Business levels reflect weak 2006/2007 winter season

Sentiment in ski locations at the beginning of the 2006/2007 winter season was strong. Market volume is particularly relevant for us, and we saw another year-on-year increase in volumes in the 2006/2007 winter season, notably in Europe. Given our position as the global market leader, we were able to participate significantly in the increase in market volume for ski slope vehicles, gaining a global market share of some 60 per cent. The size of the market reached extraordinary record levels. Given these good market conditions and strong sentiment in the sector, the Company produced and sold more PistenBullys than ever before. To a large extent customer orders had already been taken before the start of the season.

Despite this, Group sales figures are down by EUR 7.2m on the previous year’s record results. The reason for this ostensibly contradictory development is to be found in the significantly lower sales of maintenance services, replacement parts and used vehicles. There was less demand for these as a result of low snow levels at the time. All in all, sales in this area were some 18 per cent down on the previous year. Sales of maintenance services and replacement parts account for around 20 per cent of total Group sales, so any decline in this area has a clearly noticeable effect on profit.

In terms of the winter season as a whole, last winter was very disappointing for our customers, ski resort operators and cable car operators, because of the very low levels of snow. This meant that PistenBullys were deployed less, were subject to lower load levels and were therefore also less affected by wear and tear. This had a direct impact on our sales of replacement parts and maintenance services.

Sales of used vehicles are also dependant on prevailing snow conditions at the time. Used vehicles are often purchased by ski resorts located at medium or lower altitudes. Last season these resorts had very little need of used vehicles.

From the mountains to the beach
There was a pleasing increase in sales of BeachTech vehicles – albeit on a lower scale. Sales and turnover were up slightly on the previous year. Although our sales activities on North American coasts have not been going for long, they are beginning to have an effect. We were also able to make sales of beach cleaners in China and Russia.

The profit after tax figure – at EUR 14.9m – comes out at only EUR 0.3m below the previous year's figure - a disproportionate decline in turnover. The figure includes exceptional profits on the sale of securities in the previous financial year, creating an additional positive effect. However, this is not reflected in the operational outcome for the financial year. Earnings before interest and tax for the 2006/2007 financial year – at EUR 19.1m – come out well under the figure for the previous year (EUR 24.1m) and therefore also well under the original budget. The EBIT figure clearly reveals how the nature of a winter season can ultimately affect the balance sheet.

Annual General Meeting
The Annual General Meeting will be held in Laupheim on 4th March 2008.

Prospects for 2007/2008
The 2006/2007 winter season was disappointing for our customers because of low revenues. As mentioned above, the effects of this are felt directly in the season itself with regard to turnover in maintenance services, replacement parts and used vehicles. But a poor winter season also stores up effects in ski locations on their disposition to make investments in the following season - in this case, the current 2007/2008 season. Notably, this includes investment in new ski slope vehicles. We can see clear evidence of this in our current order book. Market volumes in respect of ski slope vehicles will once again be significantly lower than in the previous year. As the global market leader, we will feel the effects of this in terms of turnover and profit.

The revenue situation is also dependant on how the current winter season goes. Although the 2007/2008 season got off to a good start, to begin with, good winter sport conditions can currently only be found in ski resorts at higher altitudes. Revenue and profit are therefore substantially dependant on how the winter season goes between now and Easter.