Quarterly Report • Nov 16, 2016
Quarterly Report
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| 2012 | 2013 | 2014 | 2015 | 2016 | ||
|---|---|---|---|---|---|---|
| Sales | € '000 | 151,930 | 153,094 | 145,240 | 126,839 | 116,290 |
| EBIT | € '000 | 11,558 | 11,713 | 8,606 | 6,751 | 4,908 |
| Earnings before income taxes | € '000 | 10,193 | 8,550 | 6,107 | 5,566 | 7,600 |
| Earnings after taxes | € '000 | 6,811 | 4,852 | 3,176 | 3,445 | 5,503 |
| Earnings per share | €/share | 2.47 | 1.76 | 1.15 | 1.25 | 2.00 |
| Cash-flow | € '000 | 13,866 | 13,789 | 11,886 | 10,181 | 11,378 |
| Capital expenditures | € '000 | 10,258 | 7,292 | 4,297 | 3,489 | 3,809 |
| Depreciation | € '000 | 7,362 | 7,045 | 7,096 | 6,362 | 5,827 |
| Number of employees | 828 | 836 | 823 | 805 | 767 |
on the business performance for the nine-month period ended September 30, 2016
With economic growth in the eurozone having slowed down towards the end of 2015 and a growth rate of 1.5% recorded for the full year 2015, only a moderate 1.3% increase in the gross domestic product has been projected for 2016 in view of declining demand from China and other emerging countries. The subdued economic growth of 1.5% posted in the eurozone in the first three quarters of 2016 was in line with projections. The German economy no longer steamed ahead, with growth also settling at a low level of 1.6% in 2016. Private consumption remains the main driver of the economy, both in Germany and in the eurozone as a whole.
The economic situation in Russia remains very tight. Having contracted by 3.7% in 2015, the Russian economy is expected to decline again in 2016 in spite of a moderate pick-up in the oil price. The Russian economy is primarily suffering from the sharp drop in the oil price, as commodity and energy-driven enterprises are of special importance for the country. The economy is also being adversely affected by the sanctions imposed in the context of the Ukraine crisis and by the sharp depreciation of the Russian rouble against the euro. While the RUB exchange rate improved somewhat in the current fiscal year, the average exchange rate in the first three quarters of 2016, at RUB/€ 76.13, still exceeded the average of the first three quarters of 2013 of RUB/€ 41.71 by 83%; consequently, the prices of imported products almost doubled within only three years. Accordingly, Russia's inflation rate reached a high level in the past years and the forecast for 2016 is still very high at 7%. It is therefore not surprising that private consumption, a pillar of the Russian economy in the past, is declining.
The overall macroeconomic environment had an adverse impact on A.S. Création's sales revenues in the first nine months of 2016. At € 116.3 million, Group revenues were down by € 10.5 million or 8.3% on the previous year's € 126.8 million in the reporting period. While this was a more moderate reduction than the 12.0% drop recorded in the fiscal year 2015, the decline in revenues accelerated in the course of the year and reached 12.9% in the third quarter of 2016. In view of customers' positive response to A.S. Création's current product range, this is a disappointing trend in the opinion of the Managing Board.
The breakdown of revenues by regions shows that A.S. Création's revenues declined across all regions in the first three quarters of 2016. Sales revenues in the European Union (EU) were down by 5.9% on the previous year. Even revenues in France, which were still on a par with the previous year at the six-month stage, declined in the third quarter. Besides France, A.S. Création recorded a notable reduction in revenues in Germany, the Baltic states and the UK. While the drop in revenues in Germany is essentially attributable to lower overall demand for wallpapers and furnishing fabrics in the first nine months of the current fiscal year, the downward trend in the Baltic states reflects the loss of larger customers. As a result of the traditionally close economic relations with Russia, the Baltic economies were adversely affected by the Russian crisis. The ensuing insolvencies among A.S. Création's Baltic customers in the course of 2015 reduced the company's exports to the Baltic states in the fiscal year 2016. In the UK, A.S. Création's sales to DIY stores showed a negative trend in the current fiscal year. As stores reduced their own stocks, manufacturers received fewer top-up orders.
Having dropped by as much as 43.5% in the fiscal year 2015, gross revenues generated by A.S. Création in non-EU Eastern European countries fell by another 19.8% in the first nine months of 2016. Besides the unfavourable exchange rate of the Russian rouble against the euro, which is making exports to the region extremely difficult, in 2016 this is also attributable to the fact that no more revenues were generated with customers who became insolvent in 2015 or who are struggling with financing problems because of the economic crisis in Russia. In addition, exports to Turkey were adversely affected by the poorer economic and political situation as well as by import duties imposed on wallpapers by the Turkish government.
The overall revenue trend in the current fiscal year is not satisfying, although it is in line with the projections for the fiscal year 2016, according to which the Managing Board expects still Group sales revenues of between € 150 million and € 160 million.
