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Leifheit AG
Annual Report • Apr 1, 2006
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Annual Report
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Annual Report 2005 Condensed Version
Contents
■ Management report
6 Employees 8 Investment
13 Forecast
Standards (ifrs)
20 Notes
and valuation
54 Audit opinion
of leifheit ag
Income statement Balance sheet Changes in equity Segment reporting Statement of cash flow
2 The economic situation 3 The course of business
Procurement and logistics Development and innovation Environmental protection Risks and opportunities
15 Report on events after the balance sheet date
■ Consolidated financial statements for the 2005 financial year to International Financial Reporting
20 General principles of accounting
32 Notes on the income statement 39 Notes on the balance sheet 52 Organs of leifheit ag
56 Individual financial statements
Contacts, key dates
4 Earnings, assets and finance situation
042006·kb·ir·m.a
P.O. Box 11 65
D-56371 Nassau/Lahn Phone: ++ 49-26 04-977-0 Telefax: ++ 49-26 04-977-300 Internet: www.leifheit.com E-mail: [email protected]
Efficient products – efficient structures
Contents
■ Management report
- 2 The economic situation
- 3 The course of business
- 4 Earnings, assets and finance situation
- 6 Employees
- 8 Investment
- 9 Procurement and logistics
- 10 Development and innovation
- 11 Environmental protection
- 11 Risks and opportunities
- 13 Forecast
- 15 Report on events after the balance sheet date
■ Consolidated financial statements for the 2005 financial year to International Financial Reporting Standards (ifrs)
- 16 Income statement
- 17 Balance sheet
- 18 Changes in equity
- 18 Segment reporting
- 19 Statement of cash flow
- 20 Notes
Efficient products – efficient structures
042006·kb·ir·m.a
Annual Report 2005
Condensed Version
P.O. Box 11 65
D-56371 Nassau/Lahn Phone: ++ 49-26 04-977-0 Telefax: ++ 49-26 04-977-300 Internet: www.leifheit.com E-mail: [email protected]
- 20 General principles of accounting and valuation
- 32 Notes on the income statement
- 39 Notes on the balance sheet
- 52 Organs of leifheit ag
- 54 Audit opinion
- 56 Individual financial statements of leifheit ag
Contacts, key dates
Key data (group)
Turnover adjusted for the closure of inhouse
production of shower partitions
1) after minority interests 2) before minority interests 3) exc. redeemed own shares 4) proposal to the General Meeting
5) inc. minority interests
2005 2004 Change % Turnover – Household € m 225 237 -5.1 – Bath) € m 71 80 -11.3 – Group € m 296 317 -6.6
– Household € m 225 237 -5.1 – Bath) € m 71 74 -4.1 – Group € m 296 311 -4.8
Cash flow from operating activities € m 8.5 13.7 -38.0 Cash flow per share3) € 1.79 2.87 -37.7
Employees (annual average)) 1,862 2,070 -10.0 Employees at year-end – Household 3) 3) 1,225 1,363 -10.1 – Bath3) 549 601 -8.7 – Group3) 1,774 1,964 -9.7
Depreciation on tangible assets € m 8 18 -55.6 Total assets € m 227 229 -0.9 Equity5) € m 115 112 +2.7
Foreign share % 58 57 ebit1) € m 3.7 -15.0 ebt1) € m 3.7 -15.0 Net profit/loss for the period1) € m 0.1 -7.3 Net return on sales2) % 0.4 -1.9 Earnings per share1)3) € 0.03 -1.54
Dividend per share3) € 0.60 4) –
Investment in tangible assets € m 7 7
Equity-balance sheet total ratio5) % 51 49
Key data of leifheit group
Contacts, key dates
Key dates
■ 5 April 2006
■ April 2006
■ 15 May 2006
■ 24 May 2006
■ 14 August 2006
■ 14 November 2006
■ 27 – 29 November 2006
Investor and analyst conference
Deutsches Eigenkapitalforum, Frankfurt/Main
Contacts
d-56371 Nassau/Lahn
■ leifheit on the Internet: http://www.leifheit.com E-mail: [email protected]
■ Postal address: ■ Investor Relations: leifheit ag tel.: + + 49-26 04-977-218 p.o. box 11 65 fax: + + 49-26 04-977-340
Financial statements press conference, presentation
Interim report for the period ending 31 March 2006
Interim report for the period ending 30 June 2006
Interim report for the period ending 30 September 2006
Customer and Administration Centre, Leifheitstrasse, Nassau/Lahn
of the annual report for 2005, followed by analysts conference in Frankfurt/Main
English version of annual report 2005
General Meeting, 10.30 am at leifheit ag
Contacts, key dates
Key dates
■ 5 April 2006
■ April 2006
■ 15 May 2006
■ 24 May 2006
■ 14 August 2006
■ 14 November 2006
■ 27 – 29 November 2006
Investor and analyst conference
Deutsches Eigenkapitalforum, Frankfurt/Main
Contacts
d-56371 Nassau/Lahn
■ leifheit on the Internet: http://www.leifheit.com E-mail: [email protected]
■ Postal address: ■ Investor Relations: leifheit ag tel.: + + 49-26 04-977-218 p.o. box 11 65 fax: + + 49-26 04-977-340
Financial statements press conference, presentation
Interim report for the period ending 31 March 2006
Interim report for the period ending 30 June 2006
Interim report for the period ending 30 September 2006
Customer and Administration Centre, Leifheitstrasse, Nassau/Lahn
of the annual report for 2005, followed by analysts conference in Frankfurt/Main
English version of annual report 2005
General Meeting, 10.30 am at leifheit ag
Key data (group)
| 2005 | 2004 | Change % |
||
|---|---|---|---|---|
| Turnover – Household |
€ m | 225 | 237 | -5.1 |
| – Bath) | € m | 71 | 80 | -11.3 |
| – Group | € m | 296 | 317 | -6.6 |
| Turnover adjusted for the closure of inhouse production of shower partitions |
||||
| – Household | € m | 225 | 237 | -5.1 |
| – Bath) | € m | 71 | 74 | -4.1 |
| – Group | € m | 296 | 311 | -4.8 |
| Foreign share | % | 58 | 57 | |
| ebit1) | € m | 3.7 | -15.0 | |
| ebt1) | € m | 3.7 | -15.0 | |
| Net profit/loss for the period1) | € m | 0.1 | -7.3 | |
| Net return on sales2) | % | 0.4 | -1.9 | |
| Earnings per share1)3) | € | 0.03 | -1.54 | |
| Cash flow from operating activities | € m | 8.5 | 13.7 | -38.0 |
| Cash flow per share3) | € | 1.79 | 2.87 | -37.7 |
| Dividend per share3) | € | 0.60 4) | – | |
| Employees (annual average)) | 1,862 | 2,070 | -10.0 | |
| Employees at year-end – Household 3) 3) | 1,225 | 1,363 | -10.1 | |
| – Bath3) | 549 | 601 | -8.7 | |
| – Group3) | 1,774 | 1,964 | -9.7 | |
| Investment in tangible assets | € m | 7 | 7 | |
| Depreciation on tangible assets | € m | 8 | 18 | -55.6 |
| Total assets | € m | 227 | 229 | -0.9 |
| Equity5) | € m | 115 | 112 | +2.7 |
| Equity-balance sheet total ratio5) | % | 51 | 49 |
1) after minority interests
2) before minority interests
3) exc. redeemed own shares
4) proposal to the General Meeting
5) inc. minority interests
Efficient products – efficient structures
With our famous leifheit, soehnle and dr. oetker bakeware brands we are one of the leading European suppliers of appliances and articles to make housework easier. Prominent brands are also the basis of our success at our Bathroom Furnishings division, where kleine wolke, spirella and meusch set design and quality standards for the market and hold leading positions.
We develop innovative and attractive solutions for all the tasks around the home. With competence that is the fruit of many years, we are constantly generating new and creative product ideas that help make many chores more pleasant and efficient.
Efficiency is also the keyword for our activities in 2005. The challenge of further cutting costs while improving efficiency and quality led to a need for fundamental structural reorientation in almost all areas of the leifheit group. The results – relocation of our procurement sources to the Far East and eastern Europe, reduced complexity in our structures, concentration on a few locations, and optimisation of processes in administration and logistics. Change is the only constant, and success goes to those who embrace change and see changes as opportunities for efficiency. We will make full use of these opportunities. 2005 was a year of decisive advances on this path.
1
Upswing in world economy – Europe idling
The economy in 2005 again presented what has come to be a familiar picture, with the world economy in good shape with growth of c. 4 % in the face of current natural disasters and the sharp rise in energy and primary commodity costs, although still falling short of the previous year's record 5.2 %. This solid growth was driven by Asia, parts of South America and eastern Europe, and – although at the cost of high budget and trade deficits – the usa. By contrast, the Euro zone economies continued sluggish, growing only 1.3 % (previous year: 2.1 %) and the German economy even slowed down again. After growing 1.6 % in the previous year, the German economy recorded sluggish growth in 2005 of only 0.9 %, almost entirely from exports. In the fourth quarter, it defied the general improvement in mood at least statistically, with no growth at all.
Stagnant consumption and continuing slide in nonfood prices
Unsurprisingly, in view of the situation, private consumption in Europe again showed a sorry picture. Besides the poor state of the economy, the drastic increase in prices for petroleum, electricity and gas put an additional burden on consumer budgets, further spoiling the mood. While European economic research institutes are still estimating growth at 1.3 % for the Euro zone, consumer spending in Germany is clearly flat. In line with the saying "to err is official", the German retail association and Federal Statistical Office are arguing whether the correct picture for 2005 is a complete standstill or minimal growth.
The slide in prices evident in many nonfood product categories continued in 2005. Personal scales were particularly affected, with average prices for these products in Germany showing a further decline of over 10 %.
3
The course of business
Course set for the future!
Inevitably, leifheit was also affected by the generally adverse economic conditions described above. In addition, however, the course of business in 2005 was decisively affected by internal policies and decisions. The focus here was on the fundamental strategic reorientation in the group, which had become necessary to secure long term international competitiveness in the face of dramatic changes in global market and production conditions. The structural concept developed for this was almost entirely and successfully implemented in the course of the 2005 financial year. As part of group reorganisation, production of 450 branded articles in the product range was relocated from Germany to other countries – the Czech Republic, China, and other east European countries. This was all done during ongoing operation with unchanged international market presence, which inevitably made great demands on management.
Significant improvement in internal cost structure
At the same time, the improved cost structure laid the foundation for a strictly resultsoriented Board of Management strategy. This led to the logical decision to avoid special offers with inadequate margins, in order not to lend further weight to the slide in market prices.
All these aspects – the continuing poor consumer mood, effects of group reorganisation, deliberate selection of special offers – have to be taken into account in judging leifheit´s results.
Strong performance in the market with decreased turnover
In the light of all these factors, the leifheit group did well in 2005 with consolidated world turnover of € 296 million. The decrease of just under 5% in earnings compared to the previous year's € 311 million* is due in roughly equal amounts to the above factors. A significant factor was delivery bottlenecks for several products, which were unavoidable in the initial phase of the expanded international procurement. Although these have since been resolved, they meant that the positive consumer response to a number of innovative products which boosted third quarter earnings was not fully reflected in turnover in the fourth quarter. The turnover lost as a result of the bottlenecks was around € 5 million.
There was considerable variation in the course of business over the year, with turnover in the first quarter significantly down on the previous year as a result of the weather and weak economy. In the second and third quarters, however, the successful launch of a large number of innovative products brought leifheit its first growth in turnover since 2001, despite the adverse trend in the market. Unfortunately, turnover fell again in the fourth quarter, partly as a result of the weak economy, our deliberate avoidance of low-margin special offers, but primarily because of the delivery bottlenecks noted earlier. The foreign share in consolidated turnover rose to 58% from 57% in the previous year. This was also a result of the welcome trend in the usa, where leifheit boosted turnover by around 20% to the equivalent of € 14 million.
* Turnover adjusted for the closure of inhouse production of shower partitions
4
Key figures from the income statement (€ m) after minority interests
Household Products: individual product groups strengthen their position
0,0 0,2 0,4 0,6 0,8 1,0
The decline in total turnover affected the Household Products and Bathroom Furnishings divisions to a different extent. Turnover from branded articles in Household Products decreased to € 225 million (previous year: € 237 million), reflecting the general slowdown in consumer spending in Europe and also the temporary procurement problems and deliberate scaling back of low-margin special offers. However, many product groups, such as the scales under the soehnle brand, significantly outperformed their competitors, further expanding their market leadership.
