Resultaten derde kwartaal en eerste negen maanden van 2011

 GLOBAL GRAPHICS SA (NYSE-Euronext: GLOG), de experts in de ontwikkeling van software voor elektronische documenten en druktoepassingen, maakt de geconsolideerde financiële resultaten bekend voor het derde kwartaal en de eerste negen maanden van het jaar eindigend op 31 december 2011.

De vergelijking van het derde kwartaal 2011 met hetzelfde kwartaal vorig jaar (Q3 2010) omvat:

• Omzet van 2,0 miljoen euro dit kwartaal (of 2,2 miljoen euro tegen Q3 2010 wisselkoersen) t.o.v. 2,6 miljoen euro in Q3 2010; 

• Operationeel verlies van 0,1 miljoen euro voor dit kwartaal t.o.v. een nominale operationele winst in Q3 2010; 

• Aangepast operationeel verlies van 0,2 miljoen euro voor dit kwartaal t.o.v. een aangepaste operationele winst van 0,1 miljoen euro in Q3 2010; 

• Aangepast operationeel verlies vóór belastingen van 0,2 miljoen euro voor dit kwartaal (of een aangepast operationeel verlies van 0,02 euro per aandeel) t.o.v. een aangepaste operationele winst vóór belastingen van 0,1 miljoen euro voor Q3 2010 (of een aangepaste operationele winst vóór belastingen van 0,01 euro per aandeel); 

• Nettoverlies van 0,1 miljoen euro voor dit kwartaal (of een nettoverlies van 0,01 euro per aandeel) t.o.v. een nominaal nettoverlies in Q3 2010 (of een nettoverlies van 0,00 euro per aandeel, en 

• Aangepast nettoverlies voor dit kwartaal van 0,2 miljoen euro (of een aangepast nettoverlies van 0,02 euro per aandeel) t.o.v. een nominale aangepaste nettowinst voor Q3 2010 (of een nominale aangepaste nettowinst van 0,00 euro per aandeel). 

Gary Fry, Chief Executive Officer, lichtte de resultaten toe: "In het derde kwartaal, wat telkens het zwakste kwartaal van het jaar is, lagen de resultaten in de lijn van de verwachtingen. We hebben weliswaar nieuwe contracten afgesloten maar, zoals het typisch is voor ons OEM licentiemodel, wij verwachten de resultaten daarvan pas in de volgende kwartalen.

"In het derde kwartaal wierp de intensieve periode van productontwikkeling vruchten af. In het druksegment lanceerden wij de bèta-versie van Harlequin Multi-RIP, onze high-performance RIP die geoptimaliseerd is om digitale drukpersen op volle snelheid aan te sturen. De signalen uit de markt tonen ons dat dit product in dit segment het beste product is inzake snelheid en kwaliteit. Als een gevolg daarvan tekenden we in de loop van het derde kwartaal een contract met een belangrijke nieuwe OEM partner die deze technologie zal gaan gebruiken.

`Wij zijn ook verheugd over de toenemende interesse in onze technologie voor digitale druktoepassingen. Tijdens het derde kwartaal lanceerden wij de versie 9.0 van de Harlequin Server RIP. Die beschikt over een aantrekkelijke nieuwe eigenschap die de productiviteit van de printshops naar een nieuw niveau tilt. Onze Harlequin Server RIP OEMs zijn opgetogen over het vooruitzicht om hun upgrade business met behulp van deze release te stimuleren.

"In het segment van de elektronische documenten hebben we de bèta-versie van ons nieuwe Sunstone platform gelanceerd. Die versie werd met belangstelling verwelkomd en wordt nu geëvalueerd door een aantal onafhankelijke softwareverkopers om te worden gebruikt in productiviteitstoepassingen gericht op de onderneming. gDoc Fusion en gDoc Binder zijn beide voorbeelden van toepassingen die onze white label partners via het Sunstone platform kunnen ontwikkelen.

"We kunnen met tevredenheid mededelen dat onze bibliotheek voor PDF-creatie aan belang wint. Testen toonden aan dat zij sneller is, conversies van hogere kwaliteit oplevert en dat, wanneer documenten vanuit Microsoft Office naar PDF worden geconverteerd, de voetafdruk t.o.v. Adobe Acrobat kleiner is."

Performance van het derde kwartaal 2011

De omzet voor het kwartaal dat eindigde op 30 september 2011 bedroeg 2,0 miljoen euro t.o.v. 2,6 miljoen euro in Q3 2010, of een daling met 20,8% tegen huidige wisselkoersen en met 15,2% tegen constante wisselkoersen.

De totale bedrijfskosten bedroegen dit kwartaal 2,0 miljoen euro t.o.v. 2,4 miljoen euro in Q3 2010 en respectievelijk 2,3 miljoen euro en 2,0 miljoen euro in het eerste en het tweede kwartaal van 2011.

Voor het derde kwartaal van 2011 maakt de onderneming nog de volgende resultaten bekend:

• Operationeel verlies van 0,1 miljoen euro (ter waarde van 4,5% van de kwartaalomzet), t.o.v. een nominale operationele winst in Q3 2010 (ter waarde van 1,7% van die kwartaalomzet); 

• Aangepast operationeel verlies (zoals gedefinieerd in de onderstaande tabel) van 0,2 miljoen euro (ter waarde van 7,9% van de kwartaalomzet), vergeleken met een aangepaste operationele winst van 0,1 miljoen euro in Q3 2010 (ter waarde van 4,5% van die kwartaalomzet); 

• Aangepast verlies vóór belastingen (zoals gedefinieerd in de onderstaande tabel) van 0,2 miljoen euro t.o.v. een aangepaste winst vóór belastingen van 0,1 miljoen euro voor Q3 2010. Bijgevolg was dit kwartaal het aangepaste resultaat vóór belastingen per aandeel een verlies van 0,02 euro, t.o.v. een aangepaste winst vóór belastingen van 0,01 euro per aandeel in Q3 2010; 

• Nettoverlies van 0,1 miljoen euro (of een nettoverlies van 0,01 euro per aandeel) tegenover een nominaal netto verlies in Q3 2010 (of een nettoverlies van 0,00 euro per aandeel);  

• Aangepast nettoverlies (zoals gedefinieerd in de onderstaande tabel) van 0,2 miljoen euro tegenover een nominale aangepaste netto winst in Q3 2010. Bijgevolg was het aangepaste nettoresultaat per aandeel een verlies van 0,02 euro, tegenover een aangepaste nettowinst van 0,00 euro per aandeel in Q3 2010. 

Performance voor de eerste negen maanden
De omzet van de eerste negen maanden van 2011 bedroeg 6,2 miljoen euro t.o.v. 6,8 miljoen euro in dezelfde periode van 2010, of een daling met 8,1% tegen de huidige wisselkoersen en met 3,7% tegen constante wisselkoersen.

De totale bedrijfskosten voor de eerste negen maanden van 2011 bedroegen 6,3 miljoen euro (na het effect van overige operationele opbrengsten voor een bedrag van 0,2 miljoen euro), tegenover 8,7 miljoen euro voor dezelfde periode van 2010, waarbij het laatste bedrag voor 0,4 miljoen euro operationele uitgaven bevat (netto zonder overige operationele opbrengsten), die met name betrekking hadden op de uitgaven voor de reorganisatie die de onderneming in april 2010 doorvoerde.

Voor de eerste negen maanden van 2011 maakt de onderneming nog de volgende resultaten bekend:

• Operationeel verlies van 0,4 miljoen euro (of equivalent met 6,0% van de periodeomzet), ten opzichte van een bedrijfsverlies van 2,3 miljoen euro voor dezelfde periode van 2010 (of 33,2% van de periodeomzet voor 2010); 

• Aangepast operationeel verlies (zoals gedefinieerd in de onderstaande tabel) van 0,7 miljoen euro (of 11,1% van de periodeomzet), vergeleken met een aangepast bedrijfsverlies van 1,7 miljoen euro voor dezelfde periode in 2010 (of 24,9% van de periodeomzet in 2010); 

• Aangepast verlies vóór belastingen (zoals gedefinieerd in de onderstaande tabel) van 0,7 miljoen euro voor de eerste negen maanden van 2011 (of een aangepast verlies vóór belastingen van 0,07 euro per aandeel) tegenover een aangepast verlies vóór belastingen van 1,9 miljoen euro voor dezelfde periode van 2010 (of een aangepast verlies vóór belastingen van 0,19 euro per aandeel); 

• Nettoverlies van 0,3 miljoen euro voor de eerste negen maanden van 2011 (of een nettoverlies van 0,03 euro per aandeel) t.o.v. een nettoverlies van 2,7 miljoen euro (of een nettoverlies van 0,26 euro per aandeel) voor dezelfde periode van 2010; 

• Aangepast nettoverlies (zoals gedefinieerd in de onderstaande tabel) van 0,5 miljoen euro voor de eerste negen maanden van 2011 t.o.v. een aangepast nettoverlies van 2,1 miljoen euro voor dezelfde periode van 2010. Bijgevolg was het aangepaste nettoresultaat per aandeel een verlies van 0,05 euro per aandeel voor de eerste negen maanden van 2011 tegenover een aangepast nettoverlies van 0,21 euro per aandeel voor dezelfde periode van 2010. 

Toelichting op de resterende maanden voor 2011
Gary Fry vervolgde: "de engagementen die we tot nu toe in dit jaar van klanten hebben bekomen, zowel voor onze druk- als toepassingstechnologie, zijn bemoedigend. Door onze technische innovatie hebben we nieuwe toepassingen ontwikkeld die ons toelaten om nieuwe partnerships met klanten op te zetten.

 "Onze kostenpositie is sinds de start van dit jaar onder controle gebleven en voor de uitvoering van onze strategie blijven wij profiteren van onze beslissing in de eerste helft van dit jaar om te investeren in nieuwe vaardigheden."

Toekenning van aandelenopties aan bepaalde bestuurders

Op 2 november 2011 besliste de raad van bestuur om aandelenopties toe te kennen aan bepaalde bestuurders van de vennootschap.  Gelieve voor verdere informatie over de regels en de voorwaarden voor het toekennen van de aandelenopties, nota 17 van de beknopte geconsolideerde interim financiële rekeningen voor het voorbije kwartaal en de eerste negen maanden te consulteren.

