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Dr. Felix A. Zimmermann
(CEO of TAKKT AG)
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For the past fiscal year, we expected a generally positive economic environment, but at the same time, we saw uncertainties in some markets. This expectation materialized to a large extent during the course of the year. Overall, the economy developed positively in 2018. As the year progressed, however, the growing political uncertainty soured the economic mood amid intensified US-China trade tensions and concerns about a disorderly Brexit. The economic indicators deteriorated significantly, especially as of the third quarter. TAKKT nevertheless achieved good growth and respectable earnings in the past financial year. After a difficult start to the year, we were able to return to growth in the subsequent quarters and come in at the upper end of our forecast with an organic sales increase of 3.4 percent. In addition, both of the acquisitions made in the year under review contributed to our growth. Higher freight costs and lower freight margins in 2018 were a negative factor on the earnings side, which we had not expected to this extent at the beginning of the year. At 12.7 percent, our EBITDA margin still came in just below the range of 13 to 14 percent projected at the beginning of the year.

Digital transformation was a key strategic focus for TAKKT in 2018 again. We have forged ahead at full speed with the measures defined in our digital agenda. This continues to enjoy the highest priority in the company. We place great importance on making the progress achieved in implementing these measures quantifiable by means of key indicators. One of these figures is the share of order intake that TAKKT generates through e-commerce channels. In 2018, more than 50 percent of the total order intake was generated via digital channels for the first time. We see this positive development as a sign that we are on the right track. We are also very pleased that we have been able to recruit many new employees with specialized digital knowledge. The approximately 100 positions that we wanted to create as part of the digital agenda have been filled. We are currently analyzing which functions we should expand further on a selective basis. In addition, we are increasingly looking at leadership and organizational issues in the digital age. Real change is also needed in this area. With all the measures and projects, it is now time to make the innovations and changes initiated tangible for the customer and convert them into further business success.

With the Newport group created at the beginning of 2018 as a separate division within the TAKKT EUROPE segment, we have made it possible for the brands bundled there to have more autonomy in how they position themselves. This means that we will be able to address relevant customer groups even more effectively and thus tap into significant growth potential. The development of the newport group already delivered initial successes in the year under review. Alongside the good development of Newport’s companies, the TAKKT investment company, which is likewise part of the group, made further progress. By the end of 2018, we had finalized a total of seven investments in start-ups, and we most recently invested in the Cologne-based company odoscope. We also participated in further financing rounds with the investment company over the course of the year and focused on integrating the solutions and innovations of the start-ups in various TAKKT sales companies. This gave our organization fresh perspectives.

In addition to purchasing OfficeFurnitureOnline at the beginning of the year, TAKKT successfully concluded another acquisition in 2018. Runelandhs, a Swedish distance seller for business equipment, has been part of the TAKKT portfolio since May 2018. Along with Runelandhs, the Gerdmans brand, which is part of the KAISER+KRAFT group, is now one of the leading distance sellers of business and office equipment in Sweden.

M&A activities will also continue to be part of our growth strategy. Last year, we revised our acquisition strategy in order to do this. For one thing, we want to continue strengthening and expanding our existing business through targeted acquisitions. On the other hand, we can now easily imagine expanding our value chain to include production or services in related business areas through acquisitions. In the future, we plan to enrich our service offerings even further beyond a basic sales transaction. We want to offer our customers recognizable added value across the entire purchase process and expand our range of advice and customer support services.

Both the implementation of the digital transformation and the active shaping of the company portfolio are geared towards preparing TAKKT for future challenges. In order to achieve this objective, we see TAKKT AG taking an even more active role in the future in terms of activities to increase the value of the individual businesses. In addition to strategic management, these include the company’s development, the creation and implementation of strategic initiatives, the selection of target markets, portfolio management, the cross-segment coordination of teams of experts as well as the expansion of strategic personnel management. As an example, we plan to build small teams for operational excellence and data & analytics. We are confident that by pursuing this course together with the management of the individual TAKKT companies, we will take the right steps towards realizing the potential for success that we see in our markets.

TAKKT achieved notable successes in the area of sustainability in 2018. The strategic importance that TAKKT continuously places on “corporate responsibility” is becoming increasingly evident in our environment. We want to continue to be a role model of sustainability in our industry. Receiving the German CSR Award 2018 in the category of “Environmental Commitment” is a great incentive for us to vigorously pursue our sustainability goals. This annual report is published together with the current sustainability update, which provides information on our extensive sustainability measures.

Also due to the ongoing political and economic uncertainties, we expect a slight economic slowdown in the current fiscal year. Nevertheless, we still want to report a slight organic sales increase and achieve an EBITDA margin within our target corridor in 2019. However, we cannot rule out the possibility of a somewhat weaker economic development than expected from today’s perspective

In December, the Supervisory Board of TAKKT AG extended the contract of CFO Dr. Claude Tomaszewski by another five years until the end of October 2024. I am glad to see this sign of stability and continuity and look forward to the continued positive and trusting collaboration.

In conclusion, I want to thank all our employees on behalf of the entire Management Board for the work accomplished in the 2018 financial year. Your commitment and dedication contribute enormously to our success and the realization of our goals. I would also like to thank our customers, business partners and shareholders for the trust they have placed in us over the past year. I hope to keep seeing you at TAKKT’s side in 2019.

Stuttgart, Germany, March 2019

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Dr. Felix A. Zimmermann
(CEO of TAKKT AG)