Catalis SE / Final Results/Miscellaneous 28.07.2008 Release of a Adhoc News, transmitted by DGAP - a company of EquityStory AG. The issuer is solely responsible for the content of this announcement. --------------------------------------------------------------------------- Eindhoven, July 28, 2008 Catalis SE, worldwide provider of digital content for the film, games and telecom industry, hereby announces adjustments to its financial accounts. The FREP (Financial Reporting Enforcement Panel) each year randomly picks a number of listed companies for a review of their accounts, especially checking the conformity of these accounts with IFRS / IAS regulations and guidelines. Earlier this year Catalis SE was picked by FREP for a review of Catalis 2006 accounts. FREP requests certain adjustments relating to transaction accounting and cash flow allocation. Catalis management agreed on the changes concerning the allocation of cash flow items and follows FREPs request with regard to transaction accounting issues. Latter not necessarily based on acceptance of FREPs interpretation but on the background of avoiding further delays in the release of the 2007 accounts and 2008 quarterly statements In light of the outcome of FREPs review Catalis proactively implements some additional changes to transactional accounting treatment and stock option accounting as set forth in this article. None of the adjustments has a cash impact or changes the groups abilities in operating performance and growth. Following adjustments are made to the financial accounts 2006 going forward: Transaction accounting Capitalisation of client lists PMTC and Kuju In 2006 and early 2007, Catalis SE acquired the companies PMTC N.V. and Kuju plc. Given that both acquired companies are active in the service industry and by definition do not comprise of a substantial amount of fixed assets, most of the purchase price was allocated to goodwill in the transaction accounting. While accepting this method in general, FREP insists on allocating parts of the purchase price to the client lists acquired. Catalis management took the position that, in absence of reliable valuation processes and given the fact that several IFRS comments raise significant doubt with regard to the reliability of the valuation, capitalization and subsequent depreciation of non-contractual client relationships, the separation of acquired client lists will not add to the quality of transparency on information provided in the financial accounts. In opposite to goodwill, which is frequently checked by impairment tests, the amounts allocated to the asset class 'client list' under IFRS need to be depreciated over time. The derived valuations are EUR 68.7k for PMTC N.V. and EUR 553.3k for Kuju plc respectively. For the years 2006 2010 this leads to an annual depreciation of EUR 13.7k for PMTC N.V. For Kuju plc the respective depreciation in the years 2007 2011 amounts to EUR 110.7k. Transactional Costs Certain payments in 2006 were capitalized as transactional costs with regard to advisory services provided for the acquisition of PMTC N.V. and Kuju plc. FREP insists on these costs to be restated into the 2006 profit & loss accounts. Thus, there is a one-off cost effect on the 2006 profit & loss account of EUR 205k. Incentives for Kuju management In the course of the acquisition of Kuju plc, agreements were made with the two Kuju managers (Ian Baverstock and Jonathan Newth) to incentivise them in case they achieve or even exceed certain levels of EBT in 2007 and 2008, safeguarding the future value of the company and the transaction price paid. At the time of agreeing on these terms, all contracting parties were convinced that due to the fact that this agreement was a condition precedent to the realisation of the transaction, the payments (in shares of Catalis SE) due to the Kuju management would be accounted for as part of the transaction price and therefore will go through the balance sheet by increasing the respective goodwill. Despite of this intention, the available documentation requires these payments to be declared as bonus payments and therefore they have to be accounted for in the profit & loss accounts. This has a significant effect on the profit & loss accounts 2007 and 2008. In 2007 this effect amounts to EUR 2.2m. In 2008 the estimated effect amounts to EUR 1.5m. Generally, the effects from the incentive agreement are