Annual report 2005 - Xeikon

Annual report 2005

HIGHLIGHTS
* EBITDA excludes impairment losses on current assets.
Beyond graphic excellence

CONTENTS
1
2
3
4
5
6
7
8
9
10
11
12
13
Financial highlights
Business strategy – Beyond graphic excellence
Chairman’s statement
Operational review
Financial review
Directors and advisors
Directors’ report
Corporate governance report
Remuneration report
Social responsibility report
Auditors’ report
FINANCIAL STATEMENTS
Consolidated income statement
Consolidated balance sheet
Company balance sheet
Consolidated cash flow statement
Company cash flow statement
Reconciliations of equity
Significant accounting policies
Notes to the accounts
Notice of AGM
Proxy card
2
4
6
8
10
12
14
16
20
24
28
30
30
31
32
33
34
35
36
43
64

2
BUSINESS STRATEGY – BEYOND GRAPHIC EXCELLENCE
Punch Graphix
Punch Graphix provides innovative, competitive and
environmentally friendly imaging and printing solutions
of the highest quality for the global graphics industry.
The Company’s aim is to drive successful graphic
technology towards a higher level of performance and
help Punch Graphix’s customers achieve an edge over
the competition.
Under the Xeikon brand name, Punch Graphix designs,
develops and delivers high-end digital colour printing
systems, software and consumables for the document
printing and industrial markets. Under the basysPrint
brand name, the company creates mid to high-end
imaging systems for offset prepress commercial and
industrial markets.
Digital printing solutions: Xeikon
Digital technology prints documents directly from
electronic files onto many substrates and is, therefore,
a more cost-effective and efficient solution than other
traditional printing processes. It also allows each consecutive
print to be different, in both content and form,
which allows the print to be exceptionally personalised.
The Xeikon product range employs electro-photographic
imaging technology based on LED-array imaging and an
environmental friendly dry toner. The presses combine
unique features specifically designed for highly
productive printing environments such as: web-fed
press; widths of up to 500 mm; a wide variety of
substrates – from 40 to 350 gsm; and a truly open,
scalable and modular front-end.
4

Pre-press solutions: basysPrint and OEM
Computer-to-Plate (CtP) is a digital technology that
allows the transfer of content (text or image) directly
onto the printing plate by means of a specific light
source. Thanks to CtP technology, the intermediate film
production process that traditional plate setting needs
to undergo can be bypassed. This saves substantial
money and time, and allows printers to meet the
growing challenge of living up to shorter print runs and
tighter deadlines.
The basysPrint UV-setters range combines state-ofthe-art
CtP technology with a unique ability to image
UV-sensitive plates. This process offers the best working
conditions for operation in prepress and in the
pressroom, as well as the lowest cost per plate and
outstanding image quality.
Punch Graphix prepress solutions also offer a range of
CtP products based on visible light technology for the
newspaper markets through an OEM partnership
with Agfa.
Strategy for growth
Punch Graphix’s long-term strategy is to grow, and
achieve leadership positions, in selected market
segments. Focused innovation and improvement will
drive further sustainable growth, and the focus on
continuous technological enhancement allows the
company to deliver market and customer-oriented
innovations that bring a competitive advantage to
its customers.
Punch Graphix’s long-term growth strategy aims at
addressing market growth opportunities through its
own sales and customer support organisations and
entails three major phases, each focusing on a specific
objective:
1. Drive operational excellence
2. Extend and enhance technology leadership
3. Selectively address market growth opportunities
“Drive successful graphic technology towards a
higher level of performance.”
5