Bekendmaking van de resultaten voor het vierde kwartaal 2011 en het volledige jaar 2011

Global Graphics verwacht de geconsolideerde financiële resultaten voor het vierde kwartaal en voor het jaar eindigend op 31 december 2011 bekend te maken op woensdag 8 februari 2012, vóór beurstijd.

Over Global Graphics
Global Graphics (http://www.globalgraphics.com) is een toonaangevende ontwikkelaar van software voor e-documenten en druktoepassingen. Het levert krachtige oplossingen voor de grafische en commerciële drukindustrie, voor de markt van digitale druk, voor kenniswerkers en professionele softwaretoepassingen. De klantenkring bestaat uit apparatuurproducenten (OEMs), systeemintegratoren, softwareontwikkelaars en distributeurs. Daartoe behoren de belangrijkste merken van digitale prepress-systemen, breedformaatkleurenprinters, kleurproefystemen, digitale kopieerapparaten en printers voor de kantoor- en SOHO-markt en een brede waaier van toonaangevende softwaretoepassingen.

Toekomstgerichte verklaringen
Dit persbericht bevat, naast historische informatie, toekomstgerichte verklaringen die risico`s en onzekerheden inhouden. Dit omvat verklaringen aangaande de groei van de onderneming, haar financiering, expansieplannen en de verwachte resultaten voor toekomstige perioden. Dergelijke verklaringen steunen op de huidige verwachtingen van het management en zijn onderhevig aan een aantal onzekerheden en risico`s die ertoe zouden kunnen leiden dat de feitelijke resultaten materieel verschillen van die beschreven in de toekomstgerichte verklaringen. Hoewel het management ervan overtuigd is dat zijn verwachtingen, die in de toekomstgerichte verklaringen naar voren komen, redelijk zijn, gebaseerd op de thans beschikbare informatie, kan het aan niemand garanderen dat de verwachtingen juist zullen blijken. Bijgevolg is het aangewezen dat lezers niet louter en alleen op deze toekomstgerichte verklaringen vertrouwen. In ieder geval zijn deze verklaringen enkel van toepassing vanaf de datum van deze persmededeling. De vennootschap neemt geen enkele verplichting op zich om de hier geuite verklaringen te herzien of te actualiseren, noch om gebeurtenissen of omstandigheden van na de datum van deze mededeling te reflecteren, noch om nieuwe informatie of het voorkomen van onvoorziene gebeurtenissen te reflecteren.

GLOBAL GRAPHICS SA AND SUBSIDIARIES
CONDENSED CONSOLIDATED INTERIM STATEMENT OF INCOME (LOSS)

The accompanying selected explanatory notes are an integral part of the Company`s condensed consolidated interim financial statements as at and for the quarter and the nine-month period ended 30 September 2011.
GLOBAL GRAPHICS SA AND SUBSIDIARIES
CONDENSED CONSOLIDATED INTERIM STATEMENT OF COMPREHENSIVE INCOME (LOSS)

The accompanying selected explanatory notes are an integral part of the Company`s condensed consolidated interim financial statements as at and for the quarter and the nine-month period ended 30 September 2011.
GLOBAL GRAPHICS SA AND SUBSIDIARIES
CONDENSED CONSOLIDATED INTERIM STATEMENT OF FINANCIAL POSITION  

The accompanying selected explanatory notes are an integral part of the Company`s condensed consolidated interim financial statements as at and for the quarter and the nine-month period ended 30 September 2011.
Figures for the year ended 31 December 2010 have been extracted from the audited, full consolidated financial statements for that year.
GLOBAL GRAPHICS SA AND SUBSIDIARIES
CONDENSED CONSOLIDATED INTERIM STATEMENT OF CASH FLOWS

The accompanying selected explanatory notes are an integral part of the Company`s condensed consolidated interim financial statements as at and for the quarter and the nine-month period ended 30 September 2011.
GLOBAL GRAPHICS SA AND SUBSIDIARIES
CONDENSED CONSOLIDATED INTERIM STATEMENT OF CHANGES IN EQUITY

The accompanying selected explanatory notes are an integral part of the Company`s condensed consolidated interim financial statements as at and for the quarter and the nine-month period ended 30 September 2011.
GLOBAL GRAPHICS SA AND SUBSIDIARIES
SELECTED EXPLANATORY NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS AS AT AND FOR THE QUARTER AND NINE-MONTH PERIOD ENDED 30 SEPTEMBER 2011

NOTE 1: REPORTING ENTITY
These condensed consolidated interim financial statements as at and for the quarter and the nine-month period ended 30 September 2011 comprise Global Graphics SA, a French-based company (the `Parent`), and its subsidiaries (together referred to as `the Company`).
These condensed consolidated interim financial statements were authorized for issue by the Parent`s Board of Directors on 2 November 2011.

NOTE 2: BASIS OF PREPARATION

(a) Statement of compliance
These condensed consolidated interim financial statements as at and for the quarter and the nine-month period ended 30 September 2011 have been prepared in accordance with IAS 34, Interim Financial Reporting (`IAS 34`), and more generally  with International Financial Reporting Standards (`IFRSs`) and related interpretations issued by the International Accounting Standards Board (`IASB`), as adopted by the European Union.
For the purposes of their inclusion in the Company`s quarterly earnings release, these condensed consolidated interim financial statements do not include all of the information required for full annual consolidated financial statements and should therefore be read in conjunction with the Company`s consolidated financial statements as at and for the year ended 31 December 2010.

(b) Basis of measurement
These condensed consolidated interim financial statements have been prepared under the historical cost convention, except for the revaluation of derivative instruments at fair value through the income statement.
Non-current assets are stated at the lower of amortized cost and fair value less disposal costs, when applicable.
The methods used to measure fair value in these condensed consolidated interim financial statements are identical to those used for the preparation of the Company`s consolidated financial statements as at and for the year ended 31 December 2010, which are set out in note 4 to the Company`s consolidated financial statements for that year.

(c) Functional and presentation currency
These condensed consolidated interim financial statements are presented in euros, which is the Parent`s functional and presentation currency, rounded to the nearest thousand, unless otherwise specified.

(d) Going concern
The Company had no outstanding financial debt and a cash position of 1,394 as at 30 September 2011 (1,396 as at 30 June 2011 and 1,869 as at 31 December 2010).
On the date these condensed consolidated financial statements were drafted, based on their review of updated cash flow projections prepared by management for the period of 12 months ending 30 September 2012, the members of the Parent`s Board of Directors have no reason to believe that a material uncertainty exists that may cast significant doubt about the Company`s ability to continue as a going concern.

NOTE 3: ACCOUNTING POLICIES AND METHODS
The accounting policies and methods used for the preparation of these condensed consolidated interim financial statements are the same as those used for the preparation of the Company`s consolidated financial statements as at and for the year ended 31 December 2010, which are set out in note 3 to the Company`s consolidated financial statements for that year.

NOTE 4: CRITICAL ACCOUNTING ESTIMATES AND JUDGEMENTS
The preparation of financial statements in accordance with IFRSs requires the use of certain critical accounting estimates.
It also requires management to exercise judgement in the process of applying the Company`s accounting policies, and to make estimates and assumptions that affect the reported amounts of assets, liabilities, income and expenses.
The estimates and underlying assumptions are based on historical experience and various other relevant factors that are believed to be reasonable under the circumstances, the results of which form the basis of making management`s judgements about carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates.
The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised if the revision affects only that period or in the period and future periods if the revision affects both current and future periods.
Judgements made by the Company`s management in the application of IFRSs that have a significant effect on the Company`s condensed consolidated interim financial statements as at and for the quarter and the nine-month period ended 30 September 2011, and assumptions or estimates with a significant risk of material adjustment in the coming twelve months, are discussed hereafter.

(a) Impairment of goodwill and other intangible assets

(i) Goodwill and other intangible assets with indefinite useful lives
Goodwill and other intangible assets with indefinite useful lives are reviewed for impairment at least annually, or more frequently if events or changes in circumstances indicate that the carrying value of these items may not be recoverable, notably a decline in actual or forecast operating performance and cash flows. If the Company`s future financial performance or other events indicate that the carrying value of goodwill and other intangible assets with indefinite useful lives is impaired, the Company may be required to record a significant charge during the period in which such impairment of goodwill and other intangible assets with indefinite useful lives is determined, resulting in an unfavorable impact on the Company`s results of operations.
IAS 34 mandates that the Company applies the same impairment testing, recognition and reversal criteria (as applicable) at any interim date as it would at the end of its financial year, i.e. as at 31 December. In accordance with paragraph 36 of Appendix B of IAS 34, the Company did not perform a detailed impairment computation as at 30 September 2011 as had been done at 31 December 2010, but reviewed indications of possible impairment of goodwill and other intangible assets with indefinite useful lives as at and during the quarter and the nine-month period ended 30 September 2011.
Based on the results of this review, the Company concluded that no impairment of goodwill and other intangible assets with indefinite useful lives was required as at and for the quarter and the nine-month period ended 30 September 2011 (see also note 10b below).

2. Intangible assets that are subject to amortization 

Intangible assets that are subject to amortization (notably those arising from the capitalization of development costs in accordance with criteria set in IAS 38, Intangible Assets) are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable.

- Intangible assets reported under the Print segment of the Company`s business
Intangible assets which are reported as part of the Print segment of the Company`s business (see note 14e below) relate to two development projects (namely the Harlequin and Jaws RIP software) which management believes to meet the recognition criteria set out in paragraphs 57 to 62 of IAS 38.
Considering the absence of material changes during the quarter and the nine-month period ended 30 September 2011 in the assumptions used at 31 December 2010 for identifying any requirement to impair the intangible assets reported under the Print segment of the Company`s business, which resulted in management to consider that no impairment was required at the latter date for these intangible assets, management concluded that no impairment for the intangible assets reported under the Print segment of the Company`s business was required as at and during the quarter and the nine-month period ended 30 September 2011 (see note 9b below).

- Intangible assets reported under the eDoc segment of the Company`s business
Intangible assets which are reported as part of the eDoc segment of the Company`s business (see note 14e below) relate to three development projects (namely EDL, gDoc applications and other document conversion technologies) which management believes to meet the recognition criteria referred to above.
Considering the absence of material changes during the quarter and the nine-month period ended 30 September 2011 in the assumptions used at 31 December 2010 for identifying any requirement to impair the intangible assets reported under the eDoc segment of the Company`s business, which resulted in management to consider that no impairment was required at the latter date for these intangible assets, management concluded that no impairment for the intangible assets reported under the eDoc segment of the Company`s business was required as at and during the quarter and the nine-month period ended 30 September 2011 (see note 9b below).

