BWT generates significant earnings growth in first half-year "CHRIST" industrial segment posts earnings

BWT – the Best Water Technology Group – can report a satisfactory increase in earnings in the first half of the 2005 financial year. The Aqua Systems Technologies segment (AST) made a particular contribution to this. After three years, the positive order situation has brought the BWT industrial segment back into positive territory. Following the comprehensive reorientation of this segment, it has now been turned around, thereby creating the basis for it to be spun off as intended and, at the same time, floated in Vienna under the name "CWT – CHRIST WATER TECHNOLOGY".

Consolidated BWT Group sales rose in the first half of 2005 as against the previous year from € 242.7 million to € 245.9 million (+1.3 %). The Aqua Ecolife Technologies segment grew by 0.8 % to € 159.4 million, the Aqua Systems Technologies industrial segment by 3.5 % to € 86.1 million and the Fuel Cell Membrane Technologies segment generated sales of € 0.4 million (PY: € 1.4 million). In the second quarter, sales totaled € 132.6 million (PY: € 129.4 million), thereby rising by 2.5 % as against 2004.

The slight increase in sales in the AET segment was primarily driven by HOH in Denmark as well as Christ Aqua Ecolife in Switzerland, while the sales results in Austria and Eastern Europe declined slightly. The servicing and spare parts business once again produced above-average growth – its € 32.4 million accounted for 20.3 % of AET servicing sales, up 12.2 % on the previous year.

Aqua Systems Technologies (AST) with industrial and municipal drinking, process and waste water treatment plants profited from a substantial expansion of its servicing and spare parts volume in the first six months of the 2005 financial year. This accounted for 15 % (PY: 12 %) of sales in this segment, an increase of around 30 %. Municipal Aqua Engineering business also posted above-average growth, gaining major orders in the Arabic and Eastern European regions. The high investments of 2003/2004 in expanding the
international presence now also seem to be bearing fruit, with 36 % of sales in the AST segment already generated in Asia and 12 % in the rest of the world.

Sales in the Fuel Cell Membrane Technologies segment (FCMT), which are largely defined by single orders and therefore prone to strong fluctuations, amounted to € 0.4 million (PY: € 1.4 million) in the first six months.

Further positive business development in 2005 is particularly secure in the industrial segment: as at June 30, 2005, the order book for the BWT Group amounted to € 157.8 million and has therefore risen by almost 15 % as against the same date of the previous year. Order intake increased by 1.7 % to € 280.1 million.

While the order book in the AET segment declined from € 50.0 million to € 39.7 million, in the AST segment this value increased from € 86.7 million by more than 36 % to € 118.1 million. In the period from January to June 2005, incoming orders in industrial and municipal business rose by 15 % as against 2004 to € 116.4 million. This is all the more remarkable as last year the segment received a major order for a new microchip plant in Dresden, which this year had to be compensated for with "normal orders". Growth in municipal business stood out as particularly strong, with significant new orders received in Dubai and Eastern Europe.

EBIT € 17.7 million, +8.8 % y.o.y.

As a result of the earnings in the AST segment – the first positive result in this segment since 2002 – as well as the improved financial earnings and reduced income tax charges as against the first six months of the previous year, the BWT Group achieved significantly improved consolidated earnings. At € 12.2 million, the pervious year's figure of € 8.7 million was outperformed by 39.4 %. EBIT rose by 8.8 % – driven largely by the turnaround in the AST segment – and accounted for 7.2 % of sales (PY: 6.7 %). In the first half-year, the AET segment achieved an EBIT margin of 10.9 % and the AST segment one of 0.7 %. In the second quarter, margins of 11.5 and 2.6 % were achieved in the AET and AST segments respectively. Thanks to the reduced use of materials in the FCMT segment, the EBIT loss was reduced from € 0.5 million in the previous year to € 0.3 million.

EBIT development by business segment :

Allowing for inventory changes, the cost of materials was practically constant as against the previous year at 46.7 % of sales (46.8 %), staff costs increased from € 71.3 million to € 74.9 million € (+5.1 %), whereas depreciation and amortization (as goodwill amortization no longer applies) and the net total of other operating expenses and income were both down. Thus, in the first half-year, consolidated EBIT was at 7.2 % (PY: 6.7 %) and 8.1 % (PY: 7.4 %) in the second quarter.

