Quarterly Report • Apr 28, 2016
Quarterly Report
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| 2012 | 2013 | 2014 | 2015 | 2016 | ||
|---|---|---|---|---|---|---|
| Sales | € '000 | 55,146 | 54,529 | 54,328 | 46,969 | 44,651 |
| EBIT | € '000 | 5,174 | 5,248 | 3,661 | 4,722 | 4,528 |
| Earnings before income taxes | € '000 | 4,778 | 4,567 | 2,208 | 5,730 | 5,506 |
| Earnings after income taxes | € '000 | 3,289 | 2,936 | 932 | 4,194 | 3,884 |
| Earnings per share | €/share | 1.19 | 1.07 | 0.34 | 1.52 | 1.41 |
| Cash-flow | € '000 | 5,504 | 5,668 | 4,374 | 5,276 | 4,806 |
| Capital expenditures | € '000 | 2,103 | 1,523 | 1,832 | 686 | 1,292 |
| Depreciation | € '000 | 2,405 | 2,281 | 2,360 | 2,176 | 1,947 |
| Number of employees | 808 | 834 | 828 | 814 | 770 |
on the business performance for the three-month period ended March 31, 2016
With economic growth in the eurozone having slowed down towards the end of 2015 and a growth rate of 1.5% recorded for the full year 2015, only a moderate 1.3% increase in the gross domestic product has been projected for 2016 in view of declining demand from China and other emerging countries. The subdued economic growth of 1.3% posted in the eurozone in the first quarter of 2016 was in line with projections. The German economy no longer steamed ahead, with growth also settling at a low level of 1.5% in Q1 2016. Private consumption remains the main driver of the economy, both in Germany and in the eurozone as a whole.
The economic situation in Russia remains very tight. Having contracted by 3.7% in 2015, the Russian economy is expected to decline by another 2.5% in 2016 in spite of a moderate pick-up in the oil price. The Russian economy is primarily suffering from the sharp drop in the oil price during the last two years, as commodity and energy-driven enterprises are of special importance for the country. The economy is also being adversely affected by the sanctions imposed in the context of the Ukraine crisis and by the sharp depreciation of the Russian rouble against the euro. At RUB/€ 82.69, the average exchange rate in the first quarter of 2016 exceeded the average of the first quarter of 2013 of EUB/€ 40.19 by 105.7%; consequently, the prices of imported products more than doubled within only three years. Accordingly, Russia's inflation rate reached a high level in the past years and stood at a very high 8% at the beginning of 2016. It is therefore not surprising that private consumption, a pillar of the Russian economy in the past, is declining.
As had been expected, the overall macroeconomic environment had an adverse impact on A.S. Création's sales revenues in the first quarter of 2016. At € 44.7 million, Group revenues were down by € 2.3 million on the previous year's € 47.0 million or 4.9% on the first three months of 2016. Compared to the fiscal year 2015, however, which saw A.S. Création record a 12.0% drop in revenues, the decline in Q1 2016 was much more moderate. According to the Managing Board, this is attributable to the good quality of the product range developed over the past months, which has been very well accepted by our customers.
The breakdown of sales revenues by regions shows that A.S. Création's decline in revenues in Western and Eastern Europe slowed down markedly in the first quarter. Gross revenues in the European Union (EU) were down by only 3.4% on the previous year, compared to a reduction by 5.2% in the full year 2015. It was gratifying to see that sales revenues in France and England more or less stayed at the prior year level. By contrast, A.S. Création reported declining sales revenues in Germany and the Baltic states. While the decline in Germany is essentially due to lower orders at the beginning of the year, the drop in revenues in the Baltic states primarily reflects their traditionally close economic relations with Russia. The Russian crisis thus also leads to lower exports to the Baltic states.
Having dropped by as much as 43.5% in the fiscal year 2015, gross revenues generated by A.S. Création in non-EU Eastern European countries fell by another 18.7% in the first three months of 2016. Besides the unfavourable exchange rate of the Russian rouble against the euro, which is making exports to the region extremely difficult, this is also attributable to the fact that no more revenues were generated with customers who became insolvent in 2015 or who are struggling with financing problems because of the economic crisis in Russia.
On balance, A.S. Création's sales revenues in the first quarter of 2016 were in line with the Managing Board's expectations. Therefore the sales performance to date confirms the projections for the full year 2016, namely that Group revenues will amount to between € 160 million and € 170 million.
Although sales revenues declined by € 2.3 million in the first quarter of 2016, earnings before interest and taxes, at € 4.5 million, were down by only € 0.2 million or 4.1% on the previous year's € 4.7 million, which means that the EBIT margin again reached a high level of 10.1%.