(b) Capitalization and amortization of computer software development costs

(i) Development cost capitalization and amortization methods used by the Company
As stated in note 3e to the Company`s consolidated financial statements for the year ended 31 December 2010, costs associated with maintaining existing computer software technology and programmes are recognised as an expense when incurred.
Are recognized as intangible assets costs that are directly associated with the production of identifiable and unique software products over which the Company has proprietary rights, that can be measured reliably, and where it is probable that future economic benefits attributable to such software products will flow to the Company. Such costs only include software development employee costs.
Development costs recognized as intangible assets are amortised from the point the asset is ready for use on a straight-line basis over its estimated useful life, which do not exceed ten years. Such amortization charge is included in Research and development expenses in the consolidated statement of income.

(ii) Capitalization of computer software development costs
The following tables provide information on the aggregate amounts of computer software development costs which were capitalized as at 30 September 2011 and 2010, respectively, as well as on the amounts which were capitalized during the quarters and the nine-month periods then ended for those projects the Company considered it could demonstrate that it met all of the abovementioned recognition criteria:
- Quarter and nine-month period ended 30 September 2011

- Quarter and nine-month period ended 30 September 2010

(iii) Amortization of capitalized computer software development costs
The following tables provide information on accumulated amortization as at 30 September 2011 and 2010, respectively, as well as on the amortization expenses which were recognized in the quarters and the nine-month periods then ended for those projects the Company considered it could demonstrate that it met all of the abovementioned recognition criteria:

- Quarter and nine-month period ended 30 September 2011

- Quarter and nine-month period ended 30 September 2010

(c) Income tax

(i) Current income tax
The Company is subject to income tax in France and in all jurisdictions where it has subsidiaries (notably in the UK and the US).
Significant judgement is required in determining the provision for income taxes, as there are many transactions and calculations for which the ultimate tax determination is uncertain during the ordinary course of business.

(ii) Deferred income tax

- Policy used by the Company for recognizing deferred tax assets
The Company recognises deferred tax assets as stated in note 3p to the Company`s consolidated financial statements for the year ended 31 December 2010.
In evaluating whether it is probable or not that a deferred tax asset recognised in a specific jurisdiction may be utilised against future taxable profits to be recognised in that jurisdiction, the Company uses estimates of future taxable profits over an appropriate period of time from the balance sheet date (currently being four years), based on sales growth and profit assumptions considered to be appropriate by management over that four-year period.
Should these growth assumptions be revised downwards in future periods, the Company may be required to record a significant deferred tax charge during the period in which the downward revision of these assumptions would be effected, resulting in an unfavorable impact on the Company`s results of operations.

- Recognized deferred tax assets and liabilities

Deferred tax asset attributable to capital allowances
Deferred tax assets are predominantly attributable to capital allowances available to the UK subsidiaries as the result of the acquisitions made by the Company in the years ended 31 December 1999 and 2000. Although such allowances may be used without any deadline, they can only be used in a given year up to 20% of the outstanding balance at the beginning of that year.
The recognition of a deferred tax asset corresponding to the amount of capital allowances the Company projected to use over the four-year period ending 30 September 2015 to offset projected taxable profit to be made by its UK subsidiary over such period was made using the tax rate that was expected to apply to the period when the deferred tax asset would be expected to be realized, i.e. 25.0% from 1 April 2012 as set out in note 7d below.

It resulted in the recognition of a deferred tax asset of 1,258 as at 30 September 2011, of a deferred tax expense of 4 in the quarter ended 30 September 2011, and of a deferred tax benefit of 9 in the nine-month period ended 30 September 2011 (see note 7b below).

Deferred tax liability arising from the capitalization of developments costs
The recognition of a deferred tax liability corresponding to the amount of development costs capitalized in accordance with applicable provisions of IAS 38, net of applicable amortization, was made using the tax rate that is expected to apply to the period when the deferred tax liability is expected to be settled realized, i.e. 25.0% from 1 April 2012, as set out in note 7d below.
It resulted in the recognition of a deferred tax liability of 1,261 at 30 September 2011, a deferred tax expense of 28 in the quarter ended 30 September 2011, and a deferred tax expense of 61 in the nine-month period ended 30 September 2011.

- Unrecognized deferred tax assets
The amount of capital allowances which were available to the Company`s UK subsidiaries as at 30 September 2011, but were not projected to be used in the four-year period ending 30 September 2015, and therefore did not result in the recognition of a deferred tax asset at 30 September 2011, amounted to 13,446 at such date.
Had a deferred tax asset been recognized with regards to such portion of available capital allowances at 30 September 2011, since these allowances would only be used after 1 October 2015, the applicable tax rate at the time these allowances would be used to offset taxable profit was assumed to be the UK statutory rate which would be applicable from 1 April 2012 (i.e. 25.0%), as this is the only change in the UK corporation tax rate which was substantially enacted before 30 September 2011: the corresponding, additional deferred tax asset would amount to 3,362 at that date.

(d) Share-based compensation expense

(i) Outstanding and exercisable share options as at 30 September 2011
The following table summarises information about the Company`s outstanding and exercisable share options as at 30 September 2011:

Two conditions are attached to the exercise of share options which were granted since the start of the year ended 31 December 2008:
- firstly, the recipient of a share option grant must have been an employee and/or a director of the Company at all times between the date when the options were granted to him and the date(s) when he exercises all of part of these; and

- secondly, the exercise of options may be done by the recipient of such share option grant but only from the date when the average of the closing prices reported for the Company`s share over the last 120 trading days is at least equal to Euro 4.00 for the first quarter of the number of options granted to the recipient of the share option grant, to Euro 8.00 for the second quarter of the number of options granted to the recipient of the share option grant, to Euro 12.00 for the third quarter of the number of options granted to the recipient of the share option grant, and to Euro 16.00 for the last quarter of the number of options granted to the recipient of the share option grant.

(ii) Grant of shares made up to 30 September 2011

- Grant of shares at no cost to the recipient of such share grant (`free shares`)

Grant of free shares made on 29 July 2009
The Parent`s Board of Directors made a provisional grant of 24,750 free shares to certain employees of some of the Company`s subsidiaries on 29 July 2009.
As at 30 September 2011, after effect of the final grant of shares made to certain employees of the Company when they left the Company`s employment since share grant date, 21,750 shares may still be granted at the end of the four-year period starting on share grant date, provided that the recipients of the free share grant have been employees of the Company at all times during that four-year period.

Grant of free shares made on 10 March 2011
The Parent`s Board of Directors made a provisional grant of 96,000 free shares to certain employees of some of the Company`s subsidiaries on 10 March 2011, of which 36,000 shares to Mr. Gary Fry and 4,000 shares to Mr. Alain Pronost in their respective capacities of Chief Executive Officer and Chief Financial Officer of the Company.
As at 30 September 2011, 92,000 shares may still be granted at the end of the four-year period starting on share grant date, provided that the recipients of the free share grant have been employees of the Company at all times during that four-year period.

- Share Incentive Plan
Pursuant to the authorization granted by the Company`s shareholders on 29 April 2009, a Share Incentive Plan (SIP) was implemented for the benefit of the Company`s employees, notably those of the UK subsidiary of the Company, who may be granted ordinary shares of the Company (Matching Shares) in proportion of the purchase of ordinary shares of the Company (Partnership Shares) made through a deduction on their net pay, being noted that such grant of Matching Shares will become final at the end of a three-year period starting on the date of each purchase of Partnership Shares.
At as 30 September 2011, a total of 28,371 shares were granted to employees of the UK subsidiary of the Company, of which 9,481 since the start of the current year.

(iii) Share-based compensation expense analysis

NOTE 5: OTHER OPERATING EXPENSES AND INCOME
In accordance with provisions of paragraph 28 of the IASB Framework and paragraphs 97 & 98 of IAS 1 (revised), Presentation of Financial Statements, when material, the nature and amount of unusual, abnormal and infrequent items of income and expense have to be separately disclosed to enhance the predictive value of the consolidated statement of income (loss).

(a) Other operating expenses

(i) Legal fees incurred with respect of the implementation of an EBT
An amount of 16 was expensed in the nine-month period ended 30 September 2010 (of which none in the quarter then ended) for legal fees incurred with respect of the implementation in February 2010 of an Employee Benefit Trust (EBT) for the benefit of certain employees of the Company`s UK-based subsidiary, which is managed by Global Graphics EBT Limited, a UK-based company (see note 16 below).

(ii) Effect of the reorganisation plan which was implemented in April 2010
An amount of 406 was expensed in the nine-month period ended 30 September 2010 (of which 28 in the quarter then ended) with respect of the reorganisation plan which was implemented in April 2010, and resulted in a total of 30 of the Company`s employees being made redundant in the nine-month period ended 30 September 2010.

(iii) Legal fees incurred with respect of an alleged patent infringement  
An amount of 58 was expensed in the quarter and the nine-month period ended 30 September 2010 for legal fees incurred with respect of an alleged patent infringement brought against the Company in late June 2010.
The Company disclaimed any liability and undertook action to demonstrate that the Harlequin RIP did not infringe any valid claim of any of the patents held by the plaintiff: as a result, the latter filed a notice of voluntary dismissal of all claims against the Company on 21 July 2010.

(b) Other operating income
An amount of 205 was recognised in the nine-month period ended 30 September 2011 (of which none in the quarter then ended) pursuant to the write-back of the balance of the provision for vacant office space which was recorded as at 31 December 2010 to account for unused office space in the UK, pursuant to management`s decision to re-use all of that office space from 1 July 2011.

NOTE 6: NET FINANCING GAINS (LOSSES)

NOTE 7: INCOME TAX EXPENSE (BENEFIT)

(a) Current income tax expense (benefit)

(i) Quarter ended 30 September 2011
The Company recorded a current income tax expense amounting to 4 in the quarter ended 30 September 2011, compared with a current income tax expense amounting to 20 in the quarter ended 30 September 2010.

