RNS Number:1593Z
Nipson Digital Printing Systems PLC
02 March 2006
NIPSON DIGITAL PRINTING SYSTEMS PLC
2 March 2006
PRELIMINARY RESULTS FOR THE YEAR ENDED 31 DECEMBER 2005
Nipson Digital Printing Systems PLC ("Nipson" or "the Group"), the manufacturer
and distributor of digital printing systems and consumables, today announces its
results for the 12 months to 31 December 2005.
------------- -------------
Year to Year to
31 December 2005 31 December 2004
#'000 #'000
--------------------- ------------- -------------
Turnover 29,320 28,485
--------------------- ------------- -------------
Gross profit 7,070 9,453
--------------------- ------------- -------------
Operating profit (3,937) 23
--------------------- ------------- -------------
Profit/(loss) on ordinary activities
before taxation (4,137) (961)
The platform for profitable growth has now been laid:
*Equipment sales of #11.3m in 2005 increased 24% (2004: #9.1m)
*Results adversely affected by #2.0m of "one-off" costs
*Strong start to 2006, with growth in equipment sales and return to
profitability expected for full year
*Previous trend of decline in recurrent revenues reversed
*Effect of cost savings programmes coming through, with #1.5m impact on
the second half of 2006 (#3.5m on an annualised basis)
"2005 was a year of consolidation for the Group and the Board believes it has
established a platform for a return to profitability. Our growth strategy of
increasing the capacity of the installed machine base and thereby expanding the
recurrent revenues, remains unaltered. For 2006 we expect lower operating costs
and are encouraged by the rise in equipment sales in the first two months of the
year. This positive start to the year should continue, aided by various sales
initiatives, with all the benefits of recurrent revenues from an expanding, more
profitable and newer installed machine base".
Rimon Ben-Shaoul
Chairman
For further information, please contact:
Nipson Digital Printing Systems PLC
Alfons Buts, Managing Director - Tel: + 32 3 740 02 05
Robert Cahill, Group Finance Director - Tel: +33 (0)384 54 52 50
Bankside Consultants Ltd
Ian Seaton / Simon Bloomfield - Tel: +44 (0)20 7367 8888
CHAIRMAN'S STATEMENT
Overview
Turnover for the twelve months to 31 December 2005 was #29.3m, an increase of 3%
over the same period last year (2004: #28.5m). Equipment sales, at #11.3m, were
up by more than 24% (2004: #9.1m). The lower growth in sales in comparison to
the first half of 2005 was due to delays in finalising contracts. Since the
introduction of its new generation machines, the Group has started to target
larger customers and new market segments, requiring multiple machine
installations leading to higher print volumes. This repositioning of the
business is protecting the Group from a decline in its traditional markets. The
repositioning has taken time, but will benefit the Group in 2006. The sales to
these new, larger customers typically take longer due to the level of customer
investment and the complexity of the operations. These delays will be more than
made up for by the anticipated higher sales in the first half of 2006.
Recurrent revenues for 2005 of #18.0m were 7% down on the prior year (2004:
#19.4m). Although at #4.5m in the fourth quarter of 2005, they were lower than
in the comparative period of 2004, they were higher than the third quarter and
confirm that the previous trend of a decline in recurrent revenues has now been
reversed. This drop in recurrent revenues is partly due to old "entry level"
machines being replaced earlier than expected but also to the time required for
the repositioning of the business. In addition, the latest, more robust, Nipson
models use less spares while using more consumables due to higher print volumes.
We expect to see recurrent revenues improving based on the machines shipped and
installed recently.
Gross profit for the full year to 31 December 2005 was #7.1m, a drop of 25%
compared to last year (2004: #9.5m). Gross margins decreased to 24% compared to
33% for last year. This decline was caused by a number of factors: the Euro / US
dollar exchange rate; price competition from refurbished machines offered by
competitors in our traditional target markets; and "one-off" costs items (see
below). This supports the Board's decision to reposition the business, enabling
the Group to exploit the technological advances, speed and improved image
quality that both new VaryPress machines offer customers in the "high-end" and
"mainstream" markets.
Growth Strategy
The last three months have seen record levels of firm orders coming from a
strong and expanding project pipeline. The Group continues to make significant
progress in key geographic markets, notably North America where the initiatives
taken in 2005 should be reflected in strong sales throughout 2006. We expect our
partnerships with new distributors, such as Pitman and Kodak, to take us into
new market segments. The United States Postal Service has purchased a second
printing line and one of our existing customers has given us an order of nearly
#1m to replace a competitor's machines. Both of these orders are for delivery in
the first quarter of 2006.
The installed base in Latin America continues to grow with our new Brazilian
distributor securing its first major contract for two "high-end" machines.
