Pompey, France 10/19/2007 07:30:00 AM
GLOBAL GRAPHICS SA (Euronext: GLOG), expert in de ontwikkeling van technologie voor open document- en drukoplossingen, maakt de financiële resultaten bekend voor het kwartaal en de periode van negen maanden eindigend op 30 september 2007.
De vergelijking van het derde kwartaal 2007 met hetzelfde kwartaal vorig jaar omvat:
- Omzet van 3,5 miljoen euro dit kwartaal (3,8 miljoen euro tegen wisselkoersen van het derde kwartaal 2006) vergeleken met 3,6 miljoen euro in het derde kwartaal 2006;
- EBIT van 0,9 miljoen euro voor dit kwartaal, vergeleken met 0,7 miljoen euro in het derde kwartaal 2006;
- Pro forma bedrijfswinst (EBITA) van 0,3 miljoen euro voor dit kwartaal, vergeleken met 0,4 miljoen euro in het derde kwartaal 2006;
- Pro forma winst vóór belastingen van 0,3 miljoen euro voor dit kwartaal (of 0,03 euro per aandeel), identiek met het derde kwartaal 2006;
- Netto winst van 0,5 miljoen euro voor dit kwartaal (of 0,05 euro per aandeel), vergeleken met 0,3 miljoen euro in het derde kwartaal 2006 (of 0,03 euro per aandeel);
- Pro forma netto winst van 0,1 miljoen euro voor dit kwartaal (of 0,01 euro per aandeel), identiek met het derde kwartaal 2006.
Jim Freidah, Chief Executive Officer, lichtte toe: “De omzet van nieuwe contracten in digitale druk en elektronische documenttechnologie bleef stevig tijdens het derde kwartaal en toonde een voortgezette groei op jaarbasis. We sloten tijdens het afgelopen kwartaal ons eerste contract voor de recent gelanceerde elektronische documenttechnologie van de nieuwe generatie en verwachten tijdens het vierde kwartaal verdere contracten te sluiten. Wij onderhandelen actief met een groot aantal potentiële nieuwe klanten voor digitale druk. Het feit dat het Microsoft® Vista™ besturingssysteem slechts langzaam afnemers vindt, of meer specifiek het trage ritme waarmee XPS-gerelateerde softwaretoepassingen die onder Vista werken op de markt komen, heeft als effect dat de producenten van drukapparatuur minder gehaast zijn. Daadoor hebben velen de lancering van hun XPS-compatibele toestellen uitgesteld, wat op zijn beurt de contract- en inkomstencyclus voor Global Graphics heeft verlengd.
“In het traditionele grafische segment lag de omzet lager, wat kenmerkend is voor het derde kwartaal in dit segment. Door consolidatie ligt de omzet ook op jaarbasis opnieuw lager. De belangrijkste vakbeurs voor dit segment, Graph Expo, werd goed bezocht en in combinatie met upgrade verkopen van de nieuwe versie van Harlequin RIP zou dat sterkere resultaten voor het vierde kwartaal moeten opleveren.”
Prestatie van het derde kwartaal
De kwartaalomzet bedroeg 3,5 miljoen euro, vergeleken met 3,6 miljoen in het derde kwartaal 2006, of een daling van 1,9% bij de huidige wisselkoersen. Het afgelopen kwartaal werd ongeveer 74,8% van de omzet van de onderneming uitgedrukt in US dollar (tegen een gemiddelde koers van 1,377 dollar voor 1 euro). De wisselkoersschommelingen met de euro bleven een invloed uitoefenen op de omzet van de Onderneming en op het resultaat van haar activiteiten. Indien de kwartaalomzet omgewisseld werd tegen de gemiddelde dollarkoers die van toepassing was tijdens hetzelfde kwartaal van 2006 (1,274 dollar voor 1 euro), dan zou de omzet ca. 3,8 miljoen euro bedragen, of een groei met 5,3%, bij gelijkblijvende wisselkoersen, tegenover de omzet van het derde kwartaal van 2006.
De totale bedrijfskosten (uitgezonderd verkoopkosten, afschrijving van immateriële activa, uitgaven voor aandelencompensatie, en het netto-effect van gekapitaliseerde ontwikkelingsuitgaven voor 0,7 miljoen euro) beliepen dit kwartaal 3,1 miljoen euro, net als in dezelfde periode van 2006, en t.o.v. 3,4 miljoen euro in het tweede kwartaal van 2007.
De EBIT bedroeg dit kwartaal 0,9 miljoen euro (of 25,3% van de kwartaalomzet), ten opzichte van 0,7 miljoen euro in het derde kwartaal van 2006 (of 18,8% van de omzet van het derde kwartaal van 2006), wat neerkomt op een groei met 32,0% t.o.v. dezelfde periode vorig jaar.
EBITA (pro forma bedrijfswinst, zoals gedefinieerd in de onderstaande tabel) was dit kwartaal 0,3 miljoen euro, vergeleken met 0,4 miljoen euro in het derde kwartaal van 2006, of een daling van 14,8% tegenover dezelfde periode vorig jaar. Bijgevolg daalde de EBITA marge voor het afgelopen kwartaal naar 8,9% van de kwartaalomzet vergeleken met 10,3% in het derde kwartaal van 2006. Indien de wisselkoersen van het derde kwartaal 2006 gehanteerd werden, d.w.z. constante wisselkoersen, zou de EBITA in het derde kwartaal 2007 nagenoeg 0,5 miljoen euro bedragen hebben, een groei van 41,3% t.o.v. het EBITA cijfer van het derde kwartaal 2006.
De pro forma winst vóór belastingen (zoals gedefinieerd in de onderstaande tabel) bedroeg dit kwartaal 0,3 miljoen euro, net als in dezelfde periode van 2006. Bijgevolg bedroeg de pro forma netto winst vóór belastingen per aandeel 0,03 euro, net als in het derde kwartaal 2006.
De netto winst bedroeg in het derde kwartaal 0,5 miljoen euro (of 0,05 euro per aandeel) tegenover 0,3 miljoen euro in het derde kwartaal van 2006 (of 0,03 euro per aandeel). Dat betekent een klim met 47,0% t.o.v. dezelfde periode vorig jaar.
De pro forma netto winst (zoals gedefinieerd in de onderstaande tabel) bedroeg voor dit kwartaal 0,1 miljoen euro, net als in dezelfde periode van 2006. Bijgevolg was de pro forma winst per aandeel voor dit kwartaal 0,01 euro, identiek met het derde kwartaal 2006.
Prestatie voor de eerste negen maanden
De omzet van de eerste negen maanden van 2007 bedroeg 12,9 miljoen euro, t.o.v. 12,1 miljoen euro in dezelfde periode van 2006, of een groei met 7,1% tegen de huidige wisselkoersen. Tijdens de negen eerste maanden van 2007 werd ongeveer 85,5% van de omzet van de onderneming uitgedrukt in US dollar (tegen een gemiddelde koers van 1,343 dollar voor 1 euro). Indien de omzet van de eerste negen maanden omgewisseld werd tegen de gemiddelde dollarkoers die van toepassing was in dezelfde periode van 2006 (d.w.z. tegen een gemiddelde wisselkoers van 1,238 US dollar voor 1 euro), dan zou de omzet voor de eerste negen maanden ca. 13,9 miljoen euro bedragen of een stijging van 15,4% t.o.v. de omzet in dezelfde periode van 2006 (bij constante wisselkoersen).
De EBIT bedroeg 4,1 miljoen euro voor de eerste negen maanden van 2007 (of 32,1% van de periode-omzet) tegenover 2,5 miljoen euro (of 20,5% van de omzet) in dezelfde periode van 2006. Dat betekent een groei met 67,8% t.o.v. het cijfer voor dezelfde periode van 2006.
De EBITA voor de eerste negen maanden van dit jaar bedroeg 2,4 miljoen euro (of 18,6% van de periode-omzet), tegenover 2,0 miljoen euro (of 16,4% van de periode-omzet) voor de eerste negen maanden van 2006, en toonde dus een groei van 21,5% t.o.v. het EBITA-cijfer voor dezelfde periode van 2006. Indien de wisselkoersen van de eerste negen maanden van 2006 gehanteerd worden, d.w.z. constante wisselkoersen, zou de EBITA voor de eerste negen maanden van 2007 nagenoeg 3,1 miljoen euro hebben bedragen, wat een groei van 55,6% vertegenwoordigt t.o.v. het EBITA cijfer voor de eerste negen maanden van 2006.
De pro forma winst vóór belastingen was 2,4 miljoen euro voor de eerste negen maanden van 2007 (of 0,23 euro per aandeel), een stijging van 6,7% vergeleken met 2,2 miljoen euro of 0,22 euro per aandeel voor dezelfde periode van 2006.
De netto winst voor de eerste negen maanden van 2007 bedroeg 3,3 miljoen euro (of 0,32 euro per aandeel) en groeide met 136,0% t.o.v. 1,4 miljoen euro (of 0,14 euro per aandeel) voor dezelfde periode van 2006.
Voor de eerste negen maanden van 2007 bedroeg de pro forma netto winst 2,2 miljoen euro (of 0,21 euro per aandeel) een stijging met 97,6% t.o.v. 1,1 miljoen euro (of 0,11 euro per aandeel) voor dezelfde periode van 2006.
Programma voor inkoop van aandelen
In overeenstemming met de machtiging door de aandeelhouders aan de Raad van Bestuur tijdens hun vergadering van 27 april 2007, heeft de Onderneming haar programma voor de inkoop van eigen aandelen verder gezet tijdens het kwartaal dat eindigt op 30 september 2007.
Tijdens het derde kwartaal van 2007 kocht de Onderneming een totaal van 59.398 aandelen terug in tegen een gemiddelde prijs van 8,07 euro per aandeel. De Onderneming heeft het voornemen om nog verder eigen aandelen in te kopen op de tijdstippen en in de hoeveelheden die zij geschikt acht.
