Capital & ownership of the company s shares

Transcription

1 Barco 6 annual months report ended 30 June 2006

2 Key figures [ in thousands of euro* ] 2 nd quarter 2 nd quarter 1 st half 1 st half 2 Net sales* 186, , , ,542 Gross profit* 79,235 74, , ,602 EBITA before restructuring cost* 16,105 16,139 25,402 22,593 Restructuring cost* EBITA* 16,105 15,469 25,402 21,896 Current result before taxes* 15,920 15,142 25,252 21,447 Current result after taxes* 12,743 11,771 20,117 16,645 Current result after taxes per share Net income* 11,288 11,685 18,790 16,552 Earnings per share Diluted earnings per share Current cash-flow* 27,084 25,827 48,880 44,006 Current cash-flow per share Number of employees Total 4,215 4,327 Capital & ownership of the company s shares On 30 June 2006, the capital amounted to euro 53,940, represented by 12,616,530 shares. Ownership of the company s shares was as follows: fully diluted Gimv: 9.31% (1,174,921 shares) Gimv: 8.86% (1,174,921 shares) Public: 86.92% (10,965,762 shares) Public: 87.55% (11,611,288 shares) Barco: 3.77% (475,847 shares) Barco: 3.59% (475,847 shares)

3 Management discussion and analysis of the results 3 Second quarter sales and EBITA up year-on-year Second Quarter 2006 Financial Highlights 1 : Sales at euro million, 5.1% up year-on-year and well within management s expectations of euro million. Gross profit margin increased from 42.3% in 2Q05 to 42.6% in 2Q06. In 1Q06 it was 41.1%. EBITA at euro 16.1 million, up 4.1% from euro 15.5 million in 2Q05. EBITA margin remained stable year-on-year at 8.7%. With euro 9.3 million, EBITA margin was at 5.4% in 1Q06. 2Q06 EBITA was negatively impacted by other operating results. Net income at euro 11.3 million, considerably up from euro 7.4 million in 1Q06. In 2Q05 net income was euro 11.7 million. Current earnings per share (operating result before amortization of consolidation goodwill plus interest income/expense divided by the average number of shares outstanding) were at euro 1.05 versus euro 0.96 the year before and euro 0.61 in 1Q06. Net earnings per share of euro 0.93, compared with euro 0.95 in 2Q05 and euro 0.62 in 1Q06. Barco CEO, Martin De Prycker, commented: In the second quarter of 2006 year-on-year sales growth was continued, be it at a reduced level versus the previous quarter. This growth was supported by all main divisions. With an increase of 3.4% order intake followed the same trend as the evolution in sales. At euro 192 million order intake was slightly below our expectations, as some large orders shifted into the third quarter. In 2Q06 the book-tobill ratio was In particular the medical, events and digital cinema markets did very well, in sales as well as in order intake. EBITA increased by 4.1% versus the year before. At euro 16.1 million, it resulted in a stable margin of 8.7% year-on-year. EBITA was at the lower end of management s expectations of between euro 15 and 20 million, due to a negative impact of other operating results. Mr De Prycker added: Sales in Europe, Middle East and Africa grew from 49.7% of total sales in 1Q06 to 53.2% in 2Q06. Sales in the Americas represented 31.7% of total sales in 2Q06, down from 33.4% in the previous quarter. In the Asia Pacific region there was a temporary decrease in the percentage of total sales from 16.9% in 1Q06 to 15.1% in 2Q06. However, in this region orders increased in 2Q06 versus the previous quarter, to 17.3% of total order intake. As for the 3Q06 outlook, Mr De Prycker stated: Sales are expected to be between euro 172 million and 182 million. For EBITA we put forward a range between euro 10 and 15 million. 1 Unless otherwise indicated, all financial and operating data discussed in this announcement are in accordance with IFRS and in million of Euro. Tables state figures in thousands of Euro, unless otherwise noted. Unless otherwise stated, all comparisons are between the three-month period ended June 30, 2006, and the equivalent three-month period ended June 30, 2005.

