Business News
Punch Graphix nv: Interim results for 2008 in line with internal expectations
Friday 29. August 2008 - Punch Graphix nv today announced the results for the first half of 2008. Sales have increased by EUR 14 million (2007) to EUR 78 million (2008) compared with the same period last year. The net result is EUR 6.5 million compared with a loss of EUR 8.5 million in the first half of 2007.
Key figures (unaudited)
In 2007 Punch Graphix underwent a dramatic transformation as a result of the acquisition of Punch Graphix plc and the sale of RMS and EMS activities. To be able to provide a meaningful analysis of the development of the results, Punch Graphix has opted to also report pro-forma consolidated figures for the continued activities in the first half of 2007 (comparable basis).
Key points
Sales fell by 7% on a comparable basis, operating income by 4%.
Drupa: delayed effect on sales in the first half year as expected, number of orders booked during Drupa higher than expected.
Significant negative exchange rate effect on sales (mainly USD and GBP): -3%
CtP division sales in newspaper printing (OEM activities) under pressure: – 32%, contract negotiations ongoing
Prepress Solutions restructuring costs (EUR 1.4 million) and cost of attending Drupa (EUR 1.5 million) charged in full to first half year
Buildings sold with proceeds of EUR 3 million
EBITDA and operating result stable thanks to improved margins and adjusted cost structure as a result of 2007 cost savings plan
Net financial debt position from EUR 36.5 million at end 2007 to EUR 2.1 million
Syndicated’ loan of EUR 75 million – unused line of about EUR 50 million
Successful launch of Xeikon 8000 and completely new basysPrint product line
Product launches during the period under review
The product portfolio was significantly extended during the first half year. The Xeikon division launched the Xeikon 8000, the Xeikon 6000 with a new 1200 dpi imaging head and the Xeikon 3300, the fastest digital high-resolution five-colour label press on the market. The basysPrint division also extended its portfolio with a new generation of UV-Setters, the 450 and 850 series, and the large and extra-large-format imagers with new MCA automation technology (multi-cassette automation).
Drupa 2008, the worlds most prestigious graphics fair, was the platform for the official launch of the new product line in Europe. Altogether, Punch Graphix took more than EUR 25 million worth of orders, exceeding the targets it had set itself before the start of the event. The new machines are only being launched in the US in the second half of the year.
Review of the interim results
To be able to provide a meaningful analysis of the development of the results – given the groups dramatic transformation in 2007 – the results for the first half year of 2008 are being compared with the pro-forma consolidated results for the continued activities (i.e. excluding the stopped EMS and RMS activities) in the first half year of 2007 (S1-2007C, comparable basis).
Sales and operating income
On a comparable basis, sales in the first half year fell by 7% compared with the same period last year. The most significant causes were:
A sharp fall (-32%) in the number of orders for OEM activities in the Prepress Solutions newspaper segment. The increased sales achieved by the basysPrint division go some way to compensating for this fall.
Exchange rate effects, mainly USD and GBP. The fall would have been 4% had the exchange rate remained constant.
The Drupa effect: a drop in orders in the run-up to the four-yearly Drupa trade fair. Drupa 2008 took place from 29 May to 11 June 2008.
Weak results in the US for the Digital Printing Solutions segment.
Operating income fell from EUR 86.9 million to EUR 83.7 million. The more than EUR 6 million other operating income includes non-recurrent income of EUR 3 million from the sale of buildings.
EBITDA
On a comparable basis the EBITDA for the first half year (S1-2008: EUR 21.5 million) was stable (S1-2007: EUR 21.6 million). The most significant changes were:
General: an increase in gross margins from 59% to 63% due to a modified product mix and improved cost- effectiveness.
The Drupa effect: the costs of attending Drupa were charged in full to the first semester (EUR 1.5 million).
Digital Printing Solutions: the restructuring carried out in 2007 had a positive effect on overhead.
Prepress Solutions: substantially lower EBITDA entirely due to the fall in sales of OEM activities in the newspaper segment and restructuring costs of about EUR 1.4 million.
The costs reported under Other activities are considerably lower due to the elimination of the costs of dual listing (AIM and Euronext).
Operating result (EBIT)
Depreciation booked during the first half year fell by EUR 1.1 million compared with the same period last year, although impairment losses posted to current assets (inventories and debtors) increased by EUR 1.1 million.
The operating result is therefore stable compared with the same period last year.
The recurrent operating result (REBIT) fell to the same extent as the REBITDA, namely by 14%, as a result of the aforementioned fall in sales.
Finance income and result before tax
Finance income was strongly influenced by the changed financing structure. During the first half of 2008 finance income (EUR -2.2 million) mainly comprised interest (EUR -1.5 million), exchange rate income (EUR -0.2 million) and other finance costs (EUR -0.5 million).
On a comparable basis the result before tax is EUR 10.2 million compared with EUR 11 million for the first half of 2007 (actually reported: EUR -8.4 million).
Net result
The tax burden for the first half of 2008 amounts to 37%, which corresponds to EUR 3.8 million in taxes. This is made up of EUR 2.5 million in corporation tax and EUR 1.3 million in deferred taxes. The net result for the first half year is positive and amounts to EUR 6.4 million compared with a reported loss of EUR 8.4 million last year (on a comparable basis a profit of EUR 7.5 million would have been reported last year).
Balance sheet and cash flow statement
The groups shareholder equity amounted to EUR 179.2 million at the end of the period under review.
Tangible fixed assets dropped significantly as a result of the sale of some Group property to Accentis. This also eliminated the corresponding financial leasing debts.
A syndicated loan of EUR 75 million was taken out after the balance sheet date. This syndicated loan is part of the previously announced refinancing of the debt to Punch International and the existing lines of credit. On balance, an unused line of about EUR 50 million remains available to the Group.
Cash flow Consolidated
in million euros S1-2008 S1-2007C
Operational cash flow 15.2 4.1
Cash from working capital -6.6 -7.6
Cash from operating activities 8.6 -3.5
Cash used in investing activities -9.0 -0.1
Cash from financing activities -25.5 3.6
Foreign exchange -0.2 0.0
Net cash flow -26.1 0.0
Cash and cash equivalents end of period 14.6 0.9
Cash flows changed significantly in the first half year compared with the same period last year.
The cash flow from operating activities is now positive, at EUR 8.6 million (S1-2007: EUR -3.5 million). The net investment cash flow is EUR -9 million. The total amount invested is EUR 9.7 million, EUR 4.1 million of which relates to capitalised R&D expenditure and EUR 5.5 million of which was spent on renovating the demonstration rooms to support the launch of the new product range, additional investments in production machines and replacement of the vehicle fleet. The cash flow from financing activities amounts to EUR -25.5 million, EUR 24.5 million of which is from the aforementioned repayment of the debt to Punch International.
Prospects
The Group expects to be able to achieve a slight increase in both sales and net profit in 2008 compared with the pro-forma consolidated figures for the continued activities in 2007 (EUR 163 million sales and EUR 15.7 million net profit.)
Purchase of own shares
The Executive Board decided to use the authority granted to it to purchase its own shares. Under this authority the Executive Board is authorised to purchase own shares up to the maximum quantity the company can acquire in accordance with the law and the Articles of Association at the time of the purchase, at a price that lies between the nominal value and 110% of the stock market price at the time of the acquisition. The company will report periodically on the number of own shares it has purchased and the average purchase price in its quarterly trading updates. By the end of July 2008, the company had bought a total of 96,618 shares at an average price of EUR 4.08.