Quarterly Report • May 14, 2020
Quarterly Report
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| 2016 | 2017 | 2018 | 2019 | 2020 | ||
|---|---|---|---|---|---|---|
| Sales | € '000 | 44,651 | 41,720 | 40,424 | 38,234 | 37,814 |
| EBIT | € '000 | 4,528 | 2,068 | 1,033 | 2,193 | -1,453 |
| Earnings after income taxes | € '000 | 3,884 | 1,914 | 26 | 3,431 | -2,255 |
| Earnings per share | €/share | 1.41 | 0.69 | 0.01 | 1.24 | -0.82 |
| Cash-flow from operating activities |
€ '000 | 1,982 | -3,178 | -972 | 1,576 | -2,742 |
| Capital expenditures | € '000 | 1,292 | 792 | 1,826 | 1,074 | 1,179 |
| Depreciation | € '000 | 1,947 | 1,857 | 1,523 | 1,530 | 1,533 |
| Number of employees | 770 | 757 | 742 | 749 | 764 |
on the business performance for the three-month period ended March 31, 2020
While the eurozone economy grew by 1.2% in the full year 2019, a growth rate of only 0.9% was projected for 2020 in view of the decline in exports. Because of the coronavirus crisis, very far-reaching measures were taken in many EU countries from mid-March onwards to contain the spread of the virus. These lockdowns led to a collapse of the economies in the respective countries and of international trade. The first available forecasts for 2020 project a significant decline in economic output in the EU. The same is expected for Germany, which is the largest output market of A.S. Création. This means that the economic conditions in the eurozone have deteriorated dramatically. At this stage, it is impossible to reliably assess whether these forecasts for the full year will actually materialise.
Growth in the Russian economy had already slowed to 1.3% in 2019, down from 1.6% in 2018. Besides the unresolved political tensions between Russia and the USA and the European Union, this is mainly attributable to the VAT hike from 18% to 20% as of January 1, 2019 and the lower crude oil price. These problems are continuing in the current year. They are being exacerbated by the coronavirus crisis, which is hitting Russia hard with high infection rates and in response to which the country has imposed a strict lockdown. As a result of these many adverse factors, the exchange rate of the Russian rouble against the euro has collapsed. In the course of the first quarter of 2020, the Russian currency depreciated by around 24% – from RUB 69.34/€ at the beginning of the year to RUB 85.74/€ at the end of March 2020 – with the largest part of this devaluation occurring in the month of March alone. On balance, Russia's gross domestic product is projected to drop significantly in the full year 2020.
The macroeconomic environment has changed dramatically since March 2020 and is having an adverse impact on A.S. Création. While A.S. Création still recorded strong revenue growth of 8.5% in the first two months of the fiscal year, the company suffered a sharp 18.3% drop in revenues in March, which offset the growth achieved in first two months. At € 37.8 million, total Group revenues for the first quarter of 2020 were down by € 0.4 million or 1.1% on the previous year's € 38.2 million. While revenues in the Wallpaper Division fell by 0.8%, the Furnishing Fabrics Division lost 4.2% in revenues. Without the outbreak of the coronavirus pandemic, A.S. Création would have continued to grow its revenues in the first quarter of 2020.
The analysis of revenues by regions shows that A.S. Création was able to increase or stabilise its revenues in all regions except the European Union (EU) excluding Germany in the first quarter of 2020.
A.S. Création's domestic revenues increased by a moderate 0.5% from € 19.9 million in the previous year to € 20.0 million in the first three months of the current fiscal year. This reflects the success of the company's two campaigns "New Walls" and "Neue Bude 2.0", which were presented at the International Partner Days in autumn 2019 and for which deliveries were mostly made in the first two months of 2020. Moreover, the lockdown initiated in Germany in March did not cover all sales channels and thus not all domestic customers of A.S. Création, which means that sales of wallpapers and furnishing fabrics continued in March, albeit at a slightly lower level than in the same month of the previous year. As the sales channels were affected to different extents by the lockdown, there was a shift in sales revenues towards DIY stores and the online segment.
The slightly higher revenues in Germany contrasted with declining revenues in the rest of the EU, where A.S. Création suffered a noticeable decline in gross revenues; in the first three months of 2020, revenues thus fell by 5.1% from € 16.5 million in the previous year to € 15.6 million. This reduction is primarily attributable to the situation in France, the second largest wallpaper market in the EU behind Germany. As a result of the complete lockdown, sales of wallpapers and furnishing fabrics in France came to an almost complete standstill in the second half of March. In contrast to Germany, all sales channels were affected by the lockdown in France. In the United Kingdom, however, revenues increased in the first quarter of 2020, as A.S. Création benefited from top-up orders of an international DIY store chain and was able to grow its revenues with new customers. But these positive effects were insufficient to fully offset the revenue shortfall in France.
