Speech of Georg Gayer

Chairman of the Management Board

Financial Statements Press Conference of TAKKT AG on 23 March 2001 in Stuttgart

Only the spoken word applies


Ladies and gentlemen,

In the name of the TAKKT AG management board, I would like to welcome you to this year's financial statements press conference.

Let me briefly mention the order of events:

Following my remarks, Dr. Zimmermann - our board member responsible for finance - will give you detailed information on our profit and loss account, as well as on our year 2000 balance sheet. Afterwards, we will be happy to answer any questions you may have.

But first, I would like to remind you of our strategy.

In 1999, we promised to increase our tempo and thus improve our rate of growth, with a small reduction in our margin.

To achieve this, we have focused, and continue to focus, on the following strategic approaches:

  • The expansion of our successful business into new regions
  • Additional growth through acquisition
  • The strengthening of organic growth by
    expanding and updating our product range
    improving our services

    and last but not least, we want to
  • build up our e-commerce sales channel through our internet offers and e-procurement projects.

The highlights of the year 2000, on which I am about to report, clearly document the fact that we have been successful in implementing our strategy.

KAISER + KRAFT EUROPA
First let's take a look at KWESTO:

In accordance with our regional expansion strategy, the new KWESTO company was launched mid-2000 in the Czech Republic with a 224-page catalogue.

The product range covers office and business equipment, which at the present time comes primarily from eastern Europe.

With this company, we offer a custom-made product portfolio for small to mid-size enterprises in the rapidly developing nations of the east.
The business development here has exceeded our expectations.

We don't want to leave it at that for the medium to long-term, of course. Instead, from the Czech Republic, we will push the market penetration on into eastern Europe.

Topdeq
Topdeq France
The second highlight that I would like to discuss is Topdeq France.

This Topdeq company was launched in January 2000. The market analyses which we carried out in advance convinced us that, for Topdeq, France is another important market for pursuing the European growth strategy. The top offers coupled with top service were well received by our neighbours to the west. I'm pleased to say that the launch of Topdeq France exceeded our expectations.

Topdeq USA
At the start of this year, Topdeq continued our regional offensive. Our subsidiary company expanded to the American market. At the start of 2001, business operations began in New Jersey. This is a major, important step for Topdeq, not least because of the potential volume of the US market.

The entire American office supplies market has a turnover of around 225 billion US dollars. 22.5 billion dollars of this is accounted for by office furniture and accessories.

K + K America
Hubert
Topdeq USA was not our only activity on the US market, however. In October 2000, we acquired the B2B mail order company Hubert. In the USA, Hubert is the market leader in B2B mail order business in the area of equipment and supplies for retail grocery stores and the food service industry. Our division K + K America (C&H Distributors, Avenue Industrial Supply, Conney Safety Products, and now Hubert) covers a product range that fits well into the group strategy.

This strategy is to use synergies to systematically carry our replicable systems business over to new products, market segments, and regions.

With this acquisition, the TAKKT group has taken a decisive step forward.

We increased our number of regular customers by more than 175,000 in the growth segment of "services", and thus managed to further reduce our dependency on industries and customer groups.

With the 175,000 customers just mentioned, the company realised a turnover of around 90 million dollars in the calendar year 2000.

I would like to point out that Hubert was only consolidated with effect from acquisition on 16 October 2000.

The market volume of Hubert's business activity is around 7.5 billion US dollars. In the past five years, the average yearly growth was 7 percent. This means that Hubert grew more rapidly than the industry, which managed to achieve about 5 percent per year.

Mexico
C&H Distributors, a subsidiary of K + K America, expanded into Mexico in July 2000 and was thus the first US company of the TAKKT group to gain experience outside the North American market.

Product range/Service
The successful expansion of our product portfolio in nearly all catalogues was supported by a good economic situation.

This enabled us in the year 2000 to achieve the greatest organic growth of the past eight years.

Our new delivery service offer, "A Guaranteed Delivery Date," convinced our customers, as did the additional product offers.

E-Business
The year 2000 did not only distinguish itself only through new establishments and acquisitions. Rather, we also continued to expand our internet activities in accordance with the strategy we initiated in the past.

In our opinion, the mail order business - and we've said this several times in the past - cannot avoid e-commerce, e-procurement and e-payment. On the contrary: e-commerce is the next logical step for the mail order business model.

