RNS Number:8618L
Nipson Digital Printing Systems PLC
10 November 2006
NIPSON DIGITAL PRINTING SYSTEMS PLC
10 November 2006
RESULTS FOR THE 9 MONTHS ENDED 30 SEPTEMBER 2006
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 9 months to 30 September 2006.
9 months to Change 9 months to Year to 31
30 September +/-% 30 September December
2006 2005 2005
Unaudited Unaudited Audited
#'000 #'000 #'000
Turnover 23,786 +5.5% 22,556 29,320
Gross profit 6,308 +7.9% 5,845 7,070
Operating (loss)/profit (1,364) (2,157 (3,937)
(Loss)/profit on ordinary (1,782) (2,108) (4,137)
activities before taxation
* Equipment sales at #10.1m for the first 9 months were 12% ahead of last
year. A strong surge in sales is forecast for the final quarter taking the
annual sales well over their level for last year;
* Recurrent sales were marginally better than for the same period of 2005.
Margins have improved in each of the last four quarters; and
* Cost reduction programmes continue to progress but half of the planned
savings on the writing heads project are now not expected until 2008.
Rimon Ben-Shaoul, Chairman, commenting on the results, said the following:
"The business showed further signs of recovery which is expected to accelerate
in the final quarter and throughout next year. We have our strongest ever
equipment order book and in the fourth quarter expect record equipment sales,
which will include the first delivery for the DGCP contract. Recurrent revenues
will steadily improve reflecting the growth of the printing capacity of our
installed machine base. Finally, the effects of our cost saving programmes will
improve margins on both equipment sales and recurrent revenues."
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 9 months to 30 September 2006 was #23.8m, an increase of 5.5%
over the same period last year. Sales into North America showed an increase of
44% compared to the same period last year.
Equipment sales, at #10.1m for the 9 months, increased by 12.2% over the
comparative period. This reflects the expanding geographical reach of the
Company's sales operations and the continued acceptance of our new product
range. The sales in the United States included further deliveries of high-end
machines to our OEM partner, Kodak. Following the installation of eight machines
in the first six months of 2006 at Transcontinental Inc., one of the largest
printers in North America, a further six machines were installed in the third
quarter.
The order book for the last quarter of 2006 is strong which we expect will
ensure higher sales in 2006 compared to previous years. It will include more
than #1.0m of orders delayed from the third quarter and the first delivery under
the DGCP contract.
Recurrent revenues for the 9 months to 30 September 2006 were #13.7m, an
increase of 0.7% as compared to the same period last year. Margins have
increased in each of the last four quarters and this improvement is expected to
continue. The maintenance business produced increased profits in the third
quarter.
Gross profit for the 9 months to 30 September 2006 was #6.3m, an improvement of
7.9% on the comparative period last year of #5.8m. In the third quarter the
gross profit was lower than expected due to the delayed equipment sales. The
improved recurrent business margins were partially offset by slightly lower
margins on equipment due to #0.3m of "one-off" costs. Going forward, we
anticipate these margins will further improve as the benefits of our cost
reduction programmes continue to have an impact.
Growth Strategy
Our 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
progress in the US, we have increased sales particularly to China, Brazil and
Turkey.
The Company is targeting customers with large print volumes which includes the
fast growing Book-on-Demand market where printers need the flexibility to
produce shorter and more frequent runs for advance copies, back title lists and
small runs.
Operating Results
The operating loss for the 9 months to 30 September 2006 was #1.4m against a
loss of #2.2m for the corresponding period. The loss before tax was #1.8m
(#2.1m).
As at 30 September 2006 cash balances were #2.3m (#2.6m as at 30 June 2006). The
level of stocks continued to decrease being #9.5m at the end of the period
(#9.7m as at 30 June 2006). The level of debtors decreased to #10.2m (#11.1m as
at 30 June 2006).
The patent court case incurred expenses amounting to #156,000 for the 9 months
(see Note 5).
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).
Research & Development Costs
The costs of Research & Development have historically been charged to Profit &
Loss in the year of expense. Under the new IFRS guidelines, the Group will be
required to capitalise a major part of these costs, which will improve profits
over the coming years.
Cost Reduction Programmes
The new writing heads are now being fitted to all new machines but half of the
planned savings from this project are now not expected until 2008. However, we
expect the various programmes to achieve ultimately the previously reported
level of #3.5m annual savings.
