Pompey, France 10/20/2005 07:30:00 AM
GLOBAL GRAPHICS SA (Euronext: GLOG), a world leading developer of technology for open document and print solutions, announces financial results for the third quarter and the nine-month period ended 30 September 2005.
Pompey (France), 20 October 2005 - GLOBAL GRAPHICS SA (Euronext: GLOG), a world leading developer of technology for open document and print solutions, announces financial results for the third quarter and the nine-month period ended 30 September 2005.
Comparisons for the third quarter 2005 with the third quarter of the previous year include:
- Sales of Euro 4.3 million this quarter (Euro 4.3 million also at Q3 2004 exchange rates) compared with Euro 4.5 million in Q3 2004;
- EBITA margin of 31.7% in Q3 2005 compared with 31.5% in Q3 2004;
- Net income of 0.2 million this quarter compared with Euro 0.4 million in Q3 2004;
- Pro forma net income of Euro 1.4 million this quarter compared with Euro 1.5 million in Q3 2004, and;
- Pro forma EPS of 0.14 this quarter compared with Euro 0.15 in Q3 2004.
Jim Freidah, Chief Operating Officer, commented, “Sales slowed down during this quarter, showing a 3.5% decrease at constant exchange rates compared with the same quarter of 2004. Typically our slowest period of the year because of the summer months, revenues from our traditional market were particularly sluggish, down 8.9% for the third quarter and 6.0% year-to-date compared with the same period of 2004, at constant exchange rates. The pre-show pause in the lead up to a major US graphic arts trade show in September, Print ’05, contributed to this slow down, but we are expecting a strong fourth quarter to emerge from post show sales activity by our OEMs and system integrators at this event. Notably we expect increased revenue to result from sales of our Harlequin Print Production Manager, an initiative to target small format computer-to-plate and entry-level digital presses, and which several of our customers have already made standard with their RIPs.
“Growth in the digital print and electronic document segments remains strong. This growth is supported by a significant increase in revenues from customer shipments of production digital presses and digital office copier/printers (convenience digital print). Revenues from digital print and electronic documents are showing increases of 1.7% and 12.0% at constant exchange rates over the third quarter and year-to-date period of 2004, respectively. They account for approximately 55.9% of the Company’s total sales for the nine months to 30 September 2005 (51.6% for the first nine months of 2004).
“The first nine months of 2005 show a 3.2% increase at constant exchange rates compared with the first nine months of 2004. Looking ahead, there is growing interest from the major printer manufacturers in our XPS Early Adopter Programme. A strong sales pipeline is developing from our overall strategy to expand revenues from the digital print market where our technical excellence and flexibility provide us with a clear competitive advantage when approaching these accounts.”
Third quarter 2005 performance
Sales for the quarter amounted to Euro 4.3 million, compared with Euro 4.5 million in the third quarter 2004. The percentage of the Company’s revenues that are denominated in US dollars was approximately 85.7% this quarter. Accordingly, exchange rate fluctuations with the Euro continued to impact upon on the Company’s sales and results of operations: had sales made in US dollars this quarter been converted at the average US dollar rate applicable in the same quarter of 2004 (i.e. 1.223 US dollars for 1 Euro), total sales would have amounted to approximately Euro 4.3 million this quarter, showing a decrease of 3.5% over those reported in Q3 2004 at constant exchange rates.
Total operating expenses (excluding cost of sales, intangible assets amortization, share compensation expenses and the net effect of the capitalization of development expenses amounting to Euro 0.1 million this quarter) for this quarter amounted to Euro 2.9 million, as in Q3 2004, and compared to Euro 3.0 million in Q2 2005.
EBITA (defined in the accompanying table) was Euro 1.4 million for this quarter, similar to the amount reported in Q3 2004. EBITA margin was 31.7% of this quarter’s sales compared with 31.5% in Q3 2004 and 38.0% in Q2 2005.
Net profit for the third quarter 2005 was Euro 0.2 million, compared to Euro 0.4 million for the same period of 2004, the latter amount including a net profit from discontinued operations amounting to Euro 0.1 million.
