Pompey, France 07/27/2007 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 het semester eindigend op 30 juni 2007.
De vergelijking van het tweede kwartaal 2007 met het zelfde kwartaal in 2006 is als volgt:
- Een kwartaalomzet van 4,4 miljoen euro (4,7 miljoen euro aan de wisselkoers van het 2e kwartaal 2006), vergeleken met 4,0 miljoen euro in het tweede kwartaal 2006.
- De EBIT bedroeg dit kwartaal 1,4 miljoen euro, vergeleken met 0,8 miljoen euro in het tweede kwartaal 2006.
- De pro forma bedrijfswinst (EBITA) bedroeg dit kwartaal 0,8 miljoen euro, vergeleken met 0,6 miljoen euro in het tweede kwartaal 2006.
- De pro forma winst vóór belastingen bedroeg dit kwartaal 0,8 miljoen euro (of 0,08 euro per aandeel) tegenover 1,0 miljoen euro in het tweede kwartaal 2006 (of 0,10 euro per aandeel).
- De nettowinst bedroeg dit kwartaal 1,4 miljoen euro (of 0,14 euro per aandeel) in vergelijking met 0,2 miljoen euro in het tweede kwartaal 2006 (of 0,02 euro per aandeel).
- De pro forma netto winst bedroeg dit kwartaal 1,1 miljoen euro (of 0,10 euro per aandeel) tegenover 0,1 miljoen euro in het tweede kwartaal 2006 (of 0,01 euro per aandeel).
Jim Freidah, Chief Executive Officer, lichtte de resultaten toe: “De resultaten liggen in de lijn van onze verwachtingen en houden ons op koers om onze voorziene resultaten voor het jaar te bereiken. Wij voeren verder actief commerciële onderhandelingen met verscheidene potentiële klanten in de markt voor digitale druk en starten contractbesprekingen met zgn. Early Adopters van onze elektronische document technologie. Wij verwachten dat de omzet van deze nieuwe business segmenten (digitale druk en elektronische documenten) in het tweede halfjaar van 2007 sterk zal blijven. Hoewel de traditionele grafische markt het eerste semester zwakker presteerde dan in dezelfde periode van 2006, verwachten wij dat de omzet uit dit segment naar het jaareinde toe een opstoot zal kennen als gevolg van de lancering, in het derde kwartaal 2007, van een voor deze markt belangrijke RIP upgrade.”
Prestaties voor het tweede kwartaal
De kwartaalomzet bedroeg 4,4 miljoen euro tegenover 4,0 miljoen euro in het tweede kwartaal 2006, of een stijging met 8,1% tegen huidige wisselkoersen. Tijdens het voorbije kwartaal werd ongeveer 88,0% van de omzet uitgedrukt in US dollar (tegen een gemiddelde wisselkoers van 1,349 USD voor 1 euro). De wisselkoersschommelingen met de euro en het Britse pond bleven een weerslag hebben op de omzet van de Onderneming en haar bedrijfsresultaten. Indien de kwartaalomzet werd omgewisseld tegen de gemiddelde dollarkoers van toepassing in het tweede kwartaal van 2006 (1,256 USD voor 1 euro, of een vermindering met 7,4%), dan zou de omzet nagenoeg 4,7 miljoen euro hebben bedragen, een stijging met 15,5%, bij constante wisselkoersen, t.o.v. de omzet die over het tweede kwartaal 2006 werd gerapporteerd.
De totale bedrijfskosten voor het tweede kwartaal (exclusief kosten van verkopen, afschrijvingen van immateriële activa, uitgaven voor aandeelvergoeding en het netto effect van de kapitalisatie van ontwikkelingskosten van 0,7 miljoen euro in overeenstemming met IAS 38, d.w.z. na afschrijving van dergelijke kosten waar van toepassing) bedroegen 3,4 miljoen euro, ten opzichte van 3,3 miljoen euro tijdens dezelfde periode van 2006, of een opeenvolgende stijging met 3,0%.
De EBIT van het tweede kwartaal bedroeg 1,4 miljoen euro (of 31,5% van de kwartaalomzet) t.o.v. 0,8 miljoen euro in dezelfde periode vorig jaar (of 18,8% van de omzet van het tweede kwartaal 2006), wat een stijging van 81,5% betekent t.o.v. het tweede kwartaal 2006.
De EBITA (pro forma bedrijfswinst zoals in onderstaande tabel gedefinieerd) bedroeg in het tweede kwartaal 0,8 miljoen euro, ten opzichte van 0,6 miljoen euro in het tweede kwartaal 2006, of een stijging met 33,2% t.o.v. het tweede kwartaal 2006. Bijgevolg bedroeg de EBITA marge 19,0% van de kwartaalomzet in vergelijking met een marge van 15,50% in het tweede kwartaal 2006.
De pro forma winst vóór belasting (zoals in onderstaande tabel gedefinieerd) bedroeg in het tweede kwartaal 0,8 miljoen euro ten opzichte van 1,0 miljoen euro voor dezelfde periode van 2006, waarbij het laatste bedrag een wisselkoerswinst bevatte van 0,4 miljoen euro (d.w.z. een effect van ongeveer 0,04 euro per aandeel) terwijl het voorbije kwartaal een onbetekenend nettoverlies kende. Bijgevolg daalde de pro forma winst vóór belasting per aandeel van 0,10 euro in het tweede kwartaal 2006 naar 0,08 euro in het voorbije kwartaal, of een daling met 19,0% t.o.v. het tweede kwartaal 2006.
De netto winst bedroeg voor het tweede kwartaal 1,4 miljoen euro (of 0,14 euro per aandeel) na verwerking van een belastingsvoordeel van 0,1 miljoen euro, tegenover 0,2 miljoen euro voor dezelfde periode van 2006 (of 0,02 euro per aandeel) na verwerking van een belastingskost van 0,9 miljoen euro).
De pro forma netto winst (zoals in onderstaande tabel gedefinieerd) bedroeg voor het voorbije kwartaal 1,1 miljoen euro tegenover 0,1 miljoen euro voor dezelfde periode van 2006. Bijgevolg steeg de pro forma winst per aandeel van 0,01 euro in het tweede kwartaal 2006 naar 0,10 euro in het voorbije kwartaal.
