RNS Number:4842H
Nipson Digital Printing Systems PLC
10 August 2006
NIPSON DIGITAL PRINTING SYSTEMS PLC
10 August 2006
RESULTS FOR THE 6 MONTHS ENDED 30 JUNE 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 6 months to 30 June 2006.
6 months to Change 6 months to Year to 31
30 June 2006 30 June 2005 December 2005
Unaudited +/-% Unaudited Audited
#'000 #'000 #'000
--------------------- -------- ------ -------- ---------
Turnover 16,856 +6.6% 15,802 29,320
--------------------- -------- ------ -------- ---------
Gross profit 4,499 -15.4% 5,319 7,070
--------------------- -------- ------ -------- ---------
Operating (loss)/profit (871) 146 (3,937)
--------------------- -------- ------ -------- ---------
(Loss)/profit on ordinary
activities before taxation (1,115) 88 (4,137)
--------------------- -------- ------ -------- ---------
* Equipment sales at #7.7m for the first 6 months were strong throughout
the period, especially in the United States despite the weak dollar;
* Recurrent sales improved compared to second half of 2005 and returned to
the same levels as first half of 2005, with higher margins in all sectors
during the second quarter of 2006;
* Gross margin in the second quarter at 28.4% was much better than the
first quarter (25%);
* Major contract won with French Treasury;
* Cost savings programmes on track to start contributing from September.
Rimon Ben-Shaoul, Chairman, commenting on the results, said the following:
"The recovery in the business has continued and we expect it to accelerate in
the second half. We have our strongest equipment order book ever. Recurrent
revenues will benefit from the continuing growth of the printing capacity of our
installed machine base. Finally, the effects of our cost saving programmes will
improve margins on both equipment and recurrent sales."
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 6 months to 30 June 2006 was #16.9m, an increase of 7% over the
same period last year. Turnover increased by 25% over the second half of last
year.
Equipment sales, at #7.7m for the period, increased by 16% over the comparative
period and were up by 61% over the second half of last year. This growth results
from a number of factors: the expanding geographical reach of the Company's
sales operations and the continued acceptance of our new product range as
evidenced by strong sales growth in the United States; good performances from
both Asia and Latin America; and the continuing growth of the Book-on-Demand
market. The sales increase in the United States included further orders for
high-end machines from our OEM partner, Kodak. After six installations in Q1
2006, a further two orders were also received from Transcontinental Inc., one of
the largest printers in North America.
In addition, Nipson won a tender in France to supply two VaryPress 400 machines
before the end of this year to La Direction Generale de la Comptabilite Publique
(DGCP), the French Government's Treasury Department. Under the terms of the
contract it is anticipated that DGCP will buy a further four production lines,
which is equivalent to eight machines. We estimate the equipment value of this
contract to be Euro10m over the next 3 years. This contract is expected to generate
exceptionally high print volumes and recurrent revenues.
The order book for the second half is very strong.
Recurrent revenues for the 6 months to 30 June 2006 were 5% ahead of the second
half of last year at #9.2m, although flat as compared to the comparative period
last year.
The maintenance business was profitable during the second quarter such that
losses which were incurred during the first quarter have been recovered to
achieve break even for the half year. We expect this business to continue to be
profitable throughout the second half.
Gross profit for the 6 months to 30 June 2006 was #4.7m, a decrease of 11.3%
over the comparative period last year; this was primarily caused by a sharp
decrease in the gross margin on the maintenance business. This decrease was due
to a specific set of conditions which are being addressed. Gross profit for the
6 months to 30 June 2006 represented a substantial increase over the gross
profit of #1.8m for the second half of last year which was exceptionally low and
which, as reported in the Company's release regarding the third quarter of 2005,
among other factors, included extra costs incurred on some larger projects
installed in previous quarters.
Gross margins for the 6 months to 30 June were 26.7%. The gross margin for the
second quarter was #2.4m at 28.4% compared to the first quarter of #2.1m at
25.0%. We anticipate that as the benefits of our cost reduction programme impact
in the second half, these margins will improve further.
Growth Strategy
As stated before, the strategy is both to expand the geographical reach of our
sales operations in all market segments and to increase the printing capacity of
our installed base of machines, with the consequent expansion of recurrent
revenues. Besides the US, we are pleased to report increasing sales particularly
in China via our Singapore hub and also in Brazil.