Pro forma net income (defined in the accompanying table) was Euro 1.4 million for this quarter, compared with Euro 1.5 million in Q3 2004 and Euro 2.7 million reported in the second quarter of 2005 after effect of a deferred tax credit of Euro 1.1 million. Accordingly, pro forma EPS was Euro 0.14 this quarter compared with Euro 0.15 in Q3 2004, or a 6.7% decrease over Q3 2004.
First nine months performance
Sales for the first nine months of 2005 were Euro 14.5 million, slightly above the figure reported for the first nine months of 2004. The percentage of the Company’s revenues that are denominated in US dollars is approximately 83.1% on a year-to-date basis in 2005. Had sales made in US dollars for the first nine months of 2005 been converted using the average US dollar rate applicable in the same period of 2004 (i.e. 1.228 US dollars for 1 Euro for the first nine months of 2004 vs. 1.266 US dollars for 1 Euro for the first nine months of 2005), total sales would have amounted to approximately Euro 15.0 million for the first nine months of 2005, showing a 3.2% increase over 2004 sales at constant exchange rates.
EBITA was Euro 5.3 million for the first nine months of 2005, or 36.6% of the period’s sales, compared with the 2004 figure of Euro 4.9 million (33.7% of the first nine months of 2004 sales), showing a 9.0% improvement over the 2004 figure.
Net profit was Euro 2.7 million for the nine months to 30 September 2005, compared with a nominal net loss for the nine months to 30 September 2004.
Pro forma net income was Euro 6.2 million for the first nine months of 2005, or Euro 0.62 per share, an increase of 30.9% over the 2004 figure of Euro 4.8 million, or Euro 0.48 per share.
Johan Volckaerts, Chairman and Chief Executive Officer commented, “We currently expect results for the quarter and the year ending 31 December 2005 to allow us to reach the low end of the range for the 2005 pro forma EPS guidance provided last May, namely pro forma EPS of Euro 0.74 before tax effect and pro forma EPS of Euro 0.89 after tax effect. The US dollar strengthened during September to around 1.200 US dollars for 1 Euro, compared to our average year-to-date exchange rate of 1.266 US dollars for 1 Euro. However, if this improvement of 5.5% were to continue until year-end, it would no longer have a material impact on overall EPS for the year.
“Our cash position continues to increase rapidly, and net debt at 30 September 2005 stands at Euro 2.1 million, down by Euro 4.5 million since the beginning of the year. “
Transition to IFRSs
The Company adopted IFRSs for its financial reporting starting with the reporting for the quarter ended 31 March 2004. An explanation of how the transition to IFRSs has affected the Company’s financial position, financial performance and cash flows is set out in note 27 to the Company’s IFRS consolidated financial statements for the year ended 31 December 2004, which are included in the Company’s annual report for that year.
Third quarter 2005 conference call details
Global Graphics will hold a conference call today at 14.30 CET. Callers should dial +44 (0)20 7162 0080 and mention "Global Graphics quarterly results conference call" to the operator. The call will be available for replay for 7 working days by dialing number +44 (0) 20 7031 4064 (freephone number UK only: 0800 358 1860), access code 679528.
Fourth quarter and full year 2005 results announcement
Global Graphics expects to announce its financial results for the quarter ended 31 December 2005 and the full year 2005 on Thursday 9 February 2006.
GLOBAL GRAPHICS SA AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
PREPARED IN ACCORDANCE WITH IFRSs
In thousands of Euro, except share data in Euro
Unaudited figures
Quarters Nine months
ended 30 Sept. ended 30 Sept.