Strong revenue growth was achieved by A.S. Création in Eastern European countries outside the EU, where gross revenues in the first three months of 2020 amounted to € 4.0 million, up 5.2% on the previous year's € 3.8 million. This positive trend is the result of two effects. Thanks to the additional revenue contributions made by the second production plant that was taken into operation by Profistil in autumn 2019, the Belarusian subsidiary was able to expand its sales. In addition, A.S. Création (RUS), the Russian distribution company, increased its sales revenues with products made in Germany. By contrast, export sales to third-party customers in this region declined in both the Wallpaper Division and the Furnishing Fabrics Division.
The political and economic crises and the effects of the coronavirus pandemic also prevented an increase in revenues in the remaining countries outside Western and Eastern Europe. In this region, A.S. Création generated gross revenues of € 2.3 million in Q1 2020, which was more or less on a par with the previous year.
The consolidated revenues generated in the first quarter of 2020 are in line with the plans for the fiscal year 2020, according to which full-year revenues will amount to between € 143 million and € 153 million, with first-quarter revenues projected at between € 37 million and € 39 million.
For the first quarter of 2020, A.S. Création posted an operating loss of € -1.5 million, compared to an operating profit of € 2.2 million in the same period of the previous year. The reported loss and the decline in earnings are attributable to the Wallpaper Division, whereas the Furnishing Fabrics Division generated a slightly positive operating result as in the previous year.
The operating loss in the reporting period is exclusively due to exchange losses resulting from the massive depreciation of the Russian and Belarusian rouble against the euro in the course of the first three months of 2020. As the Eastern European subsidiary is financed in euros, this depreciation resulted in a translation-related exchange loss of € 3.5 million, whereas a translation-related exchange gain of € 0.7 million was generated in the first three months of the previous year. Adjusted for these currency effects, the operating result in the first quarter of 2020 amounted to € 2.0 million, up € 0.5 million on the € 1.5 million generated in the same period of the previous year. This higher result is also reflected in an improved adjusted EBIT margin, which stood at a gratifying 5.4% in the first quarter of 2020 (previous year: 3.8%).
The improvement in the operating result (excluding currency effects) achieved in the first three months of 2020 is slightly above the plans for 2020, which project an operating result (excluding currency effects) of between € 4 million and € 5 million for the full year and between € 1.2 million and € 1.5 million for the first quarter.
The gross profit generated from the sales process in the first quarter amounted to € 20.3 million, up € 0.2 million on the previous year's € 20.1 million. The gross profit margin deteriorated slightly by 0.4 percentage points from 53.4% in the previous year to 53.0% in the year under review. The slight decline in the gross profit margin is mainly attributable to the increase in inventories in the first three months of 2020, which contrasted with a € 0.6 million reduction in inventories in the same period of the previous year. Despite the moderate deterioration, the gross profit margin is still at a gratifying level. This primarily reflects the increased share of higher-quality and higher-priced products in the overall product range and, hence, the success of the product policy of the past years. The Managing Board therefore considers this to be a great success.
At € 9.8 million, personnel expenses in the first three months of 2020 were up by € 0.4 million or 3.7% on the previous year's € 9.4 million. As this increase exceeded the 1.7% rise in total output, the personnel expense ratio (personnel expenses as a percentage of total output) deteriorated to 25.5% in the reporting period (previous year: 25.0%). This means that the company has been unable in the first quarter of 2020 to improve this performance indicator as planned for the fiscal year 2020, which is attributable to the sharp drop in revenues which started in mid-March as a result of the coronavirus pandemic. The number of employees in the A.S. Création Group increased to 764 in the reporting period (previous year: 749). On the one hand, the Belarus production company Profistil began hiring new people for the second production line in the first quarter of 2019, which resulted in an average headcount of 116 people at this company in the reporting period, 17 more than in the first three months of 2019 (previous year: 99 people). The other entities of the A.S. Création Group reduced their average headcount by two people from 650 in the first quarter of 2019 to 648 in the first quarter of 2020.
At € 1.5 million, depreciation in the first three months of 2020 was exactly on a par with the previous year.
Other operating expenses rose by € 2.6 million from € 8.2 million in the previous year to € 10.8 million in the reporting period. Of this increase, € 3.5 million is attributable to the above-mentioned exchange losses in the reporting period. Adjusted for the exchange losses, other operating expenses amounted to € 7.3 million, € 0.9 million below the previous year's € 8.2 million, while the ratio of other operating expenses to total output improved to 19.0% (previous year: 21.7%). This improvement is essentially attributable to two effects. First, cost savings were achieved; second, the strong year-on-year decline in trade receivables led to reduced default risks and thus to a lower need for write-downs in the first quarter of 2020.