Bijkomende informatie over het programma voor de inkoop van eigen aandelen van de Onderneming is beschikbaar in het Memorandum over dit programma (beschikbaar in het Engels en het Frans). De Onderneming publiceerde dit in april 2007. Het kan gedownload worden van de website van de Onderneming op www.globalgraphics.com.
Herziening van de vooruitzichten voor 2007
Jim Freidah voegde er aan toe: “Twee belangrijke factoren beginnen nu onze vooruitzichten voor 2007 te beïnvloeden. De eerste, zoals reeds aangegeven in de toelichting over het derde kwartaal, is dat de trage lancering van de op XPS gebaseerde toepassingen en de ontbrekende haast van de apparatuurfabrikanten om XPS-compatibele toestellen te lanceren, die daar het gevolg van is, een invloed zullen hebben op onze inkomstenstroom. De tweede factor is de verdere verzwakking van de US dollar. Die oefent niet enkel een invloed uit op onze prestatie op jaarbasis over de eerste negen maanden van 2007 (wij hebben al gesteld dat indien de omzet van 12,9 miljoen euro die we tijdens de eerste negen maanden van 2007 hebben gerealiseerd, geconverteerd werd tegen de gemiddelde US dollarkoers die van toepassing was tijdens de eerste negen maanden van 2006, deze gelijk zou zijn aan 13,9 miljoen euro). Wij moeten nu rekening houden met de weerslag van de dollarverzwakking op de vooruitzichten die wij in april 2007 hebben gegeven voor het ganse jaar 2007.
“Bijgevolg herzien wij nu onze omzet- en winstvooruitzichten voor 2007. Wij verwachten voor het ganse jaar 2007 een omzet tussen 17,0 miljoen en 18,0 miljoen euro. Omdat wij onze bedrijfsuitgaven strikt onder controle houden, verlagen wij de EBITA slechts lichtjes naar een bedrag tussen ca. 3,2 miljoen en 4,0 miljoen euro. Wij blijven verder rekening houden met niet-activiteitsgebonden factoren (inclusief wisselverschillen met betrekking tot onze huidige hedgingstrategie) die een nominaal effect kunnen hebben op onze gerapporteerde resultaten. Daarom verwachten wij dat voor 2007 de pro forma netto winst vóór belastingen per aandeel zal liggen tussen 0,31 en 0,40 euro. Deze herziene vooruitzichten zijn gebaseerd op de huidige spot market koersen, met name 1,417 US dollar voor 1 euro en 2,04 US dollar voor 1 Brits pond.”
Praktische details over de telefoonconferentie m.b.t. de resultaten van het derde kwartaal van 2007
Global Graphics houdt vandaag, 19 oktober 2007, om 14u00 CET een telefoonconferentie in het Engels. Deelnemers dienen te telefoneren naar +44 20 7162 0025 en zich te melden met “Global Graphics quarterly results conference call”. Het gesprek is daarna nog gedurende 7 werkdagen te beluisteren door te bellen naar +44 20 7031 4064, toegangscode 770049.
Bekendmaking van de resultaten voor het vierde kwartaal 2007 en het volledige jaar 2007
Global Graphics verwacht de resultaten voor het kwartaal en voor het volledige jaar eindigend op 31 december 2007 bekend te maken op vrijdag 8 februari 2008 vóór beurstijd.
GLOBAL GRAPHICS SA AND SUBSIDIARIES
CONSOLIDATED INTERIM INCOME STATEMENT
In thousands of Euro, except share data in Euro
Unaudited and unreviewed figures
Quarters Nine months
ended 30 September to 30 September
2007 2006 2007 2006
Sales 3,538 3,608 12,908 12,050
Cost of sales (114) (114) (354) (343)
Amortization of intangible assets (18) (17) (52) (51)
GROSS PROFIT 3,406 3,477 12,502 11,656
Selling, general & administrative expenses (1,192) (1,366) (4,206) (4,492)
Research and development expenses (1,198) (1,391) (3,741) (4,502)
Share compensation expenses (101) (22) (349) (133)
Amortization of intangible assets (19) (19) (57) (57)
OPERATING PROFIT 896 679 4,149 2,472
Interest income (note 5) 19 29 37 80
Interest expenses (note 5) 0 (30) (6) (109)
Foreign exchange gains (losses), net (note 5) 10 (67) (29) 315
PROFIT BEFORE INCOME TAX 925 611 4,151 2,758
Income tax (benefit) expense (note 6) 437 279 894 1,378
NET PROFIT 488 332 3,257 1,380
EARNINGS PER SHARE (note 7)
Basic net profit per share 0.05 0.03 0.32 0.14
Diluted net profit per share 0.05 0.03 0.32 0.13
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The accompanying selected explanatory notes are an integral part of these consolidated interim financial statements.
GLOBAL GRAPHICS SA AND SUBSIDIARIES
CONSOLIDATED INTERIM BALANCE SHEET
In thousands of Euro 30 Sept. 2007 31 Dec. 2006
Unaudited
figures
ASSETS
NON-CURRENT ASSETS
Property, plant and equipment 1,021 1,039
Intangible assets 3,720 1,770
Goodwill 8,177 8,514
Other non-current assets 141 149
Deferred tax assets (note 4) 3,266 4,269
TOTAL NON-CURRENT ASSETS 16,325 15,741
CURRENT ASSETS
Inventories 99 94
Trade receivables 4,150 3,814
Current tax receivables 438 423
Other current assets 90 164
Prepaid expenses 475 440
Cash 3,358 3,310
TOTAL CURRENT ASSETS 8,610 8,245
TOTAL ASSETS 24,935 23,986
LIABILITIES & SHAREHOLDERS' EQUITY
SHAREHOLDERS' EQUITY
Share capital (note 8) 4,111 4,099
Share premium (note 8) 28,844 28,754
Share options outstanding 2,457 2,108
Reserve for own shares (note 9) (1,178) (399)
Accumulated deficit (3,886) (7,143)
Foreign currency translation adjustment (7,628) (6,638)
TOTAL SHAREHOLDERS' EQUITY 22,720 20,781
LIABILITIES
NON-CURRENT LIABILITIES
Other non-current liabilities 2 2
TOTAL NON-CURRENT LIABILITIES 2 2
CURRENT LIABILITIES
Bank overdrafts 0 234
Trade payables 262 457
Other payables 385 837
Customer advances and deferred revenue 1,566 1,675
TOTAL CURRENT LIABILITIES 2,213 3,203
TOTAL LIABILITIES 2,215 3,205
TOTAL LIABILITIES & SHAREHOLDERS' EQUITY 24,935 23,986
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The accompanying selected explanatory notes are an integral part of these consolidated interim financial statements.
GLOBAL GRAPHICS SA AND SUBSIDIARIES
CONSOLIDATED INTERIM STATEMENT OF CASH FLOWS
In thousands of Euro
Unaudited and unreviewed figures
Nine months
to 30 September
2007 2006
CASH FLOWS FROM OPERATING ACTIVITIES
Profit before income tax 4,151 2,758
Adjustments for:
- Depreciation on property, plant and equipment 287 145
- Amortization of intangible assets 109 108
- Amortization of capitalized development expenses 227 41
- Share compensation expenses 349 133
- Interest expenses (interest income) (31) 29
- Foreign currency exchange losses (gains) 29 (315)
- Expenses offset against the share premium (note 8) (2) (11)
- Other items (232) 737
Change in value of operating assets and liabilities:
- Inventories (5) 41
- Trade receivables (336) 454
- Current tax receivables (15) (363)
- Other current assets 74 (193)
- Prepaid expenses (35) (205)
- Trade payables (195) (158)
- Other payables (452) 427
- Customer advances and deferred revenue (109) (89)
Interest received 37 70
Interest paid (10) (108)
Income tax paid (59) (119)
NET CASH PROVIDED BY OPERATING ACTIVITIES 3,782 3,382
CASH FLOWS FROM INVESTING ACTIVITIES
- Acquisition of property, plant and equipment (326) (355)
- Capitalisation of development expenses (2,437) (781)
NET CASH USED IN INVESTING ACTIVITIES (2,763) (1,136)
CASH FLOWS FROM FINANCING ACTIVITIES
- Proceeds from the exercise of share options (note 8) 104 179
- Repurchase of own shares (note 9) (779) (145)
- Repayment of bank overdrafts (234) (93)
- Repayment of borrowings 0 (2,664)
NET CASH USED IN FINANCING ACTIVITIES (909) (2,723)
NET INCREASE (DECREASE) IN CASH 110 (477)
CASH AT 1 JANUARY 3,310 4,548
EFFECT OF EXCHANGE RATE FLUCTUATIONS
ON CASH HELD AT 1 JANUARY (62) (199)
CASH AT 30 SEPTEMBER 3,358 3,782
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The accompanying selected explanatory notes are an integral part of these consolidated interim financial statements.
GLOBAL GRAPHICS SA AND SUBSIDIARIES
CONSOLIDATED INTERIM STATEMENT OF CHANGES IN SHAREHOLDERS’ EQUITY
In thousands of Euro
Unaudited and unreviewed figures
Nine months to 30 September
2007 2006
Shareholders’ equity at 1 January 20,781 17,576
Recognized income for the period:
- Net profit for the period 3,257 1,380
- Change in foreign currency translation adjustment (990) (74)
Total recognized income for the period 2,267 1,306
Effect of share option schemes:
- Value of services rendered during the period 349 133
- Net proceeds from shares issued in the period 102 168
Total effect of share option schemes 451 301
Effect of the share repurchase programme (779) (145)
Shareholders’ equity at 30 September 22,720 19,038
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The accompanying selected explanatory notes are an integral part of these consolidated interim financial statements.
GLOBAL GRAPHICS SA AND SUBSIDIARIES
SELECTED EXPLANATORY NOTES TO THE CONSOLIDATED INTERIM FINANCIAL STATEMENTS
AS AT AND FOR THE NINE-MONTH PERIOD ENDED 30 SEPTEMBER 2007
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NOTE 1: REPORTING ENTITY
These consolidated interim financial statements as at and for the nine months to 30 September 2007 comprise Global Graphics SA, a French-based company, and its subsidiaries (together referred to as “the Company”).
