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Zumtobel Group AG

Quarterly Report Mar 6, 2018

770_10-q_2018-03-06_2034d74e-c47a-4da8-bd46-28ba57a32195.pdf

Quarterly Report

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Q1 –Q3 (May 2017 – January 2018)

Report on the 3rd Quarter 2017/18 of Zumtobel Group AG

Overview of the Third Quarter 2017/18

Key Data in EUR million Q3
2017/18
Q3
2016/17
Change in % Q1-Q3
2017/18
Q1-Q3
2016/17
Change in %
Revenues 283.7 306.1 (7.3) 908.1 973.4 (6.7)
Adjusted EBIT 0.2 10.0 (98.5) 20.5 62.0 (67.0)
as a % of revenues 0.1 3.3 2.3 6.4
EBIT (2.2) 5.6 <(100) 13.9 49.9 (72.1)
as a % of revenues (0.8) 1.8 1.5 5.1
Net profit/loss for the period (9.3) 2.2 <(100) (1.7) 29.8 <(100)
as a % of revenues (3.3) 0.7 (0.2) 3.1
Cash flow from operating results 11.7 20.2 (42.0) 53.1 95.7 (44.5)
Investments 15.3 11.0 38.6 48.6 30.7 58.2
31 January
2018
30 April
2017
Change in %
Total assets 991.6 1,019.6 (2.8)
Equity 316.8 334.0 (5.1)
Equity ratio in % 32.0 32.8
Net debt 157.1 91.0 72.6
Headcount incl. contract worker (full-time
equivalent)
6,497 6,761 (3.9)

Development of Business by Quarter

Revenues (in EUR million)

Adjusted EBIT

The Zumtobel Group Share

Based on an unchanged number of 43.5 million common shares outstanding, the market capitalisation of Zumtobel Group AG totalled EUR 411 million at the end of January 2018. There have been no major changes in the shareholder structure since the end of the 2016/17 financial year. The Zumtobel family has remained the stable core shareholder of Zumtobel Group AG since the initial public offering with a stake of roughly 35.5%. The stakes held by institutional investors as of 31 January 2018 were as follows: Lazard Freres Gestion SAS with an investment of over 5% and Erste Asset Management GmbH, Wellington Management Group LLP and SYZ Asset Management (OYSTER SIVAV) each with an investment of over 4%. The remaining shares are held primarily by other institutional investors. In the ATX, the leading index of the largest listed companies in Austria, the Zumtobel Group share ranked 30th based on market capitalisation and 17th based on trading volume as of 31 January 2018. The current weakness in the share price could result in the removal of the Zumtobel Group share from the ATX due to low market capitalisation at the scheduled semi-annual review of the index composition in March 2018, even though the market turnover would justify continued inclusion. The average daily turnover on the Vienna Stock Exchange amounted to 268,328 shares in the first nine months of 2017/18 (double-count, as published by the Vienna Stock Exchange). The company held 353,343 treasury shares as of 31 January 2018.

Development of the Zumtobel Group Share

Key Data on the Zumtobel Group Share Q1-Q3 FY 2017/18

Closing price at 29.04.2017 EUR 19.150 Currency EUR
Closing price at 31.01.2018 EUR 9.455 ISIN AT0000837307
Performance Q1-Q3 FY 2017/18 (50.6)% Ticker symbol Vienna Stock Exchange (XETRA) ZAG
Market capitalisation at 31.01.2018 EUR 411 Mio Market segment Prime Market
Share price - high at 19.06.2017 EUR 19.990 Reuters symbol ZUMV.VI
Share price - low at 30.01.2018 EUR 9.240 Bloomberg symbol ZAG AV
Ø Turnover per day (shares) 268,328 Number of issued shares 43,500,000