Adjusted for the impact of foreign exchange gains, which primarily result from the exchange rate trend of the Russian rouble against the euro, A.S. Création's earnings have even improved in the current financial year. As the Russian distribution company, A.S. Création (RUS), is primarily financed with euro-denominated loans, changes in exchange rates lead to translation-related exchange gains or losses showing up in earnings before interest and taxes. In the first quarter of 2016, the rouble gained 4% against the euro, compared to a 7% gain in the first three months of the previous year. Accordingly, A.S. Création benefited from lower exchange gains in the reporting period than in the previous year, leading to a drop in other operating income. Adjusted for foreign exchange gains of € 0.2 million (previous year: € 0.8 million), earnings before interest and taxes amounted to € 4.3 million, up € 0.4 million or 10.3% on the previous year's € 3.9 million. The EBIT margin climbed from 8.3% in the previous year to 9.6% in the current fiscal year in adjusted terms.
This positive trend is primarily attributable to the improved gross profit margin, which climbed from 54.8% in the previous year to 56.7% in the reporting period. This enabled A.S. Création to contain the decline in gross profit to € 0.5 million while sales contracted by € 2.3 million. Besides the successful product range and the optimisation of stock and inventory levels, the efficiency gains in production and the fact that commodity and energy prices were slightly lower than in the previous year also contributed to the increase in this important performance indicator.
The measures initiated to reduce personnel expenses, which were essentially completed in the fiscal year 2015 – especially the concentration of the two German production facilities – have taken effect in the meantime. The headcount of the A.S. Création Group came down from 814 in Q1 2015 to 770 in the reporting period, and personnel expenses declined by € 0.5 million or 4.4% from the previous year's € 11.4 million to € 10.9 million in the first three months of 2016. The Managing Board's objective to reduce personnel expenses as a percentage of total output below the high level of the previous year has not been reached
yet, however. In the reporting period, at 24.9%, personnel expenses as a percentage of total output were still more or less on a par with the previous year's 24.7%. This is mainly due to the fact that the savings resulting from the reduced headcount were partly offset by the 2.6% collective wage increase in November 2015 for most of the domestic employees.
Besides personnel expenses, other operating expenses and depreciation were also below the prior year levels in Q1 2016 and helped to almost entirely offset the shortfall in earnings resulting from the reduced sales revenues.
At € 1.0 million, the consolidated financial result was almost unchanged in the first quarter of 2016 (previous year: € 1.0 million). The earnings situation of the Russian production company, A.S. & Palitra, has the biggest influence on the consolidated financial result of A.S. Création. Given that A.S. Création Tapeten AG and the second shareholder, Kof Palitra, each own 50% of this company, the Russian production company is accounted for using the equity method, which means that the share in net result after taxes that is attributable to A.S. Création is recognised in the Group's financial result. The pro-rated profit of € 1.0 million in Q1 2015 declined to € 0.9 million in the reporting period. As outlined above, the Russian rouble's revaluation in the reporting period was lower than in the first quarter of 2015. As the joint venture is largely financed with euro loans, the translation-related exchange gains of A.S. & Palitra – and of the Russian distribution company, A.S. Création (RUS) – in the first quarter of 2016 were lower than in the previous year. They are included in the pro-rated result after taxes in an amount of € 0.6 million (previous year: € 1.1 million). This means that A.S. Création's share in profit after taxes adjusted for exchange gains amounted to € 0.3 million, compared to a pro-rated loss of € -0.1 million in the previous year. This positive earnings trend is primarily attributable to higher sales volumes and the resulting better utilisation of the production capacities. Against the background of the good order situation and the growing demand for Russian-made wallpapers, the two shareholders of the joint venture had decided to install another local production line already at the end of 2015. The latter will probably be taken into operation in autumn 2016. The Managing Board is very satisfied with the development of the company.
The moderate decline in EBIT and the unchanged financial result led to earnings before taxes of € 5.5 million in Q1 2016, down € 0.2 million or 3.9% on the previous year's € 5.7 million. Earnings after taxes amounted to € 3.9 million (previous year: € 4.2 million ) or € 1.41 per share (previous year: € 1.52) in the first three months of 2016.
A.S. Création was exposed to a large number of extraordinary effects in the last nine months of 2015, which had a strong adverse impact on the bottom line. Earnings before taxes in Q1 2016, at € 5.5 million, were only slightly below the € 5.6 million reported for the full year 2015, and earnings after taxes, at € 3.9 million, already exceeded the € 3.3 million posted for the full year 2015. The earnings trend in Q1 2016 was thus in line with the expectations for the full fiscal year. In the forecast for the full year 2016, the Managing Board projected a notable improvement in earnings before and after taxes compared to the fiscal year 2015 provided that no significant burdens arise from the antitrust proceedings and that the Russian rouble does not depreciate extremely against the euro by the end of 2016.