(ii) Nine-month period ended 30 September 2011
The Company recorded a current income tax benefit amounting to 231 in the nine-month ended 30 September 2011, compared with a current income tax benefit amounting to 17 in the nine-month period ended 30 September 2010
The benefit which was recorded in the nine-month period ended 30 September 2011 predominantly resulted from the refund to Global Graphics Software Limited of the research and development tax credit for the year ended 31 December 2010, which was received by that subsidiary in early April 2011 for 253.
The benefit which was recorded in the nine-month period ended 30 September 2010 predominantly resulted from the following two items:
- the refund to Global Graphics Software Limited of the research and development tax credit for the year ended 31 December 2007, which was received by that subsidiary in February 2010 for 120; and
- the loss of certain tax breaks granted to the Indian subsidiary of the Company, for a total amount of 63, pursuant to the implementation of the Company`s reorganization plan in April 2010, and the subsequent decision to put that subsidiary into liquidation (see note 16 below).

(b) Deferred tax expense (benefit)
The following table provides an analysis of the deferred tax expenses (benefits) which were recorded in the quarters and the nine-month periods ended 30 September 2011 and 2010, respectively:

(c) Reconciliation of the effective income tax expense (benefit)

(d) Recent and future decreases in the UK corporation tax rate

(i) Applicable accounting rules
In accordance with applicable provisions of IAS 12, Income taxes (IAS 12), any change in corporation tax rates cannot be reflected in a company`s consolidated accounts prepared in accordance with IFRSs unless the corporation tax rate changes have been either enacted or substantively enacted on or before the relevant balance sheet date.
In the UK, substantive enactment occurs when the relevant Finance Act has passed through the House of Commons and is awaiting only passage through the House of Lords and Royal Assent, or when a resolution having statutory effect has been passed under the Provisional Collection of Taxes Act 1968.

(ii) Recent decreases of the UK corporation tax rate

- With effect from 1 April 2011
On 23 March 2011, the Chancellor of the Exchequer announced the decrease in the main rate of UK corporation tax to 26.0% with effect from 1 April 2011, which was an additional 1.0% in addition to the 1.0% reduction in the June 2010 Budget.
Given the late notice in such rate reduction applying from 1 April 2011, it has been legislatively necessary for the reduction to be included in a resolution which was given effect under the Provisional Collection of Taxes Act 1968. Accordingly, the reduction in the UK corporation tax rate to 26.0% was substantively enacted following the passing of the resolution on 29 March 2011.
The rate of 26.0% has been that applicable for the computation of the tax expense (benefit) arising from the taxable profit (loss) made by the UK subsidiaries of the Company in the year ending 1 April 2012, as well as measuring deferred tax assets and liabilities which are expected to be realized or settled on or before 31 March 2012.
- With effect from 1 April 2012
In his Budget on 23 March 2011, the Chancellor of the Exchequer also proposed a further 1.0% reduction of the UK corporate tax rate to 25.0% from 1 April 2012.
This amendment was included in the Finance (No. 3) Bill 2010-11 that received its third reading in the House of Commons on 5 July 2011.
Accordingly, the decrease in the UK corporate tax rate from 26.0% to 25.0% was substantively enacted for the purposes of IAS 12 on 5 July 2011.
The rate of 25.0% is that applicable to measure deferred tax assets and liabilities being realized or settled on or after 1 April 2012.

(iii) Projected further reductions in the UK corporation tax rate
In his Budget on 23 March 2011, the Chancellor of the Exchequer also proposed changes to further decrease the main rate of UK corporation tax by 1.0% per annum to 23.0% by 1 April 2014.
Such changes were not substantively enacted as at 30 September 2011 and were not considered when computing the deferred tax assets and liabilities of the UK subsidiaries of the Company at that date.
The effect on the Company`s tax position of these additional reductions of the UK corporation tax rate will be reflected in the Company`s consolidated accounts in future years, as appropriate, once the corresponding reductions have been enacted.

NOTE 8: EARNINGS PER SHARE

(a) Basic earnings per share
Basic earnings per share (EPS) are calculated by dividing the profit attributable to shareholders for a period by the weighted average number of ordinary shares outstanding during that period, after taking into account any free shares the grant of which has become final in the period or any newly issued shares resulting from the exercise of share options, as applicable.

The following table provides for the computation of the weighted average number of ordinary shares to be used for basic EPS computation in the quarters and the nine-month periods ended 30 September 2011 and 2010, respectively:

(i) Computation for the quarters ended 30 September

(ii) Computation for the nine-month periods ended 30 September

(b) Diluted earnings per share
Diluted earnings per share are calculated by adjusting the weighted average number of ordinary shares outstanding to assume conversion of all dilutive potential ordinary shares.
The Company has only one category of dilutive potential ordinary shares: share options. Free shares which were granted on 29 July 2009 and 10 March 2011, as well as Matching Shares which were granted to participants to the Company`s Share Incentive Plan (see note 4d above), are not included in the calculation of diluted earnings per share since the conditions for the grant of these shares to become final were not satisfied as at 30 September 2011.
Since the average of the closing prices reported for the Company`s share during the quarter and the nine-month period ended 30 September 2011 (being Euro 1.28 and Euro 1.41, respectively) were lower than the exercise price of all share options which were outstanding as at 30 September 2011 (see note 4d above), such share options were assumed not to have a dilutive effect for diluted EPS computation during such periods.
The following table provides for the computation of the weighted average number of ordinary shares to be used for diluted EPS computation in the quarters and the nine-month periods ended 30 September 2011 and 2010, respectively:

(i) Computation for the quarters ended 30 September

(ii) Computation for the nine-month periods ended 30 September

NOTE 9: OTHER INTANGIBLE ASSETS

(a) Gross value

(b) Amortisation and impairment

NOTE 10: GOODWILL

(a) Gross value

(b) Amortisation and impairment

NOTE 11: TRADE RECEIVABLES

(a) Gross and net amounts

(b) Aging of trade receivables

NOTE 12: SHARE CAPITAL AND SHARE PREMIUM

(a) Share capital
The number of outstanding, fully paid, ordinary shares of the Company, each of par value of Euro 0.40, was 10,289,781 as at 30 September 2011 as was also the case as at 31 December 2010, resulting in a share capital amounting to 4,116.

(b) Share premium

(i) Expenses relating to the Company`s share-based remuneration plans
An amount of 4 was incurred in relation with the Company`s share-based remuneration plans in the nine-month period ended 30 September 2011, and was offset against the share premium during that period (compared with an amount of 19 in the quarter and the nine-month period ended 30 September 2010).

(ii) Expenses relating to grants of own shares
5,887 own shares held by the Company as treasury shares were granted to employees who were made redundant as part of the April 2010 reorganization plan in the nine-month period ended 30 September 2010, respectively (see note 13b below).
The difference between the repurchase value of these shares (amounting to 42) and their value at grant date to these employees (being nil) was offset against the share premium in the nine-month ended 30 September 2010.

NOTE 13: OWN SHARES

(a) Repurchase of own shares
None of its own shares were repurchased by the Company in either of the quarters or the nine-month periods ended 30 September 2011 or 2010.
As at 30 September 2011, as was already the case as at 31 December 2010, the total number of own shares held as treasury shares by the Company was 168,081, for a total repurchase value of 1,204.
(b) Grants of own shares
No final grant of shares was made by the Company in the quarter or the nine-month period ended 30 September 2011, compared with a grant of 5,887 own shares to employees made redundant as part of the reorganization plan which was implemented in April 2010, in the nine-month period ended 30 September 2010, as set out in note 12b above.

NOTE 14: SEGMENT REPORTING

1. Identification of operating and reportable segments  

1. Applicable rules 

Management has identified operating segments give rise to reporting pursuant its review of those segments giving rise to reporting to the Company`s CEO, who decides upon the best allocation of resources and monitors the operating and financial performance of each operating segment.
Two segments were identified, the Print segment for the printing software segment of the Company`s business, and the eDoc segment for the electronic document software segment of the Company`s business.
The performance of each of these segments is monitored by the Company`s CEO based on their respective gross margin contribution.

2. Allocation of assets and liabilities to operating segments 

Assets and liabilities, whether current or non-current, are allocated based on the operations of the reportable segments.
Goodwill existing at 1 January 2009 has been fully allocated to the Print segment as it relates to acquisitions of assets made in the area of printing software in the years ended 31 December 1999 and 2000.
Items such as deferred tax assets, current assets other than trade receivables, as well as current liabilities other than customer advances and deferred revenue, are not allocated to any of the Company`s reportable segments.

(b) Analysis of the Company`s sales

(i) Breakdown of sales by nature of products sold and services rendered
Both segments derive their revenue from the development and sale of software applications and/or solutions, and of related services such as customization, implementation, training, as well as support and maintenance.

The following table provides a breakdown of the Company`s sales by nature of products sold and services rendered for those sales made in the quarters and the nine-month periods ended 30 September 2011 and 2010, respectively:

(ii) Breakdown of sales based on the geographical location of customers

(c) Sales and gross profit by business segment

(i) Quarter ended 30 September 2011

(ii) Quarter ended 30 September 2010

(iii) Nine-month period ended 30 September 2011

(iv) Nine-month period ended 30 September 2010

(d) Reconciliation of gross profit to profit (loss) before income tax

(e) Reconciliation of assets and liabilities

(i) As at 30 September 2011

(ii) As at 31 December 2010

NOTE 15: RELATED PARTY TRANSACTIONS
The Company has a related party relationship with its subsidiaries (see note 16 below) as well as with its directors and executive officers, as set out below.

(a) With the Company`s directors
The amount of board fees to be allocated among the Company`s directors which was recognized in each of the quarters ended 30 September 2010 and 2011 and in each of the nine-month periods ended 30 September 2010 and 2011, were 15 and 45, respectively.

(b) With the Company`s executive officers

(i) Salaries and other short-term benefits
The executive directors received the following salaries and other short-term benefits (notably bonuses and pension scheme contributions) in the quarters and the nine-month periods ended 30 September 2011 and 2010, respectively:

(ii) Share-based compensation plans
Executive officers are entitled to participate in the Company`s share option and share grant schemes.
As indicated in note 4d above, on 10 March 2011, 36,000 and 4,000 free shares were granted to Messrs. Gary Fry and Alain Pronost, respectively.

The portions of the share-based compensation expenses which were attributable to the Company`s executive officers and were recorded in the quarters and the nine-month periods ended 30 September 2011 and 2010, respectively, were as follows:

(c) With a company which is managed by one of the Company`s directors
In its meeting on 16 December 2009, approval was given by the Company`s Board of Directors to two agreements with Andlinger & Co. CVBA, a Belgium-based company which is managed by Mr. Johan Volckaerts.

