Speech of Georg Gayer

Chairman of the Management Board

Only the spoken word applies.

Ladies and Gentlemen,

On behalf of TAKKT AG, I would like to welcome you to the financial statements press conference for the financial year 2003. I am pleased that you have found the time to attend this event. So welcome once again.

Before we start, I would like to explain the way we wish to proceed. First of all, I will present the results of the past financial year. I will then hand over to fellow Board member and Chief Financial Officer Dr. Zimmermann. He will provide detailed explanations on the figures of the TAKKT Group. Finally, we will be pleased to answer any questions you may have.

Profitability increased in difficult economic climate
Ladies and gentlemen, this chart summarises the key facts of TAKKT AG’s past financial year. The headlines of the year 2003 are basically the same as in 2002.

While this may sound repetitive to some, we feel that our strategy to constantly improve our figures while at the same time strengthening our market position is extremely important for the future expansion and the profitability of our Group. I would now like to explain the individual points.

I will start with the economic environment in which TAKKT AG operated in the past financial year.

Just like 2002, the past financial year was also characterised by a difficult economic environment. We all had expected to see an upswing in Europe, but it failed to materialise. The economy recovered somewhat towards the end of 2002 but quickly lost momentum again, especially in Germany. While an upward trend has been in evidence in the USA since the third quarter of 2003, it has mainly been driven by consumer spending and military expenditure. By contrast, the manufacturing sector, which is important for our company, is recovering only slowly. On both sides of the Atlantic, business was subject to strong fluctuations in the past financial year.

We were nevertheless able to strengthen our market position. Our profit margins remain good and we continued to improve our pre-tax profits. We conclude from this that TAKKT’s growth and portfolio strategy is paying off.

But now to the details. First, I would like to explain the reasons for the decline in turnover. I will then address the EBITA margin, which increased despite the reduced turnover and remains within the target range of 9 to 11 percent. Earnings before tax also continued to grow noticeably. 2003 cash flow almost reached the previous year’s level. Our equity ratio has also increased strongly.

Higher EBITA margin despite slightly reduced turnover
Ladies and gentlemen, the economic climate gave little cause for joy in 2003 and - together with the changes in exchange rates - had a strong impact on our business performance. Turnover therefore dropped by 8.9 percent to EUR 713.9 million. The strong influence of the exchange rates is reflected in the fact that exchange rate adjusted turnover was down only 1.1 percent.

The weak dollar also left its mark on earnings. Earnings before interest, tax and amortisation, or EBITA for short, declined by 6.4 percent to EUR 70.3 million. Nevertheless - and I find this important - the currency fluctuations had no negative effect on our profitability. To the contrary, our EBITA margin even rose by 0.2 percentage points to 9.8 percent and thus remains within our target range of 9 to 11 percent. We were again able to operate highly profitably despite the difficult market environment and the strong exchange rate fluctuations.

Better cash flow and increase in net income before tax
Let’s now take a look at cash flow. You can see that it almost reached the high level of the previous year despite the decline in turnover. Cash flow amounted to EUR 50.6 million in 2003, compared to EUR 53.0 million in the previous year. This is still an excellent level. The moderate 4.5 percent decline is mainly attributable to currency translation. The cash flow margin nevertheless increased from 6.8 to 7.1 percent.

What does that mean? The high cash flow not only reflects the TAKKT Group’s strong profitability. It also gives us the financial scope we need to reduce our liabilities as scheduled and make inroads into new markets despite the weak economy.

As you can see on the right-hand side of the chart, our net income before tax increased in the past financial year. At EUR 40.6 million earnings before taxes were up 4.1 percent on the previous year. In this context, we benefited from the fact that net interest income increased by EUR 4.9 million. This is due both to the scheduled reduction in total liabilities and to lower interest rates in the capital market. And again the weaker US dollar left its mark - when translated into euros, our reporting currency, the exchange rate had an effect on net interest income. The profit margin therefore increased at a somewhat higher rate and reached 5.7 percent.

Capital expenditure at normal level in 2003
Our capital expenditure was at a normal level. Every year, we invest between 1 and 2 percent of our turnover in maintaining, rationalisation and expansion of our operations. In the past financial year, we invested a total of EUR 9.8 million to improve our business processes and enhance the quality of our services. By expanding our capacities, for instance at our European mail order centre, we have laid the foundation for continued international expansion and organic growth.