Against the background of the difficult environment, the Managing Board is satisfied with the results achieved in the first quarter of 2016.
At € 4.8 million, cash flow was down by € 0.5 million on the previous year's € 5.3 million. Put simply, this reduction reflects the decline in EBIT in conjunction with lower annual depreciation. This reduced cash flow contrasted with greatly increased financing requirements in the reporting period.
At € 11.0 million, the seasonal increase in trade receivables that is typical of the first quarter was much higher than the previous year's € 7.4 million in the first three months of 2016. As receivables, at € 39.3 million, were still below the € 42.3 million recorded as of March 31, 2015, DSO (days of sales outstanding) declined from 74 days in Q1 2015 to 68 in the reporting period.
Capital expenditures increased by € 0.6 million from € 0.7 million in the previous year to € 1.3 million in the reporting period as the concentration of A.S. Création's German wallpaper production activities in Wiehl-Bomig entailed several construction measures as well as investments in technical replacements and additional plant capacity. In spite of the increased financing requirements, the first quarter of 2016 saw a reduction in interest-bearing financial liabilities from € 16.2 million on December 31, 2015 by € 0.9 million to € 15.3 million on March 31, 2016. As of the balance sheet date, these financial liabilities contrasted with cash and cash equivalents as well as current financial assets of € 16.3 million, leaving A.S. Création with a net credit position of € 1.0 million on March 31, 2016. On March 31, 2015, the company still had net financial liabilities (difference between interest-bearing financial liabilities and cash and cash equivalents as well as current financial assets) of € 8.0 million. The equity ratio of 63.4% as of March 31, 2016 underlines A.S. Création's very solid financial structure.
In the estimation of the Managing Board, the net assets position of A.S. Création is also very solid. As of March 31, 2016, the Group's total assets amounted to € 151.0 million (previous year: € 156.3 million), of which 81.6% (previous year: 83.2%), i.e. by far the biggest portion, related to property, plant and equipment, inventories, trade receivables, current financial assets as well as cash and cash equivalents. By contrast, intangible assets recognised in the consolidated balance sheet as of the balance sheet date (including goodwill) played only a minor role and represented only 5.3% (previous year: 5.2%) of total assets and 8.4% (previous year: 9.1%) of the equity capital.
With sales declining by 4.9% in the first quarter of 2016, the start to the new fiscal year was as difficult as had been expected. In the coming months, the company will focus on containing the drop in sales revenues and to achieve turnaround by the end of the year. The existing overcapacities in Western Europe will probably lead to intense competition for market share. A.S. Création believes it is well positioned for this competition. On the one hand, A.S. Création's closely knit sales network in Western Europe will underpin the implementation of a more aggressive marketing strategy. On the other hand, the Managing Board considers the company's product range to be very competitive on account of its width and diversity. Moreover, A.S. Création has already adjusted its production capacities to the lower volumes resulting from the reduced exports to Eastern Europe, especially to Russia, which are expected to be of a permanent nature. The initial problems associated with the concentration of the production activities at a single location will be eliminated in the coming months, so that A.S. Création will face the competition with an efficient production base operating at high capacity.
With regard to the sales trend in the non-EU Eastern European countries, the Managing Board expects demand for locally produced wallpapers to pick up further. This should benefit both the Russian distribution company, A.S. Création (RUS), and the joint venture, A.S. & Palitra. The Managing Board therefore pursues a strategy of increasing sales of locally produced goods and expanding the local production capacities. Sales of Germanmade wallpapers will probably drop below the prior year levels in the coming months, as the exchange rate between the Russian rouble and the euro will remain unfavourable and the above-mentioned loss of large customers cannot be offset in the short to medium term.
Against the background of the sales trend in the first quarter of 2016 and the expectations for the coming months, the Managing Board confirms its sales projections for the full year 2016, according to which sales revenues will come in at between € 160 million and € 170 million.
With regard to the operating performance, the sales trend in the coming months will play a critical role. As no leap in sales revenues is expected, as outlined above, the focus will remain on the ongoing adjustment of the cost structures. This also includes personnel expenses as a percentage of total output, which must be reduced to a lower level. A.S. Création Tapeten AG in Germany will additionally focus on the ongoing optimisation of its production and logistic processes.
