Q1 Q2 Q Interim Report

Transcription

1 Q1 Q2 Q Interim Report

2 CEWE COLOR: European market leader in photofinishing and in digital printing for photo books and other photo products CEWE COLOR is the service partner for the premium trademarks in the European photographic market. CEWE COLOR supplies both the over-thecounter trade and the Internet trade with photos and digital products. In 2010, the company developed 2.5 billion photos and over 4.3 million CEWE PHOTOBOOKS and other photo gifts. Our main competitive advantages are the CEWE PHOTOBOOK (the leading photo book brand throughout Europe), our high level of competence in digital printing, efficient industrial production and logistics, as well as the wide distribution via the Internet and through 45,000 retailers. 50 YEARS I N N O V A T I O N

3 HIGHLIGHTS Q Sales: above expectations 743 million prints in the third quarter 2011 surpass the target corridor of 630 to 660 million prints For the first time in a long while, the third quarter once again reported more prints: growth rate of 2.0 % against last year s quarter (Q3 2010: 729 million prints) The basic trend of From quantity to quality continues over the entire year: fewer prints, but higher quality In the third quarter, the growth of the CEWE PHOTOBOOK exceeds the total annual target corridor of + 7 % to + 12 %, at % to million books Turnover: photofinishing accounts for increase in turnover In comparison to the previous year, total Q3 turnover increases by 4.6 % to million euros Photofinishing turnover is rising: turnover per photo increased by 4.1 %, thus driving the photofinishing turnover by 6.2 % to 91.9 million euros Retail trade turnover remains stable at 29.9 million euros (+ 0.1 % as compared to previous year s quarter) Results: exceeded expectations Further strong seasonal migration on the earnings level: Q2 and Q3 declining, Q4 to generate nearly total net income in 2011 Therefore, although the Q3 EBIT declined, at 8.9 million euros (Q3 2010: 12.3 million euros) it was better than expected ( million euros); thus, also the Q1 Q3 EBIT exceeded expectations by 4.4 million euros Earnings after taxes in Q1 Q3 rising by 1.6 million euros to 0.4 million euros Annual net income targets within reach: only at least 1.8 million euros of surplus earnings required in Q4 compared to the previous year (i. e. a Q4 EBIT of at least 23.6 million euros) Stable basic trend: seasonal migration continues to strengthen the fourth quarter and has always led to at least the surplus earnings now required Statement of Financial Position and Financial Management sound equity ratio Lower investments reduce non-current assets by 0.5 million euros Operating net working capital again slightly lower from 34 days to 32 days on a year-on-year comparison Equity ratio advances from 42.4 % (September 30, 2010) to a sound 43.0 % (September 30, 2011) Cash Flow: continued to improve Cash flow from operating activities rises by 1.4 million euros Investments increased by 5 %, due to preparation of the Christmas season Thus, free cash flow increases by 1.0 million euros Return on Capital Employed: improved by 2.9 percentage points Twelve-month ROCE improved from 14.1 % (as of September 30, 2010) to 17.0 % (as of September 30, 2011)

4 Cutting robot Following digital printing, the cutting robot reduces large-sized photo products to their trimmed size. Formats of up to 3.20 x 1.60 metres can be processed on the cutting table of the robot. Thus, posters are trimmed at a speed of 100 metres per minute; also, photos behind acrylic glass or on an Alu-Dibond plate are cut to the required dimension.

5 Table of Contents Q To the Shareholders 6 Letter to the Shareholders 6 CEWE COLOR Share 12 Interim Management Report 16 Markets and Products 18 Results 32 Employees 55 Organisation and Administration 56 Report on Expected Developments 60 CEWE COLOR Group Structure and Corporate Bodies 67 Consolidated Financial Statements 68 Consolidated Income Statement 70 Consolidated Statement of Recognised Income and Expenses 71 Consolidated Statement of Financial Position 72 Consolidated Statement of Cash Flows 74 Segment Reporting 76 Consolidated Statement of Changes in Equity 78 Selected Notes 80 Auditor s Certificate 84 Further Information 86 Multi-Year Overview 88 Production Plants and Distribution Branches 96 Financial Diary 97 Imprint 97 Glossary 98 To the Shareholders Interim Management Report Consolidated Financial Statements Further Information Page reference Reference to table or graphic Internet reference Supplementary information

6 6 To the Shareholders Letter to the Shareholders Dr. Rolf Hollander, Chairman of the Boards of Management of CEWE COLOR Holding AG and the Neumüller CEWE COLOR Stiftung

7 Letter to the Shareholders To the Shareholders 7 Dear Shareholders! CEWE COLOR took a very successful course of business during the first nine months On the Highlights page, which always starts our reports, you will find the most significant results of the third quarter, or the first three quarters, respectively. This proves: we continue to be on target, again exceeding our targets in some areas. Particularly our main brand product, the CEWE PHOTOBOOK, continues to enjoy an outstanding acceptance by the consumers, and remains our most important impetus for growth. We are thus in an excellent position for the increasingly significant Christmas business, the strongest quarter by far for sales of our CEWE PHOTOBOOKS. Our commercial online printing service, viaprinto.de, had a successful start and is gaining more and more enthusiastic customers. To the Shareholders Seasonal migration of business into the Christmas quarter continues For many years, wonderful Christmas gifts have consistently featured CEWE PHOTOBOOKS and many other valueadded products, such as photo calendars and Christmas cards, photos on canvas or very decorative photos on acrylic glass or on Alu Dibond. This is a trend, which has increased in the past years. Moreover, another basic trend continues: unlike analogue films, holiday snaps are meanwhile exposed time-delayed and increasingly as value-added products as well. Profits of the fourth quarter have been strengthened by these developments, year after year since For years now, the fourth quarter in particular has been accounting for an increasing share of profits This is why the fourth quarter is increasingly gaining importance for the profit of our company. Accordingly, the share of profits of the first three quarters declines.

8 8 To the Shareholders Letter to the Shareholders EBIT before restructuring Distribution of earnings Q1 Q3 vs. Q4 in million euros e EBIT before restructuring Share in earnings Q1 Q3 vs. Q4 in % % 100 % 100 % 100 % 100 % 100 % Target 23.6 range Result Q4 Result Q1 Q3 Share in earnings Q4 Share in earnings Q1 Q3 We thus have the same situation as in the past years prior to the seasonal peak: as usual, profit of the first three quarters before restructuring has declined. As always, the fourth quarter has to fulfil its promise to increase earnings, thus reaching the annual targets. And the fourth quarter has been fulfilling this year after year since And this will not be different in 2011 either. CEWE immune to potential economic risks Economic risks will not change this fact neither for the remaining weeks of 2011 nor for the year Experience from the crisis years 2008 and 2009 has impressively confirmed that the demand for our products has remained consistently strong and increased even when economy has been flagging, consumer confidence declining, or consumer spending decreasing. For especially in such times, private belongings such as personalised photo products become all the more important. Social scientists and trend researchers call this

9 Letter to the Shareholders To the Shareholders 9 phenomenon cocooning. As a result, the earning power of CEWE COLOR does not suffer even in times of recession, but even benefits slightly from this. CEWE COLOR is well on the way to reaching the annual targets in 2011 as well The steady growth in profits in the fourth quarter for the past years will also ensure that we at least reach our annual targets in 2011 as well. Taking the operating profit (EBIT) as an example: our annual target 2011 lies around 28 to 31 million euros. To reach this target, we must increase the Q4 results of 2010 by 1.8 to 4.8 million euros to at least 23.6 million euros in the current year. A value which is absolutely realistic. For the growth in earnings of the fourth quarters was exactly in this order of magnitude, or even higher, in the past years. In the twelve-month perspective for that matter, the again increased capital efficiency of our company becomes clear: the return on capital employed, i. e. the interest rate of the invested capital, rose from 14.1 % (as of September 30, 2010) to now 17.0 % (as of September 30, 2011). A value, which is very impressive. To the Shareholders Growth EBIT before restructuring Q4 vs. previous year EBIT increase Q4 in million euros e

10 10 To the Shareholders Letter to the Shareholders In companies who offer online photofinishing only as many commercial businesses do the first three quarters do not make any contribution to the total annual earnings, some even write negative figures. This development will increasingly affect the business of CEWE COLOR as well. The seasonal migration at CEWE COLOR is, for that matter, far from being completed. Never before has CEWE COLOR been so well prepared for a Christmas season Each year, we secure the continuous seasonal migration into the fourth quarter with ever more extensive preparatory measures. This year as well, the course has been set for the rise in earnings of the fourth quarter: We have again strongly expanded the product range. Both the quality and the quantity of our marketing activities increased further. The capacity of our service hotline was again expanded. The order channels were further improved (new versions for both our CEWE PHOTOBOOK software and the online applications are available on the market). The server capacity in our computer centres was expanded again. The additional production staff is even better trained and increased in numbers. The technical production capacity was again expanded at the bottlenecks.

11 Letter to the Shareholders To the Shareholders 11 Dear shareholders, all our employees are very focused on making these improvements and others fully effective. Enjoy our great products and our excellent service. Our company is on the right way. To the Shareholders Oldenburg, November 15, 2011

12 12 To the Shareholders CEWE COLOR Share CEWE COLOR SHARE CEWE COLOR share considerably better than the DAX and SDAX In the third quarter 2011 as well, the development on the stock exchanges was under the influence of the debt crisis of some euro zone countries, in particular the difficult situation in Greece. The resulting uncertainty triggered price declines, some of which were steep, on the stock exchanges: the SDAX lost 20.4 %, the DAX slumped by as much as 25.4 % during this period. Although the CEWE COLOR share was not able to evade these external influences, it took a much better course than the SDAX and the DAX, with a decline of 11.8 %. CEWE COLOR share October 1, 2010 to October 31, 2011 in euros 10 / / / / / / / / / / / / / % Annual high euros 130 % 120 % % 100 % 90 % 80 % Annual low euros CEWE COLOR share DAX SDAX

13 CEWE COLOR Share To the Shareholders 13 Stock market turnover increasing further On average, 17,203 CEWE COLOR shares changed owners daily in the third quarter. In comparison to the respective last year s period, this corresponds to an increase of % (Q3 2010: 12,761 shares per day). Analysts agree: Buy All external analysts that have been tracking CEWE COLOR continue to agree unanimously in their positive analysis and recommend the share with a Buy or Add. A total of ten analysts track the CEWE COLOR share regularly since Berenberg Bank took up the coverage in the second quarter. All analyses are available as downloads on our homepage. en/investor-relations/ publications/studies To the Shareholders Average trading volume in shares per day 08 / / / / / / / / / / / / / / / 11 35,308 15,174 8,614 17,600 11,079 16,935 15,721 21,502 12,339 11,249 10,520 10,931 20,456 20,222 12,632

14 14 To the Shareholders CEWE COLOR Share CEWE COLOR share remains a fixed parameter in the SDAX Each month, the Deutsche Börse prepares a ranking of the corporations listed in the different indices in order to be able to review their index inclusion and to adjust it, if so required. In this process, the trading volumes as well as the market capitalisation will be used as a benchmark. According to the criterion trading volume, CEWE COLOR ranked 81st in September 2011, which corresponds to a two-rank improvement from position 83 on the June listing. According to the market capitalisation, the CEWE COLOR share is now ranked 94th, compared to 92nd in June. The CEWE COLOR share thus remains a major player on the SDAX index, which typically includes shares that rank 110th or higher. One-third of all shares are represented in the Board of Management and the Supervisory Board In total, 34.1 % of all CEWE COLOR shareholders are represented in the Board of Management and the Supervisory Board, and are thus decisively involved in the management of the business: the largest shareholder of CEWE COLOR is the heirs of Senator h. c. Heinz Neumüller (ACN Vermögensverwaltungsgesellschaft mbh & Co. KG), at 27.4 %. Together with Dr. Joh. Christian Jacobs (Sentosa Beteiligungs GmbH) holding a share of 5.3 %, as well as 1.4 % held by other members of the Board and the Supervisory Board, a major part of the shareholders are actively managing the company. Overview of the current analyst ratings Analysis Date Berenberg Bank Buy Sep. 09, 2011 GSC Research Buy Aug. 23, 2011 Close Brothers Seydler Bank Buy Aug. 18, 2011 Commerzbank Buy Aug. 15, 2011 Bankhaus Lampe Buy Aug. 15, 2011 Warburg Research Buy Aug. 11, 2011 BHF Bank Overweight Aug. 11, 2011 NORD / LB Buy Aug. 11, 2011 Silvia Quandt Research Buy Aug. 11, 2011 DZ Bank Buy Feb. 25, 2011

15 CEWE COLOR Share To the Shareholders 15 CEWE COLOR is at the service of its shareholders At CEWE COLOR, the investor relations work is dedicated to keeping all market participants informed promptly, comprehensively and regularly, ensuring a high overall transparency. Thus, CEWE COLOR does not only publish all annual and interim reports simultaneously on the Internet at but also makes available all analyst telephone conferences as webcasts and audiocasts on its website. In addition, all significant presentations of the company at conferences and other events, information on the share price, press and ad-hoc releases, and studies regarding CEWE COLOR are made available on the site. To the Shareholders Shareholder structure (November 2011) in % (100 % refer to 7.38 million shares) 27.4 % Community of heirs of Senator h.c. Heinz Neumüller, Oldenburg 10.0 % CEWE COLOR Holding AG, Oldenburg 5.3 % Sentosa Beteiligungs GmbH, Hamburg 4.5 % Sparinvest Holding A / S, Denmark 3.0 % Schroders plc, London, UK 48.4 % Other shareholders 1.4 % CEWE COLOR Board of Management and Supervisory Board* * Together with the shares of Dr. Joh. Christian Jacobs, member of the Supervisory Board (Sentosa Beteiligungs GmbH), totalling 6.7 %

16 Cutomat Following the chemical processing, the cutomat automatically cuts individual prints from the finished photographic paper reel, e. g. in the formats 9, 10 or 13. These are then sorted into the order bag, together with the index print. The order is now ready for dispatch to the customer.