2005 2004 2005 2004
Sales (note 5) 4,321 4,467 14,547 14,487 Cost of sales (135) (171) (466) (564) Amortization of intangible assets (595) (643) (2,114) (3,275) GROSS PROFIT 3,591 3,653 11,967 10,648 Selling, general & administrative expenses (1,112) (1,263) (3,676) (4,204) Research and development expenses (1,673) (1,626) (4,989) (4,839) Share compensation expenses (100) (112) (312) (241) Amortization of intangible assets (523) (451) (1,740) (1,359) Other operating income (expenses) 0 0 0 0 OPERATING PROFIT (LOSS) 183 201 1,250 5 Interest expenses, net (43) (48) (161) (247) Foreign currency exchange gains (losses), net 53 201 39 (103) PROFIT (LOSS) BEFORE TAX 193 354 1,128 (345) Income tax expense (benefit) (note 6) 29 22 (1,546) (272) NET PROFIT (LOSS) FROM CONTINUING OPERATIONS 164 332 2,674 (73) Net profit (loss) from discontinued operations 0 50 0 50 NET PROFIT (LOSS) 164 382 2,674 (23) Basic net profit (loss) per share (note 7) 0.02 0.04 0.27 0.00 of which: from continuing operations 0.02 0.03 0.27 (0.01) from discontinued operations 0.00 0.01 0.00 0.01 Diluted net profit (loss) per share (note 7) 0.02 0.04 0.26 0.00 of which: from continuing operations 0.02 0.03 0.26 (0.01) from discontinued operations 0.00 0.01 0.00 0.01 |
The accompanying selected explanatory notes form part of the Company’s September 2005 consolidated interim financial statements.
GLOBAL GRAPHICS SA AND SUBSIDIARIES
PRO FORMA OPERATING PROFIT (EBITA) COMPUTATION
In thousands of Euro
Unaudited figures
Quarters Nine months
ended 30 Sept. ended 30 Sept.
2005 2004 2005 2004
Reported operating profit 183 201 1,250 5 Add back (deduct): * Amortization of intangible assets - in cost of sales 595 643 2,114 3,275 - in operating expenses 523 451 1,740 1,359 * Share compensation expenses 100 112 312 241 * Capitalization of development expenses as required by IAS 38 (note 4) (35) 0 (98) 0 * Amortization of capitalized development 2 0 2 0 expenses (note 4) Total adjustments to reported operating profit 1,185 1,206 4,070 4,875 Pro forma operating profit 1,368 1,407 5,320 4,880 Pro forma operating profit in % of sales 31.7% 31.5% 36.6% 33.7% |
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 and 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 figures
Quarters Nine months
ended 30 Sept. ended 30 Sept.
2005 2004 2005 2004
Reported net profit (loss) 164 382 2,674 (23) Add back (deduct): * Amortization of intangible assets - in cost of sales 595 643 2,114 3,275 - in operating expenses 523 451 1,740 1,359 * Share compensation expenses 100 112 312 241 * Capitalization of development expenses (35) 0 (98) 0 * Amort. of capitalized development expenses 2 0 2 0 * Change in fair value of carry back tax assets (4) (40) (9) (55) * Tax effect on above-mentioned items 49 15 32 20 * Tax benefit related to the Harlequin acquisition 0 0 (528) 0 * Income from discontinued operations 0 (50) 0 (50) Total adjustments, net of tax 1,230 1,131 3,565 4,790 Pro forma net profit 1,394 1,513 6,239 4,767 Pro forma net profit per share (*) 0.14 0.15 0.62 0.48 |
Notes to the Company’s pro forma net profit per share computation:
(*) Pro forma net profit per share is computed using the weighted average number of ordinary shares outstanding during the respective periods, i.e. 9,990,195 shares for both the quarter and the nine months ended 30 September 2004, and 10,079,564 shares and 10,054,951 shares for the quarter and the nine months ended 30 September 2005, 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 and 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
CONSOLIDATED BALANCE SHEETS
PREPARED IN ACCORDANCE WITH IFRSs
In thousands of Euro
30 September 31 December
2005 2004
Unaudited Audited
ASSETS figures figures NON-CURRENT ASSETS Property, plant and equipment 311 239 Intangible assets 380 4,004 Goodwill 8,355 8,074 Other non-current assets 371 454 Deferred tax assets (note 4) 3,979 2,830 TOTAL NON-CURRENT ASSETS 13,396 15,601 CURRENT ASSETS Inventories 127 69 Trade receivables, net 3,240 2,744 Other receivables 320 224 Prepaid expenses 519 356 Cash 4,273 2,640 TOTAL CURRENT ASSETS 8,479 6,033 TOTAL ASSETS 21,875 21,634 LIABILITIES & SHAREHOLDERS' EQUITY SHAREHOLDERS' EQUITY Share capital (note 8) 4,047 4,012 Share premium (note 8) 28,241 27,967 Share options outstanding 1,851 1,539 Accumulated deficit (13,620) (16,294) Foreign currency translation adjustment (6,664) (7,525) TOTAL SHAREHOLDERS' EQUITY 13,855 9,699 LIABILITIES NON-CURRENT LIABILITIES Borrowings 1,998 5,148 Other non-current liabilities 2 2 TOTAL NON-CURRENT LIABILITIES 2,000 5,150 CURRENT LIABILITIES Borrowings 4,050 3,642 Bank overdrafts 320 479 Trade payables 395 436 Other payables 409 1,185 Customer advances and deferred revenue 846 1,043 TOTAL CURRENT LIABILITIES 6,020 6,785 TOTAL LIABILITIES 8,020 11,935 TOTAL LIABILITIES & SHAREHOLDERS' EQUITY 21,875 21,634 |
The accompanying selected explanatory notes form part of the Company’s September 2005 consolidated interim financial statements.