They were approved for issue by the Company’s Board of Directors on 18 October 2007.
NOTE 2: STATEMENT OF COMPLIANCE
These consolidated interim financial statements have been prepared in accordance with IAS 34, Interim Financial Reporting (IAS 34), and other applicable International Financial Reporting Standards (IFRSs) and related interpretations issued by the International Accounting Standards Board and as adopted by the European Union.
They do not include all of the information required for full annual financial statements and should be read in conjunction with the Company’s consolidated financial statements as at and for the year ended 31 December 2006.
NOTE 3: ACCOUNTING POLICIES AND METHODS
(a) Basis of preparation
These consolidated interim financial statements as at and for the nine months to 30 September 2007 have been prepared under the historical cost convention, except for the revaluation of financial assets and financial liabilities (including derivative instruments, as appropriate) at fair value through the income statement.
Non-current assets are stated at the lower of amortized cost and fair value less disposal costs, when applicable.
(b) Accounting policies and methods
The accounting policies and methods used for the preparation of the Company’s consolidated interim financial statements as at and for the nine months to 30 September 2007 are the same as those used for the preparation of the Company’s consolidated financial statements as at and for the year ended 31 December 2006, which are set out in note 2 to the Company’s consolidated financial statements for that year.
NOTE 4: CRITICAL ACCOUNTING ESTIMATES AND JUDGEMENTS
The preparation of financial statements in accordance with IFRSs requires the use of certain critical accounting estimates.
It also requires management to exercise judgement in the process of applying the Company’s accounting policies, and to make estimates and assumptions that affect the reported amounts of assets and liabilities, income and expenses.
The estimates and associated assumptions are based on historical experience and various other factors that are believed to be reasonable under the circumstances, the results of which form the basis of making management’s judgements about carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates.
The estimates and underlying assumptions are reviewed on an ongoing basis.
Revisions to accounting estimates are recognized in the period in which the estimate is revised if the revision affects only that period, or in the period and future periods if the revision affects both current and future periods.
Estimates and judgements made by management in the application of IFRSs that involve a higher degree of complexity, have a significant effect on the consolidated interim financial statements as at and for the nine months to 30 September 2007, or have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next twelve months, are discussed hereafter.
(a) Impairment of goodwill and other intangible assets
IAS 34 requires that the Company applies the same impairment testing, recognition and reversal criteria (as applicable) at an interim date as it would at the end of its financial year, i.e. at 31 December.
In accordance with paragraph 36 of appendix B of IAS 34, the Company did not perform a detailed impairment calculation as at 30 September 2007, but reviewed to determine if there were any indications of significant impairment of goodwill and other intangible assets since 31 December 2006.
Based on the result of this review, the Company concluded that there were no indications of significant impairment of goodwill as at and for the nine months to 30 September 2007.
(b) Capitalization of computer software development costs
As stated in note 2i to the Company’s consolidated financial statements for the year ended 31 December 2006, costs associated with developing or maintaining existing computer software technology and programmes are recognized as an expense when incurred.
As required by IAS 38, Intangible assets (IAS 38), costs that are directly associated with the production of identifiable and unique software products over which the Company has proprietary rights, that can be measured reliably, and that will probably generate economic benefits over more than one year, are recognized as intangible assets. Such costs consist solely of direct costs, and include the software development employee costs as well as an appropriate portion of relevant overheads, as applicable.
Computer software development costs recognized as intangible assets are then amortized over their estimated useful lives, starting from the completion date of the corresponding development project.
(i) As at and for the nine months to 30 September 2006
At 30 September 2006, the Company considered it could demonstrate that it met all of the above-mentioned recognition criteria for three specific development projects.
Capitalized development expenses corresponding to the first project, which was completed and was commercially launched in September 2005, amounted to Euro 98,000 at 30 September 2006. These expenses were amortized from completion date over the expected useful life of the asset, which ended on 30 June 2007; the corresponding amortization charge which was recognized in the quarter and the nine-month period ended 30 September 2006 with regards to this first project amounted to Euro 14,000, and Euro 41,000, respectively.
Capitalized development expenses corresponding to the other two projects amounted to Euro 255,000 at 31 December 2005 and to Euro 1,044,000 at 30 September 2006, following the capitalization of additional development expenses of Euro 380,000 and Euro 781,000 in the quarter and the nine-month period ended 30 September 2006, respectively.
As the development of these two projects was not completed at 30 September 2006, no amortization charge was recognized in the quarter and the nine-month period ended 30 September 2006 with regards to these two projects.
(ii) As at and for the nine months to 30 September 2007
At 30 September 2007, the Company considered it could demonstrate that it met all of the above-mentioned recognition criteria for three specific development projects.
Capitalized development expenses corresponding to the first project were fully amortized as at 30 June 2007: accordingly, no corresponding amortization charge was recognized in the quarter ended 30 September 2007. The amortization charge which was recognized in the nine-month period ended 30 September 2007 with regards to this first project amounted to Euro 28,000.
Capitalized development expenses corresponding to the second project amounted to Euro 1,206,000 at 31 December 2006 and to Euro 3,037,000 at 30 September 2007, following the capitalization of additional development expenses of Euro 616,000 and Euro 1,950,000 in the quarter and the nine-month period ended 30 September 2007, respectively. As certain aspects of this project resulted in the delivery of certain RIP products in the nine-month period ended 30 September 2007, corresponding costs were amortized over the expected useful life of the corresponding technology (i.e. a ten-year period) using the straight-line amortization method: the corresponding amortization charge which was recognized in the quarter and the nine-month period ended 30 September 2007 with regards to this second project amounted to Euro 88,000 and Euro 194,000, respectively.
Capitalized development expenses corresponding to the third project amounted to Euro 203,000 at 31 December 2006 and to Euro 666,000 at 30 September 2007, following the capitalization of additional development expenses of Euro 195,000 and Euro 487,000 in the quarter and the nine-month period ended 30 September 2007, respectively. As certain aspects of this project resulted in the delivery of certain software products in the third quarter 2007, corresponding costs were amortized over the expected useful life of the corresponding technology (i.e. a ten-year period) using the straight-line amortization method: the corresponding amortization charge which was recognized in the quarter and the nine-month period ended 30 September 2007 with regards to this development project amounted to Euro 5,000.
(c) Income tax
(i) Current income tax
The Company is subject to income tax in France and in all jurisdictions where it has subsidiaries (notably in the UK and the US).
Significant judgement is required in determining the provision for income taxes, as there are many transactions and calculations for which the ultimate tax determination is uncertain during the ordinary course of business.
(ii) Deferred income tax
Recognized deferred tax assets and liabilities
The Company recognizes deferred tax assets, net of deferred tax liabilities as applicable, as stated in note 2v to the Company’s consolidated financial statements for the year ended 31 December 2006.
In evaluating whether it is probable or not that a deferred tax asset recognized in a specific jurisdiction may be utilised against future taxable profits to be recognized in that jurisdiction, the Company uses estimates of future taxable profits over an appropriate period of time from the balance sheet date, based on growth and profit assumptions considered to be appropriate by management.
- Deferred tax asset attributable to capital allowances
Deferred tax assets are predominantly attributable to capital allowances available to the UK subsidiary as the result of the acquisitions made by the Company in the years ended 31 December 1999 and 2000.
Although such allowances may be used without any deadline, they can only be used in a given year up to 25% of the outstanding balance at the beginning of that year.
At 31 December 2006, considering both the recent history of tax profits made by the UK subsidiary and the projected tax profits to be made in the coming years, management considered it was appropriate to recognize a deferred tax asset corresponding to the amount of capital allowances the Company projected to use over the next four years: this resulted in the recognition of a deferred tax asset amounting to Euro 4,622,000 at that date, using the enacted UK corporation tax rate as at and for the year ended 31 December 2006 of 30%.
At 30 September 2007, the recognition of a deferred tax asset corresponding to the amount of capital allowances the Company projected to use over the period ending 30 September 2011 to offset taxable profit to be made by its UK-based subsidiary over such period, using the enacted corporation tax rate applicable for the nine-month period ended 30 September 2007 of 30%, resulted in the recognition of a deferred tax asset amounting to Euro 4,461,000, and a corresponding deferred tax charge amounting to Euro 235,000 and Euro 34,000 in the quarter and the nine-month period ended 30 September 2007, respectively.
- Deferred tax liability arising from the capitalization of developments costs
At 30 September 2007, the recognition of a deferred tax liability corresponding to the accumulated amount of development costs capitalized in accordance with applicable provisions of IAS 38 (see note 4b above), using the enacted corporation tax rate applicable for the nine-month period ended 30 September 2007 of 30%, resulted in the recognition of a deferred tax liability of Euro 1,110,000, and a corresponding deferred tax charge of Euro 244,000 and Euro 731,000 in the quarter and the nine-month period ended 30 September 2007, respectively.
- Effect of the future change in the UK corporation tax rate
The corporation tax rate applicable to the UK subsidiary of the Company will be reduced from 30% to 28% with effect from 1 April 2008. Such rate change was considered to be substantively enacted at 30 June 2007 since the Bill for the 2007 Finance Act completed its House of Commons stages on 26 June 2007. Accordingly, in accordance with paragraphs 47 to 52 of IAS 12, Income taxes, all deferred tax assets and liabilities arising from transactions effected by the UK subsidiary of the Company were re-measured at 30 September 2007 using the tax rates that are expected to apply to the period when the deferred tax asset is realized or the deferred tax liability is settled, i.e. 30% until 31 March 2008 and 28% from 1 April 2008.
The re-measurement of the deferred tax asset corresponding to the amount of capital allowances the Company projected to use over the four-year period ending 30 September 2011 to offset taxable profit to be made by its UK-based subsidiary over such period resulted in a deferred tax charge amounting to Euro 12,000 and Euro 270,000 in the quarter and the nine-month period ended 30 September 2007, respectively.