The Company's products are increasingly being adopted by customers with large
print volumes and accepted in the fast growing Book-on-Demand market where they
can produce shorter and more frequent runs for advance copies, back title lists
and small runs.
Operating Results
The operating loss for the 6 months to 30 June 2006 was #871,000 against a
profit of #146,000 for the corresponding period. The loss before tax was
respectively #1.1m compared to a profit of #88,000 with the difference primarily
due to decreased margins on maintenance business, patent litigation expenses and
higher financial expenses.
As at 30 June 2006 cash balances were #2.6m (#2.3m as at 31 December 2005). The
value of stocks at #9.7m was #0.8m lower than at the end of last year.
Nipson's major shareholder, Polar Communications, continued to supplement the
Company's bank financing by providing a discounting facility at market rates
(currently #3.4m).
The patent court case incurred expenses of a further #115,000 during the six
months (see Note 5).
Cost Reduction Programmes
The cost reduction and efficiency programmes remain on track, with our new
writing heads scheduled to be available from next month. We expect the various
on-going programmes to achieve the full level of #3.5m annual savings which we
have previously reported.
Going Forward
The recovery in the business has continued and we expect it to accelerate in the
second half. We have our strongest equipment order book ever. Recurrent revenues
will benefit from the continuing growth of the printing capacity of our
installed machine base. Finally, the effects of our cost saving programmes will
improve margins on both equipment and recurrent sales.
Rimon Ben-Shaoul
Chairman
Nipson Digital Printing Systems PLC
NIPSON DIGITAL PRINTING SYSTEMS PLC
Unaudited results for the six months ended 30 June 2006
CONSOLIDATED PROFIT AND LOSS ACCOUNT
6 months to 6 months to Full Year
30 June 30 June to 31 December
2006 2005 2005
#'000 #'000 #'000
------------------------ --------- --------- ---------
Turnover 16,856 15,802 29,320
Cost of Sales (12,357) (10,483) (22,250)
------------------------ --------- --------- ---------
Gross Profit 4,499 5,319 7,070
Administrative Expenses (5,451) (5,318) (11,016)
Other Operating Income 81 145 9
------------------------ --------- --------- ---------
Operating (Loss)/Profit (871) 146 (3,937)
Exceptional Item 0 0 124
------------------------ --------- --------- ---------
(Loss)/Profit on Ordinary Activities
before interest (871) 146 (3,813)
Interest (Payable)/Receivable and
similar charges (244) (58) (324)
------------------------ --------- --------- ---------
(Loss)/Profit on Ordinary Activities
before taxation (1,115) 88 (4,137)
Taxation 0 0 (24)
------------------------ --------- --------- ---------
Retained (Loss)/Profit on Ordinary
Activities after taxation (1,115) 88 (4,161)
------------------------ --------- --------- ---------
Earnings per Ordinary Share (2.1p) 0.2p (8.3p)
------------------------ --------- --------- ---------
Turnover and operating profit/ (loss) all derive from continuing operations.
The exceptional item in 2005 was the release of the excess provision on
re-organisation.