GLOBAL GRAPHICS SA AND SUBSIDIARIES
CONSOLIDATED CASH FLOWS STATEMENTS
PREPARED IN ACCORDANCE WITH IFRSs
In thousands of Euro
Unaudited figures
Nine months
ended 30 September
2005 2004
Net profit (loss) 2,674 (23) Adjustments to reconcile net profit (loss) to cash provided by (used in) continuing operations: * Net (profit) loss from discontinued operations 0 (50) * Depreciation on property, plant and equipment 135 186 * Amortization of intangible assets 3,854 4,634 * Share compensation expenses 312 241 * Capitalization of development expenses (note 4) (98) 0 * Amort. of capitalized development expenses (note 4) 2 0 * Deferred taxes (note 6) (1,131) (485) * Expenses offset against the share premium (note 8) (8) 0 * Change in present value of carry back tax assets (9) (55) * Other items 192 (2) Change in operating assets and liabilities: * Inventories (58) (33) * Trade receivables (496) (159) * Other receivables (96) 121 * Prepaid expenses (163) (117) * Trade payables (41) (556) * Other payables (776) (417) * Customer advances and deferred revenue (197) (489) NET CASH PROVIDED BY OPERATING ACTIVITIES 4,096 2,796 NET CASH USED IN INVESTING ACTIVITIES (170) (80) * Proceeds from the exercise of share options 317 0 * Repayment of bank overdrafts (159) (40) * Repayment of borrowings (2,742) (2,548) NET CASH USED IN FINANCING ACTIVITIES (2,584) (2,588) NET INCREASE (DECREASE) IN CASH 1,342 128 CASH AT 1 JANUARY 2,640 1,010 EFFECT OF EXCHANGE RATE FLUCTUATIONS ON CASH HELD AT 1 JANUARY 291 34 CASH AT 30 SEPTEMBER 4,273 1,172 |
The accompanying selected explanatory notes form part of the Company’s September 2005 consolidated interim financial statements.
GLOBAL GRAPHICS SA AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY
PREPARED IN ACCORDANCE WITH IFRSs
In thousands of Euro
Unaudited figures
Nine months
ended 30 September
2005 2004
Shareholders’ equity at 1 January 9,699 7,154 Net profit (loss) for the period 2,674 (23) Increase of the share capital through the exercise of share options (note 8) 35 0 Increase in the share premium through the exercise of share options (note 8) 274 0 Change in share options outstanding equity caption 312 241 Change in foreign exchange currency translation adjustment 861 687 Shareholders’ equity at 30 September 13,855 8,059 |
The accompanying selected explanatory notes form part of the Company’s September 2005 consolidated interim financial statements.
GLOBAL GRAPHICS SA AND SUBSIDIARIES
SELECTED EXPLANATORY NOTES TO THE SEPTEMBER 2005 CONSOLIDATED INTERIM FINANCIAL STATEMENTS PREPARED IN ACCORDANCE WITH IFRSs
NOTE 1: STATEMENT OF COMPLIANCE
The accompanying consolidated interim financial statements of Global Graphics SA and subsidiaries (the Company) are for the nine months to 30 September 2005.
They have been prepared in accordance with IAS 34, Interim Financial Reporting (IAS 34), and more generally with International Financial Reporting Standards (IFRSs) and related interpretations adopted by the International Accounting Standards Board (IASB).
NOTE 2: TRANSITION TO IFRSs
The Company adopted IFRSs for its financial reporting starting from the reporting for the quarter ended 31 March 2004.
