Westag AG — Interim / Quarterly Report 2017

Nov 10, 2017

QUARTERLY REPORT

FOR THE PERIOD ENDED SEPTEMBER 30, 2017

QUARTERLY REPORT ON THE FIRST NINE MONTH OF 2017

Business performance

Consolidated sales revenues

Westag & Getalit AG generated consolidated sales revenues of € 177.5 million in the first nine months of 2017. Revenues were thus down by a moderate 1.2 % on the previous year (€ 179.6 million) primarily due to the decline in domestic business. Exports again showed a positive trend during this period with revenues in the Group's foreign markets rising by 6.5 % to € 40.8 million (previous year: EUR 38.3 million). Consequently, the export share increased from 21. 3% to 23.0 %.

Sales revenues in € '000	January 1 to September 30, 2017	January 1 to September 30, 2016	Change in %
Doors/Frames	96,060	97,650	-1.6
Surfaces/Elements	75,927	76,001	-0.1
Central Division	5,526	5,951	-7.1
Total	177,513	179,602	-1.2

Sales revenues in the Doors/Frames Division came in at € 96.1 million in the reporting period (previous year: € 97.1 million). At € 75.9 million, revenues in the Surfaces/Elements Division remained almost unchanged from the previous year. The Central Division generated revenues of € 5.5 million (previous year: € 5.9 million).

Earnings in € '000	January 1 to September 30, 2017	January 1 to September 30, 2016	Change in %
Earnings before income taxes	7,045	8,655	-18.6
Net profit for the period	4,932	6,088	-19.0
Net profit for the period per ordinary share in €	0.89	1.10	-19.1
Net profit for the period per preference share in €	0.95	1.16	-18.1

As a result of the above, consolidated earnings before taxes came in at € 7.0 million (previous year: € 8.6 million). As reported at the six-month stage, earnings were impacted not only by the unsatisfactory revenue trend but also primarily by price increases for various inputs as well as higher budgets for sales and marketing activities. Consequently, net profit for the period declined to € 4.9 million (previous year: € 6.1 million). Net profit per share amounted to € 0.89 for the ordinary shares (previous year: € 1.10) and to € 0.95 for the preference shares (previous year: € 1.16).

Consolidated earnings

Employees As of September 30, 2017, Westag & Getalit AG employed 1,288 people at Group level, 23 less than on the prior year reporting date.

Capital expenditures Capital expenditures of approx. € 12.0 million are planned for the fiscal year 2017. In view of the anticipated demand, the major portion of this amount has been spent on expanding the capacities of the Doors/Frames Division, where a multi-year investment is being made in a frames finishing line. In addition, the company is investing in the Surfaces/Elements Division in order to optimise operational processes and the existing technical equipment with a view to keeping the company's plants at a high technological level.

Forecast, opportunity and risk report

Outlook The statements made in the 2016 Financial Report regarding the opportunities and risks of the business model remain generally unchanged.

The current revenue trend and price trends in the commodities markets are key factors influencing the Group's profitability. In view of the situation described above, the Management Board is not satisfied with the business performance in the year to date. The price increases for the company's own products initiated in the course of the year will not be fully reflected in the result for 2017.

The Management Board expects sales revenues for the full year to more or less reach the prior year level. Taking into account the factors weighing on profitability as discussed above, consolidated earnings for the full year are expected to come in below the previous year's level.

Rheda-Wiedenbrück, November 2017

Westag & Getalit AG

The Management Board

CONSOLIDATED BALANCE SHEET

Assets (in € '000)	September 30, 2017	December 31, 2016
Intangible assets	924	1.005
Property, plant and equipment	73.069	71.737
Financial assets	2.843	2.731
Deferred taxes	3.443	3.411
Non-current assets	80.279	78.884
Inventories	38.614	33.832
Receivables and other assets	34.036	28.055
Cash and cash equivalents	14.741	23.891
Current assets	87.391	85.778
Total assets	167.670	164.662
Liabilities (in € '000)	September 30, 2017	December 31, 2016
Subscribed capital	14.644	14.644
Capital reserve	24.399	24.399
Revenue reserves	61.511	61.511
Accumulated profit	6.878	7.676
Equity capital	107.432	108.230
Provisions for pensions and similar obligations	26.654	26.499
Other non-current provisions	1.461	1.356
Non-current liabilities	28.115	27.855
Trade payables	9.307	6.714
Other current liabilities	22.352	20.753
Current provisions	464	1.110
Current liabilities	32.123	28.577
Total assets	167.670	164.662

