Annual Report 2005

Profit and Loss Statement
Personnel expenses were reduced by 2.4 million Euros to 27.0 million Euros as a result of the
extensive restructuring measures described.
EBIT achieved in 2005 amounted to - 4.0 million Euros (previous year - 9.3 million Euros) and
the EBIT margin - 2.9% (previous year - 6.6%). The net EBIT amounted to + 4.0 million Euros,
this corresponds to an EBIT margin of + 2.9% in relation to the total performance.
NESCHEN sales companies in Europe have achieved a positive result.
The result for SEAL Graphics Europe was affected by the considerable one-time expenditures
incurred in connection with the relocation and therefore closed at a loss of 3.6 million Euros
(previous year 3.6 million Euros). Since September 2005, the business has been handled by
NESCHEN AG and machines have been manufactured in the USA. Since then, positive results
have been achieved for SEAL within NESCHEN AG. In the USA, the increase in the volume of
machine manufacturing has contributed towards the positive result which has also been
achieved at the Sun Prairie site which is now being run as a production site.
The laminating plant at SEAL UK Ltd. has closed with a loss of 1.4 million Euros (previous year
2.1 million Euros). We expect results to continue to improve significantly in 2006 due to the
improved utilization of capacity. Both the growth in the business unit “Graphics” and projects
within the business unit “Special Products” will contribute towards this.
All the business carried out in the USA has enabled us to reduce losses compared with the
previous year from 5.5 million Euros to 3.3 million Euros. This reduction was primarily due to
the considerable increase in turnover of 3.5% as well as the improvement of the gross profit
margin. Preparations carried out at the Sun Prairie site in readiness for the increase in volume
of production caused by the relocation of operations from Europe resulted in one-time expenditures
amounting to 0.3 million Euros.
The positive effects of the increase volume of machine manufacturing on the operating result
have only been felt during the past few months. However they were mainly offset against the
one-time expenditures incurred as well as the usual start-up costs.
We are expecting to achieve a virtually balanced operating result in the USA in the current
financial year. The reason for this is the high gross profit margin which has been achieved
since September, the utilization of machine manufacturing facilities which has improved considerably,
the positive effects of the closure of the Wichita site in March 2006 and the continuing
positive development in turnover.
In accordance with the German Commercial Code, NESCHEN AG has made a loss of 12.6 million
Euros (previous year 9.6 million Euros). This includes one-time expenditure as a result of
staff cutbacks as well as the other expenditure incurred in connection with the restructuring
program amounting to 2.5 million Euros.
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