Resultaten eerste semester 2007
De omzet voor het eerste halfjaar van 2006 bedroeg 9,4 miljoen euro tegen 8,4 miljoen euro in dezelfde periode van 2006, of een stijging met 11,0% tegen de huidige wisselkoersen. In het eerste semester werd ongeveer 89,5% van de omzet van de Onderneming uitgedrukt in US dollar (tegen een gemiddelde wisselkoers van 1,333 USD voor 1 euro). Indien de semesteromzet zou omgerekend worden tegen de gemiddelde dollarkoers van toepassing in het eerste semester van 2006 (een gemiddelde wisselkoers van 1,227 USD voor 1 euro, of een daling van 8,6%), dan zou de semesteromzet nagenoeg 10,1 miljoen euro hebben bedragen, of een groei met 19,7% t.o.v. dezelfde periode in 2006, bij gelijkblijvende wisselkoersen.
De totale bedrijfskosten voor het eerste halfjaar (exclusief kosten van verkopen, afschrijvingen van immateriële activa, uitgaven voor aandeelvergoeding en het netto effect van de kapitalisatie van ontwikkelingskosten van 1,5 miljoen euro in overeenstemming met IAS 38, d.w.z. na afschrijving van dergelijke kosten waar van toepassing) bedroegen 7,0 miljoen euro, tegenover 6,6 miljoen euro tijdens dezelfde periode van 2006, of een stijging met 6,6%.
De EBIT voor het eerste halfjaar bedroeg 3,3 miljoen euro (of 34,7% van de periodeomzet) t.o.v. 1,8 miljoen euro in dezelfde periode vorig jaar (of 21,2% van de omzet van de periodeomzet ), of een stijging van 81,4%.
De EBITA voor het eerste semester bedroeg 2,1 miljoen euro (ofwel 22,2% van de semesteromzet) tegenover 1,6 miljoen euro (of 19,0% van de semesteromzet voor dezelfde periode van 2006) of een stijging met 29,9%.
De pro forma winst vóór belasting voor het eerste halfjaar 2007 bedroeg 2,1 miljoen euro (of 0,20 euro per aandeel) tegenover 2,0 miljoen euro voor dezelfde periode in 2006. Dit laatste bedrag bevatte bovendien een wisselkoerswinst van 0,4 miljoen euro (d.w.z. een effect van ongeveer 0,04 euro per aandeel) of 0,19 euro per aandeel voor het eerste halfjaar van 2006. Het cijfer voor het eerste halfjaar 2007 betekent dus een stijging met 5,3% t.o.v. 2006.
De netto winst voor het eerste halfjaar 2007 bedroeg 2,8 miljoen euro (of 0,27 euro per aandeel) tegenover 1,0 miljoen euro voor dezelfde periode van 2006 (of 0,10 euro per aandeel), wat een groei met 64,2% vertegenwoordigt.
De pro forma nettowinst voor het eerste halfjaar 2007 bedroeg 2,0 miljoen euro, of 0,20 euro per aandeel tegenover 1,0 miljoen euro of 0,09 euro per aandeel voor dezelfde periode van 2006, wat een stijging van 111,8% betekent.
Liquiditeit
In het eerste halfjaar 2007 puurde de Onderneming 3,1 miljoen euro contanten uit haar activiteiten (of 33,1% van de periodeomzet) en verhoogde tevens haar netto kaspositie met 1,0 miljoen euro: van 3,1 miljoen euro op 1 januari 2007 naar 4,1 miljoen euro per 30 juni 2007, na verwerking van kapitaaluitgaven voor een totaal van 1,9 miljoen euro en het plan voor aandeleninkoop voor 0,3 miljoen euro.
Praktische details van de conference call m.b.t. de resultaten van het tweede kwartaal 2006
Global Graphics houdt vandaag, vrijdag 27 juli 2007, om 10h00 CET een conference call in het Engels. Deelnemers kunnen telefoneren naar +44 207 162 0025 en zich melden met “Global Graphics quarterly results conference call”. De telefoonconferentie is daarna nog gedurende 7 werkdagen te beluisteren door te bellen naar +44 207 031 4064, toegangscode 759694.
Bekendmaking van de resultaten van het derde kwartaal 2007
Global Graphics verwacht de resultaten voor het derde kwartaal en de periode van negen maanden eindigend op 30 september 2007, bekend te maken op vrijdag 19 oktober 2007 vóór beurstijd.
GLOBAL GRAPHICS SA AND SUBSIDIARIES
STATUTORY auditors’ report on REVIEW OF the 2007 interim financial INFORMATION
For the six-month period ended 30 June 2007
Translation of the French original
Dear Sirs,
Following our appointment as statutory auditors, and in accordance with the requirements of article L.232-7 of the French Commercial Law (Code de commerce), we hereby report to you on:
* the review of the accompanying condensed interim financial information of Global Graphics and subsidiaries as of 30 June 2007; and
* the verification of information included in the interim management report of the Company’s Board of Directors.
Management is responsible for the preparation and presentation of this condensed interim financial information in accordance with the International Financial Reporting Standards. Our responsibility is to express a conclusion on this interim financial information based on our review.
We conducted our review in accordance with professional standards applicable in France. A review of interim financial information consists of making inquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with professional standards applicable in France and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.
Based on our review, nothing has come to our attention that causes us to believe that the accompanying condensed consolidated interim financial information is not prepared, in all material respects, in accordance with IAS 34 - a standard of the International Financial Reporting Standards as adopted by the European Union on interim financial reporting.
In accordance with professional standards applicable in France, we have also verified the information given in the interim management report of the Company’s Board of Directors on the condensed consolidated interim financial information subject to our review.
We have no matters to report as to its fair presentation and its consistency with the condensed consolidated interim financial information.
