, 2007, have thus been confirmed.
As published, the group posted a net profit of 33.7 million, compared with 11.8 million a year ago. Within this context, the gain on disposal of the company’s direct marketing division as well as the mandatory capitalisation of corporation tax credits and the effects of Germany’s corporate tax reform had a positive impact on bottom-line results.
The group’s reported value-added sales and earnings before taxes (EBT) are not consistent with those published as part of the preliminary announcement due to the fact that the profit contribution from operations as well as from the gain on disposal of the direct marketing division was reclassified in the financial statements as profit of discontinued operations, in accordance with the provisions set out in IFRS 5. Correspondingly, the amounts reported in the following sections with regard to value-added sales and EBT refer solely to continuing operations.
In the 2006/7 financial year, value-added sales for the group as a whole amounted to 251.7 million, compared with 244.6 million in 2005/6. Group revenue stood at 482.2 million, in contrast to 425.6 million a year ago. Both value-added sales and revenue were buoyed by the initial consolidation of Dutch-based biegelaar. Owing to significant pressure on prices within the European gravure printing industry, EBT receded to 11.0 million, down from 26.7 million in 2005/6.
Benefiting from the favourable tax effects outlined above, post-tax profit from continuing operations rose to 18.9 million, up from 17.8 million. The result from discontinued operations amounted to plus 14.8 million in the reporting period, after minus 6.0 million in the previous year.
Earnings per share improved accordingly for continuing operations, up from 2.87 a year ago to 3.04 for the annual period just ended. Including the contribution attributable to direct marketing, earnings per share rose to 5.42 in the reporting period, up from 1.91 a year ago.
The progression of continuing operations was dominated mainly by the print business unit, which generated value-added sales of 247.8 million in the financial year just ended, up from 240.2 million in 2005/6. EBT amounted to 12.9 million, after 31.1 million a year ago. The corporate services unit, which operates as an intra-group service provider and thus generates insignificant external revenues, improved its EBT from minus 3.8 million a year ago to minus 2.7 million in 2006/7.
Net debt at group level was reined back to 168.4 million, down from 191.1 million, benefiting from positive free cash flow amounting to 11.8 million in 2006/7, in contrast to minus 6.7 million a year ago, as well as from the disposal of the direct marketing unit.
In view of the continued malaise of the industry as a whole, the Management Board of schlott gruppe has initiated far-reaching measures aimed at streamlining the company’s cost structures. The prime objective is to counteract current and foreseeable pricing pressures, achieve a significant improvement in EBT for the 2008/9 financial year, and subsequently return to solid double-digit pre-tax profits together with a satisfactory level of ROE.
The one-off costs associated with this programme have been budgeted at approx. 15 million in FY 2007/8. With value-added sales forecast to decline slightly year on year and competitive pressures expected to remain at an elevated level, the Management Board of schlott gruppe is targeting a break-even result before taxes and the aforementioned non-recurring charges for the current financial year. The cost-reduction programme currently being implemented will be outlined in greater detail at the financial press conference and analysts’ meeting on January 23, 2008.
Appropriation of profits proposed to the AGM
The Supervisory Board and the Management Board propose to the Annual General Meeting of Shareholders on February 26, 2008, an unchanged dividend of 1.00 per share. The proposal represents a continuation of the policy of consistent dividend payments and will allow shareholders to participate at an appropriate level in the disposal of the direct marketing unit, a transaction that contributed to the reduction in net debt and the strengthening of schlott gruppe’s balance sheet. At the same time, schlott gruppe wishes to reaffirm its confidence in the cost-reduction programme initiated by the company, targeting a significant and sustainable improvement in the group’s profitability as early as the 2008/9 financial year.
Changes to the Management Board
Furthermore, schlott gruppe announces Mr. Werner Reiser’s decision to step down from the Management Board of schlott gruppe AG on expiry of this contract on May 31, 2008, after 15 years of service. In future, he will act as an independent consultant.
Werner Reiser joined the company formerly known as Schlott Tiefdruck GmbH in 1993, holding a senior management position equipped with commercial power of attorney. He was subsequently appointed as a member of the Management Board of schlott gruppe AG in 1997 and was responsible from 2000 onwards for the areas of general administration, financial accounting and human resources.
Werner Reiser made a significant contribution to the successful development of the company. His commitment to schlott gruppe went far beyond the scope of his immediate area of responsibility. As early as 1997, he played a pivotal role in the initial public offering of schlott AG and subsequently shaped the many changes seen within the group as part of an acquisition-led strategy of growth.
Both the Supervisory Board and the Management Board deeply regret Werner Reiser’s decision to leave the company. The rapport established between him and the members of both boards was outstanding in every respect. At the same time the company fully respects his wish to step down from his duties as a Management Board member after such an extensive period of service.
Upon Werner Reiser’s resignation effective from May 31, 2008, the Management Board duties of financial accounting and human resources will be covered by Heiko Arnold in addition to his existing responsibilities within the area of treasury, controlling and investor relations. In addition to his duties relating to technology and production, Adam Valeri will assume responsibility for group procurement, while Bernd Rose will take charge of internal auditing and risk management alongside his duties within the area of business development and sales. This will ensure continuity and an effective transition of Management Board duties.
The Supervisory Board, Management Board and members of staff would like to take this opportunity to thank Werner Reiser for the many years of outstanding service and wish him continued success and good health.
Notes to financial data:
Alongside “revenue/sales”, schlott gruppe uses so-called “value-added sales” (VAS) as a financial indicator – both in its external communications and as part of its internal controlling mechanisms. Revenue is subject to fluctuations that are attributable to the volume of paper supplied by customers as raw material for certain projects. In contrast to paper purchased directly by the company, paper supplied by customers is not included in the accounts of schlott gruppe. In the 2006/7 financial year, the so-called paper provision ratio stood at 72.5 per cent. As a financial indicator, “value-added sales” eliminates fluctuations relating to paper supplied by customers, thus reflecting the actual sales performance.