At € -0.2 million, the financial result showed no particulars in the first quarter of 2020 (previous year: € -0.2 million).
EBIT and the financial result sent earnings before taxes falling into negative territory, at € -1.6 million, compared a positive € 2.0 million in the previous year. Earnings before taxes were impacted by the currency effects described above. Adjusted for these currency effects, earnings before taxes amounted to € 1.9 million, which is € 0.6 million higher than the previous year's € 1.3 million.
As the currency losses did not have a significant tax impact in the reporting period, income taxes were incurred in the first quarter of 2020 in spite of the reported loss before taxes. At € -2.3 million, the loss after taxes is therefore higher than the loss before taxes. Adjusted for the currency effects explained above, earnings after taxes from continuing operations amounted to € 0.9 million (previous year: € 0.7 million). This slightly improved result after taxes from continuing operations (excl. currency effects) is in line with the plans for 2020, which projected between € 2.5 million and € 3.5 million for the full year and between € 0.8 million and € 1.1 million for the first quarter.
In the course of 2019, the 50% stake in A.S. & Palitra, the Russian joint venture, was sold, which means this company was no longer included in the basis of consolidation in the reporting period – in contrast to the previous year. Accordingly, the consolidated net income for the first quarter of 2020 does not include any earnings contributions from this company. The earnings contribution of € 2.0 million made by A.S. & Palitra in the first quarter of 2019 is reported as income after taxes from discontinued operations. This additional earnings component led to commensurately higher earnings before taxes in the previous year.
In summary, it can be said that only the unusually high volatility and depreciation of the Russian and Belarusian rouble against the euro in March 2020 led to A.S. Création posting a loss in the first quarter of 2020. Adjusted for the exchange losses, A.S. Création's earnings position improved as planned in the first three months of the current fiscal year.
At € -2.7 million, operating cash flow in the first quarter of 2020 was down by € 4.3 million on the previous year's € 1.6 million. This negative operating cash flow is primarily attributable to the deterioration in earnings after taxes from continuing operations and the typical seasonal increase in net working capital. However, at € 8.6 million, the typical seasonal increase in trade receivables in the first quarter of 2020 was significantly lower than the previous year's € 9.1 million. This led to a decline in days of sales outstanding from 65 days in Q1 2019 to 63 days in the reporting period. Because of a moderate increase in inventories, inventory turnover deteriorated slightly from 4.5x per year in the previous year to 4.3x per year in the first quarter of 2020.
Financing requirements for investments amounted to € 1.2 million in the reporting period, which was more or less on a par with the previous year's € 1.1 million. Capital expenditures in the first quarter primarily comprised investments in printing tools for new wallpaper collections as well as replacement investments. Due to the negative operating cash flow, parts of the funds tied up in net working capital as well as investments and the scheduled repayment of financial liabilities had to be financed from cash and cash equivalents. Accordingly, the net credit position (difference between cash and cash equivalents as well as current financial assets and interest-bearing financial liabilities) declined by € 1.6 million in the first three months from € 6.1 million as of December 31, 2019 to € 4.5 million as of March 31, 2020. It is composed of cash and cash equivalents in the amount of € 17.3 million and interest-bearing financial liabilities in the amount of € 12.8 million, which means that very high liquidity is still guaranteed. Besides this net credit position, the high equity ratio of 61.1% on the balance sheet date (March 31, 2019: 52.4%) also underlines the very solid and robust financial structure of A.S. Création.
In the opinion of the Managing Board, A.S. Création also has a solid net worth position. As at March 31, 2020, the A.S. Création Group's total assets amounted to € 128.6 million (previous year: € 139.3 million), of which 88.9% (previous year: 80.1%), i.e. by far the biggest portion, was composed of property, plant and equipment, inventories, trade receivables as well as cash and cash equivalents. By contrast, intangible assets (including goodwill) carried in the consolidated balance sheet as of the reporting date played a minor role and represented only 6.5% (previous year: 6.4%) of the Group's total assets and 10.7% (previous year: 12.2%) of its equity capital.
