- Turnover: EUR 394 million (2006: EUR 393 million) - Operating result (excluding restructuring costs) increases by 3% to EUR 33.3 million (2006: EUR 32.3 million) - Net group result increases by 12% to EUR 17.7 million (2006: EUR 15.8 million) - Upward trends at Gamma Technologies and Exotic Fabrics - Lower volumes and continuing price pressure in Europe for Sleep Care Fabrics In the first six months of 2007 turnover came to EUR 394 million (2006: EUR 393 million). Adjusted to take account of currency effects (-3%), turnover increased by 3%. The operating result excluding restructuring costs increased by 3% and amounted to EUR 33.3 million (2006: EUR 32.3 million). Adjusted to take account of currency effects (-8%), the operating result excluding restructuring costs rose by 11%. Restructuring costs amounted to EUR 1.5 million, compared to EUR 1.4 million in 2006. The operating result increased by 3% and amounted to EUR 31.8 million (2006: EUR 30.9 million). The net group result rose by 12% to EUR 17.7 million (2006: EUR 15.8 million), mainly due to an improvement in the result of associates and joint ventures. Adjusted to take account of currency effects of EUR 1.0 million, the net group result has risen by 18% compared to last year. Gamma Technologies Turnover of Gamma Technologies amounted to EUR 254 million (2006: EUR 253 million). Adjusted to take account of currency effects (-3%), turnover increased by 3%. The sector is reaping the benefits of the transformation process started in 2004, as well as increasing demand at nearly all business units. The operating result excluding restructuring costs amounted to EUR 21.5 million (2006: EUR 19.2 million). Adjusted to take account of currency effects (-9%), the operating result increased by 21%. This increase was mainly realised by Belting and Filtration Technology, driven by higher volumes and efficiency improvements. Restructuring costs amounted to EUR 0.9 million (2006: nil). The operating result totalled EUR 20.6 million (2006: EUR 19.2 million). Despite negative currency effects, Belting Technology was able to benefit from undiminishing demand for synthetic belts. Turnover growth was posted on all continents, especially in America, where, among others, materials were delivered for use in trains. Additionally, good progress was made with a number of ongoing projects. In that respect, assembly activities were gradually relocated from Western Europe to the central assembly location in the Czech Republic. In addition, further efficiency measures were effectuated in various countries. Belting has developed endless, heat-resistant, felt belts for the aluminium industry. These belts are resistant to prolonged heat exposure up to a temperature of 400°C , are very abrasion-resistant and, due to the smooth surface, do not scratch the aluminium. The turnover of Filtration Technology was virtually the same as last year, in spite of adverse currency effects. Filtration is expanding its geographical sales network and is transferring more production to countries with strong growth prospects and a low cost structure. In that connection, assembly activities have been moved from Western Europe to the central assembly location in Poland. This means that in Sweden and Germany only weaving centres remain. Furthermore, new factories have come on stream in Mexico, China and Poland. In addition, Kirin was acquired in March, thus strengthening the business unit's position in South-East Asia. Kirin specialises in both wet and dry industrial filtration products and is based in Singapore and Malaysia. Filtration was able to end the labour conflict at National Wire Fabric in Arkansas at the end of April. Turnover of Coating & Composite Technology fell short of the strong figure posted in the first six months of last year, when FIFA flags and tent cloth were supplied for the FIFA 2006 World Cup football tournament in Germany. Coating & Composite saw the turnover of the duraskin product group (roofing structures) grow in Mexico, Poland, the Middle East and North Africa, but encountered difficulties at seemee (printable media fabric) due to lower volumes, primarily in the USA. Turnover of the protective materials product group increased in spite of delays in orders for bullet-proof vests. Delivery of these vests to the French police force is now taking place. To generate more sales, Coating & Composite is further investing in the sales organisation and innovative products. For example, the business unit has supplied the Polish telecom company Netia with a super-size billboard measuring 2,350 sq. m. that covers the complete front of an office building in Warsaw. Turnover of Sailcloth Technology increased slightly as a consequence of larger sales mainly in Germany and the United States. In particular, there was greater demand for high-grade products like Hydra Net Radial for use on sailing yachts. Dimension-Polyant has once again underlined its market leadership in sailcloth technology in 2007. Worldwide quite a number of boats were victorious in various races with sailcloth of Dimension-Polyant, such as the Skandia Geelong Race Week in Australia in January of this year. Gamma Comfort & Style Within the Gamma Comfort & Style sector turnover amounted to EUR 140 million (2006: EUR 140 million). Adjusted to take account of currency effects (-3%), turnover increased by 3%. The operating result excluding restructuring costs amounted to EUR 11.8 million (2006: EUR 13.1 million). Adjusted to take account of currency effects (-6%), the operating result decreased by 3%. In contrast to Sleep Care Fabrics, which suffered from increased price pressure and lower volumes in