Additional distributors have been appointed for the Mediterranean basin. The
Asian "hub" office, opened in Singapore in the second half of 2005, is now well
established. The first sale for some years was made in India and sales into
China continue to grow.
Operating Results
The operating loss for 2005 was #3.9m (2004: profit of #23,000). The loss before
tax in 2005 was #4.1m compared to a loss of #1.0m for 2004. This operating loss
includes "one-off" costs of more than #2m comprising: marketing expenses; patent
court case proceedings; the writing-off of stock relating to spares for older
machines; and adjustments to standard stock costs.
Cash balances were #2.3m as of 31 December 2005 (2004: #4.6m). During the year,
stocks increased from #7.7m to #10.5m, principally in finished goods produced
for delivery against order, including the major multiple machine orders in early
2006. As a result of the strong sales expected in the first half of the year,
stock levels will decrease over the coming months.
Nipson's major shareholder, Polar Communications, supplemented the Group's bank
financing by providing a discounting facility of #1.6m at market rates. The
Group has also executed and granted a corporate guarantee to Banca Regionale
Europea in Italy in connection with credit lines totalling #2.7m provided to its
wholly owned subsidiary Nipson Italia Srl. The total amount outstanding under
these credit lines as of 31 December 2005 was approximately #1.6m.
Cost Reduction Programme
The extensive cost reduction and efficiency programmes, especially the new
writing heads, are showing significant progress. The new writing heads have
performed well under full production test conditions. Major savings are expected
to be effective from the third quarter, as previously reported, to yield more
than #1.5m of savings in 2006 and an additional #2m in 2007 (totalling #3.5m on
an annualised basis). The Board has also recently appointed an experienced
manager, formerly with Hewlett Packard, to work on improving the Group's
procurement processes.
We continue to look for ways to reduce costs and improve operational efficiency.
The Group will maintain the high level of expenditure on Research & Development
which is essential to the Group's strategic development and growth.
Board Appointment
It was decided on the 1st March 2006 to appoint Robert Cahill, the Group's
Finance Director, to the Board of Directors of Nipson Digital Printing Systems
PLC.
Prospects
2005 was a year of consolidation for the Group and the Board believes it has
established a platform for a return to profitability. Our growth strategy of
increasing the capacity of the installed machine base and thereby expanding the
recurrent revenues, remains unaltered. For 2006 we expect lower operating costs
and are encouraged by the rise in equipment sales in the first two months of the
year. This positive start to the year should continue, aided by various sales
initiatives, with all the benefits of recurrent revenues from an expanding, more
profitable and newer installed machine base.
Rimon Ben-Shaoul
Chairman
Nipson Digital Printing Systems PLC
NIPSON DIGITAL PRINTING SYSTEMS PLC
Preliminary Results for the Year Ended 31 December 2005
CONSOLIDATED PROFIT AND LOSS ACCOUNT
---------- ----------
Full Year Full Year
to 31 to 31
December December
2005 2004
#'000 #'000
---------- ----------
Turnover 29,320 28,485
Cost of Sales (22,250) (19,032)
-------------------------- ---------- ----------
Gross Profit 7,070 9,453
Administrative Expenses (11,016) (9,490)
Other Operating Income 9 60
-------------------------- ---------- ----------
Operating (Loss)/Profit (3,937) 23
Exceptional Item 124 (569)
-------------------------- ---------- ----------
(Loss) on Ordinary Activities before interest (3,813) (546)
Interest (Payable)/Receivable and similar charges (324) (415)
-------------------------- ---------- ----------
(Loss) on Ordinary Activities before taxation (4,137) (961)
Taxation (24) 0
-------------------------- ---------- ----------
(Loss) on Ordinary Activities after taxation (4,161) (961)
Dividends Payable 0 0
-------------------------- ---------- ----------
Retained (Loss) for Period (4,161) (961)
-------------------------- ---------- ----------
Earnings per Ordinary Share (8.3p) (3.3p)
-------------------------- ---------- ----------
Turnover and operating profit/ (loss) all derive from continuing operations.
NIPSON DIGITAL PRINTING SYSTEMS PLC
Preliminary Results for the Year Ended 31 December 2005
CONSOLIDATED BALANCE SHEET
---------- ----------
As at 31 As at 31
December December
2005 2004
#'000 #'000
---------- ----------
Fixed Assets
Intangible Assets 635 733
Tangible Assets 4,352 4,643
-------------------------- ---------- ----------
4,987 5,376
-------------------------- ---------- ----------
Stock 10,513 7,692
Debtors 9,672 6,736
Short Term Investments 936 0
Cash at Bank 1,355 4,595
-------------------------- ---------- ----------
22,476 19,023
Creditors: amounts falling due within one year (13,348) (8,769)
-------------------------- ---------- ----------
Net Current Assets 9,128 10,254
Total Assets less Current Liabilities 14,115 15,630
-------------------------- ---------- ----------
Creditors: amounts falling due after more than one year (3,995) (6,414)
Provisions for Liabilities and Charges (626) (609)
-------------------------- ---------- ----------
Net Assets 9,494 8,607
-------------------------- ---------- ----------
Capital and Reserves
Called-up Share Capital 3,580 3,500
Other Reserves 5,914 5,107
-------------------------- ---------- ----------
Equity Shareholders Funds 9,494 8,607
-------------------------- ---------- ----------
Approval by the Board of Directors on Wednesday 22 February 2006.
