Headline: Annual Report 2007 released Ingress: The Board of Directors and the Executive Board of Brødrene Hartmann A/S today adopted the Annual Report 2007. Main body: Peter Arndrup Poulsen, CEO of Brødrene Hartmann A/S makes the following statements about 2007 in general: ”Total performance in 2007 was not satisfactory, but it is comforting to see that the negative development in earnings has now turned around. Also, several initiatives have been rolled out that provide a basis for improved earnings going forward.” ”We have abandoned the previous growth strategy and pulled out of the South American and Asian markets. The pullback involved a lot of nonrecurring costs and impairment, and they left their mark on the consolidated financial statements for the financial year 2007.” Peter Arndrup Poulsen says about the future: ” We are beginning to see the results of our efforts, but there is still room for improvement. The fourth quarter ended 2007 on a positive note and the budgets for 2008 look promising. We must definitely increase the earnings in 2008.” “Our financial gearing is at an unsatisfactory high level. We have responded by planning a share issue that will provide the Group with a stronger financial platform for the development of our core business.” Revenue and profit/(loss) Hartmann posted revenue of DKK 1,492 million in 2007, up 1% from last year. Operating profit/(loss) came to DKK -146 million against DKK 62 million last year. The consolidated financial statements are influenced by several non-recurring items, such as the impairment of assets etc. in Asia (DKK 49 million) and North America (DKK 115 million) and reorganisation costs (DKK 35 million). After allowing for these non-recurring items, the Group achieved a normalised operating profit/(loss) of DKK 53 million, which is somewhat above the year-earlier level of DKK 17 million. Impairment of tax assets North America DKK 48 million and Asia DKK 14 million respectively. Profit/(loss) on discontinued operations relates to the divestment of the Group's operations in South America and amounts to DKK -242 million. The total profit/(loss) of the Group (EAT) for 2007 came to DKK -513 million against DKK -77 million last year. Egg Packaging Europe Egg Packaging Europe returned DKK 1,043 million in revenue and DKK 64 million in operating profit/(loss). Normalised EBIT for this business area comes to DKK 69 million against DKK 83 million last year. Developments in this segment were negative in 2007, reflecting the first effects of efforts to trim the product and customer portfolios, as well as steeply increasing prices of paper and energy. On the other hand, the segment reported continued growth in the demand for high-value packaging. Management believes that Egg Packaging Europe has a potential for improving its results, as is also reflected by the profit/(loss) for Q4. Egg Packaging North America Egg Packaging North America posted revenue of DKK 147 million and DKK -144 million in operating profit/(loss). Normalised EBIT for this business area comes to DKK -28 million against DKK -44 million last year. The result is still unsatisfactory, the main reason being the continued unfavourable cross rate between the Canadian dollar (CAD) and the US dollar (USD). However, the operating performance of Egg Packaging North America in 2007 showed clear improvement over last year. Achievements made during the year include more production automation and an improved cost structure. Management is still monitoring developments in this segment closely. Industrial Packaging Industrial Packaging posted revenue of DKK 220 million and an operating profit/ (loss) of DKK -16 million. Normalised EBIT for this business area comes to DKK 40 million against DKK 9 million last year. Industrial Packaging achieved increased productivity and growth in European sales in 2007. Earnings were clearly reflective of the positive effects of the trimming of the customer and product portfolios. Industrial Packaging will focus on Europe going forward, and its performance in 2007 was characterised by one-off items such as the closing-down of production plants in Asia and of sales offices in Japan and the USA, and the restructuring of the European sales organisation. Management will focus on efforts to retain and increase the improvements achieved as a result of the restructuring. Turnaround activities Hartmann has launched a turnaround process, ‘Forward to basics', to redirect its development trend. In 2007 the new Management launched and carried out an array of activities to stabilise and consolidate the business, and the full effect is likely to show in 2009. Management has carried out a partial global pullback by winding up the Group's loss-making operations in South America and Asia. The organisation was restructured so as to match the current situation. A new management team took over, the organisational structure was changed, departments were restructured and the number of employees was reduced. Focus was shifted from growth to earnings. Loss-making activities, declining earnings and defective processes between sales and production represent the biggest challenges for Management at present. Management is responding by launching activities relating to further production efficiencies, such as lean activities, automation and reduced wastage. Also, it is crucial to achieve a further reduction of production complexity and to continue the slimming of the customer and product portfolios. Planning a capital increase Due to the many non-recurring costs and impairment, the Group's equity has been reduced from the opening level of DKK 544 million to DKK 220 million at 31 December 2007. Because of the current high gearing, the Group needs new capital for major investments and further developments. Against that background the Board of Directors has decided to start planning a share issue in 2008. The issue is expected to involve preemptive rights for existing shareholders. In connection with the possible increase of the capital it is possible to merge the three classes of shares in the Group. It has long been a wish among shareholders to introduce the principle of ‘one share - one vote'. Outlook for 2008 Hartmann expects revenue in 2008 in the range of DKK 1,460 million. Operating profit/(loss) (EBIT) is forecast at around DKK 70 million and profit/(loss) after tax (EAT) at around DKK 20 million. Foreign exchange losses from prior years relating to the operations in Asia (approx. DKK 16 million at 31 December 2007) will be reclassified from equity to the income statement upon completion of the closing-down process. The outlook does not factor in this effect. As announced earlier, the Board of Directors has decided to start planning a share issue in 2008. The issue will have a positive impact on net financial expenses and, thus, also on the consolidated profit/(loss) after tax. The outlook does not factor in this effect. Strategy 2008-2010 The turnaround process initiated in 2007 continues in 2008 with focus on a stabilisation and improvement of the Group's core business. Moving towards 2010, Hartmann will restore an attractive earnings level by optimising its core business in Europe, adjusting the activity level of Industrial Packaging and, at the same time, growing profitability in operations in North America. The objective is to create a strong Hartmann capable of acting as a platform for future growth. Changes to financial calendar The date for publication of the report for Q3 2008 has been changed to 17 November 2008. Further information, please contact Peter Arndrup Poulsen CEO Tel: +45 45 87 50 30 Mobile: +45 51 51 40 69