At € 4.9 million, A.S. Création's earnings before interest and taxes (EBIT) in the first three quarters of 2016 were down by € 1.9 million or 27.3% on the previous year's € 6.8 million. The EBIT margin fell from 5.3% in the previous year to 4.2% in the reporting period. Earnings before interest and taxes were affected by material extraordinary factors both in the current fiscal year and in the previous year:
− Other income
In June 2015, A.S. Création and the former owners of the two French companies acquired in late 2008 agreed that the latter would bear part of the penalty imposed in conjunction with the French antitrust proceedings. The income of € 2.1 million resulting from this agreement was included in the previous year's other income.
− Foreign exchange gains / losses
As the Russian Group companies are primarily financed with shareholder loans denominated in euros, changes in exchange rates lead to translation-related exchange gains or losses. Exchange gains of € 0.3 million were recognised in other operating income in the first nine months of 2016. By contrast, exchange losses of € 1.2 million were recorded in the same period of the previous year and recognised in other operating expenses.
− Valuation allowances on receivables
The negative economic developments in 2015, especially in Eastern Europe, caused financial bottlenecks at some customers. Against this background, the parameters for the risk assessment of trade receivables were reviewed and adjusted. This led to a € 1.1 million increase in valuation allowances. This one-time effect was reflected in other operating expenses in the fiscal year 2015. No further adjustment of the parameters has been required in the current fiscal year.
− Concentration of the German production activities at a single location In conjunction with the concentration of the German production activities in Wiehl-Bomig, one-time expenses for the relocation and adjustment of plant and machinery were incurred especially in the second quarter of 2016. As a result, the respective expense items exceeded the prior year level by approx. € 1.2 million in the first nine months of 2016 and weighed on other operating expenses. Provisions for severance payments in the amount of € 0.9 million were established in the previous year, compared to expenses for severance payments of only € 0.1 million in the reporting period.
In the first nine months of 2016, the above extraordinary factors had a negative impact in the amount of € 1.0 million on EBIT (previous year: € 1.1 million), which means that the effects of the extraordinary factors were almost identical in both years. The change in EBIT thus ultimately reflects the poorer earnings position of A.S. Création, which is primarily attributable to the € 10.5 million decline in sales revenues in the reporting period. The fact that A.S. Création was able to limit the reduction in EBIT to € 1.9 million shows that the company has taken the right measures to protect its profitability.
The positive gross profit margin trend of the first six months of 2016 did not continue in the third quarter, when the gross profit margin dropped to 50.7% (previous year: 54.1%). On a nine-month basis, the margin deteriorated moderately from 53.5% in the previous year to 53.0% in the current fiscal year. This was due to the generally lower sales revenues resulting from lower sales prices in Q3 2016 in conjunction with slightly higher commodity prices.
The measures initiated and implemented in the course of 2015 to reduce personnel expenses, especially the merger of the two German production facilities, are showing up in the figures for the current fiscal year. The A.S. Création Group's headcount declined from 805 in the first three quarters of 2015 to 767 in the reporting period, and personnel expenses, at € 31.0 million, were down by 6.1% on the previous year's € 33.0 million. The Managing Board's objective for the full fiscal year 2016 to reduce personnel expenses as a percentage of total output below the high level of the previous year has not been reached, however. At 26.7%, personnel expenses as a percentage of total output were more or less on a par with the previous year's 26.6%. An improvement in personnel expenses as a percentage of total output was prevented by the collective pay rise of 2.6% that became effective in November 2015 for most of the company's domestic employees as well as by the lower sales revenues.
Besides personnel expenses, depreciation and other operating expenses were also below the prior year levels in the current fiscal year 2016 and helped to reduce the shortfall in earnings resulting from the lower sales revenues.
At € 2.7 million, the consolidated financial result improved notably in the first three quarters of 2016 (previous year: € -1.2 million). The earnings situation of the Russian production company, A.S. & Palitra, has the biggest influence on the consolidated financial result of A.S. Création. Given that A.S. Création Tapeten AG and the second shareholder, Kof Palitra, each own 50% of this company, the Russian production company is accounted for using the equity method, which means that the share in net result after taxes that is attributable to A.S. Création is recognised in the Group's financial result. While a pro-rated loss of € -1.3 million was posted in the previous year, the joint venture generated a pro-rated profit of € 2.4 million in the current fiscal year. As the joint venture is largely financed with euro loans, A.S. & Palitra recorded translation-related exchange gains due to the appreciation of the Russian rouble against the euro in the reporting period. These exchange gains of € 2.0 million are included in the pro-rated result after taxes. In the previous year, the prorated result after taxes was adversely affected by exchange losses of € -1.4 million. This means that A.S. Création's share in profit after taxes adjusted for exchange gains/losses amounted to € 0.4 million (previous year: € 0.1 milion). This positive earnings trend is primarily attributable to higher sales volumes and the resulting better utilisation of the production capacities. Against the background of the good order situation and the growing demand for Russian-made wallpapers, the two shareholders of the joint venture had decided to install another local production line already at the end of 2015. The latter was taken into operation in autumn 2016. The Managing Board is very satisfied with the development of the joint venture and expects a further improvement in earnings.
The decline in EBIT and the improved financial result led to earnings before taxes of € 7.6 million in the first three quarters of 2016, up € 2.0 million or 36.5% on the previous year's € 5.6 million. Adjusted for the above extraordinary factors, A.S. Création's earnings before taxes declined from € 8.1 million in the first nine months of 2015 to € 6.6 million in the reporting period.