17 Table of Contents Interim Management Report 17 Interim Management Report Markets and Products 18 Current Economic Setting 18 Photo Market 20 Products and Marketing 22 Results 32 Sales 32 Turnover 37 Earnings and Structure of Income Statement 39 Segments 46 Statement of Financial Position and Financial Management 49 Cash Flow 52 Return on Capital Employed 54 Interim Management Report Employees 55 Organisation and Administration 56 Report on Expected Developments 60 CEWE COLOR Group Structure and Corporate Bodies 67

18 18 Interim Management Report Markets and Products: Current Economic Setting MARKETS AND PRODUCTS Current Economic Setting Global economy at a low growth rate The global dynamic growth continued to lose momentum during the first two months of the second half of According to the OECD, the growth of the real GDP of the 34 leading global economies was at 1.7 % in the second quarter 2011 already, and thus weaker than in last year s quarter (+ 2.4 %). Moreover, the global trading volume dropped in Q for the first time since mid The decisive factors for the slower economic development are temporary, such as the consequences of the natural and nuclear disaster in Japan, and the dampening effects of higher commodity prices on the available income. However, structural problems such as the required state budget reorganisations and the consistent weakness on the labour and residential real estate market also played an important part. The renewed tensions on the international financial markets also put a strain on economic development. In August 2011, the worsening debt crisis in the euro zone led to a change in sentiment on the financial markets and a rising insecurity, all of which strained corporate and consumer confidence, i. e. capital building and thus overall growth. The economies of most emerging countries, such as China, India and Brazil grew strongly in the second quarter 2011 as well, supported by the active domestic demand. The disturbances of the value-added chains caused by the events in Japan slightly slowed the speed of growth. During the second quarter 2011, the full-year GDP in the USA expanded by 1.3 %, following a 0.4 % rise in the first quarter of the year. Private consumption, which had contributed noticeably to growth in 2010, lost some of its momentum. Industrial development, however, was robust. For the third consecutive time, economic performance in Japan dropped, in the second quarter by 0.5 %. In conjunction with the slowdown of economic momentum at the beginning of the year and the higher commodity prices, the rate of growth in the euro zone was depressed in Q According to Eurostat, the GDP rose by 1.6 % after 2.4 % in the strong first quarter. Based on surveys such as the purchasing managers index (EMI), the growth dynamics has noticeably slowed down for the euro zone in the first months of the third quarter. According to Destatis, economic development in Germany clearly cooled down in Q2 at a full-year increase of 2.8 %, compared to a growth rate of 5.0 % in the previous quarter. Although exports generated new positive impetus, imports rose i. a. on account of increased imports of electricity, so that the external contribution slowed down GDP growth. Construction investments declined slightly. Moreover, for the first time since the crisis year 2009, private consumption declined owing to

19 Markets and Products: Current Economic Setting Interim Management Report 19 the higher prices for energy and special effects such as the insecurity due to the debt crisis. this year in July 2011, to 3.5 %, the Central Bank of China has not changed the rate since owing to the inflationary pressure. Inflation rising slightly Despite the decreasing crude oil prices, the high prices for energy remained the relevant driving force for the rate of inflation in September. According to Eurostat, the price increase rate in the euro zone was at 2.7 % in June. In both July and August 2011, the rate was 2.5 %. In September 2011, the rate of inflation surprisingly rose to 3.0 %, according to a first Eurostat estimate. As indicated by Destatis, prices in Germany went up by 2.3 % in June. In July and August 2011 as well, the rate of inflation of 2.4 % each month noticeably exceeded the two-percent mark. In September 2011, prices rose by 2.6 % and thus stronger than in the past three years. On the back of the economic downswing and the worsening euro crisis, the European Central Bank (ECB) lowered the key interest rate to 1.25 %. The ECB assumes that the rate of inflation is likely to remain above the two-percent mark in the months to come, and to decline thereafter. At the beginning of July 2011, the key interest rate had been raised for the second and, so far, last time this year. The Federal Reserve Bank (FED) in the USA also waived a more restrictive monetary policy in view of the economic development. After having raised the key interest rate for the third time Exchange rate: euro is losing The debt crisis in the euro zone, the development of the differences in yields, and the emerging economic weakening all had a negative effect on the price development of the European currency. From June 30 to October 5, 2011, the euro lost 7.7 % in relation to the US dollar, 12.0 % to the Japanese yen, and 9.0 % in relation to the Chinese yuan renminbi. The nominal effective exchange rate of the European currency weakened against the currencies of the 20 most significant trading partners of the euro zone, with quite high fluctuations. On October 5, 2011, the euro was quoted 3.7 % under its level of the end of June 2011, and 1.9 % under its average level of Interim Management Report

20 20 Interim Management Report Markets and Products: Photo Market Photo Market In 2010, 139 million digital cameras were sold worldwide, of which 35 million were sold in Western Europe and 8.3 million in Germany About 22 % of an average of 500 digital photos taken by each consumer per year are developed on paper In Western Europe, the market for digital value-added products grew by 16 % to 420 million euros in 2010 Digital cameras continue to be very popular The high sales of digital cameras has been continuing for almost a decade now. According to the GfK Group (Gesellschaft für Konsumforschung), 139 million digital cameras were sold worldwide in Of these, 35 million were sold in Western Europe, with Germany being the largest sales market with 8.3 million units, according to GfK. About 10 % of all digital cameras sold in Western Europe were high-grade reflex cameras an increase of 7 % as against the previous year. The latest market forecasts show that the demand for cameras will remain at a high level in the coming years despite a household saturation of more than 65 %. This development is to be seen in conjunction with the opening up of new target groups, and the fact that particularly the consumers replace or supplement their photographic equipment at shorter intervals than in the past. 91 % of the possible maximum decrease of analogue films mastered successfully As a result of the growing market share of digital cameras, analogue cameras were used to a lesser extent, thus reducing the need for film purchases. In 2000, film sales of 191 million units reached their absolute peak in Germany. In 2010, only 18 million units were sold a decline to 9 % of the original sales volume. Digital technology changes order habits In line with the change to digital photography, the photo processing and the number of paper prints have changed as well. Whereas the consumer still exposed an average of 120 photos per year in the analogue era, about 22 % of 500 (i. e. 110) digital photos are exposed on paper. However, a very encouraging trend towards high-quality products such as photo books and digital value-added products such as photo greeting cards, photo calendars and wall decoration can be noticed.

21 Markets and Products: Photo Market Interim Management Report 21 Photo books and digital value-added products with strong growth Owing to the noticeably higher photo volume and the increasing spreading of high-grade digital cameras, the consumer has sufficient photographic material at his disposal to be enhanced in the form of a photo book or a digital value-added product. The photo book was widely welcomed by consumers throughout Europe. According to FutureSource, a total of 3.6 million photo books were sold in Germany in 2008, in 2010 it was already 5.7 million units. In Western Europe, even more than 17 million photo books were sold in the past year. The market research company FutureSource is of the opinion that the number of photo books sold will increase to just short of 21 million units by The strongest sales markets are Germany, the Netherlands, Belgium and France, representing a share of 60 % of the Western European market in Large growth potentials can also be found in France and Spain in particular. According to FutureSource, the market for digital value-added products grew by 16 % to 420 million euros in Western Europe in 2010 (source: Market research FutureSource). According to the assessment of the market researchers, the market will have grown to around 500 million euros by Essential impetus for growth stems from photo books, photo greeting cards, photo calendars as well as wall decoration. Interim Management Report

22 22 Interim Management Report Markets and Products: Products and Marketing Products and Marketing Industrial photofinishing of digital photos with cost advantages, instant printing at retail outlets Digital prints may be ordered both via the home printer and kiosk systems in the retail outlets (instant printing), as well as the industrial laboratory. Home printing on the consumer printer and instant printing with thermo sublimation or inkjet printers in the retail outlets provide the consumer with the quick but more expensive prints. Industrial photofinishing, on the other hand, offers noticeably cheaper digital paper prints within a delivery period of one to two days. Whereas home printing has been declining for some years now, the exposure of photos in the industrial laboratory and through so-called kiosk systems in the shops is growing, as consumers come to increasingly appreciate the comfortable instant printing. The market research institute FutureSource has calculated that the number of photo kiosks with instant printers installed between 2009 and 2010 in Germany, Austria, Switzerland, France, Belgium and the Netherlands rose from about 42 thousand to more than 45 thousand units (FutureSource: June 2011), with an above-average growth in Germany, from 20.5 thousand to 23.5 thousand units, when comparing the different countries. CEWE COLOR already achieves more than 10 % of its photofinishing sales by instant printing with kiosk systems, and was able to sell several hundred new kiosk systems in the European market during the past months

23 Markets and Products: Products and Marketing Interim Management Report 23 Internet increasingly popular as method of ordering The broadband initiative of the German Federal Government and the telecommunications industry will noticeably strengthen this channel of distribution. There are plans to provide 75 % of the households with 50 Mbps Internet access by This will make it much easier to transfer large photo files and photo book files. Currently, over 70 % of the population in Baden-Wuerttemberg are already able to use a fast Internet access of up to 100 Mbps. CEWE COLOR was quick to recognise the growing importance of the Internet as channel of distribution and for many years now has been providing its trading partners with end-to-end e-commerce solutions for ordering digital photos. CEWE COLOR designs the Internet sites, coordinates the marketing, develops the software and operates computer centres for its trading partners. Internet photo providers, Internet portals and chemist s retail chains are the strongest users of these CEWE COLOR services. CEWE PHOTOBOOK Europe s most popular photo book With the CEWE PHOTOBOOK, CEWE COLOR has established itself very successfully as the market leader in this product area by continuous product development and the marketing of the product category, and is persistently expanding its leading position in Europe. During this expansion, CEWE COLOR also held its ground as European market leader in 2010, with more than 4.3 million CEWE PHOTOBOOKS sold. CEWE PHOTOBOOK product range to be expanded further The CEWE PHOTOBOOK in Portrait format (approx. 21 x 28 cm) with individual hardcover is definitely the bestseller of the product range. However, even larger formats are also increasingly gaining in significance, such as the CEWE PHOTOBOOK Large Landscape size. In 2011, particularly the products on photographic paper and the high-gloss finished formats were well received. Overall, it is now recognised that it is extremely important that CEWE COLOR offer a large number of different versions of the CEWE PHOTOBOOK, ranging from 26 to 154 pages. Photo books are very personal products that consumers want to customise to their individual requirements. CEWE COLOR meets these requirements by offering a wide range of products. Interim Management Report

24 24 Interim Management Report Markets and Products: Products and Marketing In 2011, the portfolio is again subjected to targeted expansion Nine new versions are now available: CEWE PHOTOBOOK Mini (approx. 15 x 11 cm) CEWE PHOTOBOOK Large Landscape with softcover (approx. 28 x 21 cm) CEWE PHOTOBOOK Compact Landscape (approx. 19 x 15 cm) with high-gloss finish CEWE PHOTOBOOK XXL Landscape (approx. 38 x 29 cm) with high-gloss finish CEWE PHOTOBOOK Compact Landscape on matte photographic paper CEWE PHOTOBOOK Large on matte photographic paper CEWE PHOTOBOOK Large on glossy photographic paper CEWE PHOTOBOOK Large Landscape on glossy photographic paper CEWE PHOTOBOOK XL on glossy photographic paper CEWE PHOTOBOOK now available on glossy photographic paper Photos on traditional photographic paper are still very suitable for ambitious photographers, since this type of paper offers optimum sharpness, clear whites, defined blacks, and the maximum colour space. Photographic paper is particularly suited for utilising to the full the potential performance of digital reflex cameras and high-resolution compact cameras, and for developing fascinating pictures. Developed by international research teams according to state-of-the-art criteria, the special photographic paper for the CEWE PHOTOBOOK is clearly, to the eye and to the touch, a new paper quality for image representation in photo books. The particularly flat lay-flat binding is ideal for the presentation of landscape prints on double pages. The CEWE PHOTOBOOK has been made available recently both on matte and on glossy photographic paper, and with up to 98 pages.

25 Markets and Products: Products and Marketing Interim Management Report 25 Photo calendars and greeting cards Photo greeting cards and folding cards are a favourite means of transmitting individual personal messages in writing and as a picture. Folding cards with high-gloss finish in the formats Classic and XL were introduced for the very special occasions, such as Christmas, weddings and births. The elegant gloss on the outer pages lends the cards a very special appearance. The folding cards with high-gloss finish are available in sets of ten with matching envelopes. Another highlight in the greeting cards portfolio is the new individual greeting card, available in the formats XL Fold Long and 13 x 18. In addition, CEWE COLOR was able to expand its assortment of photo calendars by new products in time for the Christmas business. As of now, the high-quality printed wall calendars in A3 and A4 formats are not only available on matte but also on glossy paper. The high-gloss finished pages lend the motives a special radiance. A top favourite is the CEWE COLOR photo calendar as a Christmas present or as personal season s greetings. Wall decorations The traditional photo posters as wall decoration are increasingly being replaced by more sophisticated products such as collage posters and photos on canvas. Furthermore, this category was supplemented with the high-quality products Photo on rigid foam board, Photo on Alu Dibond, Photo behind acrylic glass and Gallery print, produced by UV direct print. In addition, the format selection of the photo canvasses and the XXL poster was expanded. The XXL posters are matte posters processed in digital printing in formats of up to 100 x 300 cm. The above mentioned products are offered in Classic and Square formats as well as in the modern Landscape formats. Interim Management Report

26 CEWE PHOTOBOOK ON MATTe OR GLOSSY PHOTOGRAPHIC PAPER The inside pages of this CEWE PHOTOBOOK versions are printed on high-quality photographic paper. Subsequently, two pages each are blocked with utmost precision and care. A so-called accordeon binding without the typical fold in the middle (lay-flat binding) is thus created. These sophisticated CEWE PHOTOBOOKS are now available not only on matte, but also on glossy photographic paper in a wide variety of formats: Photographic paper, matte NEW: glossy photographic paper Available formats: NEW: Compact Landscape (approx. 19 x 15 cm) NEW: Large (approx. 21 x 28 cm) XL (approx. 30 x 30 cm) Large Landscape (approx. 28 x 21 cm) Square (approx. 21 x 21 cm) Available formats: Large (approx. 21 x 28 cm) Large Landscape (approx. 28 x 21 cm) XL (approx. 30 x 30 cm)

27 Europe s No. 1 photo book CEWE PHOTOBOOK Revised CEWE PHOTOBOOK Christmas Key Visual A picture of a brand: Ille representing the most popular European photo book: the CEWE PHOTOBOOK. During the course of the quality upgrade, the Christmas Key Visual was adapted as well: components were reduced, clarity was created, and the CEWE PHOTOBOOK was given a sophisticated high-gloss finish. from 5.99 * The perfect gift * Recommended listed price for a small CEWE PHOTOBOOK including VAT. Price may be subject to packing and postage charge. Outstanding quality Simple and easy to create Huge range of sizes and covers YEARS

28 GREETING CARDS Folding cards with high-gloss finish (set of 10) High-quality printed folding cards with high-gloss finished outer pages in the sizes Classic and XL for very special occasions! Folding cards in the size 13 x 18 (set of 10) This high-quality printed folding card in the size 13 x 18 offers plenty of space for your creativity.

