SURTECO AG on the way to the S-DAX

SURTECO AG emerged from the merger of Bausch + Linnemann AG with the Döllken Group and is now planning to strengthen the group’s free float further. In mid-March, the specialist for surface technologies listed in the Prime Standard carried out a capital increase against a cash consideration by nominally 500,000 euros and a re-placement of shares from the portfolio of an existing shareholder on the stock exchange in order to raise the free float from 7.6 percent to 14.5 percent. If the stock exchange environment is suitable, measures are planned to increase the free float to more than 20 percent. SURTECO AG is the leading provider of surface materials based on technical raw papers and plastics for technical applications worldwide and this measure would see the Group being “well on the way to the S-Dax and hence to status as a genuine small public company,” as Chairman of the Board of Management Friedhelm Päfgen emphasized.

Development during the fiscal year 2004 / Pretax result significantly above the record result for 2002

Despite a sustained weak domestic economy and unfavourable currency parities, SURTECO AG and its two Strategic Business Units “SBU Paper” and “SBU Plastics” achieved sales of € 380.4 million in the fiscal year 2004 and thereby significantly exceeded the result for the previous year (€ 355 million) by 7 percent. Germany contributes to these figures with a five percent increase in sales to 148.2 million euros.

The SBU Paper manufactures edging strips and flat foils to coat wooden materials for the furnishing industry and interior design, and the business unit contributed € 179.7 million (2003: € 174.4 million). 35 percent (€ 62.2 million) of these sales were generated by SBU Paper in Germany, the equivalent figure for the previous year was € 56.7 million. SURTECO AG is the leading provider worldwide in the market segment for edging strips based on paper with a market share of nearly 60 %.

The SBU Plastics represents the companies of the Döllken Group and in 2004, this business unit generated sales amounting to € 200.7 million (2003: € 180.6). In the area of plastic edging tapes, the SURTECO Group holds a global market share of about 37 percent. The German sales of the SGB Plastics were 2 percent higher than the value for the previous year (€ 84.5 million) at € 86.1 million.

Particularly In view of the difficult economic situation in the domestic furnishing and construction industry, foreign markets are gaining increasing importance for SURTECO AG. Foreign sales (the proportion of foreign sales is 61 percent) went up by nine percent in 2004 to € 232.2 million is a clear indication of this, with America becoming increasingly important. Although the American market environment is stagnating at a high level, SURTECO AG achieved sales of € 54.7 million (2003: 49.9 million) in American markets during the course of 2004.

The overall successful course of the fiscal year 2004 is naturally also reflected in the operating result of the SURTECO Group: EBIT rose by 19 percent in comparison with the previous year to € 44.4 million and EBT improved by 28 percent to € 34.7 million. Net income for the year was € 18.4 million and exceeded the values for the previous year by 24 percent at € 18.4 million. As a consequence of this positive development, the Board of Management will be recommending an increase in dividend by € 0.10 to € 0.80 per year.

Outlook with opportunities in North America

The unfavourable business environment in Germany is also impacting on the current business year. It is not possible to assume a sustained upswing in demand in Germany. A moderate increase may be a reasonable assumption in foreign markets, although the current growth phase is already beginning to tail off. Apart from the uncertain performance of the dollar and the price of oil, the major unknowns here are raw material prices. Against this background, SURTECO AG is only anticipating a slight rise in sales for the business year 2005.

The necessary positive stimuli for this development should mainly emanate from the North American market. SURTECO charted a new course for this development when it took over the Canadian Canplast Group in the autumn of 2004. Acquisition of this specialist for high-quality plastic edgings (279 employees, sales of approx. € 30 million) brought about a further improvement in the leading market position of SURTECO AG in the USA and Canada. Up to now, the company was only represented here through Group company Doellken-Woodtape in the area of thermoplastsic edging tapes. A market share of more than 50 percent now takes the company to a clear position as market leader in this segment, and a second brand provides even better market coverage. SURTECO AG also has the prospect of achieving synergies for raw material procurement in particular and a production site based in Canada will uncouple the Group from the negative impact of the problems associated with the exchange rate between the euro and the dollar.