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Quarterly Financial Statements for the Period Ending ...

  1. 1. Quarterly Financial Statements for the Period Ending September 30, 2003 d+s online AG
  2. 2. QUARTERLY FINANCIAL STATEMENTS FOR THE PERIOD ENDING SEPTEMBER 30, 2003 PAGE 2 Contents Preface 3 Market 4 Business Development of d+s online AG 5 Revenue Performance 5 Earnings Performance 5 Finance 6 Human Resources 6 Expansion 7 Consolidated Balance Sheet 8 Consolidated Income Statement 9 Consolidated Cash Flow Statement 10 Changes in Shareholders’ Equity 11 Appendix 12 Organization 13 Imprint 14 Financial Calendar February 13, 2004 Announcement of provisional results for FY 2003 March 22, 2004 Balance Press Conference May 14, 2004 Quarterly Report 1st Quarter 2004 August 13, 2004 Quarterly Report 2nd Quarter 2004 November 12, 2004 Quarterly Report 3rd Quarter 2004
  3. 3. QUARTERLY FINANCIAL STATEMENTS FOR THE PERIOD ENDING SEPTEMBER 30, 2003 PAGE 3 Preface At the end of the third quarter d+s online AG has almost The company’s shareholders have supported d+s online AG achieved the goals it set for this year, an increase of with great unity on this consistant way of economic conser- EUR 10 million in earnings against 2002. The first three vatism, profitabiliy and cautious development. It was only quarters of the year having passed, the company has fulfil- within a few days that the convertible bond amounting to led three quarters of its business plan. d+s online AG EUR 3.3 million, decided on at the Annual General Meeting increased its earnings by EUR 7.4 Mio. before depreciation, at the end of June and issued in the second half of interests and taxes (EBITDA) over the same period in the September, were completely taken up with a remarkable previous year. Thus a successful turnaround has sustainably involvement of minor shareholders. The major part of the been realized. convertible bond was taken by an investor who subscribed to a volume of EUR 2.4 million. Efficiency and cost structures of the company continued to improve. With a revenue share of 79 percent the personnel The acquired growth capital is to strengthen organic growth expense decreased again in the third quarter compared to and to reinforce the market position of d+s online AG as the the first half of the year, going down to 80.5 %. leading quality service provider by strategic acquisitions. Nevertheless, specifically those potentials have not been Management’s selection procedure is based on strict criteria fully exploited that will be further developed through the as well as a profound analysis of the synergy potentials. central production control. Management does not put itself under any kind of pressure when it comes to finalizing transactions. The increase in demand that set in at the beginning of the second quarter has been confirmed. With the price level Business operations in the fourth quarter of the year will remaining stable, the market shows clear signs of recovery. focus on the Christmas business being carried out with d+s online AG is not yet satisfied with the development of optimum results. Exploitation of all the possible means to its new business, however, the third quarter saw several enhance efficiency continues to be a central task in the business transactions being carried out with substantial process of further developing the company beyond the sales volumes for the year 2004 as well as foreseeable Christmas season. Company expansion will be closely increase potentials. connected with the safe increase of revenues. Sustainable profitability will continue to be the maxim of d+s online AG The European Call Centre Award 2003 for „Best Outsource management. This is reflected in the value development of Relationship“ bestowed to d+s online AG sent out a positi- the company shares. After a trough of EUR 0.70 ve sign to the market. d+s and Loyalty Partner GmbH, the (closing rate XETRA February 12, 2003), shares quoted at only German finalist, have been awarded for successfully EUR 1.92 at the end of September (closing rate XETRA setting up and operating the „PAYBACK“ Service Center. For September 30, 2003). d+s online AG as a classical outsourcing service provider, the category „Best Outsource Relationship“ is of major importance. The award confirms the company’s position as Sincerely, eader in quality among the German communication-center service providers. In spite of these successes and the increased demand, Dipl.-Ing. Achim Plate however, d+s online AG has to admit that decision-making processes continue to take a long time. Large orders may well take nine to twelve months from the first contact to finalizing the transaction. Thus the course of business con- firms the company’s decision to commit itself to conservati- ve revenue plans. Zurück zum Inha
