DOUGLAS HOLDING AG
DOUGLAS HOLDING AG is the holding organization responsible for investments and management. It also performs central leadership and service functions for the DOUGLAS Group’s subsidiaries. This includes leasing new properties within and outside of Germany, which are then sublet to the subsidiaries, supplying funds to the subsidiaries, controlling the cash management system, and providing legal advice.
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. As profit and loss transfer agreements exist with the key companies, the bulk of the earnings recorded by the subsidiaries are received in the same fiscal year.
Because the growth and income potential of the DOUGLAS Group cannot be assessed based on the single-entity financial statements of DOUGLAS HOLDING AG, this management report focuses on the consolidated financial statements.
In fiscal year 2005/06, DOUGLAS HOLDING AG recorded earnings from participating interests in the amount of 109.0 million EUR compared to 90.3 million EUR in the preceding year. The main contributor to this figure was the Perfumeries division with earnings from participating interests totaling 99.3 million EUR (previous year: 67.1 million EUR); this figure also includes income from the intra-Group sale of a 50 percent interest in Douglas Spain S.A., Madrid (21.2 million EUR). Earnings from participating interests in the Fashion division were down (-10.3 million EUR, previous year: 7.9 million EUR). This is due to the writing down of the carrying amount of the participating interest in Pohland GmbH & Co. Herrenkleidung, Cologne, in the amount of 10.0 million EUR and the income from the sale of BiBA Mode GmbH, Duisburg, in the amount of 2.8 million EUR in the previous year.
DOUGLAS HOLDING AG’s other operating income in fiscal year 2005/06 includes profits from the sale of business premises in Dortmund in the amount of 12.8 million EUR. This was included in the special account with reserve characteristics. Expenses in the amount of 9.7 million EUR were also incurred in the period under review in connection with the insolvency of the money transporter Heros. These are included in other operating expenses.
As a result of net interest income, which rose by 6.5 million EUR, the result from ordinary business activities of DOUGLAS HOLDING AG increased to 95.5 million EUR (previous year: 79.8 million EUR); net income, i.e. earnings from operating activities after the deduction of taxes, reached 72.6 million EUR (previous year: 61.7 million EUR).
Total assets increased year-on-year as of September 30, 2006, by 78.2 million EUR to 935.0 million EUR. On the assets side, property, plant and equipment experienced a decline of 13.4 million EUR – essentially because of the sale of the business premises in Dortmund. Interests in affiliated companies rose by 30.0 million EUR as a result of a capital increase at Parfümerie Douglas GmbH, Hagen. Receivables from associated companies were also up 109.4 million EUR due to higher financing requirements at the subsidiaries. Cash and cash equivalents fell by 46.6 million during the period under review.
On the liabilities side, liabilities to banks increased as a result of new long-term borrowing with a volume of 50.0 million EUR, which was offset by scheduled loan redemption totaling 34.1 million EUR. The special account with reserve characteristics also increased on balance by 10.8 million EUR.
29.3 million EUR was added to retained earnings from the 2005/06 net income. Taking into account the profit carried forward from the previous year in the amount of 0.7 million EUR, the balance sheet profit totals 44.0 million EUR. Correspondingly, DOUGLAS HOLDING AG reports equity of 632.8 million EUR as of September 30, 2006 (09/30/05: 598.3 million EUR) and an equity ratio of 67.7 percent (09/30/05: 69.8 percent).
The full financial statements of DOUGLAS HOLDING AG, which have been issued with an unqualified audit opinion by the statutory auditor, are published in Germany in the Federal Gazette and deposited with the Commercial Register at the Hagen Lower Court, Germany, under HRB 242. These statements can be requested from DOUGLAS HOLDING AG or are available online at www.douglas-holding.com.
Dividends increased to 1.10 EUR
The Executive and Supervisory Boards of DOUGLAS HOLDING AG will be asking the next Shareholders’ Meeting on March 14, 2007, to approve a dividend of 1.10 EUR per dividend-bearing share for fiscal year 2005/06 (fi scal year 2004/05: 1.00 EUR). This corresponds to a 10 percent increase. The total disbursement for the dividend bearing capital in the amount of 117.6 million EUR should be 43.1 million EUR.
General statement by the Executive Board on business in fiscal year 2005/06
Economic growth in Germany and Europe, as well as the developments in the respective sectors, had a positive impact on the DOUGLAS Group’s business in fiscal year 2005/06. Economic recovery in Germany, together with the ongoing expansions of the lifestyle concept and the numerous product and service innovations, all contributed to the DOUGLAS Group’s satisfactory growth rate in fiscal year 2005/06.
The DOUGLAS Group was also affected by the insolvency of the money transporter Heros. Contrary to original expectations of a speedy settlement of claims by the insurer, the insurer has to date refused any loss settlement. The affected companies in the DOUGLAS Group have therefore filed a lawsuit. Since an estimation of the chances of recovery appears difficult at this point, the balance of the receivable from Heros has been written off. This had a negative impact on the earnings of the DOUGLAS Group in the amount of 9.7 million EUR. Another significant event in the reporting period was the sale of the business premises in Dortmund, which generated income of 8.4 million EUR. On the balance, these two factors did not have an impact on DOUGLAS HOLDING’s earnings forecast for fiscal year 2005/06.
The generally satisfactory business developments in 2005/06 were shouldered for the most part by the Perfumeries and Books divisions. These divisions recorded material increases in sales and EBITDA and were thus able to compensate for the less gratifying developments in the Jewelry division and particularly in the Fashion division.