Earnings after taxes amounted to € 5.5 million (previous year: € 3.4 million) or € 2.00 per share (previous year: € 1.25) in the first nine months of 2016.
At € 12.3 million, operating cash flow was down by € 2.7 million in the first three quarters of 2016 on the previous year's € 15.0 million and was influenced by opposite effects in the reporting period.
Cash flow was adversely affected by the decline in EBIT on reduced depreciation. By contrast, the outcome of the French antitrust proceedings had a positive effect. In April 2016, the French court of appeal ("Cour d'appel") decided on A.S. Création's appeal in the French appeal proceedings in April 2016 and reduced the penalty imposed by the French antitrust authorities by € 2.9 million. Following the Court of Appeal's verdict, the amount of € 2.9 million was refunded by the French competition authorities and improved the company's operating cash flow. The refund has not (yet) had a positive effect on A.S. Création's bottom line, however, as the French competition authorities have lodged an appeal with the French supreme court ("Cour de cassation"). The verdict of the court of appeal has consequently not become final yet. A.S. Création will therefore post the income of € 2.9 million resulting from the verdict of the court of appeal only once it has been confirmed by the French supreme court. The supreme court is unlikely, however, to hand down its decision before the end of 2016.
Operating cash flow contrasted with increased financing requirements for investments and the dividend payment in the reporting period.
At € 3.8 million, capital expenditures exceeded the previous year's € 3.5 million by € 0.3 million in the reporting period, as the concentration of A.S. Création's wallpaper production facilities in Wiehl-Bomig entailed construction measures as well as technical replacement investments and investments in capacity expansion.
Due to the profit generated in the fiscal year 2015, a dividend of € 1.7 million was distributed to the shareholders in Q2 2016, whereas no dividend was paid out in the previous year because of the loss incurred in the fiscal year 2014.
In spite of the increased financing requirements, the first three quarters of 2016 saw a reduction in interest-bearing financial liabilities from € 16.2 million on December 31, 2015 by € 4.3 million to € 11.9 million on September 30, 2016. As of the balance sheet date, these financial liabilities contrasted with cash and cash equivalents as well as current financial assets of € 19.5 million, leaving A.S. Création with a net credit position of € 7.6 million on September 30, 2016. On the same day of the previous year, the company still had net financial liabilities (difference between interest-bearing financial liabilities and cash and cash equivalents as well as current financial assets) of € 0.3 million. The equity ratio of 64.4% as of September 30, 2016 underlines A.S. Création's very solid financial structure.
In the estimation of the Managing Board, the net assets position of A.S. Création is also very solid. As of September 30, 2016, the Group's total assets amounted to € 146.5 million (previous year: € 147.8 million), of which 79.9% (previous year: 82.7%), i.e. by far the biggest portion, related to property, plant and equipment, inventories, trade receivables, current financial assets as well as cash and cash equivalents. By contrast, intangible assets recognised in the consolidated balance sheet as of the balance sheet date (including goodwill) played only a minor role and represented only 5.5% (previous year: 5.5%) of total assets and 8.5% (previous year: 8.8%) of the equity capital.
With sales revenues down by 12.9%, the third quarter of 2016 was disappointing. The company's hopes of further slowing down the drop in revenues were not fulfilled. At this stage, the Managing Board nevertheless assumes that consolidated sales revenues will reach the projected range of € 150 million to € 160 million in the full fiscal year 2016, as announced.
Against the background of the business trend, the Managing Board considers the most important task on stabilising its revenues and returning to growth. At the same time, the cost structures need to be further improved. While the concentration of the German production facilities at a single location was right and necessary, the earnings trend shows that it was not sufficient.
The existing overcapacities in Western Europe will probably lead to intense competition for market share. A.S. Création believes it is well positioned for this competition. On the one hand, A.S. Création's closely knit sales network in Western Europe will underpin the implementation of a more aggressive marketing strategy. On the other hand, the Managing Board considers the company's product range to be very competitive on account of its width and diversity. It will be important to raise retailers' and consumers' awareness of the many design options offered by wallpaper.
With regard to the revenue trend in non-EU Eastern European countries, the Managing Board expects demand to continue to shift towards locally produced wallpaper. This trend is being intensified by the additional production capacity that has been built up in this region. Moreover, the continued unfavourable exchange rate relation between the Russian rouble and the euro is having an adverse effect on exports to Eastern Europe. While the Managing Board therefore expects sales of German-produced wallpaper in this region to settle at a low level, opportunities for growth will arise for the Russian distribution company, A.S. Création (RUS), and for the joint venture, A.S. & Palitra. However, the growing revenues of the joint venture will not be reflected in A.S. Création's consolidated sales revenues as the company is accounted for using the equity method. The Managing Board's strategy is aimed at expanding the local production capacity and increasing sales revenues via the Group companies.
Finally, the Managing Board will intensify distribution activities in the wallpaper markets outside Western and Eastern Europe, although no short-term successes are expected here.