With regard to the earnings position of A.S. Création in the remaining course of the fiscal year, the Managing Board stands by its full-year 2016 guidance as detailed in the forecast report of the 2015 Annual Report. Provided that no significant burdens exceeding the amount of € 4.9 million already recognised as an expense arise from the antitrust proceedings and that the Russian rouble does not depreciate extremely against the euro by the end of 2016, earnings before and after taxes should improve notably.
As outlined above, Q1 2016 earnings before and after taxes already reached the level reported for the full year 2015. From today's point of view, it is safe to assume that A.S. Création will be able to generate profits also in the remaining nine months of the fiscal year 2016. This means that A.S. Création is well on track to reach its earnings projections.
This view is supported by the fact that the French court of appeal decided on A.S. Création's appeal in the French appeal proceedings in April 2016 and reduced the penalty imposed by the French antitrust authorities by € 2.9 million. If the verdict becomes final, A.S. Création will book income of € 2.9 million (for the details, please refer to note No. 9 "Post balance sheet events"). This potential income is not included in the figures for the first three months of 2016.
The risk and opportunity profile of A.S. Création Tapeten AG has not changed materially as compared to the presentation in the 2015 Annual Report.
To the best of our knowledge, and in accordance with the applicable reporting principles for interim financial reporting, the interim consolidated financial statements give a true and fair view of the assets, liabilities, financial position and profit or loss of the Group, and the interim management report of the Group includes a fair review of the development and performance of the business and the position of the Group, together with a description of the principal opportunities and risks associated with the expected development of the Group for the remaining months of the financial year.
Gummersbach, April 25, 2016
The Managing Board
Krämer Bantel Suskas
as per March 31, 2016
| Assets | ||
|---|---|---|
| 31.03.2016 | 31.12.2015 | |
| € '000 | € '000 | |
| Tangible fixed assets | 28,483 | 29,146 |
| Intangible fixed assets | 8,039 | 8,057 |
| Investments accounted for at equity | 0 | 0 |
| Financial assets | 9,155 | 8,510 |
| Other assets | 3,951 | 3,690 |
| Income tax receivables | 290 | 295 |
| Deferred tax assets | 560 | 512 |
| Non-current assets | 50,478 | 50,210 |
| Inventories | 39,141 | 38,859 |
| Trade receivables | 39,271 | 28,240 |
| Other assets | 13,589 | 14,223 |
| Income tax receivables | 1,810 | 1,955 |
| Cash and cash equivalents | 6,734 | 6,918 |
| Current assets | 100,545 | 90,195 |
| Total assets | 151,023 | 140,405 |
| 31.03.2016 | 31.12.2015 | |
|---|---|---|
| € '000 | € '000 | |
| Capital stock | 9,000 | 9,000 |
| Capital reserves | 13,757 | 13,757 |
| Revenue reserves | 80,158 | 81,133 |
| Profit carried forward | -13,929 | -17,216 |
| Earnings after taxes | 3,884 | 3,287 |
| Adjustment for own shares | -4,021 | -4,021 |
| Currency translation differences | 6,933 | 7,248 |
| Equity | 95,782 | 93,188 |
| Financial liabilities (interest-bearing) | 9,075 | 10,005 |
| Other liabilities | 768 | 781 |
| Provisions for pensions | 12,619 | 11,124 |
| Deferred tax liabilities | 1,453 | 2,037 |
| Non-current liabilities | 23,915 | 23,947 |
| Financial liabilities (interest-bearing) | 6,191 | 6,172 |
| Other liabilities | 14,733 | 10,585 |
| Trade payables | 9,612 | 6,070 |
| Provisions | 77 | 131 |
| Tax liabilities | 713 | 312 |
| Current liabilities | 31,326 | 23,270 |
| Total equity and liabilities | 151,023 | 140,405 |
for the three-month period ended March 31, 2016
| Notes | 2016 | 2015 |
|---|---|---|
| No. | € '000 | € '000 |
| Sales (2) |
44,651 | 46,969 |
| Increase or decrease in unfinished and finished goods | -1,072 | -977 |
| Total output | 43,579 | 45,992 |
| Cost of materials | 18,863 | 20,771 |
| Gross profit | 24,716 | 25,221 |
| Other income | 396 | 1,069 |
| 25,112 | 26,290 | |
| Personnel expenses | 10,864 | 11,362 |
| Depreciation | 1,947 | 2,176 |
| Operating taxes | 103 | 117 |
| Other operating expenses | 7,670 | 7,913 |
| Operating expenses | 20,584 | 21,568 |
| Earnings before interest and taxes (EBIT) | 4,528 | 4,722 |
| Interest and similar income | 293 | 266 |
| Results from investments accounted for at equity | 898 | 982 |
| Interest and similar expenses | 213 | 240 |
| Financial result | 978 | 1,008 |
| Earnings before income taxes | 5,506 | 5,730 |
