Turnover in the first half of 2005 rises 22.1% to € 259.1 million (H1 2004: € 212.2 million), with organic growth of 8.8% and 13.3% through acquisitions.
Operating result up 15.2% to € 17.7 million (H1 2004: € 15.4 million).
Net profit improves by 20.1% to € 11.6 million (H1 2004: € 9.6 million).
The results have improved despite pressure on margins and increased cost level for the market development of innovations.
Financial situation

Turnover in the first half of 2005 increased by € 46.9 million (+22.1%) to € 259.1 million (H1 2004: € 212.2 million). Organic growth accounted for 8.8% of the increase, while acquisitions made in the fourth quarter of 2004 contributed 13.3%.

The gross margin as a percentage of turnover declined from 44.3% to 42.0%. This was mainly due to a continuation of the margin pressure that started in 2004 in the Cable Group as a result of higher raw material prices and competitive market conditions. Thanks to the efficiency of the business operations, the operating costs rose only 15.7% despite the extra cost in market development for innovations. Depreciation came in at € 6.7 million, which was slightly higher than in the same period in 2004 (€ 6.4 million).

The operating result improved by 15.2%, from € 15.4 million in the first half of 2004 to € 17.7 million in the first six months of 2005.

As a result of the acquisitions and the increased demand for working capital due to the company’s growth, the level of debt increased by € 29.1 million. The financial charges consequently rose from € 1.1 million in the first half of 2004 to € 1.5 million in the same period in 2005. Solvency was 42.5% (H1 2004: 49.0% ).

The tax burden fell to 28.6% (H1 2004: 32.6%) due to lower tax rates in several countries and because accumulated deductible losses incurred abroad in the past could be settled against profits.

The net profit in the first six months of 2005 improved to € 11.6 million, an increase of 20.1% compared with the same period in 2004 (H1 2004: € 9.6 million).

Earnings per share were € 1.43 (H1 2004: € 1.19).

The impact of IFRS on Shareholders’ Equity and the results was limited.

The number of employees (FTEs) on 30 June 2005 was 2,686 (30 June 2004: 2,315).

Strategy progress
The name change from N.V. Twentsche Kabel Holding to TKH Group "the solution provider" in May 2005 emphasises the TKH group’s strategy to focus on providing solutions. It marked an important step, both internally and externally, in the further positioning and development of the TKH group.

The organic growth achieved in market segments where conditions are still difficult is further proof of the potential of the TKH group with its high quality service and problem-solving capacity.

Defining the three solutions segments, Telecom Solutions, Building Solutions and Industrial Solutions resulted in a significant increase in cohesion between the activities of the different groups. The development of the portfolio and the team linked cooperation within the solutions have led to an improved positioning in promising projects and an increase in the number of orders in the form of total solutions with a higher added value.

To strengthen the positioning and reputation for innovations in Telecom Solutions and Building Solutions in a number of markets, the sales force has been further expanded. These investments are expected to pave the way for accelerated growth in these segments in the medium and longer term.

The companies acquired in 2004 made an impressive contribution to the results in the first six months of 2005. The results of these companies improved considerably, in part because they were integrated in TKH’s strategy and in particular as a result of the strong synergy within the TKH group.