  4. 4. QUARTERLY FINANCIAL STATEMENTS FOR THE PERIOD ENDING SEPTEMBER 30, 2003 PAGE 4 Market The demand on the market for communication center In the third quarter d+s online AG contracted another services has seen a positive development since spring this important client from the telecommunications market. year. More and more orders that had been delayed for Furthermore, in October an outbound order for customer months have now been placed. Among these are large-scale service was acquired with one of the largest German health complex projects which will be suited for only few providers insurance companies. Both projects comprise a volume of on account of their volumes and the kind of tasks involved nearly EUR 2.0 million expected for 2004 and partly – one of them being d+s online AG. contribute to this year’s revenues. d+s online AG will participate proportionally in the In addition to the acquisition of new clients, d+s online AG increased demand and will be able to continue to grow from continues to pay greatest attention to the development of the existing and new business in 2004. its existing clients’ projects. Significant decreases in two large-scale projects in comparison with annual planning d+s online AG has expanded its position as the leading could be over- compensated by profits from other projects. quality provider, a development that was backed up by the The management of existing customers will therefore renowned European Call Centre Award for „Best Outsource remain to be a major pillar in the growth strategy of Relationship“ bestowed at the end of September for the d+s online AG. An outstanding quality will convince „PAYBACK“ Service Center. Another highlight is the result of especially clients of large volumes to open up additional a benchmarking survey of the University of Munich. In a potentials by CRM-based up-selling and cross-selling comparison of several dozens of call centers, d+s online AG products. and the Service Center „Gruner & Jahr“ offering services such as subscriber management, email management and merchandizing, achieved by far the best marks in the field customer satisfaction. With a view to the clients’ continuously rising demands on quality, these references adding up to the number of previous awards are very useful for the company’s sales performance. Especially in the sector of highly demanding projects, where d + s online AG is established, higher revenues can be achieved, while the price level in the broad field of standard services stabilizes much more slowly after the drop of margins in the past months. Zurück zum Inha
  5. 5. QUARTERLY FINANCIAL STATEMENTS FOR THE PERIOD ENDING SEPTEMBER 30, 2003 PAGE 5 Business Development of d+s online AG Revenue Performance Earnings Performance At group level d+s online AG’s consolidated revenues In the third quarter the group earnings significantly out-per- amounted to EUR 31.0 million in the first nine months of formed the same period of the previous year. With an ope- the current financial year, thus exceeding revenues of the rating EBIT of negative EUR 1.3 million in the third quarter, comparable period in 2002, EUR 29.1 million, by 6.5 %. a performance improvement of EUR 2.6 million was achie- ved against the comparable period in 2002. The resulting On a quarterly basis consolidated revenues remained stable increase in productivity is all the more remarkable, since within the third quarter of this year compared to those of revenues remained constant compared to the same period a 2002. They fell, however, slightly short of expectations. year earlier. d+s online AG, the parent company, yet again generated the Within the first nine months of the current financial year, lion share of the group revenues, i.e. EUR 29.0 million, the group consolidated earnings (EBIT) amount to negative within the first nine months of the year representing a share EUR 4.3 million. That states a clear improvement of of 93.6 % of the group revenues. Thus, revenues of the AG EUR 7.1 million over the comparable period of the previous increased by 0.9 % to EUR 9.5 million in the third quarter year (negative EUR 11.4 million). of 2003 compared to the same period in the previous year. Compared to the first nine months of last year revenues of The development of consolidated earnings against 2002 the AG increased by EUR 2.7 million (10.4 %). becomes more evident when taking a look at the EBITDA figure. Here the group achieved improvements of Projects for new clients signing up in the second quarter EUR 7.4 million to negative EUR 0.6 million within