RNS Number:9257C
Nipson Digital Printing Systems PLC
15 May 2006
NIPSON DIGITAL PRINTING SYSTEMS PLC
15 May 2006
RESULTS FOR THE 3 MONTHS ENDED 31 MARCH 2006
Nipson Digital Printing Systems PLC ("Nipson" or "the Group"), the manufacturer
and distributor of digital printing solutions and consumables, today announces
its results for the 3 months to 31 March 2006.
---------- ------- ---------- ---------
3 months to 31 March 2006 Change 3 months to 31 March 2005 Year to 31 December 2005
Unaudited +/-% Unaudited Audited
#'000 #'000 #'000
----------------- ---------- ------- ---------- ---------
Turnover 8,555 +10.2 7,762 29,320
----------------- ---------- ------- ---------- ---------
Gross profit 2,142 -22.6 2,770 7,070
----------------- ---------- ------- ---------- ---------
Operating
(loss)/profit (459) 138 (3,937)
----------------- ---------- ------- ---------- ---------
(Loss)/profit on
ordinary activities
before taxation (620) 55 (4,137)
----------------- ---------- ------- ---------- ---------
*Strong start to 2006, with growth in equipment sales and recurrent
revenues;
*Equipment sales increased by 24% compared to the same period in 2005 to a
record level for a quarter of #3.9m;
*Recurrent revenues increased by 2% compared to the same period in 2005;
* Return to profitability delayed by unexpected higher costs on
Maintenance and Service;
*The cost savings programmes are on track with expected savings in the
second half of #1.5m (giving #3.5m on an annualised basis in 2007).
"The first quarter results confirm the progress made in 2005. Strong equipment
sales, the continuing reversal of the decline in the recurrent revenues and the
advances made on the cost reduction programmes have all contributed and we
expect this trend to continue."
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 - Tel: +44 (0)20 7367 8891
CHAIRMAN'S STATEMENT
Overview
Turnover for the three months to 31 March 2006 was #8.6m, an increase of more
than 10% over the same period last year (2005: #7.8m).
Equipment sales at #3.9m for the period, were up by more than 24% (2005: #3.1m),
building further on the 24% annual increase for 2005 compared to 2004. This
growth comes from stronger sales in the Americas and from successful penetration
of new market segments with higher growth rates. In particular, sales into Print
On Demand / Book On Demand continue to increase and now represent Nipson's
fourth target segment, which is growing more rapidly than the Group's other
three traditional markets. Higher equipment sales are expected to continue
through the second quarter of 2006.
Recurrent revenues for the three months to 31 March at #4.7m were 2% up both on
last year (2005: #4.6m) and on the last quarter of 2005, confirming, as
forecast, moderate growth.
Gross profit for the three months to 31 March 2006 was #2.1m, a drop of 23%
compared to last year (2005: #2.8m). This decline in gross profit was caused
mainly by unexpectedly high costs related to spares usage in Maintenance &
Service. This temporary situation is being addressed.
Growth Strategy
As a result of expanded geographical coverage and penetration into the Print On
Demand / Book On Demand markets, the pipeline of active sales projects has now
grown for a number of quarters. The strategy remains to increase the installed
base of machines which will lead to an expansion of recurrent revenues.
The Group continues to make significant progress in North America with around
50% of the equipment sales this quarter coming from the US, including an extra
production line at the United States Postal Services. Transcontinental Inc., the
seventh largest printer in North America, installed six VaryPress 200s in their
direct mail facility in Philadelphia. This installation adds to their current
six Nipson 8000s. Our partnerships with distributors which have extensive sales
coverage in the US, such as Pitman and Kodak, are beginning to show results.
RR Donnelley, the largest commercial printing group in the world, has installed
a second book production line in their Harrisonburg (Virginia) plant. It shows
what the VaryPress 400 is capable of: high productivity, lower cost per page,
lower inventory and more flexibility, all demonstrating how digital book
production is bringing substantial changes to the publishing business. Printers
can now produce shorter and more frequent runs for advance copies, back list
titles and small runs (500 to 2000 copies).
We have recently signed an OEM contract to supply the VaryPress 400 to Muller
Martini, a Swiss-based world leader in finishing solutions for the printing
industry, who will sell the VaryPress 400 as the digital printing component of
their Sigma Line, an automated digital book production solution. This new
distribution channel is a key component of our strategy to expand into the Book
On Demand market.
