Business News
Punch Graphix nv:: 16.5 million EUR net profit in 2008, in line with expectations
Friday 27. February 2009 - Punch Graphix nv (Punch Graphix) is today publishing its results for 2008. In comparison with 2007 sales rose from 114.6 million EUR to 163.4 million EUR. Net earnings amount to 16.5 million EUR compared with a loss of 4.9 million in 2007. Despite the world economic crisis, which struck in all its intensity in the fourth quarter, earnings are in line with the forecasts announced previously.
Key figures
As a result of the acquisition of the activities of Punch Graphix plc and the disposal of the RMS and EMS operations, Punch Graphix underwent a fundamental transformation in the course of 2007. In order to make it possible to produce a relevant analysis of the results, Punch Graphix has opted to report in addition pro-forma consolidated figures for the activities that continued through 2007 (comparable basis).
IFRS 31 December 2008 (A) 31 December 2007 (B) 31 December 2007 Difference
(A) vs. (B)
in million EUR Comparable basis (1) %
Sales 163.4 163.0 114.6 +0.2%
Operating income 177.3 171.4 135.1 +3.4%
EBITDA (2) 44.2 39.9 23.5 +10.6%
Operating result (EBIT) 26.5 22.2 -12.4 +19.3%
Result before taxes 22.4 17.8 -16.5 +23.6%
Net result 16.5 15.7 -4.9 +2.1%
Earnings per share (in euro per share) 0.58 -0.40
Earnings per share – diluted (in euro per share) 0.59
REBITDA (3) 43.5 44.4 n/a
REBIT (4) 30.7 29.3 n/a
(1) Comparable basis: pro-forma consolidation with full consolidation of Punch Graphix plc and excluding discontinued activities (EMS and RMS).
(2) EBITDA: is a not defined term according to IFRS, Punch Graphix nv defines this term as earnings before interest and taxes, plus depreciation, amortisation and provisions booked, minus any potential reductions of those items.
(3) REBITDA – recurrent EBITDA: EBITDA adjusted for one-off (non-recurring) cash elements.
(4) REBIT – recurrent EBIT: EBIT adjusted for one-off (non-recurring) cash and non-cash elements.
Main points of interest
Slight increase in sales on a comparable basis
– Impact of exchange rate effects on sales (mainly USD and GBP): -2%
– Impact of discontinuing distribution of third-party products on sales: -2%
– Organic growth of Digital Printing Solutions: 10%
– Sales of Prepress Solutions newspaper segment: -38%, impact on total sales: -7%
– Organic growth of Prepress Solutions commercial printing segment (basysPrint): +45%
Successful launch of new products for all segments
Cost cutting measures taken in 2007 have positive effect
Extra cost cutting measures in the light of the global crisis: 3 million EUR
Property transactions / Accentis
– June / November: sale of buildings to Accentis nv, a listed Belgian property group, has a positive effect of approx. 3.7 million EUR
– December: acquisition of a 24.5% stake in Accentis nv for the sum of 20.7 million EUR
– December: purchase of a 30.4 million EUR loan to Accentis at a discount of 3% (approx. 0.9 million EUR). The loan has an initial term of 5 years and is interest bearing at an annual rate of 6%. The discount realised is recognised in profit/loss spread over the term of the loan, so that the final yield amounts to 6.6%,
Sale of patents on milking robot technology, positive effect on earnings: 1.5 million EUR
Purchase of third-party interests and treasury shares: 6.3 million EUR
– Purchase of minority interests during the financial year: 0.8 million EUR
– Purchase of treasury shares during the financial year: 5.5 million EUR
Net financial debt position rose from 36.5 million EUR at the end of 2007 to 43.2 million EUR at the end of 2008
– Arrangement of syndicated loan of 75 million EUR – amount not taken up at end of 2008: approx. 20 million EUR
Product launches during the reporting period
Digital Printing Solutions
The product portfolio was expanded considerably in the course of 2008. The Xeikon division launched the Xeikon 8000, a Xeikon 6000 with a new 1200 dpi imaging head (developed for the Xeikon 8000) and two label presses, the ultra-fast Xeikon 3300 and the Xeikon 3000, which both use the same 1200 dpi imaging head. With these launches Xeikon once again set new standards in print quality and productivity. Furthermore, with the label presses Xeikon took the 2008 New Innovation Award, part of the 2008 Label Industry Global Awards bestowed by an international jury of experts on innovative, pioneering and environmentally aware companies that succeed in launching radically new technology, products or solutions for the label industry.
