DOUGLAS HOLDING AG
DOUGLAS HOLDING AG with its head office in Hagen, Germany is the strategic holding company responsible for key investments and management decisions. It also performs central leadership and service functions for the DOUGLAS Group's subsidiaries. This includes the making of all decisions concerning fundamental aspects of corporate strategy, the financing and funding of Group companies, and the filling of key management positions. The service companies, which are operated as profit centers, are also located at the company's head office, as are nearly all of the central service-offices of the sales subsidiaries. A diagram of the DOUGLAS Group's corporate structure is found on page 5 of this annual report.
DOUGLAS HOLDING AG's net income calculated in accordance with the provisions of the German Commercial Code (HGB) is decisive for the calculation of the proposed dividend; this is basically determined by the earnings received from participating interests in operating subsidiaries.
Because profit and loss transfer agreements exist with the key companies, the bulk of the earnings recorded are received in the same fiscal year.
For the 2006/07 fiscal year, the DOUGLAS HOLDING AG is reporting earnings from participating interests in the amount of 86.6 million EUR as compared to 109.0 million EUR in the preceding year. The main contributor to this figure was the Perfumeries division with earnings from participating interests in the amount of 73.6 million EUR. To be taken into consideration here is that the earnings of the previous year's period (99.3 million EUR) included income from the intra-Group sale of 50 percent of the interest in Douglas Spain S.A., Madrid (21.2 million EUR) and 10.0 million EUR more disbursements than in 2006/07. Due to the income from the sale of four René Kern stores (10.2 million EUR) and the operative growth, the Jewelry division's earnings from participating interests rose to 22.6 million EUR (previous year: 6.7 million EUR). In the Fashion division, earnings from participating interests fell even further to -20.9 million EUR (previous year: -10.3 million EUR). This resulted from the capital loss on the disposal of Pohland in the amount of 23.2 million EUR. A write-down of the carrying amounts in the amount of 10.0 million EUR had already been made in the previous year.
The decrease in other operating income and expenses is primarily traceable to one-off-items in the same period of the previous year (sale of a retail estate, Heros claim). Two law suits have been brought against the insurers of the insolvent money transporter Heros. However no court decisions have yet been rendered.
Net interest income improved by 6.9 million EUR. Because of the decrease in earnings from participating interests, earnings from the operating activities of the DOUGLAS HOLDING AG dropped to 90.6 million EUR (previous year's period: 95.5 million EUR). Net income, i.e. earnings from operating activities after deducting tax, reached 73.1 million EUR following 72.6 million EUR in the previous year.
Total assets increased year-on-year as of September 30, 2007 by 96.7 million EUR to 1,031.7 million EUR. On the assets side, interests in affiliated companies rose by 57.0 million EUR as a result of capital increases in the Books division. In addition, loans and advances to and receivables from affiliated companies increased by 88.1 million EUR – occasioned by the repayment of external financing by means of intra-Group financing and the higher requirements of the subsidiaries. Cash and cash equivalents declined by 58.7 million EUR in the period under review.
On the liabilities side, liabilities to banks increased primarily as a result of long-term borrowings with a volume of 100.0 million EUR, which was offset by scheduled and non-scheduled loan redemptions totaling 55.3 million EUR.
30.0 million EUR were transferred to retained earnings from the 2006/07 net income. Taking into account the profit carried forward from the previous year in the amount of 0.9 million EUR, net retained profits totaled 44.0 million EUR. Correspondingly, the DOUGLAS HOLDING AG is reporting equity in the amount of 663.7 million EUR per September 30, 2007 (previous year: 632.8 million EUR) and an equity ratio of 64.3 percent.
The complete financial statements of the DOUGLAS HOLDING AG, which have been issued with an unqualified audit opinion by the statutory auditor, are publicized in Germany in the so-called "elektronischer Bundesanzeiger" (Internet platform for official publications) and have been deposited in the Commercial Register at the Hagen Lower Court, Germany under HRB 242. They may also be requested in paper form from the DOUGLAS HOLDING AG and are available online at www.douglas-holding.com.
Dividends stable at 1.10 EUR
It is the intention of the DOUGLAS Group to carry on with the shareholder-friendly dividends policy practiced in the past years, and to allow shareholders to participate in corporate development in an appropriate manner. A disbursement ratio of around 50 percent of consolidated net income is therefore being strived for.
The Executive and the Supervisory Boards of the DOUGLAS HOLDING AG will be asking the Shareholders' Meeting on March 12, 2008 to approve a dividend disbursement out of net retained profits of 1.10 EUR per dividend-bearing share. Based on a closing share price of 43.81 EUR as per September 30, 2007, the dividend yield would be 2.5 percent. A total disbursement for the dividend-bearing capital in the amount of 117.7 million EUR should be 43.2 million EUR.