Group Financial Report 9M 2008

Transcription

1 Group Financial Report 9M 2008 VBH Holding AG 9 months 2008

2 02 Group Financial Report 9M 2008 Group Financial Report 9M 2008 Sales rose by 8.0% to Euro million. EBT at Euro 26.5 million is nearly at the level of the previous year. Earnings per share (EPS) declined from Euro 0.49 to Euro 0.42 due to conversion of profit sharing rights. Equity ratio increased to 35.0%. Cover: Vocational Training at VBH A Chance for a Start into a Career. Many people may learn something at VBH, with 64 trainees only in Germany VBH offers much more apprenticeship training positions than other comparable companies. On the picture the 8 trainees of Korntal-Münchingen

3 Inhalt Group Financial Report 9M Contents Executive Board 04 Letter to the shareholders Group Financial Report 9M Group Interim Report 08 Overview of the VBH-Group 09 Business development, sales proceeds and earnings 12 Convertible Profit Sharing Rights and Equity 12 The VBH Share 13 Chances and risks 14 Outlook 2008 Group interim financial statement 15 Group interim financial statement 16 Group profit and loss account 17 Group balance sheet 18 Group Cash-Flow statement 19 Consolidated Statements of Stockholders Equity 20 Group Segment Reporting 21 Explanatory Notes 24 Declaration pursuant to 37y No. 1 Securities Trading Act Further Information 26 Financial calendar 27 Contacts 27 Disclaimer

4 Dear Shareholders, This interim report will inform you about the figures and business development of the VBH Group in the first nine months of the financial year In the last three months, the business momentum of VBH weakened as a result of the impact of the financial crisis. According to many experts, the crisis of confidence among banks is now affecting the economy as a whole. This downturn has continued at an unexpectedly rapid rate and is having a negative impact on economic development worldwide. VBH was unable to escape these market trends completely, but remains on a good growth path. Sales of the VBH Group rose over the reporting period by 8.0%, from Euro million in the previous year to Euro million. This includes the newly acquired subsidiaries VBH Hody in Belgium and Fercom Srl in Italy, which contributed to this increase with sales of Euro 18.8 million. The purely organic growth of the VBH Group is currently 4.9%. The German segment showed excellent development in the reporting period, with an accumulated sales increase of 6.4% compared to the previous year. In international business, sales expectations were not fulfilled in some cases due to the difficult situation in various markets. However, percentage sales growth in Eastern Europe remained nearly in double-digit figures. The Group s EBT decreased compared to the previous year from Euro 27.1 million to Euro 26.5 million despite declining operating interest expenditure. Fully diluted earnings per share (EPS) decreased from Euro 0.49 to Euro 0.42 due to the partial conversion of profit sharing rights and a shortfall in deferred tax revenues. As a result of the financial market crisis impacting the real economy, with the recent publication of preliminary interim figures, the Executive Board has adjusted the sales forecast for the current financial year to between Euro 870 million and Euro 880 million, and the EBIT forecast to between Euro 39 and Euro 41 million. As a result, according to current knowledge, earnings per share will be between Euro 0.62 and Euro 0.65 (previous year: Euro 0.67). Irrespective of the current turbulence on the market, the Executive Board is maintaining its medium term growth targets. VBH will be able to hold its own and grow with a focus on earnings in a difficult market environment. In order to achieve this, our available potential must be used consistently. The key factors here are a newly developed own brand concept, further optimisation of our international product line and expansion into regions with high growth potential.

