Quarterly Report • May 1, 2009
Quarterly Report
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In this report we will inform you of the development of business at Leifheit in the first three months of the 2009 financial year.
| January to March | 2009 | 2008 |
|---|---|---|
| Turnover | ||
| domestic € m |
31 | 31 |
| foreign € m |
39 | 39 |
| total € m |
70 | 70 |
| Foreign share | 56% | 56% |
| EBIT € m |
2.6 | 0.0 |
| EBT € m |
2.0 | -0.6 |
| Net result for the period € m |
1.4 | -1.1 |
| Investment in tangible assets € m |
1.2 | 1.1 |
| Cash flow from operating activities € m |
8,7 | -6,7 |
| Employees (annual average) | 1,473 | 1,398 |
The global economy is now in deep decline. The IMF is forecasting a decline in gross domestic product in Europe of 4.0% in 2009 and a slump of 5.6% in Germany. This is the most dramatic crash since the end of Second World War. The growth markets of Eastern Europe, Asia and South America that had previously escaped relatively unscathed are now posting only very minor growth rates.
The financial market crisis has arrived in the real economy and its reach has now also spread to consumer sentiment. Experts are not anticipating a turnaround in growth rate developments around the world until 2010 at the earliest.
In spite of the economic downswing and the weaker consumer climate in Europe, Leifheit has further improved its performance: for the fourth time in a row, Leifheit has posted quarterly results with growth in turnover and income. Consolidated turnover rose by 0.6% in the first quarter of 2009 to around € 70 million. As in the previous year, foreign business accounted for 56% of this figure.
In the reporting period, growth impetus was generated by the Household Products division, which increased its turnover by 4.4% to around € 53 million (previous year: € 51 million). This boost was mainly generated in Germany as well as the Netherlands and France.
The Household Products division contributed € 2.3 million (previous year: € -0.3 million) to results.
The Group's strategy of on the one hand focusing the Household Products division on the core categories of laundry care, cleaning, kitchen goods and scales while driving ahead business in Central, Southern and Eastern Europe on the other is therefore bearing fruit.
The growth curve in the Bathroom Furnishings division has recently evened out: in the first quarter of 2009, turnover decreased by 9.2% to € 17 million. The main reason for this development lies in the declines in France and Russia. The Bathroom Furnishing division's contribution to consolidated turnover therefore amounted to 25% in the first quarter of 2009.
Despite the drop in sales, EBIT in the Bathroom Furnishing division was € 1.3 million, slightly up on the previous year's € 1.2 million.
As against the same period of the previous year, in which the Leifheit Group merely broke even, EBIT rose significantly to € 2.6 million. In addition to improved management, currency effects also contributed to this positive performance.
Accordingly, the net profit for the period was up to € 1.4 million (previous year: net loss of € 1.1 million).
Total assets declined by € 6.6 million as against the value on the balance sheet date 31 December 2008 to € 214.7 million.
Cash and cash equivalents climbed by € 4.5 million to € 10.7 million. This was offset by considerable reductions of € 3.7 million in trade receivables and of € 6.1 million in inventories. Thus, the measures initiated at the start of the year to reduce working capital have clearly had an effect.
Short-term debt were down by € 7.4 million. Equity increased mainly as a result of the positive net result for the period by € 0.6 million to € 101.2 million.
The equity ratio was 47.1%.
The average number of employees in the Group rose by 5.4% to 1,473 (previous year: 1,398). As at 31 December 2008, the Group's headcount had been 1,530.
The rise is essentially due to the acquisition of the Herby companies that were included in consolidation for the first time as at 1 July of the previous year.
Additions to tangible assets amounted to € 1.2 million in the reporting period (previous year: € 1.1 million).
The investments are mainly related to tools for new products, logistical infrastructure and software.
For information on the risks and opportunities at Leifheit, please see the detailed description in the consolidated management report as at 31 December 2008. There were no material changes in the reporting period. There are still no identifiable risks to the Company as a going concern.
There were no related party transactions or changes to related party transactions in the reporting period.
In the consensus opinion of industry experts, the further development of the global real economy will depend on whether and how quickly worldwide efforts to stabilise and reorganise the international financial systems will lead to success. The success of the many aid packages to bolster the real economy is also yet to be seen and the main task in hand must be to keep the inevitable rise in unemployment figures in check.
