2004-03-09: technotrans adjusts balance sheet and raises dividend
Higher revenue improves rate of return / comprehensive adjustment of balance sheet results in net loss for the year / higher dividend signals end to crisis

technotrans, a leading systems supplier of equipment for the printing industry and for micro technologies, passed beyond the nadir mid-way through 2003. A renewed downturn in sales in the first half of the year was followed by two better quarters, the latter of which brought growth rates in excess of 9 percent. Earnings totalled 106.7 million euros (previous year 117.0 million, - 8.8 percent). Gross profit for 2003 of 35.9 million euros was just 4.7 percent down on the previous year (37.7 million euros), while the margin improved from 32.2 percent to 33.7 percent. The operating profit (EBIT) improved from 5.9 million euros to 7.5 million, representing a margin of 7 percent. Whereas the prior-year figures were diminished by a provision to cover a patent dispute, slightly more than 1.6 million euros were spent on consultancy services in 2003 in connection with the planned acquisition. Balance-sheet adjustments (valuation allowances for goodwill and the write-off of deferred taxes) were the main factors behind a net loss for the year of just under 11 million euros in 2003. A proposal to increase the dividend from 0.20 to 0.30 euros will be made to the Shareholders' Meeting on May 28, 2004. At December 31, 2003 there were 596 (previous year 621) employees, a decrease of 4 percent. Capacity was increased again in the second half of the year.

technotrans has business operations in three areas: Print, Micro Technologies and Services.

Print segment:
higher second-half revenue bolsters operating result, acquisition costs fully digested

The positive trend in revenue was particularly evident in the Print segment, which accounts for two-thirds of technotrans' revenue. Up until mid-2003, revenue had fallen in eight successive quarters but then made a marked recovery, climbing back up to 70.6 million euros (previous year: 80.6 million euros) by the end of 2003. In the final quarter of 2003, revenue actually showed a year-on-year rise of 13.1 percent to 20.1 million euros compared with the final quarter of 2002 (17.8 million euros).

The result for the segment was satisfactory in 2003 at 1.8 million euros (previous year: 0.6 million euros). A sum of slightly more than 1.6 million euros in consultancy costs for the intended acquisition constituted a charge for which it was not possible to budget, and which was digested in full in the 2003 financial year. Without these costs, the rate of return for the segment would have been 4.9 percent, not 2.6 percent, and therefore on a par with the adjusted prior-year operating result in spite of the fall in revenue of 10 million euros. The valuation adjustments applied at the end of the year will have a positive impact on the future result for the Print segment.

Micro Technologies segment:
stable level of revenue, result diminished by market exploitation activities

This segment brackets together technotrans' electroforming activities and the two applications areas optical storage media and microstructure technology. The revenue of 10.8 million euros in 2003 once again matched the prior-year level. This is all the more gratifying considering that demand from the CD/DVD sector remained flat for the third year in succession, as well as the fact that the market witnessed considerable competition, with the strength of the euro against the US dollar acting as an added hurdle. The revenue contribution of microstructure technology activities was welcome, though the growth rates, starting from a very low base level, are not yet sufficient to outweigh the easing-off of demand from the CD/DVD sector, let alone emulate the past growth rates of this segment.

The result for the segment continues to be diminished by the cost of developing the future growth area of microstructure technology, totalling 641,000 euros compared with 819,000 euros in the previous year. In addition to a substantial improvement in profitability at the end of the year, positive one-off effects amounting to 600,000 euros at group level and associated among other things with the valuation allowances on goodwill in the annual financial statements were the reason why we were able to post a positive result at year-end. Depreciation for the segment will be 300,000 euros lower from 2004. This, together with various internal measures, should help to provide sustained revenue.

Services segment:
constant revenue coupled with improved result

The Services segment progressed well in 2003, as it proved possible to stabilise revenue at the previous year's excellent level of 25.3 million euros. Due to the economic situation in 2003, the emphasis for installations shifted more towards maintenance and spare parts, as expected.