the first contributed EUR 0.4 million to revenues after some of them nine months compared to the same period a year ago. were launched with considerable delay. Due to start-up problems originating outside the company the volume of a Thus the achievement of the corporate target of earnings new large-scale project had to be adapted and cut down improvements of EUR 10 million in the current financial year compared to the business plan. Apart from the delay of new becomes more realistic. projects described earlier, this was the main reason for reve- nues to fall short of expectations in the third quarter, in Within the group, d+s online AG clearly increased its ope- spite of partly successful compensation by other projects. rating EBIT before consolidation by EUR 2.6 million to negative EUR 1.3 million within the third quarter of 2003 Revenues of the company’s subsidiaries before consolidati- against the same quarter in 2002. After negative on have slightly increased in comparison with the previous EUR 3.0 million in the first half of the year 2003, quarter. They remained, however, at a low level compared to d+s online AG’s operating EBIT before consolidation totals group standards. negative EUR 4,3 million. This is a clear improvement of EUR 6.1 million compared to the same period in 2002. d+s online AG improved its EBITDA before consolidation by EUR 6.5 million to negative EUR 1.0 million within nine months compared to the same period in the previous year. Within the third quarter, d+s online AG consistenly continu- ed to optimize its resources in a structured way, enabling it to react appropriately to turnover fluctuations in the pro- duction. This resulted in another increase in the contri- bution margin for production (IV) in the third quarter as Zurück zum Inha
  6. 6. QUARTERLY FINANCIAL STATEMENTS FOR THE PERIOD ENDING SEPTEMBER 30, 2003 PAGE 6 well as in an increase of EUR 0.7 million compared to the Finance same quarter in the previous year. Thus the contribution margin IV for the first nine months of 2003 rose by The convertible bond of EUR 3.3 million issued by authority EUR 4.5 million against the comparable quarter a year ear- of the Annual General Meeting of June 25, 2003 was lier. However, the described revenues’ adaptation of a new placed completely by the beginning of September 2003. project resulted in a lower contribution margin than was Consequently the company managed to make considerable forecast. As a consequence, the increase did not turn out to headway on its way to financing future organic and be as high as expected. By constantly further developing anorganic growth. The bond is listed under non-current the central online production control and its intense utiliza- liabilities and will expire on December 31, 2005. tion, deployment of personnel will be optimized which will yet again result in a permanent improvement of the contri- Furthermore, the company managed to convert a loan obli- bution margin. gation amounting to EUR 500,000 into capital equity. 250,000 shares were issued to the creditors as compen- Moreover, administrative restructuring measures introduced sation for their repayment claims. The capital thus acquired at the end of 2002 and continued at the beginning of was not listed in the companies’ register in the period under 2003, were showing positive effects. Letting of space, cuts review and will be shown with the capital stock of the in the IT sector and the reduction of administrative person- balance. nel, all implemented at the beginning of the year, had an impact in the third quarter of the year. In addition, the Human Resources company was able to avoid an increase in material costs. d+s online AG had a total of 1,573 employees by September The non-recurrent costs for capital acquisition of 30, 2003 (1,792 in the previous year) corresponding to a EUR 0.2 million had a negative effect on the company full-time equivalent (FTE) of 1,285 employees (1,440 in the earnings. previous year). Personnel expense within the group dropped to 79 % in the third quarter (first quarter 2003: 80.5 %) against 91 % in the comparable period of the previous year. The future target of d+s online AG will be a permanent personnel expense rate of less than 75 %. Also the company’s subsidiaries improved their results in the third quarter of 2003 after some non-recurrent events. EBIT before consolidation amounted to EUR 0.1 million compared to negative EUR 0.1 over the same period of last year. Thus the subsidiaries improved their earnings by EUR 0.7 million in the first nine months of 2003 against the comparable period of 2002 and contributed EUR 0.3 milli- on to consolidated earnings before consolidation.
