Francotyp-Postalia Holding AG — Earnings Release 2006

Apr 26, 2007

News Details

Corporate | 26 April 2007 09:08

Francotyp-Postalia Holding AG increases revenues and EBIT in 2006

Francotyp-Postalia Holding AG / Final Results

Release of a Corporate News, transmitted by DGAP - a company of EquityStory
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Birkenwerder, April 26, 2007

Francotyp-Postalia Holding AG increases revenues and EBIT

New Francotyp-Postalia Group gathers pace after successful IPO

• Consolidated EBIT positive again at EUR 7 million

• Profits before taxes increased to EUR 3.3 million

• Cash flow increased to EUR 20.3 million

• The new Mail Stream Business Area initiated with the stakes in iab and
  freesort

Birkenwerder, April 26, 2007 – Francotyp-Postalia Holding AG increased
consolidated revenues in fiscal year 2006 (December 31) with the Mail Room
and Mail Stream Business Areas by 4.8% to EUR 142.9 (previous year: EUR
136.4 million). Earnings before interest and taxes (EBIT) were
substantially higher in the reporting year than in the previous reporting
year at EUR 7.0 million (-0.7). The swing of around EUR 8 million in EBIT
and the cash flow from operating activities of EUR 20.3 million show the
excellent results of the FP Group in the reporting year, published by the
Management Board at the balance sheet press conference in Berlin. There was
a consolidated net loss for the year after taxes of EUR 0.3 (-0.7) million
from the positive pre-tax result of EUR 3.3 (-3.0) million. Earnings per
share were negative at EUR -3,0 (-0.7) cents. The average number of
employees of the FP-Group over the year was 939 (889), of which 557 (538)
were employed in Germany.

'Despite the immense workload connected with expanding the group with the
Mail Stream Business Area and with the IPO, we are proud that our employees
and the management succeeded not only achieving another increase in
revenues of almost 5%, but also increasing the EBIT margin to 4.9% after
–0.5% in the previous year,' stated the Management Board, regarding the net
results for the year. The course for the current fiscal year 2007 has thus
also been set.

If the consolidated figures are adjusted for the costs involved with the
acquisition of the FP Group by FP Holding AG its implications for the
group, what emerges is the operating strength of the group, and of the Mail
Room Business Area in particular, the latter being the only source of
revenues until December 2006. The adjusted EBIT margin increased from 15.0%
to 16.4% of revenues, corresponding to adjusted earnings before interest
and taxes of EUR 23.4 (20.6) million. The return on capital employed (RoCE)
was in line with the long-term growth path with an increase from 26.7% to
30.0%.

With EUR 58.3 million, Francotyp-Postalia as market leader generated a good
third of its total revenues in Germany. The USA and Canada, the two most
important markers for the rental of franking machines, and the remaining
countries (mainly the industrial European countries aside from Germany)
each contributed almost a third of total revenues (USA und Canada: EUR 43.7
million; rest of the world: EUR 40.9 million). The world market share of
the FP Group contributed 9% with franking machines in the reporting year
while in Germany the figure was 45%.

The IPO in November 2006 brought in growth capital for the
Francotyp-Postalia Group of around EUR 51.3 million. EUR 4,5 million of
these funds are needed with respect to expenses in accordance with the IPO
and about EUR 27,5 million are dedicated for investments in the new
business segment Mailstream.To do this Francotyp-Postalia Holding AG
acquired stakes in the consolidation company freesort GmbH, Dusseldorf, and
in the hybrid mail company iab – internet access GmbH, Berlin. The
remaining portion of the net issue proceeds will be will be gradually
invested by the company in the further international expansion of the mail
room business and especially in an expanded range of equipment for rental.

'We supplemented our traditional business with franking and inserting
machines, the so-called mail room business, with the new Mail Stream
Business Area and we are now in a position to offer our customers, in
addition to franking and inserting services, sorting and consolidation
services, hybrid mail and the complete outsourcing of their outgoing
commercial outgoing mail. In this way we have occupied an excellent initial
position right at the start of the liberalisation of the German postal
markets', explained the Management Board.

Mail Room 2006

The Mail Room Business Area, the traditional business with franking and
inserting machines, sold 34,700 electronic franking machines in the
reporting year. Revenues of EUR 51.7 (54,8) million resulted from the sale
of franking and inserting machines. The FP Group thus expanded its
installed base of electronic franking machines to 248,277 units. As there
are also around 15,000 mechanical machines installed with customers, the
overall base equals 264,000 units. The expanded base for recurring
revenues, including rental income from leasing, the sale of certified
consumables, Teleporto, postmark printing plates and services, resulted in
a 12 % increase in revenues to EUR 88.4 (80.5) million from aftersales
services. The proportion of revenues for this business area thus equals
62.8% (58.6%). 2006 was a year of substantial change, as postal companies
in the USA, the Netherlands and in Great Britain introduced changes to
systems and tariffs which altered the certifications of machines and
resulted in an increased number of new machines and consumables being sold.
With expenses of EUR 12.0 (11.6) million, corresponding to 8.5 (8.5)% of
revenues for this business area, the FP Group again invested in the
modernisation of its product range. With centormail, Francotyp-Postalia
once again unveiled a new and expansive franking machine in the reporting
year and successfully introduced it on the German market in the autumn of
2006. There are plans to introduce it in North America in the current
fiscal year.