The leading economic indicators for Germany point to the downturn continuing until the middle of the year, though a slowdown in the decline is already possible. The signs of stabilisation discerned by some sentiment indicators (ifo, Purchasing Manager Index) should not obscure the fact that all indices are at a very low level and therefore participants would be well advised to remain cautious.
In the first half of 2009, the Leifheit Group will implement the last of the measures to optimise its structural organisation. These will centre on clearly separating the individual business areas so that they can make a significant contribution to the Group's efficiency enhancement with their own commercial decisions. This way, Leifheit can focus even more strongly on its core competences and increase its speed to market. In turn, this will further raise the potential to extend revenue and income.
Nonetheless, these developments are also largely dependent on how consumer sentiment progresses. Responsible forecasts on this are not yet possible at this time. Therefore, Leifheit is also reinforcing its brands with innovations relevant to consumers and is using its 50-year anniversary this year for a number of sales promotions and marketing activities.
There were no events after the end of the reporting period on 31 March 2009 of particular importance for assessing the assets, financial situation and earnings of the Leifheit Group.
| € 000 | 1 January to 31 March 2009 |
1 January to 31 March 2008 |
|---|---|---|
| Turnover | 70,337 | 69,931 |
| Cost of sales | $-40,936$ | $-40,854$ |
| Gross profit | 29,401 | 29,077 |
| Research and development costs | $-1,681$ | $-1,876$ |
| Distribution costs | $-21,452$ | $-21,666$ |
| Administrative costs | $-4,735$ | $-4,209$ |
| Other operating income, expenses and foreign currency results | 1,098 | $-1,287$ |
| Profit before result from joint ventures and investments | 2,631 | 39 |
| Result from joint ventures | 3 | |
| EBIT | 2,634 | 39 |
| Net interest income or expense | $-614$ | $-633$ |
| EBT | 2,020 | $-594$ |
| Income taxes | $-573$ | $-484$ |
| Net result for the period | 1,447 | $-1,078$ |
| Of which minority interests | $-11$ | $-23$ |
| Of which parent Company shareholders | 1,458 | $-1,055$ |
| Earnings per share (diluted and undiluted) | € 0.31 | $€ -0.22$ |
| € 000 | 31 March 2009 | 31 Dec. 2008 |
|---|---|---|
| ASSETS | ||
| Current assets | ||
| Cash and cash equivalents | 10,736 | 6,208 |
| Trade receivables | 66,372 | 70,077 |
| Inventories | 55,160 | 61,300 |
| Income tax receivables | 936 | 760 |
| Other current assets | 3,320 | 3,373 |
| Total current assets | 136,524 | 141,718 |
| Noncurrent assets | ||
| Financial assets | 601 | 599 |
| Shares in joint ventures | 907 | 908 |
| Tangible assets | 46,550 | 47,767 |
| Intangible assets | 19,996 | 20,026 |
| Deferred tax assets | 4,715 | 4,959 |
| Other noncurrent assets | 5,453 | 5,388 |
| Total noncurrent assets | 78,222 | 79,647 |
| Total assets | 214,746 | 221,365 |
| EQUITY AND LIABILITIES | ||
| Short-term debt | ||
| Trade accounts payable and other liabilities | 48,777 | 52,093 |
| Derivative financial instruments | 428 | 532 |
| Income tax liabilities | 414 | 777 |
| Provisions | 3,755 | 4,839 |
| Short-term borrowing | 5,131 | 7,672 |
| Total short-term debt | 58,505 | 65,913 |
| Long-term debt | ||
| Provisions | 3,469 | 3,482 |
| Employee benefit obligations | 43,362 | 43,141 |
| Deferred tax liabilities | 3,039 | 3,113 |
| Other long-term debt | 5,184 | 5,166 |
| Total long-term debt | 55,054 | 54,902 |
| Equity | ||
| Subscribed capital | 15,000 | 15,000 |
| Capital surplus | 16,934 | 16,934 |
| Treasury shares | -7,686 | -7,686 |
| Appropriated surplus | 74,454 | 72,996 |
| Translation reserve | 2,401 | 3,211 |
| Minority interests | 84 | 95 |
| Total equity | 101,187 | 100,550 |
| Total equity and liabilities | 214,746 | 221,365 |