Villers-les-Nancy and Nancy, 26 July 2007
The auditors
KPMG Audit Secef
A division of KPMG SA
Christophe Bernard Thierry Baillet
Partner Partner
GLOBAL GRAPHICS SA AND SUBSIDIARIES
CONSOLIDATED INTERIM INCOME STATEMENT
In thousands of Euro, except share data in Euro
Quarters Six months
ended 30 June to 30 June
2007 2006 2007 2006
Unaudited and Unaudited figures
unreviewed figures
Sales 4,366 4,037 9,370 8,442
Cost of sales (129) (107) (240) (229)
Amortization of intangible assets (17) (17) (34) (34)
GROSS PROFIT 4,220 3,913 9,096 8,179
Selling, general & administrative expenses (1,450) (1,652) (3,014) (3,126)
Research and development expenses (1,265) (1,437) (2,543) (3,111)
Share compensation expenses (112) (48) (248) (111)
Amortization of intangible assets (19) (19) (38) (38)
OPERATING PROFIT 1,374 757 3,253 1,793
Interest income (note 5) 12 34 18 51
Interest expenses (note 5) (3) (37) (6) (79)
Foreign exchange gains (losses), net (note 5) (42) 367 (39) 382
PROFIT BEFORE INCOME TAX 1,341 1,121 3,226 2,147
Income tax (benefit) expense (note 6) (51) 907 457 1,099
NET PROFIT 1,392 214 2,769 1,048
EARNINGS PER SHARE (note 7)
Basic net profit per share 0.14 0.02 0.27 0.10
Diluted net profit per share 0.14 0.02 0.27 0.10
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The accompanying selected explanatory notes are an integral part of these consolidated interim financial statements.
See accompanying statutory auditors’ report on review of the 2007 interim financial information for the six-month period ended 30 June 2007.
GLOBAL GRAPHICS SA AND SUBSIDIARIES
CONSOLIDATED INTERIM BALANCE SHEET
In thousands of Euro 30 June 2007 31 Dec. 2006
Unaudited
figures
ASSETS
NON-CURRENT ASSETS
Property, plant and equipment 1,111 1,039
Intangible assets 3,330 1,770
Goodwill 8,511 8,514
Other non-current assets 12 149
Deferred tax assets (note 4) 3,852 4,269
TOTAL NON-CURRENT ASSETS 16,816 15,741
CURRENT ASSETS
Inventories 93 94
Trade receivables 4,022 3,814
Current tax receivables 441 423
Other current assets 81 164
Prepaid expenses 621 440
Cash 4,068 3,310
TOTAL CURRENT ASSETS 9,326 8,245
TOTAL ASSETS 26,142 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 2,356 2,108
Reserve for own shares (note 9) (699) (399)
Accumulated deficit (4,374) (7,143)
Foreign currency translation adjustment (6,697) (6,638)
TOTAL SHAREHOLDERS' EQUITY 23,541 20,781
LIABILITIES
NON-CURRENT LIABILITIES
Other non-current liabilities 2 2
TOTAL NON-CURRENT LIABILITIES 2 2
CURRENT LIABILITIES
Bank overdrafts 3 234
Trade payables 468 457
Other payables 470 837
Customer advances and deferred revenue 1,658 1,675
TOTAL CURRENT LIABILITIES 2,599 3,203
TOTAL LIABILITIES 2,601 3,205
TOTAL LIABILITIES & SHAREHOLDERS' EQUITY 26,142 23,986
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The accompanying selected explanatory notes are an integral part of these consolidated interim financial statements.
See accompanying statutory auditors’ report on review of the 2007 interim financial information for the six-month period ended 30 June 2007.
GLOBAL GRAPHICS SA AND SUBSIDIARIES
CONSOLIDATED INTERIM STATEMENT OF CASH FLOWS
In thousands of Euro
Unaudited figures Six months
to 30 June
2007 2006
CASH FLOWS FROM OPERATING ACTIVITIES
* Profit before income tax 3,226 2,147
* Adjustments for:
- Depreciation on property, plant and equipment 181 94
- Amortization of intangible assets 72 72
- Amortization of capitalized development expenses 134 27
- Share compensation expenses 248 111
- Interest expenses (interest income) (12) 28
- Foreign currency exchange losses (gains) 39 (382)
- Expenses offset against the share premium (note 8) (2) (8)
- Other items (44) 803
* Change in value of operating assets and liabilities:
- Inventories 1 79
- Trade receivables (208) 48
- Current tax receivables (18) (445)
- Other current assets 83 (323)
- Prepaid expenses (181) (39)
- Trade payables 11 (51)
- Other payables (367) 86
- Customer advances and deferred revenue (17) 412
* Interest received 19 34
* Interest paid (7) (78)
* Income tax paid (57) (49)
NET CASH PROVIDED BY OPERATING ACTIVITIES 3,101 2,566
CASH FLOWS FROM INVESTING ACTIVITIES
* Acquisition of property, plant and equipment (266) (111)
* Capitalisation of development expenses (1,626) (401)
NET CASH USED IN INVESTING ACTIVITIES (1,892) (512)
CASH FLOWS FROM FINANCING ACTIVITIES
* Proceeds from the exercise of share options (note 8) 104 154
* Repurchase of own shares (note 9) (300) 0
* Repayment of bank overdrafts (231) (91)
* Repayment of borrowings 0 (1,776)
NET CASH USED IN FINANCING ACTIVITIES (427) (1,713)
NET INCREASE (DECREASE) IN CASH 782 341
CASH AT 1 JANUARY 3,310 4,548
EFFECT OF EXCHANGE RATE FLUCTUATIONS
ON CASH HELD AT 1 JANUARY (24) (221)
CASH AT 30 JUNE 4,068 4,668
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The accompanying selected explanatory notes are an integral part of these consolidated interim financial statements.
See accompanying statutory auditors’ report on review of the 2007 interim financial information for the six-month period ended 30 June 2007.
GLOBAL GRAPHICS SA AND SUBSIDIARIES
CONSOLIDATED INTERIM STATEMENT OF CHANGES IN SHAREHOLDERS’ EQUITY
In thousands of Euro
Unaudited figures
Six months to 30 June
2007 2006
Shareholders’ equity at 1 January 20,781 17,576
* Recognized income for the period:
- Net profit for the period 2,769 1,048
- Change in foreign currency translation adjustment (59) (408)
Total recognized income for the period 2,710 640
* Effect of share option schemes:
- Value of services rendered during the period 248 111
- Net proceeds from shares issued in the period 102 146
Total effect of share option schemes 350 257
* Effect of the share repurchase programme (300) 0
Shareholders’ equity at 30 June 23,541 18,473
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The accompanying selected explanatory notes are an integral part of these consolidated interim financial statements.
See accompanying statutory auditors’ report on review of the 2007 interim financial information for the six-month period ended 30 June 2007.