| Income taxes (3) |
1,622 | 1,536 |
| Earnings after taxes | 3,884 | 4,194 |
| Earnings per share (4) |
1.41 € | 1.52 € |
for the three-month period ended March 31, 2016
| 2016 | 2015 | |
|---|---|---|
| € '000 | € '000 | |
| Earnings after taxes | 3,884 | 4,194 |
| Items, that will never be reclassified to profit or loss: | ||
| Actuarial gains/losses from pension provisions | -1,436 | -1,154 |
| Deferred taxes on other comprehensive income | 449 | 360 |
| -987 | -794 | |
| Items, that are or may be reclassified to profit or loss: | ||
| Foreign currency translation differences for fully consolidated companies | -29 | -423 |
| Foreign currency translation differences for investments accounted for at equity | -286 | -481 |
| Change in fair value of an interest rate hedge | 17 | 40 |
| Deferred taxes on other comprehensive income | -5 | -12 |
| -303 | -876 | |
| Other comprehensive income (outside profit or loss) | -1,290 | -1,670 |
| Total comprehensive income | 2,594 | 2,524 |
for the three-month period ended March 31, 2016
| Capital stock |
Capital reserves |
Revenue reserves |
Profit carried forward |
Net profit |
Adjust ment for own shares |
Currency trans lation diffe rences |
Total | |
|---|---|---|---|---|---|---|---|---|
| € '000 | € '000 | € '000 | € '000 | € '000 | € '000 | € '000 | € '000 | |
| January 1, 2015 | 9,000 | 13,757 | 70,939 | 974 | -9,338 | -4,021 | 5,580 | 86,891 |
| Earnings after taxes 2014 |
0 | 0 | 0 | -9,338 | 9,338 | 0 | 0 | 0 |
| Dividend payments | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 |
| Allocation to revenue reserves |
0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 |
| Total comprehensive income 2015 |
0 | 0 | -766 | 0 | 4,194 | 0 | -904 | 2,524 |
| March 31, 2015 | 9,000 | 13,757 | 70,173 | -8,364 | 4,194 | -4,021 | 4,676 | 89,415 |
| Capital stock |
Capital reserves |
Revenue reserves |
Profit carried forward |
Net profit |
Adjust ment for own shares |
Currency trans lation diffe rences |
Total | |
|---|---|---|---|---|---|---|---|---|
| € '000 | € '000 | € '000 | € '000 | € '000 | € '000 | € '000 | € '000 | |
| January 1, 2016 | 9,000 | 13,757 | 81,133 | -17,216 | 3,287 | -4,021 | 7,248 | 93,188 |
| Earnings after taxes 2015 |
0 | 0 | 0 | 3,287 | -3,287 | 0 | 0 | 0 |
| Dividend payments | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 |
| Allocation to revenue reserves |
0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 |
| Total comprehensive income 2016 |
0 | 0 | -975 | 0 | 3,884 | 0 | -315 | 2,594 |
| March 31, 2016 | 9,000 | 13,757 | 80,158 | -13,929 | 3,884 | -4,021 | 6,933 | 95,782 |
for the three-month period ended March 31, 2016
| 2016 | 2015 | |
|---|---|---|
| € '000 | € '000 | |
| Operating activities | ||
| Earnings after taxes | 3,884 | 4,194 |
| + Depreciation on tangible and intangible fixed assets |
1,947 | 2,176 |
| +/- Increase/decrease in long-term provisions | 59 | 61 |
| -/+ Income/expenses from investments accounted for at equity | -898 | -982 |
| -/+ Increase/decrease in present value of corporate income tax credit | -3 | -7 |
| -/+ Income/expenses from changes in deferred taxes | -183 | -166 |
| Cash-flow | 4,806 | 5,276 |
| -/+ Profit/losses from disposal of tangible and intangible fixed assets | -30 | -36 |
| -/+ Increase/decrease in inventories | -151 | 46 |
| -/+ Increase/decrease in trade receivables | -11,029 | -7,410 |
| +/- Increase/decrease in trade payables | 3,462 | 3,627 |
| -/+ Increase/decrease in other net working capital | 4,924 | 2,994 |
| Cash-flow from operating activities | 1,982 | 4,497 |
| Investing activities | ||
| -/+ Cash outflows for capital expenditures on tangible and intangible fixed assets | -1,292 | -686 |
| - Cash outflows for credits and bonds granted |
0 | 0 |
| Capital expenditures | -1,292 | -686 |
| -/+ Cash outflows / proceeds from current financial investments | 0 | 0 |
| + Proceeds from the disposal of tangible and intangible fixed assets |
54 | 54 |
| Cash-flow from investing activities | -1,238 | -632 |
| Financing activities | ||
| - Dividends paid to shareholders of A.S. Création Tapeten AG |
0 | 0 |
| +/- Raising/repayment of financial liabilities (interest-bearing) | -911 | -314 |
| Cash-flow from financing activities | -911 | -314 |
| Net change in cash and cash equivalents | -167 | 3,551 |
| +/- Change in cash and cash equivalents due to exchange rate fluctuations | -17 | 54 |
| + Cash and cash equivalents at January 1 |
6,918 | 5,775 |
| Cash and cash equivalents at March 31 | 6,734 | 9,380 |
Further information on the cash flow statement are presented in the notes to the consolidated financial statement (see No. 5).