The internet as an additional sales channel
This is why we have used the internet as an additional sales channel since 1998 - with growing success. There are several reasons for this success:

  • We have customers who are already familiar with doing business over the internet.
  • We have many years of experience and our business processes are accordingly well coordinated.
  • In addition to our broad product range, we have a high service level.

Interactive websites
For these reasons, we increased our investment in the internet sales channel in the calendar year 2000, and we set new standards with interactive websites for KAISER + KRAFT in Germany, for instance, and for C&H Distributors in the USA.

E-Procurement
In addition to both the new web activities and those already underway, KAISER + KRAFT EUROPA managed to establish large e-procurement systems with companies such as Wacker-Chemie, BASF Coatings, Siemens and Novartis.

Their employees can now order from the KAISER + KRAFT product catalogue with a click of the mouse. They only need to click on the product they want in the intranet web shop. The data is transmitted online to our Stuttgart-based KAISER + KRAFT headquarters, where it is taken over by our merchandise management system.

This makes the entire ordering process significantly shorter. Both sides profit from this. Our partners save time and money. KAISER + KRAFT is becoming the customer's preferred supplier in this product segment.

Kamp-Lintfort
One last highlight that I would like to present to you is the expansion of our European mail order centre in Kamp-Lintfort, the logistics heart of KAISER + KRAFT EUROPA.

Perhaps you remember that last year we decided to enlarge it considerably. The investment volume amounts to about EUR 17 million. On 23 May 2000, the ground was broken for the second section of the extension of the high-tech logistical centre in Kamp-Lintfort. The work is progressing according to plan. We bring it into operation in the middle of 2001.

With this expansion, we will more than double capacity. This will considerably reduce delivery times for an even larger portion of our product portfolio. This is important to us so that, as a market and service leader, we can gain further shares of the market.

Investment in the future
Ladies and gentlemen, as you can see, it was an eventful year, and one in which we set the course for the future.

Our business figures show that with

  • our clearly defined strategy of growth,
  • our high and stable profitability,
  • our leading position in important markets, and
  • our relatively low business risk

we are an excellent choice for both our customers and our investors.

Without wanting to pre-empt Dr. Zimmermann, just let me mention a few figures which illustrate this clearly:

Key figures
Turnover increased by EUR 21.5% to 762.8 (627.6) million. Our EBITDA improved by 24.3% to EUR 87.6 (70.5) million. We managed to increase shareholders' equity to EUR 128.1 (99.1) million. Despite our credit-financed acquisition Hubert, our equity ratio is 22.5 (26.7) percent.

The TAKKT share
Our lasting business success has been honoured by the capital market. This means that, despite the weak stock environment, our share managed to assert itself against the general trend of the market in 2000. While the "New Economy rally" shook a lot of securities quite heavily, the TAKKT stock remained relatively untouched.

SDAX
Besides our good operational results, we benefit from the fact that, as a B2B mail order business with a worldwide presence, we are unique on the German stock market landscape. With a market capitalisation of around EUR 720 million and nearly 73 million shares, the TAKKT share is also a heavyweight in the SDAX index, in which we have been included since 19 June 2000.

Dividend
Because of our good operational results, and taking into account the further strengthening of our equity base through retention of earnings, which is necessary for the continued expansion of our business, we plan to distribute to our shareholders a dividend of 10 cents per share for the past year. This dividend is accompanied by a tax credit of around four cents for shareholders who are subject to German taxes. The gross dividend thus amounts to 14 cents.

Summary
After this overview, you can already see - and the figures will confirm this impressively - that our business is sound and that we are laying the foundations for the future, something we are doing although 2001, in regards to its economic environment, will not be an easy year.

The first two months of the new financial year show that North American business will be a bit more sluggish.

We're not losing customers, but the declining average order values show us that the American economy is not in best form.

With Topdeq Germany, we have to take a special effect into account. Last year, the special offers introduced to celebrate Topdeq Germany's 10th anniversary brought about exceptionally high rates of growth which will not be repeated this year.

In contrast to this, the business of the KAISER + KRAFT EUROPA companies has been very positive. Our product range expansion, internet offers and e-procurement projects are being eagerly accepted by our customers.

The organic growth of the TAKKT group will orient itself on our long-standing average in 2001. Together with the Hubert acquisition and its high margins, we will continue to grow in the year 2001 in regards to both turnover and EBITDA


Contact:

Georg Gayer
Tel.: (49) 711 / 5001-239
Dr. Felix A. Zimmermann
Tel.:(49) 711 / 5001-861