GLOBAL GRAPHICS SA AND SUBSIDIARIES
SELECTED EXPLANATORY NOTES TO THE 30 JUNE 2007 CONSOLIDATED INTERIM FINANCIAL STATEMENTS
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NOTE 1: REPORTING ENTITY
These consolidated interim financial statements as at and for the six months to 30 June 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 26 July 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 six months to 30 June 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 six months to 30 June 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 six months to 30 June 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 June 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 in the six months to 30 June 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.
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) Capitalized development costs as at and for the six months to 30 June 2006
At 30 June 2006, the Company considered it could demonstrate that it met all of the above-mentioned recognition criteria for two specific development projects.
Capitalized development expenses corresponding to the first project, which was completed and was commercially launched in September 2005, amounted to Euro 96,000 at 30 June 2006. These expenses are amortized from completion date over the expected useful life of the asset, expected to end on 30 June 2007; the corresponding amortization charge which was recognized in the quarter and six- month period ended 30 June 2006 with regards to this first project amounted to Euro 13,000, and Euro 27,000, respectively.
Capitalized development expenses corresponding to the second project amounted to Euro 255,000 at 31 December 2005 and to Euro 648,000 at 30 June 2006, following the capitalization of additional development expenses of Euro 230,000 and Euro 401,000 in the quarter and the six-month period ended 30 June 2006, respectively.
As the development of this second project was not completed at 30 June 2006, no amortization charge was recognized in the quarter and the six-month period ended 30 June 2006 with regards to this second project.
(ii) Capitalized development costs as at and for the six months to 30 June 2007
At 30 June 2007, the Company considered it could demonstrate that it met all of the above-mentioned recognition criteria for three development projects.
Capitalized development expenses corresponding to the first project, which amounted to a total of Euro 99,000, were fully amortized as at 30 June 2007: the corresponding amortization charge which was recognized in the quarter and the six-month period ended 30 June 2007 with regards to this first project amounted to Euro 14,000, and Euro 28,000, respectively.
Capitalized development expenses corresponding to the second project amounted to Euro 1,206,000 at 31 December 2006 and to Euro 2,545,000 at 30 June 2007, following the capitalization of additional development expenses of Euro 670,000 and of Euro 1,334,000 in the quarter and the six-month period ended 30 June 2007, respectively. As certain aspects of this project resulted in the delivery of certain RIP products in the six-month period ended 30 June 2007, corresponding costs were amortized over the expected useful life of the corresponding technology, i.e. a ten-year period, using a straight-line amortization method: the corresponding amortization charge which was recognized in both the quarter and the six-month period ended 30 June 2007 with regards to this second project amounted to Euro 106,000.
Capitalized development expenses corresponding to the third project amounted to Euro 203,000 at 31 December 2006 and to Euro 497,000 at 30 June 2007, following the capitalization of additional development expenses of Euro 141,000 and of Euro 292,000 in the quarter and the six-month period ended 30 June 2007, respectively. As the development of this third project was not completed at 30 June 2007, no amortization charge was recognized in the quarter and the six-month period ended 30 June 2007 with regards to this third project.
(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.
The Company recognizes liabilities for anticipated tax audit issues based on estimates of whether additional taxes will be due. Where the final outcome of these matters is different from the amounts that were initially recorded, such differences will impact the current and deferred income tax provisions in the period in which such determination is made.
(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 June 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 June 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 six-month period ended 30 June 2007 of 30%, resulted in the recognition of a deferred tax asset amounting to Euro 4,823,000, and a corresponding deferred tax benefit amounting to Euro 426,000 and Euro 201,000 in the quarter and the six-month period ended 30 June 2007, respectively.
* Deferred tax liability arising from the capitalization of developments costs
At 30 June 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 six-month period ended 30 June 2007 of 30%, resulted in the recognition of a deferred tax liability of Euro 913,000, and a corresponding deferred tax charge of Euro 243,000 and Euro 487,000 in the quarter and the six-month period ended 30 June 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 June 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 period ending 30 June 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 258,000 in both the quarter and the six-month period ended 30 June 2007, whereas 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 54,000 in both the quarter and the six-month period ended 30 June 2007.
Unrecognized deferred tax assets
The amount of capital allowances which were available to the UK subsidiary of the Company at 30 June 2007, but were not projected to be used within the four-year period ending 30 June 2011 and therefore did not result in the recognition of a deferred tax asset at 30 June 2007, amounted to Euro 10,255,000 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 June 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 2,871,000 at 30 June 2007.
NOTE 5: NET FINANCING COSTS
In thousands of Euro Quarters Six months
ended 30 June to 30 June
2007 2006 2007 2006
Interest income 12 31 18 45
Accretion on present value of carry-back tax assets 0 3 0 6
Total reported interest income 12 34 18 51
Interest expenses on borrowings 0 (34) 0 (72)
Interest expenses on bank overdrafts (3) (3) (6) (7)
Total reported interest expenses (3) (37) (6) (79)
Net interest income (expenses) 9 (3) 12 (28)
Foreign exchange transaction gains (losses) (70) 49 (55) 34
Fair value gains (losses) on contracts 28 318 16 348
Net foreign exchange gains (losses) (42) 367 (39) 382
Total net financing costs (33) 364 (27) 354
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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 2,000 in the quarter ended 30 June 2007 (a benefit of Euro 54,000 in the quarter ended 30 June 2006), resulting in a current income tax charge of Euro 45,000 in the six months to 30 June 2007 (a benefit of Euro 26,000 in the six months to 30 June 2006).
(b) Deferred income tax
The Company recorded a deferred income tax benefit amounting to Euro 53,000 in the quarter ended 30 June 2007 (a charge of Euro 961,000 in the quarter ended 30 June 2006), resulting in a deferred income tax charge of Euro 412,000 in the six months to 30 June 2007 (a charge of Euro 1,125,000 in the six months to 30 June 2006).