29 PHOTO CALENDAR Glossy wall calendar A4 + A3 (Portrait and Landscape format) Our new high-quality printed wall calendars with high-gloss finished pages lend your photos a very special shine, month for month. YEARS

30 REAL WORKS OF ART FROM YOUR PHOTOS! Our gallery products offer you modern and stylish forms for presenting your photos: starting with the photo on a rigid foam board or on Alu Dibond in matte finish, and the brilliant acrylic glass up to the glossy gallery print. In this process, the photo is printed behind acrylic glass and sealed with stable Alu Dibond on the back. Photo on rigid foam board Tough but appealing: your photo is printed directly on a rigid foam board a material that is, at the same time, modern, high-quality and inexpensive. It is manufactured from PVC and is very light. The effect: elegant photos with a high-class, matte surface. Photo on Alu Dibond Deluxe wall decoration: your photo is printed directly on Alu Dibond. This material consists of a synthetic core and two aluminium boards thus, designer pieces are created which are light, stable in shape, and durable.

31 Photo behind acrylic glass Crystal clear: photos behind acrylic glass. This guarantees best quality and highest colour brilliance and this in a large range of formats to choose from. Your photos behind acrylic glass always make a fantastic picture. Gallery print High-class exhibits: the gallery prints. High-quality masterpieces are created when printing your photo using UV direct print behind 4 mm thick acrylic glass, and then sealing it with a strong Alu Dibond board. YEARS

32 32 Interim Management Report Results: Sales RESULTS Sales 743 million prints in the third quarter 2011 surpass the target corridor of 630 to 660 million prints For the first time in a long while, the third quarter once again reported more prints: growth rate of 2.0 % against last year s quarter (Q3 2010: 729 million prints) The basic trend of From quantity to quality continues over the entire year: fewer prints, but higher quality In the third quarter, the growth of the CEWE PHOTOBOOK exceeds the total annual target corridor of + 7 % to + 12 %, at % to million books. An excellent basis for the significant fourth quarter Sales of CEWE COLOR products are characterised by two consumer trends: the trend to higher quality products and the seasonal migration into the fourth quarter. Total prints in million units Q Digital prints (incl. CEWE PHOTOBOOK prints) in million units Q % 8.5 % 4.8 % 7.6 % % Change to previous year % % % % % Change to previous year

33 Results: Sales Interim Management Report 33 In all of 2011 as well: seasonal migration into the fourth quarter continues The trend to an overall lower number of prints with higher quality continues From quantity to quality. CEWE COLOR s product mix thus changes increasingly in favour of the value-added products such as the CEWE PHOTOBOOK as well as the photo gift products. These product groups compensate the noticeable decline of photos from film. This decline of photos from film takes place mainly in the third quarter of a year. This is offset by the strong growing volumes of CEWE PHOTOBOOKS as well as photo gifts, photo calendars and greeting cards, which are particularly in demand in the fourth quarter as many consumers appreciate these products as Christmas gifts. The seasonal profile of the CEWE COLOR business, therefore, shifts noticeably in the direction of the end of the year. Interim Management Report Total photos seasonal allocation in % Q Q Q Q % 20 % 19 % 21 % 20 % 24 % 23 % 22 % 21 % 20 % 32 % 32 % 30 % 29 % 28 % 23 % 25 % 28 % 29 %

34 34 Interim Management Report Results: Sales Q3 sales exceed expectations: volume fully on course to achieving annual targets It is possible to estimate the shares of the quarters in the total annual volume as shown in the seasonal migration diagram below, the development of which has been consistent for years. As a result, a share in volume of about 28 % could be assumed for Q Based on the full-year target of 2.23 to 2.36 billion prints for 2011, the volume for the third quarter was anticipated at 0.63 to 0.66 billion prints. On the back of this, the third quarter exceeded the expected value, at billion prints, and thus confirmed the annual target. Likewise, the volume of the first three quarters 2011, at billion prints, surpassed the respective target of 1.52 to 1.61 billion prints. As already in the second quarter of 2010, a heatwave had hit some significant sales regions during Q3 2010, which situation was not conducive to ordering photo products, whereas order-friendly weather dominated in To put it briefly: the rainy summer in 2011 had a positive impact on ordering behaviour and incoming orders at CEWE COLOR. A detailed glance at the individual growth rates of the first three quarters 2011 in total indicates values above the ranges expected for the year: The total number of prints again following the trend From quantity to quality declined by 1.5 % to billion during the first three quarters. Thus, the reduction was lower than the corridor CEWE COLOR had predicted for the entire year 2011 (from 6 % to 11 %).

35 Results: Sales Interim Management Report 35 During the first three quarters, the number of analogue prints from film dropped by 32.3 % to 203 million prints, thus remaining within the scope of the decline expected for the full year of 30 % to 38 % (Q3 2011: 30.5 % to 83 million prints). The number of digital prints rose by 4.8 % to billion prints during the first three quarters, therefore developing stronger than the predicted range of reduction for 2011 of 1 % to 6 % (Q3 2011: % to 660 million prints). CEWE PHOTOBOOK and other value-added products continue their encouraging growth During the first three quarters of 2011, the CEWE PHOTOBOOK volume rose by 20.8 % to million books (Q3 2011: % to million books). This rise exceeds the growth corridor of 7 % to 12 % expected for Likewise, the sales volume of digital prints from the main value-added products produced using digital printing, e. g. photo calendars, photo greeting cards and wall decorations rose noticeably by a mid-double digit percentage. Interim Management Report Prints from film in million units Q CEWE PHOTOBOOKS in thousand units Q , , % 36.0 % 30.6 % 36.3 % 30.5 % Change to previous year % % % % % Change to previous year

36 36 Interim Management Report Results: Sales 89 % of total number of prints are digital Due to the success of the CEWE PHOTOBOOK and other valueadded products, digitalisation is increasingly approaching the 100 % mark. In the reporting quarter, 89 % of all prints were already digital in origin (Q1 Q3: 88.3 %), compared to 83 % in Q Customer preference Online order, pick-up at the POS confirms CEWE market positioning The ratio of prints ordered online rose from 57 % in last year s respective quarter to 65 % in the reporting quarter (429 million prints). 53 % of these consumers selected picking up their completed orders at the POS of the CEWE COLOR dealers. On the other hand, 47 % chose delivery by mail to their homes. Accordingly, 70 % of all photos were collected at the retail outlets of the CEWE COLOR trading partners. This confirms the strength of the CEWE COLOR positioning bricks and clicks, i. e. the strategic connection between over-the-counter sale and the Internet. Digital print orders in stores in million units Q Digital print orders via the Internet in million units Q % % 2.2 % 10.5 % 11.7 % Change to previous year % % % % % Change to previous year

37 Results: Turnover Interim Management Report 37 Turnover Q3 total turnover exceeds last year s quarter by 4.6 %, at million euros Photofinishing turnover is rising: turnover per photo increased by 4.1 %, thus driving the photofinishing turnover by 6.2 % to 91.9 million euros Retail trade turnover remains stable at 29.9 million euros (+ 0.1 % as compared to previous year s quarter) Turnover grows stronger than expected In Q3 2011, turnover rose at nominal million euros (adjusted for currency effects, million euros) in comparison to previous year s quarter by 5.4 million euros (+ 4.6 %). Based on the expected seasonal migration, a share of 25 % in the fullyear turnover had been anticipated for the third quarter In view of the annual turnover target of 447 to 460 million euros, this corresponds to a turnover in the range of to million euros. The turnover of million euros actually achieved in the third quarter thus surpassed the expected value. Interim Management Report Development of CEWE turnover per season in % of revenue Q Q Q Q % 19 % 20 % 20 % 19 % 24 % 24 % 22 % 22 % 20 % 21 % 30 % 28 % 27 % 26 % 25 % 27 % 29 % 31 %

38 38 Interim Management Report Results: Turnover Page 32 Sales Page 46 Segments Value-added products noticeably strengthened photofinishing turnover The trend From quantity to quality described in the chapter Sales is also clearly revealed in the photofinishing turnover. Whereas the total number of prints rose minimally in the reporting quarter, by 2.0 %, turnover of the photofinishing segments exceeded last year s level by 6.2 %, at 91.9 million euros (adjusted for currency effects, 5.5 %). In fact, the trend to a higher photofinishing turnover per print persists: in the third quarter, the plus was at 4.1 % and caused turnover per print to rise to euro cents (adjusted for currency effects, % to euro cents per print). Retail trade with stable turnover In the reporting quarter, the retail trade segment achieved an almost identical turnover as in the third quarter of the preceding year, at 29.9 million euros (+ 0.1 %; adjusted for currency effects, 1.1 %). Details to be found in the chapter Segments. Turnover in million euros Q Turnover per photo in euro cents % 4.7 % 4.7 % % % Change to previous year % % Change to previous year

39 Results: Earnings and Structure of Income Statement Interim Management Report 39 Earnings and Structure of Income Statement Strong seasonal migration on the earnings level continues: Q2 and Q3 declining, Q4 to generate nearly total net income in 2011 Therefore, although the Q3 EBIT declined, at 8.9 million euros (Q3 2010: 12.3 million euros) it was better than expected ( million euros); thus, also the EBIT in Q1 Q3 exceeded expectations by 4.4 million euros Earnings after taxes in Q1 Q3 rising by 1.6 million euros to 0.4 million euros Annual net income targets within reach: only at least 1.8 million euros of surplus earnings required in Q4 compared to the previous year (i. e. a Q4 EBIT of at least 23.6 million euros) Stable basic trend: seasonal migration continues to strengthen the fourth quarter and has always led to at least the surplus earnings now required Three seasonal particularities are decisive for understanding the earnings position of CEWE COLOR: the traditional loss-making first quarter, the still ongoing reduction of earnings in the second and third quarters, as well as the continually stronger rise in profit in the fourth quarter, overcompensating said loss. Interim Management Report EBIT before restructuring per season in % of revenue Q Q Q Q % 66 % 57 % 56 % 72 % 40 % 37 % 27 % 20 % 15 % 15 % 8 % 6 % 2 % 18 % 19 % 15 % 18 % 20 %

40 40 Interim Management Report Results: Earnings and Structure of Income Statement Selling snow to Eskimos photofinishing in the first quarter always with negative results A loss in the first quarter has been a constant feature of the photofinishing seasonal profile: as shown in the graphic of the earnings per season, CEWE COLOR has always reported an annual start-up loss in the first quarter since owing to the strong focus on seasonal business fixed costs are not covered by corresponding income in the first quarter, leading to negative results. As everyone in the industry is aware, photofinishing in the first quarter is like selling snow to Eskimos. Seasonal migration further strengthens Q4 and weakens above all Q2 and Q3: nevertheless, total earnings are still growing The market is changing: whereas the fourth quarter generates considerably higher contributions to turnover and earnings, turnover and earnings decline in the second and third quarter. In total, however, the strong growth in the fourth quarter still leads to a plus for the entire year. As the graphic of the seasonal distribution suggests, in the next few years the second and perhaps also the third quarters of a year, which during the analogue era generated the largest part of the net income, could begin to generate a negative contribution to earnings as well. One look at the earnings profile of photofinishing suppliers who operate exclusively in the Internet mail-order business substantiates this: the fourth quarter compensates the loss accumulated up to the third quarter, while at the same time generating the net income. Earnings before interest and taxes (EBIT) in million euros Q Earnings after taxes in million euros Q % 30.1 % % 22.2 % 27.6 % Change to previous year 15.4 % 19.8 % % 22.7 % 31.7 % Change to previous year

41 Results: Earnings and Structure of Income Statement Interim Management Report 41 Profitability is reached later and later in the course of the year The performance of the reporting quarter and the first half-year is to be seen against this backdrop: the seasonally weakened performance of the second quarter has not been able to make up for the annual start-up losses of the first quarter for two years now. Thus, CEWE COLOR will not be able to close the first half-year with an at least break-even result any more. This will only be achieved during the course of the third quarter at the earliest. The fourth quarter will then generate nearly the entire rising net income. In 2010, the share of the fourth quarter in net income was already at 72 % of EBIT before restructuring, or at 77 % of EBIT after restructuring. This trend is becoming even more prominent in The expansion of commercial digital printing will balance out this trend In future, with the expansion of commercial digital printing, CEWE COLOR will be able to smooth out the seasonal profile, continuously use capacities to the full, and thus strengthen the first three quarters. EBIT clearly better than expected in Q3 Particularly the earnings level reflects the course of business typical for the season as do volume (compare chapter Sales ) and turnover (compare chapter Turnover ). As shown in the graphic for the allocation of income to seasons, a share in earnings of approx. 27 % was expected for the third quarter (share in EBIT before restructuring). Based on the annual target of 28 to 31 million euros, EBIT in the third quarter 2011 was expected at about 7.6 to 8.4 million euros. In the reporting quarter, CEWE COLOR achieved EBIT of 8.9 million euros, thus clearly exceeding the expected annual target. Due to seasonal migration, in comparison to last year s respective quarter, earnings in the reporting quarter declined by 3.4 million euros. This implies a change of the quarterly EBIT margin from 10.6 % to 7.3 %. The operative reasons for the change will be examined in the discussion of the income statement for the third quarter. Page 32 Sales Page 37 Turnover Page 39 Income by seasons Interim Management Report

42 42 Interim Management Report Results: Earnings and Structure of Income Statement Profitability for 2011 surpassed in Q3 The strong results of the third quarter have now overcompensated the burdening effects of seasonal migration with growing losses at the beginning of the year. Whereas the first half-year 2011 still closed with a negative EBIT of 4.5 million euros, a positive EBIT was posted at the end of Q3, at 4.4 million euros due to the seasonal migration 2.0 million euros (excluding restructuring effects 2010: 4.2 million euros) lower than at the end of Q Due to seasonal migration, annual earnings targets within reach: only 1.8 million euros surplus earnings required in Q4 EBIT as of the end of the third quarter of 4.4 million euros is an ideal basis for reaching the annual target i. e. EBIT of 28 to 31 million euros. Thus, fourth quarter EBIT must contribute 23.6 to 26.6 million euros. Since CEWE COLOR generated an EBIT of 21.8 million euros in Q4 2010, only an EBIT increase of 1.8 to 4.8 million euros will be required. In the past four years, Q4 EBIT growth created by the seasonal migration into the Christmas quarter, had always come up to 2.6 million euros or more. The required surplus earnings of 1.8 to 4.8 million euros is therefore within tangible reach, due to the persistent seasonal migration. Growth EBIT before restructuring Q4 vs. previous year EBIT increase Q4 in million euros Q e