3
CHAIRMAN’S STATEMENT
It is a pleasure to present Punch Graphix’s first Annual
Report and Accounts as a listed company following its
admission to AIM in May 2005.
I am delighted to report that our performance for the
year exceeded our expectations at the time of the
flotation in almost every respect.
Turnover for the year to 31 December 2005 increased by
46%, operating profit by 58%, and profit before taxation
68%. Earnings per share rose 51%. Sales of the Xeikon
products, including the industry leading Xeikon 5000
model, showed good growth, both in the European and
North and South American markets and throughout
2005, sales of both the basysPrint and OEM products
distributed by Agfa also showed promising growth.
In Asia, the uptake of digital printing technology has
been slower, with customers still preferring to use more
traditional printing methods. However, this has resulted
in stronger demand for our pre-press technology in
this region as customers are able to use cheaper
consumables and therefore enjoy the benefits of much
reduced production costs over time.
As reported at the interim stage, the Group is focused on
improving efficiency across all of its operations. Excellent
progress was made during 2005 and this remains an
ongoing programme and an important element of the
Group’s strategy for future profitable growth.
The flotation of the Group raised €28.3 million net of
expenses which is being used to develop its marketing
infrastructure, to expand its direct sales organisation into
key countries and to enhance its product development
programme. During the year, the group invested
€7.9 million in plant and machinery in order to support
its expansion programme and opened new sales offices
in China, Canada and Brazil. The new manufacturing
facility in Shenzhen, China, outlined in the interim
statement, will begin assembling its first products,
in 2006.
Dividend
As set out in the Company’s AIM Admission Document,
it is the Board’s intention to pay an aggregate annual
dividend representing 30 per cent of the Group’s
consolidated profit after taxation and minority interests,
split as to one third / two thirds between the interim and
final dividends. The Board is therefore recommending a
final dividend payment of 2.35 Eurocents, in line with this
policy, to be paid on 9 June 2006 to shareholders on the
register on 12 May 2006.
Chief Executive Officer
Management and staff were all shocked by the sad and
unexpected death of Dick Tilanus, the Company’s CEO,
in January 2006. Dick joined the Punch International
Group as CEO of the Graphic Solutions Division in
November 2004 and led the formation of Punch Graphix
and its subsequent flotation. The performance of the
group in its maiden year, detailed in this report, is a
testament to Dick’s managerial skills. He was an
inspiration to us all and will be sorely missed.
The process to recruit a new CEO was completed on 5
April 2006, with the announcement of the appointment
of Ben C. Van Assche.
Ben C. Van Assche was previously CEO of Cytec Surface
Specialties nv and a member of the Executive Committee
of the Cytec Group. Before that he was a member of the
Executive Committee of the UCB Group, responsible for
the chemical sector.
We are extremely pleased to welcome Ben to Punch
Graphix. Ben’s experience will allow us to continue with
our stated strategy and he will bring further focus to our
internal and external global growth ambitions.
6

Outlook
The group has produced a first class set of results in
its first year as a public company, not just in terms of
sales and profit growth, but also in regard to product
development and improved operating efficiency. Our
focus remains on maintaining a position of technological
leadership and we will continue to invest in the
development of new products and technologies, including
post-press and niche applications. This will be achieved
both through internal research and development and
through acquisition.
Management will continue to focus on streamlining
the organisation, both operationally and financially, and
we expect to realise the benefits of our work to integrate
the sales and servicing functions of both business lines
into single, national organisations during 2006.
Following the creation of sales offices in China, Brazil and
Canada towards the end of 2005, we fully expect to further
expand our presence in these markets through direct sales
and we are continuing the concentration of our efforts to
maintain and expand our installed base across the Group’s
range of products in all our markets.
The buoyancy of those markets and the quality of our
product range allows us to look forward to the future
with confidence.
Geoffrey White
Non-executive Chairman
We will continue to build our production platform in
China, which in time will provide a low cost manufacturing
base for a range of products from across the Group.
“I am delighted to inform you that our
performance for the year exceeded
expectations in almost every respect.”
Dick Tilanus and Jan Smits in the London Stock Exchange at the occasion of the flotation of the Company on May 26, 2005, accompanied
by people of the London Stock Exchange and Altium Capital.
7