The following table provides a breakdown of the various components of the deferred tax (benefit) charge reported in the quarters and the six-month periods ended 30 June 2007 and 2006:
In thousands of Euro Quarters Six months
ended 30 June to 30 June
2007 2006 2007 2006
Charge arising from the recognition of intangible 243 69 487 120
assets, using the tax rate of 30% (note 4b)
Benefit arising from the amortisation of intangible (36) (3) (40) (6)
assets, using the tax rate of 30% (note 4b)
Effect of the re-measurement of the corresponding (54) 0 (54) 0
deferred tax liability at 30 June 2007 to account
for the future decrease in the tax rate (note 4c)
Benefit arising from the recognition of capital (426) 801 (201) 973
allowances available to the UK subsidiary using
the tax rate of 30%(note 4c)
Effect of the re-measurement of the corresponding 258 0 258 0
deferred tax asset at 30 June 2007 to account for
the future decrease in the tax rate (note 4c)
Other items (38) 94 (38) 38
Total deferred tax (benefit) charge (53) 961 412 1,125
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(c) Reconciliation of the 2007 effective tax expense (benefit)
Quarter Six months
In thousands of Euro ended 30 June 2007
Profit before income tax 1,341 3,226
Income tax expense (benefit) using the rate of 33.33% 447 1,075
Income tax expense (benefit) attributable to:
* Amortization of intangible assets (539) (694)
* Effect of differences in tax rates in foreign jurisdictions 5 (122)
* Effect of share-based plans 37 83
* Effect of the future change in the UK tax rate (note 6b) 204 204
* Effect of the UK research & development tax claim (219) (219)
* Other differences 14 130
Total income tax expense (benefit) in the income statement (51) 457
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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 June 2007 2006
Issued ordinary shares as at 1 April 10,272,531 10,175,375
Effect of the 23,000 shares issued on 2 June 2006 0 7,330
Effect of the 900 shares repurchased on 3 May 2007 (584) 0
Effect of the 5,000 shares issued on 15 June 2007 824 0
Weighted average number of ordinary shares for 10,272,771 10,182,705
the quarters ended 30 June
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(ii) Computation for the six months to 30 June 2007 2006
Issued ordinary shares as at 1 January 10,247,530 10,157,209
Effect of the 3,500 shares issued on 17 February 2006 0 2,591
Effect of the 14,666 shares issued on 27 March 2006 0 7,779
Effect of the 23,000 shares issued on 2 June 2006 0 3,685
Effect of the 3,001 shares issued on 7 February 2007 2,388 0
Effect of the 5,500 shares issued on 8 February 2007 4,345 0
Effect of the 16,500 shares issued on 13 February 2007 12,580 0
Effect of the 2,964 shares repurchased on 20 March 2007 (1,687) 0
Effect of the 80 shares repurchased on 21 March 2007 (45) 0
Effect of the 228 shares repurchased on 23 March 2007 (126) 0
Effect of the 8,664 shares repurchased on 26 March 2007 (4,643) 0
Effect of the 6,925 shares repurchased on 27 March 2007 (3,673) 0
Effect of the 1,242 shares repurchased on 28 March 2007 (652) 0
Effect of the 897 shares repurchased on 29 March 2007 (466) 0
Effect of the 10,000 shares repurchased on 30 March 2007 (5,138) 0
Effect of the 900 shares repurchased on 3 May 2007 (293) 0
Effect of the 5,000 shares issued on 15 June 2007 414 0
Weighted average number of ordinary shares for 10,250,534 10,171,264
the six months to 30 June
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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 June 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 June 2007 2006
Weighted average number of ordinary shares for 10,272,771 10,182,705
the quarters ended 30 June
Adjustment for outstanding share options 27,089 80,936
Weighted average number of ordinary shares for diluted
EPS computation for the quarters ended 30 June 10,299,860 10,263,641
(ii) Computation for the six months to 30 June 2007 2006
Weighted average number of ordinary shares for 10,250,534 10,171,264
the six months to 30 June
Adjustment for outstanding share options 36,356 91,851
Weighted average number of ordinary shares for diluted
EPS computation for the six months to 30 June 10,286,890 10,263,115
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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 six months to 30 June 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 June 2007.
(b) Share premium
The share premium amount increased by Euro 90,000 during the six months to 30 June 2007 through the net proceeds of the 30,001 share options exercised during that period (an increase of Euro 130,000 during the six months to 30 June 2006), after deduction of Euro 2,000 for operating expenses incurred in relation with the Company’s share option plans in the six months to 30 June 2006 (a deduction of Euro 8,000 for similar expenses in the six months to 30 June 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 31,900 shares were repurchased by the Company in the six-month period ended 30 June 2007(see note 7a), for a total of Euro 300,000.
In accordance with paragraph 33 of IAS 32, these 69,570 shares are held as treasury shares, and have been deducted from equity at 30 June 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 13 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 six-month periods ended 30 June 2007 and 2006, respectively, is as follows:
In thousands of Euro Quarters Six months
ended 30 June to 30 June
2007 2006 2007 2006
Continental Europe 576 595 1,484 1,242
United Kingdom 215 406 485 888
North America 3,048 2,083 6,356 4,536
Asia (including Japan and India) 517 954 1,023 1,754
Other countries 10 (1) 22 22
Total sales 4,366 4,037 9,370 8,442
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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 six-month periods ended 30 June 2007 and 2006, respectively, is as follows:
In thousands of Euro Quarters Six months
ended 30 June to 30 June
2007 2006 2007 2006
Continental Europe 0 0 0 0
United Kingdom 877 258 1,794 486
North America 3 10 13 15
Asia (including Japan and India) 35 7 85 11
Other countries 0 0 0 0
Total capital expenditures 915 275 1,892 512
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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 in the six-month period ended 30 June 2007 is Euro 19,000 and Euro 38,000, respectively (Euro 19,000 and Euro 38,000 also in the quarter and the six-month period ended 30 June 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 the six months ended 30 June 2006 and 2007, as follows:
In thousands of Euro Quarters Six months
ended 30 June to 30 June
2007 2006 2007 2006
Salaries 86 95 179 192
Other short-term benefits 1 2 3 3
Total 87 97 182 195
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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 six-month periods ended 30 June 2006 or 2007, respectively.
The expense corresponding to grants of share options and of shares at no cost made to date to the Company’s executive officers was Euro 33,000 and Euro 75,000 in the quarter and the six-month period ended 30 June 2007, respectively (Euro 18,000 and Euro 42,000 in the quarter and the six-month period ended 30 June 2006, respectively).