5 Executive board Group Financial Report 9M Dr. Ralf Lieb Rainer Hribar With effect from 28 August 2008, VBH shares were listed in the Prime Standard of Deutsche Börse. The Executive Board considers implementation of a shareholder-friendly dividend policy another factor in affording greater importance to shareholder interests. As a result, the Executive Board decided to propose to the Supervisory Board that the distribution ratio for the 2008 financial year will be raised to 35.0% of earnings per share. On the basis of the present forecast, this would result in a proposed dividend of Euro 0.22 to Euro 0.23 per share. At this point, we would like to thank all our shareholders for their confidence and trust in our company and in our work, even in these difficult times. Our objective remains to move forward with the internationalisation of VBH and to strengthen and expand the market position of VBH. In the light of varied discussions about future economic development, the Executive Board will also engage intensively with the scenario of worldwide recession and its impact on the VBH business model, in order to withstand strong market turbulence, and particularly to use the business chances which could arise from this. We will continue to direct our thinking and actions towards the vision of successfully establishing our green logo in our industry worldwide and providing added value to our shareholders. Yours sincerely Rainer Hribar Chairman of the Board of Directors Dr. Ralf Lieb Member of the Board of Directors

6 06 Group Financial Report 9M 2008 Executive board

7 Group Interim Report

8 08 Group Financial Report 9M 2008 Group Interim Report Executive board and regional managers worldwidet v.l.n.r. José Manuel Madrazo-Serna (Spain/Middle and South America), Valerij Bezrukov (Russia), Rainer Hribar (CEO), Indrek Sauga (GUS without Russia), Andrzej Wyszogrodzki (Centrall/Eastern Europe), Andre Geffke (Asia-Pacific/Middle East), Hans Wiedemann (South/Western Europe), Dr. Ralf Lieb (CFO). Overview of the VBH group * In Euro m /- in% Earnings before interests and taxes (EBIT) Earnings before taxes (EBT) Sales EPS in Euro** * FCF*** Nr. of employees 2, ,720 The figures for the company were determined on the basis of the rendering of accounts in accordance with IFRS. ** All figures fully diluted. *** Free Cash Flow = + CF operating activities + CF from investment activities - paid interests

9 Group Interim Report Group Financial Report 9M Business development, sales proceeds and earnings VBH Group In the first nine months of 2008, VBH increased its Group sales by 8.0% year-on-year to Euro million. The Group s organic growth rate increased by 4.9% over the same period. During the reporting period, there were changes to the consolidated Group compared to the previous year, with the consolidation of VBH Hody in Belgium and Fercom Srl in Italy and the acquisition of minority holdings in Bosnia. Sales momentum weakened slightly compared to the previous reporting period. EBIT fell from Euro 36.9 million in the previous year to Euro 32.0 million (-13.3%). The EBIT margin is currently 4.9% compared to 6.1% in the previous year. The decline in EBIT was due largely to one-off expenses resulting from the restructuring of warehouse sites in Italy, but also to increasing sales and currency losses in Great Britain and unexpected pressure on margins in Eastern Europe. As a result of consolidation effects, human resources expenses have risen significantly in our Russian businesses. Over the reporting season, EBT declined by 2.2% to Euro 26.5 million compared to Euro 27.1 million in the previous year, despite lower operating interest expenditure after partial conversion of profit sharing rights in early Fully diluted earnings per share (EPS) declined by 14.3% from Euro 0.49 in the previous year to Euro Basic earnings per share declined by 27.6% from Euro 0.58 to Euro The decline in EPS was due to an shortfall in deferred tax revenues, which had reduced expenses for income taxes in the previous year. As a result of the expansion of business activities and of the consolidated Group, the balance sheet total increased by Euro 52.8 million to Euro million. Short term assets, principally stocks, receivables and other asset values, increased by Euro 39.8 million to Euro million, from Euro million in the previous year. As at 30 September 2008, liquid funds increased by Euro 0.9 million to Euro 12.7 million compared to the previous year s reporting date. Short term debts, primarily trade accounts payable, and bank liabilities increased significantly by Euro 10.3 million, from Euro million in the previous year to Euro million. Cash flow from operational activities fell from Euro 10.9 million to Euro -8.6 million. Free cash flow decreased from Euro -3.3 million to Euro million. This is due largely to the Belgian acquisition of Hody and the increase in working capital. Long-term debts decreased from Euro million to Euro million. Long-term financial debts raised from Euro 76.4 million to Euro 98.3 million. However, the extraordinary termination of profit sharing rights with duration until 2014 due to the legal corporate tax reform had a positive impact. In the current financial year, this resulted in profit sharing rights of Euro 26.7 million being converted to 5.3 million shares. The remaining profit sharing rights totalling Euro 8.2 million remain subject to interest until 2009 and must be paid back by the end of the Net debts increased over the reporting period from Euro million to Euro million. Compared to the reporting date of 31 December 2007, net debts increased by Euro 14.9 million, despite the conversion of profit sharing rights. This is due to the acquisition of VBH Hody in Belgium and the seasonal increase in working capital. Inventories were again built up in the lead-up to the inflation surcharges applied by the industry for materials on 1 September However, inventories will be significantly reduced by the end of the year. The objective of reducing net debts to approximately Euro 100 million by the end of the year is being maintained. As a result of the conversion of the profit sharing rights and the management exercising option rights, the equity of VBH increased by Euro 28.3 million. In addition, transfers to retained earnings and the positive earnings development, in consideration of dividend payment, over the reporting period caused equity to increase by a total of Euro 18.3 million. As a result, equity increased from Euro million in the previous year to the current level of Euro million. As at 30 September 2008, the Group s equity ratio totalled 35.0% (previous year: 27.6%).