for the three-month period ended March 31, 2016
A.S. Création Tapeten AG is a joint stock company registered in the Federal Republic of Germany. The address of the headquarters is Südstrasse 47, D-51645 Gummersbach.
The present interim consolidated financial statements for the three-month period ended March 31, 2016 were prepared by A.S. Création Tapeten AG in condensed form in accordance with IAS 34 "Interim Financial Reporting". The accounting and valuation methods used are consistent with those used to prepare the consolidated financial statements for the year ended December 31, 2015. The latter were prepared on the basis of the International Financial Reporting Standards (IFRS) in force on the reporting date, such as they are applicable in the European Union, as well as the additional requirements pursuant to section 315a (1) of the German Commercial Code (Handelsgesetzbuch HGB). For a detailed description of the accounting and valuation methods, refer to the notes to the consolidated financial statements for the period ended December 31, 2015.
A.S. Création Tapeten AG has a policy of applying new IFRS as soon as they become effective. The newly published IFRS had no material effect on the assets, liabilities, financial position and earnings position of A.S. Création in the reporting period.
IFRS 15 introduces comprehensive new regulations regarding the recognition of revenue. In an initial analysis, only minor adjustment requirements have been identified, which may lead to a minor shift in the time at which revenue is realised as well as to the identification of additional performance obligations. In addition, the disclosures in the notes will become more extensive.
The application of IFRS 16 will lead to a moderate increase in assets and liabilities, as operating leases play only a minor role at A.S. Création. In addition, the disclosures in the notes will become more extensive.
To prepare the consolidated financial statements, the Managing Board must make estimates and assumptions that influence the recognition of assets and liabilities as well as income and expenses. All estimates and assumptions are made to the best of the Managing Board's knowledge to give a true and fair view of the net worth, financial and earnings position of the Group. The actual values may nevertheless deviate from the estimates. The results achieved in the fiscal year 2016 to date do not necessarily provide an indication of the performance in the further course of the year.
The present interim report has neither been audited nor reviewed by a certified public accountant. This English translation of the interim report is merely a convenience translation. The German version is the prevailing one.
Next to A.S. Création Tapeten AG, nine subsidiaries are consolidated, thereof eight companies are fully consolidated and one company is accounted for using the equity method. The basis of consolidation has not changed compared to the consolidated financial statements of 2015.
A.S. Création Tapeten AG's reporting currency is the euro (€).
In accordance with IAS 21, foreign currencies of subsidiaries in non-EMU countries are translated according to the functional currency concept using the modified closing rate method.
An average annual rate of £ 0.77054/€ (2015: £ 0.74325/€) and a closing rate of £ 0.78980/€ (2015: £ 0.72575/€) were used for the pound sterling, while an average annual rate of RUB 82.68911/€ (2015: RUB 71.02302/€) and a closing rate of RUB 76.53860/€ (2015: RUB 63.36950/€) were applied for the Russian rouble.
A contingent receivable in the amount of € 2.9 million (previous year: € 0 million) results from the verdict in the French appeal proceedings, which is not final yet. For details, please refer to note No. 9 "Post balance sheet events".