STATEMENT OF TOTAL RECOGNISED GAINS & LOSSES AND
RECONCILIATION OF MOVEMENT IN EQUITY SHAREHOLDERS' FUNDS
6 months to 6 months to Year to
30 June 30 June 31 December
2006 2005 2005
#'000 #'000 #'000
------------------------ --------- --------- ---------
Retained (Loss) for the Period after
taxation (1,115) 88 (4,161)
Translation Adjustments on Foreign
Currency Net Investments (214) (239) (502)
------------------------ --------- --------- ---------
Total Recognised Gains & Losses
relating to the period (1,329) (151) (4,663)
------------------------ --------- --------- ---------
NIPSON DIGITAL PRINTING SYSTEMS PLC
Unaudited results for the six months ended 30 June 2006
CONSOLIDATED BALANCE SHEET
As at 30 As at 30 As at 31
June June December
2006 2005 2005
#'000 #'000 #'000
------------------------ --------- --------- ---------
Fixed Assets
Intangible Assets 600 825 635
Tangible Assets 4,299 4,396 4,352
------------------------ --------- --------- ---------
4,899 5,221 4,987
------------------------ --------- --------- ---------
Current Assets
Stock 9,664 10,030 10,513
Debtors 11,133 9,276 9,672
Short Term Investments 1,417 - 936
Cash at Bank 1,185 4,740 1,355
------------------------ --------- --------- ---------
23,399 24,046 22,476
Creditors: amounts falling due within one
year (17,065) (10,097) (13,348)
------------------------ --------- --------- ---------
Net Current Assets 6,334 13,949 9,128
------------------------ --------- --------- ---------
Total Assets less Current Liabilities 11,233 19,170 14,115
------------------------ --------- --------- ---------
Creditors: amounts falling due after more
than one year (2,399) (4,760) (3,995)
------------------------ --------- --------- ---------
Net Assets excluding pension deficit 8,834 14,410 10,120
Pension Deficit (669) (581) (626)
------------------------ --------- --------- ---------
Net Assets including pension deficit 8,165 13,829 9,494
------------------------ --------- --------- ---------
Capital and Reserves
Called-up Share Capital 523 523 523
Share Premium Account 13,915 13,738 13,915
Reverse Acquisition Reserve 3,057 3,057 3,057
Foreign Exchange Reserve (424) 129 (210)
Profit & Loss Account (8,906) (3,618) (7,791)
------------------------ --------- --------- ---------
Equity Shareholders Funds 8,165 13,829 9,494
------------------------ --------- --------- ---------
Approved by the Board of Directors on Wednesday 9 August 2006.
Alfons Buts Robert Cahill
NIPSON DIGITAL PRINTING SYSTEMS PLC
Unaudited results for the six months ended 30 June 2006
CONSOLIDATED CASH FLOW STATEMENT
6 months 6 months Year to
to to 31
30 June 30 June December
2006 2005 2005
#'000 #'000 #'000
------------------------ --------- --------- ---------
Net Cash (Outflow) from Operating
Activities (1,027) (3,772) (8,756)
Returns on Investments and Servicing of
Finance (244) (58) (324)
Taxation 0 0 (24)
Capital Expenditure and Financial
Investment (142) (160) (254)
------------------------ --------- --------- ---------
Cash (Outflow) before Financing (1,413) (3,990) (9,358)
Financing 1,724 4,461 7,054
Translation Difference (326)
------------------------ --------- --------- ---------
(Decrease)/ Increase in Cash in Period 311 145 (2,304)
======================== ========= ========= =========
Reconciliation of Net Cash Flow to Net Debt
movement
(Decrease)/ Increase in Cash in Period 311 145 (2,304)
(Increase) in Debt and Lease Financing (1,724) 1,198 (1,505)
------------------------ --------- --------- ---------
Change in Net Debt resulting from Cash
Flows (1,413) 1,343 (3,809)
Translation Difference (159) 0 246
------------------------ --------- --------- ---------
Movement in (Debt) in Period (1,572) (1,343) (3,563)
Opening Net Debt (8,555) (4,992) (4,992)
------------------------ --------- --------- ---------
Closing Net Debt (10,127) (3,649) (8,555)
------------------------ --------- --------- ---------
NIPSON DIGITAL PRINTING SYSTEMS PLC
Unaudited results for the six months ended 30 June 2006
CONSOLIDATED CASH FLOW STATEMENT
Reconciliation of Operating
(loss)/profit to 6 months to 6 months to Year to
Net cash (outflow) from operating 30 June 30 June 31 December
activities 2006 2005 2005
#'000 #'000 #'000
------------------------ --------- --------- ---------
Operating (Loss)/Profit (871) 146 (3,937)
Exceptional cost/profit for
restructuring 0 0 124
Depreciation and amortisation 230 230 498
Decrease/(Increase) in stock 850 (2,338) (2,821)
(Increase) in debtors (1,461) (2,540) (3,539)
Increase/(Decrease) in creditors (162) 324 1,182
Increase/(Decrease) in provisions 387 406 (263)
------------------------ --------- --------- ---------
Net Cash (Outflow) from Operating
Activities (1,027) (3,772) (8,756)
======================== ========= ========= =========