Bathroom Furnishings: outperforming the industry
The Bathroom Furnishings division performed satisfactorily in 2005 in a European market characterised by a combination of sharply falling prices and consumer reticence, and even gained market shares in individual product segments. The decrease in turnover was significantly smaller than for the industry as a whole, falling to € 71 million (previous year: € 74 million*), due mainly to the streamlining of the brand range. After successful completion of the reorganisation in 2004 with the elimination of inhouse production of shower partitions, the Bathroom Furnishings division made a significant contribution to consolidated earnings in the 2005 financial year.
Earnings, assets and finance situation
| Consolidated income statement (summary) | |||
|---|---|---|---|
| € m | 2005 | 2004 | |
| Turnover | 296.2 | 317.3 | |
| Gross profit | 112.4 | 124.4 | |
| Earnings before reorganisation, | |||
| before interest and taxes (ebit) | 4.8 | 6.7 | |
| - after minority interests | 3.0 | 5.0 | |
| Earnings after reorganisation, | |||
| before interest and taxes (ebit) | 5.5 | -13.3 | |
| - after minority interests | 3.7 | -15.0 | |
| Results of financial activities | – | – | |
| ebt | 5.5 | -13.3 | |
| - after minority interests | 3.7 | -15.0 | |
| Income tax | -4.1 | 7.1 | |
| - after minority interests | -3.5 | 7.7 | |
| Profit/loss after income tax | 1.3 | -6.1 | |
| - after minority interests | 0.1 | -7.3 |
Accounting to ifrs
The consolidated financial statements for leifheit ag for the 2005 financial year were prepared in accordance with the International Financial Reporting Standards (ifrs), as in the previous year.
Lower break-even point, enhanced internal earning power
leifheit's cost structure improved steadily throughout the 2005 financial year in the course of the strategic reorientation of the group. This lowered the break-even point and enhanced internal earning power. Thanks to energetic implementation of the
* Turnover adjusted for the closure of inhouse production of shower partitions
reorganisation, several cost-cutting measures bore fruit in parts of 2005, bringing a return to positive ebit of € 3.7 million*. In the previous year, substantial provisions and expense on the impending reorganisation had resulted in a loss of € 15.0 million. 2005 also saw a return to positive after tax results of € 0.1 million* (previous year: € -7.3 million).
It should also be noted that the provisions made in 2004 were sufficient to cover in full the expense on reorganisation in 2005 and even 2006. This meant that there was no further charge against 2005 earnings.
The current figures for earnings in 2005 only partly reflect the increase in leifheit group's internal earning power, as they would have been substantially better without the delivery problems described above and certain nonrecurring expenses.
* after minority interests
Consolidated balance sheet structure (€ m)
Assets: continuing strong balance sheet ratios – equity/balance sheet total ratio 51 %
Consolidated total assets, equity and liabilities fell from € 229 million to € 227 million. Equity including minority interests rose to € 115 million (previous year: € 112 million), primarily due to the offset of badwill against retained earnings in accordance with ifrs 3. This increased the equity-balance sheet total ratio to a solid 51% (previous year: 49%). Fixed assets decreased to € 67 million (previous year: € 68 million), bringing the ratio of equity to fixed assets to an outstanding 172%.
Trade receivables were reduced to € 67 million (previous year: € 78 million). As a result of the change in procurement strategy under the reorganisation, inventories rose to € 60 million (previous year: € 51 million). Other current assets rose, primarily due to the investment of liquid assets in the money market recognised in this position.
5
6
Employment (at year-end)
Financial situation
Trade payables rose to € 56 million (previous year: € 53 million) in line with the increase in inventories. The decrease in current provisions to € 5 million (previous year: € 15 million) is primarily due to the use of the provision for reorganisation.
Consolidated cash flow totalled € 8.5 million (previous year: € 13.7 million). Adjusted for disbursements resulting from the reorganisation measures, the consolidated cash flow amounted to € 13.4 million.
| Consolidated cash flow statement (summary) € m 2005 |
2004 | |
|---|---|---|
| Cash flow from operating activities | 8.5 | 13.7 |
| Cash flow from investment activities | -5.6 | -6.5 |
| Cash flow from financing activities | -0.6 | -6.2 |
| Effects of exchange rate differences | 0.1 | 0.5 |
| Current funds at year-end | 15.1 | 12.7 |
| Change in cash | 2.4 | 1.5 |
Employees
Personnel activities in the past financial year focused on implementation of the structural concept in the Household Products division. At the same time, we maintained the priority of training and qualifying technical and management staff.
Decrease in employment reflects reorientation
The extensive reorganisation measures implemented in 2005 – the shutdown of domestic production of consumer scales at the Murrhardt plant, the conversion of the Zuzenhausen location to a logistics centre, and the transfer of production lines to the Czech plant at Blatná – significantly impacted employment. At the end of 2005 there were 1,774 employees in the leifheit group, 190 fewer than at the same time in the previous year. This represents a decrease of 9.7 % in employment. The Household Products division had 1,225 employees, Bathroom Furnishings had 549.
As many employment contracts terminated with effect from 31.12.2005, there were 1,565 employees as at 1.01.2006.
To reduce the social impact of these cuts as far as possible, full use was made of natural fluctuation and the lapse of fixed-term service contracts. Many of the employees affected were also offered the opportunity to transfer to a retraining and relocation company. To improve their chances in the labour market, qualification measures were offered together with the Federal Employment Agency.
The average number of employees in the group – which determines personnel costs – fell from 2,070 to 1,862. Personnel costs fell 18% to € 66 million (previous year: € 80 million).
The Zuzenhausen location was converted as a logistics centre. To improve the competitiveness of the location, the working week will be increased in stages from 2006 from 35 to 39 hours a week, with no change in pay.
To enhance further leifheit's image in the international markets as a developer of innovative, quality products, we have attracted a number of highly-qualified technical and management staff in development, marketing and distribution.
| Changes in employment Location |
1.01.2006 | 31.12.2005 | 31.12.2004 |
|---|---|---|---|
| Germany | 709 | 918 | 1,100 |
| Czech Republic | 509 | 509 | 506 |
| France | 158 | 158 | 168 |
| Switzerland | 136 | 136 | 135 |
| Other countries | 53 | 53 | 55 |
| Group | 1,565 | 1,774 | 1,964 |
Continuing focus on training
Although the general economic environment has become more difficult and employment has to be reduced, training continues to be a high priority at leifheit. Our goal is to give young people a good training which opens up opportunities for professional and personal development. We will stand by our principle of filling vacancies from within the company wherever possible. In the past financial year, 20 vocational trainees were hired by the leifheit group. Currently, 66 young people are completing their training in the leifheit group, 57 of them in Germany. This corresponds to 6.2% of domestic employment.
Investment (€ m)
In 2005 leifheit was again distinguished by the Koblenz Chamber of Industry and Commerce for its vocational training services and also distinguished for the first time by the Federal Employment Agency. These awards are in recognition of our services, the commitment of our vocational trainers and our ongoing support.
We work with vocational training academies and universities to interest committed and highly qualified young employees in leifheit ag at an early stage. As part of this we offer students and young academics the opportunity to deepen their theoretical knowledge through internships or write a thesis with practical orientation. In the year under review 46 young people completed an internship in the leifheit group.
Thanks to our employees
We know that our employees faced heavy challenges in the year under review. Farreaching personnel policy measures were implemented. Production facilities and procurement sources were transferred while having to secure deliveries. It was vital to bring new products and ranges to the market on deadline. Many processes and structures were revised and made more efficient. We should like to thank our employees for their commitment and contribution to the long term success of the company. We should also like to thank our works council members, whose efforts as intermediaries between management and employees contributed to reducing employment in a way which was acceptable to all involved.
Investment
v
8
Total additions to fixed assets in the leifheit group in 2005 amounted to € 8.1 million (previous year: € 10.5 million), of which € 6.5 million was for tangible assets. The investment ratio was 3.0% of the historical purchase and manufacturing cost of plant and equipment. Investment was matched by depreciation on plant and equipment totalling € 7.8 million.
In the Household Products division we invested € 4.6 million in tangible assets (previous year: € 5.7 million), primarily for tools for new products and conversion of the Zuzenhausen facility as a logistics centre. There was a significant decrease in investment in production plant due to the closure of significant parts of production at the Murrhardt, Nassau and Zuzenhausen locations.
Investment in the Bathroom Furnishings division totalled € 1.9 million (previous year: € 0.6 million).
Procurement and logistics
v
Structural concept makes heavy demands on procurement
Implementing the structural concept in the Household Products division in 2005 posed major challenges for procurement and logistics. Possibilities for procurement on global markets, particularly in the Far East and eastern Europe, were systematically analysed in order to establish and expand reliable supplier networks. New sources had to be found for some 450 products, and the quality and reliability of suppliers investigated. In addition, some 250 machines, plants and tools had to be relocated. During all these measures, the high quality of our products and our ability to supply our customers had to be maintained.
To meet the significant increase in logistical demands, we reorganised and optimised our structures in "Strategic Purchasing", "Process Management" and "Quality Management". In addition we increased the staff of our purchasing office in Guanghzhou (China), opened in 2003.
However, the sharp rise in raw materials prices in the year under review, particularly for steel, aluminium and plastics, largely offset the cost savings from relocating production to the Far East and eastern Europe.
We will continue to cooperate with our suppliers, in some cases in the product development stage, in an effort to achieve synergy in purchasing and procurement.
Supply Chain Management established
Relocation of production to eastern Europe and China has resulted in fundamental changes in the structures and processes for manufacturing and delivering our products. To maintain our familiar good delivery service to our customers, we have to reorganise the procurement process, starting with production in China and moving through the transport of goods to our warehouses and assembly of consignments to customers all around the world.
A new organisational unit has been formed for the purpose – "Supply Chain Management". The new unit is responsible for making our procurement processes more efficient, so that we can supply our customers reliably and rapidly at the lowest possible cost.
Development and innovation
Innovative strength and creativity today will determine our success in tomorrow's market. leifheit's goal is to achieve profitable growth through innovative products with concrete benefits to consumers and good value for money. We can only do this if innovation management, development competence and product marketing work together with a constant flow of information. To ensure a continuous stream of new products and ongoing improvement and further development of established products, we fundamentally revised our product development process in the year under review. The new process aims at greater efficiency in developing new products, with more responsibility for employees and teams involved in the process.
The product development process was reorganised from the initial idea through to market launch. The individual stages were clearly defined, from research, collecting innovative ideas and evaluating their potential, through approaches and approval procedures to launch and subsequent review of targets. This ensures that the heavy investment in a new product launch is made with manageable risk, while at the same time we continue to enrich our range with innovative products which appeal to retailers and consumers.
Increased use was again made of external resources, for example through alliances with universities. These have already resulted in several projects, which are currently in the technical concept phase.
We live from our ideas. With particular regard to procurement and production in the Far East, we protect our products worldwide through patents, utility models and registered designs. We also resolutely and successfully fight imitations and product piracy.
In the year under review the group had 42 employees in development, patents and product management. The overwhelming majority of these are graduates in business administration and marketing, engineers and technicians, design engineers and designers. We spent a total of € 6 million on product management, research and development.
Environmental protection
Although leifheit uses hardly any production processes which might pose an environmental threat, environmental protection is a high priority at all our production facilities. We are constantly developing our environmental protection measures on an ongoing basis, and have achieved a high level of awareness of this issue in all areas.
Lower energy use and noise levels, minimised immission of pollutants and responsible use of increasingly scarce raw materials are basic principles underlying our actions in all areas, and a key area of concern for our management team.
Risks and opportunities
Efficient risk management is particularly important when the economic environment and state of the industry are difficult. We regard efficient risk management as a strategic way of securing present and future potential success. With its global activities, leifheit is faced by risks which are inseparable from entrepreneurial activity. The function of our risk management system is to identify and evaluate risks in a timely manner, in order to take rapid countermeasures if necessary. It comprises the elements risk strategy, early warning system, risk identification, classification and management, controlling, and the monitoring and control system. In the course of strategic planning we analyse and evaluate the development of the markets, consumer behaviour, our trade partners and competitors, and the procurement markets. The core of our risk management system is the risk inventory. In this, we use risk tables for regular documentation of the relevant risks in all areas of business, which we evaluate for their likelihood and impact on the company. The material risks are then reported and discussed at divisional, departmental, Board of Management and Supervisory Board meetings. Other elements of our risk management system are our planning processes, controlling and internal audit, which is handled throughout the group by external consultants.
ernst & young ag examined the leifheit group risk management system in the course of their audit of the annual financial statements. They raised no objections. In the following sections we summarise the material risks known to us at present which may affect the development of the leifheit group.
General economic risks
The general risks of importance to leifheit include particularly those arising out of economic trends in our markets and the political environment. The state of the domestic economy and consumer reticence will continue to affect our business in 2006. However, we do not expect any material impact on the planned course of business.
There are no material risks currently apparent on the legislative or tax fronts or in the predicted trends in the capital markets.