10 10 Group Financial Report 9M 2008 Group Interim Report As at 30 June 2008, the number of outstanding shares was 45,790,408. in sales with Euro 18.8 million. Sales declined organically by Euro 6.1 million. In this reporting period, investments in fixed assets were primarily directed towards replacement requirements. A total of Euro 8.1 million was invested in tangible assets. Long-term assets rose by a total of Euro 13.1 million to Euro 96.9 million. The number of employees increased from 2,720 to 2,858. The steep increase in the number of employees is largely the result of consolidation effects in our Russian business. Segment Germany As the headquarters of the VBH Group, Germany is the region with the highest contribution to sales. The Germany segment comprises the business activities of VBH Deutschland GmbH and esco Metallbausysteme GmbH. In the first nine months of the year, the company generated sales of Euro million here. Overall, sales increased again significantly by 6.4%. Business activities in Germany were influenced positively by increased refurbishment activities by private house and apartment owners. The state incentives in the refurbishment industry currently under discussion, and the flight into real assets caused by the financial crisis understood here as increased expenditure on the refurbishment of own properties - are expected to result in a certain stability in the German market even in VBH Galro, acquired last year, is asserting itself well in the difficult Irish market and posted double-digit growth. Declining sales were posted by our companies in Spain and Great Britain, which were unable to distance themselves from the turbulence on their respective property markets. In the past months, the situation in our Spanish subsidiary has stabilised, whereas the downward momentum in Great Britain has accelerated. Overall, the other companies in the region are maintaining sales at the level of the previous year. Although market conditions in Western Europe are not expected to improve in 2009, at least a stabilisation of the critical British and Spanish markets is expected. EBIT for the companies in Western Europe fell from Euro 10.6 million to Euro 7.5 million (EBIT margin: 5.4%; previous year: 8.4%). This was primarily negatively affected by declining earnings in Italy in addition to declining earnings in Spain and Great Britain brought about by market forces. Restructuring in Italy will be completed by the end of Segment Eastern Europe The Segment Eastern Europe is the region which made the second highest contribution to sales, generating Euro million. Sales in this region continued to show strong growth in the past nine months, increasing by 9.5%. EBIT for the Germany segment rose in the first nine months by 18.2% to Euro 9.1 million (previous year: Euro 7.7 million). This corresponds to an increased EBIT margin of 0.4 percentage points to 3.2%. Segment Western Europe Sales generated at companies in Western Europe increased by 10.1% to Euro million in the reporting period. VBH Hody in Belgium and Fercom Srl in Italy were consolidated in this segment for the first time and contributed to the increase Contrary to expectations, the spread of the financial crisis across the economy has been reflected very quickly on the markets in Eastern Europe. Our companies in the Baltic region were unable to escape the negative market conditions and posted double-digit declines in sales. In the well-established Central Eastern European markets (Poland, the Czech Republic and Hungary), sales increases weakened slightly in comparison to the first six months. In Russia, Belarus and the Ukraine, sales continued to show double-digit growth. However, the gross income margin came under pressure. The regional companies in the Balkan region