Group Management Report

Significant Events since 30 April 2017

EUR 0.23 dividend for
2016/17
The 41st annual general meeting on 21 July 2017 authorised the payment of a EUR 0.23 dividend per share
for the 2016/17 financial year. This dividend was distributed to shareholders on 2 August 2017.
Zumtobel Group
starts construction on
a new plant in Serbia
The ground-breaking ceremony for the new production plant in Serbia took place on 28 July 2017. This
plant will be located in the southern industrial zone of Niš and will be built at a cost of EUR 30 million over
the next two and one-half financial years. It will cover 40,000 square metres when completed. The first
products are scheduled to come off the production line in 2018/19.
Zumtobel Group sells
Les Andelys plan
The contract for a long-term partnership between the Zumtobel Group and the French industrial group
Active'Invest was signed on 28 September 2017. This agreement also covers the sale of the Zumtobel
Group's plant in Les Andelys (France) with more than 200 employees. The Zumtobel Group will remain a
10% minority shareholder in the new company.
Gradual transfer of
Tridonic production
to Serbia
The Zumtobel Group took another step to optimise its production network and improve its competitive
position with a decision in October 2017 to combine the two lighting and components plants in Dornbirn
(Austria). Plans call for the company to focus on the production of luminaires at the corporate headquarters
in the future, while the Tridonic production equipment will be gradually relocated to the Group's new
location in Niš (Serbia) over the coming years.
Increased expertise
for Management
Board
In October 2017 the Supervisory Board of Zumtobel Group AG announced the expansion of the Managing
Board to include an additional member. Bernard Motzko will take on the position of Chief Operating Officer
(COO) in February 2018. Alfred Felder, the COO, will remain on the Management Board with responsibility
for luminaire sales.
Resignations from the
Supervisory Board
On 21 December 2017, the Zumtobel Group announced the resignation of Stephan Hutter, Vice-Chairman
of the Supervisory Board of Zumtobel Group AG, and Hans Peter Metzler, member of the Supervisory
Board of Zumtobel Group AG, from the Supervisory Board as of 31 January 2018.
Offer for discussions
to agree on the
mutual termination of
Management Board
contracts
The Supervisory Board of Zumtobel Group AG announced the receipt of a letter from CEO Ulrich
Schumacher on 15 January 2018, in which he stated his preparedness to begin discussions over a mutual
termination of his Management Board contract if this is desired by Supervisory Board. A similar offer from
CFO Karin Sonnenmoser was rejected by the Supervisory Board. The Supervisory Board expressed its full
support for Ms. Sonnenmoser and asked her to continue her work on behalf of the company.
Zumtobel Group
reorganises
Management Board
On 1 February 2018, the Supervisory Board of Zumtobel Group announced that CEO Ulrich Schumacher
had left the company as of that date and Alfred Felder has taken over responsibilities as Acting President of
the Executive Board in addition to his function as Chief Sales Officer. Moreover, CFO Karin Sonnenmoser
will leave the company by mutual agreement at the end of June 2018.

No other significant events occurred after the balance sheet date on 30 April 2017.

Development of revenues in the first three quarters of 2017/18

  • >> Group revenues decline by 6.7% (FX-adjusted: minus 4.6%)
  • >> LED share of Group revenues rises to 79.2% (Q1-Q3 2016/17: 72.9%)
  • >> Lighting Segment revenues (FX-adjusted) 5.4% below previous year revenues in new Zumtobel Group Services business division increase by 15.2%
  • >> Further decline in Components Segment revenues (FX-adjusted: minus 3.8%)

In the first nine months of the 2017/18 financial year (1 May 2017 to 31 January 2018), Group revenues fell by 6.7% to EUR 908.1 million (previous year: EUR 973.4 million). Revenue development was influenced by strong negative currency translation effects of EUR 20.7 million, which resulted primarily from the increase in the euro versus the British pound and the Swiss franc. After an adjustment for these effects, the revenue decline equalled 4.6% for the reporting period. The dynamic growth with LED products remains unbroken: revenues from the sale of LED products rose by 1.3% to EUR 719.0 million and the LED share of Group revenues increased from 72.9% to 79.2% within 12 months.

FX-adjusted decline of 4.6% in Group revenues

Segment development in EUR
million
Q3
2017/18
Q3
2016/17
Change in % Q1-Q3
2017/18
Q1-Q3
2016/17
Change in % FX adjusted
in %
Lighting Segment 214.1 232.4 (7.9) 693.5 747.0 (7.2) (5.4)
Components Segment 84.8 91.1 (7.0) 263.8 281.8 (6.4) (3.8)
Reconciliation (15.1) (17.4) (13.2) (49.2) (55.4) (11.3)
Zumtobel Group 283.7 306.1 (7.3) 908.1 973.4 (6.7) (4.6)

In the Lighting Segment, the industry trend still remains below original expectations. Revenue development was negatively influenced, above all, by significant weakness in Great Britain, the most important single market for the Zumtobel Group, as well as very aggressive price competition and revenue growth that has not yet been realised due to internal operating challenges, especially in logistics. Revenues in the Lighting Segment therefore fell by 7.2% to EUR 693.5 million (previous year: EUR 747.0 million). After an adjustment for negative foreign exchange effects, revenues were 5.4% lower than the first three quarters of the previous year. Sound development was recorded by the recently established Zumtobel Group Services, which is allocated to the Lighting Segment. This business division, which bundles all project- and softwareoriented services under a single roof, recorded a year-on-year increase of 12.1% to EUR 137.8 million and generated 15.2% of Group revenues in the first nine months of 2017/18.

Revenues in the Components Segment fell by 6.4% (FX-adjusted: minus 3.8%) in the reporting period. The concentration on margins in an increasingly competitive environment obviously generates satisfactory earnings contributions, but is also accompanied by substantial revenue declines. However, price adjustments in the first half-year helped the Group to recover in certain markets part of the previously lost market shares.

