Annual Report 2011

On a comparable basis, EBIT was expectedly CHF
0.6 million lower, having reached 5.7 % of sales
revenues in 2010 including Dörries Scharmann on
a pro forma basis. This decrease was caused by
lower capacity utilization at Dörries Scharmann
due to the slowdown in order intake in 2010 and
the first half of 2011.
Net profit and earnings per share
increased
The increase in operating profit led to significantly
higher Group net profit of CHF 10.9 million
(34 %). Earnings per share (EPS) rose by 7.6 % to
CHF 3.52. Currency translation reduced EPS
by CHF 0.50 or 14.3 %. Net profit growth was
diminished by an increase in net financial expense
resulting from the rescheduling of Dörries Scharmann
Group’s previous credit lines in the fourth
quarter of 2011, as well as by the higher tax rate
of 37 % (27 % in the previous year). The latter can
be traced to the significantly higher percentage
of profits generated in countries with a higher tax
burden and, to a lesser extent, to non-deductible
tax loss carryforwards.
Balance sheet remains strong:
Acquisition of Dörries Scharmann
refinanced through rights issue
Total assets at 31 December 2011 amounted to
CHF 327 million, an increase of CHF 157 million or
93 % compared to the previous year. The acquisition
of Dörries Scharmann Group accounted for
CHF 157 million of this increase.
Current assets increased CHF 81 million to CHF
209 million. The purchase of Dörries Scharmann
led to an increase in current assets of CHF 76
million and the remaining CHF 12 million resulted
from the free cash flow generated by the higher
level of current assets.
Fixed assets at the end of December 2011
amounted to CHF 118 million, a largely acquisition-induced
increase of CHF 76 million from the
Starrag Group Annual Report 2011 59
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previous year. There was a material change in
goodwill (CHF 16 million increase) and other intangible
assets (CHF 27 million increase) as a result
of the acquisition.
Working capital requirements as expressed by net
operating assets showed an increase of CHF 78
million to CHF 163 million, mainly because of the
acquisition of Dörries Scharmann Group. Measured
as a percentage of sales revenues, working
capital increased to 46.0 % (42.7 % in the previous
year including Dörries Scharmann). This is attributable
to an inventory buildup in response to the
tighter supply situation in procurement markets
and to currency translation effects.
Cash holdings at 31 December 2011 were sharply
higher at CHF 44 million (previous year CHF 32
million), buoyed by the high operating cash flow,
and the company’s net cash position (cash and
cash equivalents minus debt) including the acquisition
of Dörries Scharmann grew from CHF 31
million at the end of 2010 to CHF 37 million at the
end of 2011.
Starrag Group’s capital base remains strong and
stable. Thanks to the rights issue conducted to
refinance the acquisition of Dörries Scharmann
Group, the equity ratio remained at a high level of
54.1 % (2010: 64.1 %).
Cash flow
Cash flow (excluding changes in net current
assets) was significantly higher in fiscal 2011,
rising from CHF 16.0 million in 2010 to CHF 27.8
million at year-end 2011. Including the CHF 12.3
million increase in inventories in response to tight
procurement markets as well as movements in
other net current assets, operating cash flow
amounted to CHF 19.2 million (previous year CHF
32.2 million).
A total of CHF 10.2 million was invested in fixed