Sunday, May 13, 2012

Service Point Solutions (SPS) issues Press Release mentioning Q1 2012 Sales

Here’s a link to the Spanish-language-version of the Press Release, now posted in my GoogleDocs library:

And, for those of you who cannot read Spanish, here’s an English-language version of the Press Release, courtesy of GoogleTranslate (as I’ve mentioned several times before, Google Translate does not create perfect translations.)

Service Point sales of € 55m in the first quarter of 2012

• Refinance its debt, strengthen its balance sheet and significantly reducing its financial cost

• Highlight the good performance of the Scandinavian markets with significant growth in sales and EBITDA compared to 2011

May 11, 2012. - Service Point closed the first quarter of 2012 with net sales of € 54.8 m, in line with those obtained in the same quarter of 2011 in a very difficult international economic environment. It was a quarter in which additional measures are taken, especially in the British and Dutch subsidiary, to recover an acceptable level of profitability in the future. In countries that have shown growth, such as Norway, Sweden, Germany and Belgium have introduced new market specialized services focused on demand printing and online channel, which will soon be transferred to other countries in the group. The results of this period have been affected by the reduction of financial transactions in the banking sector, which has affected the sales volume printing services related to IPOs in the British subsidiary, and the process of restructuring that is taking place in the Dutch subsidiary. In the first quarter in all geographies, has focused on enhancing future business opportunities and new contracts, to show a positive trend in the second quarter. The company has continued to increase its market share, achieving an increase in the number of its customers. These initiatives have helped maintain the net loss of EUR 1.7 million. The semi-annual evolution of our income has the following developments during the period 2008 - 2012:

Gross margin has been placed online to our objectives with the exception of business in the Netherlands where the weight of the activity of the lowest postage and printing activity of our clients have worsened slightly in order to gross margin of the subsidiary. Gross margin was 64.1% compared to 63.9% obtained in the first quarter of 2011 (excluding postage line in the Netherlands the gross margin in the first quarter of 2012 would be 69.5% compared to 69.4% over the same period of 2011).

Business Initiatives

During the last six months, the company strengthened its management structure to focus the direction of business in strategic areas and creation of value.

In the last quarter of 2011, there were four geographical directions to better handle the dynamics of markets in the countries where Service Point (Scandinavia, Continental Europe, UK and USA).

In geographical terms this structure has begun to focus and strengthen the synergies and efficiencies both operationally and in terms of international clients.

The group has continued to enhance on-line initiatives and opportunities offered by the dynamism of the business of photo albums.

At levels of costs, reduced staff costs, having eliminated 50 positions in the British market at the end of the quarter and have designed a further reduction plan for the Netherlands, among other measures. These initiatives will reduce the fixed cost base by about 5 million per year, with a positive impact on results mainly from the second half of 2012.

Debt Refinancing

In late April 2012 Service Point has reached an agreement with 100% of the banks that make up its syndicated loan to improve the terms and structure of its debt. The refinancing includes the following features:

Extension of the maturity to December 2015, with the possibility of an additional year under the fulfillment of reasonable financial terms.

Debt restructuring in two instruments: EUR 70 million as long-term debt payable at maturity 95% and 25 million in convertible debt (interest).

Cancellation of the tranche of funding (20 million) more expensive debt of the company.

It allows access to an additional funding amounting to EUR 3 million. After the refinancing, expected to conclude after approval by the Board of the company during the month of June, the group can obtain a significant improvement in its balance sheet ratios and in generating financial resources. The new refinancing agreement allows the company to develop the strategic plan. It also implies a significant improvement both in terms of costs, given the significant reduction of interest expense (3 million per year). All these improvements will be visible from the second quarter.

Blog Publisher’s comment:

If I’m recalling this correctly, SPS acquired a large Swedish reprographer (Holmbergs) back around the beginning of Q2 2011.  I don’t think (but am not sure) that SPS’ sales for Q1 2011 included the Q1 2011 sales of that company.  But, I do know that sales generated by that acquired business are included in the sales SPS reported for Q1 2012.  And, if I’m right about this, then, without the effect of those sales, SPS would have reported lower Sales for Q1 2012 than SPS achieved in Q1 2011.  Difficult conditions appear to persist ….  and, here in the U.S., we’ve heard many economists says that several countries in Europe are back in recession.  2012 may well prove to be a very challenging year for SPS.

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