Europe, the trends at Exotic Fabrics were positive. Restructuring costs amounted to EUR 0.6 million (2006: EUR 1.4 million) and the operating result came to EUR 11.2 million (2006: EUR 11.7 million). Turnover at Sleep Care Fabrics lagged behind, partially due to negative currency effects and the sale of the decoration textile unit in February of this year. In addition, the business unit still has to contend with increased price pressure in Europe, resulting in lower sales volumes that could only partially be offset by higher volumes in the rest of the world. Furthermore, Sleep Care Fabrics is hindered by start-up costs as a result of the ongoing transformation process, which entails the reduction of production in Western Europe and the setting-up of new production locations in low-wage countries. The Turkish factory, completed last year, is yielding increased volumes of woven and knitted mattress fabrics. In the United States the strategic growth towards the mid-segment has been started, resulting in higher volumes and a changed price mix. In May, Sleep Care Fabrics won the Interzum Innovation Award 2007, an international prize for smart design and use of materials in the furniture industry. The award was won with Cairfull, a mattress fabric with a three-dimensional structure that creates a layer of air, making it easier to relieve pressure and to regulate temperature and humidity levels. Turnover at Exotic Fabrics rose compared to the first half-year of 2006. The business unit benefited from increasing demand for all brands. Demand for the Vlisco top brand was as high as ever. The first seasonal collection was launched in July and in the second half of this year the completion of the first Vlisco (flagship) stores are planned in Nigeria and Benin. Turnover of the local brands Uniwax and GTP also increased, mainly due to a stable market in Côte d'Ivoire and the fifty-year anniversary in Ghana. Additionally, the newly launched and cheaper GTP Nustyle brand was well received in the market. The expansion of the Woodin distribution network is being prepared, and the business unit expects to open up special Woodin stores in, among others, Nigeria (Tinapa), Ghana (Accra) and South Africa (Soweto) in the second half of the year. In light of the repositioning of all the brands, Exotic Fabrics is also strengthening its sales organisation. Financial data Interest charges increased to EUR 6.4 million (2006: EUR 6.1 million), due to a higher average interest rate. The balance of interest-bearing liabilities at the end of the period decreased to EUR 227.7 million (2006: EUR 255.8 million), mainly as a result of the proceeds from the sale of discontinued operations. The result of associates amounted to nil (2006: EUR -1.4 million). The effective tax rate decreased to 30.3% (2006: 31.2%). The net group result amounted to EUR 17.7 milllilon (2006: EUR 15.8 million). Earnings per share amounted to EUR 2.36 (2006: EUR 2.10). In the first half of 2007, purchases of property, plant and equipment totalled EUR 17.7 million (2006: EUR 14.6 million) and were primarily related to the new production locations of both Filtration Technology in Poland and of Sleep Care Fabrics in the Czech Republic. Investments rose above the level of depreciation of property, plant and equipment of EUR 15.5 million (2006: EUR 16.0 million). Due to the positive effects of working capital improvement programmes, working capital as a percentage of turnover improved to 31.0% (2006: 31.6%). Outlook Compared to 2006, the operating results increased by 3% to EUR 33.3 million in first six months of 2007, despite the negative currency effects. The Gamma Technologies sector is developing favourably. The transformation process in the Gamma Comfort & Style sector is going according to plan. In order to remain competitive, Sleep Care Fabrics is slashing capacity in Western Europe and will increase production in low-wage countries such as Turkey, the Czech Republic and Mexico. The repositioning of the Exotic Fabrics brands is on course. The strategic plan that is being developed for the coming years, will be completed this autumn. Over the full year Gamma Holding expects the operating result (excluding restructuring costs) to grow by 5 to 10% compared to 2006, barring any unforeseen circumstances. Executive Board Gamma Holding N.V. Helmond, the Netherlands, 1 August 2007 Basis on which this half-year report is drawn up The overviews, figures and explanatory notes in this half-year report have been drawn up based on International Financial Reporting Standards (IFRS). For the accounting principles, please refer to the explanatory notes included in the Financial Statements 2006. Application of these principles was unamended. Gamma Holding has opted not to draw up this half-year report based on IAS 34, Interim financial reporting. The figures in this half-year report have not been audited. Profile Gamma Holding develops, manufactures and sells innovative, high-quality textile-based products throughout the world. In 41 countries, approximately 6,700 employees are active. Its headquarters are located in Helmond (The Netherlands) and its shares are listed on Euronext Amsterdam. Gamma Holding comprises two sectors, Gamma Technologies and Gamma Comfort & Style, with activities in the field of transport and conveyor belts, filter products, coated fabrics and composites, sailcloth, mattress ticking and exotic fabrics. With these products the company is a leading global player in its selected niche markets. For more information: www.gammaholding.com For a complete reproduction of the press release including tables, please click to open the pdf document.