The re-measurement of the deferred tax liability arising from the capitalization of development costs as set out in note 4b above resulted in a deferred tax benefit amounting to Euro 15,000 and to Euro 69,000 in the quarter and the nine-month period ended 30 September 2007, respectively.
Unrecognized deferred tax assets
The amount of capital allowances which were available to the UK subsidiary of the Company at 30 September 2007, but were not projected to be used within the four-year period ending 30 September 2011 and therefore did not result in the recognition of a deferred tax asset at 30 September 2007, amounted to Euro 10,362,000 at such date (Euro 12,846,000 at 31 December 2006).
Had a deferred tax asset been recognized with regards to such portion of available capital allowances at 30 September 2007, since they would only be used after 1 April 2008, the applicable tax rate at the time these capital allowances would be used to offset taxable profit would be 28% (see above): the corresponding, additional deferred tax asset would have amounted to Euro 2,901,000 at 30 September 2007.
NOTE 5: NET FINANCING COSTS
In thousands of Euro Quarters Nine months
ended 30 September to 30 September
2007 2006 2007 2006
Interest income 19 25 37 70
Accretion on present value of carry-back tax assets 0 4 0 10
Total reported interest income 19 29 37 80
Interest expenses on borrowings 0 (27) 0 (99)
Interest expenses on bank overdrafts 0 (3) (6) (10)
Total reported interest expenses 0 (30) (6) (109)
Net interest income (expenses) 19 (1) 31 (29)
Foreign exchange transaction gains (losses) (9) 45 (64) 79
Fair value gains (losses) on contracts 19 (112) 35 236
Total reported net foreign exchange gains (losses) 10 (67) (29) 315
Total net financing costs 29 (68) 2 286
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NOTE 6: INCOME TAX (BENEFIT) EXPENSE
(a) Current income tax
The Company recorded a current income tax charge amounting to Euro 4,000 in the quarter ended 30 September 2007 (a charge of Euro 68,000 in the quarter ended 30 September 2006), resulting in a current income tax charge of Euro 49,000 in the nine months to 30 September 2007 (a charge of Euro 42,000 in the nine months to 30 September 2006).
(b) Deferred income tax
The Company recorded a deferred income tax charge amounting to Euro 433,000 in the quarter ended 30 September 2007 (a charge of Euro 211,000 in the quarter ended 30 September 2006), resulting in a deferred income tax charge of Euro 845,000 in the nine months to 30 September 2007 (a charge of Euro 1,336,000 in the nine months to 30 September 2006).
The significant components of such deferred tax charges are the following:
- the charge arising from the recognition of intangible assets as set out in note 4b amounted to Euro 244,000 in the quarter ended 30 September 2007 (Euro 114,000 in the quarter ended 30 September 2006), and to Euro 731,000 in the nine-month period ended 30 September 2007 (Euro 234,000 in the nine-month period ended 30 September 2006);
- the benefit arising from the amortization of the capitalized development costs amounted to Euro 28,000 in the quarter ended 30 September 2007 (nil in the quarter ended 30 September 2006), and to Euro 68,000 in the nine-month period ended 30 September 2007 (nil in the nine-month period ended 30 September 2006); and
- the recognition of capital allowances as set out in note 4c resulted in a charge of Euro 235,000 in the quarter ended 30 September 2007 (a charge of Euro 104,000 in the quarter ended 30 September 2006), and a charge of Euro 34,000 in the nine-month period ended 30 September 2007 (a charge of Euro 1,077,000 in the nine-month period ended 30 September 2006).
(c) Reconciliation of the 2007 effective tax expense (benefit)
Quarter Nine months
In thousands of Euro ended 30 September 2007
Profit before income tax 925 4,151
Income tax expense (benefit) using the rate of 33.33% 308 1,383
Income tax expense (benefit) attributable to:
- Amortization of intangible assets 146 (548)
- Effect of differences in tax rates in foreign jurisdictions (73) (195)
- Effect of share-based plans 33 116
- Effect of the future change in the UK tax rate (note 6b) (3) 201
- Effect of the UK research & development tax claim 0 (219)
- Other differences 26 156
Total income tax expense (benefit) in the income statement 437 894
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NOTE 7: EARNINGS PER SHARE
(a) Basic earnings per share
Basic earnings per share are calculated by dividing the profit attributable to shareholders for a period by the weighted average number of ordinary shares outstanding during that period.
(i) Computation for the quarters ended 30 September 2007 2006
Issued ordinary shares as at 1 July 10,277,531 10,198,375
Effect of the shares issued in the quarter 0 444
Effect of the shares repurchased in the quarter (note 9) (28,616) (691)
Weighted average number of ordinary shares for 10,248,915 10,198,128
the quarters ended 30 September
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(ii) Computation for the nine months to 30 September 2007 2006
Issued ordinary shares as at 1 January 10,247,530 10,157,209
Effect of the shares issued in the period 23,208 23,341
Effect of the shares repurchased in the period (note 9) (31,481) (233)
Weighted average number of ordinary shares for 10,239,257 10,180,317
the nine months to 30 September
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(b) Diluted earnings per share
Diluted earnings per share are calculated by adjusting the weighted average number of ordinary shares outstanding to assume conversion of all dilutive potential ordinary shares.
The Company has only one category of dilutive potential ordinary shares: share options. Contingently issuable shares (i.e. ordinary shares issuable for little or no cash or other consideration upon the satisfaction of specified conditions in a contingent share agreement) are not included in the calculation of diluted earnings per share until the conditions are satisfied: this was not the case at either 30 September 2007 or 31 December 2006.
The calculation is performed for the share options to determine the number of shares that could have been acquired at fair value (determined as the average market price of the Company’s shares over the period for which the computation is performed) based on the monetary value of the subscription rights attached to outstanding share options. The number of shares calculated as above is compared with the number of shares that would have been issued assuming the exercise of the share options.
(i) Computation for the quarters ended 30 September 2007 2006
Weighted average number of ordinary shares for 10,248,915 10,198,128
the quarters ended 30 September
Adjustment for outstanding share options 19,794 68,709
Weighted average number of ordinary shares for diluted
EPS computation for the quarters ended 30 September 10,268,709 10,266,837
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(ii) Computation for the nine months to 30 September 2007 2006
Weighted average number of ordinary shares for 10,239,257 10,180,317
the nine months to 30 September
Adjustment for outstanding share options 30,310 86,982
Weighted average number of ordinary shares for diluted
EPS computation for the nine months to 30 September 10,286,890 10,267,299
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NOTE 8: SHARE CAPITAL AND SHARE PREMIUM
(a) Share capital
A total of 30,001 share options were exercised during the nine months to 30 September 2007 (see note 7a for further details).
As a result, the total number of outstanding, fully paid, ordinary shares of the Company, each of par value of Euro 0.40, is 10,277,531 as at 30 September 2007.
(b) Share premium
The share premium amount increased by Euro 90,000 during the nine months to 30 September 2007 through the net proceeds of the 30,001 share options exercised during that period (an increase of Euro 150,000 during the nine months to 30 September 2006), after deduction of Euro 2,000 for operating expenses incurred in relation with the Company’s share option plans in the nine months to 30 September 2007 (a deduction of Euro 11,000 for similar expenses in the nine months to 30 September 2006).
NOTE 9: REPURCHASE OF OWN SHARES
Pursuant to the authority granted to the Board of Directors by the shareholders in their meeting on 20 April 2006, the Company initiated its share repurchase programme in the course of the quarter ended 30 September 2006.
A total of 37,670 shares were repurchased by the Company in the year ended 31 December 2006. Another 91,298 shares were repurchased by the Company in the nine-month period ended 30 September 2007, including 59,398 shares in the third quarter 2007 alone (see note 7a), for a total of Euro 779,000.
In accordance with paragraph 33 of IAS 32, these 128,968 shares are held as treasury shares, and have been deducted from equity at 30 September 2007.
More information on the Company’s share repurchase programme is available in the information memorandum on such programme (available in both French and English) which was released by the Company on 18 April 2007.
NOTE 10: SEGMENT REPORTING
(a) Primary reporting format – by business segment
The Company is engaged in only one segment of business. It is therefore not required to provide information in this respect.
(b) Secondary reporting format – by geographical area
The Company operates in four main geographical areas, even though the Company is managed on a worldwide basis, which are as follows: Continental Europe (including France, which is the home country of the Company), the UK, North America (USA and Canada) and Asia (notably Japan).
(i) Geographical allocation of sales
The allocation of sales made in these geographical areas during the quarters and the nine-month periods ended 30 September 2007 and 2006, respectively, is as follows:
In thousands of Euro Quarters Nine months
ended 30 September to 30 September
2007 2006 2007 2006
Continental Europe 498 518 1,982 1,760
United Kingdom 202 356 687 1,244
North America 2,120 1,848 8,476 6,384
Asia (including Japan and India) 714 879 1,737 2,633
Other countries 4 7 26 29
Total sales 3,538 3,608 12,908 12,050
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(ii) Geographical allocation of capital expenditures
The allocation of capital expenditures made in these geographical areas during the quarters and the nine-month periods ended 30 September 2007 and 2006, respectively, is as follows:
In thousands of Euro Quarters Nine months
ended 30 September to 30 September
2007 2006 2007 2006
Continental Europe 0 0 0 0
United Kingdom 861 586 2,655 1,072
North America 7 14 20 295
Asia (including Japan and India) 3 24 88 35
Other countries 0 0 0 0
Total capital expenditures 871 624 2,763 1,136
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NOTE 11: RELATED PARTY TRANSACTIONS
The Company has a related party relationship with its subsidiaries (see note 12) and with its directors and executive officers.
(a) With the Company’s directors
The amount of board fees to be allocated among the five directors of the Company as approved by the shareholders in each of 2006 and 2007 is Euro 75,000.