NOTE 12: SUBSIDIARIES
These consolidated financial statements include the accounts of the following companies for the six-month periods ended 30 June 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 Six months
ended 30 June to 30 June
2007 2006 2007 2006
Reported operating profit 1,374 757 3,253 1,793
Add back (deduct):
* Amortization of intangible assets
- recorded in cost of sales 17 17 34 34
- recorded in operating expenses 19 19 38 38
* Share compensation expenses 112 48 248 111
* Capitalization of development expenses
as required by IAS 38 (note 4b) (811) (230) (1,626) (401)
* Amortization of capitalized development
expenses (note 4b) 120 13 134 27
Total adjustments
to reported operating profit (543) (133) (1,172) (191)
Pro forma operating profit 831 624 2,081 1,602
Pro forma operating profit in % of sales 19.0% 15.5% 22.2% 19.0%
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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 Six months
ended 30 June to 30 June
2007 2006 2007 2006
Reported profit before income tax 1,341 1,121 3,226 2,147
Add back (deduct):
* Amortization of intangible assets
- recorded in cost of sales 17 17 34 34
- recorded in operating expenses 19 19 38 38
* Share compensation expenses 112 48 248 111
* Capitalization of development expenses
as required by IAS 38 (note 4b) (811) (230) (1,626) (401)
* Amortization of capitalized development
expenses (note 4b) 120 13 134 27
* Change in the fair value of carry-back
tax assets (note 5) 0 (3) 0 (6)
Total adjustments
to reported profit before income tax (543) (136) (1,172) (197)
Pro forma pre-tax profit 798 985 2,054 1,950
Pro forma pre-tax profit per share 0.08 0.10 0.20 0.19
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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. 10,272,772 shares and 10,182,705 shares for the quarters ended 30 June 2007 and 2006, and 10,250,534 shares and 10,171,264 shares for the six months to 30 June 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 Six months
ended 30 June to 30 June
2007 2006 2007 2006
Reported net profit 1,392 214 2,769 1,048
Add back (deduct):
* Amortization of intangible assets
- recorded in cost of sales 17 17 34 34
- recorded in operating expenses 19 19 38 38
* Share compensation expenses 112 48 248 111
* Net effect of the capitalization of
development expenses (note 4b) (691) (217) (1,492) (374)
* Change in the fair value of carry-back
tax assets (note 5) 0 (3) 0 (6)
* Tax effect of abovementioned adjustments 207 66 447 114
Total adjustments to reported net profit (336) (70) (725) (83)
Pro forma net profit 1,056 144 2,044 965
Pro forma net profit per share 0.10 0.01 0.20 0.09
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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. 10,272,772 shares and 10,182,705 shares for the quarters ended 30 June 2007 and 2006, and 10,250,534 shares and 10,171,264 shares for the six months to 30 June 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 JUNE 2007
Unaudited and unreviewed figures
SHARE AND SHARE OPTION NUMBERS
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(a) Share number
* Shares outstanding at 1 January 2007 10,247,530
* Shares issued in the six months to 30 June 2007 30,001
* Shares outstanding at 30 June 2007 10,277,531
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(b) Share option number
* Options outstanding at 1 January 2007 172,277
* Options granted in the six months to 30 June 2007 0
* Options that were cancelled in the six months to 30 June 2007 (4,350)
* Options that expired in the six months to 30 June 2007 0
* Options that were exercised in the six months to 30 June 2007 (30,001)
* Options outstanding at 30 June 2007 137,926
of which:
Vested options, i.e. immediately exercisable at 30 June 2007 90,644
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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 26,220
* Shares to which a single voting right is attached 10,251,311
* Total number of voting rights attached to the Company’s shares 10,303,751
outstanding at 30 June 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. 513,877 shares) none
- In excess of 5% of outstanding voting rights (i.e. 515,188 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 June 2007), not taking into account the 69,570 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 SIX-MONTH PERIOD ENDED 30 JUNE 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 six-month period ended 30 June 2007.
NOTE 1: ORGANIZATION OF THE GLOBAL GRAPHICS GROUP OF COMPANIES (THE ‘COMPANY’)
(a) Structure of the Company at 30 June 2007
Please refer to note 12 to the Company’s consolidated interim financial statements for the quarter and the six-month period ended 30 June 2007 for further details.
(b) Changes in the Company’s structure in the first six months of 2007
No change occurred in the Company’s structure in either the quarter or the six-month period ended 30 June 2007.
(c) Changes in the Company’s structure since 1 July 2007
No change has occurred in the Company’s structure since 1 July 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 June 2007
(i) Consolidated sales
Sales were Euro 4,366,000 in the quarter ended 30 June 2007, compared with Euro 4,037,000 in the same quarter of 2006, or an increase of 8.1% with the same period of the previous year’s figure at current exchange rates.
Approximately 88.0% of the Company’s sales in the quarter ended 30 June 2007 (74.5% in the quarter ended 30 June 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 1.349 in the quarter ended 30 June 2007 while it was 1.256 in the quarter ended 30 June 2006, or a sequential decrease of 7.4%.
At constant exchange rates, sales made in the quarter ended 30 June 2007 would amount to approximately Euro 4,661,000, showing an increase of 15.5% over the sales figure reported for the quarter ended 30 June 2006.