The changes in equity attributable to the parent Company shareholders were as follows:
| € 000 | Subscribed capital |
Capital surplus |
Treasury shares |
Appro priated surplus |
Translation reserve |
Total |
|---|---|---|---|---|---|---|
| As at 1 January 2008 | 15,000 | 16,934 | -7,618 | 72,577 | 1,571 | 98,464 |
| Net result for the period | - | - | - | -1,055 | - | -1,055 |
| Differences from foreign currency translation |
- | - | - | - | 777 | 777 |
| As at 31 March 2008 | 15,000 | 16,934 | -7,618 | 71,522 | 2,348 | 98,186 |
| As at 1 January 2009 | 15,000 | 16,934 | -7,686 | 72,996 | 3,211 | 100,455 |
| Net result for the period | - | - | - | 1,458 | - | 1,458 |
| Differences from foreign currency translation |
- | - | - | - | -810 | -810 |
| As at 31 March 2009 | 15,000 | 16,934 | -7,686 | 74,454 | 2,401 | 101,103 |
The changes in Group equity were as follows:
| € 000 | Parent Company shareholders |
Minority interests |
Total equity |
|---|---|---|---|
| As at 1 January 2008 | 98,464 | 70 | 98,534 |
| Net result for the period | -1,055 | -23 | -1,078 |
| Differences from foreign currency translation |
777 | - | 777 |
| As at 31 March 2008 | 98,186 | 47 | 98,233 |
| As at 1 January 2009 | 100,455 | 95 | 100,550 |
| Net result for the period | 1,458 | -11 | 1,447 |
| Differences from foreign currency translation |
-810 | - | -810 |
| As at 31 March 2009 | 101,103 | 84 | 101,187 |
The key figures by division in the reporting period were as follows:
| Key figures by division as at 31 March 2009 |
Household Products |
Bathroom Furnishings |
Non allocable |
Total | |
|---|---|---|---|---|---|
| Turnover | € m | 53 | 17 | – | 70 |
| EBIT | € m | 2.3 | 1.3 | -1.0 | 2.6 |
| Investments | € m | 0.9 | 0.3 | – | 1.2 |
| Depreciation and amortisation | € m | 1.7 | 0.3 | – | 2.0 |
| Employees (annual average) | 1,142 | 331 | – | 1,473 |
The figures for the same period of the previous year were as follows:
| Key figures by division as at 31 March 2008 |
Household Products |
Bathroom Furnishings |
Non allocable |
Total | |
|---|---|---|---|---|---|
| Turnover | € m | 51 | 19 | – | 70 |
| EBIT | € m | -0.3 | 1.2 | -0.9 | 0.0 |
| Investments | € m | 0.8 | 0.3 | – | 1.1 |
| Depreciation and amortisation | € m | 1.5 | 0.4 | – | 1.9 |
| Employees (annual average) | 1,080 | 318 | – | 1,398 |
| € 000 | 1 January to 31 March 2009 |
1 January to 31 March 2008 |
|---|---|---|
| Net result for the period | 1,447 | -1,078 |
| Adjustments for | ||
| expense for the issue employee shares | – | – |
| depreciation and amortisation | 2,003 | 1,891 |
| Decrease/increase in provisions | -875 | 25 |
| Loss on disposal of noncurrent assets | 4 | 8 |
| Decrease/increase in inventories, trade receivables and other assets not classified as investment or financial activities |
9,901 | -4,399 |
| Decrease in trade payables and other liabilities not classified as investment or financial activities |
-3,807 | -3,141 |
| Cash flow from operating activities | 8,673 | -6,694 |
| Acquisition of tangible and intangible assets | -1,240 | -1,040 |
| Investments in financial assets | -2 | – |
| Proceeds from the disposal of noncurrent assets | 22 | 44 |
| Cash flow from investment activities | -1,220 | -996 |
| Cash flow from financing activities | -2,573 | 1,495 |
| Effects of exchange rate differences | -351 | -114 |
| Net change in cash and cash equivalents | 4,529 | -6,309 |
| Current funds at the start of the period under review | 6,208 | 10,138 |
| Current funds at the end of the period under review | 10,737 | 3,829 |
The quarterly financial report as at 31 March 2009 were prepared in accordance with the International Financial Reporting Standards (IFRS). The same accounting methods were applied as in the consolidated financial statements as at 31 December 2008.
This quarterly financial report has not been reviewed by an auditor.
There were no changes in the Group of consolidated companies in the first quarter of 2009.
