Global Graphics reports fourth quarter and full year 2008 results

Comparisons for the fourth quarter 2008 with the fourth quarter of the previous year include:

  • Sales of Euro 2.7 million this quarter (Euro 2.5 million at Q407 exchange rates) compared with Euro 3.5 million in Q4 2007;
  • A nominal operating loss this quarter, compared with an operating profit of Euro 1.1 million in Q4 2007;
  • An adjusted operating loss of Euro 0.3 million this quarter, compared with an adjusted operating profit of Euro 0.6 million in Q4 2007;
  • A nominal adjusted pre-tax loss this quarter (or a loss of Euro 0.00 per share), compared with an adjusted pre-tax profit of Euro 0.7 million in Q4 2007 (or a profit of Euro 0.06 per share);
  • A net loss of Euro 0.2 million this quarter (or a net loss of Euro 0.02 per share), compared with a nominal net profit in Q4 2007 (or a net profit of Euro 0.00  per share); and
  • An adjusted net loss of Euro 0.4 million (or an adjusted net loss of Euro 0.04 per share), identical to the adjusted net loss reported in Q4 2007.

Commenting on performance, Gary Fry, Chief Executive Officer, said: “during the last quarter of 2008 we released our first version of our embedded print solution that will open up new markets for us; the early indications are very positive and we look forward to reporting on our success in this area.  We also enhanced our electronic document library solution and were successful in winning another important contract with a major software company; overall, the opportunity for this solution area continues to be exciting. In this quarter, we also made great progress with our new end-user electronic document application in both the technology development and the market readiness for the launch in the current financial year.”

Fourth quarter 2008 performance
Sales for the quarter amounted to Euro 2.7 million, compared with Euro 3.5 million in the fourth quarter 2007, or a decrease of 21.6 % at current exchange rates, and of 27.3% at constant exchange rates.

Sales made in the graphic arts segment were Euro 0.8 million this quarter (or 28.3% of total sales reported for the quarter), and showed a decrease of 25.1% at current exchange rates, and of 31.1% at constant exchange rates, over the Euro 1.0 million figure reported for sales made in that segment in the fourth quarter of 2007.
Sales made in the digital print and electronic document markets were Euro 1.9 million this quarter (or 71.7% of total sales reported for the quarter), and showed a decrease of 20.1% at current exchange rates, and of 25.7% at constant exchange rates, over the Euro 2.4 million figure reported for sales made in the same market segments in the fourth quarter of 2007.
The decrease in the latter two segments is predominantly due to an unfavorable comparison base with the fourth quarter of 2007 when the Company recognized a total of Euro 0.9 million in revenue pursuant to the three contracts it had announced in November 2006, compared with Euro 0.4 million this quarter, or an unfavorable variance of Euro 0.5 million.

Total operating expenses amounted to Euro 2.7 million in Q4 2008, compared with Euro 2.3 million in Q4 2007, and  included bad debt expenses for Euro 0.1 million.

The Company reported a nominal operating loss this quarter (or a loss equivalent to 2.1% of this quarter’s sales), compared with an operating profit of Euro 1.1 million in Q4 2007 (or 31.5% of Q4 2007 sales).

The Company reported an adjusted operating loss (or EBITA, as defined in the accompanying table) of Euro 0.3 million for this quarter, compared with an adjusted operating profit of Euro 0.6 million in Q4 2007. Accordingly, EBITA margin was -11.2 % of quarterly sales this quarter compared with 16.7% of sales in Q4 2007.

The Company reported a nominal adjusted pre-tax loss (as defined in the accompanying table) for this quarter, compared with an adjusted pre-tax profit of Euro 0.7 million in Q4 2007. Accordingly, adjusted pre-tax EPS was a loss of Euro 0.00 per share this quarter, compared with a profit of Euro 0.06 per share in Q4 2007.

The net result was a loss of Euro 0.2 million this quarter (or a net loss of Euro 0.02 per share), compared with a nominal net profit for Q4 2007, that equated to Euro 0.00 per share.

Consequently, the Company reported an adjusted net loss (as defined in the accompanying table) of Euro 0.4 million for this quarter (or an adjusted net loss of Euro 0.04 per share), identical to the adjusted net loss reported for Q4 2007 (or an adjusted loss of Euro 0.03 per share).

Full year performance
Sales for the year 2008 were Euro 11.2 million (Euro 12.0 million at 2007 rates) compared with Euro 16.4 million in 2007, or a decrease of 31.8 % at current exchange rates, and of 26.8% at constant exchange rates.

Sales for 2008 into the Company’s graphic arts market were Euro 3.7 million and showed a 29.9 % decline at current exchange rates and a 23.5 % decline at constant exchange rates over 2007.
Sales into new market segments, namely digital print and electronic document technologies, were Euro 7.4 million this year (66.4% of 2008 sales) and decreased 32.7% at current exchange rates and 28.4% at constant exchange rates with 2007. The decrease in these segments is predominantly due to an unfavorable comparison base with 2007 when the Company recognized a total of Euro 4.0 million in revenue with respect to the three contracts it had announced in November 2006, compared with Euro 0.9 million in the year ended 31 December 2008, or an unfavorable variance of Euro 3.2 million.