Industry risks
The ongoing concentration and globalisation in the distributive trades present both opportunities and risks for leifheit. The pressure on selling prices and terms, which will continue in 2006, is matched by the opportunities of international growth and synergies with our partners.
The greatest risk in our marketing is continuing weakness of consumer demand and falling prices due to growing imports from the Far East. Retailers' focus on special low-price offers is dominating consumption, with consumers becoming more and more price-conscious in their purchasing. However, we expect this trend to ease in 2006, with a return (however hesitant) to awareness of quality and value.
In retailing, price and predatory competition will continue. The branded products industry is under particular pressure to take steps to strengthen its brands. Key factors for leifheit's success are its innovative products. Decisive influences here are research & development and product quality. Reductions in quality or innovative strength could damage our image and endanger sales. For this reason, we give high priority to maintaining quality standards and developing products in line with consumer needs.
Risks associated with operating activities
The risks associated with operating activities can be broken down into three individual risks:
Production and procurement risks
In production the likelihood of an outage of production facilities is largely minimised by ongoing maintenance, fire protection and other precautionary measures. Insurance policies have been taken out for the group for major damage and loss of production. The risk of supplier outages is covered by identification of alternative competent suppliers. There are no risks to the company's existence currently identifiable in procurement, production, development and environmental production.
13
Risks from financing
There are no material risks from financing due to the above-average level of equity. Cash and foreign currency management and financing are handled centrally for the leifheit group. We offset foreign currency risks by hedging future payments flows. Financing of future acquisitions is covered by redeemed treasury stock, utilisation of authorised capital and borrowing.
Legal risks
We limit product, liability and environmental risks through quality assurance, as defined in our quality management manual. We also use insurance policies to reduce the financial consequences of any damage.
To limit possible risks from antitrust, patent and tax legislation and other regulations and statutes, we base our decisions on recommendations by outside experts.
Beyond this, there are no material legal risks identifiable which are not covered by balance sheet provisions.
Other risks
There are no further material risks identifiable.
Forecast
Mood drivers for the upswing
Prominent economists agree that the world economy will continue to grow rapidly in 2006, possibly even picking up more after the slight slowdown in the previous year. China, India and other Asian nations will continue to be among the most dynamic economies. However, experts expect a slowdown in the us economy with its high level of debt, primarily to Asian nations. By contrast, there are plenty of optimistic forecasts for the Euro zone. Many even believe that Europe will be able to close the long-running gap in growth with the usa significantly. A figure of 2% for economic growth is very much at the lower end of the confidence range. This is actually being touted as a serious prospect for Germany, which for years has trailed the field in growth, at least in the Federal Ministry of Economics and the dihk. According to a survey by Munich's ifo-Institute, German companies currently regard the prospects for business more favourably than at any time in the past ten years. Psychologically, the successful start of the new German government has led to a mood of optimism and revival throughout the country, and even among consumers, after their years of hesitation. The Gesellschaft für Konsumforschung (GfK) has been reporting increasing optimism among consumers every month since last autumn. They expect a "major hike" in the readiness to buy, with the mood of private households at its highest point since May 2001.
However, it remains to be seen how far the rapidly improving mood among companies and consumers will be reflected in an actual economic upswing over the course of the year. At least as far as private consumption is concerned, 2006 is unlikely to see any startling increase. The Federal Government's Annual Economic Report – not otherwise given to pessimistic predictions – expects growth of only 0.3%. By contrast, the imf is more optimistic about the mood of the German consumer, forecasting growth of 0.6%.
After group reorganisation, the focus is on the market
The Board of Management of leifheit ag sees some reason for cautious optimism in the current 2006 financial year. Besides the expected improvement of the consumer mood in Europe, there is above all the increase in the company's strengths and capability following the fundamental strategic reorientation.
leifheit expects moderate growth in 2006, with improved ebit thanks to the progress made in 2005.
With the reorganisation successfully completed, leifheit is now concentrating all its efforts on aggressively expanding its position in the international markets and tapping existing market potential. The company is relying here on the proven strengths of its brands and core products and the brand loyalty of its customers. Under the slogan "Always an idea ahead", innovative products will help raise leifheit's brand profile further, and increase performance through quality growth. Our philosophy here coincides with the revival in consumers' interest in high quality branded products, creating new market opportunities which we will consistently pursue.
The positive effects of the new cost structures will make themselves fully felt for the first time in 2006. The Board of Management will hold fast to the earnings-oriented policy it has adopted and continue to reject special offers at inadequate margins as a contribution to fighting the general slide in prices. The optimisation of the supply chain will also help improve efficiency and profitability.
Report on events after the balance sheet date
Events after the end of the 2005 financial year
There were no events after the balance sheet date of particular importance for assessing the assets, financial situation and earnings of the leifheit group.
Turnover stable at previous year's level
In the first two months of the new 2006 financial year consolidated turnover was € 51 million, in line with the previous year. Of this, € 23 million (previous year: € 22 million) represents domestic turnover.
With foreign turnover of € 28 million (previous year: € 29 million), the export ratio was 55% (previous year: 57%).
The Household Products division contributed € 38 million (previous year: € 39 million) to consolidated turnover. Domestic turnover of € 17 million also matched the previous year's level.
The Bathroom Furnishings division reported turnover of € 13 million (previous year: € 12 million), of which € 5 million was domestic, as in the previous year.
Consolidated income statement for the period 1 January to 31 December 2005
| € 000 Notes |
2005 | 2004 |
|---|---|---|
| Turnover 1 |
296,155 | 317,278 |
| Cost of sales | -183,722 | -192,862 |
| Gross profit | 112,433 | 124,416 |
| Research and development costs 5 |
-5,933 | -6,690 |
| Distribution costs 6 |
-84,881 | -88,859 |
| Administrative costs 7 |
-19,538 | -20,943 |
| Other operating income 8 |
2,970 | 3,912 |
| Other operating expenses 9 |
-1,857 | -3,642 |
| Results of operating activity before reorganisation | 3,194 | 8,194 |
| Income from/expense on reorganisation 10 |
669 | -19,976 |
| Results of operating activity | 3,863 | -11,782 |
| Investment income | 22 | – |
| Net other financial income 11 |
1,604 | -1,456 |
| ebit | 5,489 | -13,238 |
| Net interest income 12 |
-34 | -29 |
| ebt | 5,455 | -13,267 |
| Income taxes 13 |
-4,132 | 7,118 |
| Profit/loss after income taxes | 1,323 | -6,149 |
| Of which minority interests 14 |
1,192 | 1,156 |
| Of which shareholders in the parent company | 131 | -7,305 |
| Earnings per share (undiluted and diluted) 15 |
0.03 | -1.54 |
Consolidated balance sheet as at 31 December 2005
| € 000 | Notes | 31.12.2005 | 31.12.2004 |
|---|---|---|---|
| assets | |||
| Current assets | |||
| Cash | 10,063 | 12,658 | |
| Trade receivables | 66,511 | 78,342 | |
| Inventories | 16 | 60,064 | 50,856 |
| Tax receivables | 418 | 1,906 | |
| Other current assets | 17 | 12,140 | 5,106 |
| Total current assets | 149,196 | 148,868 | |
| Noncurrent assets | |||
| Financial assets | 18 | 584 | 223 |
| Tangible assets | 19 | 53,604 | 56,742 |
| Intangible assets | 20 | 13,020 | 11,277 |
| Deferred tax assets | 13 | 9,764 | 11,425 |
| Other noncurrent assets | 842 | 705 | |
| Total noncurrent assets | 77,814 | 80,372 | |
| Total assets | 227,010 | 229,240 | |
| equity and liabilities | |||
| Short-term debt | |||
| Trade accounts payable and other liabilities | 21 | 56,402 | 52,973 |
| Income tax liabilities | 1,728 | 1,249 | |
| Provisions and accruals | 22 | 5,277 | 14,900 |
| Total short-term debt | 63,407 | 69,122 | |
| Long-term debt | |||
| Provisions and accruals | 22 | 5,281 | 5,452 |
| Employee benefit obligations | 23 | 40,374 | 39,011 |
| Deferred tax liabilities | 13 | 2,726 | 3,101 |
| Other long-term debt | 402 | 650 | |
| Total long-term debt | 48,783 | 48,214 | |
| Equity | |||
| Share capital | 24 | 15,000 | 15,000 |
| Share premium account | 25 | 16,934 | 16,934 |
| Treasury shares | 36 | -7,629 | -7,638 |
| Appropriated surplus | 82,324 | 80,253 | |
| Translation reserve | 1,922 | 1,648 | |
| Minority interests | 26 | 6,269 | 5,707 |
| Total equity | 114,820 | 111,904 | |
| Total equity and liabilities | 227,010 | 229,240 |
Changes in equity
| € 000 | Capital stock |
Capital surplus |
Treasury shares |
Appropriated surplus |
Translation reserve |
Minority interests |
Total |
|---|---|---|---|---|---|---|---|
| As at 1.01.2004 | 15,000 | 16,934 | -7,656 | 93,269 | 400 | 5,759 | 123,706 |
| Dividends | – | – | – | -5,711 | – | – | -5,711 |
| Other changes in minority interests |
– | – | – | – | – | -1,208 | -1,208 |
| Issue of own shares | – | – | 18 | – | – | – | 18 |
| Net loss for the period | – | – | – | -7,305 | – | 1,156 | -6,149 |
| Differences from foreign currency translation |
– | – | – | – | 1,248 | – | 1,248 |
| As at 31.12.2004 | 15,000 | 16,934 | -7,638 | 80,253 | 1,648 | 5,707 | 111,904 |
| Other changes in minority interests |
– | – | – | – | – | -630 | -630 |
| Issue of own shares | – | – | 9 | – | – | – | 9 |
| Net profit for the period | – | – | – | 131 | – | 1,192 | 1,323 |
| Offset of badwill (first time application of ifrs 3) |
– | – | – | 2,023 | – | – | 2,023 |
| Offsetting of retrospective purchase price adjustments |
– | – | – | -83 | – | – | -83 |
| Differences from foreign currency translation |
– | – | – | – | 274 | – | 274 |
| As at 31.12.2005 | 15,000 | 16,934 | -7,629 | 82,324 | 1,922 | 6,269 | 114,820 |
Total income for the 2005 financial year in accordance with ias 1.96 c) was € 405,000 (previous year: € -6,057,000).
Segment reporting
| Key figures | Household Products | Bathroom Furnishings | Eliminations | Total | |||||
|---|---|---|---|---|---|---|---|---|---|
| by division | 2005 | 2004 | 2005 | 2004 | 2005 | 2004 | 2005 | 2004 | |
| Turnover | € m | 225 | 237 | 71 | 80 | – | – | 296 | 317 |
| ebit1) | € m | -0.4 | -13.2 | 4.1 | -1.8 | – | – | 3.7 | -15.0 |
| Assets | € m | 189 | 192 | 49 | 69 | -11 | -32 | 227 | 229 |
| Liabilities | € m | 107 | 112 | 36 | 42 | -31 | -37 | 112 | 117 |
| Depreciation and amortisation |
€ m | 6 | 16 | 2 | 2 | – | – | 8 | 18 |
| Investment | € m | 5 | 6 | 2 | 1 | – | – | 7 | 7 |
| Employees (annual average) |
1,315 | 1,431 | 547 | 639 | – | – | 1,862 | 2,070 |
1) after minority interests
| Key figures | Domestic | Europe (exc. Germany) | Rest of the world | ||||
|---|---|---|---|---|---|---|---|
| by region | € m | 2005 | 2004 | 2005 | 2004 | 2005 | 2004 |
| Turnover | 124 | 137 | 150 | 160 | 22 | 20 | |
| Assets | 154 | 177 | 81 | 79 | 3 | 5 | |
| Investment | 4 | 5 | 3 | 2 | – | – |
| Key figures | Eliminations | Total | ||||
|---|---|---|---|---|---|---|
| by region | € m | 2005 | 2004 | 2005 | 2004 | |
| Turnover | – | – | 296 | 317 | ||
| Assets | -11 | -32 | 227 | 229 | ||
| Investment | – | – | 7 | 7 |
Notes on segment reporting are shown in note 29.