| Wallpaper Division | Fabrics Division | Consolidation | Group | ||||||
|---|---|---|---|---|---|---|---|---|---|
| 2016 | 2015 | 2016 | 2015 | 2016 | 2015 | 2016 | 2015 | ||
| € '000 | € '000 | € '000 | € '000 | € '000 | € '000 | € '000 | € '000 | ||
| Germany | 20,181 | 20,816 | 3,020 | 2,985 | -24 | -51 | 23,177 | 23,750 | |
| EU (excl. Germany) | 20,128 | 21,071 | 623 | 637 | -17 | -15 | 20,734 | 21,693 | |
| European Union (EU) | 40,309 | 41,887 | 3,643 | 3,622 | -41 | -66 | 43,911 | 45,443 | |
| Other Eastern Europe | 3,497 | 4,318 | 148 | 163 | 0 | 0 | 3,645 | 4,481 | |
| Other countries | 2,627 | 2,759 | 165 | 223 | 0 | 0 | 2,792 | 2,982 | |
| Sales (gross) | 46,433 | 48,964 | 3,956 | 4,008 | -41 | -66 | 50,348 | 52,906 | |
| Reduction in revenues | -5,412 | -5,675 | -285 | -263 | 0 | 1 | -5,697 | -5,937 | |
| Sales (net) | 41,021 | 43,289 | 3,671 | 3,745 | -41 | -65 | 44,651 | 46,969 |
A breakdown of Group sales by region is provided below:
Income taxes in the reporting period were calculated using country-specific tax rates anticipated for the full fiscal year. Income taxes break down as follows:
| 2016 | 2015 | |
|---|---|---|
| € '000 | € '000 | |
| Current income tax expenses | 1,805 | 1,702 |
| Deferred taxes | -183 | -166 |
| 1,622 | 1,536 |
Earnings per share are calculated as follows:
| 2016 | 2015 | ||
|---|---|---|---|
| Number of shares outstanding (weighted average) | shares | 2,756,351 | 2,756,351 |
| Net profit | € | 3,884,312 | 4,193,860 |
| Earnings per share | €/share | 1.41 | 1.52 |
Given that no stock options or similar equity instruments exist that may lead to a change in the number of shares (so-called "capital dilution"), earnings per share represent both basic and diluted earnings per share.
Cash flow from operating activities includes the following payments:
| 2016 | 2015 | |
|---|---|---|
| € '000 | € '000 | |
| Interest received | 5 | 5 |
| Interest paid | 127 | 150 |
| Income tax paid | 1,254 | 1,270 |
| Dividends received | 0 | 0 |
Interest paid primarily relates to investment financing.
The changes in financial liabilities shown under cash flow from financing activities are composed as follows:
| 2016 | 2015 | |
|---|---|---|
| € '000 | € '000 | |
| Raising of financial liabilities (excl. financial lease) | 111 | 651 |
| Raising of liabilities under financial lease contracts | 0 | 0 |
| Repayment of financial liabilities (excl. financial lease) | -904 | -848 |
| Repayment of liabilities under financial lease contracts | -118 | -117 |
| -911 | -314 |
According to IFRS 8, segment reporting must reflect the Group's internal organisational and reporting structures. Based on A.S. Création's products and services, the corporate structure comprises two segments, i.e. the Wallpaper Division and the Furnishing Fabrics Division. Prices charged for intragroup deliveries and services are set in line with general market prices.
| Wallpaper Division | Fabrics Division | Consolidation | Group | |||||
|---|---|---|---|---|---|---|---|---|
| 2016 | 2015 | 2016 | 2015 | 2016 | 2015 | 2016 | 2015 | |
| € '000 | € '000 | € '000 | € '000 | € '000 | € '000 | € '000 | € '000 | |
| External sales | 41,004 | 43,245 | 3,647 | 3,724 | 0 | 0 | 44,651 | 46,969 |
| Intra-Group sales | 17 | 44 | 24 | 21 | -41 | -65 | 0 | 0 |
| Total sales | 41,021 | 43,289 | 3,671 | 3,745 | -41 | -65 | 44,651 | 46,969 |
| EBITDA1 | 6,355 | 6,706 | 120 | 185 | 0 | 7 | 6,475 | 6,898 |
| EBITDA-margin | 15.5 % | 15.5 % | 3.3 % | 4.9 % | 14.5 % | 14.7 % | ||
| EBIT2 | 4,450 | 4,569 | 72 | 141 | 6 | 12 | 4,528 | 4,722 |
| EBIT-margin | 10.8 % | 10.6 % | 2.0 % | 3.8 % | 10.1 % | 10.1 % | ||
| Interest income | 315 | 289 | 0 | 0 | -22 | -23 | 293 | 266 |
| Results from investments accounted for at equity |
898 | 982 | 0 | 0 | 0 | 0 | 898 | 982 |
| Interest expenses | 203 | 233 | 32 | 30 | -22 | -23 | 213 | 240 |
| Earnings before taxes | 5,460 | 5,607 | 40 | 111 | 6 | 12 | 5,506 | 5,730 |
| Return on sales (before taxes) |
13.3 % | 13.0 % | 1.1 % | 3.0 % | 12.3 % | 12.2 % | ||
| Income taxes | 1,607 | 1,497 | 13 | 36 | 2 | 3 | 1,622 | 1,536 |
| Capital expenditures3 | 1,279 | 636 | 13 | 50 | 0 | 0 | 1,292 | 686 |
| Depreciation | 1,905 | 2,137 | 48 | 44 | -6 | -5 | 1,947 | 2,176 |
| Cash-flow3 | 4,724 | 5,155 | 82 | 113 | 0 | 8 | 4,806 | 5,276 |
| Segment assets 31.03 4 | 124,416 | 134,991 | 7,783 | 7,735 | -118 | -306 | 132,081 | 142,420 |
| thereof non-current assets | (48,336) | (51,152) | (1,327) | (1,300) | (-34) | (-56) | (49,629) | (52,396) |
| Segment liabilities 31.03. 5 | 23,565 | 28,200 | 1,710 | 1,730 | -84 | -236 | 25,191 | 29,694 |
| Employees (average) | 697 | 743 | 73 | 71 | 0 | 0 | 770 | 814 |
A breakdown of key figures by segments is provided below:
A breakdown of Group sales by geographical regions is provided in the notes on sales (see No. 2).
