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schlott gruppe records earnings growth in first quarter


Preliminary results for Q1 2005/6 confirm forecasts
Group VAS recedes in line with forecasts from €93.0 million to €83.1 million due to deconsolidation of heckel subsidiary and new catalogue cycles
Group EBT rises to €9.7 million, up from €9.4 million; EBT margin increases from 10.1 per cent to 11.6 per cent
Freudenstadt, January 25, 2006 - At today’s press conference and analysts’ meeting convened by schlott gruppe, the company will be presenting its financial statements for the 2004/5 financial year ended September 30 as well as its preliminary results for the first quarter (October to December) of the current 2005/6 financial year.

Business in the first quarter of 2005/6 progressed in line with expectations. Group value-added sales (VAS) receded as forecast from €93.0 million in Q1 2004/5 to €83.1 million in the first quarter of the current financial year – mainly due to the deconsolidation of its web offset subsidiary heckel. In contrast, consolidated earnings before taxes (EBT) rose by 3.2 per cent to €9.7 million, up from €9.4 million. Growth within this area was buoyed by further cost-reduction measures and improvements in cost structures at Holding level (corporate services) as well as in the print and direct marketing divisions. As a consequence, the EBT margin was raised to 11.6 per cent, compared with 10.1 per cent in the same period a year ago.

Owing to the deconsolidation of Nuremberg-based web offset subsidiary heckel at the beginning of the reporting period as well as changes to the catalogue publication cycles of mass-market mail-order companies, the print division recorded VAS of €66.0 million, as opposed to €73.8 million in the previous financial year. However, EBT remained stable year on year at €10.5 million (Q1 2004/5: €10.6 million), with the EBT margin rising accordingly. Since heckel was operating at break-even, profit margins in the print division improved correspondingly.

Within the direct marketing division, recent cost-reduction measures have had a palpable impact. Against the backdrop of lasting sluggish trading conditions with immense pressure on prices, direct marketing recorded VAS of €16.2 million, compared with €18.8 million in Q1 2004/5. At €0.2 million, earnings before taxes remained above break-even, thus almost matching EBT posted for the same period a year ago (€0.3 million).

schlott gruppe has again confirmed its forecast for the current financial year ending September 30, 2006, with value-added sales expected to remain unchanged at above €315 million, adjusted for deconsolidated web offset activities, and EBT predicted to increase slightly year on year to over €26 million.

Notes to financial data:
Alongside “revenue/sales”, schlott gruppe uses so-called “value-added sales” (VAS) as a financial indicator – both in its external communications and as part of its internal controlling mechanisms. Revenue is subject to fluctuations that are attributable to the volume of paper supplied by customers as raw material for certain projects. In contrast to paper purchased directly by the company, paper supplied by customers is not included in the accounts of schlott gruppe. In the 2004/5 financial year, the so-called paper provision ratio stood at 73.2 per cent. As a financial indicator, “value-added sales” (VAS) eliminates fluctuations relating to paper supplied by customers, thus reflecting the actual sales performance.


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