43 Results: Earnings and Structure of Income Statement Interim Management Report 43 Two main trends influence the structure of the income statement Two main trends have partly contrary effects on the income statement: first, the trend From quantity to quality, which increases the share of value-added products with a higher share of added value. The following tendency is then discernable: the cost of materials falls, the personnel expenses and other operating expenses increase. Second, the share of the retail trade fluctuates. If its share rises, we have an opposite effect: cost of materials increase, whereas personnel expenses and other operating expenses decline. Whether an item of the income statement shows an upswing or downswing depends on which of these effects predominated in each case. Quarterly-specific product mix causes cost of materials to rise slightly to 38 % Apart from these decisive determinants, the product mix changed unusually strong during the third quarter, thus dominating the development of the material ratio: the consumer restraint in the second and third quarters 2010 on account of the heatwave particularly affected the number of digital prints and especially those ordered at the POS. As opposed to this, the sales of these products rose in the reporting quarter (as explained in the chapter Sales ). For these products, however, which have been subjected to a fierce price competition for many years, a higher material input ratio has to borne in comparison to other products. This effect is again intensified by the rise of prices for silver halide paper. As a consequence, the cost of materials ratio rose from 36.9 % to 38.0 % (46.3 million euros). Gross profit margin declines slightly to 65.0 % Apart from the increased cost of materials, lower other operating income also reduced the gross profit from 68.5 % to 65.0 %. This is accounted for by lower income from foreign exchange rate differences and reduced income from the reversal of provisions and other liabilities. Page 32 Sales Interim Management Report Profit Q1 Q3 in million euros Change Earnings before interest and taxes (EBIT) % Profit before tax (EBT) % Profit after tax

44 44 Interim Management Report Results: Earnings and Structure of Income Statement Personnel expenses up due to Christmas preparation Particularly in the fourth quarter, the share of value-added products with high added value is to rise significantly. These products require a higher deployment of staff: for both manufacturing and in the overheads sections e. g. in marketing, in product management and in the IT department, for example, for programming various designs and order applications. The increase in personnel in the overheads sections is distributed relatively evenly over the entire year, depending on the availability of good employees on the labour market i. e. also in the quarters which are slightly losing shares in turnover. This is the reason why personnel expenses increased by 1.5 million euros in the second quarter already. The same effect was noted in Q3 as well. Moreover, the company also started to increase capacities of its staff in production at an early stage, so as to be able to deploy an even larger number of well-trained additional staff in the peak season the Christmas quarter. For this reason, CEWE COLOR expensed 2.4 million euros more in Q3 than in the previous year, in total even 5.3 million euros more for the first three quarters. In total, personnel expenses in Q3 rose to 27.0 million euros (22.1 %), and to 79.6 million euros in the first three quarters. Other operating expenses drop to 29.0 % The other operating expenses dropped from 29.4 % in last year s respective quarter to 29.0 % in the reporting quarter. This development is accounted for by a disproportionately low increase from 34.2 million euros to 35.3 million euros (+ 3.1 %). Contrary to the previous year, this growth in Q3 was not so much caused by additional marketing expenditure, but rather by preparatory measures for the seasonal peak in the fourth quarter. Since last year s respective quarter was burdened by the expenses of the biennial trade fair photokina, the total marketing expenditure even declined slightly on a year-on-year comparison. The strongly increased expenses regarding the seasonal preparation comprise, for instance, the preventative maintenance of machinery, refurbishment of a roof, as well as other optimisations. This kind of work is not to disturb the fourth quarter. Reduction of tangible assets diminishes depreciation to 6.6 % Owing to the reduced ratio of tangible fixed assets to total assets, depreciation in the reporting quarter declined by 0.6 million euros to 6.6 % of turnover (8.0 million euros). This can be accounted to the fact that accumulated investments have always been lower than depreciation since 2008 even if not in every quarter.

45 Results: Earnings and Structure of Income Statement Interim Management Report 45 Financial expenditure noticeably reduced Despite slightly increased interest rates, interest expenses declined by 0.4 million euros to 0.2 million euros owing to noticeably lower borrowings. Tax expenditure down by 2.9 million euros during the first three quarters As in last year s quarter, tax expenditure in the reporting quarter remained unchanged at 2.3 million euros. Due to tax expenditure and income not relating to the accounting period and the different earnings situations of the individual companies in the completed quarter, income tax expenses have not developed in line with earnings. Total tax expenditure of the first three quarters declined by 2.9 million euros to 3.2 million euros. Responsible for this is a peculiarity of the second quarter 2010: CEWE COLOR posted 3.9 million euros of tax expenditure since a waiver of debt, which CEWE COLOR AG & Co. OHG declared vis-à-vis the French subsidiary in 2008, with a tax effect of 3 million euros in Q was not accepted by the tax authorities. 1 Net income: on target Third quarter net income after taxes declined from 9.4 to 6.4 million euros owing to the effects of seasonal migration already described. During the first three quarters of the current year, however, net income after taxes increased by 1.6 million euros to 0.4 million euros. This effect was based on the end of restructuring measures, which had still strained the first quarter Net income after taxes of 0.4 million euros is a sound basis for reaching the net profit for the year targeted at 16 to 19 million euros. In comparison to the net income of 14.8 million euros achieved in Q4 2010, an increase of 0.8 to 3.8 million euros only is now to be generated in the fourth quarter In the past three years, the seasonal migration was able to raise net income of the fourth quarter regularly and noticeably: Q4 2008: million euros; Q4 2009: million euros; Q4 2010: million euros. On the back of this, CEWE COLOR is well on course to achieving the targeted values. Interim Management Report 1 For a detailed description of the waiver of debt refer to the Annual Report 2008, in particular page 100.

46 46 Interim Management Report Results: Segments Segments All large photofinishing segments show clear effects from the seasonal migration Retail trade strengthens EBIT margin Unless otherwise stated, the notes regarding the segment turnover always refer to the nominal values, i. e. including currency effects. Page 39 Income Statement Clear classification of segments CEWE COLOR reports in the four photofinishing segments Central Europe, Benelux, Western Europe and Central Eastern Europe. The retail trade activities are summarised in the fifth segment. CEWE COLOR allocates its turnover to the product categories that generate the turnover: turnover with photofinishing products i. e. prints from film, digital prints, CEWE PHOTOBOOKS, photo calendars and greeting cards as well as other photo gifts and personalised products is allocated to the photofinishing segments. Turnover with hardware sold without further processing for instance, cameras and accessories is allocated to the segment retail trade. Central Europe: great success with CEWE PHOTOBOOKS The growth of the CEWE PHOTOBOOK and the other valueadded products in particular raised the turnover in the photofinishing segment Central Europe (Germany, Austria, Switzerland, Scandinavia) by 6.3 % to 61.6 million euros, during the first three quarters by 6.4 % to million euros. The EBIT margin of 9.4 % in the reporting quarter, or 2.9 % in the first three quarters, respectively, still remains the highest of all segments. The reduction as compared to the previous year s values is accounted for by the effects of seasonal migration as discussed in the chapter Income Statement. Q3: Sales development by segments in million euros Change Photofinishing Central Europe % Photofinishing Western Europe % Photofinishing Benelux* % Photofinishing Central Eastern Europe % Retail % Group % * No production plants, only distribution branches

47 Results: Segments Interim Management Report 47 Western Europe: effect of seasonal migration clearly visible In the reporting quarter, the turnover of Western Europe (France and the UK) rose by 5.6 % to 12.2 million euros. Therefore, a plus of 4.6 % to 30.4 million euros can be posted for the first three quarters as well. The growth rates for the turnover in Western Europe are thus on group level. Just like in the photofinishing segments in total, the EBIT margin declined from 12.4 % to 6.7 % in the third quarter, or from 1.8 % to 2.4 % in the first three quarters. The reduction is accounted for by the effects of seasonal migration as discussed in the chapter Income Statement. Benelux: turnover and earnings rising noticeably Compared to the weak quarter of last year with respect to turnover and EBIT owing to sales problems of some of the trading partners, the Benelux segment was able to record noticeable increases. Turnover stepped up 11.6 % to 10.6 million euros. This compensated the declines of the first half-year, and for the first three quarters a rise in turnover of 0.6 % was reached. The EBIT margin returned to normal from a weaker 2.9 % of last year s quarter to 8.6 %, or from 0.4 % last year to % in the first three quarters, respectively. Central Eastern Europe: turnover up %, profitability improved The segment Central Eastern Europe combines the laboratories and activities in Poland, the Czech Republic and Hungary as well as the marketing activities in Slovakia and other Eastern and South Eastern European countries. In contrast to the demand structure of many Western European countries, the decline in demand for analogue prints, especially in the third quarter, is still stronger in Central Eastern Europe. In the third quarter the most important quarter in the analogue era the loss in analogue turnover is not yet overcompensated by turnover from Page 39 Income Statement Interim Management Report Q3: EBIT by segments in million euros Change Photofinishing Central Europe % Photofinishing Western Europe % Photofinishing Benelux* % Photofinishing Central Eastern Europe % Retail % Group % * No production plants, only distribution branches

48 48 Interim Management Report Results: Segments the new print products to the same extent as is the case in the other segments. For this reason, the development of turnover in Central Eastern Europe deviates slightly from the other photofinishing segments in the first three quarters, with a rise of % only. Within the scope of the seasonal migration, the EBIT margin in Central Eastern Europe changed as well from 10.9 % in last year s quarter to 6.8 % in the reporting quarter however, in the first three quarters it increased from 17.5 % to 4.5 %. Among other reasons, this is accounted for by conversion expenses for the restructuring in Bratislava, which were incurred in the first quarter Excluding these expenses, the margin would have been at 6.1 % in the first three quarters. However, by comparison an improvement of the EBIT margin is nevertheless to be recognised for 2011 on account of the effects of restructuring and optimisation measures. Own retail trade with important functions CEWE COLOR operates multi-channel retail chains in the form of stationary shops and Internet shops in Poland, the Czech Republic, Slovakia as well as in Norway and Sweden (under the brand names Fotojoker, Fotolab, Japan Photo). This retail trade fulfils important functions for CEWE COLOR: first, it is an important marketing channel for CEWE COLOR s laboratory services particularly in Central Eastern Europe. The respective turnover and revenues are shown in the photofinishing segments. Second, CEWE COLOR has the opportunity of testing and further developing new marketing strategies for digital value-added products first and foremost the CEWE PHOTOBOOK directly in the Internet and in the shops. Third, this know-how can then be passed on to the trading partners. The CEWE COLOR retail trade provides important examples of this knowledge transfer. Retail trade: EBIT margin strengthened In the second quarter, turnover in the retail trade dropped by 10.5 % due to the earthquake tragedy in Japan which left a great number of suppliers unable to produce and deliver their goods. At the end of the second quarter, the merchandise had arrived and the warehouses at CEWE COLOR were filled as described in the Q2 report. Thus, the retail trade reached last year s level of turnover in the reporting quarter (+ 0.1 % to 29.9 million euros) and in the first three quarters as well (+ 0.2 % to 81.3 million euros). The EBIT margin, however, rose from 2.0 % in last year s quarter to 3.0 % in the reporting quarter. Therefore, CEWE COLOR doubled the margin during the first three quarters (from 0.5 % to 1.0 %).

49 Results: Statement of Financial Position and Financial Management Interim Management Report 49 Statement of Financial Position and Financial Management Lower investments reduce non-current assets by 0.5 million euros Operating net working capital again slightly lower from 34 days to 32 days on a year-on-year comparison Equity ratio advances from 42.4 % (September 30, 2010) to a sound 43.0 % (September 30, 2011) The following notes on the statement of financial position relate mainly to the development within the reporting quarter, i. e. to the comparison of the statements of financial position from June 30, 2011 and September 30, The items impacted by the annual seasonal effects are commented on additionally in comparison to September 30, Total assets down by 1.2 %, or 2.9 million euros, respectively, on a year-on-year comparison Although total assets increased by 2.8 %, or 6.8 million euros, respectively, during the course of the reporting quarter, this was almost a halving of the 6.1 million euros rise in comparison to the same period last year. The comparison with September 30, 2010 results in a contraction of the statement of financial position by 1.2 %, or 2.9 million euros, respectively. Interim Management Report Statement of financial position in million euros and in % Assets Sep. 30, 2010 Sep. 30, 2011 Liabilities Sep. 30, 2010 Sep. 30, 2011 Non-current assets million euros 49.1 % million euros 45.9 % Equity million euros 42.4 % million euros 43.0 % Non-current debt 45.2 million euros 18.2 % 32.1 million euros 13.0 % Current assets million euros million euros 50.9 % 54.1 % Current debt 97.8 million euros 39.4 % million euros 44.0 %

50 50 Interim Management Report Results: Statement of Financial Position and Financial Management Page 52 Cash Flow Non-current assets: lower investments reduce effectiveness of assets Since the investments are meanwhile lower in comparison to the previous years of the analogue-to-digital transformation (refer to chapter Cash Flow ) and the depreciation on these asset items is only returning slowly from the increased level, the non-current assets are decreasing as a whole. As a result, intangible assets went down by 0.9 million euros or 6.0 % during the reporting quarter. Contrary to this trend, the fixed assets portfolio was raised by 0.4 million euros, or 0.5 %, respectively, to make CEWE COLOR ready for the upcoming seasonal peak. For instance, automatic sorting equipment for CEWE PHOTO- BOOKS was built in various laboratories. Compared to September 30, 2010, the long-term trends dominated and the fixed asset portfolio fell by 4.4 million euros, or 5.5 %, respectively, the intangible assets by 2.8 million euros, or 16.6 %, respectively. accounted for by the development of inventories, which was reduced by 6.1 million euros to 42,3 million euros. The retail trade still increased its inventories in Q2 just prior to June 30, 2011, since the natural disaster and the nuclear reactor accident in Japan partially led to supply bottlenecks of the suppliers, which were not remedied until the end of the second quarter. This surplus caused by deliveries just prior to the reporting date was diminished by September 30. Moreover, trade receivables stepped up by 8.7 million euros to 57.0 million euros. Thus, the seasonal rise is slightly lower than in the same period of last year. In the reporting quarter, cash and cash equivalents were increased by 5.7 million euros to 19.2 million euros. The repurchase of shares in particular and the further repayment of financial liabilities slightly reduced the seasonal growth in liquidity. Current assets: season-related rise of current assets noticeably reduced Although current assets as a whole increased by 6.4 %, or 8.0 million euros, to million euros, the season-related rise of 4.9 million euros is lower than in the same period last year. In comparison to September 30, 2010, current assets increased by 4.9 %, or 6.2 million euros. The most important effect lies in the positive development of the operating gross working capital. Whereas there was still a rise of 6.9 million euros, or 8.0 %, respectively, in Q3 2010, this increase was limited to 2.7 million euros, or 2.8 %, in the reporting quarter. This was mainly

