Global Graphics reports first quarter 2011 results

• sales of Euro 2.1 million this quarter (Euro 2.0 million at Q1 2010 exchange rates) compared with Euro 2.0 million in Q1 2010;
• an operating loss of Euro 0.3 million this quarter, compared with an operating loss of Euro 1.1 million in Q1 2010;
• an adjusted operating loss of Euro 0.3 million this quarter, compared with an adjusted operating loss of Euro 1.1 million in Q1 2010;
• an adjusted pre-tax loss of Euro 0.4 million this quarter (or an adjusted pre-tax loss of Euro 0.04 per share), compared with an adjusted pre-tax loss of Euro 1.2 million in Q1 2010 (or an adjusted pre-tax loss of Euro 0.12 per share);
• a net loss of Euro 0.1 million this quarter (or a net loss of Euro 0.01 per share), compared with a net loss of Euro 1.2 million in Q1 2010 (or a net loss of Euro 0.12  per share); and
• an adjusted net loss of Euro 0.1 million this quarter (or an adjusted net loss of Euro 0.01 per share), compared with an adjusted net loss of Euro 1.2 million in Q1 2010 (or an adjusted net loss of Euro 0.12 per share).

Commenting on performance, Gary Fry, Global Graphics’ Chief Executive Officer, said:  “We have had a very busy and productive first quarter. Our revenue profile was just under our plan for the quarter but our expenses were slightly lower than we had anticipated. We continue to forge ahead with our three business segments and are excited to see opportunities emerging in each.  

“In the office printing segment, our expertise in embedded print technology combined with our track record in document conversion software places us in an extremely strong position to meet the growing demand for mobile printing applications.  In the first quarter of 2011, our alliance with Intel was publicly announced at the Lyra Imaging Symposium in California and, following this event and a further series of mobile printing demonstrations at Page 2011 in Tokyo in February and ITEX/On Demand in Washington DC in March, our embedded RIP software is now being evaluated by a number of major players.  There is a significant level of interest and the reaction of printer OEMs and industry analysts has been that our driverless mobile printing solution is unique and has compelling advantages over existing solutions. There is also growing interest in our ability to convert files into print-ready formats to complement existing mobile printing applications.

“In the production printing segment we are in a very strong position to meet the demand for high-speed applications, particularly the trend towards transactional printing where vast amounts of variable data is incorporated into bank statements or bills. In the first quarter we saw a further indicator of this in our new contract with Showa Information Systems of Japan, who is using the Harlequin RIP in a new model of printing press because of its ability to process PDF files at high-speed.

“In the eDocument segment we won a contract with a market leader in the oilfield services industry and finalized a new white label product based on gDoc for a major North American software developer that is now shipping.

“During the quarter, we created a new role for the Company, of Chief Marketing Officer. Stuart Potchinsky will focus primarily on gathering market requirements and translating these into our go-to-market plans for our applications and mobile print business.  We concluded the ramp down of staffing in India and began our graduate recruitment programme in the UK, whose aim is to introduce fresh ideas and new skills into the Company.”

First quarter 2011 performance
Sales for the quarter amounted to approximately Euro 2.1 million, compared with Euro 2.0 million for the same quarter of 2010, or a sequential increase of 2.7% at current exchange rates, and of 0.1% at constant exchange rates.

Total operating expenses amounted to Euro 2.3 million this quarter, compared with Euro 3.0 million for the same quarter of 2010, or a sequential decrease of 25.1% at current exchange rates, principally resulting from the decrease in the Company’s operating expense base pursuant to the Company’s reorganisation plan which was initiated in April 2010.

The Company reported an operating loss of Euro 0.3 million this quarter (or a loss equal to 13.8 % of Q1 2011 sales), compared with an operating loss of Euro 1.1 million for the same quarter of 2010 (or a loss equal to 54.5% of Q1 2010 sales).

The Company reported an adjusted operating loss (or EBITA, as defined in the accompanying table) of Euro 0.3 million for this quarter, compared with an adjusted operating loss of Euro 1.1 million for the same quarter of 2010. Accordingly, EBITA margin was -16.1% of sales in Q1 2011 compared with -53.3% of sales in Q1 2010.

The Company reported an adjusted pre-tax loss (as defined in the accompanying table) of Euro 0.4 million for this quarter, compared with an adjusted pre-tax loss of Euro 1.2 million for the same quarter of 2010. Accordingly, adjusted pre-tax EPS was a loss of Euro 0.04 in Q1 2011, compared with a loss of Euro 0.12 in Q1 2010.

The Company reported a net loss of Euro 0.1 million for this quarter (or a net loss of Euro 0.01 per share in Q1 2011), compared with a net loss of Euro 1.2 million for the same quarter of 2010 (or a net loss of Euro 0.12 per share in Q1 2010).

The Company reported an adjusted net loss (as defined in the accompanying table) of Euro 0.1 million for this quarter (or an adjusted net loss of Euro 0.01 per share in Q1 2011), compared with an adjusted net loss of Euro 1.2 million for the same quarter of 2010 (or an adjusted net loss of Euro 0.12 per share in Q1 2010).

Cash flow
The Company had a net cash position of Euro 1.7 million at 31 March 2011, compared with Euro 1.9 million at 31 December 2010, or a decrease of Euro 0.2 million during the first quarter of 2011.
Net cash provided by the Company’s operations was Euro 0.2 million in the first quarter of the year ending 31 December 2011 (the Company’s operations used cash for Euro 0.6 million in the first quarter of 2010), while net cash used in investing activities (through capital expenditures of computer equipment and capitalization of eligible development expenses) was Euro 0.3 million in the first quarter of 2011.

Concluding remarks
Gary Fry added: “We continue to reshape the Company by hiring new people in strategic and development roles. We are in a strong competitive position with world-class technology and engineering skills and as a result we are forging new partnerships in all three business segments.  Notably, the opportunity that we have created for our driverless mobile printing solution is very exciting and spans both our applications and office printing technology.

“We are well-positioned for a profitable outlook in 2011.  Due to the nature of our OEM relationships and their revenue profile, we expect the second half of the year to be stronger than the first half and our expense position to be reasonably flat throughout the year.”

2010 annual report
The electronic versions of the Company’s 2010 annual financial report (in English and in French) are available for download from the investor section of the Company’s website.  
Printed copies of the English and French reports are also available upon request: should you wish to receive one or more copies of the Company’s 2010 annual financial report, please send an e-mail to: investor-relations@globalgraphics.com, or make a request in writing to the Company’s registered office.

Annual meeting of the Company’s shareholders
Global Graphics expects to hold its annual meeting in Brussels (Belgium) on Thursday 16 June 2011. The final agenda, proposed resolutions and voting procedures will be available for download on the investor section of the Company’s website from Monday 9 May 2011.

Second quarter and first six months of 2011 results announcement
Global Graphics expects to announce its consolidated results for the quarter and the six-month period ending 30 June 2011 on Thursday 28 July 2011 before market opening.

About Global Graphics
Global Graphics (http://www.globalgraphics.com) is a leading developer of e-document and printing software. It provides high-performance solutions to the graphic arts/commercial print and digital print markets and for knowledge worker and professional software applications.  The Company’s customers include Original Equipment Manufacturers (OEMs), system integrators, software developers and resellers and number the world’s leading brands 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, as well as 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, neither to reflect events or circumstances after the date of this release, nor to reflect new information nor the occurrence of unanticipated events.