An explanation of how the transition to IFRSs has affected the Company’s financial position, financial performance and cash flows is set out in note 27 to the Company’s IFRS consolidated financial statements for the year ended 31 December 2004, which are included in the Company’s 2004 annual report.
NOTE 3: ACCOUNTING POLICIES AND METHODS
(a) Basis of preparation
The Company’s September 2005 consolidated interim financial statements have been prepared in accordance with the historical cost convention, as modified by the revaluation of financial assets and financial liabilities (including derivative instruments as appropriate) at fair value through the statement of income.
(b) Accounting policies and methods
The accounting policies and methods used for the preparation of the Company’s September 2005 consolidated interim financial statements are the same as those used for the preparation of the Company’s consolidated financial statements for the year ended 31 December 2004, which are set out in note 2 to the Company’s IFRS consolidated financial statements for that year.
NOTE 4: CRITICAL ACCOUNTING ESTIMATES
The preparation of financial statements in accordance with IAS 34 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 recognised 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.
Judgements made by management in the application of IFRSs that involve a higher degree of complexity or have a significant effect on the September 2005 consolidated interim financial statements 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 of 30 September 2005, but reviewed indications of significant impairment of goodwill and other intangible assets since 31 December 2004.
No impairment charge was recognized in respect of this review in the nine-month period ended 30 September 2005.
(b) 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. A current income tax benefit of Euro 528,000 was recorded in the nine months to 30 September 2005 in this respect (see note 6 for further details).
(ii) Deferred income tax
The Company recognises deferred tax assets as stated in note 2w to the Company’s IFRS consolidated financial statements for the year ended 31 December 2004.
In evaluating whether it is probable or not that a deferred tax asset recognised in a specific jurisdiction may be utilised against future taxable profits to be recognised 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 assets were recognized for Euro 3,979,000 at 30 September 2005 (Euro 2,830,000 at 31 December 2004) as it is probable that future taxable profits will be available in the next two years against which the Company can utilize the corresponding assets (see note 6 for further details).
(c) Capitalisation of software technology development costs
As stated in note 2i to the Company’s IFRS consolidated financial statements for the year ended 31 December 2004, costs associated with developing or maintaining existing software technology and programmes are recognised 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 recognised 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.
Software technology development costs recognized as intangible assets are then amortised over their estimated useful lives, which do not exceed three years, starting from the completion date of the corresponding development project.
At 1 January 2004, 30 September 2004, and 31 December 2004, the Company considered that it could not demonstrate that it met all of the criteria set out in paragraphs 57 to 62 of IAS 38 for the recognition of such internally generated intangible assets. Accordingly, no software technology development costs were capitalized at any of these dates.
At 30 September 2005, the Company considered it could demonstrate that it met all of these criteria for one specific development project which was completed and launched in September 2005. Accordingly, a total of Euro 98,000 was capitalized at 30 September 2005in accordance with criteria set out in IAS 38 and recognized as an internally generated intangible asset at that date.
Corresponding capitalized expenses are amortized from completion date of the corresponding project over the expected useful life of that asset, expected to end on 30 June 2007. The amortization charge which was recognized in the quarter and the nine-month period ended 30 September 2005 with regards to this project amounted to Euro 2,000.
NOTE 5: SEGMENT REPORTING
(a) Primary reporting format – by business segment
Following the discontinuation of the Xanalys and Hardware segments of the Company’s business in late January and early May 2002, respectively, 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).
The allocation of sales made in these geographical areas during the quarters and nine-month periods ended 30 September 2005 and 2004, respectively, is as follows:
Quarters Nine months
ended 30 Sept. ended 30 Sept.
In thousands of Euro 2005 2004 2005 2004
Continental Europe 642 961 2,223 2,521 United Kingdom 333 489 1,067 1,449 North America 2,331 2,238 8,135 7,462 Asia (including Japan) 1,000 752 3,066 2,979 Other countries 15 27 56 76 Total sales 4,321 4,467 14,547 14,487 |
NOTE 6: INCOME TAX BENEFIT
(a) Current income tax
The Company recorded a current income tax charge amounting to Euro 15,000 in the quarter ended 30 September 2005 (a charge of Euro 111,000 in the quarter ended 30 September 2004).