limited to the fiscal years 2007 and 2008. Due to potential differences arising from the stock price at year end ( 1.24, for balance sheet purposes) and issuing price there might be positive effects on the profit & loss accounts for 2008 and 2009. Stock Options Up to now granted stock options were not reflected in the companys profit& loss accounts / balance sheet due to the assumption of a very low volatility. Yet, IFRS requires a valuation of stock options based on a Black Scholes or a binomial model to be displayed in the profit & loss accounts. Based on the binomial model there are the following effects on the companys profit & loss accounts in the years 2006 2010: EUR 38k in 2006, EUR 203k in 2007, EUR 137k in 2008, EUR 67k in 2009 and EUR 22k in 2010. Accumulated effects on financial results The effect of the incentive agreement for Kuju management qualifies as an extraordinary item. Excluding this effect the financial results for 2007 are as follows: The EBIT amounts to EUR 4,754k (previously reported EUR 5,081k), the EBT amounts to EUR 3,820k and the net profit amounts to EUR 3,840k. From these figures the following earnings per share development can be derived: EUR 0.08 in 2005, EUR 0.10 in 2006 and EUR 0.14 in 2007. On this basis, earnings per share (pro forma) in 2007 rose by 49% compared to an average annual increase in EPS of 31% since 2005. On a fully diluted basis, taking into account the new shares to be issued to Kuju management in the 2007 figures, the development of (pro forma) earnings per share is as follows: EUR 0.08 in 2005, EUR 0.10 in 2006 and EUR 0.13 in 2007 This is still a 40% increase of earnings per share in 2007. In total, the total of the above mentioned effects on the profit & loss accounts of Catalis SE lead to the following adjustments of previously announced figures: For the fiscal year 2006, total adjustments amount to EUR 256.7k, reducing the reported EBIT from EUR 2.911k to EUR 2,654k. For the fiscal year 2007, total adjustment amount to EUR 2,501.2k, reducing the reported EBIT from EUR 5,081k to EUR 2,579.8k. With regard to Catalis 2008 guidance of an EBIT of EUR 5.5m, the necessary adjustments will lower the guidance by approximately EUR 1.8m to EUR 3.7m. Starting from 2009 there are no significant effects on EBIT to be accounted for. Further information A more detailed presentation on the adjustments and the effects on Catalis financial statements can be downloaded at: http://www.catalisgroup.com/index.php?id=64. Conference Call to be held To give investors and analysts the opportunity to further discuss theses issues, Catalis SE will hold a conference call on Monday, 28 July, 2008 starting at 14:00 (GMT+1). The dial-in number for the conference call is +49 (0)69 40359 685. The lines will be open for registration approx. 20 minutes before the call starts. For additional information on Catalis N.V. and its subsidiaries please refer to the websites www.catalisgroup.com, www.kuju.com and www.testroniclabs.com. For further questions please contact our Investor Relations team directly: Investor Relations Catalis SE Investor Relations Team t: +49 89 24 41 18 - 413 f: +49 89 24 41 18 - 499 info@catalisgroup.com About Catalis SE: Catalis is a worldwide leading outsourcing services provider focusing on high-end technical services relating to the creation of digital content for the film, video games and telecom industry as well as content in fields like e-learning and software. Catalis SE currently offers the following services: testing services, development services and production services. Catalis SE operates through its wholly owned subsidiaries Testronic Laboratories and Kuju plc, which in total control twelve different locations throughout the USA, Great Britain, Poland, and Belgium. DGAP 28.07.2008 --------------------------------------------------------------------------- Language: English Issuer: Catalis SE Geldropseweg 26-28 5611 SJ Eindhoven Niederlande Phone: +31 (0)40 2135930 Fax: +31 (0)40 2135604 E-mail: info@catalisgroup.com Internet: www.catalisgroup.com ISIN: NL0000233625, DE000A0GGBZ7 WKN: 927093 Listed: Regulierter Markt in Frankfurt (General Standard); Freiverkehr in Berlin, Stuttgart, München, Düsseldorf End of News DGAP News-Service ---------------------------------------------------------------------------
DGAP-Adhoc: Catalis SE announces adjustments to its financial accounts
| Source: EQS Group AG