With regard to the operating performance, the sales trend will play a critical role. As no leap in sales revenues is expected, as outlined above, the focus will remain on the ongoing adjustment of the cost structures. This also includes personnel expenses as a percentage of total output, which must be reduced to a lower level by increasing sales revenues and reducing personnel expenses. A.S. Création Tapeten AG in Germany will additionally focus on the ongoing optimisation of its production and logistic processes.
With regard to the earnings position of A.S. Création in the remaining course of the fiscal year, the Managing Board stands by its full-year 2016 guidance as detailed in the forecast report of the 2015 Annual Report. Provided that no significant burdens exceeding the amount of € 4.9 million already recognised as an expense arise from the antitrust proceedings and that the Russian rouble does not depreciate extremely against the euro by the end of 2016, earnings before and after taxes should improve notably.
In the full fiscal year 2015, A.S. Création generated earnings before and after taxes of only € 5.6 million and € 3.3 million, respectively. At € 7.6 million and € 5.5 million, earnings before and after taxes generated in the first nine months of the current fiscal year already exceed the results of the full year 2015. From today's point of view, the Managing Board assumes that A.S. Création is thus well on track to reach its earnings projections and anticipates reporting a significantly improved result compared to the previous year.
The risk and opportunity profile of A.S. Création Tapeten AG has not changed materially as compared to the presentation in the 2015 Annual Report.
To the best of our knowledge, and in accordance with the applicable reporting principles for interim financial reporting, the interim consolidated financial statements give a true and fair view of the assets, liabilities, financial position and profit or loss of the Group, and the interim management report of the Group includes a fair review of the development and performance of the business and the position of the Group, together with a description of the principal opportunities and risks associated with the expected development of the Group for the remaining months of the financial year.
Gummersbach, October 31, 2016
The Managing Board
Krämer Bantel Suskas
as per September 30, 2016
| Assets | ||
|---|---|---|
| 30.09.2016 | 31.12.2015 | |
| € '000 | € '000 | |
| Tangible fixed assets | 27,032 | 29,146 |
| Intangible fixed assets | 8,037 | 8,057 |
| Investments accounted for at equity | 0 | 0 |
| Financial assets | 9,799 | 8,510 |
| Other assets | 4,594 | 3,690 |
| Income tax receivables | 293 | 295 |
| Deferred tax assets | 650 | 512 |
| Non-current assets | 50,405 | 50,210 |
| Inventories | 38,659 | 38,859 |
| Trade receivables | 31,806 | 28,240 |
| Other assets | 4,542 | 14,223 |
| Income tax receivables | 2,144 | 1,955 |
| Cash and cash equivalents | 18,980 | 6,918 |
| Current assets | 96,131 | 90,195 |
| Total assets | 146,536 | 140,405 |
| Notes | 30.09.2016 | 31.12.2015 | |
|---|---|---|---|
| No. | € '000 | € '000 | |
| Capital stock | 9,000 | 9,000 | |
| Capital reserves | 13,757 | 13,757 | |
| Revenue reserves | 82,482 | 81,133 | |
| Profit carried forward | -18,670 | -17,216 | |
| Earnings after taxes | 5,503 | 3,287 | |
| Adjustment for own shares | -4,021 | -4,021 | |
| Currency translation differences | 6,285 | 7,248 | |
| Equity | 94,336 | 93,188 | |
| Financial liabilities (interest-bearing) | 6,625 | 10,005 | |
| Other liabilities | 689 | 781 | |
| Provisions | (1) | 16,809 | 11,124 |
| Deferred tax liabilities | 777 | 2,037 | |
| Non-current liabilities | 24,900 | 23,947 | |
| Financial liabilities (interest-bearing) | 5,293 | 6,172 | |
| Other liabilities | 15,099 | 10,585 | |
| Trade payables | 6,719 | 6,070 | |
| Provisions | 77 | 131 | |
| Tax liabilities | 112 | 312 | |
| Current liabilities | 27,300 | 23,270 | |
| Total equity and liabilities | 146,536 | 140,405 |
for the nine-month period ended September 30, 2016
| Notes | 2016 | 2015 |
|---|---|---|
| No. | € '000 | € '000 |
| Sales (2) |
116,290 | 126,839 |
| Increase or decrease in unfinished and finished goods | -288 | -2,727 |
| Total output | 116,002 | 124,112 |
| Cost of materials | 54,560 | 57,683 |
| Gross profit | 61,442 | 66,429 |
| Other income | 1,013 | 2,849 |
| 62,455 | 69,278 | |
| Personnel expenses | 30,965 | 32,978 |
| Depreciation | 5,827 | 6,362 |
| Operating taxes | 331 | 388 |
| Other operating expenses | 20,424 | 22,799 |
| Operating expenses | 57,547 | 62,527 |
| Earnings before interest and taxes (EBIT) | 4,908 | 6,751 |
| Interest and similar income | 880 | 840 |
| Results from investments accounted for at equity | 2,417 | -1,346 |
| Interest and similar expenses | 605 | 679 |
| Financial result | 2,692 | -1,185 |
| Earnings before income taxes | 7,600 | 5,566 |
