Tuesday, November 23, 2010

Service Point Announces Q3 2010 Results

Service Point SolutionsQ3 2010 Results
(www.servicepoint.net), (per report found on SP’s web-site, dated November 15, 2010.)

I was unable to find an English version of SP’s report, so I used Google translate to translate the report from Spanish to English. While Google translate is pretty good, it is not perfect!

Through the first 9 months of 2010, SP’s sales, at 154 million Euro, appear to be approximately 5% off sales reported for the first 9 months of 2009.

Compared to sales in 2009, Service Point said that sales declined less in Q3 2010 (vs. Q3 2009) than was the case in the first half of 2010 (vs. the first half of 2009.)

Comparing SP’s Q3 2010 vs. Q3 2009:

Sales, Q3 2010 – 48.3 million Euro
Sales, Q3 2009 – 49.3 million Euro

EBITDA, Q3 2010 – (.3) million Euro (loss)
EBITDA, Q3 2009 – 1.4 million Euro

Net Income, Q3 2010 – (4.7) million Euro (loss)
Net Income, Q3 2009 – (2.8) million Euro (loss)

Blog author's comment: Q3 2010 was not a pretty picture. Not only a loss on the Net Income line, but an EBITDA loss as well.

My comments about what Service Point said about “sector” performance:

Per what Service Point said in the report, “In terms of sectors, financial and educational business continues its strong performance and continues to show strength in all branches of the group.”

Translating these statements from Spanish to English were not easy; it “sounds like” this were the points that SP was attempting to explain about its performance in the AEC sector: In regard to the AEC (engineering, construction, architecture), which accounts for approximately one third of sales, the decline of sales in the AEC sector is slowing, compared to the decline over previous quarters but still has setbacks. This sector is one that is weighing on growth. Group net sales for all sectors, except for this sector, have increased

And, Service Point talked about these initiatives:

SPS has strengthened the team's American branch with the addition of a new head person, who was previously head of, and responsible for, the management of the financial sector (of SP’s business) in the UK (the latter, experiencing double-digit growth). His short-term priority will be to develop business in the U.S. operations in education and financial sectors, sectors that are growing faster in the group and have shown anti-cyclical.

In previous reports and announcements, SP talked about acquisitions it was currently targeting and/or negotiating. In the Nov 15th, 2010 report, here’s something about that, translated by Google from Spanish to English:
“As announced by the company in General Meeting and notes of previous results, the company negotiates selectively in two key areas identified for development of the group, Germany, Scandinavia and growth phase. These operations are in final stage, estimating to announce the first acquisition in the first quarter of 2011.”

So, it “sounds like” SP will be announcing an acquisition sometime during Q1 2011. Question: Will the acquisition be in Germany, Denmark, Iceland (highly doubtful), Norway, Sweden or Finland? (I think I know, but I’m not saying.)

SP’s French company, Reprotechnique, remains a drag on SP’s performance. SP’s Nov 15 report said this (Google translation from Spanish to English):

“On August 3 Reprotechnique shareholders (Service Point 51%) called the situation "redressement Judiciaire" in order to undertake a thorough operational and financial review being carried out successfully in the face to be viable as soon as possible to this venture.”

Well, after I saw the term, “redressement Judiciaire”, I had to look that up to see what it meant in English.

Redressement judiciaire = Receivership
Receivership is a measure ordered by the court of commerce when a company is insolvent.
An insolvency procedure is initiated when the company is unable to cope with current liabilities with its available assets is to say she met financial difficulties. Legally, it is said that the company is in a state of insolvency. The purpose of this procedure is to allow the continued operation of the business, maintaining employment and settle its debts. 

At the trial opening, the court will appoint: 

- A bankruptcy judge: it is responsible to ensure expeditious conduct of proceedings and protection of interests. 

- An administrator: his appointment by the court is compulsory until the company reaches certain threshold (3 million euros in sales and at least 20 employees). The administrator may have either a monitoring mission of the debtor (the company executives retain their full power) is an assistance mission (there is a joint management between the leaders and the administrator) or a representative mission (the director becomes the legal representative of the company). 

- An agent or legal representative of creditors who will act on behalf and in the collective interest of creditors and whose mission includes establishing the list of creditors. It's his hands that creditors of the company must submit a claim.

Now that you’ve read about what a “redressement Judiciaire” means, take that into consideration when you read the Google translated (Spanish to) English version of the comments Service Point made in the Nov 15th report:

Restructuring plan of the investee Reprotechnique in France (Service Point 51%);
As announced in the previous note of results of the company, the shareholders of Reprotechnique, a French company in which Service Point has a 51% and acquired in June 2008, have proceeded to the official statement of the situation "redressement Judiciaire "in order to harness its economic record and undertake a plan to make viable the subsidiary, while not involving an additional financial burden on the resources of the shareholders.

By the situation of "redressement Judiciaire" The aim is to undertake a thorough operational and financial restructuring to keep only the production facilities that provide benefits, restructuring or closing which are not. This process allows the game to freeze the company's creditors and can negotiate in a timely manner to manage a company financially viable. Under this circumstance, the French market continues to be of interest to Service Point.

A dated August 3, the Commercial Court of Créteil approved the status of "Redressenment Judiciare (bankruptcy) of Reprotechnique, having been renewed on October 15 the proceedings, setting a review date next February 2011. This has opened an observation period, in which there is continuity of the business of the company, with a freeze on the old debt, and with contributions from the Employment Tribunal in the process of saving jobs (EREs) that are executed in the coming months.

It is proceeding with the Labour Court plan below (ERE) that affects workers of the company, of which a portion will be dispensed in November, and another in February. The negotiations with works councils, social and trade unions tried already in final stage and is expected to complete the first phase in early November.

Additionally, using the judiciare redressement process has proceeded to consolidate production facilities and sale of nonstrategic assets. The sale process has been done through an "electronic tender", supervised by the commercial court, and is scheduled for November as the date of execution and acceptance of final bids.

A consultant has been selected by SPS prestige and the commercial court as the auditor of the financial model of reorganization. According to the model of this consultant covering the period 2010-2020, the company can support the restructuring plan and overcome the observation period and debt repayments. According to the model will be positive cash flow from early 2011

Is estimated to be in a position Reprotechnique "redressement Judiciaire" during a period of one year in which the company will continue operating and serving customers as before.

This decision is made to shield the shareholders and not to harm the group's cash like the results. Through this restructuring, the subsidiary of a 51% Service

Service Point can emerge stronger French business. The cash flow supports the assessment of the value of RT in the consolidated balance sheet of the group

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