Roland Bantel, who joined A.S. Création in 1997 and was appointed member of the Managing Board of A.S. Création on April 1, 2015, left the Managing Board by mutual agreement with effect from March 31, 2020. After having worked for A.S. Création for more than 23 years and having contributed to the successful development of the company, Mr Bantel would like to follow a new career path. Mr Bantel's responsibilities will be assumed by CEO Daniel Barth. Going forward, Mr Barth will thus be responsible for Corporate Strategy, Marketing and Sales. Besides Mr Barth, the Managing Board continues to be composed of Mr Maik Krämer (Finance and Controlling) and Mr Antonios Suskas (Production and Logistics).
In the 2019 Annual Report, the Managing Board published the following forecasts regarding the key performance indicators for the fiscal year 2020:
As described above, in the first quarter of 2020 all of the above-mentioned KPIs were in line with the plans and budgets for the full year, with exception of the personnel expense ratio. Because of the coronavirus crisis, however, major uncertainties exist with regard to the further development until the end of the year.
In April, the largest wallpaper markets in Europe – Germany, England, France and Russia – were in a lockdown, with the extent of the restrictions varying from country to country. It is expected that in the course of May, these countries will begin to ease some of the restrictions in order to gradually return to normality. This means, however, that the month of May as a whole will still be marked by the restrictions on private, public and economic life resulting from the coronavirus crisis. It remains to be seen to what extent the month of June will still be affected by restrictions. It is unlikely, however, that the month of June will offset the slump in revenues in April and the expected decline in revenues in May. The Managing Board therefore expects sales revenues to decline sharply in the second quarter of 2020. To adjust the cost structure to the lower sales revenues, the A.S. Création Group reduced the production capacity at the two plants in Germany and Belarus as well as the resources in administration, sales and development. In addition to the reduction of overtime accumulated in working time accounts in the past, the instrument of short-time work is also being used in some areas. There have been no significant numbers of redundancies to date. The Managing Board believes that the effect of the measures taken will not keep pace with the extent of the decline in sales revenues in the second quarter and therefore expects its operating performance (excluding currency effects) to deteriorate. The question of whether A.S. Création will still be able to achieve the plans for the full year 2020 will therefore depend on developments in the second half of 2020.
The Managing Board considers two basic scenarios to be possible in the second half of the year. In a positive scenario, demand for wallpaper and furnishing fabrics will increase as the contact bans and stay-at-home orders imposed in the context of the coronavirus crisis and the corresponding concerns will cause people to rediscover the pleasures of their own homes, which will lead to a wave of renovation. This effect will be reinforced by the fact that holiday travel is expected to be severely restricted in 2020, so that large parts of the population will spend their holidays at home and thus the financial resources normally used for holiday travel will be available for renovation purposes, among other things. In a negative scenario, however, demand for wallpapers will continue to decline. The negative economic consequences of the lockdown in the countries affected are so substantial that it will lead to a deep recession with numerous insolvencies and a sharp rise in unemployment. As a result of spreading concern about the future and financial worries, private households will severely restrict their consumer spending. Given that wallpaper and furnishing fabrics are not essential goods and that renovations can easily be postponed, this consumer restraint will lead to a decline in A.S. Création's sales revenues.
At this point in time, it is impossible for the Managing Board to seriously assess which scenario is likely to materialise. Therefore, the Managing Board is also unable to make a well-founded statement as to whether and, if so, to what extent the plans and budgets for the full year 2020 should be downgraded. The Managing Board therefore intends to decide at a later date on a possible adjustment of the plans and budgets.