| Income taxes (3) |
2,097 | 2,121 |
| Earnings after taxes | 5,503 | 3,445 |
| Earnings per share (4) |
2.00 € | 1.25 € |
for the nine-month period ended September 30, 2016
| 2016 | 2015 | |
|---|---|---|
| € '000 | € '000 | |
| Earnings after taxes | 5,503 | 3,445 |
| Items, that will never be reclassified to profit or loss: | ||
| Actuarial gains/losses from pension provisions | -2,634 | 1,074 |
| Deferred taxes on other comprehensive income | 823 | -335 |
| -1,811 | 739 | |
| Items, that are or may be reclassified to profit or loss: | ||
| Foreign currency translation differences for fully consolidated companies | -63 | 763 |
| Foreign currency translation differences for investments accounted for at equity | -900 | 786 |
| Change in fair value of interest rate hedges | 106 | 163 |
| Deferred taxes on other comprehensive income | -33 | -51 |
| -890 | 1,661 | |
| Other comprehensive income (outside profit or loss) | -2,701 | 2,400 |
| Total comprehensive income | 2,802 | 5,845 |
for the three-month period ended September 30, 2016 (3rd quarter)
| Notes | 2016 | 2015 |
|---|---|---|
| No. | € '000 | € '000 |
| Sales (2) |
34,565 | 39,679 |
| Increase or decrease in unfinished and finished goods | -1,623 | -2,404 |
| Total output | 32,942 | 37,275 |
| Cost of materials | 16,240 | 17,104 |
| Gross profit | 16,702 | 20,171 |
| Other income | 242 | -973 |
| 16,944 | 19,198 | |
| Personnel expenses | 9,559 | 10,241 |
| Depreciation | 1,945 | 2,018 |
| Operating taxes | 120 | 134 |
| Other operating expenses | 5,774 | 7,520 |
| Operating expenses | 17,398 | 19,913 |
| Earnings before interest and taxes (EBIT) | -454 | -715 |
| Interest and similar income | 288 | 292 |
| Results from investments accounted for at equity | 258 | -2,874 |
| Interest and similar expenses | 192 | 218 |
| Financial result | 354 | -2,800 |
| Earnings before income taxes | -100 | -3,515 |
| Income taxes (3) |
12 | 328 |
| Earnings after taxes | -112 | -3,843 |
| Earnings per share (4) |
-0.04 € | -1.39 € |
for the three-month period ended September 30, 2016 (3rd quarter)
| 2016 | 2015 | |
|---|---|---|
| € '000 | € '000 | |
| Earnings after taxes | -112 | -3,843 |
| Items, that will never be reclassified to profit or loss: | ||
| Actuarial gains/losses from pension provisions | -478 | 0 |
| Deferred taxes on other comprehensive income | 149 | 0 |
| -329 | 0 | |
| Items, that are or may be reclassified to profit or loss: | ||
| Foreign currency translation differences for fully consolidated companies | -11 | 1,398 |
| Foreign currency translation differences for investments accounted for at equity | -84 | 1,564 |
| Change in fair value of interest rate hedges | 52 | 25 |
| Deferred taxes on other comprehensive income | -16 | -8 |
| -59 | 2,979 | |
| Other comprehensive income (outside profit or loss) | -388 | 2,979 |
| Total comprehensive income | -500 | -864 |
for the nine-month period ended September 30, 2016
| Capital stock |
Capital reserves |
Revenue reserves |
Profit carried forward |
Earnings after taxes |
Adjust ment for own shares |
Currency trans lation diffe rences |
Total | |
|---|---|---|---|---|---|---|---|---|
| € '000 | € '000 | € '000 | € '000 | € '000 | € '000 | € '000 | € '000 | |
| January 1, 2015 | 9,000 | 13,757 | 70,939 | 974 | -9,338 | -4,021 | 5,580 | 86,891 |
| Earnings after taxes 2014 |
0 | 0 | 0 | -9,338 | 9,338 | 0 | 0 | 0 |
| Dividend payments | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 |
| Allocation to revenue reserves |
0 | 0 | 7,382 | -7,382 | 0 | 0 | 0 | 0 |
| Total comprehensive income 2015 |
0 | 0 | 851 | 0 | 3,445 | 0 | 1,549 | 5,845 |
| September 30, 2015 | 9,000 | 13,757 | 79,172 | -15,746 | 3,445 | -4,021 | 7,129 | 92,736 |
| Capital stock |
Capital reserves |
Revenue reserves |
Profit carried forward |
Earnings after taxes |
Adjust ment for own shares |
Currency trans lation diffe rences |
Total | |
|---|---|---|---|---|---|---|---|---|
| € '000 | € '000 | € '000 | € '000 | € '000 | € '000 | € '000 | € '000 | |
| January 1, 2016 | 9,000 | 13,757 | 81,133 | -17,216 | 3,287 | -4,021 | 7,248 | 93,188 |
| Earnings after taxes 2015 |
0 | 0 | 0 | 3,287 | -3,287 | 0 | 0 | 0 |
| Dividend payments | 0 | 0 | 0 | -1,654 | 0 | 0 | 0 | -1,654 |
| Allocation to revenue reserves |
0 | 0 | 3,087 | -3,087 | 0 | 0 | 0 | 0 |
| Total comprehensive income 2016 |
0 | 0 | -1,738 | 0 | 5,503 | 0 | -963 | 2,802 |
| September 30, 2016 | 9,000 | 13,757 | 82,482 | -18,670 | 5,503 | -4,021 | 6,285 | 94,336 |
for the nine-month period ended September 30, 2016
| 2016 | 2015 | |
|---|---|---|
| € '000 | € '000 | |
| Operating activities | ||
| Earnings after taxes | 5,503 | 3,445 |
| + Depreciation on tangible and intangible fixed assets |
5,827 | 6,362 |
| +/- Increase/decrease in long-term provisions | 3,051 | 189 |
| -/+ Income/expenses from investments accounted for at equity | -2,417 | 1,346 |
| -/+ Increase/decrease in present value of corporate income tax credit | -10 | -19 |