The corresponding expense recognized as part of the selling, general and administrative expenses in the quarter and the nine-month period ended 30 September 2007 is Euro 18,000 and Euro 56,000, respectively (Euro 18,000 and Euro 56,000 in the quarter and the nine-month period ended 30 September 2006).
(b) With the Company’s executive officers
(i) Salaries and other short-term benefits
The three executive directors received salaries and other short-term benefits (including bonuses and pension scheme contributions) from the Company in the quarters and nine-month periods ended 30 September 2006 and 2007, as follows:
In thousands of Euro Quarters Nine months
ended 30 September to 30 September
2007 2006 2007 2006
Salaries 85 95 264 287
Other short-term benefits 1 1 4 4
Total 86 96 268 291
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(ii) Share-based remuneration
Executive officers participate in the Company’s share option and share grant programmes. No grants of share options or shares at no cost to the recipient were made to the Company’s executive officers in either of the nine-month periods ended 30 September 2006 or 2007, respectively.
The expense corresponding to grants of share options and grants of shares at no cost made to date to the Company’s executive officers was Euro 31,000 and Euro 106,000 in the quarter and the nine-month period ended 30 September 2007, respectively (Euro 8,000 and Euro 50,000 in the quarter and the nine-month period ended 30 September 2006, respectively).
NOTE 12: SUBSIDIARIES
These consolidated financial statements include the accounts of the following companies for the nine-month periods ended 30 September 2007 and 2006, respectively:
Country Ownership interest (%)
of incorporation 2007 2006
Global Graphics (UK) Limited United Kingdom 100 100
Global Graphics Software Limited United Kingdom 100 100
Jaws Systems Limited United Kingdom 100 100
Global Graphics Software Incorporated United States of America 100 100
Global Graphics Kabushiki Kaisha Japan 100 100
Global Graphics Software (India) India 100 100
Private Limited
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Global Graphics Software (India) Private Limited was incorporated on 28 March 2006 and consolidated from that date.
GLOBAL GRAPHICS SA AND SUBSIDIARIES
PRO FORMA OPERATING PROFIT (EBITA) COMPUTATION
In thousands of Euro
Unaudited and unreviewed figures
Quarters Nine months
ended 30 September to 30 September
2007 2006 2007 2006
Reported operating profit 896 679 4,149 2,472
Add back (deduct):
- Amortization of intangible assets
recorded in cost of sales 18 17 52 51
recorded in operating expenses 19 19 57 57
- Share compensation expenses 101 22 349 133
- Capitalization of development expenses
as required by IAS 38 (note 4b) (811) (380) (2,437) (781)
- Amortization of capitalized development
expenses (note 4b) 93 14 227 41
Total adjustments
to reported operating profit (580) (308) (1,752) (499)
Pro forma operating profit 316 371 2,397 1,973
Pro forma operating profit in % of sales 8.9% 10.3% 18.6% 16.4%
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The Company provides information prepared in accordance with and required by IFRSs, but it believes that evaluating its ongoing results may not be as useful if an investor is limited to reviewing only IFRS financial measures.
Accordingly, the Company uses pro forma financial information to evaluate its ongoing operations as well as for internal planning and forecasting purposes.
The Company’s management does not itself, nor does it suggest that investors should, consider such pro forma financial measures in isolation from, or as a substitute for, financial information prepared in accordance with IFRSs.
The Company presents such pro forma financial measures in reporting its financial results to provide investors with an additional tool to evaluate the Company’s results in a manner that focuses on what the Company believes to be its ongoing business operations.
The Company’s management believes that the inclusion of pro forma financial measures provides consistency and comparability with past reports of financial information and has historically provided comparability to similar companies in the Company’s industry, many of which present the same or similar pro forma financial measures to investors.
When the Company uses such a pro forma financial measure, it provides a reconciliation of the pro forma financial measure to the most closely applicable financial measure required by IFRSs.
Investors are encouraged to review the related IFRS financial measures and the reconciliation of these pro forma financial measures to the most directly comparable IFRS financial measures as detailed above.
GLOBAL GRAPHICS SA AND SUBSIDIARIES
PRO FORMA PRE-TAX PROFIT COMPUTATION
In thousands of Euro, except share data in Euro
Unaudited and unreviewed figures
Quarters Nine months
ended 30 September to 30 September
2007 2006 2007 2006
Reported profit before income tax 925 611 4,151 2,758
Add back (deduct):
- Amortization of intangible assets
recorded in cost of sales 18 17 52 51
recorded in operating expenses 19 19 57 57
- Share compensation expenses 101 22 349 133
- Capitalization of development expenses
as required by IAS 38 (note 4b) (811) (380) (2,437) (781)
- Amortization of capitalized development
expenses (note 4b) 93 14 227 41
- Change in the fair value of carry-back
tax assets (note 5) 0 (4) 0 (10)
Total adjustments
to reported profit before income tax (580) (312) (1,752) (509)
Pro forma pre-tax profit 345 299 2,399 2,249
Pro forma pre-tax profit per share 0.03 0.03 0.23 0.22
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(*) Pro forma pre-tax profit per share is computed using the weighted average number of ordinary shares outstanding during the respective periods, i.e. 10,248,915 shares and 10,198,128 shares for the quarters ended 30 September 2007 and 2006, and 10,239,257 shares and 10,180,317 shares for the nine months to 30 September 2007 and 2006, respectively.
The Company provides information prepared in accordance with and required by IFRSs, but it believes that evaluating its ongoing results may not be as useful if an investor is limited to reviewing only IFRS financial measures.
Accordingly, the Company uses pro forma financial information to evaluate its ongoing operations as well as for internal planning and forecasting purposes.
The Company’s management does not itself, nor does it suggest that investors should, consider such pro forma financial measures in isolation from, or as a substitute for, financial information prepared in accordance with IFRSs.
The Company presents such pro forma financial measures in reporting its financial results to provide investors with an additional tool to evaluate the Company’s results in a manner that focuses on what the Company believes to be its ongoing business operations.
The Company’s management believes that the inclusion of pro forma financial measures provides consistency and comparability with past reports of financial information and has historically provided comparability to similar companies in the Company’s industry, many of which present the same or similar pro forma financial measures to investors.
When the Company uses such a pro forma financial measure, it provides a reconciliation of the pro forma financial measure to the most closely applicable financial measure required by IFRSs.
Investors are encouraged to review the related IFRS financial measures and the reconciliation of these pro forma financial measures to the most directly comparable IFRS financial measures as detailed above.
GLOBAL GRAPHICS SA AND SUBSIDIARIES
PRO FORMA NET PROFIT COMPUTATION
In thousands of Euro, except share data in Euro
Unaudited and unreviewed figures
Quarters Nine months
ended 30 September to 30 September
2007 2006 2007 2006
Reported net profit 488 332 3,257 1,380
Add back (deduct):
- Amortization of intangible assets
recorded in cost of sales 18 17 52 51
recorded in operating expenses 19 19 57 57
- Share compensation expenses 101 22 349 133
- Net effect of the capitalization of
development expenses (note 4b) (718) (366) (2,210) (740)
- Change in the fair value of carry-back
tax assets (note 5) 0 (4) 0 (10)
- Tax effect of abovementioned adjustments 216 112 663 226
Total adjustments to reported net profit (364) (200) (1,089) (283)
Pro forma net profit 124 132 2,168 1,097
Pro forma net profit per share 0.01 0.01 0.21 0.11
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(*) Pro forma net profit per share is computed using the weighted average number of ordinary shares outstanding during the respective periods, i.e. 10,248,915 shares and 10,198,128 shares for the quarters ended 30 September 2007 and 2006, and 10,239,257 shares and 10,180,317 shares for the nine months to 30 September 2007 and 2006, respectively.
The Company provides information prepared in accordance with and required by IFRSs, but it believes that evaluating its ongoing results may not be as useful if an investor is limited to reviewing only IFRS financial measures.
Accordingly, the Company uses pro forma financial information to evaluate its ongoing operations as well as for internal planning and forecasting purposes.
The Company’s management does not itself, nor does it suggest that investors should, consider such pro forma financial measures in isolation from, or as a substitute for, financial information prepared in accordance with IFRSs.
The Company presents such pro forma financial measures in reporting its financial results to provide investors with an additional tool to evaluate the Company’s results in a manner that focuses on what the Company believes to be its ongoing business operations.
The Company’s management believes that the inclusion of pro forma financial measures provides consistency and comparability with past reports of financial information and has historically provided comparability to similar companies in the Company’s industry, many of which present the same or similar pro forma financial measures to investors.
When the Company uses such a pro forma financial measure, it provides a reconciliation of the pro forma financial measure to the most closely applicable financial measure required by IFRSs.
Investors are encouraged to review the related IFRS financial measures and the reconciliation of these pro forma financial measures to the most directly comparable IFRS financial measures as detailed above.
GLOBAL GRAPHICS SA AND SUBSIDIARIES
INFORMATION ON SHARE AND SHARE OPTION NUMBERS, VOTING RIGHTS AND SIGNIFICANT
SHAREHOLDINGS AS AT 30 SEPTEMBER 2007
Unaudited and unreviewed figures
SHARE AND SHARE OPTION NUMBERS
(a) Share number
- Shares outstanding at 1 January 2007 10,247,530
- Shares issued in the nine months to 30 September 2007 30,001
- Shares outstanding at 30 September 2007 10,277,531
(b) Share option number
- Options outstanding at 1 January 2007 172,277
- Options granted in the nine months to 30 September 2007 0
- Options that were cancelled in the nine months to 30 September 2007 (11,100)
- Options that expired in the nine months to 30 September 2007 0
- Options that were exercised in the nine months to 30 September 2007 (30,001)
- Options outstanding at 30 September 2007 131,176
of which:
Vested options, i.e. immediately exercisable at 30 September 2007 87,478
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c) Contingently issuable shares
On 12 December 2006, certain directors and employees were granted 69,710 shares which will be issuable for no cash on the second anniversary of the grant date (i.e. on 12 December 2008) upon the satisfaction of the following conditions:
- Continuing employment condition: the share grant recipient must be a director or an employee of the Company at any time until 12 December 2008;
- Minimum share price condition: the closing price for the Company’s share on the last trading day immediately preceding 12 December 2008, or the average of closing prices over the twenty trading day period immediately preceding such date, must be at least equal to Euro 12.00 a share; and
- The shares may not be sold, or otherwise disposed of, before 12 December 2010.