Sales made in the traditional graphic arts segment were Euro 1,413,000 in the second quarter of 2007, showing a decrease of 26.9% at current exchange rates and of 21.7% 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 2,953,000 in the second quarter of 2007, showing an increase of 40.3% at current exchange rates and of 49.7% 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 1,374,000 in the quarter ended 30 June 2007 (or 31.5% of the quarter’s sales) compared with a profit of Euro 757,000 (18.8% of that quarter’s sales) in the quarter ended 30 June 2006, or a favorable variance of Euro 617,000 which can be analyzed as follows:
* consolidated sales increased by Euro 329,000 (see above);
* cost of goods sold was Euro 129,000 in the quarter ended 30 June 2007 (or 3.0% of the quarter’s sales), showing an increase of Euro 22,000 over the Euro 107,000 figure reported in the quarter ended 30 June 2006 (2.7% of that quarter’s sales);
* intangible asset amortization expenses included in cost of sales were Euro 17,000 in the quarter ended 30 June 2007 as well as in the quarter ended 30 June 2006 (0.4% of both quarters’ sales), as all intangible assets which were acquired in the years ended 31 December 1999 and 2000 (including patents and computer software programs) were fully amortized at 1 January 2006;
* selling, general and administrative expenses were Euro 1,450,000 in the quarter ended 30 June 2007 (or 33.2% the quarter’s sales), showing a sequential decrease of Euro 202,000 (or 12.2%) over the Euro 1,652,000 figure reported for the quarter ended 30 June 2006 (40.9% of that quarter’s sales), notably as the result of the cost control initiatives undertaken by the Company;
* research and development expenses were Euro 1,265,000 in the quarter ended 30 June 2007 (or 29.0% the quarter’s sales) showing a decrease of Euro 172,000 (or 12.0%) over the Euro 1,437,000 figure reported for the quarter ended 30 June 2006 (35.6% 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 691,000 in the quarter ended 30 June 2007 (a net effect of Euro 217,000 in the quarter ended 30 June 2006) relating to three development projects for which all criteria for such capitalization were met;
* share option and share grant compensation expenses were Euro 112,000 in the quarter ended 30 June 2007 (or 2.6% of the quarter’s sales) showing an increase of Euro 64,000 over the Euro 48,000 figure reported in the quarter ended 30 June 2006 (or 1.2% of that quarter’s sales);
* intangible asset amortization expenses included in operating expenses were Euro 19,000 in the quarter ended 30 June 2007 (0.4% of the quarter’s sales) as well as in the quarter ended 30 June 2006 (0.5% of that quarter’s sales), since all intangible assets which were acquired in the years ended 31 December 1999 and 2000 (including customer contracts and trademarks) were fully amortized at 1 January 2006, with the exception of certain trademarks.
Profit before income taxes
The profit before income taxes was Euro 1,341,000 in the quarter ended 30 June 2007 (or 30.7% of the quarter’s sales), compared with a profit before income taxes of Euro 1,121,000 in the quarter ended 30 June 2006 (27.8% of that quarter’s sales, or a favorable variance of Euro 220,000 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 12,000 over the same period of 2006, and (iii) the effect of foreign currency exchange differences, which were a net loss of Euro 42,000 in the quarter ended 30 June 2007, compared to a net gain of Euro 367,000 in the quarter ended 30 June 2006, of an unfavorable, sequential variance of Euro 409,000.
Net profit
The net profit was Euro 1,392,000 in the quarter ended 30 June 2007 (or Euro 0.14 per share), after giving effect to a tax benefit of Euro 51,000, compared with a net profit of Euro 214,000 in the quarter ended 30 June 2006 (or Euro 0.02 per share), after giving effect to a tax charge of Euro 907,000.
(b) Six-month period ended 30 June 2007
(i) Consolidated sales
Sales were Euro 9,370,000 in the six-month period ended 30 June 2007, compared with Euro 8,442,000 in the same period of 2006, or an increase of 11.0% with the same period of the previous year’s figure at current exchange rates.
Approximately 89.5% of the Company’s sales in the six-month period ended 30 June 2007 (79.5% in the six-month period ended 30 June 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 1.333 in the six-month period ended 30 June 2007 while it was 1.227 in the six-month period ended 30 June 2006, or a sequential decrease of 8.6%
At constant exchange rates, sales made in the six-month period ended 30 June 2007 would amount to approximately Euro 10,101,000, showing an increase of 19.7% over the figure reported for the six-month period ended 30 June 2006.
Sales made in the traditional graphic arts segment in the first six months of 2007 were Euro 3,190,000, and decreased by 26.8% at current exchange rates and by 20.9% 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 in the first six months of 2007 were Euro 6,180,000, and increased by 51.2% at current exchange rates and by 62.9% at constant exchange rates over sales made in the same period of 2006 in the same markets. Sales in these new segments accounted for 66.0% of the Company’s total sales for the six-month period ended 30 June 2007 (48.4% in the six-month period ended 30 June 2006).
(ii) Consolidated performance
Operating profit
The Company reported an operating profit of Euro 3,253,000 in the six-month period ended 30 June 2007 (34.7% of the period’s sales), compared with a profit of Euro 1,793,000 (21.2% of that period’s sales) in the six-month period ended 30 June 2006, or a favorable variance of Euro 1,460,000 which can be analyzed as follows:
* consolidated sales increased by Euro 928,000 (see above);
* cost of goods sold was Euro 240,000 in the six-month period ended 30 June 2007 (or 2.6% of the period’s sales), showing an increase of Euro 11,000 over the Euro 229,000 figure reported in the six-month period ended 30 June 2006 (2.7% of that period’s sales);
* intangible asset amortization expenses included in cost of sales were Euro 34,000 in the six-month period ended 30 June 2007 as well as in the six-month period ended 30 June 2006 (0.4% of both periods’ sales), as all intangible assets which were acquired in the years ended 31 December 1999 and 2000 were fully amortized at 1 January 2006;
* selling, general and administrative expenses were Euro 3,014,000 in the six-month period ended 30 June 2007 (or 32.2% the period’s sales), showing a decrease of Euro 112,000 (or 3.6%) over the Euro 3,126,000 figure reported for the six-month period ended 30 June 2006 (37.0% of that period’s sales);
* research and development expenses were Euro 2,543,000 in the six-month period ended 30 June 2007 (or 27.1% the period’s sales) showing a decrease of Euro 568,000 (or 18.3%) over the Euro 3,111,000 figure reported for the six-month period ended 30 June 2006 (36.9% of that period’s sales) despite a continuing build-up in development resources, notably in India (see note 6a below), because of the net effect of the capitalization of development expenses totaling Euro 1,492,000 in the six-month period ended 30 June 2007 (Euro 374,000 in the six-month period ended 30 June 2006) relating to certain development projects for which all criteria for such capitalization were met;
* share option and share grant compensation expenses were Euro 248,000 in the six-month period ended 30 June 2007 (or 2.6% of the period’s sales) showing an increase of Euro 137,000 over the Euro 111,000 figure reported in the six-month period ended 30 June 2006 (or 1.3% of that quarter’s sales);
* intangible asset amortization expenses included in operating expenses were Euro 38,000 in the six-month period ended 30 June 2007 (0.4% of the period’s sales) as well as in the six-month period ended 30 June 2006 (0.5% of that period’s sales), since all intangible assets which were acquired in the years ended 31 December 1999 and 2000 were fully amortized at 1 January 2006, with the exception of certain trademarks.
