Interview with Dr Florian Funck

on solid financials and the importance of good investor relations work for TAKKT
(March 2011)

Question: Why did you decide to borrow capital if TAKKT could also operate free of financial debt?

In general, a sound shareholders’ equity base is good and the right thing to have because it acts as a risk buffer for the ongoing existence of the business. However, shareholders’ equity is more expensive for a company like ours than borrowed capital because equity investors naturally expect a higher yield than debt investors as there is a greater degree of risk involved. As TAKKT’s business model generates very strong cash flows, we merit having a certain amount of borrowed capital on our balance sheet. By doing this, TAKKT can optimise its total cost of capital. With our long-term target corridor for the equity ratio of 30 to 60 percent, TAKKT is solidly positioned and can also capitalise on a variety of growth opportunities.

Question: What are the cornerstones of TAKKT’s banking strategy?

The relationship with our bank partners can best be described with three adjectives: long-term, balanced and transparent. It is longterm because we have had a trusting working relationship with most banks since our IPO. TAKKT has access to five-year revolving credit lines – just one of the indications of our bank partners’ long-term approach. It is balanced because TAKKT always ensures that its banking portfolio only contains bank partners with good credit worthiness and is spread evenly among the three sectors of the banking market – i.e. private banks, cooperative banks and public credit institutions. International private banks complement the portfolio. It is transparent because TAKKT simultaneously provides all our bank partners with comprehensive information about financial issues at our annual Bankers’ Day. Moreover, TAKKT internally assesses the banks each year, based on criteria such as risk exposure and pricing as well as problem-solving skills and creativity and discusses these evaluations with the respective banking partners.

Question: For you personally, why is investor relations work so important?

Last year’s global economic crisis clearly showed just how important it is to communicate with capital market participants comprehensively, transparently and quickly. Dodging in a difficult year was never an option for TAKKT. Quite the opposite: during turbulent times, it was – and remains – particularly important for us to convince investors that we are on the right track and that our business model offers good prospects for the future. In this, TAKKT does not differentiate between institutional funds and private investors. I personally think that open dialogue with investors is a crucial source of feedback for the management because it offers TAKKT a lot of important input from a different perspective. Under no circumstances would I want to do without this “outside-in” view.