The purpose of these agreements was to provide that the Company would:
-  be entitled to use a meeting room and related services in Brussels, against the payment of a fee amounting to Euro 1,500 each quarter; and
- be provided with advice regarding its business and sales strategy, against the payment of a fee amounting to Euro 6,000 per month, which was increased to Euro 6,500 per month from 1 February 2011 as voted by the Board on 8 February 2011.

The corresponding amounts which were expensed by the Company were 21 and 20 in the quarters ended 30 September 2011 and 2010, respectively, and 63 and 59 in the nine-month periods ended 30 September 2011 and 2010, respectively.

NOTE 16: SUBSIDIARIES
These condensed consolidated interim financial statements for the quarters and the nine-month periods ended 30 September 2011 and 2010, respectively, include the accounts of the following companies:

Global Graphics Software (India) Private Limited has been dormant since April 2010 and is currently under liquidation, the completion of which is expected before the end the current financial year.
The results for Global Graphics EBT Limited have been included in the Company`s condensed consolidated financial statements for the nine-month period ended 30 September 2010 from 3 February 2010, which was the inception of that subsidiary.

NOTE 17: SUBSEQUENT EVENTS

(a) Grant of share options on 2 November 2011
On 2 November 2011, the Board voted to grant a total of 300,000 share options to the members of the Company`s management team, including 200,000 and 12,500 share options to Messrs. Gary Fry and Alain Pronost, respectively.

The terms and conditions of such share option grant were the following:
- exercise price: Euro 1.06, being the higher of the closing price reported for the Company`s share on the last trading day immediately preceding the grant date during which trades occurred in the Company`s share (which was Euro 1.06, being the closing price reported for the share reported on 1 November 2011) and the average of the closing prices reported for the Company`s share over the last 20 trading days preceding the grant date during which trades occurred in the Company`s share (comprised between 3 October and 1 November 2011, inclusively), which was Euro 1.05 per share;
- expiry date: 6 August 2016;
- vesting conditions:
(i) continuing employment with the Company from grant date to the date(s) when these options vest;
(ii) minimum share price targets: options will vest, and may therefore be exercised, in one or several transactions at the choice of the beneficiary of the share option grant, when the closing price reported for the Company`s share will be at least equal to Euro 2.00 during a minimum of 20 trading days over any given 60 trading day period between share option grant and expiry dates for the first half of the number of options granted on 2 November 2011, and to Euro 3.00 for the remaining half;
(iii) accelerated vesting: all unvested options will automatically vest, regardless of whether or not the abovementioned minimum share price conditions were met, should one or several shareholders acting in concert as defined by article L.233-3 of French Commercial Law come to hold than 30.0% of the total number of shares forming the Company`s share capital or of the voting rights attached to such shares;

- for this grant of share options to be made to them, all members of the Company`s management team gave their consent in writing to waive all of their rights in half of the number of share options granted to them in August 2008, December 2008 or February 2010, respectively (see note 4d above).

The estimate of the corresponding expense will be made by an independent advisor; such expense is expected to be amortised over the expected life of these options.

(b) Grant of free shares on 2 November 2011
A total of 24,000 free shares were granted by the Board on 2 November 2011 to 6 employees of the Company to reward their specific contribution to the Company`s performance and development plans.
Such grant was made on a provisional basis, the irrevocable grant of these shares will occur at the end of a four-year period ending on 2 November 2015, provided that the beneficiaries of such share grant have been employed by the Company at any time during that four-year vesting period.
All of the shares which would be granted at the end of that vesting period would be shares which would have been repurchased by the Company as part of its share repurchase programme (see note 13a above) and would be freely transferable once irrevocably granted.

GLOBAL GRAPHICS SA AND SUBSIDIARIES
ADJUSTED FINANCIAL INFORMATION PREPARED BY MANAGEMENT

NOTE 1: BASIS OF PREPARATION OF ADJUSTED FINANCIAL INFORMATION
The Company`s consolidated financial statements are prepared in accordance with International Financial Reporting Standards (IFRSs) and related interpretations issued by the International Accounting Standards Board (IASB), as adopted by the European Union (EU).
However, management of the Company it believes that evaluating the Company`s ongoing results may not be as useful if an investor is limited to reviewing only IFRS financial measures, notably because management of the Company uses adjusted financial information to evaluate its ongoing operations as well as for internal planning and forecasting purposes.
To prepare adjusted financial information, management of the Company complies with the principles set in the Recommendation on Alternative Performance Measures which was issued by the Committee of European Securities Regulators (now the European Securities and Markets Authority) in October 2005.
The Company`s management does not itself, nor does it suggest that investors should, consider such adjusted financial measures in isolation from, or as a substitute for, financial information prepared in accordance with IFRSs.
The Company presents adjusted financial measures in reporting its financial results to provide investors with an additional tool to evaluate the Company`s results in a manner that focuses on what the Company believes to be its ongoing business operations.
The Company`s management believes that the inclusion of adjusted financial measures provides consistency and comparability with past reports of financial information and has historically provided comparability to similar companies in the Company`s industry, many of which present the same or similar adjusted financial measures to investors.
As a result, investors are encouraged to review the related IFRS financial measures and the reconciliation of these adjusted financial measures to the most directly comparable IFRS financial measures as detailed above.

NOTE 2: INFORMATION ON ADJUSTMENTS MADE TO REPORTED NUMBERS
The purpose of the following adjustments, which are made to reported numbers with respect of the Company`s operating, pre-tax, and net profit (loss), is to provide additional information to measure the Company`s performance.

(a) Share-based remuneration expense
In accordance with applicable provisions of IFRS 2, Share-based payments, an expense is recognized in the Company`s consolidated financial statements with respect of share-based remuneration plans, regardless of any change in the number of outstanding shares of the Company pursuant to the exercise of share options, or before the grant of shares to employees of the Company becomes final.
As a result, management of the Company believes it is appropriate to adjust the Company`s operating profit (loss) reported under IFRSs of such expense to provide a relevant measure of the Company`s operating performance.

(b) Capitalization and amortization of eligible software development expenses
Costs relating to development projects (consisting of employee costs) which meet all of the criteria set out under paragraphs 57 to 62 of IAS 38, Intangible Assets, are capitalized, and are subsequently amortized over the estimated useful life of the corresponding development project.

Considering the level of judgment required to assess whether a given development project may be eligible to such capitalization, and also to set the duration of the useful life of such project, management of the Company believes it is appropriate to adjust the Company`s operating profit (loss) reported under IFRSs of such amounts to provide a relevant measure of the Company`s operating performance.

(c) Other operating expenses and other operating income
Certain items of operating expenses and income were disclosed separately in the Company`s condensed consolidated statement of income in an attempt to provide appropriate information on the Company`s operating performance for the year ended 31 December 2010, as well as a meaningful basis of comparison with amounts which will be reported in comparative periods in the year ending 31 December 2011.

(d) Unusual, abnormal and infrequent items of income and expense
In accordance with provisions of Paragraph 97 of IAS 1 (revised), Presentation of Financial Statements, unusual, abnormal and infrequent items of income and expense have to be disclosed in a separate note, in an attempt to improve the predictive value of the consolidated statement of income (loss).
Management of the Company believes that the most appropriate way of achieving this is to adjust the Company`s operating profit (loss) reported under IFRSs of such items to provide the user of the Company`s financial information with a consistent base of comparison, excluding the effect of such items.

NOTE 3: ADJUSTED FINANCIAL INFORMATION COMPUTATION

(a) Adjusted operating profit (loss) computation

(b) Adjusted pre-tax profit (loss) computation

(i) Adjusted pre-tax EPS is computed by dividing the adjusted pre-tax profit (loss) for a given reporting period by the weighted average number of ordinary shares which were outstanding during that period, i.e. 10,121,700 and 10,119,617 shares for the quarters ended 30 September 2011 and 2010, respectively, and 10,121,700 and 10,117,701 shares for the nine-month periods ended 30 September 2011 and 2010, respectively.

(ii) Adjusted pre-tax diluted EPS is computed by dividing the adjusted pre-tax profit (loss) for a given reporting period by the weighted average number of ordinary shares to be used for diluted EPS computation during that period, as required by IAS 33, Earnings per share, i.e. 10,121,700 and 10,119,617 shares for the quarters ended 30 September 2011 and 2010, respectively, and 10,121,700 and 10,117,701 shares for the nine-month periods ended 30 September 2011 and 2010, respectively.

(c) Adjusted net profit (loss) computation

(i) Adjusted net EPS is computed by dividing the adjusted net profit (loss) for a given reporting period by the weighted average number of ordinary shares which were outstanding during that period, i.e. 10,121,700 and 10,119,617 shares for the quarters ended 30 September 2011 and 2010, respectively, and 10,121,700 and 10,117,701 shares for the nine-month periods ended 30 September 2011 and 2010, respectively.

(ii) Adjusted net diluted EPS is computed by dividing the adjusted net profit (loss) for a given reporting period by the weighted average number of ordinary shares to be used for diluted EPS computation during that period, as required by IAS 33, Earnings per share, i.e. 10,121,700 and 10,119,617 shares for the quarters ended 30 September 2011 and 2010, respectively, and 10,121,700 and 10,117,701 shares for the nine-month periods ended 30 September 2011 and 2010, respectively.

GLOBAL GRAPHICS SA AND SUBSIDIARIES
CONDENSED MANAGEMENT REPORT OF THE COMPANY`S BOARD OF DIRECTORS
FOR THE QUARTER AND THE NINE-MONTH PERIOD ENDED 30 SEPTEMBER 2011
Translation of the French language original

Pursuant to the transposition under article L.451-1-2 of the French Monetary and Financial Code of the EU Directive 2004/109/CE of the European Parliament and of the Council of 15 December 2004 (the `Transparency Directive`), we present to you the condensed management report of the Parent`s Board of Directors for the quarter and the nine-month period ended 30 September 2011.
This condensed management report was authorized for issue by the Parent`s Board of Directors on 2 November 2011.

NOTE 1: ORGANIZATION OF THE GLOBAL GRAPHICS GROUP OF COMPANIES (THE `COMPANY`)

(a) Structure of the Company at 30 September 2011
For further details on this, please refer to note 16 to the Company`s condensed consolidated interim financial statements as at and for the quarter and the nine-month period ended 30 September 2011.

