Annual Report 2005

46
Outlook
The past year - 2005 - has been dominated by the restructuring measures announced for the
whole NESCHEN Group. These were concentrated on the European sites in Raalte in the
Netherlands as well as Bückeburg in Germany. The restructuring of the North American sites
was carried out during the first quarter of 2006.
During the last three years, we have had to reduce our workforce by 20%, close a number
of companies which were not representative of our core business, reduce our product portfolio
by approximately 15%, make changes to numerous business processes, sell or consolidate
six Group companies as well as close two sites.
All in all, as of the end of 2005 consolidated turnover has dropped 9.8 million Euros compared
to 2003.
As a result, in the last few years turnover per employee has gone up 16% to 218,000 Euros.
On completion of the measures, we are expecting per capita turnover of approximately
240,000 Euros in 2006.
Most of the restructuring measures have been carried out as of the end of the first quarter
of 2006.
The gross profit margin has improved considerably during the second half of 2005 compared
with last year as a result of the implementation of numerous individual measures. The company
is now focussing on returning to a profitable financial status. We are currently seeing
an increase in demand in the main product areas and in important countries. The increase in
demand for our laminating machines can also be seen as an indicator of the revival which the
graphics market is experiencing.
The restructuring program has asked a lot of everyone involved in terms of effort and energy.
Implementation was only made possible thanks to the high level of commitment and
absolute desire for change on the part of management and the employees connected with
the program.
In view of market developments since the end of 2001, the accompanying staff cutbacks
were essential. However, the reduction of the workforce in particular but also the closure of
sites required considerable financial expenditure. The company was able to maintain its liquidity
due to the assistance provided by financial institutions as well as the successful release of
funds via inventories and other assets.
However as a result of the restructuring program, shareholders’ equity capital has been virtually
zeroed out at just 1.2 million Euros as of 31.12.2005 in the consolidated balance sheet
which has still been drawn up as a going concern in accordance with current plans.