Except for the potential consequences of the coronavirus crisis described above, the risk and opportunity profile of A.S. Création Tapeten AG has not changed materially as compared to the presentation in the 2020 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, May 8, 2020
The Managing Board
Barth Krämer Suskas
as per March 31, 2020
| Assets | |||
|---|---|---|---|
| Notes | 31.03.2020 | 31.12.2019 | |
| No. | € '000 | € '000 | |
| Tangible fixed assets | 31,492 | 33,884 | |
| Intangible fixed assets | 8,384 | 8,399 | |
| Other assets | 745 | 245 | |
| Deferred tax assets | 1,834 | 1,968 | |
| Non-current assets | 42,455 | 44,496 | |
| Inventories | 34,921 | 34,788 | |
| Trade receivables | 30,592 | 22,543 | |
| Other assets | 3,123 | 5,272 | |
| Income tax receivables | 217 | 252 | |
| Cash and cash equivalents | 17,328 | 20,649 | |
| Current assets | 86,181 | 83,504 | |
| Total assets | 128,636 | 128,000 | |
| Equity and liabilities | |||
| Notes | 31.03.2020 | 31.12.2019 | |
| No. | T€ | T€ | |
| Capital stock | 9,000 | 9,000 | |
| Capital reserves | 13,757 | 13,757 | |
| Revenue reserves | 59,323 | 58,188 | |
| Profit / loss carried forward | -542 | -15,030 | |
| Earnings after taxes | -2,255 | 14,133 | |
| Adjustment for own shares | -4,021 | -4,021 | |
| Currency translation differences | 3,332 | 2,400 | |
| Equity | 78,594 | 79,427 | |
| Financial liabilities (interest-bearing) | 9,235 | 10,765 | |
| Other liabilities | 679 | 910 | |
| Provisions | (1) | 14,799 | 14,487 |
| Non-current liabilities | 24,713 | 26,162 | |
| Financial liabilities (interest-bearing) | 3,591 | 3,766 | |
| Other liabilities | 14,332 | 11,291 | |
| Trade payables | 6,044 | 5,380 | |
| Provisions | (1) | 160 | 200 |
| Tax liabilities | 1,202 | 1,774 | |
| Current liabilities | 25,329 | 22,411 | |
| Total equity and liabilities | 128,636 | 128,000 |
for the three-month period ended March 31, 2020
| Notes | 2020 | 2019 |
|---|---|---|
| No. | € '000 | € '000 |
| Sales (2) |
37,814 | 38,234 |
| Increase or decrease in unfinished and finished goods | 455 | -617 |
| Other own work capitalized | 0 | 12 |
| Total output | 38,269 | 37,629 |
| Cost of materials | 17,982 | 17,537 |
| Gross profit | 20,287 | 20,092 |
| Other income | 346 | 1,265 |
| 20,633 | 21,357 | |
| Personnel expenses | 9,756 | 9,410 |
| Depreciation | 1,533 | 1,530 |
| Other operating expenses | 10,797 | 8,224 |
| Operating expenses | 22,086 | 19,164 |
| Earnings before interest and taxes (EBIT) | -1,453 | 2,193 |
| Interest and similar income | 7 | 11 |
| Interest and similar expenses | 176 | 242 |
| Financial result | -169 | -231 |
| Earnings before income taxes | -1,622 | 1,962 |
| Income taxes (3) |
633 | 526 |
| Earnings after taxes from continued operations | -2,255 | 1,436 |
| Earnings after taxes from discontinued operations (4) |
0 | 1,995 |
| Earnings after taxes | -2,255 | 3,431 |
| Earnings per share (5) |
-0.82 € | 1.24 € |
for the three-month period ended March 31, 2020
| 2020 | 2019 | |
|---|---|---|
| € '000 | € '000 | |
| Earnings after taxes | -2,255 | 3,431 |
| Items, that will never be reclassified to profit or loss: | ||
| Actuarial gains/losses from pension provisions | -329 | -1,370 |
| Deferred taxes on other comprehensive income | 101 | 421 |
| -228 | -949 | |
| Items, that are or may be reclassified to profit or loss: | ||
| Foreign currency translation differences for fully consolidated companies | 932 | -336 |
| Foreign currency translation differences for investments accounted for at equity | 0 | -887 |
| Change in fair value of an interest rate hedge | 1,041 | -476 |
| Deferred taxes on other comprehensive income | -323 | 148 |
| 1,650 | -1,551 | |
| Other comprehensive income (outside profit or loss) | 1,422 | -2,500 |
| Total comprehensive income | -833 | 931 |
| Capital stock |
Capital reserves |
Revenue reserves |
Profit/ loss 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, 2019 | 9,000 | 13,757 | 73,345 | -21,421 | -5,977 | -4,021 | 7,550 | 72,233 |
| First adoption of IFRS 16 |
0 | 0 | -143 | 0 | 0 | 0 | 0 | -143 |
| Earnings after taxes 2018 |
0 | 0 | 0 | -5,977 | 5,977 | 0 | 0 | 0 |
| Dividend payments | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 |
| Allocation to revenue reserves |
0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 |
| Total comprehensive income 2019 |
0 | 0 | -1,277 | 0 | 3,431 | 0 | -1,223 | 931 |
| March 31, 2019 | 9,000 | 13,757 | 71,925 | -27,398 | 3,431 | -4,021 | 6,327 | 73,021 |
for the three-month period ended March 31, 2020
| Capital stock |
Capital reserves |
Revenue reserves |
Profit/ loss 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, 2020 | 9,000 | 13,757 | 59,188 | -15,030 | 14,133 | -4,021 | 2,400 | 79,427 |
| Earnings after taxes 2019 |
0 | 0 | 0 | 14,133 | -14,133 | 0 | 0 | 0 |