11 Group Interim Report Group Financial Report 9M developed very successfully, with year-on-year sales growth of 21.0%. In view of the current market turbulence, at present it is very difficult to make forecasts for the Eastern European markets with any degree of certainty. However, we are assuming that the demand for refurbishment in the CIS states will still lead to high and sustainable growth rates, even if the 2009 financial year could still be negatively influenced by the effects of the financial crisis. EBIT fell by Euro 2.4 million to Euro 18.9 million as a result of higher raw material prices. As a result, the EBIT margin declined from 10.1% in the previous year to the present level of 8.2%. Segment Other Markets The activities in Asia (Singapore, Shanghai and Beijing) and in the Middle East (Dubai) represent a long-term future investment with high sustainable potential for VBH. These markets are controlled and further countries launched successively through our head office in Singapore. The discussion concerning climate changes and energy benefits of new window technologies are also showing early successes here. In view of the market potential available, we believe that even the current problems on the market will not negatively affect the potential for development in our Asian business. VBH generated sales of Euro 9.3 million in this segment in the reporting period against Euro 4.4 million in the previous year. EBIT amounted to Euro 0.1 million, making a positive earnings contribution to the consolidated earnings from this segment (previous year: Euro -0.6 million). Segment Corporate Services The activities of VBH Holding AG and of one leasing special purpose entity, which are combined in the Segment Corporate Services, developed as planned in terms of costs. EBIT fell from Euro -2.2 million to Euro -3.5 million.

12 12 Group Financial Report 9M 2008 Group Interim Report Convertible Profit Sharing Rights and Equity Capital Development of the VBH Share The convertible profit sharing rights of Euro 50 million, which were issued in 2004, include an option to convert them into VBH shares at a ratio of 5:1. A total of 15.1 million options were converted during the annual exercising period 2007 into 3.0 million VBH individual shares. Following the extraordinary termination of the convertible bond, Euro 26.7 million profit sharing capital was converted into 5.3 million VBH shares in The residual outstanding convertible profit sharing rights of Euro 8.2 million are to be repaid at the end of The capital stock of VBH Holding AG amounts to Euro million as at 30 September The executives of VBH converted options from the current stock option plan. This resulted in an additional increase of Euro 580,000 in capital stock. The global financial crisis and higher raw material prices led to significant share price declines across all important international financial centres in the first nine months of this year. Furthermore, the predicted downturn in economic growth will have a negative impact on share prices. VBH shares suffered just as other small cap and building stocks due to an initial fall in price from the beginning of the year until the middle of February 2008 and subsequently recovered again gradually, achieving the value held at the beginning of the year at the beginning of June However, as the financial market crisis continued, the share was affected by the downhill slide on the share markets and declined to Euro 3.88 as at the 30 September 2008 reporting date. Although the VBH share moved in step with the comparable index SDAX throughout the course of the year, a fall in price of approximately 35% is still very concerning. The highest closing price was Euro 6.10 on 30 May 2008 and the lowest price was Euro 3.51 on 29 September Various analysts continue to assess the VBH share as undervalued despite adjusted measurement parameters. Share price performances in Januar 08 Index ( = 100) September 08 DAX SDAX VBH Aktie

