TAKKT Group feels effects of economic recovery

Operational profitability increases as expected

TAKKT Group benefited from the global economic recovery in the first quarter of 2010 and only posted a slight overall decline in turnover. In March, the Group already generated positive organic growth year-on-year. Operational profitability improved compared to the previous year's period. The gross profit margin and cash flow also developed positively. Therefore, the Management Board sees the expectations for the first three months expressed at the beginning of the year confirmed.

Significant events 2010

• Organic turnover decline of 4.1 percent
• Improvement in EBITDA margin to 15.4 (14.4) percent
• New Group structure implemented from 01 January, 2010
• Acquisition of remaining minority interests in Dutch and Belgian subsidiaries

Despite the slight economic improvement, TAKKT continued to feel the effects of the global economic crisis in early 2010. In the first quarter of 2010, TAKKT Group generated consolidated turnover of EUR 185.8 (2009: 186.4) million. This corresponds to a 0.3 percent decline on the previous year. Adjusted for currency effects and the positive impact of acquiring the US restaurant equipment supplier Central in 2009, the decline in turnover amounts to 4.1 percent. This was due to lower average order values, although the absolute number of orders was already higher than the prior year.

"Considering the economic signals and the positive turnover trend, we expect turnover development to pick up in the coming quarters and to return to the growth path throughout the Group in the next quarter," said CEO Dr Felix A. Zimmermann.

The efficiency improvements introduced in 2009 as part of the FOCUS programme have helped to increase operational profitability compared to the previous year. In the first quarter of 2010, EBITDA (earnings before interest, tax, depreciation and amortisation) rose to EUR 28.7 (26.9) million. The EBITDA margin came to 15.4 (14.4) percent.

The development of the gross profit margin was again satisfactory, following 2009's positive trend at both divisions and reaching 43.0 (42.9) percent overall in the first three months. Adjusted for acquisition effects, the margin amounted to 43.4 percent.

Cash flow again proved to be a specific strength of TAKKT's business model in the first quarter of 2010, increasing by 4.1 percent to EUR 20.5 (19.7) million. The cash flow margin rose to 11.0 (10.6) percent.

New Group structure from 2010
The furthest-reaching change initiated as part of the FOCUS and GROWTH strategy programmes launched in 2009 relates to the structures and responsibilities within TAKKT Group. Since 01 January 2010, the Group is made up of two divisions – TAKKT EUROPE and TAKKT AMERICA. TAKKT EUROPE contains the Business Equipment Group (BEG) and the Office Equipment Group (OEG). The BEG consists of the companies which previously belonged to the KAISER + KRAFT EUROPA division, while the OEG comprises the European Topdeq companies. TAKKT AMERICA (previously K + K America) will still be made up of the Plant Equipment Group (PEG), the Specialties Group (SPG) and the Office Equipment Group (OEG).

Inconsistent development within TAKKT EUROPE 
At the beginning of the year, TAKKT EUROPE continued to suffer from customers' buying reluctance. All in all, the division generated turnover of EUR 114.0 (120.2) million – a fall of 5.2 percent. Developments at the individual groups varied. The BEG finished the quarter with a moderate, single-digit fall in turnover. However, the OEG (respectively the European Topdeq companies) had to take another double-digit turnover decline. One reason for this was the termination of Topdeq's US operations in late 2009, which were included in the previous year's figures.

TAKKT EUROPE`s EBITDA amounted to EUR 23.2 (20.5) million. This is equivalent to an increase of 13.2 percent. The EBITDA margin rose accordingly to 20.4 (17.1) percent. This higher profitability is primarily due to improved advertising efficiency at both groups, increased capacity utilisation at the BEG and a higher gross profit margin.

TAKKT AMERICA benefits from broad diversification
After showing signs of a recovery already in the second half of 2009, TAKKT AMERICA continued to perform well in Q1 2010. At USD 99.4 (86.3) million, turnover was up 15.2 percent on the previous year. Adjusted for the Central acquisition, the division recorded a 1.2 percent turnover rise in US dollars. The number of incoming orders continued to recover in the first quarter. However, the average order value remains below the previous year's figure. Converted into euros, turnover (including Central) amounted to EUR 71.9 (66.3) million.

The broad diversification of the customer and product portfolio had a positive effect on the division's development. TAKKT AMERICA benefited from organic turnover growth at the SPG in all three months of the first quarter. Additionally, the PEG and OEG only experienced low, single-digit declines in turnover in Q1, as expected. In the period under review, TAKKT AMERICA generated EBITDA of EUR 7.4 (8.4) million. This corresponds to an EBITDA margin of 10.3 (12.7) percent. The lower margin is attributable to timing differences in expenses, especially advertising costs.

Acquisition of minority interests
In April 2010, TAKKT acquired the remaining minority interests in the Dutch Group-company Vink Lisse B.V. and the Belgian subsidiary KAISER + KRAFT N.V. for a purchase price of almost EUR 11 million. The acquisition was financed via TAKKT AG's unutilised credit lines.

Based on conservative valuation assumptions, the acquisition will generate a return on capital invested which far exceeds the Group's weighted cost of capital. The acquisition of these remaining minority interests means that there are no other minority interests within TAKKT Group.

Outlook for 2010 – moderate turnover growth anticipated
The global economic developments in the first quarter of 2010 showed some first light at the end of the tunnel. The economy continued to recover from the deep recession, which was mainly initiated by the US real estate crisis. In this climate, the Management Board expects positive growth rates in turnover and earnings at all divisions from Q2 2010 onwards. "The current improvement in the economic climate makes it increasingly probable, that TAKKT Group’s organic turnover growth will reach the upper limit, as advised beginning of 2010, of two percent or even exceed this. The EBITDA margin for the Group should reach at least eleven percent," said Dr Florian Funck, CFO.

By expanding into additional European markets, TAKKT Group is laying an important cornerstone for its return to growth. Following the launch of KAISER + KRAFT in Russia in January, preparations are being made to introduce the new online brand Certeo in an additional European market. There are also plans to roll out gaerner in Italy and Hubert in Switzerland in 2010. Additionally, Topdeq will enter the Spanish market with an online-only presence. At product level, the range of private-brand articles will be extended due to positive experience throughout the Group. The BEG has been offering transport equipment at attractive prices with its new private-brand Quipo since March 2010, while Topdeq launched its own range of high-quality office furniture under the name of siqnatop in January 2010.

"With our sound balance sheet structure, consistently strong cash flow and a broad regional alignment, we consider ourselves well positioned for further growth, but also to handle any economic setbacks," Zimmermann commented.

Conference call
We invite you to directly address the Management Board with your questions. We will be hosting a conference call for this purpose at 15:00 (CEST) on 29 April 2010, during which we will be open to questions. To take part, please dial the following number: +49 711 9659-9628 (access code: 779134#).

IFRS figures of TAKKT Group to the end of Q1 2010
in EUR million



Short profile of TAKKT AG
TAKKT is the leading B2B direct marketing specialist for business 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 160,000 items from the areas business and warehouse equipment, classic and design-oriented office furniture and accessories, and supplies for retailers, the food service industry and the hotel market.

TAKKT Group employs some 1,800 staff, has around three million customers worldwide and distributes more than 55 million catalogues and mailings per year.

TAKKT AG is listed on the SDAX and was admitted to Deutsche Boerse's Prime Standard on 01 January 2003.

Contacts:

Dr Felix A. Zimmermann, CEO
Tel. +49 711 3465-8201

Dr Florian Funck, CFO
Tel. +49 711 3465-8207

Email: investor@takkt.de