1 EBITDA is the common international abbreviation of earnings before interest, taxes, depreciation and amortisation.
2 EBIT is the common international abbreviation of earnings before interest and taxes. It is equivalent to the segment result.
3 Capital expenditures and cash flow correspond with the item which is shown in the consolidated cash flow statement.
4 Segment assets are the total assets of the segment less interest-bearing intercompany loans, cash and cash equivalents, deferred tax assets and income tax receivables.
5 Segment liabilities are the business segment 's total liabilities less shareholders' equity, long-term provisions, tax liabilities, deferred tax liabilities and financial liabilities.
Of the total non-current Group assets of € 49.629 million (previous year: € 52.396 million), an amount of € 29.480 million (previous year: € 30.972 million) relates to Germany, an amount of € 10.913 million (previous year: € 11.855 million) to other EU countries and an amount of € 9.236 million (previous year: € 9.569 million) to non-EU Eastern European countries.
The Managing Board had the following members in the reporting period:
All business relations with related parties are contractually agreed and conducted on an arm's length basis.
In the fiscal year, A.S. Création maintained business relations with OOO A.S. & Palitra, which is accounted for using the equity method. Details of the business relationship are shown below:
| 2016 | 2015 | |
|---|---|---|
| € '000 | € '000 | |
| Sales | 39 | 105 |
| Purchases | 1,431 | 1,325 |
| Interest income | 289 | 261 |
| 31.03.2016 | 31.03.2015 | |
|---|---|---|
| € '000 | € '000 | |
| Shareholder loans | 17,204 | 16,589 |
| Receivables | 3,764 | 2,783 |
| Liabilities | 1,382 | 1,265 |
The relationship of the company with A.S. Création Tapeten Stiftung, a charitable foundation, as well as the agreements with Franz Jürgen Schneider and Jörn Kämper relating the release from the anti-trust proceedings continued to exist in the period under review.
In December 2014, the French Cartel Office ("Autorité de la concurrence") issued a penalty notice against SCE - Société de conception et d'édition SAS ("SCE") and MCF Investissement SAS ("MCF"), two French member companies of the A.S. Création Group, and imposed penalties totalling € 5.0 million. An appeal was filed against the penalty notice in February 2015. On April 14, 2016 the court of appeal ("Cour d'appel") in Paris announced the verdict in the appeal proceedings and reduced the penalties to be paid by SCE and MCF to a total amount of € 2.1 million. An appeal against the verdict of the court of appeal may be filed with the French court of last resort ("Cour de cassation") within one month. Should the verdict become final, A.S. Création will post earnings and cash inflow of € 2.9 million in the 2016 consolidated financial statements, as the penalty of € 5.0 million originally imposed by the French antitrust authorities was fully recognised as an expense in the 2014 consolidated financial statements and had to be paid in full in 2015 under French law in spite of the appeal. In June 2015, A.S. Création and the former owners of SCE and MCF agreed that the latter would contribute € 2.1 million to the penalty imposed by the French antitrust authorities. This amount is independent of the verdict now announced and was transferred to A.S. Création in June 2015. This means that the penalty of € 2.1 million now imposed by the court of appeal is borne by the former owners of SCE and MCF.
Gummersbach, April 25, 2016
The Managing Board
Krämer Bantel Suskas
Investor Relations Maik Krämer, Director of Finance Südstraße 47, D-51645 Gummersbach-Derschlag Phone: +49-2261-542 387 fax: +49-2261-542 304 e-mail: [email protected]
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