13 Group Interim Report Group Financial Report 9M Chances and Risks The uncertainty currently dominating the markets makes it difficult to forecast with any degree of certainty. However, the Executive Board believes that, during the last nine months, the changes to the medium-term prospects for the development of the global economy have not been as drastic as the media have reported. Furthermore, in comparison to the long-term high average price for energy, growing awareness of the population concerning the issue of climate change, discussed incentives for investments in the field of refurbishment and the introduction of the energy pass for residential buildings in Germany mean that the VBH can continue to be optimistic about the future. Against this backdrop, VBH anticipates the market situation in Germany and Western Europe will stabilise at the present level, whereas further growth potential is perceived for Eastern Europe and Asia. The growth of VBH is supported by selective acquisitions, further expansion of the market position into existing markets and expansion into markets with high growth potential. Despite this restrained optimism, we should not rule out the fact that the current crisis in sentiment will lead to a longer lasting economic crisis on a global basis. For this reason, the Executive Board will also provide a worst case scenario in its plans which will take into consideration the effects of this development which from today s perspective are unlikely. We want to be prepared in order to be able to generate above-average results even in unfavourable circumstances. The experiences of VBH after the turn of the millennium are helping in the accomplishment of this challenge. The risk estimate was updated for the current financial report. With the exception of the economic risks already discussed, there were no substantial changes in the risk situation of the VBH Group compared with the risks expressed in the Corporate Governance Report in the Annual Report Therefore, it is assumed that these will also continue to exist over the course of 2008 without significant changes.

14 14 Group Financial Report 9M 2008 Group Interim Report Outlook 2008 As it has been already communicated with preliminary interim business figures for the current reporting period, the Executive Board is expecting sales of between Euro 870 million and Euro 880 million (previous year: Euro million) and EBIT of between Euro 46 and Euro 48 million (previous year: Euro 49.4 million) for the current financial year. This results in an EBT of Euro 39 and Euro 41 million (previous year: Euro 38.2 million) and earnings per share of between Euro 0.62 and Euro 0.65 (previous year: Euro 0.67). leader in the fittings industry in Europe. The development of our own brands, the further optimisation of our product range and selective acquisitions will help to achieve our growth targets. For this reason, the Executive Board is optimistic about the future despite the current crisis. The green VBH logo will be established on the market worldwide. Korntal-Münchingen, November 2008 VBH is in a good strategic position in its already established markets, will continue to invest in growth markets and will continue to expand its strong market position as a market VBH Holding Aktiengesellschaft Executive Board

15 Group interim financial statement

16 16 Group Financial Report 9M 2008 Group interim financial statement Group Profit and Loss Account Group Profit and Loss Account as of 30. September 2008 according IFRS in Euro k in Euro k Change y/y 1. Consolidated sales 649, ,765 8,0% 2. Change in inventories of finished goods and work in progress Other operating income 10,513 11,953-12,0% 4. Total operating performance 660, ,719 7,6% 5. Cost of materials -493, ,356 7,6% 6. Personnel expenses -71,073-61,840 14,9% 7. Other operating expenses -59,842-52,744 13,5% 8. Earnings before interest, taxes and depreciation (EBITDA) 36,340 40,778-10,9% 9. Depreciation -4,363-3,916 11,4% 10. Earnings before interest and taxes (EBIT) 31,977 36,862-13,3% 11. Income from participations ,0% 12. Interests and similar income ,1% 13. Write-off financial assets and securities and bonds Interests and similar expenses -6,076-10,196-40,4% 15. Expenses from transfer of losses Financial result -5,456-9,736-44,0% 17. Earnings before taxes (EBT) 26,521 27,126-2,2% 18. Income tax -6,221-6,757-7,9% 19. Deffered taxes -36 3, ,9% 20. Earnings after taxes (EAT) 20,264 24,190-16,2% Other shareholders proportion in EAT VBH shareholders proportion in EAT Earnings per share in Euro fully diluted Earnings per share in Euro undiluted

