Gigaset AG

Earnings Release • Nov 19, 2009

News Details

Corporate | 19 November 2009 07:30

ARQUES Industries AG: Operating performance picks up momentum in the third quarter

ARQUES Industries AG / Interim Report

19.11.2009

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Operating performance picks up momentum in the third quarter
* Positive EBITDA of EUR 9.9 million in Q3
* Financial liabilities reduced by EUR 55 million to EUR 94.5 million over
the last quarter
* Further impairments upon portfolio streamlining depress results
* Optimism for the 4th quarter

Munich, November 19, 2009. Streamlining the portfolio of subsidiaries and
applying strict cost management have had a positive impact on the results
of ARQUES Industries AG (ISIN DE0005156004) in the third quarter. This made
it possible to record EBITDA of EUR 9.9 million for the quarter, which is
well above the figures for the preceding quarters of 2009 and also the
year-ago result, all of which were negative. As in the prior periods, the
results indicators below the level of EBITDA were again depressed by
writedowns and impairments on subsidiaries. A loss of EUR 9.5 million after
tax (Q3 2008: loss of EUR 78.4 million) accrued for the quarter as a
result. ARQUES has succeeded in decreasing its financial liabilities by EUR
55 million to EUR 94.5 million in the third quarter. The main factor
permitting this was the disposal of the holding in Actebis. Since year-end
2008, financial debt has thus been reduced by 55%. The company is also
confident of being able to reduce its debt further in the fourth quarter.
Given the fact that the subsidiaries are again expected to generate a
positive operating performance in the final quarter of the year, positive
EBITDA should also be reported for the months of October to December. The
performance of the Gigaset subsidiary, which has benefited from the success
of new products and expansion into new, fast-growing markets such as South
America, was particularly pleasing. The fact that ARQUES succeeded in
reducing the fixed costs in the holding company by more than 50%, as
announced, also had a positive impact. Consequently, the goal for ARQUES in
fiscal 2010 remains unchanged - at least breaking even over the year as a
whole. For this to happen, the economic recovery will need to continue
worldwide.

'We succeeded in stopping the downward spiral in the third quarter, ending
the period with a significant operating profit. One of the factors helping
us here was the improved economic environment overall. What was far more
important, though, was that our efforts to enhance the risk profile of our
portfolio of subsidiaries and our cost structures began to bear fruit. This
is also reflected in the huge reduction in our financial liabilities,' said
Hans-Gisbert Ulmke, Chairman of the Executive Board of ARQUES Industries AG
in commenting on the figures for the third quarter.

Nine-month figures affected by massive non-recurring effects
On the earnings side, the cumulative figures for the first three quarters
have been shaped by the consistent streamlining of the company portfolio.
Since the start of the year, ten subsidiaries with aggregate revenues of
EUR 4.7 billion have been sold. These disposals, coupled with the
revaluation of the retained subsidiaries, required writedowns and
impairments totaling EUR 118.6 million to be taken, EUR 19.9 million of
which related to the third quarter. This gave rise to a massive
deterioration in the nine-month EBITDA, from a negative EUR 6.1 million to
a negative EUR 125.1 million. A loss of EUR 114.7 million after taxes
accrued in the equivalent period last year.

Big improvement in the balance sheet structure
The further consolidation of the portfolio of subsidiaries had a lasting
impact on total assets, which decreased by EUR 876,6 million overall to EUR
842.4 million at September 30, 2009 compared with year-end 2008. Financial
liabilities have been reduced from EUR 212.0 million to EUR 94.5 million
since December 31, 2008. The decline in the third quarter amounted to EUR
55 million, of which more than EUR 30 million is attributable to the
disposal of Actebis. The equity ratio also benefited from this development
in the third quarter, rising from just 11.1% at June 30 to 17.4%. The cash
flow from operating activities remains dissatisfactory, with a total cash
outflow of EUR 71.0 million being recorded after the third quarter.

Optimism for the fourth quarter, break-even targeted for 2010
In the light of already advanced negotiations, the ARQUES Executive Board
considers it possible that at least one further subsidiary will be sold and
one company may be acquired in the final quarter of the year. In terms of
the operating result (EBITDA), a profit is again targeted. In particular,
this optimism is built around the strong demand at Gigaset in the run-up to
Christmas. Further improvements are also projected on the debt side. Thus,
the British School of Motoring (BSM), which was only acquired in February
2009 for a symbolic price, was sold, yielding net proceeds of EUR 11
million which will accrue to ARQUES in the fourth quarter of 2009 and the
first quarter of 2010. Nevertheless, significant risks still remain on
account of the restrictive policies of banks, credit insurers and factoring
companies together with remaining uncertainty in many industries about the
sustainability of the expected economic recovery. This notably holds true
for the automotive sector that is a key player for ARQUES. Should the
current upturn continue at the pace predicted by many experts, however, the
declared goal remains to reach break-even in the coming fiscal year. After
consolidation of the portfolio has been completed, ARQUES will concentrate
more heavily on growth in 2010. Both the strong performance of the
individual subsidiaries in the existing portfolio and also new companies
still to be acquired are expected to contribute to this growth.

The complete quarterly report, as well as additional information about
ARQUES Industries AG, can be found at the company's website at
www.arques.de

About ARQUES
ARQUES Industries AG, Munich, (www.arques.de) is a business partner of
conglomerates regarding company spin-offs and a turnaround specialist who
focuses on the acquisition and the active restructuring of companies in
transitional situations, in order to develop these, with its own team and
own resources, to competitive enterprises with a positive yield. ARQUES
revitalizes its subsidiaries' potential for creating value for the benefit
of all its stakeholders, taking on the relevant social responsibility. The
shares of ARQUES Industries AG are traded on the regulated market (Prime
Standard) of the Frankfurt Stock Exchange under the symbol 'AQU' (ISIN:
DE0005156004) and are listed in the SDAX.

ARQUES Industries AG
Corporate Communication
Christian Schneider
Email: schneider@arques.de
Tel.: +49 (0)89 255-5000

19.11.2009 Financial News distributed by DGAP. Media archive at www.dgap-medientreff.de and www.dgap.de

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Language: English
Company: ARQUES Industries AG
Arnulf Office Park - Arnulfstraße 37-39
80636 München
Deutschland
Phone: +49 89/255500-0
Fax: +49 89/255500-200
E-mail: schneider@arques.de
Internet: www.arques.de
ISIN: DE0005156004
WKN: 515600
Indices: SDAX
Listed: Regulierter Markt in Frankfurt (Prime Standard); Freiverkehr
in Berlin, Düsseldorf, München, Hamburg, Stuttgart

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