FRANCOTYP-POSTALIA CONTINUES TO IMPROVE ITS EARNINGS POWER AND FINANCIAL STRENGTH IN THE FIRST QUARTER OF 2010

Francotyp-Postalia Holding AG, a provider of mail management services active worldwide, increased its earnings power and strengthened its financial position in the first quarter of 2010. Although sales declined slightly, EBITDA improved to € 7.1 million, compared to € 5.3 million in the same quarter of the previous year. Free cash flow, which is the difference between cash inflow from operating activities and cash outflow from investment, increased by € 2.9 million to € 5.0 million.

In the first three months of this year, revenues in the FP Group reached € 33.6 million, compared to € 34.2 million in the same period last year. Recurring revenues from service contracts, rentals, consumables, postal services and software services remained stable. However, new business continued to be sluggish due to the still very difficult state of the economy.

In terms of operating profitability, the FP Group improved its results. This positive development is largely due to the successful restructuring process carried out last year, combined with strict cost management. While material expenses increased by € 0.4 million to € 9.2 million due to an increase in finished and unfinished products, personnel expenses fell by € 0.9 million to € 12.7 million. At the same time, other expenses also declined by € 0.3 million to € 7.9 million, while depreciation and amortization decreased by € 0.5 million to € 5.6 million. Consolidated net income improved in the first quarter of 2010 to € -0.7 million, compared to € -2.0 million in the same quarter of the previous year.

Outlook for 2010

Despite the continuing challenges posed by its operating environment, the FP Group expects revenues and EBITDA figures to close slightly up for the full financial year 2010, compared to the previous year. The Company is forecasting revenues of between € 130 to € 135 million and an EBITDA of between € 22 to € 24 million. In the previous year, the Company closed its year-end figures with total revenues of € 129.0 million and a comparable EBITDA result of € 22.0 million.

"In view of the improvements we have made to cost structures and the high level of recurring sales, we see a good chance for a slight upturn in business during the current year, despite the ongoing difficulties posed by our operating environment," commented Hans Szymanski, CFO for the FP Group. Developments in the first quarter show that the FP Group is gaining in profitability, step-by-step. "We intend to continue down this route over the coming quarters, and will further optimize our cost structure in order to maintain and expand the profitability of the FP Group," continued Szymanski.