Consolidated statement of cash flow for the period 1 January to 31 December 2005
| € 000 | 2005 | 2004 |
|---|---|---|
| Net profit/loss for the period | 1,323 | -6,149 |
| Adjustments for | ||
| expense for the issue of employee shares | 9 | 18 |
| depreciation and amortisation | 9,181 | 20,044 |
| Decrease/increase in provisions | -8,430 | 13,694 |
| Gain on disposal of fixed assets | -534 | -1,333 |
| Decrease/increase in inventories, trade receivables and other assets not classified under investment or financing activities |
3,669 | -9,713 |
| Increase/decrease in trade payables and other liabilities not classified under investment or financing activities |
3,287 | -2,881 |
| Cash flow from operating activities | 8,505 | 13,680 |
| Subsequent purchase costs for acquisition of an affiliate | -324 | -1,066 |
| Acquisition of tangible and intangible assets | -7,744 | -10,246 |
| Investment in financial assets | -363 | -2 |
| Incoming payments from the disposal of assets | 2,842 | 4,766 |
| Cash flow from investment activities | -5,589 | -6,548 |
| Dividends paid to shareholders in the parent company | – | -5,711 |
| Dividends paid to minority interests | -558 | -513 |
| Cash flow from financing activities | -558 | -6,224 |
| Effects of exchange rate differences | 117 | 569 |
| Net change in cash | 2,475 | 1,477 |
| Current funds at the start of the period under review | 12,658 | 11,181 |
| Current funds at the end of the period under review | 15,133 | 12,658 |
| Income tax paid/refund | -5,589 | 1,710 |
| Interest paid | -23 | -22 |
| Interest received | 177 | 139 |
Breakdown of current funds at end of the period under review
| Cash | 10,063 | 12,658 |
|---|---|---|
| Available-for-sale securities | 5,070 | – |
| 15,133 | 12,658 |
NOTES TO THE ANNUAL FINANCIAL STATEMENTS FOR THE PERIOD ENDING 31 DECEMBER 2005
General principles of accounting and valuation
General
leifheit ag, has its registered office in Nassau and concentrates on the development and distribution of innovative, functionally superior and high quality branded products in the sectors of non-electrical household articles and bathroom textiles and accessories.
leifheit ag drew up its consolidated financial statements for 2005 in accordance with the International Financial Reporting Standards (ifrs) formulated by the International Accounting Standards Board (iasb). All the International Accounting Standards (ias) or International Financial Reporting Standards (ifrs) and interpretations of the International Financial Reporting Interpretation Committee (ifric) – previously the Standing Interpretations Committee (sic) – required to be applied in the 2005 financial year were followed. The previous year's figures were calculated on the same principles.
The financial statements expressed in Euro are a fair presentation of the assets, financial situation and earnings of the leifheit group. Unless otherwise stated, all figures are in thousands of Euro.
The income statement was drawn up in accordance with the internationally prevailing cost of sales method. To draw up the consolidated financial statements in accordance with the ifrs, assumptions must be made for several items which affect recognition in the consolidated balance sheet or consolidated income statement and the statement of contingent assets and liabilities.
The consolidated financial statements are prepared in accordance with ifrs and § 315a (1) hgb in combination with Art. 4 of eu Regulation 1606/2002.
Consolidation principles
The consolidated financial statements include leifheit ag and the companies controlled by it. Control is present if the group directly or indirectly holds the majority of voting rights in the subscribed capital of a company and/or can govern the financial and operating policies of a company so as to obtain benefits from its activities. Minority interests and their share in net profit or loss for the period are shown separately in equity of the balance sheet and the income statement.
The financial statements of subsidiaries are prepared using uniform accounting and valuation methods and the same balance sheet date as the financial statements of the parent company.
Acquisitions are accounting for using the purchase method. Assets and liabilities are measured at prorated fair value at the time of acquisition at the percentage of the interest acquired. If the acquisition cost of the interests exceed the group share in the equity of the company measured in this way, the resulting goodwill must be capitalised. Previously undisclosed reserves and charges are carried, amortised or reversed during subsequent consolidation, depending on the corresponding assets and liabilities.
For all acquisitions on or after 31.03.2004, ifrs 3 (Business combinations) applies. As a result of applying ifrs 3, leifheit recognises assets and liabilities from an acquisition in full at fair value at the time of acquisition. Minority interests are recognised at their share in the fair value of the assets and liabilities. Application of ifrs 3 and ias 36 further led to leifheit discontinuing regular amortisation of goodwill, replacing it since 1.01.2005 by annual assessment for possible impairment of goodwill at the level of cash-generating units, if necessary writing it down to its fair value. Differences on the liabilities side of the balance sheet resulting before 31.03.2004 are offset after 1.01.2005 against retained earnings in accordance with ifrs 3. Differences resulting after 31.03.2004 are recognised in the income statement.
In addition, under ias 38 each intangible asset must be classified as having a finite or indefinite useful life. If an intangible asset has a finite useful life, it must be amortised over that life. The amortisation periods and methods for intangible assets with finite lives are reviewed at least annually and whenever there are signs of impairment. Intangible assets with indefinite useful lives are not amortised, as no time limit can be set for the period during which the asset generates economic benefits to the company. However, intangible assets with indefinite lives are reviewed annually to ensure that the carrying amount of an asset does not exceed its recoverable value. This is done whether or not there are signs of impairment.
Acquired enterprises are included in the consolidated financial statements from the time of acquisition.
Intragroup balances and transactions and resulting unrealised intragroup profits and losses are eliminated in full. Provisions are made for deferred taxes arising from temporary differences from consolidation as required in ias 12.
The same consolidation methods were used for the financial statements for 2005 and 2004.
Companies consolidated
The following domestic and foreign companies were included in the consolidated financial statements, in addition to leifheit ag: leifheit ag directly or indirectly held the majority of voting rights in these companies as at 31.12.2005
The following companies were included in the consolidated financial statements, in addition to leifheit ag:
| Company name | Date of | Share in equity and voting - |
|---|---|---|
| initial consolidation | rights, 2005, in % | |
| btf Textilwerke GmbH, Bremen (d) | 1.1.1989 | 100.0 |
| kleine wolke ag, Berikon (ch) | 1.1.1989 | 100.0 |
| kleine wolke Textilgesellschaft mbH & Co. kg, Bremen (d) | 1.1.1989 | 100.0 |
| leifheit España s.a., Madrid (e) | 1.1.1989 | 100.0 |
| leifheit International (uk) Ltd., London (gb) | 1.1.1989 | 100.0 |
| spirella ag, Embrach (ch) | 1.1.1989 | 100.0 |
| spirella France s.a.r.l., Toulouse (f) | 1.1.1989 | 100.0 |
| spirella GmbH, Nassau (d) | 1.1.1989 | 100.0 |
| btf Blatná s.r.o., Blatná (cz) | 1.1.1995 | 100.0 |
| leifheit International u.s.a. Inc., Melville, NY (usa) | 1.1.1997 | 100.0 |
| meusch-Wohnen-Bad und Freizeit GmbH, Bremen (d) | 1.9.1999 | 100.0 |
| birambeau s.a.s., Paris (f) | 1.1.2001 | 66.0 |
| leifheit-birambeau s.a.s., Paris (f) | 1.1.2001 | 60.0 |
| soehnle ag, Montlingen (ch) | 1.1.2001 | 100.0 |
| soehnle Italia S.r.l., Brescia (i) | 1.1.2001 | 100.0 |
| soehnle s.a.s., Duttlenheim (f) | 1.1.2001 | 100.0 |
| soehnle-Waagen GmbH & Co. kg, Murrhardt (d) | 1.1.2001 | 100.0 |
| soehnle-Waagen Verwaltungs-GmbH, Murrhardt (d) | 1.1.2001 | 100.0 |
| soehnle Professional GmbH & Co. KG, Murrhardt (d) | 10.11.2004 | 100.0 |
| soehnle Professional Verwaltungs-GmbH, Murrhardt (d) | 9.12.2004 | 100.0 |
Foreign currency translation
Where individual financial statements of consolidated companies are drawn up in local currencies, monetary items in foreign currencies (cash, receivables, payables) are valued at the balance sheet date and exchange rate differences recognised in the income statement. Exceptions to this are translation differences for monetary items which in substance are part of net investment (e.g. long-term loan which replaces equity) in an independent foreign entity.
Translation of financial statements of consolidated companies drawn up in foreign currencies is done on the basis of the functional currency concept using the modified closing rate method in compliance with ias 21.
As our subsidiaries and branches operate independently in financial, economic and organisational terms, their functional currency is identical in principle with the local currency. For inclusion in the consolidated financial statements, the assets and liabilities of the subsidiaries and branches are translated at the exchange rate at the balance sheet date, and income and expenses are translated at annual average exchange rates. The exchange difference arising out of translation is recognised in a separate reserve in equity. Exchange differences from the previous year's translation are taken to this translation reserve.
| Exchange rate € 1 | Average rate on balance sheet date | Annual average rate | ||
|---|---|---|---|---|
| 31.12.2005 | 31.12.2004 | 2005 | 2004 | |
| Pound Sterling | 0.69 | 0.71 | 0.69 | 0.71 |
| Swiss Franc | 1.56 | 1.54 | 1.55 | 1.55 |
| Czech Krone | 28.99 | 30.39 | 29.84 | 32.15 |
| US-Dollar | 1.18 | 1.36 | 1.25 | 1.24 |
| Japanese Yen | 139.13 | 139.83 | 136.84 | 133.74 |
The exchange rates used for translation are shown in the following table:
Cash and cash equivalents
Cash includes cash on hand and demand deposits. Cash equivalents are short term, highly liquid investments that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value.
Receivables
Receivables are recognised at the time revenue is realised or consideration received and valued at amortised cost, taking into account any necessary allowances.
Hedging transactions
Foreign exchange futures contracts are used to hedge against future exchange rate fluctuations. When entering into these hedging transactions, specific foreign exchange futures contracts are allocated to specific fundamental transactions, i.e. either to hedge the risk of a change in the fair value of a recognised asset or debt (fair value hedge) or to hedge the risk of fluctuations in cash flows which can be allocated to a specific risk associated with a recognised asset or debt or the risk associated with a planned transaction (cash flow hedge). The foreign exchange futures contracts entered into by leifheit are classified as "fair value hedges" within the meaning of ias 39. Within the hedging context, the hedging instruments are recognised at market value; adjustment is made for a fair value hedge in the income statement.
Inventories
Inventories are recognised at the lower of cost and net realisable value. Cost is measured on the basis of weighted average cost method.
Costs of manufacture include production-related full costs based on normal capacity utilisation. Costs of manufacture include direct costs directly attributable to products (e.g. material and labour) and fixed and variable production overheads (e.g. material and production overheads). Costs are specifically taken into account which are incurred by the specific cost centres. Borrowing costs are not capitalised as part of purchase or manufacturing costs but are expensed in the period in which they are incurred (ias 23).
The risks in holding inventory due to reduced realisable value are taken into account through appropriate write-downs. The write-downs are calculated on the basis of the future production range or actual consumption. Depending on the individual inventory item, individual periods are applied which are reviewed and modified on the basis of objective evaluation criteria. In measurement, lower net realisable value on the balance sheet date is taken into account. If the circumstances which previously caused inventories to be written down no longer exist so that the net realisable value is increased, the resulting increase in value is recognised as a reduction in material cost.
Financial assets
Financial assets are carried at fair value and include equity investments and other financial assets. If fair value cannot be measured reliably, the assets are carried at amortised cost.
Tangible assets
Tangible assets are recognised at cost less cumulated regular depreciation and impairment. If tangible assets are sold or scrapped, the associated costs and cumulated depreciation are derecognised; any realised profit or loss from the disposal is recognised in the income statement.
The purchase or manufacturing cost of a tangible asset comprises the purchase price
| Years | |
|---|---|
| Buildings | 25-50 |
| Other structures | 10-20 |
| Injection moulding machines | 10 |
| Plant and machinery | 5-10 |
| Injection moulding and diecasting tools | 3-6 |
| Vehicles | 6 |
| Computing equipment | 3-5 |
| Software | 4-8 |
| Furniture and fixtures and office equipment | 3-13 |
| Display and pos stands | 3 |
including import duties and non refundable purchase taxes, and any directly attributable costs of bringing the asset to its working condition and the location for its intended use. Subsequent expense such as maintenance and repair costs incurred after the assets have been commissioned are recognised as expense in the period in which it is incurred.
Depreciation uses the straight line method based on the likely useful life.
The useful life and method of depreciation for tangible assets are reviewed periodically to ensure that the method of depreciation and depreciation period comply with the expected useful life of tangible assets. Depreciation based solely on tax regulations is not taken.
Plant under construction is classified as unfinished assets and recognised at cost. Plant under construction is depreciated from the time at which the relevant asset is completed and used in operation.
Leasing
A lease is classified as an operating lease if substantially all risks and rewards incident to ownership remain with the lessor. As leifheit acts exclusively as a lessee under operating leases, the corresponding assets are not recognised in the balance sheet. Lease payments are recognised as expense on a straight line basis over the term of the lease.
Intangible assets
Patents, licences and software
Expense on patents and licences is capitalised and subsequently amortised over their likely useful life using the straight line method. The estimated useful life of patents and licences varies between 5 and 15 years. The carrying amount of assets is regularly reviewed.
