ANNUAL REPORT 2011 A.S. CRÉATION TAPETEN AG

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FOREWORD 8 FOREWORD Dear readers, dear shareholders, Our review of the past year shows that 2011 was something of a mixed bag for A.S. Création. With sales revenues growing by 4.1% from € 184.6 million in the previous year to € 192.3 million in 2011, A.S. Création marked a new record and underlined its position as the leading wallpaper manufacturer in Europe. The build-up of the new wallpaper production facility in Russia is continuing at a fast pace. This important project is being implemented in the context of a joint venture with our partner Kof Palitra, the leading wallpaper manufacturer in Russia. With the main buildings and halls completed last year before the start of winter, we currently expect production to start in autumn 2012. These products will be marketed by our Russian subsidiary, A.S. Création (RUS), which is building up and expanding its local sales organisation as planned. As expected, the start-up costs incurred in building up these activities in Russia weighed on the company’s bottom line in 2011. The adverse impacts arising from the increased commodity and energy prices were much stronger than expected. We were unable to offset these negative effects through better sales prices of our own products and internal productivity increases. This is primarily refl ected in A.S. Création’s gross profi t margin, which declined from 48.5% in 2010 to 45.8% in 2011. In terms of total output in the past fi scal year, this decline represents a shortfall in earnings of € 5.2 million. As a result, earnings before interest and taxes, at € 9.6 million, were down by € 4.7 million or 33.0% on the previous year's level of € 14.3 million. In the eyes of the Managing Board, this deterioration in the earnings position of A.S. Création is not acceptable. As mentioned before, the March 2011 increase in our sales prices was insufficient. In response to the higher commodity and energy prices, we have therefore announced a further adjustment of our prices with effect from February 1, 2012. The deterioration in the earnings position described above is reflected in a decline in earnings per share from € 3.05 in the previous year to € 1.69 in 2011. We want to maintain our dividend policy which provides for a payout ratio of between 40% and 45% and will propose to the General Meeting of Shareholders to pay out a dividend of € 0.75 for the fi scal year 2011 (2010: € 1.35). The price of the A.S. Création share fell by 14.8% from € 28.76 to € 24.49 in the course of the year. At 14.5%, the decline in the SDAX was almost the same. If the dividend of € 1.35 per share paid out to the shareholders of A.S. Création in May 2011 is taken into
account, however, the A.S. Création share lost 10.2% in 2011. Even though this means that A.S. Création outperformed the SDAX, the share price is not satisfactory. Besides the general downward movement in share prices, the A.S. Création share was adversely affected by two incidents, i.e. the profi t warning published in October 2011 and the administrative offence proceedings initiated by the Federal Cartel Office, about which the company informed in November 2011. The Federal Cartel Offi ce’s accusation letter shows that Tapetenfabrik Gebr. Rasch GmbH & Co. KG, the competitor who lost its market leading position in Germany to A.S. Création in the past years, is a leniency applicant in the proceedings. We have meanwhile thoroughly examined the accusations made against us and have objected to all accusations in a detailed letter in January 2012. At this stage, we cannot predict the outcome of the proceedings. From the point of view of Sales, the fi scal year 2011 started quite spectacularly at the Heimtextil show in Frankfurt where the entire wallpaper industry exhibited its products and concepts in the attractive new Hall 3.1 for the fi rst time. A.S. Création presented its new products at a new exhibition booth in the most prominent position in this hall. Two important projects were completed in the further course of the year. First, we presented our fi rst fl agship store, which opens up entirely new marketing perspectives for wallpaper retailers. The store format presents wallpapers as fashion and lifestyle products and is more reminiscent of a brand store than of a traditional wallpaper department. Second, our touch-screen module “tapeten-bestellshop”, which was developed as a customer consulting tool for retail stores, was optimised once more. In particular, the new module offers greatly enhanced possibilities for simulating the effect the wallpapers selected by the customer will have on a given room. This highly successful software has meanwhile been installed on over 500 devices and helps retailers worldwide present and sell wallpapers from A.S. Création. The new products and innovative marketing concepts formed the basis for the increase in sales revenues generated by A.S. Création in the course of 2011. In this context, we should mention our still young digital printing products, which represent an exciting addition to our range for our established partners but also helped us winning new customer groups. We primarily owe this success to our “Architect Paper” sales team and their commitment to this new technology. We are especially pleased with our sales growth FOREWORD 9
Page 1 and 2: ANNUAL REPORT 2011 A.S. CRÉATION T
Page 3: Foreword 8 Managing Board and Super
Page 7 and 8: higher sales also in the Eastern Eu
Page 9 and 10: January February April May November
Page 11 and 12: Board has transferred decision-maki
Page 13 and 14: • discussion about the recommenda
Page 15 and 16: CORPORATE GOVERNANCE STATEMENT AND
Page 17 and 18: Declaration of conformity pursuant
Page 19 and 20: to the Supervisory Board in writing
Page 21 and 22: Accounting and audit The consolidat
Page 23 and 24: Introduction The A.S. Création Gro
Page 25 and 26: possible. On the other hand, there
Page 27 and 28: homing or cocooning, which they see
Page 29 and 30: evenues generated by A.S. Création
Page 31 and 32: the fiscal year is due to the revis
Page 33 and 34: dards by an independent auditor on
Page 35 and 36: with effect from March 1, 2011. In
Page 37 and 38: Cash-flow in € m 17.6 19.0 2009 2
Page 39 and 40: production facility in Russia, the
Page 41 and 42: from the performance-oriented syste
Page 43 and 44: up to € 4,500,000 through the iss
Page 45 and 46: or its Audit Committee for the audi
Page 47 and 48: product for PVC, which would result
Page 49 and 50: with supplies to joint customers. A
Page 51 and 52: 5% are projected for Russia’s GDP
Page 53 and 54: start-up losses incurred in Russia
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Political stock markets weigh on sh
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light of this fact, the Managing Bo
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Shareholder Structure Free float 41
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CONSOLIDATED FINANCIAL STATEMENTS A
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Equity and Liabilities Notes 31.12.
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A.S. Création Tapeten AG, Gummersb
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A.S. Création Tapeten AG, Gummersb
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of domestic and foreign companies i
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In accordance with IAS 21, foreign
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attributable cost but also the fact
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conditions, shorter useful lives re
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(2) Intangible fixed assets The tab
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(5) Other assets A breakdown of oth
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(8) Inventories Inventories compris
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As in the previous year, capital re
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(13) Other liabilities The breakdow
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The table below shows the changes i
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administrative offence proceedings.
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(21) Depreciation A breakdown of de
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Complementary information (26) Cash
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The table below shows a breakdown o
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(31) Additional disclosures on fina
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(34) Supervisory Board In FY 2011,
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on its website. The declaration of
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In our opinion, based on the findin
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PROFIT APPROPRIATION PROPOSAL Balan
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Equity and Liabilities 31.12.2011 3
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March 22, 2012 Analyst presentation
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Cover photo: A fascinating microcos
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ANNUAL REPORT 2011 A.S. CRÉATION TAPETEN AG

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