Artwork Systems Announces Q1 Results, Evaluating Strategic Options Including Possible Sale

GENT, BELGIUM—2/16/07—Artwork Systems Group N.V. (EURONEXT: ARTS), a world leader in professional pre-press software, announces the financial results for the first quarter of its financial year 2007, ended December 31, 2006. Consolidated revenues for the quarter amounted to 11.15 million euro, a decrease of 7.18% compared to 12.01 million euro in the first quarter of fiscal year 2006, and net income amounted to 2.55 million euro, a decrease of 23.55% compared to 3.34 million in the first quarter of fiscal year 2006.

First quarter highlights

On October 16, 2006, Artwork Systems announced that it had confirmed an OEM agreement with Screen. Under the agreement, Screen integrates ArtPro, Artwork Systems’ specialized packaging software, within its Trueflownet prepress environment to give users powerful packaging production capabilities.

At the same time, the company announced excellent sales results at the Graph Expo trade show in Chicago, Illinois (October 15-18, 2006). Order intake amounted to 2.1 million USD during the four days show. It was also the occasion to launch Equinox, a revolutionary color management system for the packaging industry. The launch was successful and the first substantial revenue is expected in fiscal year 2008.

During the first quarter of fiscal year 2007, the split in revenue was as follows: products amounted to 64% and services amounted to 36%. The gross margin amounted to 83.19%. The company’s management confirms that these results indicate a slow start for the year, but this was expected, as business remains weak. Management, however, confirms the outlook for FY2007.

The percentage of revenues for each regional market changed slightly. The share of the Americas increased from 39% to 41% while Europe decreased from 54% to 49%.

Asia’s share increased from 5% to 8% while the Rest of the World remained stable at 2%.

The decrease of the US dollar had a negative impact of 3.4% on net revenue for the first quarter of fiscal year 2007.

Artwork Systems evaluates strategic options

Artwork Systems has decided to thoroughly evaluate its strategic options for the future of the company. To support this analysis, the Board of Directors has mandated ING Corporate Finance. All strategic options, such as a capital restructuring, a partnership and/or a sale to a strategic partner, are open for discussion. The strategic exercise is currently only in a preliminary phase.

The market for professional pre-press software and more specifically the segment for packaging and label printing, has known an important technological and geographical development during the past years. For many years now, Artwork Systems is in the frontline when it comes to these developments and the company is striving to further build on this position in the future.

“Recent contacts illustrate that the strong position of Artwork Systems, the continuously high profitability and the favourable sector expectations are highly regarded”, says Peter Denoo, President & CEO.

“Being a referential shareholder, we continuously evaluate all strategic options to safeguard the future of the company in the interest of all stakeholders – staff, management, shareholders and customers”, says Guido Van der Schueren, Chairman of the Board of Directors.

Share buy back program

During the month of July 2005, Artwork Systems Group started implementing the share buy back program approved by the annual shareholders’ meeting of January 28, 2005, and extended by the annual shareholders’ meetings of January 27, 2006. At December 31, 2006, 2,004,294 euro is accounted for as Treasury Stock (deducted from equity), representing 196,625 shares.

Dividend payment

The shareholders’ meeting of January 26, 2007, approved a dividend payment of 0.65 euro gross per share, which will be paid to the shareholders on February 28, 2007 (exdividend date February 28).

Outlook 2007

The company confirms its outlook for this fiscal year of annual revenue between approximately 46 and 47 million euro, with a net profit between approximately 11 and 11.5 million euro.

About Artwork Systems
Artwork Systems develops complete and integrated software solutions for the preparation of professional color printing or pre-press. Artwork Systems now has offices in Belgium, France, Germany, Ireland, the United Kingdom, and the United States with international support structures in Australia, Argentina, Brazil, Mexico and Hong Kong. Partner organizations in more than 40 countries are responsible for the additional worldwide distribution of the various products. With Enfocus and Dimensional Impressions, Artwork Systems has a presence in Los Angeles, CA, USA. The most important markets are Western Europe and the United States. During fiscal year 2006, worldwide turnover amounted to 46.48 million euro.