Global Graphics reports fourth quarter and full year 2010 results

GLOBAL GRAPHICS SA (NYSE-Euronext: GLOG), experts in developing e-document and printing software, announces consolidated results for the quarter and the year ended 31 December 2010.

Comparisons for the quarter ended 31 December 2010 with the same quarter of the previous year include:

  • sales of Euro 2.8 million this quarter (Euro 2.6 million at Q4 2009 exchange rates) compared with Euro 2.2 million in Q4 2009;
  • an operating profit of Euro 0.3 million this quarter, compared with an operating loss of Euro 0.5 million in Q4 2009;
  • an adjusted operating profit of Euro 0.5 million this quarter, compared with an adjusted operating loss of Euro 0.3 million in Q4 2009;
  • an adjusted pre-tax profit of Euro 0.6 million this quarter (or an adjusted pre-tax profit of Euro 0.05 per share), compared with an adjusted pre-tax loss of Euro 0.3 million in Q4 2009 (or an adjusted pre-tax loss of Euro 0.03 per share);
  • a net profit of Euro 0.1 million this quarter (or a net profit of Euro 0.01 per share), compared with a net loss of Euro 0.1 million in Q4 2009 (or a net loss of Euro 0.01  per share);
  • an adjusted net profit this quarter of Euro 0.2 million (or an adjusted net profit of Euro 0.02 per share), compared with a nominal adjusted net profit in Q4 2009 (or an adjusted net profit of Euro 0.00 per share); and
  • a positive cash flow of Euro 0.9 million for this quarter, compared with a negative cash flow of Euro 0.1 million for the same quarter of 2009.

Commenting on performance, Gary Fry, Chief Executive Officer, said: “I am very pleased by our performance in the fourth quarter of 2010. We are now seeing the benefit of our lower expense base and healthier sales. In fact, the fourth quarter was a very exciting quarter in all three segments of our business. On the commercial printing side, HP remains a very supportive partner.  In addition to our work with HP Indigo, we are now supplying software to drive the newly announced range of colour inkjet web presses.  This series, which can print up to 600 feet per minute, can be powered by the HP digital front end that uses our high-performance Harlequin RIP. We are very excited by this development and believe that this will continue to add significant revenue growth to our commercial printing segment.

“In the office printing segment we worked hard with our partner Intel® on a radical new way of printing Microsoft Office and PDF documents from any device, mobile or fixed, without the need of a cloud infrastructure or printer drivers. We have created a proof of concept that demonstrates that we can deliver exceptional quality and speed.  As more office workers use a greater range of devices to access information – such as Smartphones, tablets and slates – so demand to print high-quality office documents while on the move is increasing. Our technology will make it much easier for people to print in the future.

“In line with our strategy we have been working on creating more white label and OEM opportunities for our gDoc range of electronic document applications.  In the fourth quarter we signed our first major OEM customer for gDoc in Japan and this resulted in significant revenue in the fourth quarter. We are working closely with a number of other major partners on various gDoc white label deals that we expect to deliver a strong revenue growth path in this segment. ”

Fourth quarter 2010 performance
Sales for the quarter amounted to Euro 2.8 million, compared with Euro 2.2 million for the same quarter of 2009, or a sequential increase of 27.8% at current exchange rates, and of 17.0% at constant exchange rates.

Total operating expenses (net of other operating income for Euro 0.1 million) amounted to Euro 2.4 million this quarter, compared with Euro 2.6 million for the same quarter of 2009.

The Company reported an operating profit of Euro 0.3 million for this quarter (or a profit equal to 11.9% of Q4 2010 sales), compared with an operating loss of Euro 0.5 million for the same quarter of 2009 (or a loss equal to 21.1% of Q4 2009 sales).

The Company reported an adjusted operating profit (or EBITA, as defined in the accompanying table) of Euro 0.5 million for this quarter, compared with an adjusted operating loss of Euro 0.3 million in the same quarter of 2009. Accordingly, EBITA margin was 17.6 % of sales in Q4 2010, compared with
-14.8 % of sales in Q4 2009.

The Company reported an adjusted pre-tax profit (as defined in the accompanying table) of Euro 0.6 million for this quarter, compared with an adjusted pre-tax loss of Euro 0.3 million for the same quarter of 2009. Accordingly, adjusted pre-tax EPS was a profit of Euro 0.05 in Q4 2010, compared with a loss of Euro 0.03 in Q4 2009.

The Company reported a net profit of Euro 0.1 million for this quarter (or a net profit of Euro 0.01 per share), compared with a net loss of Euro 0.1 million for the same quarter of 2009 (or a net loss of Euro 0.01 per share).

The Company reported an adjusted net profit (as defined in the accompanying table) for this quarter of Euro 0.2 million (or an adjusted net profit of Euro 0.02 per share), compared with a nominal adjusted net profit for the same quarter of 2009 (or an adjusted net profit of Euro 0.00 per share).

Full year 2010 performance

Sales for the year ended 31 December 2010 were Euro 9.6 million (Euro 9.1 million at 2009 rates) compared with Euro 9.4 million in the year ended 31 December 2009, or an increase of 2.6% at current exchange rates, but a decrease of 3.1% at constant exchange rates.

