Blog Publisher’s comments appear at the very end of this post.
Below, you will find a “Google-Translate”
translation of the latest financial-results-report issued by Service Point
Solutions. As I’ve previously stated
whenever I’ve used Google-Translate to translate SPS reports from Spanish to
English, translations are far from perfect (and, they read kind of weird, to
the point where it is easy – very easy - to get a headache when you read
them!) This report was found on CNMV,
the web-site of the Spanish equivalent of the U.S. SEC.
Before I begin the translated version, I’m
going to give you a link to the Spanish-language version of the report. (This
is the “official” report). Here’s that link:
Okay, let’s get on with the translated
version of the report:
Results
Second Semester
2013
February 28,
2014
(Semester
results approved by the Board
SPS
Administration on February 27, 2013)
1. Abstract
During the
fourth quarter of 2013, Service Point Solutions and banks that are part of its
syndicated financing failed to reach agreement on refinancing your debt, and
the company was doomed to pre-bankruptcy process. The results of this quarter
reflect the depreciation of the assets they have left the scope of
consolidation of the Group.
As of October
24, 2013, Service Point Solutions, SA reported a Fact Relevant to the CNMV the
rejection of any of the proposals submitted to the financial institutions up to
that time, acceleration and acceleration of the credits, to not extend the
"standstill" and the implementation of the enforcement of security
corresponding to a significant part of the Group's businesses (subsidiaries
operating in the UK, the U.S., Norway and Sweden). The same day, the Board of
Directors of the company took the decision to submit the application provided
for in Article 5a of the Bankruptcy Act.
SPS maintains as
of today the ownership of the shares of companies mentioned above, but as they
are already controlled by an administrator (Ernst & Young LLP), SPS does
not receive the economic and financial information and therefore proceeded to
the deconsolidation of same from October 1, 2013. For this reason the data for
the fourth quarter of 2013 are not comparable with the same period last year.
From 1 October 2014, the Group's consolidation perimeter includes only business
in Belgium, Holland, Spain and Germany (the latter has ceased to form part of
the scope of consolidation during the first quarter of 2014) plus the header
group.
During the
fourth quarter of 2013 the results of the subsidiaries have not intervened to
line with the second and third quarter, showing a positive development,
especially levels of profitability. Throughout the year 2013, the company has
continued implementation of measures to restore profitability and create a cost
base more flexible for the future. The main management actions have been
carried out in the area costs, which have been implemented significant
reductions of costs whose impact is being visible and in the last semester.
Also the customer relationship has been shown relatively positive despite the
environment of pre-bankruptcy process and then bankruptcy and therefore the
Group's operating profit in the fourth quarter was positive, compared with a
loss of 1.5 million euros in the same period last year.
Point of Service
Sales in the fourth quarter amounted to 16.7 €, 68% below those obtained in the
same period last year, mainly due to changes in consolidated
The operating
costs of these companies have been reduced by 26% compared to same quarter of
2012, demonstrating that the company is well on its expense reduction
initiatives, resulting in a significant improvement in results next year.
EBITDA for the quarter was 1.7 M €, in contrast to a profit 2.0 M € reported in
the same period of 2012. A proforma level, ie comparing the same consolidated
EBITDA has increased from a loss of € 0.3M in 2012 1.7 M €. At year
cumulative EBITDA is only 2% smaller than the 2012, with an smaller
perimeter.
The full year
net income continues to record losses of 144.5 M €, very higher than the
previous year. The significant decline in net income accumulated compared to
the same period in 2012 is primarily due to record impairment of goodwill in
the Netherlands, Spain and Germany for total amount of 38.6 M €, and an impact
on the output of consolidated subsidiaries intervened approximately 90M €.
During the
fourth quarter and even to this date, the company has continued actively
working with potential investors, which in turn have made offers to financial
institutions in order to cancel all syndicated debt, and parallel working on
the viability of the companies under their control.
Two. Evolution Fourth Quarter 2013
Shown in Table,
the main magnitudes of Service Point during the fourth quarter of 2012 and 2013
(Income statement, fourth quarter data, in thousands of euros):
|
|
Q4 2012
|
Q4 2013
|
|
Sales
|
52.699
|
16.687
|
|
Gross Margin
|
32.982
|
10.007
|
|
EBITDA
|
1.972
|
1.697
|
|
EBIT
|
(1.480)
|
90
|
|
Net Profit
|
(5.337)
|
(140.813)
|
Point of Service
Sales in the fourth quarter amounted to 16.7 €, 68% below those obtained in the
same period last year, mainly due to changes in scope of consolidation and
changes to billing terms of some contracts with customers in the Netherlands
(which have no impact at margins). Without such impacts fourth quarter sales
have dropped by 7%.
