RSDB year results 2008

NET RESULT 2008 IN LINE WITH FORECAST

2008
The deteriorating economic conditions have led to shrinking marketing budgets, which had a direct impact on the turnover in our plants. At the same time, these budget reductions also led to increasing overcapacity in the industry. For the first time in the history of the graphics industry, even the 4th quarter saw a break with the trend, with lower machine occupancy and poor profits throughout Europe.

The European market of Print Productions, like the RSDB printing companies, for the whole of 2008 showed a decline, in kilotons of paper, of more than 1%. The continued difficult market conditions led to further price erosion and pressure on margins.

The year 2008 was again characterised by our efforts to reverse the declining trend in the printing market by going for the necessary consolidation process within Europe. It looked like this could be realised with the Hombergh/De Pundert Group (HHBV). In the end, much to our disappointment, it became clear in September that HHBV would not be able to raise the money for its intended offer.

After the demerger and partial sale of parts of the business line Marketing Communications in 2007, the MediaPartners Group and Leads to Loyals in 2008 both went their own way with the development of their plans. The investigation into the feasibility of a possible divestment of Media Partners Group has not yet given us a satisfactory solution.

2008 Result
The balance between supply and demand in the printing industry has been further disturbed as a result of the deteriorated financial and economical climate. According to the forecast issued in December, turnover from continuing business activities fell by EUR 37.5 million to EUR 447.5 million (2007: EUR 485.0 million), partly caused by the divestment of 2organize and Logic Use (2007: revenue EUR 6.6 million) and by declining print runs and sizes of magazines and the discontinuation of titles by customers.

The value-added (VA) at continued pressure on margins was EUR 18.0 million lower, at EUR 212.9 million (2007: EUR 230.9 million). This was caused on the one hand by the divestment of 2organize and Logic Use (2007: VA 4.8 million) and on the other hand by lower prices.

As a result of the improvement programmes already started in 2007 and the sale of 2organize and Logic Use (2007: operating costs EUR 4.8 million) the operating costs declined by EUR 20.6 million to EUR 207.1 million (2007: EUR 227.7 million). In addition to this, costs are managed by further and continuous process control / automation. The number of employees on the basis of ftes declined from 2,257 at year-end 2007 to 2,189 at year-end 2008. This efficiency boost was partly undone by the annual wage increase in accordance with the Grafimedia central labour agreement (CAO).

EBITDA fell to EUR 37.2 million (2007 EUR 40.9 million). The trend of pressure on margins that started some years ago continued in 2008, with an EBITDA / VA margin of 17.5% and a ROCE (return on capital employed) of 0.7%.

The operating result (EBIT) fell to EUR 5.8 million (2007: EUR 6.3 million). RSDB NV reported a net profit after tax for 2008 of EUR 1.3 million, against EUR 5.4 million for 2007.

With an unchanged number of 3,290,275 issued ordinary shares, this result development led to an earnings per share of EUR 0,41 (2007: EUR 1,65).

The cash flow from operating activities declined to EUR 13.3 million (2007: EUR 50.4 million). The decline of the operating cash flow was caused mainly by a decrease of trade and other payables of EUR 19.6 million due to the decline of the investment commitments and liabilities related to the acquisition of QWE. Paper stocks were maintained at a high level with regard to the expected significant price increases for 2009. Net investments amounted to EUR 23.0 million (2007: EUR 30.2 million)

*) Operating result (EBIT) divided by liquid assets minus short-term debt.

Finance position and covenants
After payment of dividend over 2007 (EUR 5,7 mln) and interest, interest bearing debt has (inclusive cash) increased by EUR 13.2 million to EUR 71.7 million (2007: EUR 58.5 million) as at year end 2008. The company has a strong balance sheet with a solvency of 45,2% (ultimo 2007 44,5%), a debt / EBITDA ratio of 1.9 and an EBITDA/interest costs ratio of 8.6. Of the total gross debt of EUR 73.2 million (at year-end 2008),

In addition to the existing financial leases and mortgage loan, RSDB has entered into an agreement in principle with ING and ABN AMRO for a EUR 50 million committed facility as from May 1, 2009, with a term of 1 year. This facility will be sufficient to carry out our stand-alone business plan.
The covenants agreed fit within RSDB’s financial framework (debt/normalized EBITDA < 3), normalised EBITDA/Interest expense > 4.75, solvency > 30%).

Strategy
The market pressure on the graphics industry, including RSDB, is continuously increasing. The present poor economic conditions, with many marketing budgets being cut, have a direct impact on our revenues. For that reason, all efforts must primarily focus on the development of a Business plan based on a stand-alone situation for RSDB. This must not, however, prevent any other future development. Our aim remains to play a leading role in the realization of a European consolidation, which means that in addition to increasing our scale we also must take the necessary actions to restore the balance of supply and demand. Not only in view of the current problems of the market, also with a view on the future developments on the demand side.

The strategy is also aimed at continuing to make carefully weighted investments within the process of consolidation in order to replace outdated technology with the aim of being competitive with regard to pricing and service, while remaining profitable.

Priorities
In line with our strategy, we have stated a number of priorities for 2009 that apply to the company as a whole. These priorities are;

Dividend
RSDB´s dividend policy is based on a cash payout of 40% of the net result per ordinary share as long as the solvency meets the required minimum of 30%. For the years 2006 and 2007 RSDB chose, in view of the healthy balance sheet, to pay the same dividend as for 2005, being 75% of the 2006 net profit and 107% of the 2007 net profit.

In the context of the conditions under which the banks have given a waiver over 2008 and the new credit facilities no proposal for dividend pay out over 2008 will be made.

In addition, in the light of the prospects for 2009 and the necessary far-reaching measures as part of our stand-alone plan, it is an appropriate gesture towards all people in our organisation.

Prospects
In view of the economic situation as a whole, coming on top of the failure to achieve the desperately needed consolidation, we shall have to take far-reaching steps to implement the Business plan, which will involve exceptional costs.

Such potential fundamental measures will have financial consequences which, coupled with the impossibility of predicting the economic climate, means we can make no precise statements about the development of results in 2009. What we can indicate, however, is that we expect that the net result will be negative.

We would like to take this opportunity to state that our half-year figures will include a significant change of the accounting policy used in preparing the interim financial reporting for the expected cost of and obligation for accumulating compensated absences. The result of the first half year will be negatively impacted by this change in accounting policy while the result of the second half year will be positively impacted by this change.

RSDB NV
Management Board

Deventer, 19 March 2009

For further information:
J.P. Caris. CEO
Drs E.H.O.M. Bouwman. CFO
Tel. +31 570 - 69 49 05

Supplementary information:
The figures in this press release are based on the finalised annual account for 2008, which will be presented to the Shareholders' General Meeting for approval. The figures in this press release have not been audited.

The annual report containing the complete figures for 2008 will be published on 30 March. The General Shareholders’ Meeting will be held this year on Wednesday 15 April, commencing at 3 o’clock in the afternoon in the Rosarium, Amsterdam.
The usual press reception will follow immediately afterwards. Ladies and gentlemen of the press may announce their intention to attend via info@rsdb.com.

Appendices:

Figures RSDB 2008 PDF (49KB) contains: Consolidated profit and loss account Balance Cash flow