Consolidated earnings € 12.2 million, +39.4% y.o.y.

The increase in financial earnings was due to a fall in interest expense of € 0.2 million and an improved result of financial investments by 15.3 % to minus € 0.7 million. Earnings before taxes were € 17.0 million, 12 % higher than in the first half-year of 2004 (€ 15.2 million). The consolidated tax rate declined to 27.4 %, primarily as a result of the reduction in Austrian corporation tax, which allowed earnings after taxes to rise to € 12.4 million, up 39.1 % on the previous year's figure of € 8.9 million. Consolidated earnings after minorities increased by 39.4 % to € 12.2 million, earnings per share were € 0.68 (PY: € 0.49).

Cash flow from the result € 17.1 million (PY: € 15.6 million)

The rise in consolidated earnings increased the cash flow from the result from € 15.6 million by 10 % to € 17.1 million in the first six months. Year-on-year, however, working capital rose more strongly as against the end of the previous year, particularly as a result of extended operations in the industrial segment, which reduced the cash flow from operations from € 9.1 million to minus € 1.0 million. With an approximately equal level of investment activity and the payment of a 12.5 % higher dividend of € 4.8 million, net debt therefore rose from € 78.9 million to € 86.0 million. However, thanks to the increased Group equity (€ 144.7 million as against € 129.5 million in June of the previous year), gearing declined slightly in spite of this from 60.9 % to 59.5 %

Investments in tangible assets € 4.6 million (PY: € 3.5 million)

Investments in tangible and intangible assets rose by € 1.1 million to € 4.6 million yearon-year. This increase was generated by the AET segment, while – at € 0.8 million – the AST segment invested virtually the same as in the previous year.

Overall, the number of employees in the BWT Group rose by 141 people year-on-year from 2,696 to 2,837 as at June 30. As against the end of the previous year (2,780) the increase was 57 people. 1,999 people (PY: 1,939) were employed in the AET segment, 821 (PY: 743) in the AST segment and 17 (PY: 14) in the FCMT segment. The rise in staff numbers in the AET segment relates largely to the expansion of servicing activities, while the focus in the AST segment was on the further internationalization of operations (Asia, South Africa and USA).

Outlook

The results for the first half of 2005 confirm the planning of the Management Board for 2005. The BWT Group in its current form is anticipating slight growth in sales to more than € 500 million (PY: € 488 million) for 2005 as a whole, as well as strong earnings growth, achieving consolidated earnings of more than € 20 million after € 16.8 million in 2004.

Spin-off of the AST segment preserving the share capital structure – IPO as "CWT"

On June 27, 2005, the BWT Management Board and the Management Board of CHRIST signed the spin-off agreement, firing the starting shot for hiving off Christ Water Technology AG with its industrial and municipal business of Aqua Systems Technologies (AST). Subject to the approval of the spin-off by the Annual General Meetings of BWT AG and Christ Water Technology AG, the objective of this is that Christ Water Technology AG manages the segment as an independent company in the future under the globally renowned “CHRIST” brand and notes it on the Vienna Stock Exchange alongside BWT. If this spin-off is successfully implemented, BWT AG shareholders will receive a free CWT share for each share held in BWT in order that BWT AG shareholders will maintain all the shares of Christ Water Technology AG after implementation of the spin-off.

The hiving off of CHRIST will mark a milestone in the company history of BWT/CHRIST, and create the foundations for profitable and dynamic growth on the different "Industry" and "Household Technology" markets. By each focusing on their respective market segment and selectively leveraging their resources as well as the capital market, both CHRIST (Industry) and BWT (Household Technology) will play a leading role on the water market, which is defined by consolidation. According to current planning, all legal steps required for the transaction and the IPO of CWT will most probably be completed by early November
2005.

The members of the Management Board of BWT and of CWT would be delighted if you, the shareholders, would continue to support our two companies and profit from our expansion, the excellent market position and the growth prospects offered by the global water and water treatment market.

Mondsee, August 2005

The management board

Download the halfyear report as pdf here

Information and inquiries:
BWT AG, A-5310 Mondsee
Walter-Simmer-Straße 4
Phone. +43 6232 5011-0
Fax. +43 6232 4058
E-mail: investor.relations@bwt.at