The operating
costs of these companies have been reduced by 26% compared to same quarter of
2012, demonstrating that the company is well on its expense reduction initiatives,
resulting in a significant improvement in results next year. The measures
already implemented to date represent an annualized savings more than five
million. EBITDA for the quarter was € 1.7M, which contrasts a profit of € 2.0M
reported in the same period of 2012. A proforma level, i.e., comparing the same
consolidated EBITDA has increased from a loss of € 0.3M in 2012 to 1.7M €. At
year cumulative EBITDA is only 2% lower than 2012, with a smaller
perimeter.
In all
geographical areas, the focus is on enhancing trade opportunities future and
new contracts, to achieve a positive trend in the following months.
As has been
reported in several Highlights, over recent months company has been working on
solutions to restructure its syndicated debt. From the date of application of
Article 5a placement of the Bankruptcy Act on 24 October 2013, the composition
of the Board of Directors of the Company has changed completely. Steps to meet
legally established in the Bankruptcy Act, and not having yet reached a
definitive agreement with financial institutions, the new Council of Directors
appointed by co-option and ratified at the Extraordinary Meeting Shareholders
held on February 24, 2014, decided to present the 4th February, the
voluntary petition in bankruptcy of the Company. He also filed for voluntary
bankruptcy seven subsidiaries domiciled in Spain, Netherlands, Belgium and
Sweden.
The order of
declaration of bankruptcy on February 20, 2014 was issued.
Also, to meet
the legally established steps in the German Insolvency Act, the decision to
submit the February 1 application of insolvency was made creditors of the
German Society.
Three. Conclusions
The fourth
quarter shows a clear improvement in operating results compared to the same
period last year, thanks to the results of the subsidiaries under the control
of the Group.
The losses
primarily reflect the costs of depreciation of assets operated by the banks.
Operating profit
was positive, reflecting the business under the control of the Group maintained
an upward trend and future plans include a feasibility positive basis for
future development.
The Group
continues to work on finding and implementing solutions to the situation
bankruptcy in which is located.
On February 27,
2014, the Board approved the results of SPS prepared for the fourth quarter based on the facts
known to the company that date and not reflected in the Group's accounts
for the possible impact the company if not were to find a solution
syndicated debt restructuring. The effect on the balance sheet
and income statement of the situation is impossible to quantify at
present.
Blog Publisher’s comments:
Well, early on,
soon after SP USA was shut down and, through word of mouth, it became readily
apparent that SPS’ lenders had taken control of various SPS operating
subsidiaries (namely, SP USA, SP UK, SP Norway, and SP Sweden), I predicted
that SPS’ financial results reports would be a complete mess, and, true to that
prediction, that’s so.
Apparently, the
results of the operating subsidiaries lenders took control of have been
stripped out of SPS’ most recent financial-results-report; the most recent
financial-results-report, apparently, reports only the financial results of the
SPS group that remains under the umbrella of SPS (namely, SP Spain, SP Germany,
SP Netherlands and SP Belgium. All of
these operations are in bankruptcy proceedings.) The ENORMOUS “net-income” loss shown in the
report (over 140 million Euros!!!) is apparently the result of SPS’ loss on the
write-down of goodwill and assets on the SPS operations taken over by lenders
and similar write-downs on goodwill and assets of continuing SPS-controlled
operations.
Humpty Dumpty sat on a wall,
Humpty Dumpty had a great fall.
All the king's horses and all the king's men
,
Couldn't put Humpty together again
One of the dumbest
decisions ever to grace the reprographics industry worldwide – the shutdown of
SP USA. That business was worth
something, it could have been sold as an on-going operation, but, nonetheless,
someone made a stupid decision to shut it down and walk away.
What’s going on
with the other SPS operations that were taken over by the lenders? Well, apparently, those operations are being “administered”
by Ernst & Young, as administrator, on behalf of the lenders who took
control of SP UK, SP Norway and SP Sweden.
I can’t imagine that lenders want to own reprographics businesses, so
look for those businesses to be sold off, one by one (or, possibly, as a group,
but I seriously doubt that.) The rumor
mill reports that negotiations are underway to sell SP UK. But, that’s only a rumor, there’s been no
confirmation of that.
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