Cash flow sufficient to fund growth and repay liabilities
As capital expenditure was in line with the long-term average, our free cash flow reached an excellent EUR 40.8 million. As I said before, this provides the TAKKT Group with sufficient liquidity to repay our liabilities as scheduled and fund our future expansion internally.

Increased equity ratio and stable dividend
Shareholders’ equity also developed favourably. While it initially declined by EUR 18.4 million due to the distribution of the dividend for 2002 and the currency effects, it later increased because of the net income, which remained almost unchanged from the previous year. The equity ratio (excluding minority interests) rose by 5 percentage points to 32.8 percent. This provides us with sufficient funds to finance our future growth internally.

The stable earnings and the high cash flow enable us to offer our shareholders an appropriate share in the results of the past financial year. The Management and the Supervisory Boards will therefore propose to the Annual General Meeting to pay an unchanged dividend of EUR 0.10 per share. This would be equivalent to a payout ratio of approximately 31 percent.

Highlights
Ladies and gentlemen, let’s now take a look at the highlights of the past financial year. I will begin with KAISER + KRAFT EUROPA, the strongest contributor to the TAKKT Group’s turnover and earnings.

The division successfully completed a large-scale project in 2003. A total of EUR 4 million has been invested in the extension to KAISER + KRAFT EUROPA’s mail order centre in Kamp-Lintfort, which now offers space for an additional 2,700 pallets. The KAISER + KRAFT companies can now supply their customers with an even larger number of products directly from stock. The additional space also enables us to step up our international purchasing activities. This allows us to offer our customers the best products in the world at competitive prices. The warehouse extension continues our strategy of expanding the warehouse business, which generally generates higher profit margins than the drop shipment business.

We are also poised to benefit from eastern enlargement of the EU. In Hungary, KWESTO, our specialist brand for Eastern Europe, opened its fourth company, following the ones in the Czech Republic, Poland and Slovakia. This means that the company has a presence in the most important new EU countries before the accession date.

In January 2003, KAISER + KRAFT mailed its first catalogue in the Japanese market. The product range has been very well received by our Japanese customers. Start-up losses are in line with our projections. Due to the positive response, the company will finish its test phase earlier than planned and accelerate its organic growth in the coming years by expanding both its product range and its delivery radius. Both the volume of new business and the number of repeat purchases are encouraging us to accelerate the pace.

The Topdeq subsidiaries in France and the USA are also one step further. Started up in recent years, these companies expanded their delivery ranges, which helped them win many new customers. Overall, both companies developed favourably. Topdeq USA, in particular, reported a strong increase in turnover, which was not least attributable to its successful Internet presence. Online turnover accounted for more than 15 percent of the company’s total turnover - this is the highest percentage of all TAKKT companies.

Let’s stay in North America. K + K America also continued to expand by establishing a new company in Mexico. The first Spanish catalogue with products in Mexican currency was mailed in January 2003. The products - transport, warehouse and business equipment - are mainly targeted at medium sized companies and the large number of small businesses. Despite some processing obstacles and logistical challenges, the targets set for 2003 were reached.

Hubert, another subsidiary of K + K America, expanded its product range in the past financial year. While the company used to focus exclusively on equipment and supplies for food retailers, the food service industry and the hotel market, it mailed its first general retail catalogue to potential customers in August 2003.

The enlarged product range means that Hubert will be less exposed to the development in the food retail sector and the food service and hotel market. The general retail market also offers huge growth potential, given that it comprises some 650,000 businesses, which makes it more than twice as big as the food retail, food service and hotel markets combined.

Ladies and gentlemen, the successful and stable business model, our high profitability, our strong international presence and the well-balanced portfolio mean that the TAKKT Group is excellently positioned. Moreover, we will continue to expand our exemplary services, creating added value for our customers. As in the previous decades, the TAKKT Group will emerge from the current phase of economic weakness with renewed strength.

Corporate Governance
Before I come to the outlook for the current year, I would like to say a few words about another important topic, namely corporate governance.

