DANE-ELEC MEMORY : 2009 results

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DANE-ELEC MEmory

RESS RELEASE

Paris, April 7, 2009

2008 Results

DANE-ELEC Memory,
which manufactures and distributes digital products (Dram, external hard drives and handled products), has published its 2008 annual results.

Highlights

In 2008, Dane-Elec Memory saw a number of developments, notably at sales and marketing level, which have impacted the year's financial results:

Industry climate. The electronics industry has not been spared from the effects of the widespread slowdown in household consumption. In addition, the large-scale increase in global production capacity in recent years has led to over-production, severely depressing prices. In the space of 12 months, the average price for Dram modules and Flash memories has fallen by almost 60%. New products. 2008 saw the ramp-up of new products developed by the group and initially marketed in Europe. So by Dane-Elec external hard drives, the Zpen digital pen and the Dane-Elec Music range of digital players generated revenues of ¤22.1 million, or over 13% of total group sales. Innovation. To pursue its strategy of competitive differentiation by marketing innovative products, Dane-Elec Memory increased the resources allocated to R&D in France, Israel and China. In 2008, R&D spending amounted to ¤1 million, compared with ¤650 million in 2007. Sales under licence. In parallel with this innovation policy, Dane-Elec Memory developed another avenue of differentiation by signing a global licensing agreement with Duracell. As a result, the group began selling a range of mass storage products including memory cards and USB drives in the United States under the Duracell brand name. These products contributed to the extension of our distribution network with 11 new distributors in North America, and increased market share. Sales network. In 2008, Dane-Elec Memory reallocated its commercial resources towards regions offering the greatest growth potential. Offices were accordingly opened in Turkey and Dubai, while activities in Germany and Italy are now run by other subsidiaries.


 

Income Statement

Eur million
 
2008
 
2007
 
Revenues
 
161.8
 
202.7
 
Gross margin
 
19.6
 
28.1
 
% of revenues
 
12.1%
 
13.9%
 
Recurrent operating income
 
(9.3)
 
1.0
 
Operating income
 
(9.8)
 
1.0
 
Net interest charges
 
(0.8)
 
(0.3)
 
Tax
 
3.1
 
(0.6)
 
Net income
 
(7.5)
 
0.2
 

In 2008, the Dane-Elec Memory group posted revenues of ¤161.8 million that can be analysed as follows:

The dollar's depreciation against the euro had a negative impact of ¤5.1 million; The rise in sales volumes was offset by the fall in average prices for commoditised products (Drams and Flash memories), There were substantial differences from one country to another, with strong performance in the United States and Spain mainly counterbalanced by lower activity in France.

In addition, retail activity via Intervalle was hit by the sudden halt to sales of hand-held GPS systems by ViaMichelin, cutting revenues by ¤5.3 million.

The 1.8 point reduction in gross margin can largely be explained by:

Increased transport costs for component purchases (up 1.2 points), Substantial fourth-quarter dollar volatility.

Increased payroll costs and external charges were due to:

The return to strongly seasonal sales, requiring the deployment of additional resources in the shape of external service providers, advertising, transport, etc., for a total of ¤1 million; The in-depth reorganisation of the group, leading to a one-off increase in direct and indirect personnel costs amounting to approximately ¤610,000; Higher, non-activated R&D costs amounting to ¤350,000.

The group made an operating loss of ¤9.8 million. The increase in interest charges can be attributed to the rise in net debt. After factoring in a ¤3.1 million tax credit, the group ended the year on a net loss of ¤7.5 million.

Balance sheet and net equity

Eur million
 
31/12/2008
 
31/12/2007
 
Non-current assets (PP&E)
 
4.6
 
3.0
 
Stocks
 
20.9
 
22.6
 
Trade receivables
 
46.1
 
42.1
 
Other current assets
 
8.9
 
7.9
 
Total assets
 
80.4
 
75.6
 

 
 
 
 
 
Shareholders' equity
 
35.8
 
42.7
 
Non-current liabilities
 
5.5
 
0.5
 
Trade payables
 
23.6
 
16.3
 
Other current liabilities
 
15.6
 
16.1
 
Total liabilities
 
80.4
 
75.6
 

The working cash flow requirement fell slightly over the year. Changes in the product mix due to the increase in the proportion of new products limited the fall in inventories. At the same time, the strong activity levels seen at year-end, notably in Spain, explain the increase in trade receivables and payables.

As at 31 December 2008, Dane-Elec Memory's shareholders' equity stood at ¤35.8 million. Net long-term debt stood at ¤13.1 million. The group renegotiated part of its credit lines with its financial partners. An outstanding debt of ¤6.5 million was transformed into a non-current debt with a repayment schedule running to June 2011.

At 31 March 2009, Dane-Elec Memory had unused credit lines amounting to ¤10.2 million.

Strategy and outlook

In line with the strategy implemented from 2006, Dane-Elec Memory will continue to focus its sales efforts on competitively-differentiating and innovative products such as Zpen, Notesearch, and NoLimitMemory. Among its development priorities, the group is targeting the telecoms operators market, as seen in the 2008 distribution agreement signed with Orange in France.

In 2009, Dane-Elec Memory will benefit from the impact of full-year sales of its new products, whose range is steadily expanding, and from an extended sales network. Multimedia products (external hard drives, digital pen and music players) are to be distributed on the North American market, for example, while products marketed under license with Duracell will progressively be marketed in Europe.

In parallel, measures implemented in 2008 to lower the break-even point should gradually start to bear fruit, both in terms of profitability and of changes in the net financial position.

The next date for your diary is Tuesday 12 May after close of trading, for the condensed first-quarter 2009 accounts, when the group will provide a detailed update on its situation and outlook.

About DANE-ELEC Memory

Founded in France in 1985 by David Haccoun and Nessim Bodokh, Dane-Elec Memory is an international company headquartered near Paris. The company specialises in the manufacture and distribution of digital products: Drams, external hard drives and handled products.

Since it was founded, the group has seen steady growth and is a European leader in its sector. As a global player, Dane-Elec Memory operates in Europe, the United States, and Asia (China - Taiwan). The group has a Dram manufacturing and assembly plant in Ireland and a packaging logistics platform in France, making it extremely responsive to demand.

In parallel, Dane-Elec Memory also has a handled product distribution subsidiary (via Intervalle).

In 2008, Dane-Elec Memory generated revenues of 162 million euros.

Dane-Elec Memory is listed on Euronext Paris, Segment C.

ISIN: FR000036774, Mnemo: DAN, REUTERS: DEMY.

Full financial information at www.dane-elec.fr or at www.actus-finance.com

¢ Actus Finance contacts:

Shareholders / Analysts / Investors:

Jérôme Fabreguettes-Leib

Tel.: + 33 1 77 35 04 36

jfl@actus.fr

Press:

Nicolas Bouchez

Tel.: + 33 1 77 35 04 37

nbouchez@actus.fr

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