The Company recorded a current income tax benefit of Euro 430,000 in the six months to 30 June 2005, including a benefit of Euro 528,000 in the quarter ended 30 June 2005 as a result of the write-back of the balance of the provision which was recorded at the time of the acquisition of the assets and business of the Harlequin group of companies to account for management’s best estimate of the ultimate settlement of the liability for the tax years ended prior to acquisition date which were under audit by the Internal Revenue Service (IRS) at acquisition date.
Consequently, the Company recorded a current income tax benefit amounting to Euro 415,000 in the nine-month period ended 30 September 2005 (a charge of Euro 213,000 in the nine-month period ended 30 September 2004).
(b) Deferred income tax
The Company recorded a deferred income tax charge amounting to Euro 14,000 in the quarter ended 30 September 2005 (a benefit of Euro 89,000 in the quarter ended 30 September 2004), resulting in a deferred income tax benefit amounting to Euro 1,131,000 in the nine-month period ended 30 September 2005 (a benefit of Euro 485,000 in the nine-month period ended 30 September 2004).
This benefit principally arises from the recognition of the tax losses and capital allowances which the Company expects to use to offset projected taxable profit made by its UK subsidiary over a two-year period from balance sheet date.
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
2005 2004 Issued ordinary shares at 1 July 10,060,616 9,990,195 Effect of the 3,262 shares issued on 23 August 2005 1,383 0 Effect of the 30,000 shares issued on 25 August 2005 12,065 0 Effect of the 23,000 shares issued on 9 September 2005 5,500 0 Weighted average number of ordinary shares for 10,079,564 9,990,195 the quarters ended 30 September |
(ii) Computation for the nine months to 30 September
2005 2004 Issued ordinary shares at 1 January 10,028,752 9,990,195 Effect of the 4,616 shares issued on 21 February 2005 3,754 0 Effect of the 12,582 shares issued on 1 March 2005 9,863 0 Effect of the 8,000 shares issued on 25 May 2005 3,780 0 Effect of the 6,666 shares issued on 24 June 2005 2,417 0 Effect of the 3,262 shares issued on 23 August 2005 466 0 Effect of the 30,000 shares issued on 25 August 2005 4,066 0 Effect of the 23,000 shares issued on 9 September 2005 1,853 0 Weighted average number of ordinary shares for 10,054,951 9,990,195 the nine months to 30 September |
(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.
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
2005 2004 Weighted average number of ordinary shares for 10,079,564 9,990,195 the quarters ended 30 September Adjustment for outstanding share options 139,487 0 Weighted average number of ordinary shares for diluted EPS computation for the quarters ended 30 September 10,219,051 9,990,195 |
(ii) Computation for the nine months to 30 September
2005 2004 Weighted average number of ordinary shares for 10,054,951 9,990,195 the nine-month periods ended 30 September Adjustment for outstanding share options 144,721 0 Weighted average number of ordinary shares for diluted EPS computation for the nine months to 30 September 10,199,672 9,990,195 |
NOTE 8: SHARE CAPITAL AND SHARE PREMIUM
(a) Share capital
A total of 88,126 share options were exercised during the nine-month period ended 30 September 2005 (see note 7 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 10,116,878 at 30 September 2005.
(b) Share premium
The share premium amount increased by Euro 274,000 during the nine-month period ended 30 September 2005 through the net proceeds of the share options exercised during that period, i.e. after deduction of approximately Euro 8,000 for operating expenses incurred in relation with the Company’s share option plans in the period.
NOTE 9: CHANGE IN THE COMPOSITION OF THE COMPANY
(a) Liquidation of Global Graphics Management SA
On 23 March 2005, the Company decided to undertake the liquidation of its wholly owned, Belgium-based subsidiary, Global Graphics Management SA.
There was no material effect on the Company’s September 2005 interim consolidated financial statements as a result of this decision.
No material effect is to be expected on future periods' results as a result of this decision.
(b) Disposal of the Company’s 3.8% shareholding in Xanalys Corporation
In late January 2002, the Company disposed of 80.1% of the Xanalys segment of business, which was de-consolidated from that date. The Company’s holding in Xanalys Corporation was reduced from 19.9% to 3.8% through the year ended 31 December 2004, and further reduced to 3.1% in the first six months of 2005, as a result of successive increases in the share capital of that company to which the Company did not take part.