| Dividend payments | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 |
| Allocation to revenue reserves |
0 | 0 | -355 | 355 | 0 | 0 | 0 | 0 |
| Total comprehensive income 2020 |
0 | 0 | 490 | 0 | -2,255 | 0 | 932 | -833 |
| March 31, 2020 | 9,000 | 13,757 | 59,323 | -542 | -2,255 | -4,021 | 3,332 | 78,594 |
for the three-month period ended March 31, 2020
| 2020 | 2019 | ||
|---|---|---|---|
| € '000 | € '000 | ||
| Operating activities | |||
| Earnings after taxes | -2,255 | 3,431 | |
| + | Depreciation on tangible and intangible fixed assets | 1,533 | 1,530 |
| +/- Increase/decrease in long-term provisions | -18 | 46 | |
| -/+ Income/expenses from investments accounted for at equity | 0 | -1,910 | |
| - | Non-cash decrease in financial liabilities | -36 | 0 |
| -/+ Income/expenses from changes in deferred taxes | -152 | -134 | |
| -/+ Profit/losses from disposal of tangible and intangible fixed assets | 28 | 33 | |
| -/+ Increase/decrease in inventories | -788 | -505 | |
| -/+ Increase/decrease in trade receivables | -8,633 | -9,113 | |
| +/- Increase/decrease in trade payables | 830 | 4,036 | |
| -/+ Increase/decrease in other net working capital | 6,749 | 4,162 | |
| Cash-flow from operating activities | -2,742 | 1,576 | |
| thereof from continued operations | (-2,742) | (1,534) | |
| Investing activities | |||
| - | Cash outflows for capital expenditures on tangible and intangible fixed assets | -1,179 | -1,074 |
| Capital expenditures | -1,179 | -1,074 | |
| + | Proceeds from credits and bonds granted | 0 | 90 |
| + | Proceeds from the disposal of tangible and intangible fixed assets | 10 | 36 |
| Cash-flow from investing activities | -1,169 | -948 | |
| thereof from continued operations | (-1,169) | (-1,038) | |
| Financing activities | |||
| +/- Raising/repayment of financial liabilities (interest-bearing) | -819 | -93 | |
| Cash-flow from financing activities | -819 | -93 | |
| thereof from continued operations | (-819) | (-93) | |
| Net change in cash and cash equivalents | -4,730 | 535 | |
| +/- Change in cash and cash equivalents due to exchange rate fluctuations | 1,409 | 104 | |
| + | Cash and cash equivalents at January 1 | 20,649 | 11,890 |
| Cash and cash equivalents at March 31 | 17,328 | 12,529 |
Further information on the cash-flow statement is presented in the notes to the consolidated financial statement (see No. 6).
for the three-month period ended March 31, 2020
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 consolidated interim financial statements for the period ended March 31, 2020 were prepared by A.S. Création Tapeten AG in a condensed form in accordance with the provisions of IAS 34 "Interim Financial Reporting". The accounting and valuation methods used are the same as those used for the consolidated financial statements for the period ended December 31, 2019. The latter was prepared on the basis of the International Financial Reporting Standards (IFRS) that were applicable on the reporting date and had been adopted by the European Union as well as the additional requirements pursuant to section 315e (1) of the German Commercial Code (Handelsgesetzbuch HGB). A detailed description of the accounting and valuation methods was published in the notes to the consolidated financial statements for the period ended December 31, 2019.
A.S. Création Tapeten AG has a policy of applying new IFRS as soon as they become effective. The IFRS that were first adopted in the period under review did not have a material impact on the consolidated financial statements of A.S. Création as of March 31, 2020:
The following standard has been published but has not yet become effective or been endorsed by the EU in fiscal 2020:
− Amendments to IAS 1 "Presentation of Financial Statements"; first-time adoption for fiscal years beginning on or after January 1, 2023.
No material impact on the consolidated financial statements of A.S. Création are expected.
The preparation of the interim financial statements in accordance with IFRS requires the Managing Board to make estimates and assumptions that affect the presentation of assets and liabilities as well as income and expenses. All estimates and assumptions are made to the best of our knowledge and belief in order to provide a true and fair view of the net assets, financial and earnings position of the Group. The actual values may nevertheless differ from the estimated values. The results achieved in the fiscal year 2020 to date do not necessarily allow predictions to be made about the further course of business.
The present interim financial statements have neither been audited nor reviewed by an auditor.
In addition to A.S. Création Tapeten AG, nine subsidiaries were fully consolidated as of the balance sheet date. The scope of consolidation has not changed compared to the 2019 consolidated financial statements.