  7. 7. QUARTERLY FINANCIAL STATEMENTS FOR THE PERIOD ENDING SEPTEMBER 30, 2003 PAGE 7 Expansion d+s online AG has directly linked further company Intensive negotiations are going on about an acquisition by expansion to revenue growth from profitable projects, thus d+s online AG for further expanding its market position. The clearly giving earnings maximization priority over revenue standards for requirements to be met are very high. Apart maximization. from synergy potentials necessary for positive results, management expects an extension of the value-added Company development focuses on further efficiency chain. Acquisitions can be made provided that the takeover increase in the field of production. The core objective is to of competitors at a reasonable price will contribute to optimize the time relevant to generate revenues. After an significantly improving the market position and that average of about 33 minutes per productive hour in the year technologies are compatible. 2002, the future target is a rate of 43 minutes. The strategy to align production strictly to the contribution margin proved to be absolutely correct allowing for costs to be considerably better controlled than a year ago. This effect will continue to be supported by cost reductions achieved by restructuring measures in spring. At present, company expansion is primarily taking place within the company since future company success largely depends on the extremely efficient organization of all production procedures. In order to technologically automize the optimum use of resources, d+s online AG developed a central “Online-Produktionssteuerung” (OPS) in the first half of the year which is to further optimize personnel deployment. The system has meanwhile been integrated into the largest accounts and has indicated further useful potentials for increasing efficiency. OPS will be enhanced by practical experience and gradually expanded to all large- scale projects. As a consequence, d+s online AG expects that improvements achieved in the first selected projects will be followed by further productivity gains. These will have sustainable positive effects on the personnel expense.
  8. 8. QUARTERLY FINANCIAL STATEMENTS FOR THE PERIOD ENDING SEPTEMBER 30, 2003 PAGE 8 Consolidated Balance Sheet* Assets Liabilities and Shareholders’ Equity 9-Month Report Annual Report 9-Month Report Annual Report Jan. 1, 2003 – Jan. 1, 2002 – Jan. 1, 2003 – Jan. 1, 2002 – Sept. 30, 2003 Dec. 31, 2002 Sept. 30, 2003 Dec. 31, 2002 EUR k EUR k EUR k EUR k CURRENT ASSETS CURRENT LIABILITIES Cash assets 2.929 3.558 Trade payables 2.448 4.275 Trade receivables 5.624 3.822 Other accruals 49 32 Inventories 409 222 Due to banks 5.217 2.458 Deferred tax assets 10.577 10.577 Other current liabilities 4.459 5.879 Prepaid expenses and other Prepaid expenses Minority interests 842 917 current assets 1.857 1.476 Accrued and deferred items 0 444 TOTAL CURRENT ASSETS 21.396 19.655 TOTAL CURRENT LIABILITIES 13.015 14.005 NON-CURRENT ASSETS NON-CURRENT LIABILITIES Property, plant and equipment 5.519 7.329 Retirement Benefit Obligations 0 157 Intangible assets 352 296 Bank borrowings and Investments/Bonds of fixed assets 25 692 convertible bonds 3.784 502 Goodwill 6.762 8.303 Special item for investment subsidies on property, plant and equipment 1.146 1278 TOTAL NON-CURRENT ASSETS 12.658 16.620 TOTAL NON-CURRENT LIABILITIES 4.930 1.937 SHAREHOLDERS' EQUITY Capital stock 6.885 6.635 Additional paid-in capital 38.372 37.789 Accumulated deficit -29.110 -23.970 Minority Interests -38 -121 TOTAL SHAREHOLDERS' EQUITY 16.109 20.333 TOTAL ASSETS 34.054 36.275 TOTAL LIABILITIES 34.054 36.275 * According to IAS