17 Group interim financial statement Group Financial Report 9M Group Balance-Sheet Group Balance-Sheet at 30. September 2008 according IFRS Assets in Euro k in Euro k in Euro k A. LONG-TERM ASSETS I. Intangible assets 47,753 39,739 38,467 II. Tangible assets 35,927 33,943 33,543 III. Financial assets 1, IV. Other long-term assets 11,879 12,476 11,386 LONG-TERM ASSETS 96,981 86,847 83,849 B. SHORT-TERM ASSETS I. Inventories 157, , ,658 II. Receivables and other assets short-term 165, , ,735 III. Securities IV. Liquid funds 12,745 13,175 11,840 V. End-of-year adjustments 1,529 1,484 2,395 SHORT-TERM RECEIVABLES AND ASSETS 337, , ,635 ASSETS 434, , ,484 EQUITY AND LIABILITIES in Euro k in Euro k in Euro k A. EQUITY I. Subscribed capital 45,790 39,865 39,865 II. Capital reserve 41,541 19,149 19,149 III. Earnings reserve 12,409 9,490 8,951 IV. Net income for the year 42,443 33,192 28,351 V. Shares held by other shareholders 9,658 9,142 8,954 VI. Treasury stock EQUITY 151, , ,271 B. LONG-TERM LIABILITIES I. Provisions for pensions 12,720 12,305 12,103 II. Provisions for taxes, similar obligations and other liabilities 8,732 9,225 8,494 III. Loans/convertible profit-sharing privileges 8,175 34,902 34,902 IV. Liabilities to banks 98,297 65,098 76,376 LONG-TERM LIABILITIES 127, , ,875 C. SHORT TERM LIABILITIES I. Provisions 11,813 10,451 10,887 II. Liabilities to banks 39,348 31,366 31,476 III. Trade payables 76,944 51,591 73,148 IV. Other liabilities 26,476 32,169 28,827 SHORT-TERM LIABILITIES TO BANKS 154, , ,338 EQUITY AND LIABILITIES 434, , ,484

18 18 Group Financial Report 9M 2008 Group interim financial statement Group Cash-Flow statement according IFRS Group Cash-Flow statement at 30. September 2008 according IFRS in Euro k in Euro k Period earnings before tax and extraordinary items 26,521 27,126 Depreciation 4,363 3,916 Increase/decrease in provisions 1, Profit/loss from the disposal of long-term assets Interest expence 5,456 9,737 Decrease/increase in receivables and other assets -32,346-22,880 Increase/decrease of inventories -23,480-16,010 Increase/decrease in trade payables and other payables 15,630 12,541 Paid income tax -6,257-2,937 Cash-flow from operational activity -8,557 10,923 Inflow from the disposal of long-term assets Disbursements for the acquisition of long-term assets -8,776-5,098 Disbursemets for the share purchase of consolidated companies -8,089 0 Interest received Cash-flow from investment activities -15,649-4,117 Inflow payments from the issues of shares 1, Inflow payments/disbursements from taking out/repaying loans 35,840 10,035 Paid interest -6,076-10,196 Paid dividends -6,211-5,089 Cash-flow from financing activities 25,143-4,292 Exchage rate-dependend and other value change in cash and cash equivalents -1,366 0 Net change in cash ,514 Cash and cash equivalents at the beginning of the period 13,174 9,326 Cash and cash equivalents at the end of the period 12,745 11,840 11,260,00 Free Cash Flow * -30,282-3,390 * Free Cash Flow = + CF operating activities + CF from investment activities - paid interests

19 Group interim financial statement Group Financial Report 9M Consolidated Statements of Stockholders Equity As 30. September 2008 in accordance with IFRS in Euro k Subscribed capital Capital reserve Legal reserves Other consolidated reserves Group net income for the year Minority interests Treasury stock Group total equity Satus as per ,495 6,463 2,011 4,706 13,453 9, ,715 Capital increase convertibles VBH Holding AG 3,020 12,078 15,098 Capital increase option privilege VBH Holding AG Provisions for Cash Flow Hedge Distribution -4,380-4,380 Consolidation -3,072-3,103-6,175 Shift of currency adjustment item Annual net profit/loss 21,705 2,485 24,190 Allocation to retained income and other regrouping 7 5,240-2, ,604 Status as per ,865 19,149 2,018 6,934 28,351 8, ,271 Satus as per ,865 19,149 2,095 7,395 33,192 9, ,838 Capital increase convertibles VBH Holding AG 5,345 21,381 26,726 Capital increase option privilege VBH Holding AG 580 1,011 1,591 Provisions for Cash Flow Hedge -5,980-5,980 Distribution Consolidation -46-1,782-1,828 Shift of currency adjustment item Annual net profit/loss 18,177 2,087 20,264 Allocation to retained income and other regrouping 1 3,225-2, Status as per ,790 41,541 2,096 10,313 42,443 9, ,841