4 CONSOLIDATED RESULTS FOR THE QUARTER Sales & Orders Operating Results (EBITA) Income Taxes 4 Sales for the quarter increased by 5.1% year-onyear to euro million, well in line with management s expectations of euro million for the quarter. All divisions increased their sales, with the exception of Barco Manufacturing Services, due to the shift of internal demand for subcontracting to Asia since the second quarter of The highest growth in sales was recorded in the division Media & Entertainment, with 28%. Sales to Europe, Middle East and Africa represented 53.2% of consolidated sales, while 31.7% of sales was realized in the Americas and 15.1% in Asia Pacific. Orders increased by 3.4% to euro million, from euro million in the year ago period. The book-to-bill ratio was 1.03, compared with 1.05 for 2Q05. Gross Profit & Margin EBITA increased by 4.1%, to euro 16.1 million, or 8.7% of sales. This compares to euro 15.5 million and 8.7% of sales for 2Q05. In 2Q06 EBITA was negatively impacted by other operating results. Research and development expenses increased year-on-year from 9.2% to 9.6% of sales. Sales & marketing costs decreased from 16.7% to 16.4% of sales. In some countries investments were made in stronger sales and marketing teams, but on the other hand there was a reduction of costs following the consolidation executed in the European sales and marketing organizations. General & administration expenses also decreased, from 7.9% to 7.3% of sales. Other operating results were euro minus 1.2 million. This was mainly due to currency fluctuations and exceptionals. In 2Q05 other operating income was euro 1.2 million. Goodwill impairment Income taxes decreased from euro 3.4 million to euro 3.2 million year-on-year. Current earnings per share (operating result before amortization of consolidation goodwill plus interest income/expense divided by the weighted average number of shares outstanding) for the quarter were at euro 1.05 versus euro 0.96 the year before. Net Income Net income for the quarter improved sequentially from euro 7.4 million in 1Q06 to euro 11.3 million in 2Q06 or a net margin of 6.1%. In 2Q05 net income was 11.7 million. Net earnings per ordinary share (EPS) for the quarter were euro 0.93, down from euro 0.95 in 2Q05. In 1Q06 net earnings per ordinary share were euro Fully diluted net earnings per share were euro 0.88, compared to euro 0.90 in the same period the year before. Gross profit increased 5.9% to euro 79.2 million from euro 74.8 million in 2Q05. Gross profit margin was 42.6% versus 42.3% in 2Q05 and 41.1% in 1Q06. Gross profit margins at the level of the main divisions remained relatively stable with year-onyear changes within a 1% range. Goodwill impairment of euro 1.6 million was booked on the Voxar acquisition (September 2004) as the 3D clinical software market is not developing as fast as was expected. Book-to-bill ratio 2Q06 1Q06 4Q05 3Q05 2Q05 Book-to-bill ratio

5 CONSOLIDATED RESULTS FOR THE SIX MONTHS Sales Sales increased with 8.3% year-on-year to euro million, a growth coming from the divisions Presentation & Simulation, Media & Entertainment and BarcoView. The division Control Rooms had sales at the same level as in 2Q05, while BarcoVision had a decrease of close to 5% in 1H06, despite an increase of 7% in 2Q06. The most outspoken growth was in Media & Entertainment with 38.6%. The BarcoView division increased its sales with 8.0% and Presentation & Simulation with 5.7%. Gross Profit & Margin Gross profit increased with 10.6% year-on-year from euro million to euro million. Gross margin increased from 41.0% to 41.9%. Goodwill Impairment Goodwill impairment of euro 1.6 million was booked on the Voxar acquisition (September 2004) as the 3D clinical software market is not developing as fast as was expected. Income Taxes Income taxes increased year-on-year to euro 5.1 million from euro 4.8 million. Current earnings per share (operating result before amortization of consolidation goodwill plus interest income/expense divided by the weighted average number of shares outstanding) increased to 1.66 versus euro 1.36 for 1H05. Net Income program. On 30 June 2006 accounts receivable were at euro million, compared to euro million at the end of June Inventory was at million versus euro million on 30 June Capex for the first half of 2006 was euro 6.3 million. OUTLOOK FOR 3Q06 The following statements are forward looking and actual results may differ materially. Sales for 3Q06 are expected to range between euro 172 and 182 million, versus euro million in 3Q05. EBITA is expected in the range of euro 10 to 15 million, versus euro 11.1 million the year before. 5 Operating Results (EBITA) EBITA increased by 16.0% year-on-year to euro 25.4 million. EBITA margin went up to 7.1% from 6.6% the year before. At 9.6% of sales expenses for research & development remained relatively stable year-on-year. Sales & marketing and general & administration costs went down in percentage of sales, respectively from 17.5% to 16.9% and from 8.2% to 7.8%. Other operating result decreased from euro 4.2 million to euro minus 1.9 million. Main reasons are currency fluctuations and non-recurrent items. Net income increased year-on-year to euro 18.8 million. In 1H05 it was euro 16.6 million. Net earnings per ordinary share (EPS) were up to euro 1.55 from euro 1.35 for the first half of Fully diluted net earnings per share for the first half of the year were euro 1.46 compared with euro 1.27 in the year ago period. Balance Sheet At the end of 1H06 Barco had a net cash position of euro 2.1 million, compared to a net cash position of euro 22.0 million at 31 December In 1H06 euro 26.1 million was paid in dividend and euro 6.6 million was spent on the share buy-back

