Key figures
The group’s EBITDA for 2012 was EUR 32.0 million, an increase of 5% on 2011 (EUR 30.5 million). The operating result (EBIT) for 2012 increased by 4% to EUR 20.2 million (2011: EUR 19.5 million). The net profit for 2012 was EUR 9.0 million (2011: EUR 7.0 million), including the negative result on the stake in Accentis of EUR 7.7 million (2011: negative result of EUR 7.7 million).

Significant events during the year

Market launches at Drupa
In May 2012, Xeikon took part in Drupa, the world’s most prestigious graphics trade fair which is held every four years. The 2012 fair provided a platform for the official market launch of new products. Many customers waited until Drupa to place equipment orders.

For Digital Printing Solutions, Xeikon launched the Xeikon 8500, Xeikon 8600 and Xeikon 8800 presses for the document printing market and the Xeikon 3030Plus for the labels and packaging market. Visitors to the fair were also able to discover the new MyPress operating software and Xeikon’s cloud solution for color management, Xeikon Color Control. In addition, a new technology, Trillium, was demonstrated which makes printing possible at up to six times the speed of the current digital printing systems. Xeikon expects to commercialize this technology in a few years’ time. For Prepress Solutions, basysPrint introduced its new generation of UV platesetters, the 460x and 860x series, as well as UV platesetters for very large formats (VLF). Xeikon also presented its new ThermoflexX product line to the public at the fair.

Xeikon’s participation at Drupa was a success. For both Digital Printing Solutions and Prepress Solutions, it recorded substantial orders, worth more than EUR 23 million or over 40% of the equipment turnover reported for 2011.

Technology Award for X-800 plug-in
In July 2012, Xeikon received the 2012 InterTech Technology Award for its X-800 VariLane, a software plugin for the X-800 digital front-end. The X-800 VariLane has been specially developed to give label printers more flexibility. Thanks to this plug-in, labels of different sizes can be simultaneously printed in parallel lanes, benefiting both productivity and cost. The material on which the labels are printed is used more efficiently, yielding a cost saving of up to 30%.

Launches at Labelexpo Americas
In mid-September 2012, Xeikon took part in Labelexpo Americas 2012, launching its Vectorizor, a new plugin for the X-800 digital front-end for driving the laser die-cutting devices that cut out the different labels. A patent application for Vectorizor is in progress. Xeikon also demonstrated its new transparent and scratchresistant Durable Clear Toner at the fair. This toner is suitable for application as a spot varnish layer. As a result, for example, certain parts of an image can be varnished while others are left unvarnished. For labels and packaging, this can be useful: for instance, it allows a use-by date to be applied later or makes it easier to glue together the packaging. Because the toner is applied digitally in the press’s fifth color station, printers no longer necessarily have to invest in extra varnishing equipment.

In addition, Xeikon sponsored two sustainability initiatives at the event: Ecovillage and Global Green Awards. In Ecovillage, waste from the live demonstrations of participating exhibitors such as Xeikon was collected and converted into fuel pellets. The Global Green Awards is an annual competition for suppliers of label printers. The awards go to suppliers that are working to minimize the environmental impact of the label industry.

Post-balance-sheet events
On 8 January 2013, Xeikon announced that it was holding initial talks with a party that had expressed an interest to Xeikon in making a public offer for its shares. Xeikon emphasized that the parties were then in the initial phase of their talks, and that if developments so required, further communication would immediately take place in accordance with legal requirements.

Discussion of the annual results

Sales and operating income
Compared with 2011, sales remained constant. Sales rose by 3% at Digital Printing Solutions, but were down at Prepress Solutions. The main developments are as follows:

• Prepress Solutions sales during 2012 fell by  more than 7% from their 2011 level. This drop was due to increasing competition from Chinese suppliers and the difficult market conditions in the conventional offset printing market. Sales during 2012 for the Digital Printing Solutions segment increased, despite difficult market conditions.
• Equipment sales in 2012 were up 5% compared with 2011.
• Recurring income from consumables and service activities fell by 3.4%. This fall mainly took place during the first quarter, and was due to a number of specific customers from North America that experienced sales losses. In the other regions, recurring income remained stable. In the second half of the year, recurring income was up 3.3% on its level in the second half of 2011.
• In geographical terms, sales rose in Europe (+6.1%), but fell in North and South America (-8.4%) and Asia (-7.1%).
• Sales in the second half of the year represent 57% of the total for the year.