Lighting Segment-FX-adjusted revenues 5.4% below previous year

Further revenue decline in Components Segment

Q3 2017/18 Q1-Q3 2017/18
Revenues in
EUR million
Change in % Revenues in
EUR million
Change in % in % of Group
D/A/CH 83.9 (3.4) 274.5 (5.0) 30.2
Northern Europe 61.7 (23.0) 204.6 (18.9) 22.5
Benelux & Eastern Europe 46.2 13.8 138.9 10.6 15.3
Southern Europe 44.5 1.8 133.9 (3.0) 14.7
Asia & Pacific 29.1 (0.6) 94.2 0.0 10.4
Middle East & Africa 11.8 (23.5) 38.6 (12.9) 4.2
Americas 6.6 (35.6) 23.3 (22.0) 2.6
Total 283.7 (7.3) 908.1 (6.7) 100.0

Distribution of regional revenues

Substantial declines in Great Britain and the USA

The trend from the previous quarters generally continued during the third quarter of 2017/18. The D/A/CH region, the strongest market in the Zumtobel Group, recorded a 5.0% decline (FX-adjusted: minus 3.6%) in revenues to EUR 274.5 million. Revenues in Switzerland were slightly higher year-on-year (FXadjusted), but remained constant in Austria and were slightly lower in Germany. Above all in Switzerland, there are growing signs of an improvement during the coming months. Revenues in Northern Europe fell by 18.9% to EUR 204.6 million, also due to strong negative foreign exchange effects from the British pound. After an adjustment for these foreign exchange effects, revenues were 15.6% below the high prior year level. Lighting Segment sales in Great Britain were substantially lower during the second and third quarters due to a more difficult market environment and an exceptionally good previous year. The Benelux & Eastern Europe region also continued the sound trend from previous years during the reporting period with an increase of 10.6% (FX-adjusted: plus 11.9%) to EUR 138.9 million. The Southern European region consists primarily of Italy, Spain and France. Italy and Spain continued the solid revenue growth from the previous year, but France remained disappointing despite a gradual easing of the negative trend during the first nine months of 2017/18. Revenues in this region fell by 3.0% to EUR 133.9 million. In the Asia & Pacific region, improved revenue growth in Asia more than offset the continuing negative development in Australia. Revenues in this region reflected the previous year (FX-adjusted: plus 4.4%). The Middle East & Africa region saw a slight stabilisation of the difficult political and economic environment in several Middle East countries during recent months. The substantial revenue declines in 2016/17 were followed by a decline of 12.9% (FXadjusted: minus 10.1%) in the first nine months of 2017/18. The America region reported a largely marketbased decline of 22.0% (FX-adjusted: 18.0%) to EUR 23.3 million.

Development of earnings in the first three quarters of 2017/18

  • >> Adjusted Group EBIT falls to EUR 20.5 million
  • >> Profitability negatively affected by substantial decline in revenues, an aggressive price competition and higher warranty provisions
  • >> Fixed costs favourably influenced by savings measures
  • >> Net profit slightly negative at minus EUR 1.7 million

Group EBIT adjusted for special effects fell to EUR 20.5 million in the first nine months of 2017/18 (previous year: EUR 62.0 million). This decline was also reflected in the return on sales, which dropped from 6.4% auf 2.3%. The deterioration in the Group's profitability during the reporting period is, for the most part, attributable to the Lighting Segment, where adjusted EBIT declined from EUR 46.4 million to EUR 14.0 million. Adjusted EBIT in the Components Segment amounted to EUR 24.2 million (Q1-Q3 2016/17: EUR 30.8 million). The profitability in both segments was negatively influenced by substantial revenue declines and an aggressive price competition. The Lighting Segment also recorded higher warranty provisions in the second quarter, above all in connection with long-term road lighting projects in Great Britain.

As a result, the gross profit margin (after development costs) for the Zumtobel Group declined to 31.8% (previous year: 34.1%). Development costs included in the cost of goods sold fell by EUR 6.6 million to EUR 50.9 million (previous year: EUR 57.5 million). The central bundling of R&D activities and the streamlining of the plant landscape supported the realisation of additional synergy effects.