In the spirit of responsible and transparent management, the TAKKT Group has expressly endorsed the regulations of the German Corporate Governance Code, which was first published in February 2002. The third amendment to the Code came into force on June 30, 2003.

The Code makes a distinction between mandatory “recommendations” and voluntary “suggestions”. If a listed company does not comply with all “recommendations”, this must be publicly disclosed and reasons for non-compliance must be given. TAKKT expressly endorses these recommendations and has treated its shareholders, partners and employees in an open and fair manner already before the Code came into effect.

TAKKT does not follow two of the recommendations for the following - and, as we feel, convincing - reasons.

First, we still do not consider it necessary to establish an audit committee as the Supervisory Board is a relatively small body with only nine members, each of whom is capable of reviewing the financial statements thoroughly and asking the Management Board the right questions. Second, we will not provide any information about individual Management Board and Supervisory Board members’ compensation, given that such individualised information would objectively not be much more meaningful than the cumulative compensation.

A declaration of conformity pursuant to Paragraph 161 of the German Stock Corporation Act was issued by the Management and the Supervisory Boards of TAKKT on December 31, 2003. Detailed information and the full wording are published in the Annual Report and on our website.

Outlook on 2004
This takes us to my last topic, the outlook on the year 2004. What will happen to the economy and to TAKKT?

We are cautious as far as the economic environment is concerned and optimistic with regard to our own strength.

We will continue to improve our services in the year 2004. For this purpose, we have initiated a project entitled “Perfect Service” - not because our service is poor - actually our services are good - but they are not always perfect. The project involves not only our employees but also the Management Board, the directors of the subsidiaries and all our partners. By optimising our service, we will increase customer loyalty, which will, in turn, increase their buying frequency and, hence, enhance our profitability.

Outlook on 2004: German GDP
We are cautious because we consider the economies in the USA and particularly in Europe to be very vulnerable.

In the USA, GDP growth continues to be driven by consumer spending and military expenditure. However, both sectors are growing only on the back of a dramatic increase in private and public debt. Moreover, the strong worldwide pressure on pension systems and rising healthcare costs will prevent an increase in disposable incomes and consumer confidence.

We are also cautious because we consider economic researchers’ and governments’ growth projections to be too optimistic. In the past two years, growth rates were much lower than projected.

The projections for Germany’s 2003 GDP are shown on the left-hand side of the chart.

A growth rate of 1.0 percent was projected in December 2002. This projection was downgraded to 0.8 percent in March 2003. As you all know, the actual rate was a disappointing negative 0.1 percent.

If the growth rates projected by economic researchers are actually achieved in our markets, we expect the TAKKT Group’s organic turnover growth to be 3 percent adjusted for exchange rate. Earnings before tax would then increase super-proportionally and profitability would continue to improve.

Outlook on 2004: Expanding our market position
Why are we optimistic?

First of all, because of the strength of the TAKKT Group, which I outlined before. Second, because we are confident that the new companies established in recent years will develop favourably.

The KWESTO and KAISER + KRAFT brands already have a presence in the major Eastern European markets.

EU enlargement, which is scheduled for May 1, 2004, will lay the foundation for a continued dynamic development in these countries, which will have a positive effect on the activities of our subsidiaries in Poland, the Czech Republic, Hungary and Slovakia.

Today, the growth rates posted by the accession countries clearly exceed the current EU average. Their relatively low purchasing power will approach the EU level in the medium term.

Those EU accession countries in which the TAKKT Group is not active account for 20 percent of the potential of all new member countries.

We nevertheless intend to gradually market our products, at reduced fixed costs, also in these countries. Thanks to our sophisticated systems business, this will require relatively low capital outlay.

Needless to say, we will also expand in our other markets. KAISER + KRAFT Japan and Topdeq USA, for instance, plan to gradually expand their delivery ranges in the coming years.

Outlook on 2004
Ladies and gentlemen, as you can see, the TAKKT Group’s growth and portfolio strategy has paid off in a difficult economic environment. The Group’s activities rest on a broad basis, we have a strong international presence and a well-balanced portfolio. Our profitability remains high. In other words, the TAKKT Group is excellently positioned for the future.

With this outlook, I would like to finish my presentation. Dr. Zimmermann, may I ask you to elaborate on the details of our financial statements.

Thank you very much!