4
OPERATIONAL REVIEW
Turnover for the year to 31 December 2005 increased
by 46% to €153.2m (2004: €105.2m). Of this, €49.9m
was generated by the pre-press activities, and €103.3m
by the digital printing activities. The split between
equipment and consumables sales was 57% / 43%.
Operating profit for the period was €21.5m (2004:
€13.6m), an increase of 58%.
Profit before taxation rose by 68% to €18.5m (2004:
€11.0 m). Earnings per share were 13.32 euro cent
(2004: 8.84 euro cent), an increase of 51%.
At 31 December 2005, net assets amounted to €96.0m
(2004: €54.2 m) including cash and deposit balances
of €30.0m (2004: €5.1m).
In the year to December 2005, market conditions
were positive, due principally to the rapidly increasing
number of applications for digital printing and
continuing progress in the acceptance of computer
to plate pre-press procedures. This market growth has
also been driven by the replacement of first generation
computer to plate machines with new improved
products. As at December 2005, Punch Graphix’s
installed base was in excess of 2,700 machines.
Pre-press solutions
Pre-press activities saw strong growth throughout the
year, with an increase in sales of 84% to €49.9 million,
compared with €27.0 million last year.
Customer interest in basysPrint’s Computer to Plate,
based on UV sensitive plates technology remains high.
Our sales teams are also receiving positive market
feedback on the newly launched scrolling capability,
which avoids the interruptions characteristic
of the traditional exposure techniques, resulting
in a faster and more stableprocess and new lens filters,
which improve the lifetime of the DMD processors.
Both enhancements to the Group’s offering were
launched during 2005.
In May 2005, the Group extended its OEM agreement
with Agfa for the manufacture of CtP (computer to plate)
machines until 2009. The Group accepted a reduction in
margin in exchange for greater levels of long-term cooperation;
the initial impact of which were seen in the
second half of 2005.
In aggregate during the year, the pre-press division
- basysPrint and the agreement with Agfa - substantially
increased the number of machines manufactured by
over 58% from 249 units in 2004 to 393 units in 2005.
During the second half of 2005, basysPrint continued
to transfer sales and servicing capabilities from third
party dealers to the Group’s newly expanded in-house
organisation. The benefits of this are expected to be
realised during 2006 and beyond.
Digital printing solutions
Sales of Xeikon digital printing equipment and associated
consumables, in particular the Xeikon 5000 launched in
February 2004, have been strong throughout the year,
resulting in sales of €103.3 million (2004: €78.1 million).
The number of units sold increased 39%, from 80 units in
2004 to 111 units in 2005.
In the US, the appointment of a new General Manager
to oversee both the sales and servicing operations has
reinforced the operation and helped generate very
encouraging results, despite competitive pricing
pressure. The Xeikon 5000 remains one of the leaders in
its market, in terms of quality and speed.
The balance between the first and second halves of
the year reflects both the expected seasonality, and the
strong contribution from a number of high margin rental
contracts in the first half.
8

The Digital printing solutions business saw a small
increase in the sales of consumables during the year.
Consumable sales tend to lag behind the delivery and
installation of printing equipment as customers often
take time to run the newly installed equipment at full
capacity. As a result, the machines delivered in 2005
will contribute to further growth in consumable sales in
due course.
During 2005 we established our sales and servicing
joint venture in Shenzhen to serve the Chinese market.
Whilst there is strong demand for the Group’s pre-press
products, the adoption of high-end digital printing
in this region is proving slower than first anticipated.
Management’s forward planning reflects these market
conditions.
People
The separation of Punch Graphix from Punch International
led to an internal reorganisation and the
appointment of new people to the management team.
During the year Véronique Mathias was appointed
to the management team, responsible for business
development and marketing and Siegfried Trinker
joined as Chief Sales Officer early 2006. Wim Deblauwe,
Piet De Paepe and Koenraad Van der Elst have all
stepped down from the management team during the
year and we thank each of them for their contribution
during the creation and flotation of Punch Graphix.
Jan Smits
Chief Financial Officer
Capital expenditure
During the reported year, the group invested €7.9m in
plant and machinery in order to support its expansion
programme.
Research & development
Punch Graphix continues to invest in improvements to
its product range that are essential if the Group is to
maintain its position as a leading supplier of printing
equipment and supporting consumables. A total of
€11.5m was spent during the year on the development
of products and technologies (2004: €11.8 million), of
which €6.1 million was charged to the profit and loss
account. The balance is to be written off over three to
four years, in line with the Group’s accounting policy.
Part of the proceeds of the AIM IPO in May 2005 have
and will continue to be used to further advance our
research and investment in new product development.
Current areas of R&D focus in digital printing are the print
engines, the toner consumable and the digital front-end;
with a specific focus on image quality, lower total cost
per page, and substrate independence. In pre-press, the
focus is on reduced cost price per machine, and higher
speed solutions.
9