Going Forward
The business showed further signs of recovery which is expected to accelerate in
the final quarter and throughout next year. We have our strongest ever equipment
order book and in the fourth quarter expect record equipment sales, which will
include the first delivery for the DGCP contract. Recurrent revenues will
steadily improve reflecting the growth of the printing capacity of our installed
machine base. Finally, the effects of our cost saving programmes will improve
margins on both equipment sales and recurrent revenues.
Rimon Ben-Shaoul
Chairman
Nipson Digital Printing Systems PLC
NIPSON DIGITAL PRINTING SYSTEMS PLC
Unaudited results for the nine months ended 30 September 2006
CONSOLIDATED PROFIT AND LOSS ACCOUNT
9 months to 9 months to Full Year to
30 September 30 September 31 December
2006 2005 2005
#'000 #'000 #'000
Turnover 23,786 22,556 29,320
Cost of Sales (17,478) (16,721) (22,250)
Gross Profit 6,308 5,835 7,070
Administrative Expenses (7,685) (8,139) (11,016)
Other Operating Income 13 147 9
Operating (Loss)/Profit (1,364) (2,157) (3,937)
Exceptional Item 0 (123) 124
(Loss)/Profit on Ordinary
Activities before interest (1,364) (2,034) (3,813)
Net Interest Payable (418) (74) (324)
(Loss)/Profit on Ordinary
Activities before taxation (1,782) (2,108) (4,137)
Taxation 0 0 (24)
Retained (Loss)/Profit on
Ordinary Activities after
taxation (1,782) (2,108) (4,161)
Earnings per Ordinary Share (3.4p) (4.2p) (8.3p)
(Basic and Diluted)
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
9 months to 9 months to Full Year to
30 September 30 September 31 December
2006 2005 2005
#'000 #'000 #'000
Retained (Loss) for the Period (1,782) (2,108) (4,161)
after tax
Translation Adjustments on
Foreign Currency Net Investments (133) (404) (502)
Total Recognised Gains & Losses (1,915) (2,512) (4,663)
relating to the period
NIPSON DIGITAL PRINTING SYSTEMS PLC
Unaudited results for the nine months ended 30 September 2006
CONSOLIDATED BALANCE SHEET
As at 30 As at 30 As at 31
September September December
2006 2005 2005
#'000 #'000 #'000
Fixed Assets
Intangible Assets 576 651 635
Tangible Assets 4,158 4,363 4,352
4,734 5,014 4,987
Current Assets
Stock 9,465 9,916 10,513
Debtors 10,250 9,132 9,672
Cash and Cash Equivalents 2,340 2,397 2,291
22,055 21,445 22,476
Creditors: amounts falling due (16,319) (10,025) (13,348)
within one year
Net Current Assets 5,736 11,420 9,128
Total Assets less Current 10,470 16,434 14,115
Liabilities
Creditors: amounts falling due after (2,214) (4,380) (3,995)
more than one year
Net Assets excluding pension deficit 8,256 12,054 10,120
Pension Deficit (677) (586) (626)
Net Assets including pension deficit 7,579 11,468 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 (343) 243 (210)
Profit & Loss Account (9,573) (6,093) (7,791)
Equity Shareholders Funds 7,579 11,468 9,494
Approved by the Board of Directors on Thursday 9 November 2006.