Income statement in EUR million Q3
2017/18
Q3
2016/17
Change in % Q1-Q3
2017/18
Q1-Q3
2016/17
Change in %
Revenues 283.7 306.1 (7.3) 908.1 973.4 (6.7)
Cost of goods sold (194.8) (205.5) (5.2) (619.4) (641.3) (3.4)
Gross profit 89.0 100.6 (11.6) 288.7 332.1 (13.1)
as a % of revenues 31.4 32.9 31.8 34.1
SG&A expenses adjusted for special effects (88.8) (90.6) (1.9) (268.3) (270.1) (0.7)
Adjusted EBIT 0.2 10.0 (98.5) 20.5 62.0 (67.0)
as a % of revenues 0.1 3.3 2.3 6.4
Special effects (2.3) (4.4) (47.1) (6.5) (12.1) (46.2)
EBIT (2.2) 5.6 <(100) 13.9 49.9 (72.1)
as a % of revenues (0.8) 1.8 1.5 5.1
Financial results (6.6) (6.2) (7.4) (13.6) (14.5) 5.7
Profit/loss before tax (8.8) (0.6) <(100) 0.3 35.4 (99.2)
Income taxes (0.5) 0.1 <(100) (1.9) (8.3) (76.7)
Result from discontinued operations 0.0 2.7 <(100) 0.0 2.7
Net profit/loss for the period (9.3) 2.2 <(100) (1.7) 29.8 <(100)
Earnings per share (in EUR) (0.22) 0.05 <(100) (0.04) 0.69 <(100)

Note: EBITDA (plus depreciation and amortisation) amounted to EUR 52.2 million in the first three quarters of 2017/18.

Selling expenses (including research) amounted to EUR 234.3 million in the first nine months of 2017/18 (Q1-Q3 2016/17: EUR 240.1 million) and were substantially lower than the previous year in spite of salary increases required by collective agreements. The cost reduction measures implemented during the year were reflected in a reduction of EUR 5.8 million in selling expenses. Administrative expenses were stable at EUR 38.2 million (Q1-Q3 2016/17: EUR 38.1 million). Other operating results, excluding special effects,

Reduction in selling expenses

Adjusted Group EBIT falls to EUR 20.5 million

Decline in development costs

declined to EUR 4.2 million (previous year: EUR 8.1 million) due to lower license income from the LED business and a reduction in government grants.

Negative special effects from transformation process

Negative special effects of EUR 6.5 million were recorded in the first three quarters of 2017/18 (previous year: EUR 12.1 million). These effects are related primarily to adjustments in the global production network, e.g. the sale of the Zumtobel Group's plant in Les Andelys (France) which has since been finalised.

Adjusted EBIT in EUR million Q3
2017/18
Q3
2016/17
Change in % Q1-Q3
2017/18
Q1-Q3
2016/17
Change in %
Reported EBIT (2.2) 5.6 <(100) 13.9 49.9 (72.1)
thereof special effects (2.3) (4.4) (47.1) (6.5) (12.1) (46.2)
Adjusted EBIT 0.2 10.0 (98.5) 20.5 62.0 (67.0)
as a % of revenues 0.1 3.3 2.3 6.4

Improvement in financial results

Financial results improved by EUR 0.8 million year-on-year to minus EUR 13.6 million (previous year: minus EUR 14.5 million). Interest expense is attributable primarily to the current credit agreement and to finance leases. Other financial income and expenses totalled minus EUR 8.6 million (previous year: minus EUR 8.7 million). The fluctuations in the fair value measurement of financial instruments reflect the high volatility on the foreign exchange market, above all in connection with the British pound, Swiss franc and US dollar.

Q3 Q3 Change in % Q1-Q3 Q1-Q3 Change in %
Financial result in EUR million 2017/18 2016/17 2017/18 2016/17
Interest expense (1.8) (2.0) (8.8) (5.0) (5.7) (11.9)
Interest income 0.1 0.1 6.8 0.3 0.3 0.9
Net financing costs (1.7) (1.9) 9.8 (4.7) (5.4) 12.6
Other financial income and expenses (4.9) (4.1) (17.9) (8.6) (8.7) (2.0)
Result from companies accounted for at-equity (0.1) (0.2) 50.4 (0.3) (0.3) (7.7)
Financial results (6.6) (6.2) (7.4) (13.6) (14.5) 5.7

Net profit drops to minus EUR 1.7 million

Profit before tax amounted to EUR 0.3 million in the first nine months of 2017/18 (previous year: EUR 35.4 million), and income taxes totalled EUR 1.9 million (previous year: EUR 8.3 million). Net profit therefore fell to minus EUR 1.7 million (previous year: EUR 29.8 million). Earnings per share for the shareholders of Zumtobel Group AG (basic EPS based on 43.1 million shares) equalled minus EUR 0.04 (previous year: plus EUR 0.69).