Sales in the Print segment of the Company’s business were Euro 7.9 million in 2010, compared with Euro 7.6 million in 2009, or an increase of 4.1% at current exchange rates, but a decrease of 0.9% at constant exchange rates.

Sales in the eDoc segment of the Company’s business were Euro 1.7 million in 2010, compared with Euro 1.8 million in 2009, or a decrease of 3.7% at current exchange rates, and of 12.3% at constant exchange rates.

Total operating expenses (net of other operating income for Euro 0.1 million) amounted to Euro 11.1 million in the year ended 31 December 2010, compared with Euro 10.4 million in the year ended 31 December 2009.

The Company reported an operating loss of Euro 1.9 million in the year ended 31 December 2010 (or a loss equal to 19.9% of 2010 sales), compared with an operating loss of Euro 1.3 million in the year ended 31 December 2009 (or a loss equal to 14.3% of 2009 sales).

The Company reported an adjusted operating loss of Euro 1.2 million in the year ended 31 December 2010 (i.e. a loss equal to 12.4 % of 2010 sales), compared with an adjusted operating loss of Euro 1.5 million in the year ended 31 December 2009 (i.e. a loss equal to 16.4 % of 2009 sales).

The Company reported an adjusted pre-tax loss of Euro 1.4 million in the year ended 31 December 2010 (or an adjusted pre-tax loss of Euro 0.14 per share), compared with an adjusted pre-tax loss of Euro 1.6 million in the year ended 31 December 2009 (or an adjusted pre-tax loss of Euro 0.16 per share).

The Company reported a net loss of Euro 2.6 million in the year ended 31 December 2010 (or a loss of Euro 0.26 per share), compared with a net loss of Euro 1.6 million in the year ended 31 December 2009 (or a net loss of Euro 0.16 per share).

The Company reported an adjusted net loss of Euro 2.0 million in the year ended 31 December 2010 (or an adjusted net loss of Euro 0.19 per share), compared with an adjusted net loss of Euro 1.7 million in the year ended 31 December 2009 (or an adjusted net loss of Euro 0.17 per share).

Cash flow
The Company had a net cash position of Euro 1.9 million at 31 December 2010, compared with Euro 1.1 million at 30 June 2010, and Euro 3.1 million at 31 December 2009.  Net cash used by the Company’s operations was Euro 0.4 million in the year ended 31 December 2010 while net cash used in investing activities (through capital expenditures of computer equipment and capitalization of eligible development expenses) was Euro 1.1 million. The Company’s cash position improved in the second half of 2010 with a positive contribution of Euro 0.9 million, almost entirely made in the last quarter of 2010.
 
Concluding remarks
Gary Fry added: “The first half of 2010 was very tough for Global Graphics, but despite difficult trading conditions we managed to restructure the business to introduce key skills and resources that did not previously exist.  We also strengthened our technology platform in line with our strategy of delivering solutions based on a common platform into three different market segments. Each of those segments is now proven with new customers and growth opportunities. We were able to execute well in the second half of 2010: sales in that period showed an increase of 28.5% over sales reported for the first six months of 2010 and of 34.4% over sales reported for the last six months of 2009 with the Company returning to a largely profitable and cash-generating position, notably in the fourth quarter of 2010. I am proud of our employees and partners that have enabled us to do this.”

Fourth quarter and full year 2010 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 2010. Callers should dial +44 (0)20 7162 0025 and mention "Code 887408 – Global Graphics quarterly results" to the operator.  The call will be available for replay for 7 working days by dialing number +44 (0)20 7031 4064 (freephone number UK only: 0800 358 1867), access code 887408.

Auditors’ reports on the 2010 statutory and consolidated accounts
The attached condensed consolidated financial statements and selected explanatory notes, which were drafted by the Company’s Board of Directors on 8 February 2011, 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, the full version of the notes attached to the Company’s consolidated accounts, as well as all reports drafted by the Company’s Board of Directors with respect of the year ended 31 December 2010.  
As in previous years, their final audit reports will be included in the Company’s financial report for the year ended 31 December 2010.

First quarter 2011 results announcement
Global Graphics expects to announce its consolidated financial results for the quarter ending 31 March 2011 on Wednesday 27 April 2011 before market opening.

Annual meeting of the Company’s shareholders
Global Graphics expects to hold its annual meeting in Brussels (Belgium) in June. The precise timing, final agenda, proposed resolutions and voting procedures will be announced a minimum of 35 days in advance of meeting date in accordance with applicable provisions of French Company Law.

About Global Graphics
Global Graphics (http://www.globalgraphics.com) is a leading developer of OEM and white label software for printing and electronic document applications. The Company’s customers include the world’s leading brands of digital pre-press systems, digital production presses, large-format color printers, multi-function copiers and office printers, as well as a wide variety of market leading document management 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 them, neither to reflect events or circumstances after the date of this release, nor to reflect new information nor the occurrence of unanticipated events.

Editors notes

Contact

CFO Alain Pronost/Global Graphics
+33 3 83 49 45 08

Jill Taylor/Global Graphics
+44 1954 283074
Jill.Taylor@globalgraphics.com

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