On 24 August 2005, the entire share capital of Xanalys, including the 3.1% shareholding held by the Company, was acquired by CompuDyne-Public Safety and Justice Inc. (CompuDyne), a division of CompuDyne Corporation.
There was no material effect on the Company’s September 2005 interim consolidated financial statements as a result of this disposal.
No effect is to be expected on the results of future periods as the Company is not bound by any representations or warranties given to CompuDyne in the context of this disposal.
GLOBAL GRAPHICS SA AND SUBSIDIARIES INFORMATION ON SHARE AND SHARE OPTION NUMBERS, VOTING RIGHTS AND SIGNIFICANT SHAREHOLDINGS AS AT 30 SEPTEMBER 2005 Unaudited figures SHARE AND SHARE OPTION NUMBERS * SHARE NUMBER - Shares outstanding at 1 January 2005 10,028,752 - Shares issued in the nine months to 30 September 2005 88,126 - Shares outstanding at 30 September 2005 10,116,878 * SHARE OPTIONS NUMBER - Options outstanding at 1 January 2005 458,001 - Options granted in the nine months to 30 September 2005 0 - Options that were cancelled in the nine months to 30 September 2005 (21,834) - Options that expired in the nine months to 30 September 2005 0 - Options that were exercised in the nine months to 30 September 2005 (88,126) - Options outstanding at 30 September 2005 348,041 of which: Vested options, i.e. immediately exercisable at 30 September 2005 162,123 VOTING RIGHTS (*) * Shares with a double voting right (**) 3,026,875 * Shares with a single voting right 7,090,003 * Total number of voting rights attached to the Company’s shares 13,143,753 SIGNIFICANT SHAREHOLDINGS * Stichting Andlinger & Co. Euro-Foundation - Number of shares 2,950,255 - % of total outstanding issued shares 29.16% - Number of voting rights 5,660,990 - % of total voting rights (*) 43.07% * Other shareholders holding in excess of 5% of - Outstanding issued shares (i.e. 505,844 shares at 30 September 2005) none - Outstanding voting rights (i.e. 657,188 rights at 30 September 2005) none |
Notes:
(*) The information on voting rights is provided with regards to voting rights relating to outstanding ordinary shares of the Company only, i.e. 10,116,878 shares at 30 September 2005.
(**) The introduction of a double voting right was voted by the Company’s shareholders at their meeting held on 21 June 2002.
It applied with immediate effect to any fully paid-up share held in nominative form with the Company’s share registrar for a minimum of two consecutive years, as allowed by article L.225-123 of the French Commercial Code.
Editor's Notes
About Global Graphics
Global Graphics (http://www.globalgraphics.com) is a leading developer of technology for open document and print solutions. It provides sophisticated high performance software components to the graphic arts/commercial print and digital print markets and for PDF (Portable Document Format) software applications. The Company supplies its RIPs, PDF document, workflow and color solutions mostly to a customer base of Original Equipment Manufacturers (OEMs), system integrators, software developers and resellers. These partners include the world's leading vendors of digital pre-press systems, large-format color printers, color proofing systems, digital copiers and printers for the corporate and SOHO (Small Office / Home Office) markets, and a wide variety of market leading software applications.
Forward-looking statements
This press release contains, in addition to historical information, forward-looking statements that involve risks and uncertainties. These include statements regarding the Company’s growth, funding, expansion plans and expected results for future periods. Such statements are based on management’s current expectations and are subject to a number of uncertainties and risks that could cause actual results to differ materially from those described in the forward-looking statements. Although management believes that their expectations reflected in the forward-looking statements are reasonable based on information currently available to them, they cannot assure any reader that the expectations will prove to have been correct. Accordingly, any reader should not place undue reliance on these forward-looking statements. In any event, these statements speak only as of the date of this release. The Company undertakes no obligation to revise or update any of them to reflect events or circumstances after the date of this release, nor to reflect new information nor the occurrence of unanticipated events
Contacts
Johan Volckaerts, CEO
Tel: + 32 2 647 80 70
Alain Pronost, CFO
Tel: + 33 6 62 60 56 51