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME FOR THE FIRST NINE MONTHS OF THE YEAR

(in € '000)	January 1 to September 30, 2017	January 1 to September 30, 2016
Sales revenues	177,513	179,602
Changes in inventories of finished goods and work in progress	2,875	1,357
Other own work capitalised	189	182
	180,577	181,141
Other operating income	903	402
Cost of materials	88,181	86,897
Personnel expenses	55,972	56,979
Depreciation of intangible fixed assets and property, plant and equipment	7,286	7,695
Other operating expenses	23,268	21,569
Other taxes	227	217
Operating result	6,546	8,186
Financial result	499	469
Earnings before income taxes	7,045	8,655
Taxes on income	2,113	2,567
Consolidated net profit for the period	4,932	6,088
Income components recognised in equity	0	-4,643
Consolidated comprehensive income	4,932	1,445
Net profit for the period per ordinary share (diluted and basic)	0,89	1,10
Net profit for the period per preference share (diluted and basic)	0,95	1,16
Average number of shares (diluted and basic)	5,359,970	5,403,747

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME FOR THE THIRD QUARTER OF 2017

in T€	July 1 to September 30, 2017	July 1 to September 30, 2016
Sales revenues	59.744	60.774
Changes in inventories of finished goods and work in progress	649	-809
Other own work capitalised	102	38
	60.495	60.003
Other operating income	571	120
Cost of materials	29.519	28.763
Personnel expenses	18.443	18.672
Depreciation of intangible fixed assets and property, plant and equipment	2.354	2.434
Other operating expenses	8.270	7.069
Other taxes	75	71
Operating result	2.405	3.114
Financial result	164	157
Earnings before income taxes	2.569	3.271
Taxes on income	770	935
Consolidated net profit for the period	1.799	2.336
Income components recognised in equity	0	-4.643
Consolidated comprehensive income	1.799	-2.307
Net profit for the period per ordinary share (diluted and basic)	0,33	0,43
Net profit for the period per preference share (diluted and basic)	0,33	0,43
Average number of shares (diluted and basic)	5.355.164	5.394.798

CONSOLIDATED CASH FLOW STATEMENT

in € '000	January 1 to September 30, 2017	January 1 to September 30, 2017
Operating result	6,546	8,186
Income tax payments	-2,852	-1,772
Depreciation and amortisation of fixed assets	7,286	7,695
Result from asset retirements	-45	-82
Change in current assets	-10,651	-6,808
Change in debt capital	4,419	5,350
Cash flow from operating activities	4,703	12,569
Investments in property, plant and equipment and intangible assets	-8,539	-5,560
Change in financial assets	0	30
Change in time deposits	1,810	0
Income from associated companies	333	366
Income from asset retirements	46	142
Cash flow from investment activities	-6,350	-5,022
Interest income	37	5
Interest expenses	0	-1
Purchase of own shares	-547	-360
Dividend payments	-5,183	-4,145
Cash flow from financing activities	-5,693	-4,501
Change in cash and cash equivalents	-7,340	3,046
Cash and cash equivalents as of January 1	19,081	16,835
Cash and cash equivalents as of June 30	11,741	19,881