Costs of new software and implementation are capitalised and treated as an intangible asset, unless these costs are an integral part of the associated hardware. Software is amortised over a period of four to eight years using the straight line method.
Brand names
Consideration paid for brand names is carried as an asset. Brand names are recognised under ias 38 as intangible assets with indefinite useful lives are not amortised, as no time limit can be set for the period during which the asset generates economic benefits to the company. Brand names are assessed annually for possible impairment in accordance with ias 36 and written down if necessary to their fair value.
Goodwill
The excess of the cost of an acquisition over the interest acquired on the day of purchase in the fair value of identifiable assets and liabilities is known as goodwill and is recognised as an asset.
The identifiable assets and liabilities recognised are measured at their fair value at the time of acquisition. Any minority interest is measured by the share of the minority shareholders in the fair value of the recognised identifiable assets and liabilities.
All goodwill arising on acquisition of an independent entity and adjustments to fair value of the book value of the assets and liabilities arising out of the acquisition of the independent entity are treated as assets and liabilities of the entity. In accordance with ifrs 3 in combination with ias 36 and 38, goodwill is assessed annually and written down if necessary to fair value.
Badwill existing at 31.12.2004 was offset against retained earnings on 1.01.2005 in application for the first time of ifrs 3.
Differences on the liabilities side of the balance sheet (badwill) arising after 31.03.2004 are taken to the income statement at the time they arise.
Impairment of tangible and intangible assets
Tangible and intangible assets are assessed for impairment if there are material reasons or a change in circumstances indicating that the carrying amount of an asset may not be recoverable (ias 36). As soon as the carrying value of an asset exceeds the recoverable amount, an impairment loss is recognised in the income statement. The recoverable amount is the higher of the asset's net selling price and its value in use. The net selling price is the amount obtainable from the sale of an asset in an arm's length transaction, less the costs of disposal. Value in use is the present value of estimated future cash flows expected to arise from the continuing use of an asset and from its disposal at the end of its useful life. The recoverable amount is identified for each asset individually or, if this is not possible, for the cash-generating unit to which the asset belongs.
Research and development costs
Development costs for newly developed products are capitalised in accordance with ias 38 if they are clearly attributable and both technical feasibility and marketing of the newly developed products are ensured. Development work must also generate probable future economic benefits. As not all these requirements are met in the leifheit group, development costs are not capitalised.
Research costs cannot be capitalised, in accordance with ias 38, and are accordingly recognised directly as an expense in the income statement.
Deferred taxes
Deferred taxes are accounted for using the balance sheet liability method for all temporary differences between the tax base of an asset or liability and its carrying amount in the consolidated balance sheet (temporary concept). In addition, deferred tax assets from loss carryforwards must be recognised.
The carrying amount of deferrals is the probable tax liability or asset in the following financial year based on the tax rate prevailing at the time of realisation.
Deferred tax assets whose realisation is improbable were written down.
Deferred taxes are recognised in separate items in the balance sheet and income statement.
Liabilities
Current liabilities are recognised at repayment or settlement amount. Noncurrent liabilities are carried at amortised cost. Differences between historic cost and settlement amount are taken into account using the effective interest rate method.
Provisions and accruals
Under ias 37 provisions are recognised where there is a current obligation to third parties as a result of a past event which will probably lead to an outflow of resources and can be reliably estimated.
Provisions for warranty claims are recognised under ias 37 on the basis of the previous or estimated future outflows for the warranty obligations on the products sold. Other provisions are recognised under ias 37 for all identifiable risks and uncertain obligations for the amount probably required to settle them and not offset against reimbursement claims.
Provisions which do not lead to an outflow of resources in the following year are recognised at the discounted amount required to settle the obligations at the balance sheet date. The discount is subject to market interest rates.
Employee benefit obligations, pension reserves
The actuarial valuation of pension reserves is based on the projected unit credit method required by ias 19 for post-employment benefit obligations. Under this method the post-employment benefits and vested benefits are taken into account together with expected future increases in salaries and pensions.
Equity
Treasury shares reduce the equity recognised in the balance sheet. Acquisition of treasury shares is shown as a change in equity. No gain or loss is recognised in the income statement for the sale, issue or cancellation of treasury shares. Consideration received is recognised in the financial statements as a change in equity.
Provisions for currency translation are recognised for currency translation differences arising out of the consolidation of the financial statements of independent foreign subsidiaries or branches.
Currency translation differences from a monetary item which is essentially part of net investment by the company in an independent foreign entity, e.g. a long term loan, are recognised as equity in the consolidated financial statements up to the point of disposal or repayment. If the corresponding assets are sold the total revaluation or provision for currency translation is recognised as income or expense in the same period in which the gain or loss on the disposal is recognised.
Recognition of income and expense
Turnover and other operating income is only recognised when the service has been provided or the goods or products delivered, i.e. transfer of risk to the customer has taken place.
Income from assets for which there is a buy-back agreement with a subsidiary is only recognised when the assets have finally left the group. Up to this point it is recognised in inventories.
The cost of sales includes costs incurred to make sales and the purchase cost of merchandise purchased and held for resale. This heading also includes the cost of transfers to provisions for warranty obligations.
Distribution costs include labour and material costs and depreciation and amortisation for marketing, shipment, freight, advertising, sales promotion, market research and customer service costs.
General administrative costs include labour and material costs and the depreciation and amortisation attributable to administration.
Taxes like land tax and vehicle tax are attributed to production, sales or administrative costs on their assessment basis.
Contingent liabilities and assets
Contingent liabilities are not recognised in the financial statements. They are shown in the notes unless the probability of an outflow of resources embodying economic benefits is very low. Contingent assets are not recognised in the financial statements. However, they are shown in the notes if the inflow of economic benefits is probable.
Events after the balance sheet date
Events after the balance sheet date which provide additional information on conditions that existed at the balance sheet date (adjusting events after the balance sheet date) are taken into account in the financial statements. Non-adjusting events after the balance sheet date are shown in the notes, if they are material.
Material exercises of discretion, estimates and assumptions
Preparing the annual financial statements requires exercises of discretion and estimates and assumptions about the amounts of receivables, liabilities and provisions, statement of contingent liabilities and recognised income and expenses. The actual results may be different. The most important assumptions and estimates in connection with review for possible impairment of assets are stated in note 20, the assumptions and estimates in connection with recognising pension liabilities in note 23.
New accounting standards required to be applied from 2005
Since 2003 the International Accounting Standard Board (iasb) has published numerous changes to existing ifrs as well as new ifrs and Interpretations of the International Financial Reporting Interpretation Committee (ifric) which companies are required to apply to all financial years starting on or after 1.01.2005, unless otherwise described below. The individual changes or publications applied from 1.01.2005 and their significance for the consolidated financial statements are described below.
On 18.12.2003 the iasb published a series of revised accounting standards following conclusion of the Improvement Project. Specifically, these were the 13 standards ias 1, ias 2, ias 8, ias 10, ias 16, ias 17, ias 21, ias 24, ias 27, ias 28, ias 31, ias 33 and ias 40.
Due to the application of the Improvement Project, the following changes were made under ias 1 in the presentation of the consolidated financial statements:
- As a result of the clarification in ias 32 (2004) of the classification of equity and borrowed funds, minority interests are now treated as part of equity. Minority interests are accordingly recognised in the balance sheet under equity (ias 1.68).
- In the statement of changes in shareholders' equity a new column was inserted to show minority interests and group equity separately (ias 1.96).
- The transfer of consolidated net profit for the period to the consolidated income statement after minority interests is replaced by separate identification of the profit or loss attributable to minority interests (ias 1.82).
- In the statement of cash flow, the result for the period after minority interests is replaced by the result for the period as a heading.
The other ifrs amended under the Improvement Project have no material effect on the consolidated financial statements.
On 19.02.2004 the iasb published ifrs 2 "Share based payment" on recognition of share option plans and similar consideration related to the value of shares. This standard essentially deals with the recognition of transactions under which the accounting company issues equity instruments such as shares or share options as consideration for goods or services. See note 32 for the effects of the application of ifrs 2.
On 31.03.2004 iasb published ifrs 3 "Business combinations" and the thoroughly revised ias 36 and ias 38. The material innovations are the elimination of the "pooling of interest" method and scheduled amortisation of goodwill and their replacement by the "impairment only" approach. ifrs 3 must be applied to all business combinations entered into on or after 31.03.2004. For existing differences arising out of transactions before the amendment date ifrs 3 requires transition to the "impairment only" approach for financial years commending on or after 31.03.2004. See note 20 for the effects of the application of ifrs 3.
New accounting standards whose application will be mandatory in future
Besides the ifrs required to be applied for the 2005 financial year the iasb has published further ifrs and ifric which will be required to be applied at a later date. The following section lists the standards and interpretations which may be relevant for the leifheit group. While earlier application of these standards is permitted, leifheit is not yet choosing to do so.
On 16.12.2004 the iasb announced a change to ias 19 "Employee benefits" regarding recognition of profits and losses from changes to actuarial assumptions for defined benefit pension plans. In addition to the existing recognition in the income statement and "Corridor method" (ias 19.92 and 93) the change permits recognition of unrealised actuarial profits and losses in equity (ias 19.93a). Using this method the current present value of pension obligations is recognised in the balance sheet. Deferred taxes arising out of application of this method are also recognised in equity. The future effects of application of this new standard on group assets, income and financial situation depend on which option the Board of Management chooses. This decision has not yet been made.
On 18.08.2005 the iasb published ifrs 7 "Financial instruments disclosures". This replaces the existing ias 30 and incorporates all the provisions of ias 32 regarding disclosure. Changes and additions were also made to the capital disclosure requirements in ias 1. The standard results in a thorough reorganisation of the disclosure requirements for financial instruments. Essentially, disclosure is required of management's objectives, methods, risks, collateral and processes. Disclosure requirements under ifrs 7 and the revised capital disclosure requirements under ias 1 must be applied to reporting period starting on or after 1.01.2007, although earlier application is recommended. Application of ifrs 7 is not expected to lead to any changes in valuation in future, and so is not expected to affect assets, income and the financial situation. However, further information and presentation will be required in the notes to the financial statements.
Notes on the income statement
1 Turnover
| Turnover by region € 000 | 2005 | 2004 |
|---|---|---|
| Domestic | 124,314 | 137,053 |
| Europe (exc. Germany) | 149,480 | 159,829 |
| Rest of the world | 22,361 | 20,396 |
| 296,155 | 317,278 |
Consolidated turnover in other European countries totalled € 149.5 million (previous year: € 159.8 million), broken down between € 121.6 million (previous year: € 128.8) in the 24 eu partner countries and € 20.1 million (previous year. € 23.3 million) in Switzerland. "Rest of the world" includes the usa as the largest single market, accounting for € 13.7 million (previous year: € 11.9 million).
In the segment reporting, consolidated turnover is broken down between the Household Products and Bathroom Furnishings divisions.
| € 000 | 2005 | 2004 |
|---|---|---|
| Expense for raw materials and consumables and | ||
| merchandise purchased for resale | 136,332 | 133,386 |
| Expense for goods and services purchased | 7,973 | 4,575 |
| 144,305 | 137,961 |
2 Cost of materials
3 Deprectiation and amortisation
| € 000 | 2005 | 2004 |
|---|---|---|
| Tangible assets | ||
| Cost of sales | 4,702 | 7,347 |
| Research and development costs | 147 | 182 |
| Selling expenses | 2,185 | 2,718 |
| Administrative costs | 758 | 784 |
| Reorganisation | – | 6,964 |
| 7,792 | 17,995 | |
| Intangible assets and goodwill | ||
| Cost of sales | 261 | 649 |
| Research and development costs | 64 | 110 |
| Selling expenses | 749 | 1,061 |
| Administrative costs | 315 | 229 |
| 1,389 | 2,049 | |
| Total depreciation and amortisation | 9,181 | 20,044 |
4 Personnel costs, employment
| € 000 | 2005 | 2004 |
|---|---|---|
| Wages and salaries | 49,955 | 63,690 |
| Social security contributions and employee benefits | 12,363 | 13,737 |
| Expense on post-employment benefits | 3,248 | 2,574 |
| 65,566 | 80,001 |
Consolidated labour costs fell 18 % to € 65,566,000 as a result of the decrease in employment.
| 2005 | 2004 | |
|---|---|---|
| Industrial workers | 1,138 | 1,296 |
| Salaried employees | 652 | 697 |
| Trainees | 72 | 77 |
| 1,862 | 2,070 |
The decrease of 10 % in average annual employment in the group to 1,862 was almost entirely the result of the closure of domestic production of consumer scales at the Murrhardt plant, the conversion of the Zuzenhausen facility as a logistics centre and the relocation of production lines to the Czech plant at Blatná.