Alfons Buts Robert Cahill
NIPSON DIGITAL PRINTING SYSTEMS PLC
Unaudited results for the nine months ended 30 September 2006
CONSOLIDATED CASH FLOW STATEMENT
9 months to 9 months to Full Year to
30 September 30 September 31 December
2006 2005 2005
#'000 #'000 #'000
Net Cash (Outflow) from Operating
Activities (478) (6,650) (8,756)
Returns on Investments and Servicing
of Finance (418) (109) (324)
Taxation 0 0 (24)
Capital Expenditure and Financial
Investment (177) (217) (254)
Cash (Outflow) before Financing (1,073) (6,976) (9,358)
Financing 1,147 5,237 7,054
Translation Difference (459)
(Decrease)/ Increase in Cash in 74 (2,198) (2,304)
Period
Reconciliation of Net Cash Flow to
Net Debt movement
(Decrease)/ Increase in Cash in 74 (2,198) (2,304)
Period
(Increase) in Debt and Lease (1,147) 511 (1,505)
Financing
Change in Net Debt resulting from (1,073) (1,687) (3,809)
Cash Flows
Translation Difference (90) 0 246
Movement in (Debt) in Period (1,163) (1,687) (3,563)
Opening Net Debt (8,555) (4,992) (4,992)
Closing Net Debt (9,718) (6,679) (8,555)
NIPSON DIGITAL PRINTING SYSTEMS PLC
Unaudited results for the nine months ended 30 September 2006
CONSOLIDATED CASH FLOW STATEMENTS
Reconciliation of Operating (loss)/ 9 months to 9 months to Full Year to
profit to Net cash (outflow) from 30 September 30 September 31 December
operating activities 2006 2005 2005
#'000 #'000 #'000
Operating (Loss)/Profit (1,364) (2,108) (3,937)
Exceptional cost/profit for 0 0 124
restructuring
Depreciation and amortisation 346 374 498
Decrease/(Increase) in stock 1,048 (2,224) (2,821)
(Increase) in debtors (578) (2,655) (3,539)
Increase/(Decrease) in creditors (368) 27 1,182
Increase/(Decrease) in provisions 438 (64) (263)
Net Cash (Outflow) from Operating (478) (6,650) (8,756)
Activities
CONSOLIDATED CASH FLOW STATEMENT
Analysis of Financing 9 months to 9 months to Full Year to
headed in Cash Flow Statement 30 September 30 September 31 December
2006 2005 2005
#'000 #'000 #'000
Cash (Outflow) before Liquid (1,073) (6,976) (9,358)
Resources and Financing
Financing
New Debt 642 961 1,172
Increase in Loan from Parent 1,854 0 1,606
Undertaking
Loan Repayments (992) (930) (985)
Capital Repayments on Finance (357) (217) (289)
Leases
Proceeds of Share Issue 0 5,423 5,550
Net Cash Inflow for Financing 74 5,237 7,054
Translation Difference (25) (459)
(Decrease)/ Increase in Cash in 49 (2,198) (2,304)
Period
STATEMENT OF NET FUNDS/(DEBT)
As at 1 Cash Other Exchange As at 30
January Flow Non-Cash Movements September
2006 Changes 2006
#'000s #'000s #'000s #'000s #'000s
Cash and equivalent at
bank and in hand
Increase in cash in the 2,291 74 - (25)- 2,340
period
Debt - due within one
year:
- Third Party (4,805) 350 (1,517) (24) (5,996)
- Related Party (1,619) (1,854) - 44 (3,429)
Debt - due after one (2,771) 1,517 30 (1,224)
year
Finance leases (1,651) 357 - (115) (1,409)
Total Debt (10,846) (1,147) - (65) (12,058)
Total Net Debt (8,555) (1,073) - (90) (9,718)
GEOGRAPHICAL ANALYSIS OF SALES
Country / Region 9 months to 9 months to Full Year to
30 September 30 September 31 December
2006 2005 2005
#'000s #'000s #'000s
France 3,622 4,184 5,355
Rest of Europe 7,240 7,730 9,558
USA and Canada 7,412 5,157 6,415
Asia 2,019 2,258 2,774
Latin America 2,469 2,183 3,401
Other 1,024 1,044 1,817
Total 23,786 22,556 29,320
RECONCILIATION OF MOVEMENT IN EQUITY SHAREHOLDERS' FUNDS
9 months to 9 months to Full Year to
30 September 30 September 31 December
2006 2005 2005
#'000 #'000 #'000
Retained (Loss) for the Period after (1,782) (2,108) (4,161)
taxation
Translation adjustments on foreign (133) (404) (502)
currency net investments
Total Recognised Gains & Losses (1,915) (2,512) (4,663)
relating to the period
Proceeds of Share Capital Issued 0 80 80
Premium on Shares Issued in the year 0 5,293 5,470
Net (Decrease)/Increase in (1,913) (2,861) 887
Shareholder Funds
Equity Shareholder Funds at Start of 9,494 8,607 8,607
Period
Equity Shareholders' Funds at 30 7,579 11,468 9,494
June 2006
NIPSON DIGITAL PRINTING SYSTEMS PLC
Unaudited results for the nine months ended 30 September 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 with-in 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.
The costs of Research & Development have historically been charged to Profit &
Loss in the year of expense. Under the new IFRS guidelines, the Group will be
required to capitalise a major part of these costs.
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 and the remaining appeals are
expected to be heard by the beginning of 2007 (subject to the comment below). In
written decisions rendered thus far in regard to such appeals already heard, the
appeal instance confirmed the Lower Court decision in favour of the Group in
regard to one patent and decided to appoint an expert to provide further opinion
in regard to two other patents. In parallel to such proceedings, 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 January 2007.
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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