  9. 9. QUARTERLY FINANCIAL STATEMENTS FOR THE PERIOD ENDING SEPTEMBER 30, 2003 PAGE 9 Consolidated Income Statement* Quarterly Report Quarterly Report 9-month- 9-month- III / 2003 III / 2002 Report Report July 1, 2003 – July 1, 2002 – Jan. 1, 2003 – Jan. 1, 2002 – Sept. 30, 2003 Sept. 30, 2002 Sept. 30, 2003 Sept. 30, 2002 EUR k EUR k EUR k EUR k Revenue Performance 9.956 10.038 31.040 29.146 Other operational revenue 662 445 1.675 1.296 Increase of stocks of finished and unfinished 62 103 201 292 Material expenditure / expenditure -593 -1.104 -2.048 -3.884 Personnel costs -7.897 -9.087 -24.875 -26.540 Depreciation on tangible assets (and on intangible assets of capital assets) -695 -762 -2.117 -2.267 Depreciation on goodwill -545 -580 -1.617 -1.136 Other operational revenue -2.283 -2.570 -6.582 -7.919 Restructuring expenditures -392 -392 Operating Result -1.333 -3.909 -4.323 -11.404 Other interests and similar revenues 10 60 39 103 Depreciation on financial assets 0 -1.500 -354 -1.500 Interests and similar expenditures -160 -203 -427 -452 EBIT -1.483 -5.552 -5.065 -13.253 Tax on income and revenues -1 -61 -15 2.835 Other taxes 0 -1 Result before Minderheiten -1.484 -5.613 -5.081 -10.418 Allocation to reconciliation line for shares possessed not as an owner 9 21 -60 55 Deficit -1.475 -5.592 -5.141 -10.363 Result per share (unwatered) -0,23 -1,02 -0,87 -1,88 Result per share (watered) -0,23 -1,02 -0,87 -1,88 Potential shares from the convertible bonds do not result in dilution since the company shows a loss per share. * According to IAS
  10. 10. QUARTERLY FINANCIAL STATEMENTS FOR THE PERIOD ENDING SEPTEMBER 30, 2003 PAGE 10 Consolidated Cash Flow Statement* 9-month Report 9-month Report 01.01.2003 – 01.01.2002 – 30.09.2003 30.09.2002 EUR k EUR k Cash flow from operating activities Earnings before taxes -5.081 -13.253 Interest income -39 -103 Interest expense 427 452 non-realized loss on investments 354 1.500 EBIT -4.339 -11.404 Depreciation of property, plant and equipment 2.117 2.267 Regular amortization of goodwill 1.619 1.136 EBITDA -603 -8.001 Changes in assets and liabilities Trade receivables -1.802 2.826 Inventories -187 -418 Prepaid expenses and other current assets -381 1.540 Trade payables -1.827 -641 Accruals 17 29 Other current liabilities -920 3.082 Prepaid expenses -444 863 Gross cash flow from operating activities -6.147 -720 Interest income 39 103 Interest expense -427 -452 Net cash flow from operating activities -6.535 -1.069 Acquisition of conTakt KG, Itzehoe 0 -5.835 Investment in property, plant and equipment -363 -1.749 Sales of financial assets 646 9.700 Follow-up acquisition costs -54 0 Acquisition of participations 0 -22 Goodwill arising from withdrawal trom sales of shares 0 -540 Allocation/reduction special item for investment subsidies on fixed assets -132 -307 Cash inflow/cash flow from investments 97 1.247 Repayment/borrowing of loans -31 -4.000 Convertible bonds 3.313 0 Repayment of loan to minority shareholders -75 0 Assumption of loans 0 2.643 Minority interest 0 917 Cash paid on bailees' shares 0 5 Retirement benefit obligations -157 140 Cash flow from financing activities 3.050 -295 Changes in funds -3.388 -117 funds at the beginning of period 1.100 2.923 Funds at the end of period -2.288 2.806 Composition of funds Cash and bank deposits 2.929 3.656 Bank borrowings -5.217 -850 Funds at the end of period -2.288 2.806 * According to IAS
  11. 11. QUARTERLY FINANCIAL STATEMENTS FOR THE PERIOD ENDING SEPTEMBER 30, 2003 PAGE 11 Changes in Shareholders’ Equity* January 1 – September 30, 2003 Gezeichnetes Kapitalrücklage Bilanzverlust Minderheiten- Total Kapital anteile EUR k EUR k EUR k EUR k EUR k As of January 1, 2003 6.635 37.789 -23.970 -121 20.333 Appreciation of financial assets acc. to IAS 39 0 333 0 0 333 Acquisition of Knowledge Factory 0 0 0 24 24 Sachkapitalerhöhung 250 250 0 0 500 Capital increase by way of contribution in kind 0 0 -5.141 60 -5.081 Result January 1 - September 30, 2003 6.885 38.372 -29.110 -38 16.109 January 1 – September 30, 2002 Capital Additional Accumulated Minority Total stock paid-in capital deficit interests EUR k EUR k EUR k EUR k EUR k As of January 1, 2002 5.521 36.787 -9.733 32 32.607 Up-date January 1, 02 d+s Software Contor 0 0 5 0 5 Minority interest in the foundation of branches 0 0 0 -5 -5 Devaluation of financial assets acc. to IAS 39 0 436 0 0 436 Result January 1 - September 30, 2002 0 0 -10.364 -55 -10.419 As of September 30, 2002 5.521 37.223 -20.092 -28 22.624 * According to IAS