Cash flow and asset position

Positive development of working capital

Cash flow from operating results fell from EUR 95.7 million in the first three quarters of the previous year to EUR 53.1 million in the first three quarters of 2017/18 due to the decline in profitability and lower depreciation and amortisation. Working capital totalled EUR 221.6 million as of 31 January 2018 and was EUR 18.4 million below the level on 31 January 2017. As a percent of rolling 12-month revenues, working capital declined from 18.2% to 17.9% year-on-year. The seasonal increase in working capital during the reporting period was substantially lower than the previous year due to the decline in revenues and strict receivables management. Cash outflows from the changes in other operating positions totalled EUR 29.2 million (Q1-Q3 2016/17: cash outflows of EUR 18.2 million). The change in current provisions resulted primarily from the use of the provision for restructuring. Cash outflows for other non-current and current assets and liabilities resulted from a decrease in other obligations to employees, above all following

bonus payments for the 2016/17 financial year. Cash flow from operating activities therefore dropped from EUR 63.2 million to EUR 13.5 million in the first nine months of 2017/18.

Working Capital in % of rolling 12-month revenues

Investments in non-current assets rose substantially to EUR 48.6 million in the first three quarters of 2017/18 (Q1-Q3 2016/17: EUR 30.7 million). These expenditures consisted mainly of tools and equipment for new products, expansion and maintenance investments as well as capitalised research and development costs (EUR 8.4 million). A total of EUR 6.6 million was spent on the new production plant in Serbia during the first nine months of 2017/18. In addition, the previously rented CIT building in Dornbirn (Austria) was purchased for EUR 7.1 million in May 2017. The positive effect recorded under cash inflows from the disposal of property, plant and equipment consisted chiefly of the proceeds from the sale of property in Usingen (Germany) following the termination of production at this location in 2016/17. The negative cash flow effect reported under changes in non-current and current financial assets for the first three quarters of 2017/18 included the payments for 48% of the shares in Inventron AG, Switzerland. The change in cash and cash equivalents from changes in the scope of consolidation involve the reduction in liquid funds following the sale of Europhane SAS, France, which was founded for the sale of the plant in Les Andelys. The decline in cash flow from operating activities and increase in capital expenditure led to a decrease in free cash flow, which fell to minus EUR 39.3 million (previous year: plus EUR 40.6 million).

Cash flow from financing activities consists primarily of the increased use of the facilities provided by the consortium credit agreement and interest paid during the first three quarters of the reporting year. The EUR 0.23 dividend per share for the 2016/17 financial year, which was approved by the annual general meeting on 21 July 2017, was distributed to shareholders on 2 August 2017.

Free cash flow at minus EUR 39.3 million

Balance sheet data in EUR million 31 January 2018 30 April 2017
Total assets 991.6 1,019.6
Net debt 157.1 91.0
Debt coverage ratio 2.49 0.86
Equity 316.8 334.0
Equity ratio in % 32.0 32.8
Gearing in % 49.6 27.2
Investments 48.6 45.2
Working capital 221.6 220.1
As a % of rolling 12 month revenues 17.9 16.9

Continued solid balance sheet structure

The quality of the balance sheet structure remains nearly unchanged. The equity ratio equalled 32.0% as of 31 January 2018. Net debt followed the normal seasonal pattern with an increase of EUR 66.1 million to EUR 157.1 million (31 January 2017: EUR 120.3 million), and gearing – the ratio of net debt to equity – therefore deteriorated from 27.2% to 49.6%.

Outlook for 2017/18: operating results (adjusted EBIT) of EUR 15 to 25 million and a decline of roughly 8% in revenues

The general development of the professional lighting industry still remains below original expectations and there are no signs of the hoped-for recovery in the near future. Similar to the previous quarters, visibility is low and the pressure on prices is high. The continued substantial revenue decline in Great Britain, the most important single market for Zumtobel Group AG, led the Management Board to further adjust the guidance for the 2917/18 financial year (1 May 2017 to 30 April 2018) on 24 January 2018. The Zumtobel Group now expects operating results (adjusted EBIT) of EUR 15 to 25 million and a decline of roughly 8% in revenues for the full 2017/18 financial year.

The recently reorganised Management Board of the Zumtobel Group has defined a clear agenda for the coming months and set a goal to stabilise operating development and consistently pursue the implemented cost savings measures. In addition, a streamlined management team will develop a strategic roadmap with clear measures and goals which will be presented to the capital market in June 2018 together with the announcement of results for the 2017/18 financial year. Given the necessity of further reducing structural costs, these activities will include a thorough evaluation of all structures, corporate processes, markets and product portfolios. This will lead to additional restructuring costs in the fourth quarter of 2017/18. The overriding goal is to return the company to a sustainable profitable growth course as quickly as possible.

Dornbirn, 6 March 2018

Alfred Felder Karin Sonnenmoser Bernard Motzko Acting President of the Executive Board Chief Financial Officer (CFO) Chief Operating Officer (COO)

Zumtobel Group AG has adjusted the scope of the interim reports due to the changed requirements of the "Prime Market Rules" of the Vienna Stock Exchange for first and third quarter interim reporting. The adjustment particularly relates to the notes to the consolidated financial statements as required by IAS 34. Financial information presented in the interim report for the first three quarters of 2017/18 is fundamentally based on the same accounting and valuation methods underlying the consolidated financial statements of the Zumtobel Group AG for the 2016/17 financial year.

