SURTECO AG projects new record figures

Leading specialist for surface technologies SURTECO AG achieved the best year in the company’s history during 2006. The Group numbers among the major international suppliers to the construction and furnishing industries and succeeded in increasing Group sales revenues by 2 % to € 403.2 million to achieve a profit of € 28.8 million (+ 32 %). The trend during the first half of 2007 confirmed this positive development: A slight increase in sales of 2 % to € 209.1 contrasts with a disproportionate growth in earnings. As at 30 June 2006, EBT improved by 11 % to € 26.2 million. Consolidated net income increased by 10 % to € 16.1 million. Provided there are no upsets in the market over the next few months, SURTECO AG looks set also to achieve record figures in 2007.

Not least on the basis of this positive scenario, SURTECO AG intends to relaunch the dynamic entrepreneurial development pursued in previous years in 2007, following a four-year phase of consolidation and restructuring, as outlined by the Board of Management at the Annual General Meeting. The Group can move forward with a very healthy balance sheet and an equity ratio of more than 44 % which gives additional room for manoeuvre. The company will use this to finance further growth and expansion of existing market positions. The complete takeover of long-term French sales partner SDCA and Italian company ARBE provides an indication of the direction. The same applies to the acquisition of the line of skirting and edging systems from the Gardinia Home Decor Group. This acquisition enables SURTECO AG to strengthen the market presence of the Döllken-Weimar GmbH.

In order to finance additional growth, SURTECO AG obtained long-term funds amounting to € 150 million through a private placement in the USA and Germany carried out in June. This form of investment was a new departure for SURTECO AG and the company took the enthusiastic response of investors as an unmistakable signal that the capital market favours and supports its profit-oriented growth strategy.

The focus of SURTECO AG on international operations – the company currently generates 64 % of its business abroad - is highlighted by a resolution taken by the Annual General Meeting: The Group will convert to a “European Company – Societas Europaea SE”. This will provide it with a multinational and modern legal structure which is applicable throughout the European Union.

SURTECO AG is continuing to work towards a listing in the SDAX Index. The increase in free float from 19.9 % to 23.7 % carried out April last year represents a step in this direction and other measures remain to be taken. The potential of the SURTECO share has been indicated by performance during the recent weeks. At times shares were being quoted at € 40. Naturally, the SURTECO share was also affected by the downward trend triggered as a result of the crisis in international financial markets. The share price is currently fluctuating around € 34 per share. Based on earnings for 2006, this corresponds to a price/earnings ratio of 13. The comparable average price/earnings ratio of all SDAX shares corresponds to a multiplicator of 18. A share-price of around € 45 is calculated on this basis of this average weakened by the crisis and this highlights the potential of the share.

Assuming an initial portfolio of € 10,000 (converted), the shareholders of SURTECO AG, have been able benefit from an average annual return (growth in value + dividends) of 36 % on the capital they invested in 1994 over the past 13 years. And they are continuing to make good returns on their shares: the Annual General Meeting resolved to increase the dividend for 2006 by 25 % to € 1 per share.