Prepress Solutions
The basysPrint division also expanded its portfolio with a new generation of UV-Setters, the Series 400 and 800, and the large and extra-large format platesetters with MCA automation technology (multi-cassette automation). The new generation continues to build on the proven technology of its predecessors and the groups years of experience in the newspaper printing segment, which places especially stringent demands on automation and productivity. The result is an advanced platform that still offers the high image quality for which basysPrint is known, but with improved efficiency and considerably higher productivity without sacrificing cost effectiveness. The design of the casing of the Series 400 and 800 carried off the prestigious iF Design Award.
An upgrade of the platform was also launched for the newspaper segment (OEM).
Discussion of the annual results
In order to make a relevant analysis of developments in earnings possible, given the radical transformation of the group in 2007, the results for 2008 are compared with the pro-forma consolidated results for the activities continued through 2007 (i.e. excluding the discontinued EMS and RMS) to provide a comparable basis (2007C).
Sales and operating income
Sales Consolidated
in thousand EUR 2008 2007C
Sales per segment
Digital Printing Solutions 119,692 114,887
Prepress Solutions (CtP) 43,664 48,078
Total sales 163,356 162,965
Sales per activity/product
Equipment 91,159 85,192
Consumables 44,094 46,250
Service & Other 28,103 31,523
Total sales 163,356 162,965
Sales per region
Europe 125,370 122,430
Americas 34,645 36,364
Asia (including Australia and New Zealand) 3,341 4,171
Total sales 163,356 162,965
On a comparable basis, sales rose slightly compared with 2007. The most important developments are:
Exchange rates, mainly USD and GBP, have a negative effect of approx. 2% on the overall growth of sales.
Discontinuing distribution of third-party products has a negative impact of approx. 2% on the growth of sales.
Organic growth of Digital Printing Solutions on a comparable basis: 10%.
Steep decline (-38%) in Prepress Solutions sales for OEM activities in the newspaper segment. The increase in sales achieved by the basysPrint division (45%) only partly makes up for this fall.
The fall in turnover generated by consumables and service is caused virtually entirely by exchange rate effects and discontinuing distribution of third-party products.
The operating income rose from 171.4 million EUR to 177.3 million EUR. The 14 million EUR of other operating income in 2008 includes non-recurring income amounting to approx. 5 million EUR from the sale of buildings and patents.
EBITDA
EBITDA Consolidated
in thousand EUR 2008 2007C
Digital Printing Solutions 33,538 29,796
Prepress Solutions (CtP) 6,333 10,996
Other activities 4,302 -848
Consolidated 44,174 39,940
Non-recurring elements:
Costs of takeover bid – 1,500
Restructuring costs 3,000 3,000
Costs of attending Drupa 1,500 –
Capital gain on sale of patents -1,500 –
Capital gain on sale of assets -3,700 –
REBITDA 43,474 44,440
On a comparable basis EBITDA rose by 11%. REBITDA (EBITDA corrected for one-off (non-recurring) cash elements) shows a fall of approx. 2%. The most important comments are:
Stable margins
Logical movement of EBITDA in comparison with sales in both Digital Printing Solutions (increase) and Prepress Solutions (fall).
Significant non-recurring income (mainly under other activities) and expenses.
The sale of the buildings, which are now leased, has a negative impact on EBITDA of approximately 2.7 million EUR on an annual basis. However, the net result on an annual basis is almost unaffected, because of the fall in the cost of depreciation and amortisation (-1.2 million EUR) and financial expenses (-1.3 million EUR).
.
Operating result (EBIT)
EBIT Consolidated
in thousand EUR 2008 2007C
Digital Printing Solutions 19,918 12,431
Prepress Solutions (CtP) 1,243 10,590
Other activities 5,297 -848
Consolidated 26,458 22,173
Non-recurring elements:
On EBITDA -700 4,500
Non-recurring amortisations and provisions 4,900 2,600
REBIT 30,658 29,273
The operating result rose by approx. 19% to 26.5 million EUR. The most important changes are:
Depreciation and amortisation have fallen from 17.2 million EUR in 2007 to 13.5 million EUR in 2008.
Discontinuing distribution of third-party products and revamping all of our own product range (Xeikon and basysPrint) has resulted in a write-down of inventories amounting to 2.3 million EUR.
Punch Graphix has a strict policy on the valuation of trade receivables: all receivables that are more than 90 days past their due date are written down completely. The present economic crisis is having a negative effect on customers payment patterns so that the impairments recognised on trade receivables have increased to 2.6 million EUR. This has limited the increase in the recurring operating result (REBIT) to 5%.