5 Research and development costs
| € 000 | 2005 | 2004 |
|---|---|---|
| Labour costs | 3,474 | 4,296 |
| Cost of materials | 273 | 323 |
| Depreciation and amortisation | 212 | 293 |
| Other research and development costs | 1,974 | 1,778 |
| 5,933 | 6,690 |
6 Distribution costs
| € 000 | 2005 | 2004 |
|---|---|---|
| Labour costs | 26,999 | 27,679 |
| Outgoing freight | 16,540 | 17,089 |
| Advertising costs | 14,449 | 14,379 |
| Commissions | 8,943 | 9,776 |
| Depreciation and amortisation | 3,524 | 3,078 |
| Fees and bought-in services | 2,934 | 3,780 |
| Costs of cars, travel and entertainment | 2,871 | 3,139 |
| Rent | 2,077 | 2,008 |
| Office and other overheads | 1,227 | 1,316 |
| Maintenance | 746 | 813 |
| Post and telephone costs | 659 | 885 |
| Royalties | 571 | 698 |
| Insurance | 511 | 451 |
| Payments to customers | 493 | 318 |
| General operating and administrative costs | 376 | 425 |
| Liquidated damages | 168 | 581 |
| Other selling expenses | 1,793 | 2,444 |
| 84,881 | 88,859 |
7 Administrative costs
| € 000 | 2005 | 2004 |
|---|---|---|
| Labour costs | 10,963 | 11,885 |
| Fees and bought-in services | 2,980 | 3,112 |
| Depreciation and amortisation | 1,074 | 1,013 |
| Costs of cars, travel and entertainment | 599 | 534 |
| Maintenance | 529 | 579 |
| Office and other overheads | 523 | 523 |
| Rent | 506 | 617 |
| Post and telephone costs | 459 | 536 |
| Insurance | 187 | 418 |
| General operating and administrative costs | 182 | 205 |
| Other administrative costs | 1,536 | 1,521 |
| 19,538 | 20,943 |
35
8 Other operating income
| € 000 | 2005 | 2004 |
|---|---|---|
| Income from disposal of assets | 979 | 2,825 |
| Income from sales of shares | 466 | – |
| Income from insurance claims | 165 | 181 |
| Commission income | 136 | 325 |
| Other operating income (smaller than € 200,000) | 1,224 | 581 |
| 2,970 | 3,912 |
Profits from disposals of assets in the previous year relate primarily to the sale of the real estate of soehnle ag in Montlingen.
9 Other operating expenses
| € 000 | 2005 | 2004 |
|---|---|---|
| Losses on disposal of assets | 445 | 1,492 |
| Costs of payments transactions | 222 | 244 |
| Rent for assets not used for operating purposes | – | 540 |
| Other operating expense (smaller than € 300,000) | 1,190 | 1,366 |
| 1,857 | 3,642 |
10 Income from/expense on reorganisation
| € 000 | 2005 | 2004 |
|---|---|---|
| Income from/expense on reorganisation | 669 | -19,976 |
In the 2005 financial year provisions totalling € 669,000 for the reorganisation decided in 2004 and carried out in 2005 were reversed. The reorganisation measures in the previous year included expense for personnel adjustments, additional depreciation on tangible assets for the shutdown of consumer scales production in Murrhardt, the conversion of the Zuzenhausen facility into another logistics centre, further relocation abroad of production in the Household Products division, and the shutdown of the shower partition business for spirella.
11 Net other financial income
| € 000 | 2005 | 2004 |
|---|---|---|
| Exchange rate gains/losses | 1,604 | -1,456 |
The increase in results of other financial activities is due to exchange rate gains from the liquidation of foreign currency futures transactions, valuation of receivables and liabilities in foreign currencies and exchange rate gains and losses arising out of exchange rate changes between the recording and settlement of receivables and liabilities in foreign currencies.
12 Net interest income
| € 000 | 2005 | 2004 |
|---|---|---|
| Interest income | 174 | 153 |
| Interest expense | -208 | -182 |
| -34 | -29 |
13 Income taxes
| € 000 | 2005 | 2004 |
|---|---|---|
| Corporation tax (Germany) | 298 | 856 |
| Municipal trade tax (Germany) | -405 | 851 |
| Foreign income tax | -3,225 | -3,040 |
| Deferred tax on income | -800 | 8,451 |
| -4,132 | 7,118 |
The tax rate for leifheit ag for corporation tax and municipal trade tax in Germany was 37.2 % in 2005 (previous year: 37.1 %).
| € 000 | 2005 | 2004 |
|---|---|---|
| ebt | 5,455 | -13,267 |
| Taxes assuming the tax rate applying to the parent company | -2,029 | 4,922 |
| Losses by group companies with no tax effect | -470 | -829 |
| Effects of the leifheit ag tax office audit | -136 | -203 |
| Reduction in tax due to the corporation | ||
| tax credit for the leifheit ag dividend | 506 | – |
| Different foreign tax rates | 527 | 655 |
| Taxes for earlier years | -640 | 1,860 |
| Writedown of deferred tax assets | -1,775 | – |
| Other | -115 | 713 |
| Tax load | -4,132 | 7,118 |
Derivation of the theoretical income tax liability that would result from applying the prevailing tax rate in the parent company's domicile is shown below:
Deferred taxes are recognised for all material temporary differences between the tax base and carrying amount. The deferred taxes have the following breakdown:
| € 000 | 31.12.2005 | ||||
|---|---|---|---|---|---|
| Deferred tax assets |
Deferred tax liabilities |
Deferred tax assets |
Deferred tax liabilities |
||
| Fixed assets | 562 | 3,353 | 567 | 3,037 | |
| Inventories | 351 | 445 | 145 | 424 | |
| Balance sheet date exchange rate, receivables | 74 | 861 | 575 | 472 | |
| Foreign currency futures | – | – | 144 | 123 | |
| Pensions | 3,465 | – | 3,110 | – | |
| Provisions for part-time working by older employees | 657 | – | 605 | – | |
| Other provisions and accruals | 188 | 501 | 1,994 | 633 | |
| Impairment/write-up on treasury stock | 600 | 661 | 599 | 661 | |
| Balance sheet date exchange rate, liabilities | 364 | 91 | 273 | 18 | |
| Other timing differences | – | – | – | 4 | |
| Tax loss carryforwards | 5,798 | – | 4,699 | – | |
| Gross value | 12,059 | 5,912 | 12,711 | 5,372 | |
| Offset | -3,186 | -3,186 | -2,312 | -2,312 | |
| Consolidation | 891 | – | 1,026 | 41 | |
| Balance sheet amounts | 9,764 | 2,726 | 11,425 | 3,101 |
Deferred tax assets amounting to € 8,309,000 from tax loss carryforwards were not recognised or written-off (previous year: € 6,392,000) because it is assumed that it will not be possible to make use of these. This is based on a tax plan for a five-year period.
14 Minority interests
Minority interests relate to minority interests in birambeau s.a.s. and leifheitbirambeau s.a.s.
15 Earnings per share
Earnings per share are calculated by dividing the share in net profit or loss of the shareholders of leifheit ag by the weighted average number of shares in circulation during the financial year. No financial or compensation instruments were used which lead to a dilution of the earnings per share.
| 2005 | 2004 | ||
|---|---|---|---|
| Shares issued | 000 shares | 5,000 | 5,000 |
| Weighted average number of treasury shares | 000 shares | 241 | 242 |
| Weighted average number of shares at 31.12. | 000 shares | 4,759 | 4,758 |
| 2005 | 2004 | ||
| Net profit/loss for the period after minority interests | € 000 | 131 | -7,305 |
| Weighted average number of shares at 31.12. | 000 shares | 4,759 | 4,758 |
| Undiluted eps | € | 0.03 | -1.54 |
Notes on the balance sheet
16 Inventories
| € 000 | 31.12.2005 | 31.12.2004 |
|---|---|---|
| Raw materials, consumables and supplies | 7,955 | 10,037 |
| Unfinished products and services | 2,012 | 3,312 |
| Finished products and goods purchased and held for resale | 49,184 | 36,541 |
| Payments on account | 913 | 966 |
| 60,064 | 50,856 |
The increase in inventories is entirely the result of increased stocks of finished products and goods for resale. At the same time, stocks of raw materials, supplies and work in progress were reduced. This is due to the revised procurement strategy under the reorganisation.
17 Other current assets
| € 000 | 31.12.2005 | 31.12.2004 |
|---|---|---|
| Available-for-sale securities | 5,096 | 26 |
| vat receivables | 3,335 | 2,090 |
| Balances in our favour with creditors | 918 | 1,290 |
| Current prepayments and accrued income | 876 | 965 |
| Receivables from transferred costs | 317 | 7 |
| Receivables from employees | 232 | 126 |
| Receivables from transferred supplier discounts | 155 | 109 |
| Receivables from disposal of assets | 150 | – |
| Receivables from transferred burdens | 131 | 156 |
| Other tax receivables | 129 | 28 |
| Other current assets (smaller than € 100,000) | 801 | 309 |
| 12,140 | 5,106 |
The increase in available-for-sale securities is the result of the investment of cash in money market funds. These are not subject to material fluctuation in market value.
Prepayments and deferred income include specifically prepayments for services which will not be provided until the following year.
| Cost of purchase or production | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|
| € 000 | 1.01.2005 | Foreign currency differences |
Additions | Reversals | Reclassifi- cations |
Offset against retained earnings |
31.12.2005 | ||||
| 18 | Financial assets | ||||||||||
| Participations | 1,249 | – | – | – | – | – | 1,249 | ||||
| Other financial assets | 80 | – | 363 | 2 | – | – | 441 | ||||
| 1,329 | – | 363 | 2 | – | – | 1,690 | |||||
| 19 | Tangible assets | ||||||||||
| Land and buildings | 67,959 | 326 | 8 | 1,672 | 1,015 | – | 67,636 | ||||
| Plant and machinery | 74,775 | 255 | 164 | 14,695 | 1,758 | – | 62,257 | ||||
| Other fixtures and fittings, | |||||||||||
| tools and equipment | 71,198 | 25 | 2,589 | 16,499 | 31 | – | 57,344 | ||||
| Payments on account and | |||||||||||
| under construction | 307 | 1 | 3,780 | 101 | -2,636 | – | 1,351 | ||||
| 214,239 | 607 | 6,541 | 32,967 | 168 | – | 188,588 | |||||
| 20 | Intangible assets | ||||||||||
| Brands | 7,231 | – | – | – | -21 | – | 7,210 | ||||
| Badwill | -2,023 | – | – | – | – | 2,023 | – | ||||
| Goodwill | 3,088 | – | 294 | – | – | -83 | 3,299 | ||||
| Other intangible assets | 14,576 | -5 | 909 | 301 | -147 | – | 15,032 | ||||
| 22,915 | -5 | 1,203 | 301 | -168 | 1,940 | 25,584 |
Additions to goodwill relate to an increase in the investment in birambeau s.a.s. from 65.3 % to 66.0 %.
Additions to intangible assets are primarily due to software.
| 41 | |
|---|---|
| Net book value | Cumulated depreciation and amortisation | ||||||
|---|---|---|---|---|---|---|---|
| 31.12.2004 | 31.12.2005 | 31.12.2005 | Reclassifi- cations |
Reversals | Additions | Foreign currency differences |
1.01.2005 |
| 175 175 |
1,074 | – | – | – | – | 1,074 | |
| 409 48 |
32 | – | – | – | – | 32 | |
| 584 223 |
1,106 | – | – | – | – | 1,106 | |
| 35,827 | 34,687 | 32,958 | 561 | 1,616 | 1,842 | 39 | 32,132 |
| 8,282 9,905 |
53,975 | -299 | 13,038 | 2,286 | 156 | 64,870 | |
| 9,423 10,833 |
47,921 | -95 | 16,015 | 3,664 | 2 | 60,365 | |
| 1,221 177 |
130 | – | – | – | – | 130 | |
| 56,742 | 53,604 | 134,984 | 167 | 30,669 | 7,792 | 197 | 157,497 |
| 4,803 4,808 |
2,407 | -16 | – | _ | – | 2,423 | |
| – -2,023 |
– | – | – | _ | – | _ | |
| 3,299 3,088 |
– | – | – | _ | – | _ | |
| 4,918 5,404 |
10,114 | -151 | 293 | 1,389 | -3 | 9,172 | |
| 11,277 | 13,020 | 12,564 | -167 | 293 | 1,389 | -3 | 11,638 |
The cumulated scheduled amortisation of goodwill and badwill up to 31.12.2004 was offset against the relevant goodwill and badwill on 1.1.2005 in accordance with ifrs 3. Badwill was subsequently offset against retained earnings in application for the first time of ifrs 3.