  12. 12. QUARTERLY FINANCIAL STATEMENTS FOR THE PERIOD ENDING SEPTEMBER 30, 2003 PAGE 12 Appendix to Interim Report for the Quarter ending September 30, 2003 Introduction Post-Balance Sheet Events The following information includes the additions to our No essential events have been reported after the balance consolidated financial statements for the quarter ending on sheet deadline. December 31, 2002, to be made by September 30, 2003. For complete information, we refer interested parties to our annual report with our consolidated financial statements Holdings of Shares by Directors and Officers for the year ending December 31, 2002. Number of shares (as of September 30, 2003) Convertible Bonds (CB) Accounting and Valuation Conventions The accounting and valuation conventions used for the MANAGEMENT preparation of the interim report for the quarter ending September 30, 2003, remain essentially unchanged from Achim Plate (Chairman) 718.517 those used for the preceding consolidated financial (CB 100.000) statements. Holger Schimming 694.891 For the first time as of September 30, 2003, the company has registered software under self-created intangible assets. As of September 30, 2003, development costs for SUPERVISORY BOARD modules of the online production control (OPC) amounting to EUR 140,000 were capitalized. Dr. Christoph Seibt (Chairman) 0 Hartmut Bühne (Vice Chairman) 0 Dividends Thomas Hoffmann 372.612 No dividends or intermediate dividends were paid in the (As of June 25, 2003) (CB 100.000) course of the period under review. The financial statements of d+s online AG for the year ending December 31, 2003 did Karl-Friedrich Kalmund 250.000 not provide any payment of dividends from results as of the (As of June 25, 2003) (CB 2.407.275) closing date. Mario Bethune-Steck 131 Segment Information Klaus Böhning 131 (As of October 1, 2003) Since d+s online AG’s revenues are generated exclusively by domestic activities and since over 90 % of the group’s activities involve communication-center activities, no information is provided according to segment. Treasury Shares As of September 30, 2003, the company held a total of 51,947 treasury shares acquired at an average price of EUR 6.62 per share. The total purchase price of EUR 0.34 milli- on was offset against shareholders’ equity at the time of purchase.
  13. 13. QUARTERLY FINANCIAL STATEMENTS FOR THE PERIOD ENDING SEPTEMBER 30, 2003 PAGE 13 Organization SUPERVISORY BOARD MANAGEMENT Dr. Christoph H. Seibt Attorney, Hamburg Achim Plate Operations, Administration Chairman (Chairman) Finance / Controlling / IR Group Controlling Hartmut Bühne Businessman, Hamburg Key Account Management Vice Chairman Communication IT Thomas Hoffmann Businessman, Glückstadt (As of June 25, 2003) Holger Schimming Sales Sales Marketing Karl-Friedrich Kalmund Businessman, Munich Business Development (As of June 25, 2003) Partnering Mario Bethune-Steck Employee, Bargteheide, Employees’ representative Retired: Klaus Böhning Employee, Hamburg, (As of October 1, 2003) Employees’ representative Alexander Duhre Up to January 31, 2003 Retired: Hartmut Bader Legal Consultant, Hamburg (Up to June 25, 2003) Josef Rentmeister Physicist, Düsseldorf (Up to June 25, 2003) Heike Wilke Employee, Hamburg (Up to July 31, 2003) Employees’ representative
  14. 14. QUARTERLY FINANCIAL STATEMENTS FOR THE PERIOD ENDING SEPTEMBER 30, 2003 PAGE 14 Imprint d+s online AG Überseering 4 . D-22297 Hamburg P.O. Box 60 05 26 . D-22205 Hamburg Germany Contact: Corporate Communication Thiess Johannssen Telephone: +49 (0) 40 / 41 14-39 00 E-mail: public-relations@ds-online-ag.de Investor Relations Henning Soltau Telephone: +49 (0) 40 / 41 14-35 42 E-mail: investor-relations@ds-online-ag.de