The Services segment remains a dependable source of earnings for the group in these difficult times. The result for the segment of 4.8 million euros represents 63.5 percent of consolidated operating earnings. Services which yield above-average profitability, such as the sale of software licences, helped to boost the margin to a satisfying 18.9 percent for the year under review (previous year: 15.9 percent). Since the fourth quarter, however, it has become evident that the temporary need to provide more intensive support for new products appearing on the market, as is the case before the DRUPA industry exhibition, is having an adverse effect on the result.

Balance sheet structure:
goodwill reduced and liquidity improved

The balance sheet total at December 31, 2003 was 72.4 million euros (previous year: 92.5 million euros). Valuation allowances for goodwill applied at the end of the year were the main reason for this fall. These were reduced from 19.8 million euros in the previous year to 4.5 million euros (-77.5 percent). In this connection, the level of deferred tax assets was likewise reduced from 4.4 million euros at the end of 2002 to 1.1 million euros at December 31, 2003. These measures will reduce potential future balance-sheet risks.

Liquidity improved again. Compared with 7.3 million euros at the end of 2002, cash now totalled 8.8 million euros (+ 20.1 percent). Equity moved in line with the changes on the assets side. This fell by 15.4 million euros, from 51.7 million euros to 36.3 million euros, in particular as a result of the accumulated loss (11.0 million euros) Long-term borrowings were further reduced in 2003 (-3.3 million, -21.5 percent).

The main balance sheet indicators remain virtually unaffected by these changes, or have improved significantly as a result (prior-year figures in brackets): the equity ratio remains satisfactory at 50.1 percent (55.9 percent), the capital employed (as the sum of interest-bearing liabilities and equity) fell to 55.3 million euros (74.4 million euros), the return on capital employed (ROCE; operating profit + currency result as a ratio of capital employed) rose to 13.3 percent (7.6 percent).

Outlook: improved result but revenue flat
On the strength of the stronger underlying economic figures, at the start of the year the Board of Management anticipates that the crisis in the printing industry will be overcome in 2004; the intensity and sustainability of this recovery, on the other hand, remain unclear. "At this early stage of the recovery, we do not anticipate this year's industry exhibition DRUPA 2004 to provide anything like the impetus of the previous event in 2000," commented Heinz Harling, Chairman of the Board of Management of technotrans AG. "Our expectations are reflected by our targets of revenue growth ranging between eight and ten percent for the Print segment."

technotrans' strategy remains to boost the "technotrans content per printing press". "In a relevant market worth around 600 million euros, we have formulated various objectives for ourselves in order to tap further potential for the future," explained Sales Director Ralph Teunissen. "This is another reason why we are convinced that we will rapidly be able to return to a course of growth, and one that is not solely dependent on an economic recovery. We are also paying particular attention to the market of Japanese printing press manufacturers, to which we attach considerable importance above all as a gateway to the growth region of Asia."

technotrans has used the crisis to optimise its cost structures and processes. Finance Director Wolfgang Breme added: "Our attention will be focused on keeping costs tightly under control even once the recovery is under way, and thus on ensuring that any growth above all has a disproportionately high impact on earnings." As matters stand, the Board of Management therefore expects the group to post revenue of 115 million euros in 2004. The aim will once again be to improve profitability this year. The company's objective for EBITA (operating result + currency result before goodwill amortisation) is to draw closer to double figures (2003: 8.4 percent). The Board of Management expects the net profit for the year to be in the order of 5.5 to 6 million euros. The free cash flow should likewise rise to between 7 and 8 million euros.

Key Data 01-12/2003

Dates
The Interim Report 1/2003 will be published on May 4, 2003. The Annual Shareholders' Meeting will be held on Friday, May 28, 2003 in Münster.

technotrans AG - WKN 744 900

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These press releases contain forward-looking statements which are based on assumptions and estimations by the management board of technotrans AG. Even though the management board is of the opinion, that those assumptions and estimations are realistic the future development and the projected results may deviate substantially from the forward-looking statements. Those deviations can be due to several factors including but not limited to changes in the macro-economic situation, in the exchange rates, in the interest rates and in the graphic arts industry. technotrans AG gives no warranty and does not assume the liability for any damages in case the future development and the projected results do not correspond with the forward looking statements.