| -/+ Income/expenses from changes in deferred taxes | -576 | -1,142 |
| Cash-flow | 11,378 | 10,181 |
| -/+ Profit/losses from disposal of tangible and intangible fixed assets | -60 | -43 |
| -/+ Increase/decrease in inventories | 440 | 1,967 |
| -/+ Increase/decrease in trade receivables | -3,422 | 278 |
| +/- Increase/decrease in trade payables | 536 | 717 |
| -/+ Increase/decrease in other net working capital | 3,378 | 1,860 |
| Cash-flow from operating activities | 12,250 | 14,960 |
| Investing activities | ||
| - Cash outflows for capital expenditures on tangible and intangible fixed assets |
-3,809 | -3,247 |
| - Cash outflows for credits and bonds granted |
0 | -242 |
| Capital expenditures | -3,809 | -3,489 |
| -/+ Cash outflows / proceeds from current financial investments | 9,000 | 0 |
| + Repayments of credits and bonds granted |
330 | 0 |
| + Proceeds from the disposal of tangible and intangible fixed assets |
177 | 146 |
| Cash-flow from investing activities | 5,698 | -3,343 |
| Financing activities | ||
| - Dividends paid to shareholders of A.S. Création Tapeten AG |
-1,654 | 0 |
| +/- Raising/repayment of financial liabilities (interest-bearing) | -4,260 | -4,001 |
| Cash-flow from financing activities | -5,914 | -4,001 |
| Net change in cash and cash equivalents | 12,034 | 7,616 |
| +/- Change in cash and cash equivalents due to exchange rate fluctuations | 28 | -17 |
| + Cash and cash equivalents at January 1 |
6,918 | 5,775 |
| Cash and cash equivalents at September 30 | 18,980 | 13,374 |
Further information on the cash flow statement are presented in the notes to the consolidated financial statement (see No. 5).
for the nine-month period ended September 30, 2016
A.S. Création Tapeten AG is a joint stock company registered in the Federal Republic of Germany. The address of the headquarters is Südstrasse 47, D-51645 Gummersbach.
The present interim consolidated financial statements for the nine-month period ended September 30, 2016 were prepared by A.S. Création Tapeten AG in condensed form in accordance with IAS 34 "Interim Financial Reporting". The accounting and valuation methods used are consistent with those used to prepare the consolidated financial statements for the year ended December 31, 2015. The latter were prepared on the basis of the International Financial Reporting Standards (IFRS) in force on the reporting date, such as they are applicable in the European Union, as well as the additional requirements pursuant to section 315a (1) of the German Commercial Code (Handelsgesetzbuch HGB). For a detailed description of the accounting and valuation methods, refer to the notes to the consolidated financial statements for the period ended December 31, 2015.
A.S. Création Tapeten AG has a policy of applying new IFRS as soon as they become effective. The newly published IFRS had no material effect on the assets, liabilities, financial position and earnings position of A.S. Création in the reporting period.
IFRS 15 introduces comprehensive new regulations regarding the recognition of revenue. In an initial analysis, only minor adjustment requirements have been identified, namely a possible minor shift in the time at which revenue is realised as well as the identification of additional performance obligations. In addition, the disclosures in the notes will become more extensive.
The application of IFRS 16 will lead to a moderate increase in assets and liabilities, as operating leases play only a minor role at A.S. Création. In addition, the disclosures in the notes will become more extensive.
To prepare the consolidated financial statements, the Managing Board must make estimates and assumptions that influence the recognition of assets and liabilities as well as income and expenses. All estimates and assumptions are made to the best of the Managing Board's knowledge to give a true and fair view of the net worth, financial and earnings position of the Group. The actual values may nevertheless deviate from the estimates. The results achieved in the fiscal year 2016 to date do not necessarily provide an indication of the performance in the further course of the year.
The present interim report has neither been audited nor reviewed by a certified public accountant. This English translation of the interim report is merely a convenience translation. The German version is the prevailing one.
Next to A.S. Création Tapeten AG, ten subsidiaries are consolidated, thereof nine companies are fully consolidated and one company is accounted for using the equity method. Compared to the consolidated financial statements for 2015, consolidated entity has increased by one company.
A.S. Création Tapeten AG's reporting currency is the euro (€).
In accordance with IAS 21, foreign currencies of subsidiaries in non-EMU countries are translated according to the functional currency concept using the modified closing rate method.
