Saturday, November 16, 2013

Service Point Solutions issued a Press Release yesterday to announce its Q3 2013 Financial Results

This post contains information about the Press Release that SPS issued yesterday as well as (at the end of this post) a "summary" of what we think we know, so far. 

To start off this morning's blog-post, here’s a link to the Spanish-language Press Release Service Point Solutions released on November 15th.

Unfortunately, I did not find an English-language version of the Press Release.  Below, you will see a “Google-Translate” Spanish-to-English translation of just the text that was in the Press Release.  As always, keep in mind that Google-Translate does not produce perfect translations.  This translation is not only difficult to read, it may have mis-translated some of the text.  The only “official version” of the Press Release is the Spanish-language version.  (For those who want to look at the numbers in the Press Release, go back to yesterday’s post or open up the Spanish-language version of this Press Release.)

If you care to read my comments, see far below.

Barcelona, November 15, 2013. - Results for the third quarter of Service Point Solutions (SPS.MC), show a clear improvement over the previous year due to the significant reduction operating costs by 18.7% over the same period in 2012, and the implementation of specific projects to reduce expenses by more than five million euros, which will be visible in the accounts in the coming months and especially from next year.

Service Point Solutions, October 24 pre-contest hosted in order to defend the interests of its shareholders, creditors and employees, presented this week a new offer banks with the aim of approaching their positions. This offer by a greater amount, less constraints and an implementation schedule smaller, clearly improves the current alternative banks to sell assets. Another meeting is planned between banks and enterprises in the next week to discuss the terms of the offer.

Sales in the third quarter amounted to 39.6 M €, 19% lower than those obtained in the same period last year, mainly due to changes in scope of consolidation (out of France) and changes to the billing terms of certain contracts with customers in the Netherlands (no impact on margins). Without them, up to September sales would have fallen by 9.5%.

However, thanks to reinforcement in the business, the solid foundation of pipeline projects and selective investments to enhance strategic services, the company expects that the next quarter sales performance is in line with the corresponding last year, excluding impacts of France and Holland.

The gross margin has improved to 64.5% of turnover, which reflects a good return on sales despite price competition that exists in the market. Namely result of the group's growing focus towards segments of higher value- added services; especially print on demand, online photos, facility management contracts (managed services, etc.)

EBITDA for the quarter was € 0.7M, which contrasts with a loss of-0.1M € for the same period of 2012.  At the end of this quarter EBITDA is 4% higher than 2012.

The net result is recorded accumulated losses amounting to 3.7 M €, much lower than the previous year. The significant improvement in cumulative net income over the same period year 2012 is due in part to record an exceptional income in 2013 corresponding to the output of France subsidiary amounting to 2.9 M €, the negative impact in 2012 of certain costs balance sanitation level that impacted net income by 3.5 M € (1.8 M € EBIT level) and the € 2M reduction in interest expenses after financial restructuring in late October signed, 2012.

For markets in Central Europe (Spain, Belgium, Holland and Germany), which represents 37% of the Group revenue, sales have had a negative trend with a fall of over 26% (excluding output has France in 2012 and the changes made to the billing terms of some contracts with customers in the Netherlands, this impact was 11%, and Scandinavia (28% of revenues group) has started to regain profitability. However, in the United Kingdom (25% of revenues group) the results have improved over the same period last year and is properly positioned to achieve a very satisfactory result for the whole year. U.S., which represents 8%, sales have been 11% below the same period in 2012.

As has been reported in several Relevant, over recent months the company has been working on solutions syndicated debt restructuring. After analyzing different alternatives, the company has told the banks two proposed buyback of debt. These deals to recapitalize the company were directed to repurchase 100% of debt favorable conditions for the company (between € 15M and € 20M), facilitating their complete entities and decoupling final project, leaving no structural debt SPS.

On October 23, 2013, financial institutions (Lloyds Bank, GE Capital, IKB, Calyon, KBC, Deutsche Bank and Banco Sabadell) syndicated loan holders have rejected Service Point Solutions the bids submitted by that date and have reported acceleration and acceleration of any credits and start the execution of securities for a significant part of the group's business (subsidiaries operating in the UK, USA, Norway and Sweden). As Consequently, the SPS Board of Directors adopted October 24, 2013 the decision of eligible for pre-contest (article 5a of the Companies Act) in order to defend the interests of their shareholders, creditors and employees.

Blog Publisher’s comments:

Based on previous SPS fillings I’ve read and on articles published in the Boston Business Journal, on IRgA Today, and on this blog, I did not find any “new” news in SPS’s Press Release.

Based on everything we’ve read, so far, we think this is a fairly good summary of Service Point Solutions’ situation:

v SPS has, for several months, been conducting discussions with its lending group regarding the refinancing (or payoff) of its substantial debt.
v SPS has presented at least two proposals to its lenders, but both were unacceptable to SPS’s lenders.
v SPS is continuing its discussions with its lenders regarding the refinancing (or payoff) of its debt.
v In September, Mr. Holmberg, a reprographics / imaging industry veteran who sold his company to SPS not too long ago, resigned from the CEO position in September and from the SPS Board of Directors in October.  Within the past 30 days, two other SPS directors have resigned from SPS’s board.
v In September, SPS appointed a new CEO, someone who is not a veteran of the reprographics / imaging industry.
v In October, SPS filed for “protection from its creditors” (sounds like some form of Chapter 11).
v SPS’s lenders are, apparently, moving to take control of SPS assets that secured their loans to SPS.  This may or may not have an effect on SPS’s continuing operations.
v SP USA shut down on Friday, November 7th, per orders given, that day, by Kevin Eyers, COO and Managing Director of SP USA.  Employees had no advance notice.  Customers were not given any advance notice.  It is believed that Mr. Eyers is no longer employed by SP USA.
v We have yet to find any evidence of SP USA filing Chapter 7.
v SP USA’s vendors have no idea what’s going on regarding the possible resolution of SP USA’s debts.  (We encourage SPS to reach out to SP USA’s vendors to let them know what’s going on!)
v The most remarkable ABSENCE of information is that there is absolutely no mention, at all, in the November 15th Press Release that Service Point USA has been shut down.
v Excluding SP USA, we believe that all other SP subsidiaries are continuing in operation.  It is rumored that CFI, SPS’s financial printing business, closed down its operations in the U.S., but that has not been confirmed.   

If anyone knows further information about SPS or SP USA, please let me know, via e-mail to

Finally, the Press Release provides this information (but, if you do send an e-mail inquiry to Luis, don’t hold your breath waiting for a response!)

Para más información: (which means, FOR MORE INFORMATION, CONTACT): Luis G. Canomanuel
LUCA Comunicación Corporativa Tel.: +34 91 435 17 12

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