20 20 Group Financial Report 9M 2008 Group interim financial statement Segment reporting Segment reporting as 30. September 2008 in accordance with IFRS 9 M 2007 in accordance with IFRS in Euro k Segment Germany Segment Western Europe Segment Eastern Europe Segment Other Markets Segment Corporate Services Consolidation VBH Group Sales external 263, , ,655 3, ,901 Sales group 7,462 4, ,298-10,215 3,864 Total sales 271, , ,481 4,364-10, ,765 Earnings before interest and taxes (EBIT) 7,685 10,574 21, , ,862 Total assets 115, , ,791 5, , , ,484 Total liabilities 139,882 76,861 55,903 11, , , ,214 Employees , ,720 9 M 2008 in accordance with IFRS in Euro k Segment Germany Segment Western Europe Segment Eastern Europe Segment Other Markets Segment Corporate Services Consolidation VBH Group Sales external 271, , ,823 7, ,644 Sales group 17,280 4, ,927-17,236 7,160 Total sales 288, , ,503 9,292-17, ,804 Earnings before interest and taxes (EBIT) 9,069 7,543 18, , ,978 Total assets 133, , ,694 10, , , ,346 Total liabilities 151,808 82,148 69,506 15, , , ,505 Employees , ,858

21 Group interim financial statement Group Financial Report 9M Explanatory Notes Basis The Group Interim Financial Statement of VBH Holding AG as of 30 September 2008 is prepared according to the International Financial Reporting Standards (IFRS) for interim reporting as are to be applied in the European Union (EU) and according to the regulations of the Securities Trading Act (WpHG) for group semi-annual financial reports. These Interim Financial Statements only refer to the Group and contain all information and notes details which according to IFRS and WpHG are necessary for interim financial statements. The Group Semi-Annual Financial Report should be read together with the Annual Report 2007 and the additional information contained therein. The Group Annual Financial Statements of VBH Holding AG as at 31 December 2007 was prepared in accordance with valid International Financial Reporting Standards (IFRS) as in effect on the closing date. The accounting and valuation methods were continued unchanged when preparing this Group Financial Report 9M/2008. The Group Financial Report 9M/2008 is not certified and it was not subject to any kind of audit review. Consolidated Group All essential companies besides VBH Holding AG were included in the Group Financial Statements. The consolidated Group at the closing of 2007 was changed through the purchase of the Belgian company VBH Hody, which was acquired on 14 April The time of transfer of the de facto control was set at 1 January Included in the Italian subgroup was Fercom Srl, Turin effective as of 1 January Owing to irrelevant implications for the consolidated earnings, the previous year figures were not adjusted retrospectively after six months by changes in the consolidated group at the end of Financial Results In the reporting period, operating interest expenditure fell from Euro 10.2 million to Euro 6.1 million. The financial results improved from Euro -9.7 million in the previous year to Euro -5.5 million. Decisive for this development are the lower interest expenditure through the partial conversion of the profit sharing certificates into shares as well as through the improved rating of VBH Holding AG. Moreover, a one-off expense of Euro 3.0 million for a derivative financial instrument was reported in the financial results in the previous year. Income Taxes ncome taxes are recorded during the reporting period based on the best estimate of the weighted average annual income tax rate that is anticipated for each company for the entire year. On this basis, a tax rate of 27% was used in calculations for the reporting period. Minority Interests Minority interests in the profit result primarily from the minority participations of foreign managing directors as well as of joint venture partners in our respective regional companies. Earnings per share Earnings per share are determined by taking into account the weighted number of average outstanding shares. When calculating the diluted earnings per share, shares which may potentially be issued from the still applicable stock option plan are taken into account (status as at 30 September 2008: 45,790,408 shares). Acquisition of own shares On 9 June 2008, the Annual General Meeting authorised the Executive Board to acquire up to 10% of the issued shares by 8 December These were acquired through the stock exchange or by way of a public purchase offer which was directed to all shareholders. Segment reporting The organisational structure of VBH is still divided into five segments, which at the same time reflect the control structure of the Group. The segments consist of Germany, Western Europe, Eastern Europe, Other Markets and Corporate Services. If the shares are purchased through the stock exchange, the purchase price may not exceed or fall short of the mean value of the prices of shares in the company on the last 10 stock exchange trading days which preceded the purchase by more than 10%. If these are purchased based on a public offer to all shareholders then the purchase price paid to the shareholders may not exceed or fall short of the average value