(b) Changes in the Company`s structure since 1 October 2011
No change has occurred in the Company`s structure since 1 October 2011; Global Graphics Software (India) Private Limited has been dormant since late April 2010 and under liquidation since early May 2010.

NOTE 2: MANAGEMENT DISCUSSION OF CONSOLIDATED FINANCIAL RESULTS
The Company prepares its condensed consolidated interim financial statements in accordance with IAS 34, Interim Financial Reporting, and more generally with International Financial Reporting Standards (IFRSs) as well as related interpretations issued by the International Accounting Standards Board (IASB), as adopted by the European Union (EU).
Amounts indicated hereafter are presented in euros (which is the reporting currency of the Company), rounded to the nearest thousand, unless otherwise specified.

(a) Quarter ended 30 September 2011

(i) Sales analysis
Sales were 2,039 in the quarter ended 30 September 2011, compared with 2,575 in the third quarter of the year ended 31 December 2010, or a sequential decrease of 20.8% at current exchange rates.
Approximately 82.8% of the Company`s sales made in the quarter ended 30 September 2011 were denominated in US dollars, which sequentially decreased versus the euro, since the average euro/US dollar rate was 1.402 in the quarter ended 30 September 2011, while it was 1.292 in the third quarter of the year ended 31 December 2010, or a sequential decrease of 7.8%.
At constant exchange rates, sales made in the quarter ended 30 September 2011 would have amounted to approximately 2,183, showing a decrease of 15.2% over the figure reported for sales in the third quarter of the year ended 31 December 2010.
Sales made in the Print segment of the Company`s business were 1,674 in the quarter ended 30 September 2011, and showed a decrease of 17.8% at current exchange rates and of 11.6% at constant exchange rates, over the 2,037 figure reported for sales made in the same segment of the Company`s business in the third quarter of the year ended 31 December 2010.

Sales made in the graphic arts market were 641 in the quarter ended 30 September 2011 and showed a decrease of 0.9% at current exchange rates but an increase of 7.6% at constant exchange rates over the 647 figure reported for sales made in that market in the third quarter of the year ended 31 December 2010.
Sales made in the digital printing market were 1,033 in the quarter ended 30 September 2011 and decreased 25.7% at current exchange rates and 20.5% at constant exchange rates over the 1,390 figure reported for sales made in that market in the third quarter of the year ended 31 December 2010.
Sales made in the eDoc segment of the Company`s business were 365 in the quarter ended 30 September 2011, and showed a decrease of 32.2% at current exchange rates and of 29.0% at constant exchange rates over the 538 figure reported for sales made in the same segment of the Company`s business in the third quarter of the year ended 31 December 2010.

(ii) Performance analysis

Operating loss
The Company reported an operating loss of 91 in the quarter ended 30 September 2011 (or 4.5% of the quarter`s sales), compared with an operating profit of 43 in the third quarter of the year ended 31 December 2010 (or 1.7% of that quarter`s sales), or an unfavorable, sequential variance of 134, which can be analyzed as follows:
- sales decreased by 536, as set out in note 2a (i) above;
- cost of sales was 102 in the quarter ended 30 September 2011 (5.0% of the quarter`s sales), compared with 124 in the third quarter of the year ended 31 December 2010 (4.8% of that quarter`s sales), or a favorable variance of 22;
- selling, general and administrative expenses totaled 851 in the quarter ended 30 September 2011 (41.7% of the quarter`s sales), showing a sequential decrease of 303 (i.e. of 26.3%) over the 1,154 figure reported for such expenses in the third quarter of the year ended 31 December 2010 (44.8% of that quarter`s sales);
- research & development expenses totaled 1,177 in the quarter ended 30 September 2011 (57.7% of the quarter`s sales) showing a sequential decrease of 66 (i.e. of 5.3%) over the 1,243 figure reported for such expenses in the third quarter of the year ended 31 December 2010 (48.3% of that quarter`s sales): such expenses included a benefit of 108 with respect of the effect, after amortization, of the capitalization of eligible development expenses relating to the development projects for which all criteria for such capitalization were met, compared with an expense of 27 in the third quarter of the year ended 31 December 2010 (please refer to note 4b to the Company`s condensed consolidated interim financial statements as at and for the quarter and the nine-month period ended 30 September 2011 for further details on this);
- there were no other operating expenses in the quarter ended 30 September 2011, compared with other operating expenses amounting to 86 in the third quarter of the year ended 31 December 2010;
- there were no other operating income in the quarter ended 30 September 2011, compared with other operating income amounting to 75 in the third quarter of the year ended 31 December 2010.

Loss before income tax
The Company reported a loss before income tax of 82 in the quarter ended 30 September 2011 (or 4.0% of the quarter`s sales), compared with a profit before income tax of 19 in the third quarter of the year ended 31 December 2010 (or 0.7% of that quarter`s sales), or an unfavorable variance of 101 which resulted from the combination of:
- the recognition of an operating loss in the quarter ended 30 September 2011 compared with an operating profit in the third quarter of the year ended 31 December 2010, or an unfavorable variance of 134;
- the decrease in interest income of 2 over the 4 figure reported for interest income in the third quarter of the year ended 31 December 2010; and
- the favorable effect of foreign currency exchange differences, which were gains of 7 in the quarter ended 30 September 2011, compared with losses of 28 in the third quarter of the year ended 31 December 2010, or a favorable variance of 35.

Net loss
The Company reported a net loss of 118 in the quarter ended 30 September 2011 (or a net loss of Euro 0.01 per share) after giving effect to an income tax expense of 36 (including a current income tax expense of 4 and a deferred tax expense of 32), compared with a net loss of 22 in the third quarter of the year ended 31 December 2010 (or a net loss of Euro 0.00 per share).

(b) Nine-month period ended 30 September 2011

(i) Sales analysis
Sales were 6,234 in the nine-month period ended 30 September 2011, compared with 6,780 in the nine-month period ended 30 September 2010, or a sequential decrease of 8.1% at current exchange rates.
Approximately 77.8% of the Company`s sales made in the nine-month period ended 30 September 2011 were denominated in US dollars, which sequentially decreased versus the euro, since the average euro/US dollar rate was 1.396 in the nine-month period ended 30 September 2011, while it was 1.309 in the nine-month period ended 30 September 2010, or a sequential decrease of 6.2%.
At constant exchange rates, sales made in the nine-month period ended 30 September 2011 would have amounted to approximately 6,529, showing a decrease of 3.7% over the figure reported for sales in the nine-month period ended 30 September 2010.
Sales made in the Print segment of the Company`s business were 4,732 in the nine-month period ended 30 September 2011, and showed a decrease of 19.4% at current exchange rates and of 14.7% at constant exchange rates, over the 5,868 figure reported for sales made in the same segment of the Company`s business in the nine-month period ended 30 September 2010.
Sales made in the graphic arts market were 2,072 in the nine-month period ended 30 September 2011 and showed a decrease of 6.9% at current exchange rates and of 1.2% at constant exchange rates over the 2,225 figure reported for sales made in that market in the nine-month period ended 30 September 2010.
Sales made in the digital printing market were 2,660 in the nine-month period ended 30 September 2011 and decreased 27.0% at current exchange rates and 23.0% at constant exchange rates over the 3,643 figure reported for sales made in that market in the nine-month period ended 30 September 2010.
Sales made in the eDoc segment of the Company`s business were 1,502 in the nine-month period ended 30 September 2011, and showed an increase of 64.7% at current exchange rates and of 67.2% at constant exchange rates over the 912 figure reported for sales made in the same segment of the Company`s business in the nine-month period ended 30 September 2010.

(ii) Performance analysis

Operating loss
The Company reported an operating loss of 371 in the nine-month period ended 30 September 2011 (or 6.0% of the period`s sales), compared with an operating loss of 2,251 in the nine-month period ended 30 September 2010 (or 33.2% of that period`s sales), or a favorable, sequential variance of 1,880, which can be analyzed as follows:
- sales decreased by 546, as set out in note 2b (i) above;

- cost of sales was 315 in the nine-month period ended 30 September 2011 (5.1% of the period`s sales), compared with 328 in the nine-month period ended 30 September 2010 (4.8% of that period`s sales), or a favorable variance of 13;
- selling, general and administrative expenses totaled 3,020 in the nine-month period ended 30 September 2011 (48.4% of the period`s sales), showing a decrease of 1,256 (i.e. of 29.4%) over the 4,276 figure reported for such expenses in the nine-month period ended 30 September 2010 (63.1% of that period`s sales);
- research & development expenses totaled 3,475 in the nine-month period ended 30 September 2011 (55.7% of the period`s sales) showing a sequential decrease of 547 (i.e. of 13.6%) over the 4,022 figure reported for such expenses in the nine-month period ended 30 September 2010 (59.3% of that period`s sales): such expenses included a benefit of 232 with respect of the effect, after amortization, of the capitalization of eligible development expenses relating to the development projects for which all criteria for such capitalization were met, compared with an expense of 55 in the nine-month period ended 30 September 2010 (please refer to note 4b to the Company`s condensed consolidated interim financial statements as at and for the quarter and the nine-month period ended 30 September 2011 for further details on this);
- there were no other operating expenses in the nine-month period ended 30 September 2011, compared with other operating expenses amounting to 480 in the nine-month period ended 30 September 2010;
- other operating income amounted to 205 in the nine-month period ended 30 September 2011, and resulted from the write-back of the balance of the provision which was recorded at 31 December 2010 with respect of the portion of the building leased by the Company in Cambourne which was not used during the first six months of 2011, compared with other operating income amounting to 75 in the nine-month period ended 30 September 2010.

Loss before income tax
The Company reported a loss before income tax of 400 in the nine-month period ended 30 September 2011 (or 6.4% of the period`s sales), compared with a loss before income tax of 2,494 in the nine-month period ended 30 September 2010 (or 36.8% of that period`s sales), or a favorable variance of 2,094 which resulted from the combination of:
- the sequential decrease of the operating loss for 1,880, as discussed above;
- the decrease in interest income of 5 over the 10 figure reported for interest income in the nine-month period ended 30 September 2010;
- the cost of unwinding the discount of the provision for vacant lease as discussed above, resulting in an estimated interest charge of 26 in the nine-month period ended 30 September 2011 (none in the nine-month period ended 30 September 2010); and
- the favorable effect of foreign currency exchange differences, which were losses of 8 in the nine-month period ended 30 September 2011, compared with losses of 253 in the nine-month period ended 30 September 2010, or a favorable variance of 245.