An average annual rate of £ 0.80313/€ (2015: £ 0.72714/€) and a closing rate of £ 0.86135/€ (2015: £ 0.73800/€) were used for the pound sterling, while an average annual rate of RUB 76.12693/€ (2015: RUB 66.42453/€) and a closing rate of RUB 70.88230/€ (2015: RUB 74.58250/€) were applied for the Russian rouble.
Non-current provisions break down as follows:
| Other provisions | 2,889 16,809 |
0 11,742 |
|---|---|---|
| Pension provisions | 13,920 | 11,742 |
| € '000 | € '000 | |
| 30.09.2016 | 30.09.2015 |
In December 2014, the French competition authorities ("Autorité de la concurrence") issued a penalty notice against SCE - Société de conception et d'édition SAS ("SCE") and MCF Investissement SAS ("MCF"), the two French member companies of the A.S. Création Group, and imposed penalties totalling € 5.0 million. An appeal was filed against the penalty notice in February 2015. On April 14, 2016, the court of appeal ("Cour d'appel") in Paris announced the verdict in the antitrust proceedings and reduced the penalties payable by SCE and MCF to a total of € 2.1 million. The penalty of € 5 million originally imposed by the French competition authorities was fully recognised as an expense in the 2014 consolidated financial statements. Under French law, the penalty had to be paid in full in 2015. Following the Court of Appeal's verdict, the amount of € 2.9 million was refunded by the French competition authorities in April 2016. As the French competition authorities have lodged an appeal with the French supreme court ("Cour de cassation"), the refund has not been recognised as other income but as a non-current provision.
| Wallpaper Division | Fabrics Division | Consolidation | Group | ||||||
|---|---|---|---|---|---|---|---|---|---|
| 2016 | 2015 | 2016 | 2015 | 2016 | 2015 | 2016 | 2015 | ||
| € '000 | € '000 | € '000 | € '000 | € '000 | € '000 | € '000 | € '000 | ||
| Germany | 48,464 | 51,416 | 7,924 | 7,851 | -81 | -118 | 56,307 | 59,149 | |
| EU (excl. Germany) | 52,191 | 56,257 | 1,717 | 1,760 | -39 | -39 | 53,869 | 57,978 | |
| European Union (EU) | 100,655 | 107,673 | 9,641 | 9,611 | -120 | -157 | 110,176 | 117,127 | |
| Other Eastern Europe | 11,776 | 14,766 | 348 | 355 | 0 | 0 | 12,124 | 15,121 | |
| Other countries | 9,396 | 10,955 | 385 | 433 | 0 | 0 | 9,781 | 11,388 | |
| Sales (gross) | 121,827 | 133,394 | 10,374 | 10,399 | -120 | -157 | 132,081 | 143,636 | |
| Reduction in revenues | -15,047 | -16,109 | -745 | -689 | 1 | 1 | -15,791 | -16,797 | |
| Sales (net) | 106,780 | 117,285 | 9,629 | 9,710 | -119 | -156 | 116,290 | 126,839 |
A breakdown of Group sales by region is provided below:
Income taxes in the reporting period were calculated using country-specific tax rates anticipated for the full fiscal year. Income taxes break down as follows:
| 2016 | 2015 | |
|---|---|---|
| € '000 | € '000 | |
| Current income tax expenses | 2,673 | 3,263 |
| Deferred taxes | -576 | -1,142 |
| 2,097 | 2,121 |
Earnings per share are calculated as follows:
| 2016 | 2015 | ||
|---|---|---|---|
| Number of shares outstanding (weighted average) | shares | 2,756,351 | 2,756,351 |
| Net profit | € | 5,503,290 | 3,444,594 |
| Earnings per share | €/share | 2.00 | 1.25 |
Given that no stock options or similar equity instruments exist that may lead to a change in the number of shares (so-called "capital dilution"), earnings per share represent both basic and diluted earnings per share.
Cash flow from operating activities includes the following payments:
| 2016 | 2015 | |
|---|---|---|
| € '000 | € '000 | |
| Interest received | 15 | 19 |
| Interest paid | 370 | 474 |
| Income tax paid | 3,059 | 3,879 |
| Dividends received | 0 | 0 |
Interest paid primarily relates to investment financing.
The changes in financial liabilities shown under cash flow from financing activities are composed as follows:
| 2016 | 2015 | |
|---|---|---|
| € '000 | € '000 | |
| Raising of financial liabilities (excl. financial lease) | 0 | 1,246 |
| Raising of liabilities under financial lease contracts | 0 | 0 |
| Repayment of financial liabilities (excl. financial lease) | -3,923 | -4,894 |
| Repayment of liabilities under financial lease contracts | -337 | -353 |
| -4,260 | -4,001 |
According to IFRS 8, segment reporting must reflect the Group's internal organisational and reporting structures. Based on A.S. Création's products and services, the corporate structure comprises two segments, i.e. the Wallpaper Division and the Furnishing Fabrics Division. Prices charged for intragroup deliveries and services are set in line with general market prices.