6 DIVISIONAL RESULTS FOR THE QUARTER 6 BarcoView Sales at BarcoView rose 2.7% year-on-year. With a growth year-on-year of 27.4% Barco s market leadership in the Medical market is once more reaffirmed. Deliveries in Defense & Security were lower than the year before, which was also the case for Traffic Management. Sales in Avionics grew with almost 80%. The book-to-bill ratio for BarcoView for the quarter was at 1.02, with a significant increase in orders in the medical market compared to the one year ago period. Orders in Avionics were lower than the very high order intake in 2Q05, following the 2005 Le Bourget Airshow. In Defense & Security orders stabilized at the level of 2Q05. Some smaller orders came in, which are laying the foundation for new future business. In the Traffic Management market order intake decreased as projects were further delayed into The gross profit margin went slightly down to 45.4% from 46.3%, mainly due to a shift in the product mix. At 9.5% the EBITA margin remained stable year-on-year, but increased versus the 8.7% margin of 1Q06. Barco Media & Entertainment Sales increased by 27.8% compared to 2Q05, driven by a substantial growth in the events and digital cinema markets. Sales in the media market were lower than in the same period of last year. The book-to-bill ratio for the division was at Orders in the media market were up almost 8% despite a more selective market approach. Order growth in the events market was over 40% while orders almost doubled in Digital Cinema. Gross profit margin increased sequentially from 31.1% in 1Q06 to 31.9 in 2Q06. In 2Q05 it was 34.5%. EBITA margin was 2.9%, compared to 5.9% in 2Q05 and 4.4% in 1Q06. However, EBITA margin for 2Q06 was negatively hit by currency fluctuations and exceptionals for euro 3 million. Without this non-recurrent cost the margin would have been 8.2%. Barco Control Rooms In 2Q06 sales grew by 2.7% year-on-year. This is a lower growth rate than the year before, but a larger backlog (+ 12%) compared to the end of 2Q05 has been built up for the second half of Orders declined compared to 2Q05 due to competitive pressure in the broadcast market. Book-to-bill ratio was The Control Rooms division had a gross profit margin of 43.8%, up from 43.5% the year before and 40% in 1Q06. Barco Presentation & Simulation Sales for the division increased 1% compared to 2Q05, thanks to a 4% increase in sales in the presentation market. Simulation sales on the other hand, declined year-on-year as the shift towards a new technology for flight simulation is still ongoing. Sequentially however, sales improved in 2Q06. Flight simulation is still the most important application for Barco in this market. The book-to-bill ratio was at 1.08, with order-intake in the simulation market lower than in the one year ago period and flat in the presentation market. Gross profit margin improved to 42.5 in 2Q06 versus 41.7% in 2Q05 and 39.6% in 1Q06. EBITA margin improved sequentially from 1.3% in 1Q06 to 6.9%, which is at the same level as in 2Q05. BarcoVision Sales at BarcoVision were up 7.1% in 2Q06. The book-to-bill ratio of 1.05 shows some recovery in the investment climate, China excluded. Still an important contract for system business was won in China, which helped to achieve the high book-tobill ratio. Order intake increased by almost 12% compared to 2Q05. Gross profit margin increased to 47.8% from 47.4% in the one-year-ago period and 45.5% in 1Q06. The EBITA margin was high at 13.0% compared to the 6.8% margin in 1Q06. In 2Q05 the EBITA margin was exceptionally high at 21.0%, thanks to the profitable sale of 2 buildings in the UK. Excluding this sale EBITA margin was 11.6% in 2Q05.

7 Barco Manufacturing Services Sales in the Manufacturing Services division were lower than the year before because of a shift in production to Asian subcontractors, as more final assembly is done in India and China. Orders increased with more than 5% in preparation of high internal demand in 2H06. 7 The EBITA margin was 5.7%, much higher than the 0.2% margin in 2Q05 and 2.4% in 1Q06, thanks to the reduction in manpower and cost, resulting from the restructuring in the previous year. SHARE BUY-BACK PROGRAM In 1H06 Barco spent euro 6.6 million on buying back shares. The company now owns 475,847 of its own shares or 3.77% before dilution. The buy-back program started in 2003.