Net loss
The Company reported a net loss of 268 in the nine-month period ended 30 September 2011 (or a net loss of Euro 0.03 per share) after giving effect to an income tax benefit of 132 (including a current income tax benefit of 231 and a deferred tax expense of 99), compared with a net loss of 2,678 in the nine-month period ended 30 September 2010 (or a net loss of Euro 0.26 per share).  

NOTE 3: MANAGEMENT`S COMMENTS ON THE COMPANY`S PERFORMANCE

(a) Salient features by the Company`s Chief Executive Officer (CEO)

(i) Operational highlights

Gary Fry, Global Graphics` Chief Executive Officer, said: "our results in the third quarter, which is typically the slowest quarter of the year, were in line with our expectations. Whilst we signed new deals, as is typical of our OEM licensing model, we expect revenue will follow in coming quarters.

"The third quarter saw an intensive period of product development come to fruition.
"In the printing segment of the Company`s business, we released the beta version of our Harlequin Multi-RIP, our new high-performance RIP, which is optimized to drive digital presses at full speed.  Indications from the market show that this is the number one product in this segment in terms of speed and quality and, as a result, during the third quarter, we signed a significant new OEM partner that will deploy this technology.  
We are also pleased that we have seen an increased level of interest in our technology for digital print applications. During the third quarter we also released version 9.0 of the Harlequin Server RIP with an exciting new feature set that will raise the productivity of print shops to a new level. Our Harlequin Server RIP OEMs are enthusiastic about the prospect of driving upgrade business with this release.

"In the electronic document segment of the Company`s business, we released the beta version of our new Sunstone platform which has been greeted with significant interest and is in evaluation with a number of Independent Software Vendors for use in productivity applications aimed at the enterprise. gDoc Fusion and gDoc Binder are examples of applications that our white label partners can build using the Sunstone platform.
We are also delighted to say that our PDF creation library is gaining traction:  it has been verified as being faster, producing higher-quality conversions and with a smaller footprint than Adobe® Acrobat® when converting documents into PDF from Microsoft Office.

(ii) Financial highlights for the nine-month period ended 30 September 2011

Financial performance
Sales amounted to 6,234 in the nine-month period ended 30 September 2011, showing an 8.1% decrease at current exchange rates and of 3.7% at constant exchange rates with the 6,780 figure reported for sales in the nine-month period ended 30 September 2010.
Sales made in the Print segment of the Company`s business continued to be slow, particularly those made in the digital printing market this quarter, resulting in a decrease of 14.7% at constant exchange rates over sales made in the same segment of the Company`s business in the nine-month period ended 30 September 2010.
Sales made in the eDoc segment of the Company`s business increased 67.2% at constant exchange rates over sales made in the same segment of the Company`s business in the nine-month period ended 30 September 2010.

Operating expenses (excluding cost of sales) were 6,290 in the nine-month period ended 30 September 2011, compared with 8,703 in the nine-month period ended 30 September 2010, or a sequential decrease of 27.7% at current exchange rates.
Such decrease predominantly resulted from an ongoing, lower operating expense base pursuant to the reorganization plan which was undertaken by the Company in April 2010.
The Company reported an adjusted operating loss of 693 in the nine-month period ended 30 September 2011 (or an adjusted operating loss equal to 11.1% of the period`s sales), compared with an adjusted operating loss of 1,691 in the nine-month ended 30 September 2010 (or an adjusted operating loss equivalent to 24.9% of that period`s sales).

The Company reported an adjusted pre-tax loss of 696 (or an adjusted pre-tax loss of Euro 0.07 per share) in the nine-month period ended 30 September 2011, compared with an adjusted pre-tax loss of 1,934 (or an adjusted pre-tax loss of Euro 0.19 per share) in the nine-month period ended 30 September 2010.

The Company reported an adjusted net loss of 456 (or an adjusted net loss of Euro 0.05 per share) in the nine-month period ended 30 September 2011, compared with an adjusted net loss of 2,133 (or an adjusted net loss of Euro 0.21 per share) in the nine-month period ended 30 September 2010.

Cash flows for the nine-month period ended 30 September 2011
Net cash flows provided by the Company`s operations amounted to 539 in the nine-month period ended 30 September 2011 (or 8.6% of the period`s sales), compared with net cash flows used by the Company`s operations amounting to 1,552 in the nine-month period ended 30 September 2010 (or 22.9% of that period`s sales).
Cash balances available at 1 January 2011 (which amounted to 1,869) allowed the Company to fund these operating requirements as well as its capital expenditures incurred in the nine-month period ended 30 September 2011, either on property, plant and equipment for 96, or those resulting from the capitalization of development expenses (see note 2b above) which totaled 919 in the nine-month period ended 30 September 2011, and to close the period with a net cash position of 1,394.

(b) Prospects for the remainder of the financial year by the Company`s CEO
The customer commitments we have obtained so far this year for both our print and applications technologies are encouraging.
Through our technical innovation we have developed new applications that are enabling us to forge new customer partnerships.
Our expense position has remained under control since the start of this year, and we continue to benefit, in terms of our ability to execute on our strategy, from the decision to invest in new skills we made in the first half of this year.

NOTE 4: SIGNIFICANT OPERATIONAL AND FINANCIAL RISK FACTORS

(a) Significant operational risk factors

(i) Dependence on the graphic arts and digital print industries
The Company continues to derive a substantial portion of its revenues from software products and related services provided to the graphic arts and digital print industries. Accordingly, the Company`s future success significantly depends upon the continued demand for its products within such industries.
The Company believes that an important factor in its growth has been the substantial change in the graphics arts and digital print industries, as evidenced by continuing consolidation and technological innovation, notably the introduction of new Page Description Languages (PDLs) such as XPS, Microsoft`s fixed document format. If this environment of change were to slow, the Company could experience reduced demand for its products in such industries.
(ii) Failure to manage a successful transition to new products and markets
The Company has historically derived a significant portion of its revenues from the sale of new and enhanced software products (such as Raster Imaging Processors or RIPs). Any delays or failures in developing new products, including upgrades of current products, and anticipating changing customer requirements or market conditions, may have a harmful impact on the Company`s sales and operating results.
Additionally, the Company plans to continue to release numerous new product offerings and upgrade versions of its current software products, including the transition of its RIP product to new variants (e.g. host driver and embedded variants) and new operating systems releases, and in connection with the transition to new markets, such as those for electronic document applications.
The Company`s inability to extend its core technologies into new applications and new platforms and to anticipate or respond to technological changes and customer or market requirements could affect market acceptance of its products and could cause a decline in the Company`s sales and results.

(iii) Inadequate protection of proprietary technology and IP rights
The Company`s success is heavily dependent upon its proprietary technology. To protect its proprietary rights, the Company relies on a combination of patent, copyright, trade secret and trademark laws, as well as the early implementation and enforcement of non-disclosure and other contractual restrictions. As part of its confidentiality procedures, the Company enters into written non-disclosure agreements with its employees, prospective customers, OEMs and strategic partners and takes affirmative steps to limit access to, and distribution of, its software, intellectual property (IP) and other proprietary information.
Despite these efforts, in the event such agreements are not timely made, complied with or enforced, the Company may be unable to effectively protect its proprietary rights and the enforcement of its proprietary rights may be cost-prohibitive. Unauthorized parties may attempt to copy or otherwise obtain, distribute, or use the Company`s products or technology. Monitoring unauthorized use of the Company`s software products is difficult.
Management of the Company cannot be certain that steps taken to prevent unauthorized use of the Company`s proprietary technology, particularly in countries where the laws may not protect proprietary rights as fully as in the EU or the United States, will be effective.
The Company`s source code also is protected as a trade secret. However, from time to time, the Company licenses its source code to OEMs and partners, which subjects it to the risk of unauthorized use or misappropriation despite the contractual terms restricting disclosure, distribution, copying and use.
In addition, it may be possible for unauthorized parties to obtain, distribute, copy or use the Company`s proprietary information or to reverse engineer its trade secrets.
The Company holds patents, and has patent applications pending, in the United States and in the EU. There may be no assurance that patents held by the Company will not be challenged, that patents will issue from the pending applications or that any claims allowed from existing or pending patents will be of sufficient scope or strength to provide efficient protection for the Company`s intellectual property rights.

(iv) Costs of enforcing, acquiring and defending IP rights
In connection with the enforcement of its own intellectual property rights, the acquisition of third party intellectual property rights or disputes relating to the validity or alleged infringement of third-party rights, including patent rights, the Company has been and may be in the future subject to claims, negotiations or protracted litigations.
Intellectual property disputes and litigation are typically costly and can be disruptive to the Company`s business operations by diverting the attention and energies of management and key technical personnel. Although the Company has successfully defended or resolved past litigation and disputes, it may not prevail in any future litigation and disputes.
Third-party intellectual property rights could subject the Company to significant expenditures, require the Company to enter into royalty and licensing agreements on unfavorable terms, prevent the Company from licensing certain of its products, cause disruption to the markets where the Company operates or require the Company to satisfy indemnification commitments with its customers including contractual provisions under various license arrangements any one of which could harm the Company`s business.

(v) Fluctuating operating results and factors affecting operating results
As a result of a variety of factors discussed above, the Company`s sales and operating results for a particular period are difficult to predict. The Company`s sales may grow at a slower rate than experienced in previous periods, and, in some periods, may decline.
Additionally, the Company periodically provides guidance on its future sales and results. Such guidance reflects a number of assumptions, including assumptions about product pricing and demand, seasonal trends, competitive factors, and adoption of new products or releases of existing products. If one or more of these assumptions proves incorrect, the Company`s actual results may vary materially from those anticipated, estimated or projected.

(vi) Adverse economic conditions
The current worldwide economic downturn has reduced and is likely to continue to affect capital expenditures made by customers of the Company`s customers` products, notably in the Print segment of its business. Reduced sales by the Company`s customers hurt its business by reducing demand for its products.
Moreover, if the Company`s customers are not successful in generating sufficient sales or are precluded from securing financing, they may not be able to pay, or may delay payment of, amounts receivable by the Company and also modify, delay or cancel plans to purchase the Company`s products, which will have an adverse effect on its sales. In addition, the Company`s operating expenses could increase due to, among other things, salary increases, resulting in a harmful effect on the Company`s results and financial condition.
When preparing the Company`s consolidated financial statements, management is required to make estimates and assumptions that affect amounts in these financial statements and accompanying notes, some of which are based on forecasts of future results.
The ongoing worldwide economic downturn and the resulting higher volatility increases the risk that the Company`s actual results will differ materially from management forecasts, requiring adjustments in future consolidated financial statements.
See also note 4c below for a discussion on risks associated with the use of accounting estimates and forecasts.

