Highlights
Industry has discovered the Internet. Or rather: re-discovered it. Following the sometimes drastic cuts in Internet budgets between 2000 and 2003, since mid-2004 companies have started to gradually expand their commitment to the Internet again. There is a growing awareness that budget cuts in the interactive channels were often exaggerated. The controllers are doing their sums and are surprised to note that expanding web-based communication and sales platforms is increasingly becoming worthwhile. This is new. But this development has not come out of the blue.
Fig. 5 | Development of revenues according to quarters in € millions
SinnerSchrader advanced more quickly than planned in the 2004/2005 financial year. The expected revival of the market came into play in the period of the report and SinnerSchrader was able to make use of the opportunities presented by the new organisational structure to a pleasing extent. Revenue growth and development of earnings exceeded the plans. Revenue returned to the level of 2001/2002 and the operating result was well above zero. This means that an important milestone on the way to good earning power has been reached. However, the level of the operating margin reached in the 2004/2005 financial year – EBITA to (gross) revenue – of 1.2 % also shows that there is still a long way to go.
In the medium term, SinnerSchrader is aiming for an operating margin of between 10 % and 12 %. To achieve this goal, for the next three financial years SinnerSchrader is assuming double digit growth rates in revenue, margin improvements in the project services business of the Interactive Software and Interactive Marketing segments and the elimination of the costs for vacant rented property with the end of the current rental contract for the office space in Hamburg as of 30 June 2006.
The plans are based on a positive assessment of the development of the market relevant to SinnerSchrader. In this context, the general expectations of a reasonable, albeit not especially strong, growth in the German economy – measured in terms of gross domestic product – of 1.2 % in 2006 as well as growth in the IT market on the one hand and the web market on the other with growth predictions for 2006 of 3.4 % and over 2.0 % respectively form a good basis. However, the expectations of the development of the importance of the Internet as a communication and transaction platform are more important. Although hardly any reliable predictions are available yet, everything indicates that a second phase of dynamic development has started after the first growth wave between 1996 and 2000. In the current worldwide Technology Fast 500 survey from Deloitte Touche, the industry segment “Internet/IP-related” was at the top in terms of assessment of growth potential, after third and second place in the two previous years; it occupied this first place both for 2005 and for the next three years.
On the basis of its good position in the German market, SinnerSchrader is expecting to be able to profit from this development. Revenue growth of between 10 % and 15 % and an operating result (EBITA) of between € 0.3 million and € 0.5 million are planned for the 2005/2006 financial year. With a continuation of this growth and the disappearance of the costs for vacant rental space, it is then planned to clearly exceed the mark of one million euros in the operating result for the 2006/2007 financial year. In addition to this planned organic development, SinnerSchrader is interested in developing further growth and profit potential by means of acquisitions to complement previous business, but especially to expand its business portfolio with complementary services.
Hamburg, 7 November 2005
The Management Board