Income Statement

in TEUR Q3
2017/18
Q3
2016/17
Change
in %
Q1-Q3
2017/18
Q1-Q3
2016/17
Change
in %
Revenues 283,718 306,112 (7.3) 908,132 973,379 (6.7)
Cost of goods sold (194,765) (205,533) (5.2) (619,383) (641,270) (3.4)
Gross profit 88,953 100,579 (11.6) 288,749 332,109 (13.1)
as a % of revenues 31.4 32.9 31.8 34.1
Selling expenses (76,882) (81,925) (6.2) (234,294) (240,080) (2.4)
Administrative expenses (13,096) (11,409) 14.8 (38,239) (38,113) 0.3
Other operating results (1,159) (1,638) (29.2) (2,292) (4,012) (42.9)
thereof special effects (2,334) (4,413) (47.1) (6,532) (12,140) (46.2)
Operating profit/loss (2,184) 5,607 <(100) 13,924 49,904 (72.1)
as a % of revenues (0.8) 1.8 1.5 5.1
Interest expense (1,812) (1,986) (8.8) (5,016) (5,696) (11.9)
Interest income 126 118 6.8 285 282 0.9
Other financial income and expenses (4,857) (4,121) 17.9 (8,576) (8,747) (2.0)
Result from companies accounted for at-equity (96) (194) (50.5) (334) (310) 7.7
Financial results (6,639) (6,183) (7.4) (13,641) (14,471) 5.7
as a % of revenues (2.3) (2.0) (1.5) (1.5)
Profit/loss before tax (8,823) (576) <(100) 283 35,433 (99.2)
Income taxes (505) 132 <(100) (1,938) (8,317) (76.7)
Loss/Profit from continuing operations (9,328) (444) <(100) (1,655) 27,116 <(100)
Result from discontinued operations 0 2,662 (100.0) 0 2,662 (100.0)
Net loss/profit for the period (9,328) 2,218 <(100) (1,655) 29,778 <(100)
as a % of revenues (3.3) 0.7 (0.2) 3.1
thereof due to non-controlling interests (124) (41) <(100) (146) (42) <(100)
thereof due to shareholders of the parent company (9,204) 2,259 <(100) (1,509) 29,820 <(100)
Average number of shares outstanding – basic (in 1,000 pcs.) 43,147 43,147 43,147 43,147
Average diluting effect (stock options) (in 1,000 pcs.) 0 0 0 0
Average number of shares outstanding – diluted (in 1,000 pcs.) 43,147 43,147 43,147 43,147
Earnings per share (in EUR)
Basic earnings per share (diluted and basic) (0.22) 0.05 (0.04) 0.69
Earnings per share from continuing operations (in EUR)
Basic earnings per share (diluted and basic) (0.22) (0.01) (0.04) 0.63
Earnings per share from discontinued operations (in EUR)
Basic earnings per share (diluted and basic) 0.00 0.06 0.00 0.06

State of Comprehensive Income

in TEUR Q3
2017/18
Q3
2016/17
Change
in %
Q1-Q3
2017/18
Q1-Q3
2016/17
Change
in %
Net loss/profit for the period (9,328) 2,218 <(100) (1,655) 29,778 <(100)
Actuarial gain/loss 0 0 4,789 (20,672) >100
Deferred taxes due to actuarial loss/gain 0 0 (198) 1,890 <(100)
Total of items that will not be reclassified ("recycled") subsequently to the
income statement
0 0 4,591 (18,782) >100
Currency differences (3,092) (1,427) <(100) (6,237) 11,449 <(100)
Currency differences arising from loans (333) 2,665 <(100) (3,866) (6,397) (39.6)
Hedge accounting 248 425 (41.6) 644 1,026 (37.2)
Deferred taxes due to hedge accounting (63) (106) 40.5 (161) (257) (37.3)
Total of items that will be reclassified ("recycled") subsequently to the income
statement
(3,240) 1,557 <(100) (9,620) 5,821 <(100)
Subtotal other comprehensive income (3,240) 1,557 <(100) (5,029) (12,961) 61.2
thereof due to non-controlling interests (152) 47 <(100) (340) 144 <(100)
thereof due to shareholders of the parent company (3,088) 1,510 <(100) (4,689) (13,105) 64.2
Total comprehensive income (12,568) 3,775 <(100) (6,684) 16,817 <(100)
thereof due to non-controlling interests (276) 6 <(100) (486) 102 <(100)
thereof due to shareholders of the parent company (12,292) 3,769 <(100) (6,198) 16,715 <(100)

