Valora reports good third quarter performance

For the first time in its history, Valora is today publishing estimated quarterly financial results. The Group has two reasons for this step. First, the unsatisfactory performance turned in during the 2nd quarter of 2007 had led to uncertainty among financial analysts and shareholders as to the Group’s ongoing performance. The good results achieved in the 3rd quarter demonstrate that the performance slump suffered in the second three months of this year was merely a dip on the road to recovery. Second, the Chairman of the Board is taking the publication of these estimated 3rd quarter results as an opportunity to counter recent public attacks made by a newly created group of investors. As he puts it, "Valora is not a football for speculators to kick around. The Group’s strategy makes sense, and it is being implemented effectively.” Valora has undergone far-reaching changes in recent years. The unsuccessful policy of divestiture and acquisitions pursued in the late 1990’s has made way for a strategy based on focus. Correcting these mistakes ultimately cost Valora more than CHF 600 million. By mid-2008, when the five production companies have been sold, implementation of this focussed strategy will have been completed. Valora will then be a pure-play trading company, an internationally active trading Group operating in three divisions: Retail, Media and Trade. "In the near term, management will concentrate on stabilising operational profitability, by actively pursuing cost efficiencies and organic growth”, in the words of Fritz Ammann, Valora’s Board Chairman.

Cautious optimism At an operational level, Valora has staged an impressive recovery from the poor performance it displayed in the previous quarter. Initial 3rd quarter estimates show that the Group achieved good results in each of the months from July to September 2007. Compared with figures for the same quarter last year, net revenues were raised by CHF 39 million to reach CHF 756 million, while estimated operating income topped CHF 21 million, compared with CHF 18 million a year earlier. Based on these results, and taking the 2007 first-half figures into account, Valora anticipates that the 2007 financial year as a whole should generate a Group operating profit of at least CHF 48 million, with comparable results being achieved in 2008 as well. The sale of the production companies is progressing well. The Board of Directors intends to return the net proceeds of this sale to the Group’s shareholders.

Kiosks begin to reveal silver lining The problems confronting the kiosk business in Switzerland have been identified and contained. The measures needed to remedy the situation are currently being implemented and are now receiving the attention they require. Earlier inaccurate estimates of the progress already made by restructuring initiatives have been corrected. The management team has assigned priority to modernising the IT systems, re-focussing category management and optimising our sales organisation and outlet network. The outlet network will increasingly be divided into geographical and product-range-specific clusters and 2008 will also see the first franchising concepts being tested. "We will continually adapt our kiosk business to shifting trends in market and customer needs”, as CEO Peter Wüst puts it.

By-laws are binding The Board of Directors will listen attentively to the arguments advanced by the recently created investor group. It is unanimous in adhering to clear and consistent entrepreneurial values: sustainable profitability rather than one-off results, quality before quantity and long-term strategy before short-term tactics. What the Board will not do is entertain proposals based solely on short-term, speculative financial objectives. The Board decisively rejects the various calls for an extraordinary shareholders’ meeting which have recently been expressed in the media. Valora’s by-laws limit the number of voting shares which can be registered to one individual shareholder or to a group of shareholders acting in concert to 5% of all outstanding shares. An extraordinary shareholders’ meeting can be called only at the behest of at least 10% of the shareholders eligible to vote. In Fritz Ammann’s words, "It is the duty of Valora’s Board and management to adhere strictly to these provisions in the bylaws.”

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