Impairment test of goodwill and intangible assets with indefinite life
Goodwill and brand names acquired in a business combination were attributed to the following two cash-generating units for the purposes of impairment tests:
- "Management Division birambeau" and
- "Brand soehnle"
The cash-generating units are based on internal management reporting.
The recoverable amount for each cash-generating unit is determined on the basis of calculating a value in use based on cash flow forecasts for a five year horizon. Assumptions are made for future trends in turnover and costs. If material assumptions differ from the actual values, this could lead to impairment in future which would have to be recognised in the income statement. The discount rate used in the cash flow forecasts is 8.5%, with no growth assumed.
Carrying amount at the balance sheet date
| € 000 | Goodwill | Brand names | ||
|---|---|---|---|---|
| 2005 | 2004 | 2005 | 2004 | |
| Management Division birambeau | 3,299 | 3,088 | – | – |
| Brand soehnle | – | – | 4,803 | 4,803 |
The impairment test at the balance sheet date showed no need for amortisation.
21 Trade or other payables
| Remaining term up to 1 year, € 000 | 31.12.2005 | 31.12.2004 |
|---|---|---|
| Trade payables | 21,306 | 18,228 |
| Employees | 9,384 | 7,377 |
| Customer discounts | 8,408 | 7,564 |
| Advertising cost subsidies | 3,298 | 3,341 |
| Other taxes (but not income taxes) | 3,022 | 2,381 |
| Outstanding invoices | 2,888 | 4,314 |
| Social security contributions | 1,803 | 2,128 |
| Amounts owed to debtors | 1,484 | 1,368 |
| Customer rebates | 924 | 1,074 |
| Severance payments to sales representatives | 131 | 310 |
| Other liabilities (smaller than € 100,000) | 3,754 | 4,888 |
| 56,402 | 52,973 |
43
22 Provisions
| € 000 | 31.12.2005 | 31.12.2004 | ||||
|---|---|---|---|---|---|---|
| of which | of which | of which | of which | |||
| Total | current | noncurrent | Total | current | noncurrent | |
| Warranties | 3,349 | 2,230 | 1,119 | 3,069 | 2,121 | 948 |
| Long-service recognition | 861 | – | 861 | 975 | – | 975 |
| Part-time work by | ||||||
| older employees | 2,733 | – | 2,733 | 2,854 | – | 2,854 |
| Threatening losses | 536 | 222 | 314 | 838 | 406 | 432 |
| Litigation and legal costs | 180 | 180 | – | 208 | 208 | – |
| Other provisions and accruals | 2,899 | 2,645 | 254 | 12,408 | 12,165 | 243 |
| 10,558 | 5,277 | 5,281 | 20,352 | 14,900 | 5,452 |
Other provisions relate primarily to provisions for reorganisation.
| € 000 | 1.01.2005 | Foreign currency difference |
Used | Reversals | Additions | 31.12.2005 |
|---|---|---|---|---|---|---|
| Current provisions | ||||||
| Warranties | 2,121 | -2 | 1,735 | 104 | 1,950 | 2,230 |
| Threatening losses | 406 | – | 262 | – | 78 | 222 |
| Litigation and legal costs | 208 | – | 46 | 33 | 51 | 180 |
| Other current provisions | 12,165 | -1 | 10,048 | 712 | 1,242 | 2,645 |
| 14,900 | -3 | 12,091 | 849 | 3,321 | 5,277 |
| € 000 | 1.01.2005 | Foreign currency difference |
Used | Reversals | Additions | 31.12.2005 |
|---|---|---|---|---|---|---|
| Noncurrent provisions | ||||||
| Warranties | 948 | – | 385 | – | 556 | 1,119 |
| Long-service recognition | 975 | – | 149 | 148 | 183 | 861 |
| Part-time work by older employees | 2,854 | – | 935 | 185 | 999 | 2,733 |
| Threatening losses | 432 | – | 118 | – | – | 314 |
| Other noncurrent provisions | 243 | – | – | – | 11 | 254 |
| 5,452 | – | 1,587 | 333 | 1,749 | 5,281 |
23 Employee benefit obligations
The leifheit group has defined benefit pension plans for certain employees. Provisions have been recognised for retirement and survivor benefits to be paid.
In accordance with normal practice in Germany, the pension plan is not secured by a pension fund. Pension reserves are calculated on the basis of an independent actuarial opinion. The amount and scope of the benefits are based on length of service and salary. The pension plan is insured.
The obligations under defined benefit pension plans are measured using the projected unit credit method. Gains and losses not yet recognised from changes in actuarial assumptions are recognised as income (expense) over the entire expected remaining service of active employees.
The following table shows the changes in pension obligations in the relevant reporting periods:
| € 000 | 31.12.2005 | 31.12.2004 |
|---|---|---|
| Present value of defined benefit obligations (dbo) | ||
| not funded by plan assets | 47,472 | 41,168 |
| Actuarial losses not yet recognised | -8,303 | -3,137 |
| Recognised net debt from pension | ||
| obligations in Germany | 39,169 | 38,031 |
| Pension obligations, France | 758 | 659 |
| Obligations similar to pensions | 447 | 321 |
| Employee benefit obligations | 40,374 | 39,011 |
Expense on post-employment benefits in Germany shows the following breakdown:
| € 000 | 31.12.2005 | 31.12.2004 |
|---|---|---|
| Current service expense | 636 | 707 |
| Interest expense on the obligation | 2,021 | 1,944 |
| Recognised actuarial net loss | 16 | 23 |
| Total expense on post-employment benefits | 2,673 | 2,674 |
There were the following changes in the liability (in Germany) recognised in the balance sheet:
| € 000 | 2005 | 2004 |
|---|---|---|
| Net debt at start of year | 38,031 | 36,676 |
| Net expense recoginised in the income statement | 2,673 | 2,674 |
| Payments to beneficiaries | -1,535 | -1,319 |
| Net debt at end of year | 39,169 | 38,031 |
The present value of defined benefit obligations (dbo) not funded by plan assets changed as follows:
| € 000 | 2005 | 2004 |
|---|---|---|
| dbo at start of the year | 41,168 | 37,681 |
| Current service cost | 636 | 707 |
| Interest expense | 2,021 | 1,944 |
| Payments | -1,535 | -1,319 |
| Actuarial losses | 5,182 | 2,155 |
| dbo at end of year | 47,472 | 41,168 |
Over the past five years the present value of defined benefit obligations (dbo) not funded by plan assets has changed as follows:
| € 000 | 2005 | 2004 | 2003 | 2002 | 2001 |
|---|---|---|---|---|---|
| dbo at balance sheet date | 47,472 | 41,168 | 37,681 | 37,832 35,858 |
The actuarial assumptions used as the basis for measuring obligations under post-employment benefit plans at 31 December were as follows:
| % | 2005 | 2004 |
|---|---|---|
| Discount rate | 4.3 | 5.0 |
| Future trend in incomes | 2.0 | 2.0 |
| Future trend in pensions | 1.5 | 1.4 |
| Rate of turnover | 3.0 | 3.0 |
| Calculations based on "Richttafeln Prof. K. Heubeck" Life Tables | 2005 G | 1998 |
24 Capital stock
The capital stock of leifheit ag totals € 15,000,000 (previous year: € 15,000,000) denominated in Euro and divided into 5 million no-par bearer shares.
The shares are evidenced as follows:
| 220,000 | single share certificates for | 1 | share |
|---|---|---|---|
| 63,000 | collective share certificates for | 10 shares | |
| 83,000 | collective share certificates for | 50 shares |
By resolution of the General Meeting on 30.05.2001 the Board of Management was authorised up to 1.05.2006 to increase the capital stock by a total of up to € 2,500,000 through one or more issues of new shares for cash.
25 Capital reserves
The capital surplus of € 16,934,000 (previous year: € 16,934,000) represents the premium on the capital increase in autumn 1989.
26 Minority interests
Minority interests relate to 34.0 % (previous year: 34.7 %) of the equity of birambeau s.a.s. and 40.0 % of the equity of leifheit-birambeau s.a.s. (previous year: 40.0 %).
27 Proposal for the appropriation of earnings
The leifheit ag dividend is based on the net profit shown in the leifheit ag financial statements drawn up in accordance with German commercial law.
leifheit ag earnings for the past 2005 financial year amount to € 3,000,000. leifheit ag holds 240,564 treasury shares.
The Board of Management and Supervisory Board propose adopting the following resolution:
A dividend of € 0.60 for each share with entitlement to dividend, making a total of € 2,855,661.60 will be distributed to shareholders. The dividend on the 240,564 treasury shares held by the company at the time of the General Meeting will be transferred to retained earnings.
28 Financial instruments
Currency and interest risk
The leifheit group is internationally active, and is accordingly subject to market risks due to changes in exchange rates. Due to the group's strong internal financing capacity and short-term investment of time deposits, changes in interest rates do not currently represent any risk.
The group uses financial derivatives to manage the risk of exchange rate differences. The guidelines used for risk management are implemented by a central finance department in close cooperation with the group companies.
The group enters into various kinds of foreign currency contracts in the course of managing the exchange rate risk from the cash flow from business and financial activities in foreign currencies. The transaction risk is calculated for each relevant foreign currency.
To manage the exchange rate risk, leifheit nets out the planned flows of payments in each relevant foreign currency and hedges the surplus, primarily through foreign exchange contracts. The effect of hedging transactions is recognised in the income statement under "Net other financial income".
| Foreign currency future transactions, remaining term up to 1 year | |||||
|---|---|---|---|---|---|
| Currency million | 31.12.2005 | 31.12.2004 | |||
| US-Dollar | 1.1 | 15.1 | |||
| Swiss Franc | 0.7 | – | |||
| Hongkong Dollar | – | 8.0 |
The fair value of foreign exchange futures contracts is determined using the prices in the foreign exchange futures market on the balance sheet date (taking into account the prevailing foreign currency swap rate).
Market risk
Market risk arises out of changes in financial market prices which have a positive or negative effect on the value of financial instruments. Market risk for the financial instruments in the balance sheet is insignificant, as these do not include any listed securities.
Liquidity risk
A liquidity forecast for a fixed planning horizon, existing unused credit lines and high internal financing capability ensure the availability of liquidity at all times.
Credit risk
The theoretical maximum credit risk of the original financial instruments corresponds to the value of all receivables less the liabilities to the same debtors. Allowances for credit risk and credit insurance for selected customers cover the actual risk.
29 Segment reporting
The breakdown by division corresponds to the internal reporting structure and covers the two divisions Household Products and Bathroom Furnishings. The Household Products division produces and markets non-electrical household appliances under the leifheit, dr. oetker bakeware and birambeau brands and scales under the soehnle brand. The Bathroom Furnishings division brings together the activities under the spirella, kleine wolke and meusch brands (bathroom mats, textiles and accessories).
Segment data is calculated as follows:
- The geographical regions relevant for leifheit are Germany, Europe (excluding Germany) and the rest of the world.
- Minority interests have already been eliminated from ebit.
- The segment assets are the basis for calculating total assets of participating interests. Receivables and interest-bearing loans within the segments are eliminated.
- Debt includes provisions, liabilities and deferred and accrued items; intra-segment liabilities are netted out.
- Depreciation and investments relate exclusively to tangible assets. Acquisitions are not included.
- Employment figures are annual averages.
30 Contingent liabilities
Group companies did not enter into any contingent liabilities.
31 Other financial obligations
There are leasing agreements for business premises, edp and telephone equipment, vehicles and similar assets and licensing agreements with annual expense of around € 1.6 million. These obligations total c. € 3.6 million during the non-cancellable remaining terms up to 2010. As at 31.12.2005 there were purchase commitments totalling € 0.8 million (previous year: € 0.6 million). The leasing agreements represent operating leases within the meaning of ias 17.
There are obligations under agreements for the purchase of tangible assets totalling € 0.5 million (previous year: € 0.4 million) for tools and vehicles.
There are also liabilities under foreign exchange futures contracts for hedging against exchange rate movements totalling usd 1.1 million (equivalent to € 1.0 million) whose fair value at the balance sheet date is € 1.0 million and foreign exchange futures contracts for hedging against exchange rate movements totalling € 0.5 million (equivalent to chf 0.7 million) whose fair value at the balance sheet date is chf 0.7 million.
32 Remuneration of the Board of Management and Supervisory Board in accordance with § 314 (1) no. 6a hgb and ifrs 3
Remuneration of the Board of Management for activities in subsidiaries amounted to € 17,000 (previous year: € 25,000).
Remuneration of the Board of Management totalled € 1,328,000 (previous year: € 1,335,000), of which variable compensation represented € 530,000 (previous year: € 45,000). Remuneration of the Supervisory Board totalled € 233,000 (previous year: € 195,000).
The company granted one of the members of its Board of Management a share based payment component from March 2005. This is an instrument which provides for payment in cash rather than shares. The main conditions for bonus payments are that the price of the leifheit share exceeds the CDAX by at least five percentage points and lies at least € 10.00 above the reference stock exchange price of € 24.18 per share.
