iNTERviEW WiTH DR. ROLF HOLLANDER

Chairman of the Neumüller CEWE COLOR Stiftung

To the Shareholders

To the Shareholders

01 Interview with Dr Rolf Hollander

20 To the Shareholders Interview with Dr Rolf Hollander

www.viaprinto.de

– 2.9?!? And turnover is down by one third? What happened there?

We deliberately let go of our weak-margin wholesaling activities.

That accounts for the largest share of the decline in our turnover, and it has not had any significant impact on our result. That much was OK. But what really hit us hard was the decrease in sales of digi-tal reflex cameras, especially in Poland. We have thus also missed out on supplier bonuses, and we have had to write down inventories.

We will react to this trend. We have already made initial adjustments to our business model and our pricing policy.

What will you do?

Through targeted advertising, we will stabilise our valuable turnover and develop related new and growing product ranges. We will focus more strongly on online sales and we will cut costs by closing unprofitable branches. We will look closely at all of our other costs. And we will continue to lower our costs until we return to the profit zone. However, for all of the

justified criticism we shouldn’t forget that the strategic Retail business segment exclusively comprises hardware turnover, since our highly profitable photofinishing services which are generated through Retail are reported within our Photofinishing business segment.

Another question on the financial statements: You haven’t made it all that easy for readers this year: In the profit and loss account, you have rearranged some of your selling expenses and other taxes. You have done that for 2014 and also for the previous year, 2013. What is the reason for that?

Here, we have complied with the requirements of our IFRS account-ing standard and have naturally also adjusted the figures for the previous year accordingly. These standards are intended to establish comparability between different companies. In terms of the specific concrete changes which we have made: On the one hand, we have

transferred certain types of advertis-ing costs subsidies as a component of selling expenses from turnover to other operating expenses, thus increasing our turnover. We had pre-viously netted advertising costs sub-sidies against turnover. Ultimately, this doesn’t actually change any-thing since our reported expenses have now been increased by exactly the same value as this reclassified amount. On the other hand, we have also reclassified other taxes as part of other operating expenses, which means that we have reported a slightly lower EBIT figure than we had indicated in the calculation in previous years, since we had previously initially deducted other taxes and income taxes from our EBT. We have naturally adjusted the figures for previous years accord-ingly. It was important to us that we communicate these presenta-tional changes transparently.

2.3 billion

photos produced

30,232 ^tonnes

of printed paper

5.9 million

CEWE PHOTOBOOKS

You mentioned your turnover growth to 70 million euros in the Commercial Online Printing segment. Will you actually achieve your target of 100 million euros in 2016? That might be difficult through organic growth alone…

Since 2012 we have at any rate achieved growth here from 43 to more than 70 million euros. Our growth rate is thus highly respectable. Can we promise that we will organically reach a turnover level of 100 mil-lion euros as early as 2016, on the basis of our current growth level?

Probably not. But we nonetheless still have this target in our sights.

Organic growth is only ever one possible solution. With inorganic growth, 100 million euros in 2016 is still possible. Above all, we con-tinue to stand by our goal of achieving a result in this segment which is at least balanced in 2016. In 2007, we set ourselves a medium-term goal of a turnover volume of 500 million euros. In 2012 we actually achieved this – not least thanks to our acquisition of Saxoprint. To be sure, turnover goals are not an end in themselves. That is illustrated not least by our decision to actively switch off our weak-margin whole-saling source of turnover in our Retail segment. If we don’t make it to 100 million euros, then that wouldn’t be a disaster. We’re certainly not going to buy turnover, come what may. The key issue is the long-term value that we provide in creating additional euros of turnover.

On the subject of possible acquisitions: Isn’t your financing structure much too comfortable?

Not at all. To be sure, 2014 is an important landmark for us: CEWE is now completely debt-free and has a net asset position in excess of 20 million euros. However, this should be viewed in the broader con-text: At a good 51 per cent, our equity ratio has reached a level which we feel comfortable with, and we have delivered continuously rising dividends for 6 years now. As a debt-free company with a growth out-look and an attractive dividend value, we offer a combination of the qualities which value investors appreciate. To sum up: Firstly, we now have a significant year-end net asset position for the first time since our acquisition of Saxoprint. Secondly, this is an assessment as of this specific reporting date, which reflects our strongly cash-generating Christmas business. We will once again realise a net debt position over the course of the year. Thirdly, only a small part of the cash posi-tion which we can now see has been generated from within our com-pany. It has largely resulted from our placement of 500,000 treasury shares in April 2014 which – besides our goal of increasing our free float – we also implemented as a basis for acquisitions. We are thus also positioned for potential inorganic growth. Fourthly, we live in very fast-moving times. Solid financial resources allow us to focus 100 % on our goal: operational value creation!

22 To the Shareholders Interview with Dr Rolf Hollander

What does “operational value creation” mean for you?

It’s like in a restaurant: The key is to buy good ingredients at a low price. Reasonably priced in the best sense of the word. If you buy cheap ingredients, you will disappoint quality-oriented customers.

We certainly won’t do that. Satisfied customers are our capital. To keep with the culinary theme: We intend to serve a creative menu and produce an experience which our guests enjoy and which they’re willing to pay a reasonable price for. We want to excite consumers throughout the world of photography, and we intend to offer our cus-tomers in our Commercial Online Printing segment a rapid, easy-to-use, high-quality and appropriately priced service. A company which focuses on these issues has already made a key step in the direction of achieving positive figures. And everyone likes those – our custom-ers, our employees and our shareholders.

What are your plans for 2015?

If we’re not getting better every day, we’re not doing our job. That’s the CEWE principle. That is why we have improvements planned for all of our segments, and we are hard at work on delivering them.

Many thanks to Dr. Hollander for the interview