The Herby companies were acquired as at 1 July 2008 and therefore were not included in the comparative prior-year figures of the income statement.
In the first quarter of 2009, the gross margin remained stable year-on-year at 41.8%.
Development and distribution costs declined by € 0.4 million. Administrative expenses rose by € 0.5 million on account of consulting projects in particular.
While balanced foreign currency losses of € 1.2 million were incurred in the same period of the previous year, balanced foreign currency gains of € 1.2 million were reported in the first quarter of 2009. Among other things, this is due to the measurement of currency forwards.
Particularly as a result of the reduction in working capital, cash and cash equivalents rose by € 4.5 million as against 31 December 2008 to € 10.7 million. Inventories were reduced by € 6.1 million, trade receivables by € 3.7 million.
Short-term debt decreased by € 7.4 million, essentially as a result of the payment of annual customer reimbursement in the first quarter. Short-term borrowing was down by € 2.5 million.
Equity climbed by € 0.6 million to € 101.2 million with an equity ratio of 47.1%.
The Leifheit AG dividend (ISIN DE 0006464506) is based on the net profit shown in the Leifheit AG annual financial statements prepared in accordance with German GAAP.
The Leifheit AG net profit for the 2008 financial year amounts to € 13,000,000.
The Board of Management and Supervisory Board propose the following resolution to the Annual General Meeting on 17 June 2009:
A dividend of € 0.60 per eligible no-par-value share – for a total of 4,749,856 no-par-value shares – representing a total distribution of € 2,849,913.60 which will be distributed to shareholders out of the net profit for the 2008 financial year of € 13,000,000. The remaining amount of € 10,150,086.40 will be carried forward to new account.
The Annual General Meeting has been convened for 17 June 2009 at the Company's registered office in Nassau/Lahn.
Leifheit did not acquire or use any treasury shares in the reporting period. Including the treasury shares acquired and issued in previous years, we therefore held 250,154 shares (5.0% of the share capital) with a value of € 7,686 thousand on 31 March 2009. There are no subscription rights for members of the executive bodies and employees in accordance with section 160 para 1 no. 2 of the German Stock Corp Act (AktG).
The companies of the Group have not entered into any contingent liabilities.
There are leasing agreements for business premises, IT and telephone equipment, vehicles and similar assets and licensing agreements with a remaining
expense for 2009 of around € 2.3 million. These obligations total approximately € 4.0 million during the non-cancellable remaining terms until 2013. As at 31 March 2009, there were purchase commitments totalling € 1.7 million. The lease agreements constitute operating leases as defined by IAS 17.
Furthermore, there are obligations from currency forwards to hedge exchange rates of USD 27.1 million (or € 20.0 million) with a fair value on the balance sheet date of € 20.3 million. There are also obligations from currency forwards to hedge exchange rates of CZK 176.0 million (or € 6.3 million) with a fair value on the balance sheet date of € 6.4 million.
There were no personnel changes in the Group's organs in the first quarter of 2009.
The Board of Management declares that, to the best of its knowledge, and in accordance with the applicable reporting principles, the interim financial statements give a true and fair view of the assets, earnings and financial position of the Group, and the
summarized interim management report presents a true and fair view of the business and situation of the Group, together with the principal risks and opportunities associated with the expected development of the Group.
This quarterly financial report contains forward-looking statements which are based on management's current estimates regarding future developments. Such statements are subject to risks and uncertainties which are beyond Leifheit's ability to control or estimate precisely, such as statements on the future market environment and economic conditions, the behaviour of other market participants and government measures. If one of these uncertain or unforeseeable factors occurs or the assumptions on which these statements are based prove inaccurate, actual results could differ materially from the results cited explicitly or contained implicitly in these statements. Leifheit neither intends to nor accepts any specific obligation to update forward-looking statements in line with events or developments after the date of this report.
Technical factors (e. g. conversion of electronic formats) may lead to discrepancies between the financial statements in this quarterly financial report and those submitted to the electronic Federal Gazette. In this case the version submitted to the electronic Federal Gazette is binding.
In the event of any discrepancies between this English translation of the quarterly financial report and the German version, the German version takes priority over the English translation.
P.O. Box 11 65 D-56371 Nassau/Lahn Germany Phone: ++49-2604-977-0 Telefax: ++49-2604-977-300 Internet: www.leifheit.com E-mail: [email protected]
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