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Bene 1st quarter results

Wednesday 25 June 2014

The Vienna stock exchange-listed Bene Group substantially improved its earnings over the first three months of the current financial year to 30 April 2014 as compared to the same period in the previous year, in spite of the continued difficult market environment. The company furthermore improved its gross profit margin from 56.9% to 58.6%. During the first three months of the year, the Austrian expert for office and working environments concentrated on markets and sectors experiencing strong growth whilst reducing total sales volume.
With the goal of achieving a more selective, margin-based market approach, Bene accepted a reduction of sales above all in Austria and Germany. Whilst Bene achieved strong growth in its sales in the UK and in the growing Middle Eastern market, the latest developments in Ukraine had a profound impact on sales in the CEE/Russia/CIS region. The Bene Group’s sales in total declined in comparison to the same period in the previous financial year by around 20% to EUR 35.1 million. At the same time, the Bene Group took essential steps related to costs and margins towards achieving a sustainable turnaround. As part of this cost reduction effort, Bene reduced personnel costs by around EUR 1.6 million as compared to the same period in the previous year and the number of employees from 1,343 on 30 April 2013 to 1,064 on 30 April 2014. In spite of burdens related to the restructuring process, the company was able to reduce remaining operational costs by EUR 1.5 million, or 17.7%, as compared to the first quarter 2013/14. The company’s new focus on profitable projects, begun in the preceding year, was reflected in the growth of the gross profit margin from 56.9% to 58.6%, amongst other indicators. Taken together, these effects led to a positive EBITDA before restructuring of EUR 0.2 million. Although restructuring costs still prevented it from breaking even, the Bene Group has noticeably improved all of its earnings figures. The EBITDA of EUR -0.6 million was a EUR 1.9 million improvement over the comparable figure from the previous year. The EBIT was increased by EUR 2.2 million to reach EUR -2.5 million.
There were welcome developments in the net working capital, which the company managed to decrease by around EUR 1.0 million during the first quarter. For this reason, Bene was able to generate a positive cash flow from operational activities during the reporting period. Reflecting this development, the group’s net financial liabilities also remained basically unchanged from the previous reporting date and came to EUR 65.6 million on 30 April 2014. The debt, and with it the group’s free cash flow, was therefor noticeably better than had been budgeted in the financial planning for the current fiscal year.
Total assets, with a value of EUR 96.1 million, remained nearly unchanged in comparison to the previous reporting date. Equity declined as a result of the quarterly loss and amounted to EUR -25.4 million as at 30 April 2014.

Outlook
Given the developments during the first quarter, the Group’s management remains committed to its objective of achieving a balanced operating result in the current financial year. This applies despite the fact that it does not look like the targeted sales growth of 10% for the entire year will be fully achieved. As a result of the market situation in Eastern Europe and possible delays in the implementation of major projects the company expects a similar sales volume at least as in the previous year. It is too early to predict with any confidence how economic development will proceed in those markets that are most important for Bene, especially those in Eastern Europe.

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