Balance Sheet

in TEUR 31 January 2018 in % 30 April 2017 in %
Goodwill 193,300 19.5 197,810 19.4
Other intangible assets 52,035 5.2 52,947 5.2
Property, plant and equipment 206,947 20.8 203,526 20.0
Financial assets accounted for at equity 3,764 0.4 1,818 0.2
Financial assets 2,488 0.3 1,243 0.1
Other assets 4,361 0.4 4,875 0.5
Deferred taxes 41,200 4.2 42,707 4.2
Non-current assets 504,095 50.8 504,926 49.6
Inventories 203,073 20.5 197,012 19.3
Trade receivables 163,463 16.5 198,230 19.4
Financial assets 1,188 0.1 1,590 0.2
Other assets 39,887 4.0 35,016 3.4
Liquid funds 79,872 8.1 81,352 8.0
Available-for-sale assets 0 1,503 0.1
Current assets 487,483 49.2 514,703 50.4
ASSETS 991,578 100.0 1,019,629 100.0
Share capital 108,750 11.0 108,750 10.7
Additional paid-in capital 335,316 33.8 335,316 32.9
Reserves (129,348) (13.0) (140,139) (13.7)
Net loss/profit for the period (1,509) (0.2) 25,404 2.4
Capital attributed to shareholders of the parent company 313,209 31.6 329,331 32.3
Capital attributed to non-controlling interests 3,617 0.3 4,659 0.5
Equity 316,826 31.9 333,990 32.8
Provisions for pensions 82,202 8.3 93,805 9.2
Provisions for severance compensation 48,117 4.9 47,801 4.7
Provisions for other employee benefits 9,634 0.9 10,266 1.0
Other provisions 8,055 0.8 646 0.1
Borrowings 218,818 22.1 168,267 16.5
Other liabilities 4,503 0.5 4,628 0.4
Deferred taxes 450 0.0 547 0.1
Non-current liabilities 371,779 37.5 325,960 32.0
Provisions for taxes 21,583 2.2 23,093 2.3
Other provisions 27,781 2.8 38,753 3.8
Borrowings 18,587 1.9 4,539 0.4
Trade payables 129,884 13.1 157,074 15.4
Other liabilities 105,138 10.6 126,795 12.4
Liabilities held for sale 0 9,425 0.9
Current liabilities 302,973 30.6 359,679 35.2
EQUITY AND LIABILITIES 991,578 100.0 1,019,629 100.0

Cash Flow Statement

in TEUR Q1-Q3
2017/18
Q1-Q3
2016/17
Profit/loss before tax 283 35,433
Depreciation and amortisation 38,273 45,515
Gain/loss from disposal of fixed assets 880 (2,397)
Interest income/ Interest expense 4,731 5,450
Other financial income and expenses 8,576 9,021
Results from discontinued operations 0 2,662
Share of profit or loss in companies accounted for at equity 334 0
Cash flow from operating results 53,077 95,684
Inventories (2,327) (25,111)
Trade receivables 29,477 31,546
Trade payables (32,788) (6,768)
Prepayments received (1,583) (10,293)
Change in working capital (7,221) (10,626)
Non-current provisions (1,788) (3,572)
Current provisions (12,803) (16,736)
Other current and non-current assets and liabilities (14,621) 2,107
Change in other operating items (29,212) (18,201)
Income taxes paid (3,185) (3,657)
Cash flow from operating activities 13,459 63,200
Cash inflows from the disposal of property, plant and equipment and other intangible assets 4,183 4,451
Cash inflows from the sale of non-current financial assets 500 0
Cash outflows for the purchase of property, plant and equipment and other intangible assets (48,556) (30,702)
Change in non-current and current financial assets (5,723) 3,687
Change in liquid funds from changes in the consolidation range (3,179) 0
Cash flow from investing activities (52,775) (22,564)
FREE CASH FLOW (39,316) 40,636
Change in non-current and current financial assets 44,442 (26,190)
Loss absorption for non-controlling interests 0 (631)
Capital increases 0 631
Dividends (10,480) (8,629)
Interest paid (4,924) (5,640)
Interest received 285 282
Cash flow from financing activities 29,323 (40,177)
CHANGE IN CASH AND CASH EQUIVALENTS (9,993) 459
Cash and cash equivalents at the beginning of the period 77,205 75,305
Cash and cash equivalents at the end of the period 63,347 75,659
Effects of exchange rate changes on cash and cash equivalents (3,865) (105)
Change absolute (9,993) 459