51 Results: Statement of Financial Position and Financial Management Interim Management Report 51 Working capital again slightly reduced from 34 days to 32 days on a year-on-year comparison During the reporting quarter, gross operating working capital rose by 2.7 million euros to 99.2 million euros, or 5.4 million euros, respectively, compared to the same period of the preceding year. During the same period, trade receivables rose by 3.4 million euros to 59.6 million euros, mainly due to the optimisation of the payment terms and the higher investment volume of the third quarter as against the second. Current trade payables increased noticeably by 9.4 million euros in comparison to September 30, Therefore, the net operating working capital in total is noticeably beneath last year s level, at 39.6 million euros (September 30, 2010: 43.6 million euros). In relation to the respective quarterly turnover, the working capital situation improved once again: expressed in days working capital, the net operating working capital went down from 34 days at the end of last year s quarter to 32 days at the end of the reporting quarter. rose by 0.2 million euros. Thus, the equity ratio rose from 42.4 % to 43.0 % during the past twelve months. Apart from this change in equity and the rise in current trade liabilities already discussed, the following changes have occurred on the liabilities side in the reporting quarter: gross financial liabilities were repaid by 2.0 million euros, amounting to 25.9 million euros as of September 30, As a result of repayments and maturities, the non-current financial liabilities went down by 1.9 million euros to 18.5 million euros. The current financial liabilities in the reporting quarter declined by 0.1 million euros to 7.4 million euros. The other current liabilities rose by 5.1 million euros to 28.6 million euros. The increase is the result from effects of liabilities to employees such as the 13th salary, bonuses, vacation and overtime pay as well as, in particular, higher turnover tax liabilities of the retail trade accounted for by lower pre-tax deductions. Interim Management Report Stable high equity ratio: 43.0 % Group performance of 6.4 million euros achieved in Q3 was opposed by negative expenses and earnings not affecting income, at 2.4 million euros, which primarily concerned foreign-currency effects, as well as income tax on expenses and earnings not affecting income, and share buybacks of 4.9 million euros. This led to a reduction of equity capital from million euros to million euros in the course of the reporting quarter. However, in comparison to the previous year s period, equity

52 52 Interim Management Report Results: Cash Flow Cash Flow Cash flow from operating activities rises by 1.4 million euros Investments increased by 5 %, due to preparation of the Christmas season Thus, free cash flow increases by 1.0 million euros Cash flow from operating activities rises by 1.4 million euros In the reporting quarter, EBIT as the starting point for the determination of cash flow of 8.9 million euros was 3.4 million euros lower than in last year s quarter due to the persistent seasonal migration (Q1 Q3 2011: 4.4 million euros, or 2.0 million euros lower than in 2010). As a result of the adjustment for non-cash effects, e. g. depreciation, EBIT-induced cash flow was at 15.8 million euros, i. e. 5.6 million euros less than in last year s quarter (Q1 Q3 2011: 28.0 million euros, or 8.0 million euros less than in 2010) main difference apart from seasonal migration-related EBIT: non-cash effects from foreign currencies. Owing to a consequent working capital management, positive cash flows of 0.7 million euros were generated in the reporting quarter, by reducing funds tied up in the operating net working capital as described in the chapter Statement of Financial Position. Seasonally-driven positive influences (6.8 million euros) were generated in the other net working capital, which were nearly on the level of last year s quarter. In the reporting quarter, tax payments of 2.0 million euros were effected, after 4.8 million euros in Q The latter, however, included additional tax payments of 3.0 million euros. Taking into account the cash flow effects from paid taxes, there was a working capital and tax-induced cash flow of 5.5 million euros in the reporting quarter. Together with the EBIT-induced cash flow, the cash flow from operating activities amounted to 21.3 million euros, and thus was 1.4 million euros higher than in last year s respective quarter. Since the beginning of the year, an amount of 0.1 million euros was released from net operating working capital; i. e. 1.9 million euros less than in the previous year. However, the previous high value resulted from the reduction of surplus kiosk paper stocks. Of the positive influences of 13.4 million euros generated in other net working capital since the beginning of the year, 10.0 million euros are accounted for by funds allocated from liquid assets, which had previously been invested for more than three months. The other effects were increased turnover tax liabilities or higher other short-term provisions and liabilities e. g. in the personnel sector contributed by other working capital to cash flow. Taking into consideration the paid taxes ( 7.7 million euros) and the operating net working capital (0.1 million euros), a cash flow from operating activities of 33.9 million euros was generated, 3.0 million euros more than in the same period of the previous year.

53 Results: Cash Flow Interim Management Report 53 Investments reduced by 0.3 million euros in Q1 to Q3 In the reporting quarter, cash flows for investments taking into consideration insignificant deposits from the disposal of assets, were at 8.3 million euros and thus 0.4 million euros higher than in last year s quarter. In the third quarter 2010, an amount of 1.4 million euros of the investments was incurred by the purchase of non-current assets in connection with the purchase of the activities of Eurofoto A / S in Norway. Adjusted for this effect, investments rose by 1.8 million euros in the reporting quarter as against last year s respective quarter. As already discussed in the chapter Statement of Financial Position, essential investments were made in preparation of the Christmas season. An amount of 7.2 million euros was invested in production plant and buildings. Of this amount, 4.4 million euros were accounted for by machinery such as printing machines, or sorting equipment for the CEWE PHOTOBOOK, as well as approx. 0.9 million euros by DigiFoto Makers, on-site printers and the respective furniture. In addition, around 1.1 million euros were expensed for software. In the first half-year, the company thus made up for the investments that were reduced by 0.7 million euros compared to H As a result, total investments in Q1 to Q3 amounting to 19.0 million euros were still 0.3 million euros lower than in last year s period, however, adjusted for the acquisition of the assets of Eurofoto A / S they rose by 1.2 million euros. Free cash flow rises by 1.0 million euros Therefore, free cash flow rose by 1.0 million euros from 12.0 million euros in last year s quarter to 13.0 million euros in the reporting quarter. For Q1 Q3, free cash flow totals 14.9 million euros representing a plus of 3.3 million euros as against last year s respective period. Page 49 Statement of Financial Position and Financial Management Interim Management Report

54 54 Interim Management Report Return on Capital Employed Return on Capital Employed Twelve-month ROCE improved from 14.1 % (as of September 30, 2010) to 17.0 % (as of September 30, 2011) Capital employed further reduced In comparison to the same seasonal period of the previous year, the capital employed declined further from million euros in 2010 to million euros as of September 30, Twelve-month perspective to be applied to capital employed and EBIT When we consider the return on capital employed, the total profit for the year is set off against the average capital employment in the same year. When we divide the profit by the capital employed we get a return on capital employed, smoothing out the seasonal effects at the same time. Therefore, the profits of twelve months are each added and the average of the past four quarterly cut-off dates is calculated for the capital employed, starting with the cutoff date of the current reporting quarter. Twelve-month perspective: lower capital employed and further strong rising earnings power The average capital employed as of September 30, 2011, based on the quarterly cut-off dates, amounted to million euros a reduction of 2.4 million euros against the same period of the previous year. The sum of EBIT from the fourth quarter 2010 to the third quarter 2011 amounts to 26.2 million euros, thus exceeding the comparable value from the fourth quarter 2009 to the third quarter 2010 by 4.1 million euros. Adjusted for restructuring expenditure, the increase still amounts to 1.9 million euros. ROCE rises to 17.0 % The rise in EBIT over the past twelve months on the one hand, and the slight reduction of the average capital employed on the other, resulted in a noticeable rise in the return on investment. CEWE COLOR achieves an attractive interest rate of 17.0 % on the invested capital. In the previous year, ROCE was still at 14.1 % as of September 30, 2010, and excluding restructuring expenses at 15.5 %. Both values of the previous year were thus surpassed. Twelve-month ROCE in % Q % 14.1 % 8.3 % 7.0 % 2.6 % 49.6 % 68.1 % % % % Change to previous year

55 Employees Interim Management Report 55 EMPLOYEES The number of employees rose slightly in comparison to the previous year In comparison to the previous year, the number of employees of CEWE COLOR Group increased by 1.3 % to 2,686 (previous year: 2,651) as of the end of September for the Christmas quarter at an early stage already, so as to be able to deploy an even higher number of well-trained staff during the peak season. This slight rise by a total of 35 employees is, on the one hand, the result of the expansion of the retail trade activities in Norway, which was already implemented at the end of 2010, and which is still visible in the year-on-year comparison. On the other hand, the central functions of R & D in the software development segment and in marketing and product management were reinforced by further staff. In addition, the number of employees in production at some of the sites increased slightly by the end of the third quarter, because CEWE COLOR began expanding its manpower Interim Management Report Q1 Q3: Employees by region Change Central Europe 1,703 1, % Western Europe / 0.0 % Benelux % Central Eastern Europe % Group 2,686 2, %

56 56 Interim Management Report Organisation and Administration ORGANISATION AND ADMINISTRATION CEWE COLOR Holding AG, Neumüller CEWE COLOR Stiftung and CEWE COLOR AG & Co. OHG CEWE COLOR Holding AG is the financial holding company within CEWE COLOR Group, and one of the two shareholders of CEWE COLOR AG & Co. OHG. Apart from the members of the Board of Management, it has no other employees. CEWE COLOR AG & Co.OHG manages the entire operating business of the group. It is managed by the board members and the managing directors of the Neumüller CEWE COLOR Stiftung. The remaining 2,678 staff of the group are in the employ of CEWE COLOR AG & Co. OHG, as well as in the other downstream companies of the group. The second shareholder is the Neumüller CEWE COLOR Stiftung. This again has five board members and three managing directors, including the four board members of CEWE COLOR Holding AG. There are no other employees apart from the abovenamed persons. The foundation (Stiftung) is responsible for managing operations within the CEWE COLOR AG & Co. OHG.

57 Organisation and Administration Interim Management Report 57 Shareholders CEWE COLOR Holding AG 4 Members on the Board of Management, no other employees Shareholder of OHG Supervisory Board of AG Board of Management of AG Neumüller CEWE COLOR Stiftung 8 Members on the Board of Management / Executive Board, no other employees Managing shareholder of OHG Board of Trustees of the foundation Board of Management of the foundation / Executive Board Interim Management Report CEWE COLOR AG & Co. OHG manages ca. 2,700 employees Conducts the entire operations of CEWE COLOR Group Managed by the Boards of Management and the Executive Board of the foundation

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60 60 Interim Management Report Report on Expected Developments REPORT ON EXPECTED DEVELOPMENTS Commercial digital printing is to be expanded In the course of the analogue-to-digital transformation of the photofinishing business, CEWE COLOR has built up capacities and competence in digital printing production technology. This technology and comprehensive Internet competence are the basis for commercial digital printing, which CEWE COLOR started and plans to expand in the coming years. In the photofinishing sector, the company has for the first time built up a brand product, the CEWE PHOTOBOOK, which is positioned in the premium segment. CEWE COLOR took effective marketing and advertising measures to increase the brand preference of the consumers and boost sales via the trading partners. CEWE COLOR will pursue this course of action. Focus remains on Europe CEWE COLOR operates its business almost exclusively in Europe. In the foreseeable future, turnover and earnings are most likely to also be generated almost exclusively in Europe. However, CEWE COLOR could also become active in further regions, if particularly attractive opportunities should present themselves. Continuous improvement of the technological basis As in the past, CEWE COLOR is striving to increase the effectiveness and efficiency potential of the production and data transfer technologies in the coming years as well. Best-practice transfers between the production sites and external benchmarks provide the basis for this effort. R & D departments are focusing on the consumer The interfaces with the consumer are at the forefront of the effort to improve existing technologies. CEWE COLOR is also working on production and logistics solutions to organise the handling of orders in a higher quality, more cost-effectively and in the wide CEWE sense of the term in a more sustainable manner. Continuous innovation also includes products and services The portfolio of CEWE COLOR products and services has to be improved all the time. Over the past years, this was a very pronounced characteristic of the successful analogue-to-digital transformation. CEWE COLOR is striving to use the momentum gained in the innovation processes implemented over the past years to consolidate and expand its position as frequent market leader. Global economy remains on expansion course The International Monetary Fund (IMF) sees the global economy in a dangerous phase. In September 2011, the IMF revised its forecast for the global economic growth down 0.3 percentage points to 4.0 % in comparison to its June prediction for the current year, and for 2012 by 0.5 percentage points, also to 4.0 %. The IMF pointed out that the forecast was made under the assumption that Europe s politicians would be able to dampen the crisis in the euro zone, the US politicians would succeed in achieving the balance between economic support and medium-term budget consolidation, the volatility on the global fi-

61 Report on Expected Developments Interim Management Report 61 nancial markets would not escalate, and the expansive monetary policy would take a respite. For the industrial countries, the IMF revised downward its forecast regarding the real GDP growth more noticeably to 1.6 % for 2011 (June 2011: 2.2 %), and to 1.9 % for the coming year (June 2011: 2.6 %) than for the emerging countries. They are expected to expand by 6.4 % (June 2011: 6.6 %) in 2011, and by 6.1 % (June 2011: 6.4 %) in For the euro zone, the European Central Bank (ECB) expects a very moderate growth in the second half-year. This is due to the lower dynamic of global demand, the loss of corporate and consumer confidence as well as the persistent tensions in some government bond markets in the euro zone. The IMF noticeably reduced its forecast for the economic growth in the euro zone by 0.4 percentage points to 1.6 % in the current year, and by 0.6 % to 1.1 % for On the other hand, Germany s leading economic research institutes increased their prediction for the GDP growth from 2.8 % to 2.9 % due to the strong start of the year. However, the declining foreign economic impetus and the more careful domestic demand of enterprises and private households owing to the debt and confidence crisis in the euro zone, will slow down economic dynamics during the further course of the year. The high losses in value and large price fluctuations at the financial markets triggered by the euro crisis, and the noticeable deterioration of central sentiment indicators since August 2011 indicate, in the opinion of the institutes, that the total economic production will even stagnate in the second half of 2011 / Economy is expected to pace up again as from the second quarter 2012 with declining insecurity in the euro zone. Nevertheless, the institutes noticeably reduced their economic forecasts for 2012 from % to %, owing to the unfavourable international environment and the uncertainty stemming from the sovereign debt crisis in the euro zone. CEWE COLOR largely disconnected from general economic trend The business model of CEWE COLOR proved to be extremely robust in the economic and financial crisis of the years 2008 and 2009: the development of CEWE COLOR currently correlates very little with the general economic development. The consumers attach a high emotional value to the products of the core business, photofinishing, which at the same time involves a comparably low financial input. The downswing in economic activity and the consumer restraint did not materially affect CEWE COLOR in 2008 and 2009: the GDP of the 17 EU states declined by 4.2 % in On the other hand, CEWE COLOR turnover, adjusted for currency effects, went up % during the same period. The switch to higher-priced value-added products (such as wall decoration) suggests that this product segment could become more dependent on consumer sentiment. However, no such trend is currently evident. Interim Management Report

62 62 Interim Management Report Report on Expected Developments Slight growth in photofinishing during the course of the year CEWE COLOR is fostering the growing market share of valueadded products to offset the decline in single prints in the conventional chemical silver-halide process. This affects the commencing retreat of single prints from digital data, alongside the now advanced decline of analogue prints from film. With the CEWE PHOTOBOOK (the European market leader), additional value-added products, and its strong Internet competence, CEWE COLOR is excellently positioned to promote and profit from this transformation. Ramping up of commercial digital printing unaffected by economic situation Web-to-Print commercial digital printing offers numerous benefits for those who order through this channel: a gain in quality through highly professional print products well above the currently popular copy-shop quality, as well as a time gain through user-friendly online ordering, quick production and prompt delivery. Customers also save agency outlay through easy-touse standard programmes and utilise reasonably priced, useroriented small print runs. For example, brochures of all types can always be produced to demand in the current version. This has direct economic and qualitative benefits for the customer. In future, CEWE COLOR can increase the capacity utilisation and optimise the seasonal profile with this segment. Challenge: Web-to-Print marketing The development of the business model of Web-to-Print commercial digital printing depends mainly on two factors: how quickly we can convince a large number of companies of the advantages of the offer, and how quickly the customers change their actual behaviour. The established patterns of behaviour in printing and binding have to be changed away from customers doing their own printing, away from the copy shop, and away from using conventional print suppliers. Experience shows that such changes in patterns of behaviour take time. However, CEWE COLOR expects commercial digital printing within the Web-to-Print business to account for a noticeably higher share of total turnover in the medium term. The characteristic features of 2012 will resemble those of 2011 So 2011 will be characterised by the same dual approach: on the one hand, the active further development of the CEWE PHOTO- BOOK business and other value-added products; on the other hand, the work in developing the business model in commercial digital printing. Judging from our present viewpoint, these will be the main development directions in which the company will be working in 2012 as well. Seasonal migration into the fourth quarter continues As was described in detail in the Results chapter, the migration of sales, turnover and income to the fourth quarter is continuing. This growth is mainly at the expense of the second and third quarters. This trend will also continue in 2012.