VOTING RIGHTS (*)
- Shares to which a double voting right is attached 25,720
- Shares to which a single voting right is attached 10,251,811
Total number of voting rights attached to the Company’s shares 10,303,251
outstanding at 30 September 2007
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SIGNIFICANT SHAREHOLDERS
Stichting Andlinger & Co. Euro-Foundation
- Number of shares held 2,882,981
% of total outstanding issued shares 28.05%
- Number of voting rights held 2,882,981
% of total voting rights (*) 27.98%
Other significant shareholders known to the Company
- In excess of 5% of outstanding issued shares (i.e. of 513,877 shares) none
- In excess of 5% of outstanding voting rights (i.e. of 515,163 rights) none
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Note:
(*) The information on voting rights is provided with regards to voting rights relating to all outstanding ordinary shares of the Company (i.e. 10,277,531 shares at 30 September 2007), before effect of the voting rights attached to the 128,968 own shares held by the Company at that date, which are deprived from their voting rights.
GLOBAL GRAPHICS SA AND SUBSIDIARIES
INTERIM MANAGEMENT REPORT OF THE COMPANY’S BOARD OF DIRECTORS
FOR THE QUARTER AND THE NINE-MONTH PERIOD ENDED 30 SEPTEMBER 2007
Translation of the French language original
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Pursuant to the transposition under article L.451-1-2 of the French Monetary and Financial Code of the EU Directive 2004/109/CE of the European Parliament and of the Council of 15 December 2004 (the ‘Transparency Directive’), we present to you the interim management report of the Company’s Board of Directors for the quarter and the nine-month period ended 30 September 2007.
NOTE 1: ORGANIZATION OF THE GLOBAL GRAPHICS GROUP OF COMPANIES (THE ‘COMPANY’)
(a) Structure of the Company at 30 September 2007
Please refer to note 12 of the Company’s consolidated interim financial statements for the quarter and the nine-month period ended 30 September 2007 for further details.
(b) Changes in the Company’s structure in the first nine months of 2007
No change occurred in the Company’s structure in either the quarter or the nine-month period ended 30 September 2007.
(c) Changes in the Company’s structure since 1 October 2007
No change has occurred in the Company’s structure since 1 October 2007.
NOTE 2: MANAGEMENT DISCUSSION OF KEY FIGURES
The Company prepares its consolidated accounts in accordance with the International Financial Reporting Standards (IFRSs) and related interpretations issued by the International Accounting Standards Board, and as adopted by the European Union (EU).
(a) Quarter ended 30 September 2007
(i) Consolidated sales
Sales were Euro 3,538,000 in the quarter ended 30 September 2007, compared with Euro 3,608,000 in the same quarter of 2006, or a decrease of 1.9% with the same period of the previous year’s figure at current exchange rates.
Approximately 74.8% of the Company’s sales in the quarter ended 30 September 2007 (78.4% in the quarter ended 30 September 2006) were denominated in US dollars, which substantially decreased versus the Euro (the Company’s reporting currency) as the average exchange Euro/US dollar rate was 1.377 in the quarter ended 30 September 2007 while it was 1.274 in the quarter ended 30 September 2006, or a sequential decrease of 8.1%.
At constant exchange rates, sales made in the quarter ended 30 September 2007 would amount to approximately Euro 3,800,000, showing an increase of 5.3% over the sales figure actually reported for the quarter ended 30 September 2006.
Sales made in the traditional graphic arts segment were Euro 1,128,000 in the quarter ended 30 September 2007, showing a decrease of 23.5% at current exchange rates and of 17.9% at constant exchange rates over sales made in the same segment in the same period of 2006.
Sales made in the digital print and electronic document markets were Euro 2,410,000 in the quarter ended 30 September 2007, showing an increase of 13.0% at current exchange rates and of 21.4% at constant exchange rates over sales made in the same period of 2006 in the same market segments.
(ii) Consolidated performance
Operating profit
The Company reported an operating profit of Euro 896,000 in the quarter ended 30 September 2007 (or 25.3% of the quarter’s sales) compared with a profit of Euro 679,000 (18.8% of that quarter’s sales) in the quarter ended 30 September 2006, or a favorable variance of Euro 217,000 which can be analyzed as follows:
- consolidated sales decreased by Euro 70,000 (see above);
- cost of goods sold was Euro 114,000 in the quarter ended 30 September 2007 (or 3.2% of the quarter’s sales), the same as in the quarter ended 30 September 2006;
- the intangible asset amortization expense included in cost of sales was Euro 18,000 in the quarter ended 30 September 2007 compared with Euro 17,000 in the quarter ended 30 September 2006 (0.5% of both quarters’ sales), or an unfavorable variance of Euro 1,000;
- selling, general and administrative expenses were Euro 1,192,000 in the quarter ended 30 September 2007 (or 33.7% the quarter’s sales), showing a sequential decrease of Euro 174,000 (or 12.7%) over the Euro 1,366,000 figure reported for the quarter ended 30 September 2006 (37.9% of that quarter’s sales), notably as the result of the cost control initiatives undertaken by the Company;
- research and development expenses were Euro 1,198,000 in the quarter ended 30 September 2007 (or 33.9% the quarter’s sales) showing a sequential decrease of Euro 193,000 (or 13.9%) over the Euro 1,391,000 figure reported for the quarter ended 30 September 2006 (38.6% of that quarter’s sales) despite a continuing build-up in development resources, notably in India (see note 6b below), because of the net effect of the capitalization of development expenses totaling Euro 718,000 in the quarter ended 30 September 2007 (a net effect of Euro 366,000 in the quarter ended 30 September 2006) relating to two development projects for which all criteria for such capitalization were met;
- share option and share grant compensation expenses were Euro 101,000 in the quarter ended 30 September 2007 (or 2.9% of the quarter’s sales) showing an increase of Euro 79,000 over the Euro 22,000 figure reported in the quarter ended 30 September 2006 (or 0.6% of that quarter’s sales);
- intangible asset amortization expenses included in operating expenses were Euro 19,000 in both the quarters ended 30 September 2007 and 2006 (0.5% of both quarters’ sales).
Profit before income tax
The profit before income tax was Euro 925,000 in the quarter ended 30 September 2007 (or 26.1% of the quarter’s sales), compared with a profit before income tax of Euro 611,000 in the quarter ended 30 September 2006 (16.9% of that quarter’s sales, or a favorable variance of Euro 314,000 which results from the combination of: (i) the increase of the operating result as discussed above, (ii) the increase in interest income (net of interest expenses) of Euro 20,000 over the same period of 2006, and (iii) the effect of foreign currency exchange differences, which were a net gain of Euro 10,000 in the quarter ended 30 September 2007, compared to a net loss of Euro 67,000 in the quarter ended 30 September 2006, of a favorable sequential variance of Euro 77,000.
Net profit
The net profit was Euro 488,000 in the quarter ended 30 September 2007 (or Euro 0.05 per share), after giving effect to a tax charge of Euro 437,000, compared with a net profit of Euro 332,000 in the quarter ended 30 September 2006 (or Euro 0.03 per share), after giving effect to a tax charge of Euro 279,000.
(b) Nine-month period ended 30 September 2007
(i) Consolidated sales
Sales were Euro 12,908,000 in the nine-month period ended 30 September 2007, compared with Euro 12,050,000 in the same period of 2006, or an increase of 7.1% with the figure reported for the first nine months of 2006 at current exchange rates.
Approximately 85.5% of the Company’s sales in the nine-month period ended 30 September 2007 (78.8% in the nine-month period ended 30 September 2006) were denominated in US dollars, which substantially decreased versus the Euro as the average exchange Euro / US dollar rate was 1.343 in the nine-month period ended 30 September 2007 while it was 1.238 in the nine-month period ended 30 September 2006, or a sequential decrease of 8.5%.
At constant exchange rates, sales made in the nine-month period ended 30 September 2007 would amount to approximately Euro 13,901,000, showing an increase of 15.4% over the figure actually reported for the nine-month period ended 30 September 2006.
Sales made in the traditional graphic arts segment in the first nine months of 2007 were Euro 4,318,000, and decreased by 25.9% at current exchange rates and by 20.1% at constant exchange rates over sales made in the same segment in the same period of 2006.
Sales made in the digital print and electronic document markets were Euro 8,590,000 in the first nine months of 2007, and increased by 38.1% at current exchange rates and by 48.6% at constant exchange rates over sales made in the same markets in the same period of 2006. Sales in these new segments accounted for 66.5% of the Company’s total sales for the nine-month period ended 30 September 2007 (51.6% in the nine-month period ended 30 September 2006).