(vii) Recruitment and retention of key personnel
An important part of the Company`s future success depends on the continued service and availability of the Company`s senior management, including its CEO and other members of the executive team. These individuals have acquired specialized knowledge and skills with respect to the Company. The loss of any of these individuals could harm the Company`s business.

The Company`s business is also dependent on its ability to attract, retain, and motivate talented, highly skilled personnel, notably in the development and technical support areas. Such personnel are in high demand and competition for their talents is intense. Should the Company be unable to continue to successfully attract and retain key personnel, its business may be harmed.

(b) Significant financial risk factors
The Company`s activities expose it to a variety of financial risks, notably foreign exchange risk, credit risk, liquidity risk and cash flow interest-rate risk.

(i) Foreign exchange risk
The Company operates internationally and is exposed to foreign exchange risk arising from various currency exposures, primarily with respect to the US dollar and the British pound. Foreign exchange risk arises from future commercial transactions, recognized assets (notably cash and trade receivables) and liabilities, as well as net investments in foreign operations.

• Risk arising from future commercial transactions and balance sheet items 

To manage their foreign exchange risk arising from future commercial transactions, recognized assets and liabilities (i.e. which are denominated in a currency that is not the entity`s functional currency), certain entities in the Company use foreign currency forward or option contracts transacted with high-credit-quality financial institutions after review and approval by the Company`s Chief Financial Officer.
No such contracts were outstanding at either 30 September 2011 or 31 December 2010: as a result, the Company did not record any exchange gain or loss with respect of such contracts in the nine-month period ended 30 September 2011, compared with a loss of 108 in the nine-month period ended 30 September 2010.

• Risk arising from net investments in foreign subsidiaries 

In addition, the Company has certain investments in foreign operations, whose net assets are exposed to foreign currency translation risk. Currency exposure arising from the net assets of the Company`s foreign operations in the UK and in the US is managed primarily through borrowings denominated in the relevant foreign currencies, where appropriate.
Please refer to note 6 to the Company`s condensed consolidated interim financial statements for the quarter and the nine-month period ended 30 September 2011 for further details on foreign currency exchange differences for those periods.

(ii) Credit risk
Financial instruments that potentially subject the Company to credit risk consist primarily of trade receivables.
As it markets and sells its products and services to a broad base of customers including OEM partners, distributors, and system integrators, the Company has no significant concentration of credit risk though relatively few customers accounted for a substantial portion of the Company`s sales within the last few years as a result of the dominance of a limited number of significant players in the Company`s markets.
The ten major customers represented approximately 58.4% of the Company`s sales in the nine-month period ended 30 September 2011 (compared with 63.5% in the same period of 2010 and with 64.1% for the whole of 2010); approximately 42.3% of sales were made with the five largest customers of the Company in the nine-month period ended 30 September 2011 (compared with 44.1% for the same period of 2010, and with 45.1% for the whole of 2010), and approximately 14.7% with the major customer alone in the nine-month period ended 30 September 2011 (compared with 17.4% in the same period of 2010 and with 16.8% for the whole of 2010).
(iii) Liquidity risk
Due to the dynamic nature of its business, the Company aims to maintain flexibility for financing its activities by keeping committed credit lines available.
However, considering the Company`s cash position of 1,394 as at 30 September 2011, and  the absence of any financial debt at such date, the Company did not apply for any lines of credit in the quarter and the nine-month period ended 30 September 2011.

(iv) Cash-flow interest-rate risk
As the Company had no significant interest-bearing assets and liabilities at either 30 September 2011 or 31 December 2010, the Company`s income and operating cash flows for the quarter and the nine-month period ended 30 September 2011 were substantially independent of changes in market interest rates.
Please refer to note 6 to the Company`s condensed consolidated interim financial statements for the quarter and the nine-month period ended 30 September 2011 for further details on interest income and expenses for those periods.

(v) Sovereign debt risk
The Company did not have any exposure to sovereign debt risk as at and during the nine-month period ended 30 September 2011 as it did hold any financial assets of that nature during that period.

(c) Other significant risk factors

(i) Use of accounting estimates and of forecasts
The preparation of financial statements in accordance with IFRSs requires the use of certain critical accounting estimates and forecasts. It also requires management to exercise judgement in the process of applying the Company`s accounting policies, and to make estimates and assumptions that affect the reported amounts of assets, liabilities, income and expenses.
The estimates and underlying assumptions are based on historical experience and various other relevant factors (including projected future sales and related cash inflows either from established software products such as RIP software in the Print segment of the Company`s business, or from recently launched software applications such as gDoc Fusion, the adoption of which is expected by the Company`s management to sequentially grow at a significant pace over time) that are believed to be reasonable under the circumstances, the results of which form the basis of making management`s judgements about carrying values of assets and liabilities that are not readily apparent from other sources.
Actual results may differ from these estimates.

The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised if the revision affects only that period or in the period and future periods if the revision affects both current and future periods.
Please refer to notes 4a (ii) and 4c (ii) to the Company`s condensed consolidated interim financial statements for the quarter and the nine-month period ended 30 September 2011 for further information on critical accounting estimates and the use of sales and cash flow forecasts, as well as the risks attached to them, the downward revisions of which may principally affect the carrying value of goodwill and other intangible assets (including those resulting from the capitalization of development costs) as well as of deferred tax assets.

(ii) Future changes in, or interpretations of, accounting principles
As noted in note 2a to the Company`s condensed consolidated interim financial statements for the quarter and the nine-month period ended 30 September 2011, the Company prepares its consolidated financial statements in accordance with IFRSs, as amended from time to time, and related interpretations issued by the IASB, as adopted by the EU.
Accordingly, changes to these standards by the IASB or delays in the adoption of newly adopted standards by the EU, may have a significant effect on the Company`s reported results and may even retroactively affect previously reported transactions or periods.

Accounting principles used by the Company that may be affected by recently issued exposure drafts notably include the following:
- the exposure draft on income tax, which was published for public comments by the IASB on 31 March 2009, outlined proposed changes to the method of accounting for income tax. The project started as a convergence project with US GAAP; however, in the light of responses to that exposure draft, the IASB`s Board has narrowed the scope of the project, which resulted in certain amendments to the existing standard, IAS 12, Income Taxes in December 2010. The IASB hinted that more fundamental changes to accounting for income taxes will be considered after 2011. - the exposure draft, Revenue from Contracts with Customers, which was published for public comment by the IASB and the FASB on 24 June 2010, outlined the IASB`s intent to publish a final standard on revenue recognition no later than June 2011 to supersede the existing two standards on revenue recognition: IAS 11, Construction Contracts, and IAS 18, Revenue, as well as related interpretations. On 15 June 2011, the IASB and the FASB issued a joint press release confirming that a new exposure draft would be issued for comments during the third quarter of 2011, the objective being to issue a new standard in the course of the year ending 31 December 2012.

NOTE 5: RELATED PARTY TRANSACTIONS
Please refer to note 15 to the Company`s condensed consolidated interim financial statements for the quarter and the nine-month period ended 30 September 2011 for details on such transactions.

NOTE 6: INFORMATION ON THE COMPANY`S PERSONEL

1. Breakdown by geographical area of employment 

2. Breakdown by nature of employment 

In addition, as at 30 September 2011, the Company also employed a total of 3 contractors, of which 2 were software developers.

NOTE 7: VOTING RIGHTS AND SIGNIFICANT SHAREHOLDERS

1. Voting rights attached to shares outstanding as at 30 September 2011 

(i) Theoretical number of voting rights

(ii) Number of voting rights to be used for annual meeting quorum computation

2. Significant shareholders 

(i) Stichting Andlinger & Co. Euro-Foundation
At 30 September 2011, Stichting Andlinger & Co. Euro-Foundation held 2,883,001 shares of the Company, or approximately 28.02% of the total number of shares of the Company which were outstanding at such date.
Attached to these 2,883,001 shares were a total of 2,883,021 voting rights, representing approximately 28.00% of the total number of voting rights attached to the Company`s ordinary shares which were outstanding at 30 September 2011.

(ii) Other significant shareholders
At 30 September 2011, no other shareholder was known to the Company to hold in excess of either 5.0% of the total number of shares forming the share capital of the Company, or 5.0% of the theoretical number of voting rights attached to such shares as computed in note 7a above.

NOTE 8: INFORMATION REGARDING GLOBAL GRAPHICS SA
Because Global Graphics SA has only one employee and all of its revenue results from the recharge of corporate management fees to the Company`s operating entities which are based in the UK and in the US, its statutory results for the quarter and the nine-month period ended 30 September 2011 are not provided since they were not considered as meaningful in the context of the reporting of the Company`s condensed consolidated results as at and for the quarter and the nine-month period ended 30 September 2011.
GLOBAL GRAPHICS SA AND SUBSIDIARIES
STATEMENT MADE BY THE PERSON TAKING RESPONSIBILITY FOR THE FINANCIAL REPORT FOR THE NINE-MONTH PERIOD ENDED 30 SEPTEMBER 2011
Translation of the French language original

I hereby confirm that, to the best of my knowledge, the condensed consolidated accounts included in the Company`s financial report for the nine-month period ended 30 September 2011 have been prepared in accordance with IAS 34, Interim Financial Reporting, and more generally with International Financial Reporting Standards (IFRSs) and related interpretations issued by the International Accounting Standards Board, as adopted by the European Union, and give a true and fair view of the assets, liabilities, financial position, and profit or loss of Global Graphics SA and its subsidiaries as at and for the nine-month period ended 30 September 2011.

I also hereby confirm that the attached condensed management report includes a fair review of the information referred to in article 222-6 of the Règlement général de l`Autorité des marchés financiers, and notably of the material events that occurred in the nine-month period ended 30 September 2011 and their impact on the condensed consolidated accounts for the same period, the main risks and uncertainties for the remaining three months of the current financial year, and the main transactions with related parties which occurred during the nine-month period ended 30 September 2011.

Made in Brussels (Belgium) on 2 November 2011,

Gary Fry  
Chief Executive Officer