63 Report on Expected Developments Interim Management Report 63 Commercial digital printing to strengthen the first three quarters in future As was hinted at in the Results chapter, the second and perhaps also the third quarters of a year could consequently generate a negative contribution to earnings in the next few years. One look at the earnings profile of photofinishing suppliers who operate exclusively in the Internet mail-order business substantiates this: the fourth quarter compensates the loss accumulated up to the third quarter, at the same time generating the net income. In future, CEWE COLOR will be able to smooth out the seasonal profile with the expansion of commercial printing, continuously using capacities to the full and thus strengthening the first three quarters. Two main trends impact the structure of the income statement Two main trends had partly contrary effects on the income statement: the first effect came from the From quantity to quality trend, in which the share of value-added products with higher added value grew. The following tendency is then discernable: the cost of materials falls, the personnel costs and other operating expenses increase. Second, the share of the retail trade fluctuates. If the share rises, an opposing effect will be the result: the cost of materials rises while personnel and other operating expenses fall. The importance of this trend will depend on the development of the retail trade. The interaction of these trends will probably determine the structure of the income statement in the coming years with a tailwind from two directions The last major analogue-to-digital transformation-related restructuring burdens, in the amount of approx. 10 million euros per year, had to be shouldered in Net income for 2010 has already profited strongly from this. However, optimisation costs of 2.2 million euros for the transformation of the Bratislava location were recorded in 2010, based on an analysis of the location layouts in Europe. The Board of Management does not expect comparable expenses of this extent to arise again in the short term. In 2011, an additional tailwind will come from the falling away of the special tax burden in the amount of 3.0 million euros, which arose in This burden resulted from the fiscal non-recognition of the 2008 debt waiver vis-à-vis the French subsidiary. This advantage now materialised in the income statement of Q Page 32 Results Interim Management Report

64 64 Interim Management Report Report on Expected Developments Further increase in earnings forecast for 2011 The company will use this impetus to invest in the CEWE PHOTO- BOOK and other value-added photofinishing products, as well as in Web-to-Print commercial digital printing. CEWE COLOR will strive to increase earnings in 2011 as well, despite expenses for future market developments. Earnings per share are expected to increase from 2.02 euros per share (2010) to 2.36 to 2.80 euros per share in 2011 a rise of up to 39 %. CEWE COLOR is thus well positioned to continue to increase the value of the enterprise in the coming years for employees, shareholders, trading partners and consumers. All further targets are shown in the following table: Targets for 2011 Change to previous year Digital prints billion units 6 % to 1 % Prints from film billion units 38 % to 30 % Total prints billion units 11 % to 6 % CEWE PHOTOBOOKS million units + 7 % to + 12 % Investments million euros + 14 % to + 21 % Revenues (adjusted for foreign-currency effects) million euros + / 0 % to + 3 % EBIT million euros + / 0 % to + 10 % Earnings before taxes (EBT) million euros + / 0 % to + 10 % Earnings after tax million euros + 17 % to + 39 % Earnings per share euros / share + 17 % to + 39 %

65 Report on Expected Developments Interim Management Report 65 Annual targets 2011 within reach With the results of the first three quarters, CEWE COLOR has created an excellent starting position to achieve these annual targets. EBIT for the first three quarters was at 4.4 million euros. To achieve the annual target of 28 to 31 million euros, the fourth quarter 2011 must, therefore, generate an EBIT of 23.6 to 26.6 million euros. Compared to the fourth quarter 2010, merely a growth in EBIT of 1.8 to 4.8 million euros is thus required to achieve the annual target. This target is absolutely realistic, since the Q4 growth rate in the past four years always exceeded this figure (see graphic). Also the targeted annual surplus is clearly within reach: the annual surplus of the first three quarters 2011 was at 0.4 million euros. To achieve the annual target of 16 to 19 million euros, CEWE COLOR only has to generate a growth of (rounded) 0.7 to 3.7 million euros in the fourth quarter 2011 as compared to the previous year (Q4 2010: 14.8 million euros). On the back of the positive trend and the growing earnings dynamic of the fourth quarter (see graphic), this is realistic as well. Therefore, the Board of Management once more confirms its earnings targets for Interim Management Report Growth EBIT before restructuring Q4 vs. previous year EBIT increase Q4 in million euros Q e Growth net income for the year before restructuring Q4 vs. previous year Net income for the year growth Q4 in million euros Q e

66 66 Interim Management Report Report on Expected Developments Consistent dividend policy CEWE COLOR follows a consistent dividend policy, provided this is feasible in view of the economic situation of the company and the prevailing investment opportunities. At the same time, the shareholders are to participate in the company s increased earnings. As a result of the 102 % rise in earnings per share in 2010, CEWE COLOR accordingly distributed the record dividend of 1.25 euros per share for Oldenburg, November 15, 2011 CEWE COLOR Holding AG The Board of Management Dr. Rolf Hollander (Chairman of the Board of Management) Dr. Reiner Fageth Andreas F.L. Heydemann Dr. Olaf Holzkämper

67 CEWE COLOR Group Structure and Corporate Bodies Interim Management Report 67 CEWE COLOR GROUP STRUCTURE AND CORPORATE BODIES Neumüller CEWE COLOR Stiftung CEWE COLOR Holding AG Board of Trustees Wilfried Mocken, Rheinberg (Chairman) Otto Korte, Oldenburg (Deputy Chairman) Maximilian Ardelt, Munich Helmut Hartig, Oldenburg Dr. Peter Nagel, Bad Kreuznach Hubert Rothärmel, Oldenburg Board of Management Dr. Rolf Hollander, Oldenburg (Chairman) Dr. Michael Fries, Oldenburg Harald H. Pirwitz, Oldenburg Felix Thalmann, Westerstede Frank Zweigle, Oldenburg Supervisory Board Hubert Rothärmel, Oldenburg (Chairman) Hartmut Fromm, Berlin (Deputy Chairman) Prof. Dr. Dr. h.c. Hans-Jürgen Appelrath, Oldenburg Dr. Joh. Christian Jacobs, Hamburg Otto Korte, Oldenburg Prof. Dr. Michael Paetsch, Willich Board of Management Dr. Rolf Hollander, Oldenburg (Chairman) Dr. Reiner Fageth, Oldenburg Andreas F.L. Heydemann, Bad Zwischenahn Dr. Olaf Holzkämper, Oldenburg Interim Management Report Management Dr. Reiner Fageth, Oldenburg Thomas Grunau, Oldenburg (until June 30, 2011) Andreas F.L. Heydemann, Bad Zwischenahn Dr. Olaf Holzkämper, Oldenburg

68 Incoming sorting facility A digital camera in the incoming sorting facility collects the data the customer entered on the order bag, and thus the photo product to be processed. At the same time, the unit logs into the CEWE production systems. It is now possible to sort similar customer orders automatically, so as to start production in batch sizes that are as large as possible.

69 Contents Consolidated Financial Statements 69 Consolidated Financial Statements Consolidated Income Statement 70 Consolidated Statement of Recognised 71 Income and Expenses Consolidated Statement of Financial Position 72 Consolidated Statement of Cash Flows 74 Segment Reporting 76 Consolidated Statement of Changes in Equity 78 Selected Notes 80 Auditor s Certificate 84 Consolidated Financial Statements

70 70 Consolidated Financial Statements Consolidated Income Statement Consolidated Income Statement for Q1 Q and 2011 of CEWE COLOR Holding AG, Oldenburg Figures in thousand euros Q1 Q Q Q Change Q1 Q Q1 Q Change Revenues 446, , , % 308, , % Increase / decrease in the inventory of finished and unfinished products Other work performed and capitalised 1, % 1,007 1, % Other operating income 24,929 3,477 5, % 13,871 16, % Cost of materials 168,660 46,332 42, % 119, , % Gross profit / loss 304,544 79,166 79, % 203, , % Employee expenses 102,320 26,951 24, % 79,551 74, % Other operating expenses 136,362 35,285 34, % 94,801 88, % Earnings before interest, taxes, depreciation and amortisation (EBITDA) 65,862 16,930 20, % 29,351 34, % Depreciation of property, plant and equipment and amortisation of intangible assets 37,710 8,023 8, % 24,975 28, % Earnings before interest and taxes (EBIT) 28,152 8,907 12, % 4,376 6, % Net financial income 1, % 768 1, % Earnings before taxes (EBT) 26,376 8,720 11, % 3,608 4, % Income taxes 11,710 2,096 2, % 2,627 5, % Other taxes % % Earnings after taxes 13,717 6,434 9, % 445 1,130 net profit / loss attributable to minority shareholders net profit / loss attributable to the shareholders of the parent company 13,715 6,432 9, % 445 1,129 Earnings per share (in euros) basic % diluted %

71 Consolidated Statement of Recognised Income and Expenses Consolidated Financial Statements 71 Consolidated Statement of Recognised Income and Expenses for Q1 Q and 2011 of CEWE COLOR Holding AG, Oldenburg Figures in thousand euros Q1 Q Q Q Change Q1 Q Q1 Q Change Earnings after tax 13,717 6,434 9, % 445 1,129 Currency translation differences 1,796 2,087 1,067 2,162 2,013 Market assessment of hedging transactions Taxes on income and expenses recognised not affecting income Expenses and income after taxes not affecting income 2,775 2,347 1,054 2,422 1,784 Total profit / loss 16,492 4,087 10, % 1, total profit / loss attributable to minority shareholders total profit / loss attributable to the shareholders of the parent company 16,487 4,087 10, % 1, Consolidated Financial Statements

72 72 Consolidated Financial Statements Consolidated Statement of Financial Position Consolidated Statement of Financial Position as of September 30, 2011 of CEWE COLOR Holding AG, Oldenburg ASSETS Figures in thousand euros Dec. 31, 2010 Sep. 30, 2011 June 30, 2011 Change Sep. 30, 2010 Change Property, plant and equipment 80,495 76,122 75, % 80, % Real estate held as financial investment 4,803 4,852 4, % 4, % Goodwill 9,053 9,072 9, % 10, % Intangible assets 16,301 14,030 14, % 16, % Non-current financial assets % Non-current receivables from income tax refund 2,896 2,437 2, % 3, % Non-current receivables and assets % % Deferred tax assets 5,387 5,376 5, % 5, % Non-current assets 119, , , % 121, % Assets held available for sale % % Inventories 50,287 42,268 48, % 40, % Current trade receivables 72,024 56,978 48, % 52, % Current receivables from income tax refund 1,150 5,095 4, % 2, % Current other receivables and assets 20,983 8,943 9, % 11, % Cash and cash equivalents 23,382 19,173 13, % 18, % Current assets 168, , , % 126, % 287, , , % 248, %

73 Consolidated Statement of Financial Position Consolidated Financial Statements 73 SHAREHOLDERS EQUITY AND LIABILITIES Figures in thousand euros Dec. 31, 2010 Sep. 30, 2011 June 30, 2011 Change Sep. 30, 2010 Change Subscribed capital 19,188 19,188 19,188 19,188 Capital reserves 56,228 56,228 56,228 56,228 Special items for treasury shares 17,647 22,749 17, % 17, % Retained earnings and net retained profits 62,897 52,677 48, % 46, % Equity capital attributable to shareholders 120, , , % 105, % Minority interest Equity 120, , , % 105, % Non-current special items for investment grants % % Non-current provisions for pensions 10,025 10,621 10, % 10, % Non-current deferred tax liabilities 1,791 1,589 1, % 1, % Non-current other provisions % % Non-current financial liabilities 24,099 18,545 20, % 31, % Other non-current liabilities % % Non-current liabilities 37,391 32,102 34, % 45, % Current special items for investment grants % Current provisions for taxes 4,694 3,821 3, % 3, % Current other provisions 8,633 8,274 7, % 7, % Current financial liabilities 6,641 7,391 7, % 7, % Other current trade payables 82,599 59,649 56, % 50, % Other current liabilities 26,746 28,584 23, % 28,596 Current liabilities 129, ,818 98, % 97, % 287, , , % 248, % Consolidated Financial Statements

74 74 Consolidated Financial Statements Consolidated Statement of Cash Flows Consolidated Statement of Cash Flows for Q1 Q and 2011 of CEWE COLOR Holding AG, Oldenburg Figures in thousand euros Q Q Change EBIT 8,907 12, % + / Adjustments for: + / Depreciation (+) / allocations ( ) 8,023 8, % + / Effective influences from foreign currencies 1, / Change of other non-current liabilities % + / Change of other non-current receivables / Income / loss from the disposal of fixed assets / Other non-cash transactions % = EBIT adjustment for cash flow 6,866 9, % = EBIT-induced cash flow 15,773 21, % + / Decrease (+) / increase ( ) operating net working capital 679 3,472 Decrease (+) / increase ( ) other operating net working capital + / (excl. income tax items) 6,813 6, % Taxes paid 1,979 4, % = Working capital and tax-induced cash flow 5,513 1,463 = Cash flow from operating activities 21,286 19, % Cash flow from investing activities to fixed assets 8,335 6, % Cash flow from purchases of consolidated / group shares / acquisitions 0 1,364 + Cash flow from the disposal of tangible and intangible assets Cash flow from the disposal of financial and similar assets = Cash flow from investing activities 8,323 7, % = Free cash flow 12,963 12, % Disbursed dividends Purchase of treasury shares 4, ,486 % Evaluation of stock options according to IFRS % = Cash flow to shareholders 4, ,107 % + / Cash flow to (+) / cash flow from ( ) the change of financial liabilities 1,974 4, % + / Cash flow to (+) / cash flow from ( ) the change of interest income % + / Other non-cash financial transactions = Cash flow from financing activities 7,016 4, % Cash and cash equivalents at start of period 13,480 10, % + / Effect of exchange rate changes on cash and cash equivalents Cash flow from operating activities* 21,286 19, % Cash flow from investing activities* 8,323 7, % + / Cash flow from financing activities* 7,016 4, % = Cash and cash equivalents at end of period 19,173 18, % * In the preceding years, the cash flows were combined in net changes of liquid funds due to payments.