Alfons BUTS Ken LALO
NIPSON DIGITAL PRINTING SYSTEMS PLC
Preliminary Results for the Year Ended 31 December 2005
CONSOLIDATED CASH FLOW STATEMENT
Year to Year to
31 December 31 December
2005 2004
#'000 #'000
Net Cash (Outflow) from Operating Activities (8,756) (4,435)
Returns on Investments and Servicing of Finance
Interest Paid (324) (414)
Taxation (24) 0
Capital Expenditure and Financial investment
Purchase of Tangible Fixed Assets (254) (225)
---------- ----------
Cash (Outflow) before Liquid Resources and
Financing (9,358) (5,074)
Financing
New Debt 1,172 1,912
Increase in Loan from Parent Undertaking 1,606 0
Loan Repayments (985) (1,375)
Capital Repayments on Finance Leases (289) (438)
Proceeds of Share Issue 5,550 8,588
---------- ----------
Net Cash Inflow for Financing 7,054 8,687
---------- ----------
(Decrease)/ Increase in Cash in Period (2,304) 3,613
========== ==========
Reconciliation of Net Cash Flow to Net Debt
movement
(Decrease)/ Increase in Cash in Period (2,304) 3,613
(Increase) in Debt and Lease Financing (1,505) (109)
---------- ----------
Change in Net Debt resulting from Cash Flows (3,809) 3,504
Translation Difference 246 553
Movement in (Debt) in Period (3,563) 4,057
Opening Net Debt (4,992) (9,049)
---------- ----------
Closing Net Debt (8,555) (4,992)
========== ==========
NIPSON DIGITAL PRINTING SYSTEMS PLC
Preliminary Results for the Year Ended 31 December 2005
RECONCILIATION OF MOVEMENT IN EQUITY SHAREHOLDERS' FUNDS
Year to Year to
31 December 31 December
2005 2004
#'000 #'000
Retained (Loss) for the Period (4,161) (961)
Translation Adjustments on Foreign Currency Net
Investments (502) 127
Proceeds of Share Capital Issued 80 143
Premium on Shares Issued in the year 5,470 8,445
---------- ----------
Net Increase in Shareholder Funds 887 7,754
Equity Shareholder Funds at Start of Period 8,607 853
---------- ----------
Equity Shareholders' Funds at 31 December 2005 9,494 8,607
========== ==========
NIPSON DIGITAL PRINTING SYSTEMS PLC
Preliminary Results for the Year Ended 31 December 2005
NOTES
1. Nature of financial information
The financial information in this announcement does not constitute statutory
accounts as defined in Section 240 of the Companies Act 1985, but is derived
from the 2005 accounts which the auditors have indicated that they intend to
give an unqualified opinion. The auditors have reported on the 2004 accounts,
their report was unqualified and did not contain any statement under section 237
(2) or (3) of the Companies Act 1985. Copies of the Group's Report & Accounts
will be sent to shareholders shortly and will be available from the Group's
registered office at 110 Cannon Street, London EC4N 6AR.
2. Accounting Policies
The results have been prepared in accordance with the accounting policies
adopted for the last audited accounts, being the financial statements to 31
December 2004.
3. Contingent liabilities
Certain entities within the Group were sued before the German courts for alleged
infringement of six patents. Following a hearing before the court of first
instance the court held in favour of the Group in regard to three patents and in
favour of the plaintiff in regard to three other patents, one of which had
expired in December 2004. Both the Group and the plaintiff filed respective
appeals. In parallel, complaints seeking to annul the two patents decided by the
lower court in favour of the plaintiff and which had not expired have been filed
by the Group before another German court with hearings during 2006.
While the outcome of such proceedings cannot be predicted, the Group and its
outside intellectual property counsel believe that the Group has a reasonable
basis to believe that it should be successful in the proceedings.
4. Dividends
The directors do not recommend the payment of a final dividend (2004: Nil).
5. Earnings/Loss per Ordinary Share
The Earnings/Loss per Ordinary Share is calculated on the weighted average
number of ordinary shares in issue during the year of 50,326,573 (2004:
29,135,202).
This information is provided by RNS
The company news service from the London Stock Exchange
END
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