Press Release, 12.11.2007
TA Triumph-Adler AG confirms full-year forecast
New financing opens up additional growth opportunities; Sales up 12.6 %; Pre-tax earnings almost trebled to € 8 million
After adjustments in deferred taxes following the corporation tax reform, net income for the period meets expectations at -€ 31 million
Nuremberg, November 12, 2007: In the first nine months of the financial year 2007 the TA Triumph-Adler AG group has exceeded its declared targets for growth in sales and fully achieved projected earnings. TA Triumph-Adler AG increased consolidated sales in the first nine months by 12.6 % to € 307.5 million, compared with € 273.1 million in the same period last year. Pre-tax earnings for this period have almost trebled from € 2.8 million to € 8.0 million. The efficiency specialist in the document business confirmed that it has its sights set on earnings before tax at the lower end of the double-digit million range for the full year 2007 with sales in excess of € 400 million.
As announced on several occasions, the reduction in tax rates following the passing of the corporation tax reform necessitated an adjustment in the Group’s capitalized deferred taxes amounting to some € 35.8 million. The tax cost for the nine month period therefore amounts at € 39.0 million, with net earnings accordingly standing at -€ 31 million. Leaving aside the effects of this legally necessary but purely technical adjustment which does not affect our cash position, net income from operations for the reporting period came in at € 4.8 million, against € 0.6 million in the same period last year. The company confirms that this result is entirely in line with expectations.
New financing lowers costs, opens up new opportunities
In its nine-month report published today, TA Triumph-Adler AG draws particular attention to the successful implementation of its new financing. The company now expects to consistently reduce its financing costs by more than € 5 million per year relative to previous cost levels. At the same time TA Triumph-Adler also has plans to intensify growth through acquisitions in its core business area and realize further improvements in results by exploiting synergies.
The effects of the new financing arrangements and the announced adjustment in deferred taxes following the corporation tax reform will be reflected in substantial changes on the balance sheet. As of September 30, 2007, the consolidated balance sheet total stood at € 411.4 million, down by € 29.5 million relative to the closing balance sheet on December 31, 2006 (€ 440.9 million).
Equity ratio remains stable despite adjustment in deferred taxes
As a result of the adjustment necessitated by the reduction in corporation tax rates, capitalized deferred taxes were cut back from € 167.6 million to € 129.8 million.
On the equity side, after the reduction in capital then followed by a subsequent increase, subscribed capital now stands at € 80.3 million. The increase in capital was clearly oversubscribed, yielding just under € 28 million gross. The adjustment in deferred taxes is reflected in the balance sheet deficit of € 42.6 million. As of September 30, 2007, TA Triumph-Adler AG therefore had consolidated equity amounting to € 45.7 million (before minority interests). As of December 31, 2006, the figure before minority interests stood at € 50.1 million.
The equity ratio therefore remained almost constant – thanks also to the balance sheet contraction – at 11.3 % (September 30, 2007) compared with 11.5% (December 31, 2006). Here too the company has achieved one of the stated aims of its refinancing, namely to counteract the anticipated need for writedowns necessitated by the tax reform.
Substantial reduction in debt
In winding up the previous financing arrangements, both a mezzanine loan and the previous syndicated borrowings were redeemed in full. This is reflected in the reduction in both long- and short-term debt. Long-term debt has been cut by € 24.4 million from € 68.0 million on December 31, 2006, to just € 43.6 million, while short-term borrowings are down from € 10.7 million to € 7.2 million. Included among the current debt totaling € 50.8 million are the company’s new financing instruments, in particular a new syndicated loan amounting to € 25 million and two loans against borrower's note.
Operating result increased
In the traditionally weak third quarter the company nevertheless achieved growth in both segments of its business. Direct sales generated revenues of € 83.7 million, against € 81.4 million in the same period last year. Meantime from July 1 to September 30, 2007, the distribution segment recorded sales of € 18.2 million (previous year: € 17.5 million). TA Triumph-Adler also points out that with the introduction of a new generation of color machines, sales and earnings in the third quarter of 2006 were unusually strong – hence the relatively low level of growth.
The results in both segments showed a clear year-on-year rise over the first nine months. EBIT in the distribution segment was up from € 1.3 million in 2006 to € 2.2 million in 2007, while the operating EBIT margin rose from 3.6 % to 4.6 %. In the third quarter of last year this segment returned a negative result of -€ 0.3 million, whereas EBIT in Q3 this year came in at +€ 0.3 million.
EBIT in the direct sales segment climbed from € 9.9 million in 2006 to € 13.7 million in 2007. The operating EBIT margin also rose from 6.5 % to 7.2 %. However the bottom line in the direct sales segment declined in Q3 from € 5.2 million in 2006 to € 3.7 million this year.
The group as a whole improved earnings before interest and taxes by 49.2 % in the first nine months from € 11.2 million to € 15.9 million. This figure already takes account of the € 2.1 million exceptional cost of the new financing package. The operating EBIT margin rose from 5.9 % to 6.7 %. Without the cost of the new financing, EBIT would have amounted to € 18.0 million, representing an operating EBIT margin of 7.4 %.
The financial result improved in the first nine months from -€ 8.4 million in 2006 to -€ 7.9 million this year. This positive trend can be attributed primarily to the redemption of the company’s previous financing. The new arrangements will consistently reduce interest costs by around € 0.5 million per month, the full benefit of which will begin to be felt in the fourth quarter of 2007.
Pre-tax earnings as a result almost trebled to € 8.0 million, compared with a profit before tax last year of € 2.8 million.
Thanks to the marked improvement in the pre-tax result for the period, cash flow in the first nine months of the current financial year rose from € 12.4 million in the same period last year to € 16.8 million. Liquidity as of September 30, 2007, stood at € 27.4 million.
On September 30, 2007, the TA Triumph-Adler Group employed a workforce of 1,381, compared with 1,414 on December 31, 2006.
Further details can be obtained from:
TA Triumph-Adler AG
Dr. Joachim Fleing
Phone: +49 (0) 911 / 68 94 - 499
Fax: +49 (0) 911 / 68 98 -200
Mailing address:
Suedwestpark 23
D -90449 Nuremberg, Germany
ir@ta.ag
www.triumph-adler.de
Important notice:
This press release contains forward-looking statements that are based on assumptions and estimates made by the management of TA Triumph-Adler AG. Even if the management of the company is of the view that these assumptions and estimates are appropriate, future actual developments and future actual events may diverge significantly from these assumptions and estimates due to various factors. These factors may include, by way of example, changes in the macroeconomic situation, exchange rates, interest rates, as well as changes both within the market and in the competitive environment as the result of technological change. TA Triumph-Adler AG provides no guarantee, and accepts no liability, if future developments, and results achieved in the future, do not accord with the assumptions and estimates expressed in this press release.