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. Besides, the following exchange rates come to the use:
| Closing rate of the period | Average rate of the period | ||||
|---|---|---|---|---|---|
| 31.03.2020 | 31.12.2019 | 2020 | 2019 | ||
| Pound Sterling (GBP/€) | 0.88643 | 0.85080 | 0.86225 | 0.87251 | |
| Russian Rouble (RUB/€) | 85.73890 | 69.34060 | 73.41285 | 74.68387 | |
| Belarus Rouble (BYN/€) | 2.87930 | 2.35240 | 2.46999 | 2.43903 |
Long-term provisions refer to pension provisions, while short-term provisions mainly refer to potential losses from current contracts and warranties.
A breakdown of Group sales by region is provided below:
| Wallpaper Division | Fabrics Division | Consolidation | Group | ||||||
|---|---|---|---|---|---|---|---|---|---|
| 2020 | 2019 | 2020 | 2019 | 2020 | 2019 | 2020 | 2019 | ||
| € '000 | € '000 | € '000 | € '000 | € '000 | € '000 | € '000 | € '000 | ||
| Germany | 17,431 | 17,319 | 2,630 | 2,637 | -18 | -18 | 20,043 | 19,938 | |
| EU (excl. Germany) | 15.116 | 15,902 | 535 | 582 | -8 | -5 | 15,643 | 16,479 | |
| European Union (EU) | 32,547 | 33,221 | 3,165 | 3,219 | -26 | -23 | 35,686 | 36,417 | |
| Other Eastern Europe | 4,019 | 3,795 | 17 | 43 | 0 | 0 | 4,036 | 3,838 | |
| Other countries | 2,236 | 2,174 | 83 | 134 | 0 | 0 | 2,319 | 2,308 | |
| Sales (gross) | 38,802 | 39,190 | 3,265 | 3,396 | -26 | -23 | 42,041 | 42,563 | |
| Reduction in revenues | -4,032 | -4,136 | -195 | -193 | 0 | 0 | -4,227 | -4,329 | |
| Sales (net) | 34,770 | 35,054 | 3,070 | 3,203 | -26 | -23 | 37,814 | 38,234 |
Income taxes recognised comprise the income taxes paid or due in the individual countries as well as deferred tax assets and liabilities. Income taxes break down as follows:
| 2020 | 2019 | |
|---|---|---|
| € '000 | € '000 | |
| Income taxes | 785 | 659 |
| Deferred income taxes | -152 | -133 |
| 633 | 526 |
In addition, income taxes in the amount of € 0.00 million (previous year: € 0.038 million) were incurred on discontinued operations.
Due to the sale of the 50% stake in OOO A.S. & Palitra in December 2019, earnings components attributable to these assets are presented separately as earnings after taxes from discontinued operations. These are composed as follows:
| 2020 | 2019 | |
|---|---|---|
| T€ | T€ | |
| Results from assets accounted for at equity | 0 | 1,910 |
| Interest income from shareholder loans | 0 | 123 |
| Financial result from discontinued operations | 0 | 2,033 |
| Income taxes | 0 | -38 |
| Earnings after taxes from discontinued operations | 0 | 1,995 |
Earnings per share are calculated as follows:
| 2020 | 2019 | ||
|---|---|---|---|
| Number of shares outstanding (weighted average) | shares | 2,756,351 | 2,756,351 |
| Net profit | € | -2,254,910 | 3,430,667 |
| Earnings per share | €/share | -0.82 | 1.24 |
| thereof from continued operations | €/share | (-0.82) | (0.52) |
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:
| 2020 | 2019 | |
|---|---|---|
| € '000 | € '000 | |
| Interest received | 6 | 52 |
| thereof from discontinued operations | (0) | (42) |
| Interest paid | 148 | 185 |
| Income tax received | 73 | 37 |
| Income tax paid | 1,432 | 97 |
Interest paid primarily relates to investment financing.
The changes in financial liabilities shown under cash-flow from financing activities are composed as follows:
| 2020 | 2019 | |
|---|---|---|
| € '000 | € '000 | |
| Raising of financial liabilities | 59 | 406 |
| Repayment of financial liabilities | -878 | -499 |
| thereof from financial lease contracts | (-108) | (-22) |
| -819 | -93 |
In the reporting period, contract fulfilment costs as defined in IFRS 15 amounted to € 0.452 million (previous year: € 0.470 million); these are provided continuously over the term of the underlying contract. As the performance for the contract fulfilment costs capitalised in the contractual period, these costs were immediately written off in full in the reporting period.
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.
