TAKKT continues to grow dynamically

Threefold increase in dividend

“TAKKT AG significantly increased its turnover and profit figures in 2007 – and grew even more strongly than expected,” said Georg Gayer, CEO of TAKKT Group, at the financial statements press conference in Stuttgart. The turnover of the leading B2B mail order group for office, business and warehouse equipment in Europe and North America rose by 2.9 percent against the previous year to EUR 986.2 (2006: 958.5) million. Adjusted for currency fluctuations and the turnover of US subsidiary Conney Safety Products LLC (Conney), which was sold with effect from 30 September 2007, the growth in turnover reached 9.2 percent. All three divisions have contributed to this organic turnover growth.

“Against the background of uneven economic conditions in our key regions, Europe and North America, this again confirms the success of our strategy of international diversification,” said Gayer. TAKKT did not only reach a record turnover in 2007, but at the same time was also able to increase its profitability. Despite expenses for new start-up companies, EBITDA reached EUR 142.3 (119.5) million – an increase of 19.1 percent over the previous year. The margin improved from 12.5 to 14.4 percent and was thus above the long-term target corridor, which TAKKT had raised by one percentage point to 11 to 13 percent only last year. “The fact that TAKKT was able to achieve such a good result was due in particular to higher gross profit margins in all three divisions as well as further improvements in capacity utilisation in Europe,” explained CFO Dr Florian Funck. “The sustained high operating profitability of KAISER + KRAFT EUROPA and the anticipated margin improvements for Topdeq and K + K America have caused us to raise the medium-term target corridor for the EBITDA margin – to 12 to 15 percent as from 2008.”

Profit before tax rose disproportionately by 25.0 percent to EUR 116.1 (92.9) million. Profit for the period under review improved by 26.8 percent over the previous year and rose to EUR 79.3 (62.5) million.

KAISER + KRAFT EUROPA on a successful track
In 2007, KAISER + KRAFT EUROPA further strengthened its position as the highest-turnover division within TAKKT Group. The division achieved a turnover of EUR 519.8 (451.2) million, an increase of 15.2 percent. Nearly all KAISER + KRAFT EUROPA subsidiary companies contributed to this result with double-digit growth rates. Despite expenditure on numerous start-ups in the years 2005 to 2007, EBITDA rose by 27.7 percent to EUR 108.4 (84.9) million. The margin improved by 2.1 percentage points from 18.8 to 20.9 percent. This was made possible by the improved gross profit margin, better capacity utilisation of mail order infrastructure and an improvement in advertising efficiency.

Topdeq successful as premium brand
Topdeq profited in 2007 from stable economic conditions in Europe and its successful repositioning as a premium brand. The division increased its turnover by 6.1 percent to EUR 91.2 (86.0) million. Adjusted for currency changes, this represented a rise of 8.5 percent. All companies contributed to this growth. Particularly positive was the development in Belgium, Switzerland and France, as well as the development of the young company in Austria.

Profitability also rose. The EBITDA margin reached 7.6 percent and was thus 2.6 percentage points above the 2006 level. The reasons for this successful result were the concentration on profitable customer segments, the higher gross profit margin, as well as the optimisation of processes.

K + K America affected by weakness of US economy
Turnover at TAKKT Group’s third division, K + K America, fell by 3.0 percent from USD 528.8 to 513.0 million due to the sale of Conney. Translated into the reporting currency euro, the decrease was more substantial on account of the weaker US dollar, and fell by 10.9 percent to EUR 375.6 (421.5) million.

Adjusted for the effects of the Conney sale, on the other hand, turnover on a US dollar basis rose by 2.0 percent. The uneven development of business, which has been observed over several quarters, continued. Especially pleasing was the positive development of the National Business Furniture (NBF) Group against the trend. Hubert also grew significantly. These two companies mainly address customers operating in the service sector. C&H in the USA and Avenue in Canada, on the other hand, were unable to match the development of the previous year. However the development of C&H in Mexico remains positive.

The EBITDA of K + K America reached EUR 36.1 (39.3) million – a fall of 8.2 percent. This included a profit of EUR 1.4 million from the sale of Conney. On the other hand the EBITDA margin improved over the previous year and rose to 9.6 (9.3) percent.