(ii) Consolidated performance
Operating profit
The Company reported an operating profit of Euro 4,149,000 in the nine-month period ended 30 September 2007 (32.1% of the period’s sales), compared with a profit of Euro 2,472,000 in the nine-month period ended 30 September 2006 (20.5% of that period’s sales), or a favorable variance of Euro 1,677,000 which can be analyzed as follows:
- consolidated sales increased by Euro 858,000 (see above);
- cost of goods sold was Euro 354,000 in the nine-month period ended 30 September 2007 (or 2.7% of the period’s sales), showing an increase of Euro 11,000 over the Euro 343,000 figure reported in the nine-month period ended 30 September 2006 (2.8% of that period’s sales);
- the intangible asset amortization expense included in cost of sales was Euro 52,000 in the nine-month period ended 30 September 2007 compared with Euro 51,000 in the nine-month period ended 30 September 2006 (0.4% of both periods’ sales), or an unfavorable variance of Euro 1,000;
- selling, general and administrative expenses were Euro 4,206,000 in the nine-month period ended 30 September 2007 (or 32.6% the period’s sales), showing a decrease of Euro 286,000 (or 6.4%) over the Euro 4,492,000 figure reported for the nine-month period ended 30 September 2006 (37.3% of that period’s sales);
- research and development expenses were Euro 3,741,000 in the nine-month period ended 30 September 2007 (or 29.0% the period’s sales) showing a decrease of Euro 761,000 (or 16.9%) over the Euro 4,502,000 figure reported for the nine-month period ended 30 September 2006 (37.4% of that period’s sales) mostly because of the net effect of the capitalization of development expenses totaling Euro 2,210,000 in the nine-month period ended 30 September 2007 (Euro 740,000 in the nine-month period ended 30 September 2006) relating to three development projects for which all criteria for such capitalization were met;
- share option and share grant compensation expenses were Euro 349,000 in the nine-month period ended 30 September 2007 (or 2.7% of the period’s sales) showing an increase of Euro 216,000 over the Euro 133,000 figure reported in the nine-month period ended 30 September 2006 (or 1.1% of that period’s sales);
- intangible asset amortization expenses included in operating expenses were Euro 57,000 in both the nine-month period ended 30 September 2007 (0.4% of the period’s sales) and the nine-month period ended 30 September 2006 (0.5% of that period’s sales).
Profit before income taxes
The profit before income taxes was Euro 4,151,000 in the nine-month period ended 30 September 2007 (or 32.2% of the period’s sales), compared with a profit before income taxes of Euro 2,758,000 in the nine-month period ended 30 September 2006 (22.9% of that period’s sales), or a favorable variance of Euro 1,393,000 which results from the combination of: (i) the increase of the operating result as discussed above, (ii) the increase in interest income (net of interest expenses) of Euro 60,000 over the same period of 2006, and (iii) the effect of foreign currency exchange differences, which were a net loss of Euro 29,000 in the nine-month period ended 30 September 2007, compared to a net gain of Euro 315,000 in the nine-month period ended 30 September 2006, or an unfavorable variance of Euro 344,000.
Net profit
The net profit was Euro 3,257,000 in the nine-month period ended 30 September 2007 (or Euro 0.32 per share), after giving effect to a tax charge of Euro 894,000, compared with a net profit of Euro 1,380,000 in the nine-month period ended 30 September 2006 (or Euro 0.14 per share), after giving effect to a tax charge of Euro 1,378,000.
NOTE 3: MANAGEMENT’S COMMENTS ON THE COMPANY’S PERFORMANCE
(a) Salient features for the nine-month period ended 30 September 2007
(i) Operational highlights
Despite the recent, unfavorable evolution of the exchange rate between the Euro and the US dollar, a slow graphic arts market since the start of the year, and a lack of urgency from digital printing equipment manufacturers to launch XPS-compatible devices subsequent to a slower than expected adoption of Vista, the Company’s consolidated results for the first nine months of 2007 are in line with management’s expectations for such period, notably because:
- sales in the new market segments were significantly higher than those made in the same segments in the first nine months of 2006, as a result of the contribution of the contracts signed in the last quarter of 2006; and
- operating expenses have been under tight control since the start of the year; whereas non-operating expenses (notably foreign currency exchange differences) had a nominal effect on the Company’s reported performance over the first nine months of 2007.
(ii) Financial highlights
Liquidity
Cash flow provided by the Company’s operations was Euro 3,782,000 in the nine-month period ended 30 September 2007 (or 29.3% of the period’s sales), compared with Euro 3,382,000 in the nine-month period ended 30 September 2006 (or 28.1% of that period’s sales).
Such cash flow combined with cash balances available at 1 January 2007 (which amounted to a total of Euro 3,310,000) allowed the Company to:
* repay all of the bank overdraft facilities which were outstanding at 1 January 2007 for a total of Euro 234,000;
* fund the Company’s capital expenditures on property, plant and equipment of Euro 326,000 in the nine-month period ended 30 September 2007, or resulting from the capitalization of development expenses (see note 2b above) which totaled Euro 2,437,000 in the nine-month period ended 30 September 2007;
* allow the Company to repurchase some of its own shares for a total of Euro 779,000 (see below); and
* close the period with a net cash position of Euro 3,358,000, compared with a net cash position of Euro 3,076,000 at 1 January 2007, or a favorable variance of Euro 282,000 over the first nine months of the year ending 31 December 2007.
Exercise of share options
A total of 30,001 share options were exercised in the nine-month period ended 30 September 2007, resulting in total exercise proceeds of Euro 104,000.
Share repurchases
A total of 91,298 of its own shares were repurchased by the Company in the nine-month period ended 30 September 2007 (including 59,398 shares in the third quarter 2007 alone) for a total cost of Euro 779,000.
(b) Prospects for the rest of the current financial year
(i) Operational prospects
Sales in the graphic arts segment of the Company’s business are expected to pick up in the last quarter of 2007, notably because of upgrade sales of the new version of the Harlequin RIP which was launched at Graph Expo in September.
As to sales in the other segments of the Company’s business, ongoing negotiations continue with a number of potential new digital print customers which are expected to turn into contracts before the end of the current year. In addition, further contracts for the Company’s electronic document technology are expected to be signed during the fourth quarter of 2007.
(ii) Financial prospects
Considering the Company’s actual results for the first nine months of the current year and its current expectations for the three months to 31 December 2007, and because of the slower than expected adoption of XPS and the unfavorable evolution of the exchange rate between the US dollar and the Euro, the Company’s management now expects sales for the current year to range between Euro 17.0 and 18.0 million, EBITA to range between Euro 3.2 and 4.0 million, i.e. between 18.8% and 22.2% of the projected sales for 2007 (EBITA was Euro 2.4 million for the first nine months of 2007, or 18.6% of such period’s sales), and pro forma pre-tax profit to range between Euro 0.31 and 0.40 per share (pro forma pre-tax profit was Euro 0.23 per share for the first nine months of 2007).
Such guidance is based on current exchange rates, namely 1.417 US dollars for 1 Euro and 2.040 US dollars for 1 British Pound.
NOTE 4: SIGNIFICANT OPERATIONAL AND FINANCIAL RISK FACTORS
(a) Significant operational risk factors
(i) Dependence on the graphic arts and digital print industries
The Company derives substantially all of its revenues from software products and related services provided to the graphic arts and digital print industries. Accordingly, the Company’s future success significantly depends upon the continued demand for its products within such industries.
The Company believes that an important factor in its growth has been the substantial change in the graphics arts and digital print industries, as evidenced by continuing consolidation and technological innovation (notably the introduction of new Page Description Languages, or PDLs, such as XPS, Microsoft’s new, fixed-document format). If this environment of change were to slow, the Company could experience reduced demand for its products.
(ii) Failure to manage a successful transition to new products and markets
Any delays or failures in developing new products, including upgrades of current products, and anticipating changing customer requirements or market conditions, may have a harmful impact on the Company’s sales and operating results.
The Company has historically derived a significant portion of its revenues from the sale of new and enhanced software products (such as Raster Imaging Processors or RIPs). Additionally, the Company plans to release numerous new product offerings and upgrade versions of its current software products, including the transition of its RIP product to new variants (e.g. host driver and embedded variants) and new operating systems releases, pursuant to the introduction of XPS, and in connection with the transition to new markets, such as those for its Electronic Document conversion Library (EDL) technology. The Company’s inability to extend its core technologies into new applications and new platforms and to anticipate or respond to technological changes and customer or market requirements could affect market acceptance of its products and could cause a decline in the Company’s sales and results.
(iii) Inadequate protection of its proprietary technology and intellectual property rights
The Company’s success is heavily dependent upon its proprietary technology. To protect its proprietary rights, the Company relies on a combination of patent, copyright, trade secret and trademark laws, as well as the early implementation and enforcement of non-disclosure and other contractual restrictions. As part of its confidentiality procedures, the Company enters into written non-disclosure agreements with its employees, prospective customers, OEMs and strategic partners and takes affirmative steps to limit access to, and distribution of, its software, intellectual property and other proprietary information.
Despite these efforts, in the event such agreements are not timely made, complied with or enforced, the Company may be unable to effectively protect its proprietary rights and the enforcement of its proprietary rights may be cost-prohibitive. Unauthorized parties may attempt to copy or otherwise obtain, distribute, or use the Company’s products or technology. Monitoring unauthorized use of the Company’s software products is difficult. Management cannot be certain that steps taken to prevent unauthorized use of the Company’s proprietary technology, particularly in countries where the laws may not protect proprietary rights as fully as in the EU or the United States, will be effective.
The Company’s source code also is protected as a trade secret. However, from time to time, the Company licenses its source code to OEMs and partners, which subjects it to the risk of unauthorized use or misappropriation despite the contractual terms restricting disclosure, distribution, copying and use. In addition, it may be possible for unauthorized parties to obtain, distribute, copy or use the Company’s proprietary information or to reverse engineer its trade secrets.
The Company holds patents, and has patent applications pending, in the United States and in the EU. There may be no assurance that patents held by the Company will not be challenged, that patents will issue from the pending applications or that any claims allowed from existing or pending patents will be of sufficient scope or strength to provide efficient protection for the Company’s intellectual property rights.
(iv) Costs of enforcing, acquiring and defending intellectual property rights
In connection with the enforcement of its own intellectual property rights, the acquisition of third party intellectual property rights or disputes relating to the validity or alleged infringement of third-party rights, including patent rights, the Company has been and may be in the future subject to claims, negotiations or protracted litigations.
Intellectual property disputes and litigation are typically very costly and can be disruptive to the Company’s business operations by diverting the attention and energies of management and key technical personnel. Although the Company has successfully defended or resolved past litigation and disputes, it may not prevail in any future litigation and disputes.
Third-party intellectual property rights could subject the Company to significant expenditures, require the Company to enter into royalty and licensing agreements on unfavorable terms, prevent the Company from licensing certain of its products, cause disruption to the markets where the Company operates or require the Company to satisfy indemnification commitments with its customers including contractual provisions under various license arrangements any one of which could harm the Company’s business.