22 22 Group Financial Report 9M 2008 Group interim financial statement of the prices of shares of the company on the last 10 stock exchange trading days which preceded the publication of the offer by more than 20%. The Executive Board is authorised in certain cases, with the approval of the Supervisory Board and under the exclusion of the subscription right of the shareholders, to sell the acquired own shares in another manner than through the stock exchange or by an offer to all shareholders. The Executive Board was further authorised to collect own shares in the company. This would lead to a reduction in capital. No activities in this respect have been carried out so far and are currently not planned. Significant Events and Staff Changes Effective as of 15 March 2008, Dr Ralf Lieb was appointed as member of the Executive Board. Effective as of 31 March 2008, Mr Rainer Hribar was appointed Chairman of the Executive Board. Mr Stephan M. Heck was judicially appointed as a further member representing the shareholders on the Supervisory Board as of 8 January 2008 and was elected for a further period of office at the Annual General Meeting with the other shareholder representatives. Effective as of 9 June 2008, Mr Martin Morlok was elected as employees representative on the Supervisory Board, as a successor to Mr Jochen-Michael Fussner. Information on Business Transactions with Closely Associated Companies and Persons All performance relationships with closely associated companies are covenanted under contract and correspond to market conditions. The company did not maintain relations with closely associated persons during the reporting period.

23 Declaration pursuant to 37y No. 1 Securities Trading Act

24 24 Group Financial Report 9M 2008 Declaration pursuant to 37y No. 1 Securities Trading Act The Executive Board assures in accordance with its best knowledge and belief that the Group Interim Financial Statement dated 30 September 2008 provides a fair and accurate view that is commensurate with the actual statues of the Group s assets, finances and earnings in accordance with applicable accounting standards for preparing interim reports, and that the course of business, including business results and the Group s status, is reproduced in the Group Interim Director s Report in such a manner that conveys a fair and accurate view of actual conditions and that describes the Group s essential developments for the remainder of the fiscal year. Korntal-Münchingen, November 2008 VBH Holding Aktiengesellschaft Executive Board

25 Further Information Konzernzwischenabschluss VBH Konzern-Halbjahresfinanzbericht

26 26 Group Financial Report 9M 2008 Further information Financial calender Annual report 2008 March 31, 2009 Balance sheet press conference March 31, 2009 Interim Report Q May 14, 2009 Annual Shareholder s Meeting June 10, 2009 Interim Report Q August 13, 2009 Interim Report Q November 12, 2009

27 Further information Group Financial Report 9M Contacts VBH Holding AG Siemensstraße 38 D Korntal-Münchingen Telephone switchboard: Internet: Contact Investor Relations Securities code no ISIN Code: DE Disclaimer This report contains statements that are based on the future. Such kinds of forecast-related statements are based on certain assumptions and expectations that were made at the time that this report was published. They are therefore linked to risks and uncertainties, and actual results may deviate considerably from the results described in statements that are based on the future. A large number of such risks and uncertainties will be determined by factors that are not subject to the influence of VBH Holding AG and that cannot be assessed with certainty today. These include future market conditions and economic developments, the conduct of other market participants, achievement of any anticipated synergy effects and legal and political decisions. VBH Holding AG does not perceive itself as obligated to publish corrections of such kinds of statements that are based on the future in order to reflect events or conditions that occur after publication of this report.

28 VBH Holding AG Siemensstraße Korntal-Münchingen Telefon