Focusing and expansion
In 2007 TAKKT consistently pursued its strategy of focusing on B2B mail order business in durable equipment. For this reason the Group sold its K + K America subsidiary Conney, a specialist in products in the area of occupational safety and first aid. Additionally, as part of this focusing strategy, the NBF Group eliminated private customers from its portfolio, who had been served via the internet brand FurnitureOnline.com.

In 2007, KAISER + KRAFT EUROPA consistently drove forward its expansion, entering the Slovakian market with a second brand. Topdeq and Hubert extended their warehouse capacities in the USA. Topdeq also expands its German facility in Pfungstadt into a cross-divisional logistics centre for office equipment. In pursuit of its multi-brand strategy, in 2008 the KAISER + KRAFT EUROPA subsidiary Gaerner established a new company in Spain, where the division has already been represented successfully by the brand KAISER + KRAFT since 1989. In addition the K + K America subsidiary Hubert will dispatch its first catalogues in Germany this year, and will thus tap into additional potential in the retailing and the food service customer segment.

Dividend increase and special dividend
Thanks to the good result for the period under review, shareholders’ equity of TAKKT Group in 2007 again rose significantly. As at 31 December 2007, the equity ratio excluding minority interests amounted to 58.6 (47.7) percent. The Group thus has a good foundation for further dynamic growth. In order for shareholders to participate appropriately in the company’s success, the dividend shall increase significantly. At the Annual General Meeting on 7 May 2008, the Management and Supervisory Boards will therefore propose to raise the ordinary dividend by 28 percent from 25 to 32 cent per share. In addition the proceeds from the sale of Conney shall be distributed to shareholders in the form of a special dividend of 48 cent per share. The total dividend will thus amount to 80 cent per share, and will have more than tripled the prior year's dividend.

TAKKT will continue in future to enable its shareholders to participate directly in the profits and cash flow of the company in so far as no larger investment projects or acquisitions are undertaken.

Changes in the Management Board of TAKKT AG
At its meeting on 14 March 2008 the Supervisory Board of TAKKT AG appointed Dr Felix A. Zimmermann as a member of the TAKKT Management Board. As from 1 May 2008 Dr Zimmermann shall be Deputy Chairman of the Management Board with responsibility for the division K + K America. Due to the step down of Thomas A. Loos in summer 2007 Georg Gayer temporarily assumed the responsibility for this division.

Outlook: cautiously optimistic
For the year 2008, TAKKT takes a cautiously optimistic view on its growth potential. TAKKT cannot expect any significant stimulus from economic developments in North America in 2008. The group sees potential in the continuous optimisation and expansion of its product range, its catalogues and its services. A further growth driver is international expansion. For 2008, TAKKT AG anticipates organic turnover growth (i.e. adjusted for currency effects as well as acquisitions and the Conney divestment) of at least four percent. The Group also aims for an EBITDA margin in the upper half of the target corridor, which has been raised again this year to 12 to 15 percent.

The figures for the first quarter of 2008 will be published on 29 April 2008. The Annual General Meeting will take place on 7 May 2008 in Forum Ludwigsburg.

Short profile of TAKKT AG
TAKKT AG is the leading B2B mail order company for office, business and warehouse equipment in Europe and North America. The Group is represented with its brands in more than 25 countries. The product range of the TAKKT subsidiaries comprises over 130,000 items from the areas business and warehouse equipment, classical and design-oriented office furniture and accessories, as well as sales promotion items for retailers, the food service industry and the hotel market.

TAKKT AG employs some 2,000 staff, has about three million customers worldwide and distributes more than 70 million catalogues and mailings per year. 

The company is listed on the SDAX and was admitted to Deutsche Boerse’s Prime Standard on 1 January 2003.

Key figures of the TAKKT Group under IFRS

Stuttgart, 20 March 2008

Contact:

Georg Gayer, CEO
Phone +49 711 34658-201

Dr Florian Funck, CFO
Phone +49 711 34658-207

E-mail: investor@takkt.de