The IPEX show in the UK last month provided not only a good level of additional
contacts but also stimulated interest from commercial printers, especially for
our high-end solutions. Biddles, a leading UK book printer, stated during a
press conference at IPEX that their new and innovative business model,
"Publisher's Choice", relies on Nipson technology.
Operating Results
The operating loss for the three months to 31 March 2006 was #0.5m (2005: profit
of #0.1m). The loss before tax was #0.6m (2005: profit of #0.1m). The operating
loss was mainly due to poor margins in Maintenance & Service, which is being
addressed. The cost saving programmes are on track for the year. The patent
court case cost a further #60,000 in the quarter (see the update in Note 3).
As of 31 March 2006, cash balances were #2.3m (the same as at 31 December 2005).
Stocks decreased at the end of March to #9.6m (#10.5m December 2005) with the
decrease being off-set by the need to take in raw materials for second quarter
sales orders.
Nipson's major shareholder, Polar Communications, continued to supplement the
Group's bank financing by providing a discounting facility at market rates
(currently at #2.7m). The Group has maintained the corporate guarantee to Banca
Regionale Europea in connection with credit lines totalling #2.7m (not fully
utilised) provided to Nipson's subsidiary in Italy. The partial repayment of a
long term loan was rescheduled.
Cost Reduction Programme
The cost reduction and efficiency programmes, including the new writing heads,
have shown significant progress. The new writing heads continue to perform well
under full production test conditions. As previously reported, major savings are
expected to be effective from the third quarter to yield more than #1.5m of
savings in 2006 and an additional #2m in 2007 (totalling #3.5m on an annualised
basis).
Going Forward
The first quarter results confirm the progress made in 2005. Strong equipment
sales, the continuing reversal of the decline in the recurrent revenues and the
advances made on the cost reduction programmes have all contributed and we
expect this trend to continue.
Rimon Ben-Shaoul
Chairman
Nipson Digital Printing Systems PLC
NIPSON DIGITAL PRINTING SYSTEMS PLC
Unaudited results for the three months ended 31 March 2006
CONSOLIDATED PROFIT AND LOSS ACCOUNT
----------------------- ----------- ----------- ----------
3 months 3 months Full Year
to 31 to 31 to 31
March March December
2006 2005 2005
(unaudited) (unaudited) (audited)
#'000 #'000 #'000
----------------------- ----------- ----------- ----------
Turnover 8,555 7,762 29,320
Cost of Sales (6,413) (4,992) (22,250)
----------------------- ----------- ----------- ----------
Gross Profit 2,142 2,770 7,070
Administrative Expenses (2,687) (2,706) (11,016)
Other Operating Income 86 74 9
----------------------- ----------- ----------- ----------
Operating (Loss)/Profit (459) 138 (3,937)
Exceptional Item 0 0 124
----------------------- ----------- ----------- ----------
(Loss)/Profit on Ordinary Activities
before interest (459) 138 (3,813)
Interest (Payable)/Receivable and
similar charges (161) (83) (324)
----------------------- ----------- ----------- ----------
(Loss)/Profit on Ordinary Activities
before taxation (620) 55 (4,137)
Taxation 0 0 (24)
----------------------- ----------- ----------- ----------
Retained(Loss)/Profit on Ordinary
Activities after taxation (620) 55 (4,161)
----------- ----------- ----------
Turnover and operating (loss)/profit all derive from continuing operations.