75 Consolidated Statement of Cash Flows Consolidated Financial Statements 75 Q1 Q Q1 Q Change 4,376 6, % 24,975 28, % 1, % ,086 % % 23,635 29, % 28,011 35, % 115 2, % 13, ,767 % 7,713 7, % 5,843 5,130 33,854 30, % 19,219 18, % 0 1, ,989 19, % 14,865 11, % 8,481 7, % 5, ,541 % % 13,344 7, % 4,804 6, , % ,916 1, % 23,382 8, % ,854 30, % 18,989 19, % 18,916 1, % 19,173 18, % Consolidated Financial Statements

76 76 Consolidated Financial Statements Segment Reporting Segment Reporting for Q1 Q and 2011 of CEWE COLOR Holding AG, Oldenburg Photofinishing Retail Segment Reporting Q1 Q Figures in thousand euros Central Europe Benelux Western Europe Centr. East. Europe Total Photo finishing Eliminations CEWE COLOR Group total Revenues with external third parties 152,697 23,869 30,470 19, ,818 81, ,070 Currency effects 1, ,515 1,140 2,655 Revenues with external third parties, adjusted for currency effects 151,327 23,869 30,590 19, ,303 80, ,415 Revenues with other segments 25,019 1,646 1,702 2,881 31, ,852 Segment turnover 177,716 25,515 32,172 22, ,066 81,856 31, ,070 EBIT 4, , ,376 Restructuring expenditures EBIT before restructuring 4, , ,376 Segment Reporting Q1 Q Figures in thousand euros Central Europe Benelux Photofinishing Western Europe Centr. East. Europe Total Photofinishing Retail Eliminations CEWE COLOR Group total Revenues with external third parties 143,475 23,733 29,116 19, ,672 81, ,795 Revenues with other segments 29,148 1,463 2, , ,104 Segment turnover 172,623 25,196 32,019 20, ,125 81,774 35, ,765 EBIT 8, ,394 5, ,371 Restructuring expenditures 2,211 2,211 2,211 EBIT before restructuring 8, ,183 8, ,582

77 Segment Reporting Consolidated Financial Statements 77 Segment Reporting for Q and 2011 of CEWE COLOR Holding AG, Oldenburg Photofinishing Retail Segment Reporting Q Figures in thousand euros Central Europe Benelux Western Europe Centr. East. Europe Total Photo finishing Eliminations CEWE COLOR Group total Revenues with external third parties 61,092 10,585 12,179 8,002 91,858 29, ,771 Currency effects Revenues with external third parties, adjusted for currency effects 60,583 10,585 12,226 7,901 91,295 29, ,833 Revenues with other segments 8, , ,346 Segment turnover 70,040 11,226 12,930 8, ,150 29,967 11, ,771 EBIT 5, , ,907 Restructuring expenditures EBIT before restructuring 5, , ,907 Segment Reporting Q Figures in thousand euros Central Europe Benelux Photofinishing Western Europe Centr. East. Europe Total Photofinishing Retail Eliminations CEWE COLOR Group total Revenues with external third parties 57,485 9,487 11,529 8,019 86,520 29, ,401 Revenues with other segments 11, , ,669 Segment turnover 69,086 10,045 12,446 8,101 99,678 30,392 13, ,401 EBIT 9, , , ,295 Restructuring expenditures EBIT before restructuring 9, , , ,295 Consolidated Financial Statements

78 78 Consolidated Financial Statements Consolidated Statement of Changes in Equity Consolidated Statement of Changes in Equity for Q1 Q and 2011 of CEWE COLOR Holding AG, Oldenburg Parent company other comprehensive group income Figures in thousand euros Subscribed capital Capital reserves Revaluation reserves IFRS 3.59 Consolidated equity generated Special item for Stock Option Plan Other equity items Balance on Jan. 1, ,188 56,228 1,075 59,656* Earnings after tax 445 Changes in the group of consolidated companies Expenses and income not affecting profit or loss Total profit / loss 445 Paid dividends 8,482 Acquisition of treasury shares Stock Option Plan Owner-related change in equity capital 8, Balance on Sep. 30, ,188 56,228 1,075 51, Balance on Jan. 1, ,188 56,228 1,075 49,586* 3, Earnings after tax 1,129 Expenses and income not affecting profit or loss 220 Total profit / loss 1, Paid dividends 7,149 Acquisition of treasury shares Owner-related change in equity capital 7,149 Balance on Sep. 30, ,188 56,228 1,075 41,308 3, * Taking into consideration a reclassification of 214 thousand euros from provisions not affecting income.

79 Consolidated Statement of Changes in Equity Consolidated Financial Statements 79 Parent company other comprehensive group income Minority shareholders Market valuation of hedge transactions Adjustment item for currency translation in equity Income taxes without effect on net income taken into account Retained earnings and net retained profits Equity acc. to consolidated statement of financial position before deduction of treasury shares Special items for treasury shares Equity capital attributable to shareholders Minority capital Adjustment item for currency translation Minority interest Equity capital according to consolidated statement of financial position 1, , ,313 17, , , , ,422 2,422 2,422 2,422 2, ,977 1,977 1, ,017 8,482 8,482 8,482 8,482 5,102 5,102 5, ,243 8,243 5,102 13,345 13, , ,093 22, , , , ,666 17, , ,694 1,129 1,129 1, , , ,000 2,000 2, , , ,149 7,149 7,149 7, ,149 7, ,460 7, , , ,388 17, , ,108 Consolidated Financial Statements

80 80 Consolidated Financial Statements Selected Notes Selected Notes Corporate information CEWE COLOR Holding AG, Oldenburg, (hereinafter referred to as CEWE COLOR Holding) is a public limited company listed on the stock exchange with registered seat in Germany. The major operating activities of CEWE COLOR Group (hereinafter referred to as CEWE COLOR) are photofinishing and the photo retail trade. Principles regarding the preparation of the consolidated interim report as of September 30, 2011 The consolidated interim report of CEWE COLOR Holding as of September 30, 2011 was prepared in accordance with the International Financial Reporting Standards (IFRS) applicable on the cut-off date, and the interpretations of the International Accounting Standards Board (IASB) to be applied in the EU. This interim report contains all data and information required according to IAS 34 for an abridged interim report. In preparing the abridged interim report, the Board of Management is obligated to make estimations and assumptions in compliance with the accounting principles, regarding the presentation of assets and liabilities as well as income and expenses, and the disclosure of contingent liabilities and assets. The actual future amounts are likely to deviate from the estimations. The accounting policies, evaluation and recognition standards, as well as consolidation methods were applied to the quarterly financial report as of September 30, 2011 without any changes as compared to December 31, 2010, and are shown in the consolidated financial statements as of December 31, Likewise, the fundamental principles and methods of estimation for the quarterly financial report have not changed in comparison to the previous periods. Scope of consolidated companies Apart from CEWE COLOR Holding AG as parent company, the scope of consolidation includes nine domestic and 15 foreign companies. In addition, the pension commitments transferred to the CEWE COLOR Versorgungskasse e. V., Wiesbaden, according to IAS 19 continue to be included in consolidation. Not included in consolidation is the Bilder-planet.de GmbH, Cologne, and Printpartners Nederland B. V., Veenendaal, Netherlands on account of their subordinate economic significance. There has been no change in the scope of consolidation since the annual financial statements as of December 31, Seasonal influences on operations Reference is made to the notes in the interim management report with respect to the seasonal and economic influences on the quarterly financial report as of September 30, 2011.

81 Selected Notes Consolidated Financial Statements 81 Essential business transactions No events affecting the statement of financial position, the income statement or the cash flow because of their nature, size or incidence worth mentioning have occurred up to September 30 of the current financial year. Events following the reporting date No events worth mentioning because of their nature, size or incidence occurred after September 30, Notes to the income statement, statement of financial position, statement of cash flows Detailed explanations regarding the income statement are set down in the interim management report in the chapters Turnover and Earnings and Structure of Income Statement ; the notes on the statement of financial position and statement of cash flows are described in the chapters Statement of Financial Position and Financial Management as well as Cash Flow. We have shown the development of equity capital separately in the statement of changes in equity following the income statement, the statement of recognised income and expenses, the statement of financial position and the statement of cash flows. Page 37 Turnover Page 39 Earnings and Structure of Income Statement Page 49 Statement of Financial Position and Financial Management Page 52 Cash Flow Earnings per share Figures in thousand euros Q Q Q1 Q Q1 Q Consolidated earnings after third-party interests 6,433 9, ,129 Weighted average undiluted number of shares (in pieces) 6,740,888 6,788,145 6,691,775 6,789,814 Undiluted earnings per share (in euros) Consolidated earnings 6,433 9, ,129 + Interests of third-party shareholders entitled to subscription rights + Interest expense from shareholder loans of OHG Current and deferred taxes 1 Adjusted consolidated earnings 6,436 9, ,120 Weighted average diluted number of shares (in pieces) 6,760,888 6,808,145 6,711,775 6,809,814 Diluted earnings per share (in euros) Consolidated Financial Statements

82 82 Consolidated Financial Statements Selected Notes Page 49 Statement of Financial Position and Financial Management Page 46 Segments Equity capital CEWE COLOR Holding held 500,055 no-par shares as treasury shares as of December 31, In addition, the CEWE COLOR Versorgungskasse e. V., Wiesbaden, held 112,752 nopar shares of the company on the same date. In compliance with IAS 19, the latter were to be included in the consolidated financial statements by way of adjustment, thus showing a total of 612,807 no-par shares as treasury shares at the reporting date of December 31, Based on the resolution of the general meeting of June 2, 2010, the company repurchased a total of 189,938 no-par shares at an average price of euros between March 29, 2011 and September 30, Another 58,849 no-par shares at an average price of euros have since been purchased up to October 28, The repurchase was terminated on this date. Furthermore, the Board of Management resolved in March 2010, to offer the employees of the domestic associated companies of CEWE COLOR Holding AG company shares at a preferential price as staff shares. A total of 10,890 shares were required for this project. The required shares were withdrawn from the portfolio of CEWE COLOR Holding. As of September 30, 2011, the treasury share portfolio of CEWE COLOR Holding, according to Section 71 of the German Stock Corporation Act (AktG) held a total of 679,103 no-par shares (total volume 18,977 thousand euros, average share price euros per share; previous year: 488,305 shares, 13,544 thousand euros, euros per share) and for the group according to IAS 19 a total of 791,855 shares (total volume 22,749 thousand euros, average share price euros per share, previous year: 601,057 shares, 17,007 thousand euros, euros per share). As of November 15, 2011, the treasury share portfolio held 737,952 no-par shares at an average share price of euros. As of September 30, 2011, the equity capital of CEWE COLOR Holding AG was unchanged in comparison to previous year s quarter, at 19,188 thousand euros, divided into 7,380,020 shares. For information on changes in equity, reference is made to the consolidated statement of changes in equity and explained in the chapter Statement of Financial Position and Financial Management. Notes to segment reporting The segment report is divided into the photofinishing segments Central Europe, Western Europe, Benelux and Central Eastern Europe, as well as the segment retail trade. This division corresponds to internal management reporting. Internal revenues of the group are consolidated in the column Eliminations. The segment earnings before financial performance and taxes are reported as key earnings and performance indicator. A detailed explanation of the segment reporting is shown in the chapter Segments of the interim management report.

83 Selected Notes Consolidated Financial Statements 83 Contingent liabilities Contingent liabilities existed from the granting of guarantees and grants to third parties, from pending risk of litigation and from other issues in the amount of 2,385 thousand euros (end of previous quarter: 2,231 thousand euros). Transactions with related parties CEWE COLOR Group defines the related parties to include the members of the Board of Management and the Supervisory Board of CEWE COLOR Holding AG, Oldenburg, the Neumüller CEWE COLOR Stiftung, Oldenburg, members of the Board of Management, the managing directors and the Board of Trustees of the Neumüller CEWE COLOR Stiftung, Oldenburg, the heirs of Senator h.c. Heinz Neumüller, Oldenburg, companies associated with the latter, next of kin of same as well as the CEWE COLOR Versorgungskasse e. V., Wiesbaden. Any and all transactions with related parties are dealt with at conditions customary in the market. The nature and extent of operations have not changed materially in comparison to the consolidated financial statements as of December 31, Oldenburg, November 15, 2011 CEWE COLOR Holding AG The Board of Management Dr. Rolf Hollander (Chairman of the Board of Management) Consolidated Financial Statements Dr. Reiner Fageth Andreas F.L. Heydemann Dr. Olaf Holzkämper

84 84 Consolidated Financial Statements Auditor s Certificate Auditor s Certificate To CEWE COLOR Holding AG, Oldenburg We have examined the abridged consolidated interim financial statements consisting of the statement of financial position, the income statement, the statement of recognised income and expense, the abridged statement of cash flows, the statement of changes in equity as well as the selected explanatory notes and the consolidated interim management report of CEWE COLOR Holding AG, Oldenburg, for the period from January 1 to September 30, 2011, all of which are integral parts of the quarterly financial report in accordance with Section 37x (3) in conjunction with Section 2 of the German Securities Trading Act (WpHG). The preparation of the abridged consolidated interim financial report according to IFRS for interim financial reporting as applied in the EU, and the consolidated interim management report according to the standards of the WpHG is the responsibility of the legal representatives of the company. It is our task to issue a certificate on the abridged consolidated interim financial statements and the consolidated interim management report, based on our examination. We have conducted our examination of the abridged consolidated interim financial report and the consolidated interim management report in compliance with the generally accepted accounting principles as determined by the Institut der Wirtschaftsprüfer (IDW German Institute of Chartered Accountants), and under supplementary observation of the International Standard on Review Engagements Review of Interim Financial Information performed by the Independent Auditor of the Entity (ISRE 2410). These standards require that we plan and perform our examination to exclude with reasonable assurance that the abridged consolidated interim financial statements, in essential issues, have not been prepared in compliance with IFRS for interim financial reporting as applied in the EU, and that the consolidated interim management report has not been prepared in compliance with the standards of the WpHG, applicable in the preparation of consolidated interim management reports. An examination is primarily limited to questioning of company employees and to analytical evaluations, and thus does not offer the assurance reached by an

85 Auditor s Certificate Consolidated Financial Statements 85 audit. As our mandate does not include an audit, we cannot express an opinion. Based on our examination, no facts have come to our knowledge which would lead to the assumption that the abridged consolidated interim financial report has not, in essential issues, been prepared in compliance with IFRS for interim financial reporting as applied in the EU, or that the consolidated interim management report has not, in essential issues, been prepared in accordance with the standards of the WpHG applicable for the preparation of consolidated interim management reports. Oldenburg, November 15, 2011 COMMERZIAL TREUHAND Gesellschaft mit beschränkter Haftung Wirtschaftsprüfungsgesellschaft Steuerberatungsgesellschaft Dipl.-Kfm. H. Sanders ppa. Dipl.-Kfm. T. Münchenberg Certified Public Accountant Certified Public Accountant Consolidated Financial Statements

86 Production of photo mugs The customer s photo is affixed to coffee or beer mugs of various colours, using a transfer film. In so-called thermographic printing, a permanent connection with the ceramic vessel is produced using heat and pressure.