CONSOLIDATED CASH FLOW STATEMENT
Analysis of Financing 6 months to 6 months to Year to
headed in Cash Flow Statement 30 June 30 June 31 December
2006 2005 2005
#'000 #'000 #'000
------------------------ --------- --------- ---------
Cash (Outflow) before Liquid
Resources and Financing (1,413) (3,990) (9,358)
Financing
New Debt 739 188 1,172
Increase in Loan from Parent
Undertaking 1,785 0 1,606
Loan Repayments (560) (866) (985)
Capital Repayments on Finance
Leases (240) (284) (289)
Proceeds of Share Issue 0 5,423 5,550
------------------------ --------- --------- ---------
Net Cash Inflow for Financing 1,724 4,461 7,054
Translation Difference (326)
------------------------ --------- --------- ---------
(Decrease)/ Increase in Cash
in Period 311 145 (2,304)
------------------------ --------- --------- ---------
STATEMENT OF NET FUNDS/(DEBT)
As at Cash Other Exchange As at
1 January Flow Non-Cash Movements 30 June
2006 Changes 2006
#'000s #'000s #'000s #'000s #'000s
----------------- -------- ------ -------- -------- -------
Cash and equivalent at bank
and in hand
Increase in cash
in the period 2,291 311 - - 2,602
Debt - due within one year:
- Third Party (4,805) (249) (1,402) (21) (6,477)
- Related Party (1,619) (1,785) - (22) (3,426)
Debt - due after one year (2,771) 70 1,402 (18) (1,317)
Finance leases (1,651) 240 - (98) (1,509)
----------------- -------- ------ -------- -------- -------
Total Debt (10,846) (1,724) 0 (159) (12,729)
----------------- -------- ------ -------- -------- -------
Total Net Debt (8,555) (1,413) 0 (159) (10,127)
----------------- -------- ------ -------- -------- -------
GEOGRAPHICAL ANALYSIS OF SALES
Country / Region 6 months to 6 months to Full Year to
30 June 2006 30 June 2005 31 December 2006
#'000s #'000s #'000s
---------------------- --------- --------- ------------
France 2,471 2,848 5,355
Rest of Europe 5,227 5,649 9,558
USA and Canada 5,009 3,650 6,415
Asia 1,466 1,407 2,774
Latin America 2,214 1,677 3,401
Other 469 571 1,817
---------------------- --------- --------- ------------
Total 16,856 15,802 29,320
---------------------- --------- --------- ------------
RECONCILIATION OF MOVEMENT IN EQUITY SHAREHOLDERS' FUNDS
6 months to 6 months to Year to
30 June 30 June 31 December
2006 2005 2005
#'000 #'000 #'000
------------------------ --------- --------- ---------
Retained (Loss) for the Period after
taxation (1,115) 88 (4,161)
Translation Adjustments on Foreign
Currency Net Investments (214) (239) (502)
------------------------ --------- --------- ---------
Total Recognised Gains & Losses relating
to the period (1,329) (151) (4,663)
Proceeds of Share Capital Issued 0 80 80
Premium on Shares Issued in the year 0 5,293 5,470
------------------------ --------- --------- ---------
Net (Decrease)/Increase in Shareholder
Funds (1,329) (5,222) 887
Equity Shareholder Funds at Start of
Period 9,494 8,607 8,607
------------------------ --------- --------- ---------
Equity Shareholders' Funds at 30 June
2006 8,165 13,829 9,494
========= ========= =========
NIPSON DIGITAL PRINTING SYSTEMS PLC
Unaudited results for the six months ended 30 June 2006
NOTES
1. Nature of Financial Information
The financial information contained within this interim report has been prepared
in accordance with UK GAAP and is unaudited. It does not constitute statutory
accounts within the meaning of section 240 of the Companies Act 1985. A copy of
the statutory accounts for the year ended 31 December 2005 has been delivered to
the Registrar of Companies. The auditor's report on those accounts was
unqualified and did not contain statements under section 237(2) or (3) 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. IFRS
The Group has calculated and analysed certain changes required by provisions
under IFRS2 and FRS20 concerning the evaluation of certain options given to
employees. Although there is a small charge for each of the years 2005, 2006 and
2007, the Group considers this not to be material and will not be restating its
2005 accounts before the publication of the 2006 full year accounts.
4. Guarantees
The corporate guarantee to Banca Regionale Europea outlined in previous
announcements was maintained.
5. 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. Some of these appeals have been heard with a written decision expected
by the Court shortly and the remaining appeals are expected to be heard before
the end of 2006 (subject to the comment below). 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 Court, in the appeal
on the infringement action, decided to stay the appeal proceedings until a
decision on the plaintiff's appeal in the nullity action). 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
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