Total operating expenses amounted to Euro 10.8 million in 2008, compared with  Euro 10.6 million in 2007, and included Euro 0.2 million of bad debt expenses which were recorded in the second half of the year, and Euro 0.5 million of non-recurring expenses relating to the January 2008 redundancy plan and the June 2008 replacement of James Freidah by Gary Fry as the Company’s CEO, which were recorded in the first half of the year.

The Company reported a nominal operating loss in 2008 (or a loss equivalent to 0.8% of 2008 sales) compared with an operating profit of Euro 5.2 million in 2007 (or 32.0% of 2007 sales).

The Company reported an adjusted operating loss of Euro 0.3 million for 2008 (or a loss equivalent to 2.7 % of 2008 sales) compared with an adjusted operating profit of Euro 3.0 million in 2007 (or 18.2 % of 2007 sales).

Adjusted pre-tax profit was Euro 0.2 million for 2008 (or Euro 0.02 per share), compared with an adjusted pre-tax profit of Euro 3.0 million for 2007 (or Euro 0.30 per share).

The Company reported a net loss of Euro 0.6 million for 2008 (or a net loss of Euro 0.06 per share) compared with a net profit of Euro 3.3 million for 2007 (or a net profit of Euro 0.32 per share).

The Company reported an adjusted net loss of Euro 0.6 million for 2008 (or a loss of Euro 0.06 per share), compared with an adjusted net profit of Euro 2.0 million for 2007 (or a profit of Euro 0.20 per share).

Concluding remarks
Gary Fry added: “2008 was a year of considerable investment in new technologies and new routes to market to further expand our customer base and revenue opportunities during which we managed not only to maintain our financial position as planned, but also to increase our cash position significantly.
“Though it had a detrimental effect on the reported value of our sales, the significant change in the exchange rates helped us achieve this goal towards the latter part of the year and will continue to help us during 2009 as our cost base is very much biased toward the British pound and our revenue profile is biased toward the US dollar.
“Clearly the global recession continues to be a concern for us, our customers and our partners. Despite the difficult economic conditions, we believe that with the development of our new market areas and a number of very important deals that are currently in progress across all market segments, we are well positioned to achieve some growth during 2009.”

Fourth quarter and full year 2008 conference call details
Global Graphics will hold a conference call today at 10.00 CET about its results for the quarter and the year ended 31 December 2008. Callers should dial +44 (0)1452 555 566 and mention "Global Graphics financial results" or conference call ID 85017508 to the operator.  The call will be available for replay for 7 working days by dialing number +44 (0)1452 550000 (freephone number UK only: 0800 953 1533), access code 85017508#.

Auditors’ reports on the 2008 Company’s accounts
The attached condensed consolidated financial statements and selected explanatory notes, which were drafted by the Company’s Board of Directors on 10 February 2009, have been audited by the Company’s auditors, and are therefore final.
The Company’s auditors still have additional audit procedures to perform, including, but not limited to, the Company’s statutory accounts and reports, as well as the full version of the notes attached to the Company’s consolidated accounts.
As in previous years, their audit reports will be included in the Company’s annual report for the year ended 31 December 2008.

2008 annual report
The Company expects to publish the electronic versions of its annual report (in English and in French) on or around 27 March 2009. Printed copies of the English and French reports will be available shortly thereafter. Should you wish to receive one or several copies of the Company’s annual report for 2008, please let us know by sending an e-mail to the following e-mail address: investor-relations@globalgraphics.com, or a request in writing to the registered office of the Company.

First quarter 2009 results announcement
Global Graphics expects to announce its financial results for the quarter ending 31 March 2009 on Friday 24 April 2009 before market opening.

Annual meeting of the Company’s shareholders
Global Graphics expects to hold its annual meeting on Friday 24 April 2009 in Brussels (Belgium). The precise timing, agenda, proposed resolutions and voting procedures will be announced a minimum of 35 days in advance.

Editors notes

About Global Graphics

Global Graphics (http://www.globalgraphics.com) is a leading developer of e-document and printing software. It provides high-performance solutions to the graphic arts/commercial print and digital print markets and for knowledge worker and professional software applications.  The Company’s customers include Original Equipment Manufacturers (OEMs), system integrators, software developers and resellers and number the world’s leading brands of digital pre-press systems, large-format color printers, color proofing systems, digital copiers and printers for the corporate and SOHO (Small Office / Home Office) markets, as well as a wide variety of market leading software applications.

Forward-looking statements
This press release contains, in addition to historical information, forward-looking statements that involve risks and uncertainties. These include statements regarding the Company’s growth, funding, expansion plans and expected results for future periods. Such statements are based on management’s current expectations and are subject to a number of uncertainties and risks that could cause actual results to differ materially from those described in the forward-looking statements. Although management believes that their expectations reflected in the forward-looking statements are reasonable based on information currently available to them, they cannot assure any reader that the expectations will prove to have been correct. Accordingly, any reader should not place undue reliance on these forward-looking statements. In any event, these statements speak only as of the date of this release. The Company undertakes no obligation to revise or update any of these statements neither to reflect events or circumstances after the date of this release, nor to reflect new information nor the occurrence of unanticipated events.

Contact

Alain Pronost, CFO
Tel: + 33 (0)6 62 60 56 51

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