A breakdown of key figures by segments is provided below:
| Wallpaper Division | Fabrics Division | Consolidation | Group | |||||
|---|---|---|---|---|---|---|---|---|
| 2020 | 2019 | 2020 | 2019 | 2020 | 2019 | 2020 | 2019 | |
| € '000 | € '000 | € '000 | € '000 | € '000 | € '000 | € '000 | € '000 | |
| External sales | 34,753 | 35,038 | 3,061 | 3,196 | 0 | 0 | 37,814 | 38,234 |
| Intra-Group sales | 17 | 16 | 9 | 7 | -26 | -23 | 0 | 0 |
| Total sales | 34,770 | 35,054 | 3,070 | 3,203 | -26 | -23 | 37,814 | 38,234 |
| EBITDA1 | -42 | 3,614 | 122 | 109 | 0 | 0 | 80 | 3,723 |
| EBITDA-margin | -0.1 % | 10.3 % | 4.0 % | 3.4 % | 0.2 % | 9.7 % | ||
| EBIT2 | -1,523 | 2,143 | 70 | 50 | 0 | 0 | -1,453 | 2,193 |
| EBIT-margin | -4.4 % | 6.1 % | 2.3 % | 1.6 % | -3.8 % | 5.7 % | ||
| Interest income3 | 11 | 16 | 0 | 0 | -4 | -5 | 7 | 11 |
| Interest expenses | 164 | 225 | 16 | 22 | -4 | -5 | 176 | 242 |
| Earnings before taxes3 | -1,676 | 1,934 | 54 | 28 | 0 | 0 | -1,622 | 1,962 |
| Return on sales (before taxes)3 |
-4.8 % | 5.5 % | 1.8 % | 0.9 % | -4.3 % | 5.1 % | ||
| Income taxes3 | 616 | 517 | 17 | 9 | 0 | 0 | 633 | 526 |
| Capital expenditures4 | 1,174 | 1,041 | 5 | 33 | 0 | 0 | 1,179 | 1,074 |
| Depreciation | 1,481 | 1,471 | 52 | 59 | 0 | 0 | 1,533 | 1,530 |
| Cash-flow3 | ||||||||
| from operating activities | -2,741 | 1,581 | -1 | -47 | 0 | 0 | -2,742 | 1,534 |
| from investing activities | -1,170 | -1,010 | 1 | -28 | 0 | 0 | -1,169 | -1,038 |
| from financing activities | -745 | -105 | -74 | 12 | 0 | 0 | -819 | -93 |
| Segment assets (closing date)5 |
102,770 | 118,528 | 6,520 | 6,488 | -34 | -26 | 109,256 | 124,990 |
| thereof non-current assets | (39,362) | (40,058) | (1,259) | (1,360) | (0) | (0) | (40,621) | (41,418) |
| Segment liabilities (closing date)6 |
19,594 | 32,839 | 1,655 | 1,483 | -34 | -26 | 21,215 | 34,296 |
| Employees (average) | 699 | 686 | 65 | 63 | 0 | 0 | 764 | 749 |
A breakdown of Group sales by geographical regions is provided in the notes on sales (see No. 3).
2 EBIT is the common international abbreviation of earnings before interest and taxes. It is equivalent to the segment result.
1 EBITDA is the common international abbreviation of earnings before interest, taxes, depreciation and amortisation.
3 These values refer to continued operations.
4 Capital expenditures correspond to the cash flow statement.
5 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.
6 Segment liabilities are the business segment's total liabilities less shareholders' equity, long-term provisions, tax liabilities, deferred tax liabilities and financial liabilities.
| Total | Remaining term of up to 1 year |
Remaining term of over 1 year |
|||||
|---|---|---|---|---|---|---|---|
| 31.03.2020 | 31.12.2019 | 31.03.2020 | 31.12.2019 | 31.03.2020 | 31.12.2019 | ||
| € '000 | € '000 | € '000 | € '000 | € '000 | € '000 | ||
| Germany | 70,051 | 62,902 | 50,749 | 43,864 | 19,302 | 19,038 | |
| EU (excl. Germany) | 21,283 | 20,646 | 12,077 | 11,447 | 9,206 | 9,199 | |
| Other Eastern Europe | 17,922 | 21,583 | 5,809 | 7,292 | 12,113 | 14,291 | |
| 109,256 | 105,131 | 68,635 | 62,603 | 40,621 | 42,528 |
The table below shows a breakdown of the Group's assets by regions and maturities:
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.
The relationship of the company with A.S. Création Tapeten Stiftung, a charitable foundation, mentioned in the consolidated financial statement 2019, as well as the agreements with Franz Jürgen Schneider relating the release from the anti-trust proceedings continued to exist in the period under review. No expenses incurred in this context in the reporting period as well as in the previous year.
No events that require reporting occurred.
Gummersbach, May 08, 2020
The Managing Board
Barth Krämer 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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