(v) Fluctuating operating results and factors affecting operating results
As a result of a variety of factors discussed above, and also because of the effect on its revenue of new, multiple-element contracts which were recently signed, the Company’s quarterly sales and operating results for a particular period are difficult to predict. The Company’s sales may grow at a slower rate than experienced in previous periods, and, in some periods, may decline. Additionally, the Company periodically provides guidance on its future sales and results. Such guidance reflects a number of assumptions, including assumptions about product pricing and demand, seasonal trends, competitive factors, and adoption of new products or releases of existing products. If one or more of these assumptions proves incorrect, the Company’s actual results may vary materially from those anticipated, estimated or projected.
(vi) Recruitment and retention of key personnel
An important part of the Company’s future success depends on the continued service and availability of the Company’s senior management, including its Chief Executive Officer and other members of the executive team. These individuals have acquired specialized knowledge and skills with respect to the Company. The loss of any of these individuals could harm the Company’s business.
The Company’s business is also dependent on its ability to attract, retain, and motivate talented, highly skilled personnel, notably in the development and technical support areas. Such personnel are in high demand and competition for their talents is intense. Should the Company be unable to continue to successfully attract and retain key personnel, its business may be harmed.
(b) Significant financial risk factors
The Company’s activities expose it to a variety of financial risks, notably foreign exchange risk, credit risk, liquidity risk and cash flow interest-rate risk.
(i) Foreign exchange risk
The Company operates internationally and is exposed to foreign exchange risk arising from various currency exposures, primarily with respect to the US dollar and the British pound. Foreign exchange risk arises from future commercial transactions, recognized assets (notably trade receivables) and liabilities, as well as net investments in foreign operations.
To manage their foreign exchange risk arising from future commercial transactions, recognized assets and liabilities (i.e. which are denominated in a currency that is not the entity’s functional currency), certain entities in the Company use option currency contracts transacted with high-credit-quality financial institutions after review and approval by the Company’s Chief Financial Officer.
Since the beginning of the current year, the Company entered into several option contracts to mitigate its foreign currency exposure without payment of an upfront premium. These contracts give the Company the right, but not the obligation, to convert at the respective maturity dates of these contracts, an amount of US dollars (“$”) into Euros at a maximum rate (the “strike price”) assuming that, during the life of the corresponding contract, the exchange rate between the $ and the Euro was always higher than a minimum rate (the “trigger rate”). Should this trigger rate occur, the Company would be obliged to convert an amount of $ at the strike price at the maturity dates of these contracts.
At 30 September 2007, outstanding contracts are as follows:
- expiring on 15 November 2007: $ 500,000, at a strike price of $ 1.4100 for Euro 1 (and a trigger rate of $ 1.3150 for Euro 1);
- expiring on 13 December 2007: $ 500,000, at a strike price of $ 1.3300 for Euro 1 (and a trigger rate of $ 1.2395 for Euro 1); and
- expiring on 28 February 2008: $ 500,000, at a strike price of $ 1.3900 for Euro 1 (and a trigger rate of $ 1.2660 for Euro 1).
In addition, the Company has certain investments in foreign operations, whose net assets are exposed to foreign currency translation risk. Currency exposure arising from the net assets of the Company’s foreign operations in the UK and in the US is managed primarily through borrowings denominated in the relevant foreign currencies, where appropriate.
(ii) Credit risk
Financial instruments that potentially subject the Company to credit risk consist primarily of trade receivables.
As it markets and sells its products and services to a broad base of customers including OEM partners, distributors, and system integrators, the Company has no significant concentration of credit risk though relatively few customers accounted for a substantial portion of the Company’s sales within the last few years as a result of the dominance of a limited number of companies in the Company’s markets.
In the first nine months of 2007, the ten major customers represented approximately 65.4% of the Company’s sales for the period (48.1% for the same period of 2006, and 52.9% for the whole of 2006); approximately 49.4% of the sales made in the first nine months of 2007 were made with the five largest customers of the Company (30.6% for the same period of 2006, and 35.9% for the whole of 2006) and approximately 24.6% with the major customer alone (7.3% for the same period of 2006, and 10.8% for the whole of 2006).
(iii) Liquidity risk
Prudent liquidity risk management implies maintaining sufficient cash and the availability of funding through an adequate amount of committed credit facilities, where appropriate.
Due to the dynamic nature of the underlying business, the Company aims to maintain flexibility by keeping committed credit lines available. However, at 30 September 2007, considering the Company’s net cash position of Euro 3,358,000 at such date (compared with a net cash position of Euro 3,076,000 at 31 December 2006) and the net cash flow provided by its operations in the first nine months of 2007 (amounting to Euro 3,782,000), the Company did not apply for any such lines of credit.
(iv) Cash-flow interest-rate risk
As the Company had no significant interest-bearing assets and liabilities at either 31 December 2006 or 30 September 2007, the Company’s income and operating cash flows for the quarter and the nine-month period ended 30 September 2007 were substantially independent of changes in market interest rates.
Please refer to note 5 to the Company’s consolidated interim financial statements for the quarter and the nine-month period ended 30 September 2007 for further details on the Company’s net financing costs for such periods.
NOTE 5: MAIN RELATED PARTY TRANSACTIONS
Please refer to note 11 to the Company’s consolidated interim financial statements for the quarter and the nine-month period ended 30 September 2007 for further details.
NOTE 6: INFORMATION ON THE COMPANY’S PERSONEL
(a) Breakdown by geographical area of employment
30 September 31 December 30 September
2007 2006 2006
United Kingdom 79 84 81
India 22 17 9
United States of America 18 18 18
Japan 4 4 2
Continental Europe 2 2 2
Total 125 125 112
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(b) Breakdown by nature of employment
30 September 31 December 30 September
2007 2006 2006
Research and development 81 80 71
Sales, marketing and support 25 24 22
General, administrative and other 19 21 19
Total 125 125 112
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NOTE 7: INFORMATION REGARDING GLOBAL GRAPHICS SA
(a) Overview
Global Graphics SA is the French holding company of the Global Graphics group of companies and plays a pivotal role in managing the Company’s business and growth.
(b) Statutory key figures for the nine-month period ended 30 September 2007
Because Global Graphics SA has only one employee and all of Global Graphics SA sales result from the recharge of corporate management fees to the Company’s operating entities (notably those based in the UK and in the US), its statutory results for the quarter and the nine-month period ended 30 September 2007 are not provided since they were not considered as meaningful with respect to the reporting of the Company’s interim consolidated results for the quarter and the nine-month period ended 30 September 2007.
GLOBAL GRAPHICS SA AND SUBSIDIARIES
STATEMENT MADE BY THE PERSON TAKING RESPONSIBILITY FOR THE FINANCIAL REPORT
FOR THE FIRST NINE MONTHS OF THE YEAR ENDING 31 DECEMBER 2007
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Translation of the French language original
I hereby confirm that, to the best of my knowledge, the interim consolidated accounts included in the Company’s financial report for the first nine months of the year ending 31 December 2007 have been prepared in accordance with IAS 34, Interim Financial Reporting, and give a true and fair view of the assets, liabilities, financial position, and profit or loss of Global Graphics SA and its subsidiaries as at and for the nine months to 30 September 2007.
I also hereby confirm that the attached interim management report includes a fair review of the information referred to in article 222-6 of the Règlement général de l’Autorité des marchés financiers, and notably of the material events that occurred in the first nine months of the current financial year and their impact on the interim consolidated accounts, the main risks and uncertainties for the remaining three months of the current financial year, and the main transactions with related parties which occurred in the nine-month period ended 30 September 2007.
Made in Brussels (Belgium) on 18 October 2007,
James Freidah
Chief Executive Officer
Editor's Notes
Over Global Graphics
Global Graphics (http://www.globalgraphics.com) is een toonaangevende ontwikkelaar van technologie voor open document- en drukoplossingen. Het levert krachtige en gesofistikeerde softwarecomponenten voor de grafische en commerciële drukindustrie, voor de markt van digitale druk en voor PDF (Portable Document Format) software toepassingen. Global Graphics verkoopt zijn RIP, PDF, workflow en kleurentoepassingen aan een klantenkring die hoofdzakelijk bestaat uit apparatuurproducenten (OEMs), integratoren, softwareontwikkelaars en distributeurs. Deze partners omvatten de meeste belangrijke spelers in de digitale pre-press wereld, breedformaatkleurenprinters, kleurproefystemen, digitale kopieerapparaten, printers voor de kantoor- en SOHO-markt en een brede waaier van toonaangevende softwaretoepassingen.
Toekomstgerichte verklaringen
Dit persbericht bevat, naast historische informatie, toekomstgerichte verklaringen die risico’s en onzekerheden inhouden. Dit omvat verklaringen aangaande de groei- en expansieplannen van de onderneming, haar financiering en de verwachte resultaten voor toekomstige perioden. Dergelijke verklaringen steunen op de huidige verwachtingen van het management en zijn onderhevig aan een aantal onzekerheden en risico’s die ertoe zouden kunnen leiden dat de feitelijke resultaten materieel verschillen van die beschreven in de toekomstgerichte verklaringen. Hoewel het management ervan overtuigd is dar zijn verwachtingen die in de toekomstgerichte verklaringen naar voren komen redelijk zijn, gebaseerd op de thans beschikbare informatie, kan het aan niemand garanderen dat de verwachtingen juist zullen blijken. Dienovereenkomstig is het aangewezen dat lezers niet louter en alleen op deze toekomstgerichte verklaringen vertrouwen. In ieder geval zijn deze verklaringen van toepassing op de datum van deze persmededeling. De vennootschap neemt geen enkele verplichting op zich om de hier geuite verklaringen te herzien of te actualiseren teneinde gebeurtenissen of omstandigheden van na de datum van deze mededeling of nieuwe informatie of het voorkomen van onvoorziene gebeurtenissen te reflecteren.
Contacts
Alain Pronost, CFO
Tel: + 33 6 62 60 56 51