| Wallpaper Division | Fabrics Division | Consolidation | Group | ||||||
|---|---|---|---|---|---|---|---|---|---|
| 2016 | 2015 | 2016 | 2015 | 2016 | 2015 | 2016 | 2015 | ||
| € '000 | € '000 | € '000 | € '000 | € '000 | € '000 | € '000 | € '000 | ||
| External sales | 106,712 | 117,183 | 9,578 | 9,656 | 0 | 0 | 116,290 | 126,839 | |
| Intra-Group sales | 68 | 102 | 51 | 54 | -119 | -156 | 0 | 0 | |
| Total sales | 106,780 | 117,285 | 9,629 | 9,710 | -119 | -156 | 116,290 | 126,839 | |
| EBITDA1 | 10,533 | 12,807 | 202 | 301 | 0 | 5 | 10,735 | 13,113 | |
| EBITDA-margin | 9.9 % | 10.9 % | 2.1 % | 3.1 % | 9.2 % | 10.3 % | |||
| EBIT2 | 4,825 | 6,560 | 63 | 169 | 20 | 22 | 4,908 | 6,751 | |
| EBIT-margin | 4.5 % | 5.6 % | 0.7 % | 1.7 % | 4.2 % | 5.3 % | |||
| Interest income | 948 | 907 | 1 | 1 | -69 | -68 | 880 | 840 | |
| Results from investments accounted for at equity |
2,417 | -1,346 | 0 | 0 | 0 | 0 | 2,417 | -1,346 | |
| Interest expenses | 578 | 656 | 96 | 91 | -69 | -68 | 605 | 679 | |
| Earnings before taxes | 7,612 | 5,465 | -32 | 79 | 20 | 22 | 7,600 | 5,566 | |
| Return on sales (before taxes) |
7.1 % | 4.7 % | -0.3 % | 0.8 % | 6.5 % | 4.4 % | |||
| Income taxes | 2,099 | 2,080 | -8 | 35 | 6 | 6 | 2,097 | 2,121 | |
| Capital expenditures3 | 3,714 | 3,347 | 95 | 142 | 0 | 0 | 3,809 | 3,489 | |
| Depreciation | 5,708 | 6,247 | 139 | 132 | -20 | -17 | 5,827 | 6,362 | |
| Cash-flow3 | 11,279 | 10,001 | 99 | 175 | 0 | 5 | 11,378 | 10,181 | |
| Segment assets 30.09 4 | 116,970 | 122,341 | 7,015 | 7,139 | -67 | -198 | 123,918 | 129,282 | |
| thereof non-current assets | (48,176) | (48,893) | (1,306) | (1,290) | (-20) | (-45) | (49,462) | (50,138) | |
| Segment liabilities 30.09. 5 | 20,878 | 22,786 | 1,754 | 1,624 | -47 | -140 | 22,585 | 24,270 | |
| Employees (average) | 695 | 733 | 72 | 72 | 0 | 0 | 767 | 805 |
A breakdown of key figures by segments is provided below:
A breakdown of Group sales by geographical regions is provided in the notes on sales (see No. 2).
1 EBITDA is the common international abbreviation of earnings before interest, taxes, depreciation and amortisation.
2 EBIT is the common international abbreviation of earnings before interest and taxes. It is equivalent to the segment result.
3 Capital expenditures and cash flow correspond with the item which is shown in the consolidated cash flow statement.
4 Segment assets are the total assets of the segment less interest-bearing intercompany loans, cash and cash equivalents, deferred tax assets and income tax receivables.
5 Segment liabilities are the business segment 's total liabilities less shareholders' equity, long-term provisions, tax liabilities, deferred tax liabilities and financial liabilities.
Of the total non-current Group assets of € 49.462 million (previous year: € 50.138 million), an amount of € 29.018 million (previous year: € 30.172 million) relates to Germany, an amount of € 10.494 million (previous year: € 11.390 million) to other EU countries and an amount of € 9.950 million (previous year: € 8.576 million) to non-EU Eastern European countries.
The Managing Board had the following members in the reporting period:
All business relations with related parties are contractually agreed and conducted on an arm's length basis.
In the fiscal year, A.S. Création maintained business relations with OOO A.S. & Palitra, which is accounted for using the equity method. Details of the business relationship are shown below:
| 2016 | 2015 | |
|---|---|---|
| € '000 | € '000 | |
| Sales | 299 | 253 |
| Purchases | 3,458 | 3,936 |
| Interest income | 864 | 821 |
| 30.09.2016 | 30.09.2015 | |
|---|---|---|
| € '000 | € '000 | |
| Shareholder loans | 16,942 | 16,672 |
| Receivables | 4,426 | 3,193 |
| Liabilities | 1,035 | 653 |
The relationship of the company with A.S. Création Tapeten Stiftung, a charitable foundation, as well as the agreements with Franz Jürgen Schneider and Jörn Kämper relating the release from the anti-trust proceedings as reported in the consolidated financial statements for 2015 continued to exist in the period under review.
No events that require reporting have occurred.
Gummersbach, October 31, 2016
The Managing Board
Krämer Bantel Suskas
Investor Relations Maik Krämer, Director of Finance Südstraße 47, D-51645 Gummersbach-Derschlag Phone: +49-2261-542 387 fax: +49-2261-542 304 e-mail: [email protected]
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