8 Income statement [ in thousands of euro ] 2 nd quarter 2 nd quarter 1 st half 1 st half 8 Net sales 186, , , ,543 Cost of goods sold -106, , , ,941 Gross profit 79,235 74, , ,602 Research and development expenses -17,769-16,210-34,552-32,222 Sales and marketing expenses -30,579-29,613-60,407-57,993 General and administration expenses -13,601-14,062-27,758-27,025 Other operating income (expense) - net -1,180 1,234-1,853 4,231 EBITA before restructuring cost 16,105 16,139 25,402 22,593 Restructuring cost Operating result before goodwill impairment (EBITA) 16,105 15,469 25,402 21,896 Goodwill impairment -1, ,601 0 Operating result 14,504 15,469 23,802 21,896 Interest income (expense) - net Other non-operating income (expense) - net Income before taxes 14,319 15,142 23,651 21,447 Income taxes -3,177-3,370-5,134-4,803 Net income of consolidated companies 11,142 11,771 18,517 16,645 Minority interest Net income attributable to equityholders of the parent (net income) 11,288 11,685 18,790 16,552 Earnings per share Diluted earnings per share

9 Balance sheet [ in thousands of euro ] 30 June Dec 2005 Assets Goodwill 58,949 60,954 Capitalized development cost 65,503 65,315 Other intangible assets 2,084 2,107 Land and buildings 56,470 62,583 Assets under construction 1,438 1,137 Other tangible assets 35,738 38,812 Investments Deferred tax assets 13,275 15,938 Other non-current assets 3,931 4,063 9 Non-current assets 237, ,287 Inventory 167, ,364 Trade debtors 175, ,757 Other amounts receivable 27,347 24,590 Deposits and cash at bank and in hand 83, ,256 Prepaid expenses and accrued income 9,407 9,111 Current assets 462, ,078 Total assets 700, ,365 Equity and liabilities Equity attributable to equityholders of the parent 397, ,083 Minority interest 775 1,176 Equity 398, ,258 Long-term debts 19,745 22,564 Deferred tax liabilities 3,121 4,628 Other long-term liabilities Non-current liabilities 23,377 27,703 Current portion of long-term debts 769 4,780 Short-term debts 60,806 56,967 Trade payables 76,578 66,063 Advances received on contracts in progress 16,096 14,985 Tax payables 19,113 23,195 Employee benefits 41,009 41,535 Other current liabilities 10,789 6,645 Accrued charges and deferred income 13,216 17,157 Provisions for liabilities and charges 40,056 43,077 Current liabilities 278, ,403 Total equity and liabilities 700, ,365

10 Comments 10 IAS 34 was applied to the quarterly financial report. The same accounting policies and methods of computation are followed in the interim financial statements as were followed in the annual financial statements of Following acquisitions and disposals of activities have an influence on the comparison of 1H06 with 1H05: - The acquisition of the business of System Technologies (now Innovative Designs), which took place on 31 March When looking at the quarterly results of Barco, it should be noted that the first and third quarter of the year normally generate lower sales than the second and fourth quarter. Changes in equity attributable to equityholders of the parent [ in thousands of euro ] 2 nd quarter 2 nd quarter 1 st half 1 st half Equity attributable to equityholders Equity attributable to equityholders of the parent 31 March, , ,432 of the parent 31 December, , ,845 Net income attributable to equityholders of the parent 11,288 11,686 Net income attributable to equityholders of the parent 18,790 16,552 Dividend -26,067-25,278 Dividend -26,067-25,278 Translation adjustment -5,429 5,064 Translation adjustment -7,720 8,734 Cash-flow hedge Cash-flow hedge 702-1,820 Capital increase 0 0 Capital increase 0 3,727 Acquisition of own shares -6,535-4,211 Acquisition of own shares -6,535-4,211 Share-based payment Share-based payment Equity attributable to equityholders Equity attributable to equityholders of the parent 30 June, , ,788 of the parent 30 June, , ,788