If all conditions are met and the option is exercised by the beneficiary, a payment of € 250.00 will be made for each of the 1,000 bonus units granted. The amount per bonus unit increases for each full Euro by which the stock exchange price exceeds the reference price by more than € 10.00. One third of the bonus units can be converted after a waiting period of two years, a further third after three years and the last third at the earliest after four years, not to exceed 1.05.2010. The value of the bonus programme is limited to € 1,500,000.
Provision is made for the obligation under this agreement prorated over the qualifying 48 month period. The value of the bonus programme is calculated using a Black-Scholes option price model. The expense on share based compensation in the 2005 financial year is € 80,000. This corresponds to the amount of the provision.
33 Total remuneration and pension reserves for former members of the Board of Management and/or Supervisory Board in accordance with § 314 (1) no. 6b hgb
In the year under review total remuneration for former members of the Board of Management was € 988,000. Pension reserves for current pensions totalled € 4,268,000 in the 2005 financial year. The amounts for the previous year are not disclosed under § 286 (4) hgb.
34 Advances and loans to the Board of Management in accordance with § 314 (1) no. 6c hgb
At the balance sheet date there were interest-free advances for retirement pensions to the above group amounting to € 31,000 and a loan of € 105,000. The loan matures in 2008 and is subject to interest of 5 % p.a. The reductions in advances from the previous year during the period under review amounted to € 31,000.
35 Breakdown of the shareholdings in accordance with § 285 no. 11 hgb The complete list of shareholdings in leifheit ag is deposited with the commercial register of the Montabaur municipal court (hrb 2857) in accordance with § 287 hgb.
36 Statement on treasury shares in accordance with § 160 (1) no. 2 AktG
The General Meeting on 25.05.2005 cancelled the existing authorisation and newly authorised the Board of Management to acquire treasury shares up to 10 % of the current capital stock of € 15 million. The redemption of leifheit shares reduces the number on the market, improves the balance sheet ratios and increases eps. This creates additional incentive for potential investors. The treasury shares acquired can also be used as consideration in future acquisitions.
leifheit did not acquire any treasury shares in the period under review. 290 shares (€ 9,000) were issued as long-service bonuses. Including the treasury shares bought in the previous year, this gives leifheit a holding as at 31.12.2005 of € 7,629,000 representing 240,564 shares or 4.8 % of the share capital.
leifheit did not acquire any treasury shares in the previous year. A total of 590 shares (€ 18,000) were issued in the previous year as long-service and employee shares.
37 Existence of a participating interest in accordance with § 160 (1) no. 8 AktG
Shareholders to be disclosed under the Securities Trading Act (WpHG) – i.e. having an interest of more than 5 % in the capital stock – were home Beteiligungen, Munich (47.02 %) and mkv Verwaltungs GmbH, Munich (9.40 %).
38 Declaration in accordance with § 161 AktG (German Corporate Governance Code)
The Board of Management and Supervisory Board issued the declaration required under § 161 AktG on 21.12.2005 that leifheit is in compliance with the recommendations of the "Government Commission on the German Corporate Governance Code" published by the German Federal Justice Ministry and citing the recommendations not currently adopted. The declaration is published on the company's web site.
51
39 Events after the balance sheet date
There were no events after the balance sheet date of particular importance for assessing the assets, financial situation and earnings of the leifheit group.
40 Exemption of domestic companies from specific accounting requirements under § 264 (3) no. 4 hgb or § 264b no. 4 hgb
As a result of inclusion in the consolidated financial statements the following fullyconsolidated associated German companies are exempt from the audit and disclosure obligations for annual financial statements under § 264 b hgb or § 264 (3) hgb:
- kleine wolke Textilgesellschaft mbH & Co. kg, Bremen
- spirella GmbH, Nassau/Lahn
- soehnle-Waagen GmbH & Co. kg, Murrhardt
41 Remuneration of the auditors in accordance with § 314 (1) no. 9 hgb
The expense on the fees of the group auditors ernst & young recognised in 2005 amounted to € 420,000 (previous year: € 411,000), on tax advice to € 234,000 (previous year: € 246,000) and on other services to € 105,000 (previous year: € 92,000).
Organs of leifheit ag
Members of the Supervisory Board
- Dieter Schüfer, Nassau/Lahn Chairman
- Formerly Chairman of the Board of Management of leifheit ag
- Dr. jur. Robert Schuler-Voith, Göppingen Deputy Chairman, Chairman of the Supervisory Board of Schuler ag
- ■ Joachim Barnert*, Zuzenhausen Toolmaker
* Employee representative
- Thomas Standke*, Nassau/Lahn Toolmaker
- ■ Dr. rer. pol. Friedrich M. Thomée, Munich Managing Director of Thomée Vermögensverwaltung GmbH & Co. kg
- Dipl. Oec. Helmut Zahn, Munich Managing Director of Schuler-Beteiligungen GmbH
Members of the Board of Management
- Dr. rer. nat. Hans-Georg Franke, Montabaur Chairman (from 1 March 2005)
- Dipl. Ing. Stephan Gerster, Bad Breisig
- ■ Dipl. Kfm. Frank Gutzeit, Offenhausen
53
The following members of the Board of Management and Supervisory Board hold individual controlling functions in subsidiaries together with the following offices in Supervisory Boards and comparable controlling organs in companies.
■ Dieter Schüfer
GeoPost International Management & Development Holding GmbH, Aschaffenburg, Supervisory Board Chairman Scheurich GmbH & Co. kg, Kleinheubach, Advisory Board Chairman Wolfcraft GmbH, Kempenich, Advisory Board Chairman (to June 2005)
■ Dr. Robert Schuler-Voith
Schuler AG, Göppingen, Supervisory Board Chairman
■ Dr. Friedrich M. Thomée
TV-Loonland ag, Unterföhring, Supervisory Board Chairman
■ Helmut Zahn
Schuler ag, Göppingen, Supervisory Board member Flossbach & von Storch Vermögensmanagement ag, Cologne, Supervisory Board member (since May 2005)
■ Dr. Hans-Georg Franke
Gardena ag, Ulm, Supervisory Board Chairman Wolfcraft GmbH, Kempenich, Advisory Board member (to June 2005), Advisory Board Chairman (since June 2005)
■ Stephan Gerster
Scheurich GmbH & Co. kg, Kleinheubach, Advisory Board member
Nassau/Lahn, 10 March 2006
leifheit Aktiengesellschaft The Board of Management
Dr. Hans-Georg Franke Stephan Gerster Frank Gutzeit
Audit opinion
We have issued the following opinion on the consolidated financial statements and the group management report:
"We have audited the consolidated financial statements prepared by leifheit ag, Nassau, Germany, comprising the balance sheet, the income statement, statement of changes in equity, segment reporting, cash flow statement and the notes to the consolidated financial statements for the fiscal year from January 1 to December 31, 2005. The preparation of the consolidated financial statements and group management report in accordance with ifrss as adopted by the eu, and the additional requirements of German commercial law pursuant to Sec. 315a (1) hgb are the responsibility of the Company's management. Our responsibility is to express an opinion on the consolidated financial statements and the group management report based on our audit.
We conducted our audit of the consolidated financial statements in accordance with Sec. 317 hgb ["Handelsgesetzbuch": German Commercial Code] and German generally accepted standards for the audit of financial statements promulgated by the Institut der Wirtschaftsprüfer [Institute of Public Auditors in Germany] (idw). Those standards require that we plan and perform the audit such that misstatements materially affecting the presentation of the net assets, financial position and results of operations in the consolidated financial statements in accordance with the applicable financial reporting framework and in the group management report are detected with reasonable assurance. Knowledge of the business activities and the economic and legal environment of the Group and expectations as to possible misstatements are taken into account in the determination of audit procedures. The effectiveness of the accounting-related internal control system and the evidence supporting the disclosures in the consolidated financial statements and the group management report are examined primarily on a test basis within the framework of the audit. The audit includes assessing the annual financial statements of the entities to be included in consolidation, the determination of the entities to be included in consolidation, the accounting principles and consolidation standards used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements and the group management report. We believe that our audit provides a reasonable basis for our opinion.
Our audit has not led to any reservations.
In our opinion, based on the findings of our audit, the consolidated financial statements comply with ifrss as adopted by the eu, the additional requirements of German commercial law pursuant to Sec. 315a (1) hgb and full ifrs and give a true and fair view of the net assets, financial position and results of operations of the Group in accordance with these requirements. The group management report is consistent with the consolidated financial statements, and as a whole provides a suitable view of the Group's position and suitably presents the opportunities and risks of future development."
Eschborn/Frankfurt am Main, Germany, March 13, 2006
Ernst & Young AG Wirtschaftsprüfungsgesellschaft
signed signed Seckler Knappe Wirtschaftsprüfer Wirtschaftsprüfer [German Public Auditor] [German Public Auditor]
Individual financial statements of leifheit ag
The individual financial statements of leifheit ag, audited by Ernst & Young ag Wirtschaftsprüfungsgesellschaft, Eschborn/Frankfurt am Main, and given an unqualified auditor's report, were drawn up in accordance with German commercial law and the provisions of the German Stock Corporation Act. They are published on the company's web site (www.leifheit.com), filed with the commercial register of Montabaur municipal court, and published in the Federal Gazette. They can also be requested from leifheit ag, Investor Relations, P.O. Box 1165. 56371 Nassau/Lahn ([email protected]).
Contacts, key dates
Key data of leifheit group
Key data (group)
Turnover adjusted for the closure of inhouse
production of shower partitions
1) after minority interests 2) before minority interests 3) exc. redeemed own shares 4) proposal to the General Meeting
5) inc. minority interests
2005 2004 Change % Turnover – Household € m 225 237 -5.1 – Bath) € m 71 80 -11.3 – Group € m 296 317 -6.6
– Household € m 225 237 -5.1 – Bath) € m 71 74 -4.1 – Group € m 296 311 -4.8
Cash flow from operating activities € m 8.5 13.7 -38.0 Cash flow per share3) € 1.79 2.87 -37.7
Employees (annual average)) 1,862 2,070 -10.0 Employees at year-end – Household 3) 3) 1,225 1,363 -10.1 – Bath3) 549 601 -8.7 – Group3) 1,774 1,964 -9.7
Depreciation on tangible assets € m 8 18 -55.6 Total assets € m 227 229 -0.9 Equity5) € m 115 112 +2.7
Foreign share % 58 57 ebit1) € m 3.7 -15.0 ebt1) € m 3.7 -15.0 Net profit/loss for the period1) € m 0.1 -7.3 Net return on sales2) % 0.4 -1.9 Earnings per share1)3) € 0.03 -1.54
Dividend per share3) € 0.60 4) –
Investment in tangible assets € m 7 7
Equity-balance sheet total ratio5) % 51 49
Contacts
■ Postal address: ■ Investor Relations:
leifheit ag tel.: + + 49-26 04-977-218 p.o. box 11 65 fax: + + 49-26 04-977-340 d-56371 Nassau/Lahn
■ leifheit on the Internet: http://www.leifheit.com E-mail: [email protected]
Key dates
■ 5 April 2006
Financial statements press conference, presentation of the annual report for 2005, followed by analysts conference in Frankfurt/Main
- April 2006 English version of annual report 2005
- 15 May 2006
Interim report for the period ending 31 March 2006
■ 24 May 2006
General Meeting, 10.30 am at leifheit ag Customer and Administration Centre, Leifheitstrasse, Nassau/Lahn
■ 14 August 2006
Interim report for the period ending 30 June 2006
■ 14 November 2006
Interim report for the period ending 30 September 2006
■ 27 – 29 November 2006
Investor and analyst conference Deutsches Eigenkapitalforum, Frankfurt/Main
042006·kb·ir·m.a
Efficient products – efficient structures
Annual Report 2005
Condensed Version
Contents
■ Management report
6 Employees 8 Investment
13 Forecast
Standards (ifrs)
20 Notes
and valuation
54 Audit opinion
of leifheit ag
Income statement Balance sheet Changes in equity Segment reporting Statement of cash flow
2 The economic situation 3 The course of business
Procurement and logistics Development and innovation Environmental protection Risks and opportunities
15 Report on events after the balance sheet date
■ Consolidated financial statements for the 2005 financial year to International Financial Reporting
20 General principles of accounting
32 Notes on the income statement 39 Notes on the balance sheet 52 Organs of leifheit ag
56 Individual financial statements
Contacts, key dates
4 Earnings, assets and finance situation
P.O. Box 11 65 D-56371 Nassau/Lahn Phone: ++ 49-26 04-977-0 Telefax: ++ 49-26 04-977-300 Internet: www.leifheit.com E-mail: [email protected]