ARQUES Industries AG / Final Results
30.04.2009
Release of a Corporate News, transmitted by DGAP - a company of EquityStory AG.
The issuer is solely responsible for the content of this announcement.
---------------------------------------------------------------------------
ARQUES set for realignment after clearing up its portfolio
- Financial crisis and to clear up the past lead to non-recurring charges
of about EUR134 million, profit before taxes and profit after taxes both
substantially negative
- 2008 goals were achieved: Revenues soar to EUR5.5 billion, EBITDA comes
to EUR116 million
- Financial liabilities substantially reduced, cash and cash equivalents
significantly increased
- Fiscal 2009 to be dominated by the effects of the global recession:
Return to original business strategy, focus on cost and liquidity
management
Starnberg, April 30, 2009. Fiscal year 2008 was the most difficult year in
the history of ARQUES Industries AG (ISIN DE0005156004). Especially in the
second half of the year, the operating business of the ARQUES subsidiaries
and the value of the company's investments in those subsidiaries were
adversely impacted by the massive repercussions of the financial crisis.
The acquisition policy of the last years led to more risk taking and
substantial non-recurring charges. Nonetheless, ARQUES managed to achieve
the adjusted revenue and EBITDA targets announced in November. Thus, the
consolidated revenues of EUR5.5 billion were higher than the target value
of more than EUR5 billion and significantly higher than the corresponding
year-ago figure of EUR2.1 billion. The same was true of the company's
EBITDA (Earnings Before Interest, Taxes, Depreciation and Amortization),
which at EUR115.6 million was clearly higher than the target value of
EUR105 million, but significantly lower than the corresponding prior-year
figure of EUR202.7 million. Due to the continued difficult economic
environment, ARQUES charged writedowns of EUR133.7 million on its
investment portfolio in 2008, which impacted the company's earnings
performance below the level of EBITDA. Thus, ARQUES reported a negative
EBIT of minus EUR111.4 million and a net loss after taxes of EUR141.6
million for fiscal year 2008. On the other hand, the strict focus on
liquidity and cash flow management produced positive results. The company's
financial liabilities were reduced by EUR127.5 million to EUR212.0 million.
Also, the free cash flow was improved by EUR205.7 million to EUR180.9
million and the company's holdings of cash and cash equivalents were
increased from EUR84.5 million at the end of 2007 to EUR142.4 million at
the end of 2008.
The company's business performance in fiscal year 2009 will be heavily
influenced by the effects of the global recession. Besides continuing to
pursue the active restructuring and focused operational improvement of the
companies comprised within the investment portfolio, ARQUES will also take
advantage of opportunities to make acquisitions. In this regard, the
company will return to its original business strategy of paying only
symbolic purchase prices and minimizing risks to the greatest extent
possible. ARQUES will remain focused on the acquisition of spin-offs.
'Fiscal 2008 was the most difficult year in the history of ARQUES
Industries AG. Not only the repercussions of the financial crisis, but also
the consequences of our own decisions were a massive drag on the company's
earnings performance below the level of EBITDA. We promptly initiated
measures to optimize our portfolio, costs and liquidity and these measures
have already produced some successful results. We managed to reduce our
liabilities, improve liquidity and renew our short-term credit facilities.
Still, our primary focus in 2009 will be the continued consolidation and
the realignment of the ARQUES Group,' said Hans Gisbert Ulmke, Chief
Financial Officer of ARQUES Industries AG.
Significant changes in the investment portfolio
ARQUES effected a total of eight acquisitions and seven company sales in
fiscal 2008. The main purpose of these transactions, especially in the
second half of the year, was to optimize the investment portfolio. ARQUES
has continued on this course in fiscal 2009. By the end of April, ARQUES
had sold or otherwise divested seven additional subsidiaries and acquired
one further company. As of today's date, portfolio companies totaling
EUR671.4 million in revenues have been sold since mid of 2008. All
together, these companies contributed an EBITDA of EUR0.7 million and
caused writedowns of EUR114.5 million, which were reflected in their EBIT
contributions for 2008. Currently, ARQUES' investment portfolio comprises
14 companies, of which Actebis and Gigaset are the largest, with combined
revenues of EUR4.2 billion.
Bargain purchase revenues substantially lower than in the previous year
ARQUES' operating earnings quality improved further in fiscal year 2008. As
is customary for the ARQUES business model, the company recognized income
from the reversal of negative goodwill (bargain purchases) of EUR112.5
million on its total acquisitions in 2008, with Gigaset accounting for a
large portion (EUR81.7 million) of that number. However, this figure was
substantially lower than the prior-year figure of EUR214.7 million. Due to
the financial crisis and the fact that newly acquired companies usually
report losses at the time when they are first consolidated with ARQUES, the
operating earnings of the subsidiaries were substantially negative on
aggregate. The company realized exit proceeds totaling EUR50.6 million in
2008.