Mail Stream 2006

The two stakes acquired in November 2006 for the new Mail Stream Business
Area had already contributed EUR 1.5 million to consolidated revenues in
December 2006. There were on average 30 employees over the course of the
year. Over the year as a whole, iab GmbH realised EUR 3.6 million, while
freesort GmbH realised EUR 2.5 million in the same period. At iab, 12.5
million items of mail were processed, while the figure at freesort was 42
million.

Outlook for 2007

The FP Group is aiming in the current fiscal year 2007 for a profitable
growth in revenues of around 5% for Mailroom, increase of revenue in upper
double-digit range for Mailstream and to be able to pay out a dividend. The
integration of iab and freesort into the group will be completed in the
same period.

The company will push further ahead with its international activities in
the Mail Room Business Area and further expand its market position in the
key markets of the USA, Canada, Great Britain and Netherlands by
intensifying its rental business. Francotyp-Postalia expects additional
growth potential from the conversion to the new postage systems in the USA,
Netherlands and Great Britain as well as the possible upcoming introduction
of the new electronic postage system in Italy.

We recently launched a new product into the US market leaving FP well
placed to participate in the potential growth.

The integration of the Mailstream business area will be continued as well
as the expandation of the Mailstream business in 2007. For this reason,
Francotyp-Postalia is planning to rapidly expand the existing branch
network at freesort from 5 to 10 branches and to further expand iab. In
initial discussions with European post companies, the company is looking
for strategic alliances for the hybrid mail business model.

Further information

Francotyp-Postalia Holding AG

Investor Relations

Sabina Prüser

Telephone: +49 (0) 3303 525 777

Fax: +49 (0) 3303 53 70777

E-mail: ir@francotyp.com

The presentation documents and the Annual Report can be downloaded at the
company’s internet site www.francotyp.com.

Multi-year overview

Francotyp-Postalia Group 2006 20051)
Adjusted figures2)
Revenues (EUR million) 143.1 137.3
Growth in revenues (%) 4.2% 7.1%
Total output per year (EUR million) 155.7 142.4
Growth in total output per year (%) 9.3% 9.0%
EBITDA (EUR million) 32.2 29.0
in percentage of revenues 22.5% 21.2%
Earnings before interest and taxes EBIT (EUR million) 23.4 20.6
in percentage of revenues 16.4% 15.0%
Return on capital employed ROCE3) (%) 30.0% 26.7%
Figures in accordance with consolidated financial
statements2)
Revenues (EUR million) 142.9 136.4
Growth in revenues (%) 4.8% 6.4%
_ Germany 58.3 60.0
_ Outside Germany 84.6 76.4
EBITDA (EUR million) 32.0 21.9
in percentage of revenues 22,4% 16,1%
Earnings before interest and taxes EBIT (EUR million) 7,0 -0,7
in percentage of revenues 4,9% -0,5%
Net loss for the year (EUR million) -0.3 -0.7
in percentage of revenues -0.2% -0.5%
Investment4) (EUR million) 16.2 12.5
Cash flow from operating activities (EUR million) 20.3 n/a
in percentage of revenues 14.2% n/a
Equity capital (EUR million) 14.7 4.0
Equity (EUR million) 60.9 3.3
in percentage of the balance sheet total 26.1% 2.2%
Equity return (%) -0.5% -21.2%
External funds (EUR million) 172.5 145.2
Balance sheet total (EUR million) 233.4 148.5
Earnings per share (EUR) -0.03 n/a
Number of employees in the group (average over the year) 939 889

1) The figures are taken from the supplementary pro-forma financial
information for the consolidated income statement for Francotyp-Postalia
Holding GmbH, the current Francotyp-Postalia Holding AG, for fiscal year
2005. This pro-forma financial information from the 2005 income statement
reflects the operating activities for the whole of fiscal year 2005, while
the transaction-related effects such as interest have only occurred for
depreciation posted at group level and tax effects from April 20, 2005. The
supplementary pro-forma financial information of the consolidated income
statement for fiscal year 2005 used for comparison have no significance for
the whole of 2005 in terms of interest, transaction-related depreciation
and taxes.

2) Adjusted by the follow-up costs of the initial consolidation of the FP
Group in its current form carried out in 2005.

3) ROCE: EBITA, adjusted in % of the average capital employed (= net
working capital + fixed assets adjusted by capitalisations in connection
with company acquisitions).

4) Not including payments for company acquisitions.

Francotyp-Postalia Holding AG
Media Relations
Telefon: +49 (0)3303 525 777
Telefax: +49 (0)3303 53 70 77 77
E-Mail: pr@francotyp.com

DGAP 26.04.2007

Language: English
Issuer: Francotyp-Postalia Holding AG
Triftweg 21-26
16547 Birkenwerder Deutschland
Phone: +49 (0)3303 525 777
Fax: +49 (0)3303 53 70 77 77
E-mail: ir@francotyp.com
www: www.francotyp.com
ISIN: DE000FPH9000
WKN: FPH900
Indices:
Listed: Amtlicher Markt in Frankfurt (Prime Standard); Freiverkehr in
Berlin-Bremen, Stuttgart, München, Düsseldorf

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