11 Cash-flow statement [ in thousands of euro ] 2 nd quarter 2 nd quarter 1 st half 1 st half Cash-flow from operating activities Operating result before goodwill impairment (EBITA) 16,105 15,469 25,402 21,896 Amortization capitalized development cost 10,226 9,358 20,169 17,992 Depreciation of tangible and intangible fixed assets 4,116 4,698 8,594 9,369 Gains and losses on tangible fixed assets -13-1, ,013 Share options recognized as cost Gross operating cash-flow 30,581 28,276 54,445 47,483 Changes in trade receivables -3,227-16,001 11,388-4,574 Changes in inventory -13,970-9,038-26,884-18,490 Changes in trade payables -2,547-5,590 10,516-17,899 Other changes in net working capital ,676-5,296 6,494 Change in net working capital -20,139-27,953-10,276-34,469 Net operating cash-flow 10, ,168 13,014 Interest income/expense Income taxes -1,870-3,428-6,813-6,574 Cash-flow from operating activities 8,386-3,432 37,205 5,992 Cash-flow from investing activities Expenditure on product development -11,860-11,930-22,399-24,825 Purchases of tangible and intangible fixed assets -3,167-4,155-6,271-7,512 Proceeds on disposals of tangible and intangible fixed assets 1,417 2,133 4,239 3,987 Acquisition of Group companies, net of acquired cash Disposal of Group companies, net of disposed cash ,760 Other investing activities Cash-flow from investing activities -13,610-13,565-24,431-29,689 Cash-flow from financing activities Dividends paid -26,067-25,278-26,067-25,278 Share issue ,727 Acquisition of own shares -6,535-4,211-6,535-4,211 Proceeds from (+), payments of (-) long-term liabilities -2, ,820 1,045 Proceeds from (+), payments of (-) short-term liabilities 16,948 36, ,252 Cash-flow from financing activities -17,710 7,696-35,593 20,535 - Net decrease/increase in cash and cash equivalents -22,934-9,301-22,820-3,162 Cash and cash equivalents at beginning of period 106,370 96, ,256 90,610 Cash and cash equivalents at end of period 83,436 87,449 83,436 87,449

12 Geographical breakdown of sales 12 2 nd quarter nd quarter 2005 AMERICAS 31,7% AMERICAS 30.3% EMEA* 53.2% ASIA-PAC. 15,1% EMEA* 50.4% ASIA-PAC. 19.3% 1 st half st half 2005 AMERICAS 32.5% AMERICAS 30.6% EMEA* 51.5% ASIA-PAC. 16.0% EMEA* 51.2% ASIA-PAC. 18.2% * Europe, Middle East, Africa

13 Results per division Sales in '000 euro and current EBITA nd quarter 2 nd quarter 13 Sales EBITA %EBITA Sales EBITA %EBITA Control Rooms 30,758 3, % 29,953 2, % Presentation & Simulation 26,439 1, % 26,229 1, % Media & Entertainment 56,140 1, % 43,922 2, % BarcoView 58,380 5, % 56,912 5, % BarcoVision 15,391 1,995 13,0% 14,376 3, % Barco Manufacturing Services 21,945 1, % 27, % Eliminations -23,051-21,726 Total 186,003 16,105 8,7% 176,896 15, % st half 1 st half Sales EBITA %EBITA Sales EBITA %EBITA Control Rooms 54,311 3, % 54,317 3, % Presentation & Simulation 52,347 2, % 49,539 2, % Media & Entertainment 110,750 4, % 79,902 1, % BarcoView 116,849 10, % 108,240 9, % BarcoVision 28,935 2, % 30,432 5, % Barco Manufacturing Services 41,312 1, % 50,681-1, % Eliminations -46,444-42,567 Total 358,060 25, % 330,543 21, %

14 14 Auditor s report Limited review report of the statutory auditor on the interim consolidated financial report of Barco NV as of 30 June, 2006 and for the six-month period then ended. (free translation) We performed a limited review of the interim consolidated financial report of Barco NV as of 30 June, 2006 with a balance sheet total of EUR thousand and a net income attributable to equity holders of the parent for the period of EUR thousand. The interim consolidated financial report has been prepared in accordance with International Financial Reporting Standards. The engagement has been performed in connection with the interim financial reporting of the company. We conducted our review in accordance with the relevant recommendation of the Instituut der Bedrijfsrevisoren (Belgian Institute of Auditors). This review consisted primarily of the analysis, comparison and discussion of the financial information and consequently was less extensive than a full scope audit of the consolidated financial information. Our review has not revealed any information that would lead to any material modifications to the interim consolidated financial report. Kortrijk, 24 July, 2006 Ernst & Young Bedrijfsrevisoren BCV (B160) represented by Marc Van Hoecke Partner

15 Registered office Pres. Kennedypark 35 BE-8500 Kortrijk Tel.: +32 (0) Fax: +32 (0) Group management Pres. Kennedypark 35 BE-8500 Kortrijk Tel.: +32 (0) Fax: +32 (0) Stock exchange Euronext Brussel Financial information More information can be obtained from the Investor Relations Department of the group management: JP Tanghe, Vice President Barco President Corp. Comm. and Investor Relations Tel.: +32 (0) Fax: +32 (0) Sigrid Desanghere, Corp. Comm. and Investor Relations Executive Tel.: +32 (0) Fax: +32 (0) Report This report "6 months ended 30 June 2006" is also available in Dutch and can be consulted on

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