Financial result and result before taxes
The financial result (-4.5 million EUR) consists mainly of net interest charges amounting to 2.2 million EUR and exchange rate and hedge losses amounting to 2.1 million EUR. On a comparable basis the result before taxes comes to 22.4 million EUR, compared with 17.8 million EUR in 2007 (effectively reported: -16.5 million EUR).
Net result
The tax burden for 2008 amounts to 26.4%, which corresponds to 5.9 million EUR in taxes. The net result is 16.5 million EUR as against 15.7 million EUR in 2007 on a comparable basis (effectively reported: -4.9 million EUR).
Balance sheet and cash flow statement
Balance sheet Consolidated
in million EUR 2008 2007
Non-current assets 205 188
Current assets 76 79
Cash and cash equivalents 17 41
Total assets 297 308
Shareholders equity 184 174
Interest bearing loans & borrowings 60 53
Debt to Punch International – 24
Other liabilities 53 57
Total liabilities & equity 297 308
Net financial debt 43 37
Net financial debt / EBITDA 0.98 0.80
Solvency 62% 56%
At the end of the reporting period the shareholders equity amounted to 184 million EUR. This implies a net increase of 10 million EUR as against the previous year, which arises chiefly from the results for the financial year (16 million EUR), offset by the purchase of treasury shares and minority interests (-6 million EUR).
The non-current assets item has risen by 17 million EUR, mainly because of the sale of the groups real property to Accentis nv.
The debt to Punch International, which still amounted to 24 million EUR at the end of the previous year, was repaid in its entirety.
Cash flow Consolidated
in million EUR 2008 2007
Operational cash flow 35.0 22.5
Cash from working capital -5.0 12.7
Cash from operating activities 30.0 35.2
Cash used in investing activities -36.0 -64.1
Cash from financing activities -18.2 67.6
Foreign exchange 0.2 1.0
Net cash flow -24.0 39.7
Cash and cash equivalents end of period 16.7 40.7
The cash flow from operating activities realised in 2008 amounts to 30 million EUR and consists of an operational cash flow of 35 million EUR, offset by a 5 million EUR increase in working capital requirement.
The investment cash flow for the financial year amounts to -36 million EUR net, of which -21 million EUR relates to the acquisition of the holding in Accentis nv. The other investments relate to R&D (7 million EUR) and property, plant and equipment (9 million EUR).
In 2008 new bank loans of 61 million EUR were taken out and 21 million EUR of debts to banks repaid. The debt of 24 million EUR to Punch International was also repaid in its entirety and a loan to Accentis nv amounting to 30 million EUR was taken over. Finally, treasury shares were purchased at a price of approx. 6 million EUR. The financing cash flow works out at -18 million EUR and the net cash flow at -24 million EUR.
Forecasts
Global economic conditions are uncertain, so that it is very difficult to estimate how our customers activities will develop. Further, their access to finance is being limited by the credit crisis, so it is not possible to make concrete forecasts at present.
Changes in the Supervisory Board
On 22 December 2008 Mr Philip Ghekiere informed the Supervisory Board that he wished to relinquish his office as a member of the Board as of 1 February 2009. Mr Ghekiere has concluded a collaboration agreement with NPM Capital, a Dutch investment company where, as Managing Director, he is responsible for expanding investment activities in Belgium. Under the agreement he has undertaken to quit his offices as an independent member of the supervisory boards of non-NPM Capital-related companies wherever possible. The Supervisory Board presented Mr Ghekieres resignation to the Extraordinary General Meeting on 13 February 2009, which accepted it. The Supervisory Board has undertaken to ask the next General Meeting for discharge for Mr Ghekiere.
No vacancy has arisen as a result of Mr Ghekieres departure. The Supervisory Board has decided to consider filling the position in the future; for the time being the board will consist of three members.
The Supervisory Board would once again like to thank Mr Ghekiere for the valuable contribution he has made as a member of the board.
Purchase of treasury shares
The board has resolved to avail itself of the authority granted it to purchase treasury shares. Under this authority, which was extended at the Extraordinary General Meeting on 13 February 2009, the directors are empowered to purchase treasury shares up to the maximum quantity that may be vested in the company by virtue of statute and the articles of association at the time of acquisition, at a price between their par value and 110% of the stock-market price at the time of acquisition, The company will periodically report on the number of treasury shares purchased and the average acquisition price in its quarterly trading updates. At the end of 2008 the company had purchased a total of 2,088,521 treasury shares at an average price of 2.66 EUR.
Proposed dividend
The Board of Directors does not propose to pay a dividend for the 2008 financial year.