Profit before income taxes
The profit before income taxes was Euro 3,226,000 in the six-month period ended 30 June 2007 (or 34.4% of the period’s sales), compared with a profit before income taxes of Euro 2,147,000 in the six-month period ended 30 June 2006 (25.4% of that period’s sales), or a favorable variance of Euro 1,079,000 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 40,000 over the same period of 2006, and (iii) the effect of foreign currency exchange differences, which were a net loss of Euro 39,000 in the six-month period ended 30 June 2007, compared to a net gain of Euro 382,000 in the six-month period ended 30 June 2006, or an unfavorable variance of Euro 421,000.
Net profit
The net profit was Euro 2,769,000 in the six-month period ended 30 June 2007 (or Euro 0.27 per share), after giving effect to a tax charge of Euro 457,000, compared with a net profit of Euro 1,048,000 in the six-month period ended 30 June 2006 (or Euro 0.10 per share), after giving effect to a tax charge of Euro 1,099,000.
NOTE 3: MANAGEMENT’S COMMENTS ON THE COMPANY’S PERFORMANCE
(a) Salient features for the six-month period ended 30 June 2007
(i) Operational highlights
Despite the recent, unfavorable evolution of the exchange rate between the Euro and the US dollar, and a slow graphic arts market since the start of the year, the Company’s consolidated results for the first six months of the year ending 31 December 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 six months of 2006, as a result of the contribution of the contracts signed in the last quarter of 2006.
(ii) Financial highlights
Liquidity
Cash flow provided by the Company’s operations was Euro 3,101,000 in the six-month period ended 30 June 2007 (or 33.1% of the period’s sales), compared with Euro 2,566,000 in the six-month period ended 30 June 2006 (or 30.4% 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 231,000;
* fund the Company’s capital expenditures on property, plant and equipment of Euro 266,000 in the six-month period ended 30 June 2007, or resulting from the capitalization of development expenses (see note 2b above) which totaled Euro 1,626,000 in the six-month period ended 30 June 2007;
* allow the Company to repurchase some of its own shares for a total of Euro 300,000 (see below); and
* close the period with a net cash position of Euro 4,065,000, compared with a net cash position of Euro 3,076,000 at 1 January 2007, or a favorable variance of Euro 989,000 over the first six months of the year ending 31 December 2007.
Exercise of share options
A total of 30,001 share options were exercised in the six-month period ended 30 June 2007, resulting in total exercise proceeds of Euro 104,000.
Share repurchases
A total of 31,900 of its own shares were repurchased by the Company in the six-month period ended 30 June 2007, for a total cost of Euro 300,000.
(b) Prospects for the rest of the current financial year
(i) Operational prospects
Despite the typical slower summer period, sales in the traditional graphic arts market are expected to get a boost in the second half of the year, and notably in the fourth quarter when the Company expects to launch the new version of the Harlequin RIP program.
Sales in the new market segments are also expected to stand around or at higher levels than last year in the second half of the year, notably because of further expected contribution of the contracts signed in the last quarter of 2006.
Additionally, the Company remains in active negotiations with several potential customers in the digital print market and has started contract negotiations with Early Adopters of its electronic document technology.
(ii) Financial prospects
Considering the Company’s actual results for the first six months of the current year and its current expectations for the six months to 31 December 2007, and despite the unfavorable evolution of the exchange rate between the US dollar and the Euro, the Company’s management expects sales for the current year to range between Euro 18.0 and 20.0 million, EBITA to range between Euro 3.5 and 5.2 million, i.e. between 19.5% and 26.0% of the projected sales for 2007 (Euro 2.1 million in the first six months of 2007, or 22.2% of such period’s sales), and pre-tax pro forma profit to range between Euro 0.34 and 0.50 per share (Euro 0.20 per share in the first six months of 2007), as had been indicated in last April.
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 nondisclosure and other contractual restrictions. As part of its confidentiality procedures, the Company enters into written nondisclosure 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.
In January 2007, 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 June 2007, outstanding contracts are as follows:
* Expiring on 13 September 2007: $ 500,000, at a strike price of $ 1.3300 for Euro 1 (and a trigger rate of $ 1.2460 for Euro 1); and
* 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).
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 six months of 2007, the ten major customers represented approximately 68.7% of the Company’s sales for the period (50.1% for the same period of 2006, and 52.9% for the whole of 2006); approximately 53.6% of the sales made in the first six months of 2007 were made with the five largest customers of the Company (33.0% in the first six months of 2006, and 35.9% for the whole of 2006) and approximately 28.4% with the major customer alone (8.1% in the first six months 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 June 2007, considering the Company’s net cash position of Euro 4,065,000 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 six months of 2007 (amounting to Euro 3,101,000), 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 June 2007, the Company’s income and operating cash flows for the quarter and the six-month period ended 30 June 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 six-month period ended 30 June 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 six-month period ended 30 June 2007 for further details.
NOTE 6: INFORMATION ON THE COMPANY’S PERSONEL
(a) Breakdown by geographical area of employment
30 June 31 Dec. 30 June
2007 2006 2006
United Kingdom 80 84 80
India 25 17 5
United States of America 18 18 19
Japan 4 4 3
Continental Europe 2 2 2
Total 129 125 109
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(b) Breakdown by nature of employment
30 June 31 Dec. 30 June
2007 2006 2006
Research and development 84 80 67
Sales, marketing and support 26 24 24
General, administrative and other 19 21 18
Total 129 125 109
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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) Half-yearly statutory key figures
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 six-month period ended 30 June 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 six-month period ended 30 June 2007.
GLOBAL GRAPHICS SA AND SUBSIDIARIES
STATEMENT MADE BY THE PERSON TAKING RESPONSIBILITY FOR THE FINANCIAL REPORT FOR THE FIRST SIX MONTHS OF THE YEAR ENDING 31 DECEMBER 2007
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 six 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 six months to 30 June 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 six months of the current financial year and their impact on the interim consolidated accounts, the main risks and uncertainties for the remaining six months of the current financial year, and the main transactions with related parties which occurred in the six-month period ended 30 June 2007.
Made in Cambourne (United Kingdom) on 26 July 2007,
James Freidah
Chief Executive Officer
Editor's Notes
Over Global Graphics
Global Graphics (http://www.globalgraphics.com) is een toonaangevende ontwikkelaar van open document technologie 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