87 Contents Further Information 87 FURTHER INFORMATION Multi-Year Overview 88 Production Plants and Distribution Branches 96 Financial Diary 97 Imprint 97 Glossary 98 Further Information

88 88 Further Information Multi-Year Overview: Consolidated Income Statement Multi-Year Overview Consolidated Income Statement Figures in million euros Q Q Q Revenues Increase / decrease in the inventory of finished and unfinished products Other own work capitalised Other operating income Cost of materials Gross profit Personnel expenses Other operating expenses Income before taxes, interest and depreciation (EBITDA) Depreciation of property, plant and equipment and amortisation of intangible assets Earnings before interest and taxes (EBIT) Financial results Earnings before taxes (EBT) Income taxes Other taxes Earnings after taxes Profit / loss attributable to minority shareholders Profit / loss attributable to shareholders of the parent company

89 Multi-Year Overview: Consolidated Income Statement Further Information 89 Q Q Q Q Q1 Q Q1 Q Q1 Q Q1 Q Q1 Q Q1 Q Q1 Q Further Information

90 90 Further Information Multi-Year Overview: Consolidated Statement of Financial Position Multi-Year Overview Consolidated Statement of Financial Position Assets Figures in million euros Sep. 30, 2005 Sep. 30, 2006 Sep. 30, 2007 Sep. 30, 2008 Sep. 30, 2009 Sep. 30, 2010 Sep. 30, 2011 Property, plant and equipment Real estate held as financial investment Goodwill Intangible assets Financial assets Non-current receivables from income tax refund Non-current receivables and assets Deferred tax assets Non-current assets Assets held available for sale Inventories Current trade receivables Current receivables from income tax refund Current other receivables and assets Cash and cash equivalents Current assets

91 Multi-Year Overview: Consolidated Statement of Financial Position Further Information 91 Shareholders Equity and Liabilities Figures in million euros Sep. 30, 2005 Sep. 30, 2006 Sep. 30, 2007 Sep. 30, 2008 Sep. 30, 2009 Sep. 30, 2010 Sep. 30, 2011 Subscribed capital Capital reserve Special item for treasury shares Revenue reserves and net profits Equity capital attributable to shareholders Third-party interests Equity Non-current special items for investment grants Non-current provisions for pensions Non-current deferred tax liabilities Non-current other provisions Non-current financial liabilities Non-current other liabilities Non-current liabilities Current special items for investment grants Current provisions for taxes Current other provisions Current financial liabilities Current other trade payables Current other liabilities Current liabilities Further Information

92 92 Further Information Multi-Year Overview: Key Figures: Volume and Employees, Income, Capital Multi-Year Overview Key Figures: Volume and Employees, Income, Capital Volume and Employees Q Q Q Digital prints in million units Prints from film in million units Total prints in million units 1, CEWE PHOTOBOOKS in thousand units Employees on a full-time basis 3,721 3,058 3,083 Income Q Q Q Revenues in million euros EBITDA in million euros EBITDA margin in % of revenue EBIT in million euros EBIT margin in % of revenue Restructuring costs in million euros EBT before restructuring in million euros EBT in million euros Profit after taxes in million euros Capital Sep. 30, 2005 Sep. 30, 2006 Sep. 30, 2007 Total assets in million euros Capital Employed (CE) in million euros Equity in million euros Equity ratio in % of assets Net debt in million euros ROCE (previous 12 months) in % of average capital employed

93 Multi-Year Overview: Key Figures: Volume and Employees, Income, Capital Further Information 93 Q Q Q Q Q1 Q Q1 Q Q1 Q Q1 Q Q1 Q Q1 Q Q1 Q , , , , , , , , ,726 2,224 2,138 1,950 1,876 1,763 1, , , , , , , ,821 2,666 2,607 2,765 3,734 3,165 3,155 2,837 2,730 2,602 2,686 Q Q Q Q Q1 Q Q1 Q Q1 Q Q1 Q Q1 Q Q1 Q Q1 Q Sep. 30, 2008 Sep. 30, 2009 Sep. 30, 2010 Sep. 30, 2011 Q1 Q Q1 Q Q1 Q Q1 Q Q1 Q Q1 Q Q1 Q Further Information

94 94 Further Information Multi-Year Overview: Key Figures: Cash Flow, Share Multi-Year Overview Key Figures: Cash Flow, Share Cash Flow Q Q Q Gross cash flow in million euros Outflow of funds from investing activities in million euros Net cash flow in million euros Cash flow from operating activities in million euros Cash flow from investing activities in million euros Free cash flow in million euros Share Q Q Q Number of shares (nominal value: 2.60 euros) in units 6,000,020 5,400,020 7,380,020 Earnings per share basic in euros diluted in euros

95 Multi-Year Overview: Key Figures: Cash Flow, Share Further Information 95 Q Q Q Q Q1 Q Q1 Q Q1 Q Q1 Q Q1 Q Q1 Q Q1 Q Q Q Q Q Q1 Q Q1 Q Q1 Q Q1 Q Q1 Q Q1 Q Q1 Q ,380,020 7,380,020 7,380,020 7,380,020 6,000,020 5,400,020 7,380,020 7,380,020 7,380,020 7,380,020 7,380, Further Information

96 96 Further Information Production Plants and Distribution Branches Production Plants and Distribution Branches Contact persons in our sales offices en/company/ marketing Germany CEWE COLOR AG & Co. OHG Meerweg D Oldenburg Phone + 49 (0) 4 41 / Fax + 49 (0) 4 41 / CEWE COLOR AG & Co. OHG Oskar-von-Miller-Straße 9 D Germering (Munich) Phone + 49 (0) 89 / Fax + 49 (0) 89 / CEWE COLOR AG & Co. OHG Erftstraße 40 D Mönchengladbach Phone + 49 (0) / Fax + 49 (0) / CEWE COLOR AG & Co. OHG Karl-Marx-Straße 18 D Dresden Phone + 49 (0) 3 51 / Fax + 49 (0) 3 51 / CEWE COLOR AG & Co. OHG Freiburger Straße 20 D Eschbach (Freiburg) Phone + 49 (0) / Fax + 49 (0) / diron GmbH & Co. KG Otto-Hahn-Straße 21 D Münster Phone + 49 (0) / Fax + 49 (0) / Abroad Japan Photo Holding Norge A / S Flåtestadtveien 3 N 1416 Oppegård (Oslo) Phone + 47 / Fax + 47 / Japan Photo Sverige AB Norra Hamngatan 40 S Gothenburg Phone + 46 / Fax + 46 / CEWE COLOR Nordic ApS Segaltvej 16 DK 8541 Skødstrup (Århus) Phone + 45 / 86 / Fax + 45 / 86 / CEWE COLOR Fotoservice AG Hochbordstraße 9 CH 8600 Dübendorf (Zurich) Phone + 41 / 1 / Fax + 41 / 1 / CEWE COLOR AG & Co. OHG Colerusgasse 24 / 1 A 1220 Vienna Phone + 43 / CEWE COLOR Belgium N. V. Generaal De Wittelaan 9 / b9 B 2800 Mechelen Phone + 32 / 3 / Fax + 32 / 3 / CEWE COLOR Nederland B. V. Industrieweg 73 NL 8071 CS Nunspeet Phone + 31 / 3 41 / Fax + 31 / 3 41 / CEWE COLOR S. A. S. La Tour Asnières 4 avenue Laurent Cély F Asnières sur Seine Phone + 33 / 1 / Fax + 33 / 1 / CEWE COLOR S. A. S. Z. A. de la Croix Rouge F Vern sur Seiche (Rennes) Phone + 33 / 2 / Fax + 33 / 2 / CEWE COLOR S. A. S. Z. A. E. des Trois Ponts F Fabrègues (Montpellier) Phone + 33 / 4 / Fax + 33 / 4 / CEWE COLOR Sp. z o. o. ul. Strzelecka 11 PL Kedzierzyn-Kozle Phone + 48 / 77 / Fax + 48 / 77 / CEWE COLOR Sp. z o. o. ul. Droga Mazowiecka 23 PL Graudenz Phone + 48 / 56 / Fax + 48 / 56 / Fotojoker Sp. z o. o. ul. Strzelecka 11 PL Kedzierzyn-Kozle Phone + 48 / 77 / Fax + 48 / 77 / CEWE COLOR a. s. Kloknerova 2278 / 24 CZ Prague 4 Phone / 2 / Fax / 2 / CEWE COLOR a. s. Kopcianska 14 SK Bratislava 5 Phone / 2 / Fax / 2 / CEWE COLOR Magyarország Kft. Béke út H 1135 Budapest Phone + 36 / 1 / Fax + 36 / 1 / CEWE COLOR Ltd. Unit 4, Spartan Close Titan Business Centre Tachbrook Park UK Warwick CV34 6RR Phone + 44 / 19 / Fax + 44 / 19 / CEWE COLOR Zagreb d. o. o. Jurisiceva 24 HR Zagreb Phone + 36 / 1 / Fax + 36 / 1 /

97 Financial Diary, Imprint Further Information 97 Financial Diary November 21 22, 2011 Equity Forum of the Deutsche Börse, Frankfurt March 22, 2012 Publication of the Annual Report 2011 March 22, 2012 Financial Statements Press Conference and Analyst Conference, Frankfurt This interim report is a product of viaprinto.de, the online print shop of CEWE COLOR. Imprint This interim report is also available in German. We would be happy to send you a copy upon request: Phone: + 49 (0) 4 41 / Fax: + 49 (0) 4 41 / IR@cewecolor.de CEWE COLOR Holding AG is a member of the Deutscher Investor Relations Kreis e. V. Responsible CEWE COLOR Holding AG Meerweg 30 32, D Oldenburg Phone: + 49 (0) 4 41 / Fax: + 49 (0) 4 41 / info@cewecolor.de Concept and design FIRST RABBIT GmbH, Cologne Photos CEWE COLOR AG & Co. OHG, Oldenburg Printed by CEWE COLOR AG & Co. OHG, Oldenburg Auditor of the Consolidated Financial Statements COMMERZIAL TREUHAND Gesellschaft mit beschränkter Haftung Wirtschaftsprüfungsgesellschaft Steuerberatungsgesellschaft Wilhelmshavener Heerstraße 79, D Oldenburg Further Information

98 98 Further Information Glossary Glossary Note: Whenever digital photos are mentioned in this interim report, this always includes the number of CEWE PHOTOBOOK prints as well as the photos of photo gifts. As a rule, all figures are calculated with the most accurate values and are commercially rounded in the tables. This may lead to deviations, particu larly in the total line. Borrowed capital The total of the values reported as non-current and current liabilities under equity and liabilities Capital Employed (CE) Net working capital plus non-current fixed assets and cash and cash equivalents Core capital employed Capital employed less cash and cash equivalents and other financial assets, which exceed turnover of the previous twelve months by 5 % Days working capital Term of the net working capital in days measured by the turnover of the past quarter EBIT Earnings before interest and taxes EBIT-induced cash flow EBIT plus depreciation (EBITDA) and further adjustments; subtotal before cash flow from operating activities, i. e. prior to financing effects from net working capital and paid taxes EBITDA Earnings before interest, taxes, depreciation and amortisation EBT Earnings before taxes and financial result Equity capital The residual claim to the net assets remaining after deduction of debts applicable according to IAS 32 Equity ratio Share of equity capital in total capital; the mathematical ratio of equity to total assets Financial liabilities Non-current and current financial liabilities shown as such, without rights to repayment subject to interest shown in the statement of financial position under other credit lines Free cash flow Cash flow from operating activities minus cash flow to investing activities (both according to statement of cash flows) Gross cash flow Earnings after taxes plus amortisation on intangible assets and depreciation on property, plant and equipment Gross financial liabilities Total of non-current financial liabilities and current financial liabilities Gross working capital Current assets without cash and cash equivalents Liquidity ratio Ratio between cash and cash equivalents and total assets Net cash flow Gross cash flow less investments Net financial liabilities Non-current financial liabilities plus current financial liabilities less cash and cash equivalents Net working capital Current assets without cash and cash equivalents less current liabilities without current special items for investment grants and without current financial liabilities Operating net working capital Inventories plus current trade receivables minus current trade payables Other net working capital Contains the assets held for sale, current receivables from income tax refunds, current receivables and assets less current provisions for taxes, as well as other current provisions and other current liabilities Return On Capital Employed (ROCE) Earnings before taxes and before the financial result (EBIT) for a full annual cycle compared to the four-quarter average of capital employed Working capital and tax-induced cash flow Changes from net working capital and paid taxes

99 Relax with viaprinto. Organise print runs of any size: easy, fast and reliable. Your CEWE COLOR Online Print Service. Impressive pages bound for success.

100 from 5.99 * The perfect gift * Recommended listed price for a small CEWE PHOTOBOOK including VAT. Price may be subject to packing and postage charge. Europe s No. 1 photo book Outstanding quality Simple and easy to create Huge range of sizes and covers