Pompey France 07/12/1999 09:00:00 AM
GLOBAL GRAPHICS (EASDAQ: GLGR), the leading worldwide supplier of plate-processing equipment for the flexographic and lithographic printing industry, announced today that it has successfully completed the acquisition of Harlequin Group www.harlequin.com.The acquisition, out of receivership, was previously announced last Wednesday, subject to satisfactory completion of terms. Head quartered in Cambridge, UK, Harlequin has offices in Edinburgh and Manchester. In the United States, Harlequin has offices in Cambridge (Massachusetts) and in New Hampshire.
The purchase price for the assets of the UK operations and shares of Harlequin Inc. was 18 million Euro. One-time costs of up to 3 million Euro are still expected in the coming months, bringing the total acquisition cost to an estimated 21 million Euro. The acquisition was financed with a bridge loan from KBC Bank, without whose extremely fast commitment this transaction would not have been possible. KBC Bank agreed to have a stake of 5% in Harlequin’s capital which it could exchange for Global Graphics’ newly issued shares at the time of the capital increase in the fall of 1999.
Harlequin is a leading provider of Raster Image Processing (RIP) software and supporting software applications solutions to the Digital Printing and Publishing (DP&P) sector of the printing industry. Eighty five percent of Harlequin’s annual revenues are generated by sales of RIPs and software to the DP&P sector.
Harlequin was forced into receivership because of massive R&D investments for several years in software for Information Management and Software Tools applications. In the fiscal year ended March 31, 1999, Harlequin spent an estimated 19.5 million Euro on these projects, which generated only 4.2 million Euro in revenue. The DP&P products were profitable with estimated EBIT of 5.2 million Euro on sales of 21 million Euro. The continuous cash drain from the development of Information Management and Software Tools applications ultimately resulted in the receivership end of June.
As of today, these excessive expenditures have been stopped, staff has been reduced from 230 people on January 1st, 1999 to 133 people today, and business therefore returned to profitability. Harlequin is expected to generate revenue of approximately 30 million Euro and EBIT before goodwill amortisation of around 7.5 million Euro for the twelve months ended March 31, 2000.
Johan Volckaerts, Chairman and CEO of Global Graphics said, "The Harlequin name is an industry icon. Its technology has been largely recognized through the whole industry. We believe that we will bring to the company the management skills and direction that may have failed it in the past. The company will be run very independently from our manufacturing operations and will help us accelerate the development of our digital solutions and applications in order to become a leading supplier of complete print solutions to the lithographic and flexographic markets. "
Johan Volckaerts added, "I would also like to emphasis that the success of Harlequin is due in large part to the recognised brilliance of its software development teams and the unflagging efforts of all the staff. This has been a difficult time for them and we appreciate their loyalty and belief in the company. Our goal is to strengthen Harlequin, not to change the very origins of its success. The acquisition will ensure Harlequin’s financial stability and provide the means to continue to supply creative, innovative solutions."
"We also look forward to working with our new OEM partners, some of whom are also customers of other group companies. We will be meeting all OEM partners in the coming weeks. In fact, I'll take this opportunity to assure them that there will be no change in our service and support to them and no preferential treatment for group companies."
He concluded, "Given the re-structuring and cost reduction efforts already undertaken, the expected growth for Harlequin’s flagship products, and the core profitability of the company, we expect Harlequin not only to grow but to be the most important profit contributor to the Global Graphics group within a very short time. This acquisition will also significantly improve the shareholder value of Global Graphics. Harlequin will report to Andrew Brian, Managing Director of Global Graphics UK."
The Harlequin flagship RIP management product (ScriptWorks®) is widely regarded as the benchmark high-resolution, high-speed, full feature RIP for the DP&P sector. Harlequin has further RIP offerings, notably its recently launched SOAR®; (Scalable Open Architecture) line.
A RIP is a computer language interpreter which converts images created by software packages into a printable final product. It is essential to the proper functioning of most of todays’ digital output devices. Digital output devices include Imagesetters, Platesetters, wide-format and ultra-wide colour printers, Digital Presses, CtP equipment and Workflow Servers. Many of the world’s leading manufacturers of such digital output devices are Harlequin OEM partners.
To enhance and complement its RIP product range, Harlequin also offers a wide variety of software tools, features and functions. In particular, Harlequin’s colour management software and workflow management software are highly respected throughout the industry.
Key strengths of the Harlequin RIP product range and software solutions are their user-friendliness, ease of upgrade, ease of integration and scalability. This enables OEM partners to easily integrate the RIP into their own digital output devices as well as to upgrade Scriptworks® to new versions in the field.
The market for professional RIP solutions and supporting software solutions is expected to grow from U$425 million to at least U$750 million in the next two years. With its ScriptWorks® and SOAR® RIP solutions, Harlequin is ideally placed to maintain its leading position in the high-end market segment and to become a powerful force in the rapidly growing middle market segment.
A second product offering, HIntS (Harlequin Intelligence Systems), which is aimed at the law enforcement, banking and insurance industries, among others, represents 15% of total sales. HIntS consists of suites of powerful, scaleable integrated information management solutions. These enable clients to turn vast amounts of data from multiple sources into coherent and precise information profiles.
Harlequin also provides a wide range of other software development tools. They are mostly used for internal development support and represent only 1-2% of sales.
GLOBAL GRAPHICS is a worldwide fast expanding manufacturer of integrated digital pre-press systems and a world leader in plate-processing equipment for the flexographic and lithographic industry with companies in France, Italy, UK, USA and Malaysia.
ScriptWorks® and SOAR® are registered trademarks of Harlequin.
For more information, contact Global Graphics on the World Wide Web at www.glographics.com
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 and expansion plans following the acquisition of Harlequin. 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.