The writedowns on the portfolio investments were divided among several
companies, with Eurostyle (EUR53 million) and Schöps (EUR17.6 million)
accounting for the largest individual writedowns. The diluted earnings per
share fell from EUR4.43 in 2007 to minus EUR4.93 in 2008, while the number
of shares outstanding was unchanged at 26.45 million.
Substantial increase in cash flow
In view of the difficult operating conditions, ARQUES focused primarily on
optimizing its balance sheet structure and liquidity management in 2008.
The operating cash flow was increased substantially, from EUR42.2 million
to EUR119.0 million, and the free cash flow from minus EUR24.8 million to
EUR180.9 million. Accordingly, the cash and cash equivalents also rose from
EUR84.5 million to EUR142.4 million. Despite a likewise significant,
EUR127.5 million reduction in financial liabilities to EUR212.0 million,
the equity ratio for 2008 came to 15.3% (PY: 21.9%), which is still
unsatisfactory.
2009: Year of consolidation
As in 2008, the ARQUES management will continue to focus in 2009 on
slashing the company's debt, generating a significantly positive free cash
flow and building up liquidity. Due to the fact that the number of
companies comprised in the investment portfolio has been reduced over the
past 15 months, the consolidated revenues will be substantially less than
the corresponding figure for 2008. The amount of earnings will depend very
much on the potential need for further writedowns. If such additional
writedowns prove to be necessary, they will be much less than the total
writedowns for 2008. Aside from the transactions that have already been
effected in 2009, ARQUES is planning additional exits and acquisitions. In
this regard, the company will concentrate its efforts on restructuring
cases and paying adequate prices. Also, ARQUES will seek to avoid assuming
bank liabilities and loans, guarantees and other risks. The preferred size
of any acquisitions will range from companies with revenues of EUR30
million to EUR1 billion. The preferred size of the overall portfolio is
from 15 to 20 portfolio companies.
In addition, ARQUES will take steps to improve cost efficiency in 2009. The
holding company has already been streamlined considerably, the goal being
to lower the holding company costs from EUR22 million in 2008 to less than
EUR10 million and to allocate some to the subsidiaries. Furthermore, ARQUES
plans to strengthen its risk management system considerably.
As in previous years and in accordance with the ARQUES business model, it
can be assumed that ARQUES will generate a significant earnings
contribution from so-called bargain purchases from the acquisitions still
to be effected in 2009. The acquisition pipeline is well filled and ARQUES
will benefit from its status as a proven partner to large corporations
looking to spin off their divisions or companies.
All these measures should help to consolidate the ARQUES Group and place it
on a sound economic and financial footing in the years 2009 and 2010. The
earnings quality will likewise be improved by these measures.
Additional information about the company and the Annual Report of ARQUES
Industries AG can be found at the website www.arques.de.
About ARQUES
ARQUES Industries AG, Starnberg (www.arques.de), is a partner for major
corporations in corporate spin-offs and a turnaround specialist
concentrating on the acquisition and active restructuring of companies in
crisis situations in order to turn them into competitive and profitable
companies with a dedicated team and their own efforts. ARQUES revitalizes
its subsidiaries' potential for adding value for the benefit of all of
their stakeholders under consideration of the associated social
responsibility. The shares of ARQUES Industries AG are traded on the
Frankfurt Stock Exchange's Regulated Market (Prime Standard) under the
symbol 'AQU' (ISIN: DE0005156004) and have been listed in the
SDAX.
Contact:
ARQUES Industries AG
Corporate Communication
Christian Schneider
Email: schneider@arques.de
Tel.: +49 (0) 8151/ 651 0
DGAP 30.04.2009
---------------------------------------------------------------------------
Language: English
Issuer: ARQUES Industries AG
Münchner Str. 15a
82319 Starnberg
Deutschland
Phone: +49 (0)8151 651-0
Fax: +49 (0)8151 651- 500
E-mail: schneider@arques.de
Internet: www.arques.de
ISIN: DE0005156004
WKN: 515600
Indices: SDAX
Listed: Regulierter Markt in Frankfurt (Prime Standard); Freiverkehr
in Berlin, Hamburg, Düsseldorf, München, Stuttgart
End of News DGAP News-Service
---------------------------------------------------------------------------
DGAP-News: ARQUES set for realignment after clearing up its portfolio
| Source: EQS Group AG