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

in € '000	Subscribed capital	Capital reserve	Revenue reserves	Accumulated profit	Equity capital
January 1, 2016	14,644	24,399	60,911	7,850	107,804
Change in other reserves					0
Purchase of own shares				-360	-360
Changes not recognised in profit/loss				-4,643	-4,643
Dividend payments				-4,145	-4,145
Consolidated net profit for the period				6,088	6,088
September 30, 2016	14,644	24,399	60,911	4,790	104,744
January 1, 2017	14,644	24,399	61,511	7,676	108,230
Change in other reserves					0
Purchase of own shares				-547	-547
Changes not recognised in profit/loss					0
Dividend payments				-5,183	-5,183
Consolidated net profit for the period				4,932	4,932
September 30, 2017	14,644	24,399	61,511	6,878	107,432

NOTES TO THE FINANCIAL STATEMENTS

Accounting principles	With regard to its scope, the quarterly report of Westag & Getalit AG for the period ended september 30, 2017 was prepared on the basis of section 51a BörsO for the Frankfurt Stock Exchange in accordance with applicable International Financial Reporting Standards (IFRS). The same accounting and valuation methods as for the consolidated financial statements for the year ended December 31, 2016 were used.
	Given that a Russian distribution company was established at the end of 2016, Westag & Getalit AG publishes its figures on a consolidated basis. The prior year figures have been adjusted accordingly.
Cash flow statement	The cash flows in the cash flow statement were determined using the indirect method. Cash and cash equivalents shown in the consolidated cash flow statement comprise all cash and cash equivalents except for term deposits with a term of more than three months in the amount of € 3,000 thousand (September 30, 2016: € 0 thousand).
Cash and cash equivalents	Cash and cash equivalents carried in the balance sheet include no securities.
Composition of subscribed capital	The subscribed capital of € 14,643,200 is composed of 2,860,000 no-par ordinary shares and 2,860,000 non-voting no-par preference shares with a total value of € 7,321,600 per share type.
Profit-neutral components of income and expenses	The increase in pension provisions is due to the sustainable change in interest rates on capital markets. Reporting in the statement of comprehensive income is made under consideration of the associated deferred taxes in the profit-neutral components of income and expenses.
Purchase commitments	As of September 30, 2017, purchase commitments towards our suppliers amounted to € 6,226 thousand, compared to € 1,796 thousand on September 30, 2016.

Earnings per share	Earnings per share as defined in IAS 33 are calculated for both ordinary and preference shares by dividing the net profit for the period attributable to the respective share type by the average number of shares of the respective type. Accordingly, earnings are divided into the different share types taking into account the higher dividend for the preference shares. Diluted earnings per share are equivalent to earnings per share.
Own shares	As of September 30, 2017, the company held 364,836 own shares, 24,009 shares more than on June 30, 2016. All own shares held by the company are preference shares.
Related party disclosures (IAS 24)	No changes occurred with regard to the related party disclosures in the 2016 Annual Report. Sales revenues with associated companies amounted to € 308 thousand in the first nine months of 2017 (previous year: € 239 thousand).
Post balance sheet events	No events that require reporting occurred after September 30, 2017.
Review	The interim financial report has been neither audited in accordance with section 317 HGB nor reviewed by the auditors.
Responsibility statement	To the best of our knowledge, and in accordance with the applicable interim reporting principles, the interim consolidated financial statements give a true and fair view of the net assets, financial position and results of operations of the Group and the Group Management Report 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 in the remaining course of the fiscal year.
	Rheda-Wiedenbrück, November 2017
	Westag & Getalit AG

The Management Board

FINANCIAL CALENDAR*

29.03.2018	Publication of the 2017 Financial Report on our website
03.05.2018	Annual accounts press conference in Rheda-Wiedenbrück
09.05.2018	Publication of the quarterly statement for the period ended March 31, 2018
26.06.2018	Annual General Meeting (AGM) of Shareholders in Rheda-Wiedenbrück

* For updates refer to:

www.westag-getalit.com/finanzkalender

Westag & Getalit AG

Postfach 26 29 | 33375 Rheda-Wiedenbrück | Deutschland Tel. +49 5242 17-0 | Fax +49 5242 17-75000 www.westag-getalit.com | ir@westag-getalit.com