Statement of Changes in Equity

Q1 –Q32017/18

Attributed to shareholders of the parent company
in TEUR Share
capital
Additional
paid-in
capital
Other
Reserves
Currency
reserve
Hedge
accounting
Reserve
IAS 19
Total controlling
interests
Non
Total
equity
30 April 2017 108,750 335,316 45,714 (27,419) (1,040) (131,990) 329,331 4,659 333,990
+/- Net profit/loss for
the period
0 0 (1,509) 0 0 0 (1,509) (146) (1,655)
+/- Other
comprehensive income
0 0 0 (9,763) 483 4,591 (4,689) (340) (5,029)
+/- Total comprehensive
income
0 0 (1,509) (9,763) 483 4,591 (6,198) (486) (6,684)
+/- Dividends 0 0 (9,924) 0 0 0 (9,924) (556) (10,480)
31 January 2018 108,750 335,316 34,281 (37,182) (557) (127,399) 313,209 3,617 316,826

Q1–Q32016/17 2016/172016/17

Attributed to shareholders of the parent company
in TEUR Share
capital
Additional
paid-in
capital
Other
Reserves
Currency
reserve
Hedge
accounting
Reserve
IAS 19
Total Non
controlling
interests
Total
equity
30 April 2016 108,750 335,316 30,210 (23,167) (2,046) (120,791) 328,272 4,973 333,245
+/- Net profit/loss for
the period
0 0 29,820 0 0 0 29,820 (42) 29,778
+/- Other
comprehensive income
0 0 0 4,907 770 (18,782) (13,105) 144 (12,961)
+/- Total comprehensive
income
0 0 29,820 4,908 769 (18,782) 16,715 102 16,817
+/- Capital increases 0 0 0 0 0 0 0 631 631
+/- Change in non
controlling interests
0 0 (631) 0 0 0 (631) 0 (631)
+/- Dividends 0 0 (8,629) 0 0 0 (8,629) 0 (8,629)
31 January 2017 108,750 335,316 50,769 (18,259) (1,277) (139,573) 335,727 5,707 341,434

The balance sheet position "reserves" comprises other reserves as well as the currency reserve, the reserve for hedge accounting, the reserve for stock options and the IAS 19 reserve for "employee benefits".

Service

Financial Terms

Adjusted EBIT EBIT adjusted for special effects
Adjusted EBIT margin = Adjusted EBIT as a percentage of revenues
CAPEX Capital expenditure
Debt coverage ratio Net debt divided by EBITDA
EBIT Earnings before interest and taxes
EBITDA Earnings before interest, taxes, depreciation and amortisation
Equity ratio = Equity as a percentage of assets
Gearing = Net debt as a percentage of equity
Net debt = Non-current borrowings + current borrowings - liquid funds - current financial
receivables from associated companies
WACC Weighted average cost of capital (debt and equity)
Working capital = Inventories + trade receivables - trade payables - prepayments received

Financial Calendar

Annual Results 2017/18 28 June 2018
Record Date fort he Annual General Meeting 17 July 2018
42nd Annual General Meeting 27 July 2018
Ex-Dividend Day 31 July 2018
Record Date Dividende 1 August 2018
Dividend Payout Day 2 August 2018
Report on the First Quarter 2018/19 (1 May 2018 - 31 July 2018) 4 September 2018
Report on the First Half-year 2018/19 (1 May 2018 - 31 October 2018) 4 December 2018
Report on the First Three Quarters 2018/19 (1 May 2018 - 31 January 2019) 5 March 2018

Contact Information

Harald Albrecht Simone Deitmer VP Investor Relations Head of Corporate Communications Telephone +43 (0)5572 509-1125 Telephon +43 (0)5572 509-575 E-Mail [email protected] E-Mail [email protected]

Investor Relations Relations Press / Corporate C Corporate C Communication ommunication ommunication

Financial Reports

Our financial reports are available in English and German for download under: http://www.zumtobelgroup.com.

More Information

on Zumtobel Group AG and our brands can be found on the Internet under:

www.zumtobelgroup.com www.zumtobel.com www.thornlighting.com www.tridonic.com www.acdclighting.co.uk

Imprint

Publisher: Zumtobel Group AG, Investor Relations, Harald Albrecht Coordination Financials: Jan Güstemeyer Translation: Donna Schiller-Margolis Copyright: Zumtobel Group AG 2018 Produced in-house with FIRE.sys

Disclaimer

This quarterly financial report includes statements on future developments, which are based on information available at the present time and involve risks and uncertainties that could cause the results realised at a later date to vary from these forward-looking statements. These statements on future developments are not to be under-stood as guarantees. On the contrary, future developments and results are dependent on a wide range of factors and connected with various risks and incalculable events. Moreover, they are based on assumptions that may prove to be incorrect. Included here, for example, are unforeseeable changes in the political, economic and business environment, especially in the regions where the Zumtobel Group operates, as well as the competitive situation, interest rates and foreign exchange rates, technological developments and other risks and incalculable events. Other risks may arise as a result of price developments, unforeseeable events in the operating environments of acquired companies or Group companies as well as ongoing cost optimisation programmes. The Zumtobel Group does not plan to update these forward-looking statements. This interim financial report is also presented in English, but only the German text is binding.

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