Operating income was EUR 132.8 million, compared with EUR 134.0 million in 2011. Other operating income was EUR 2.6 million (2011: EUR 4.2 million), and consisted mainly of grants received and R&D costs passed on to third parties.

EBITDA
Compared with the previous financial year, EBITDA rose 5.5% to EUR 32.0 million (2011: EUR 30.5 million). This increase in EBITDA in 2012 compared with 2011 was due to strict cost management, efficiency improvements and a better product mix.

Operating result (EBIT)
The operating result (EBIT) was EUR 20.2 million, which represents a 4% increase on 2011 (EUR 19.5 million). This increase is due to strict cost management, efficiency improvements and a better product mix compared with 2011. In overall terms, depreciation, impairments and provisions increased by EUR 1.0 million in 2012 from their level in 2011. The details are as follows:
• Depreciation decreased from EUR 9.0 million in 2011 to EUR 8.2 million in 2012.
• Non-recurring impairment losses were EUR 1.5 million in connection with customer receivables (2011: EUR 0.3 million), and EUR 1.7 million in connection with inventory (2011: EUR 1.6 million). The group recorded EUR 0.4 million of provisions in 2012 (2011: nil).

Financial result and result before tax
The net financial result in 2012 was a gain of EUR 0.6 million (2011: a loss of EUR 0.3 million). The result before tax was EUR 13.0 million (2011: EUR 11.5 million).
Xeikon recognized a negative result of EUR 7.7 million from its stake in Accentis in 2012 (2011: EUR 7.7 million). This negative result was due to an impairment to reflect a fall in the value in use of Accentis.
The tax burden in 2012 was 20% (2011: 24%) of the result before tax adjusted for the share in the result of associates.

Net result – group share
The group share in the net profit was EUR 9.0 million, compared with EUR 7.1 million in 2011.

Balance sheet
Shareholders’ equity at the end of the reporting period was EUR 185.7 million. This represents a net increase of EUR 8.5 million from last year, mainly arising from the net profit for the year (EUR 9.0 million) and purchases of treasury shares (EUR -0.3 million).
At the end of the financial year, Xeikon had a EUR 8.3 million debt receivable from Punch International (2011: EUR 7 million) and a EUR 26.6 million debt receivable from Accentis (2011: EUR 26.6 million); both are shown under long-term receivables.
Net financial debt fell from EUR 29.0 million to EUR 10.8 million.

Cash flow statement
Cash from operating activities was EUR 26.3 million for 2012, resulting from an operational cash flow of EUR 25.5 million and a decrease in working capital of EUR 0.7 million.
The investment cash flow totaled EUR -7.7 million, and consisted among other items of the capitalization of EUR 5.6 million of R&D projects and the provision of EUR 1.3 million of additional funds under the current loan agreement with Punch International (amount receivable as at 31 December 2012: EUR 8.3 million).
Cash from financing activities came to EUR -10.5 million (2011: EUR -11.6 million), and included the repayment of EUR 10 million on the syndicated loan taken out with a bank consortium.

Information about financial loan agreements
The group has a syndicated loan with a bank consortium for which contractual provisions are made in covenants that are assessed on a half-yearly basis. The outstanding amount was reduced by EUR 10 million during 2012; the balance at the end of 2012 was EUR 35 million (2011: EUR 45 million). In 2012 Xeikon was again in compliance with all conditions set in the covenants.

Prospects
The group does not wish to announce any concrete objectives.

Changes in the Supervisory Board and the Executive Board
No changes occurred in the Supervisory Board and Executive Board other than those announced in the press release of 8 October 2012.

Purchase of treasury shares
The management has decided to make use of the authority granted to it to purchase treasury shares. Under this authority, the management is empowered to purchase treasury shares up to the maximum quantity that may be vested in the company by virtue of the law and the articles of association at the time of acquisition, at a price between their par value and 110% of the stock-market price at the time of acquisition. In its quarterly trading updates, the company will report periodically on the number of treasury shares purchased and the average acquisition price. Since the authority was granted, the company has purchased a total of 3,152,332 treasury shares at an average price of EUR 2.68. This represents 10.98% of the total number of shares outstanding. In the course of 2012, Xeikon has purchased 119,580 treasury shares.

Proposed dividend
The Executive Board proposes that no dividend be distributed for the 2012 financial year.