NIPSON DIGITAL PRINTING SYSTEMS PLC
Unaudited results for the three months ended 31 March 2006
CONSOLIDATED BALANCE SHEET
-------------------------- ----------- ----------
As at 31 As at 31
March December
2006 2005
(unaudited) (audited)
#'000 #'000
-------------------------- ----------- ----------
Fixed Assets
Intangible Assets 627 635
Tangible Assets 4,352 4,352
-------------------------- ----------- ----------
4,979 4,987
-------------------------- ----------- ----------
Stock 9,572 10,513
Debtors 11,011 9,672
Short Term Investments 1,423 936
Cash at Bank 820 1,355
-------------------------- ----------- ----------
22,826 22,476
Creditors: amounts falling due within one year (14,706) (13,348)
-------------------------- ----------- ----------
Net Current Assets 8,120 9,128
Total Assets less Current Liabilities 13,099 14,115
-------------------------- ----------- ----------
Creditors: amounts falling due after more than one
year (3,844) (3,995)
-------------------------- ----------- ----------
Net Assets excluding pension deficit 9,255 10,120
Pension Deficit (630) (626)
-------------------------- ----------- ----------
Net Assets including pension deficit 8,625 9,494
-------------------------- ----------- ----------
Capital and Reserves
Called-up Share Capital 523 523
Share Premium Account 13,915 13,915
Reverse Acquisition Reserve 3,057 3,057
Foreign Exchange Reserve (459) (210)
Profit & Loss Account (8,411) (7,791)
-------------------------- ----------- ----------
Equity Shareholders Funds 8,625 9,494
-------------------------- ----------- ----------
Approval by the Board of Directors on Wednesday 10 May 2006.
Alfons BUTS Robert Cahill
NIPSON DIGITAL PRINTING SYSTEMS PLC
Unaudited results for the three months ended 31 March 2006
CONSOLIDATED CASH FLOW STATEMENT
3 months to Year to
31 March 31 December
2006 2005
(unaudited) (audited)
#'000 #'000
Net Cash (Outflow) from Operating Activities (650) (8,756)
Returns on Investments and Servicing of Finance
Interest Paid (161) (324)
Taxation 0 (24)
Capital Expenditure and Financial investment
Purchase of Tangible Fixed Assets (81) (254)
---------- ----------
Cash (Outflow) before Liquid Resources and Financing (892) (9,358)
Financing
New Debt 0 1,172
Increase in Loan from Parent Undertaking 1,084 1,606
Loan Repayments (166) (985)
Capital Repayments on Finance Leases (74) (289)
Proceeds of Share Issue 0 5,550
---------- ----------
Net Cash Inflow for Financing 844 7,054
---------- ----------
(Decrease) in Cash in Period (48) (2,304)
========== ==========
Reconciliation of Net Cash Flow to Net Debt
movement
(Decrease) in Cash in Period (48) (2,304)
(Increase) in Debt and Lease Financing (844) (1,505)
---------- ----------
Change in Net Debt resulting from Cash Flows (892) (3,809)
Translation Difference (80) 246
---------- ----------
Movement in (Debt) in Period (972) (3,563)
Opening Net Debt (8,555) (4,992)
---------- ----------
Closing Net Debt (9,527) (8,555)
========== ==========
=== ===
NIPSON DIGITAL PRINTING SYSTEMS PLC
Unaudited results for the three months ended 31 March 2006
RECONCILIATION OF MOVEMENT IN EQUITY SHAREHOLDERS' FUNDS
3 months to Year to
31 March 31 December
2006 2005
(unaudited) (audited)
#'000 #'000
Retained (Loss) for the Period (620) (4,161)
Translation Adjustments on Foreign Currency Net
Investments (249) (502)
Proceeds of Share Capital Issued 0 80
Premium on Shares Issued in the year 0 5,470
---------- ----------
Net (Decrease)/Increase in Shareholder Funds (869) 887
Equity Shareholder Funds at Start of Period 9,494 8,607
---------- ----------
Equity Shareholders' Funds at 31 March 2006 8,625 9,494
========== ==========
NIPSON DIGITAL PRINTING SYSTEMS PLC
Unaudited results for the three months ended 31 March 2006
NOTES
1. Nature of financial information
The financial information contained with-in this interim report has been
prepared in accordance with UK GAAP and is unaudited. It does not constitute
statutory accounts with-in the meaning of section 240 of the Companies Act 1985.
2. Accounting Policies
The interim results have been prepared in accordance with the accounting
policies adopted for the last audited accounts, being the financial statements
to 31 December 2005.
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 during December 2004. Both the Group and the plaintiff filed respective
appeals which are expected to be heard in 2006. In parallel, complaints seeking
to annul the two patents decided by the lower court in favour of the plaintiff
and which had not expired were filed by the Group before another German court
dealing with nullity issues. One of the nullity actions was heard by the court
on 8 March 2006 and it decided in favour of the Group. The plaintiff has
appealed against this decision. The second nullity action is expected to be
heard 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.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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