5
FINANCIAL REVIEW
Introduction
The results published in this annual report have been
prepared under the International Financial Reporting
Standards as adopted by the European Union.
The group has delivered a first year of excellent sales,
profits and earnings per share. The proceeds of the IPO
are being used to reinforce the company’s balance sheet,
speed up its development and extend its geographic
presence.
Minority interests and earnings per share
Minority interests decreased slightly. The group acquired
the minority interests in the UK and France at the time
of the IPO.
In the reported year, earnings per share increased by
more than 51% to 13.32 euro cent. The average number
of shares in issue used in the calculation of earnings per
share was 93,258,058. For 2004 the company used a
number of 80,000,000 shares.
Trading
Sales increased from €105.2m, in 2004, to €153.2m in
2005. Of this amount €15m relates to the acquisition of
basysPrint, which was acquired in December 2004. For
this reason, only the balance sheet figures are included
in the comparable figures of 2004. That year basysPrint’s
turnover was €17.7m.
The split between digital printing and pre-press was 65%
against 35%. The split between equipment sales and
recurring revenues (sales of consumables for the digital
printing machines, spare parts and servicing) saw results
comparable to the previous year: 57% equipment and
43% recurring revenues. Geographically, Europe is the
most important market (67%), followed by the US (28%)
and Asia (5%).
The EBITDA (earnings before interest, tax, depreciation
and amortisation) increased by 69%, from €20.6m, in
2004, to €34.7m in 2005. In sales terms this represents
a margin of 22.6%. Operating profit on sales for the year
was €21.5 m (14%), which represents an increase of
1.1 percentage points.
The tax charge of €5.5 m reflects an effective tax rate
of 30.3%. This compares to an effective rate of 31.7% in
2004. The group has benefited from some tax losses in
Belgium and Germany.
Dividend
The Board recommends a final dividend of 2.35 euro
cent. This is a payout ratio of approximately 20% of the
net profit.
Cash flow
Cash flow from operating activities was €3.9m due to an
increase in working capital of €21m.
Receivables were up by €13m due to the increase in
sales and a very strong last quarter. Inventories increased
by €4m, primarily by using more sea freight instead of
air freight for purchasing raw materials and transporting
Punch Graphix equipment and consumables.
Capital expenditure was €7.9m for tangible assets,
spent on improvements or replacements of production
equipment and own assets held for rental contracts and
demonstration equipment. For intangible assets a total
amount of €6.6m was spent on software development
and implementation, as well as on capitalised development
costs.
During the year Punch Graphix created its own sales
organisation in Canada and Brazil. It also embarked on a
joint venture in China to sell and service the company’s
digital printing presses.
10
Cash and short-term investments at the end of the year
amounted to €30m.

Shareholders’ funds
Shareholders’ funds totaled €95.4m. The increase in the
year of €41.8m is driven mainly by the retained earnings
of €12.4m and share capital issued on flotation.
Jan Smits
Chief Financial Officer
“In the reported year, earnings per share increased
by more than 51% to 13.32 euro cent.”
11

6
DIRECTORS AND ADVISORS
Board of Directors, Secretary and advisors of
the company
Independent non-executive directors
Executive directors
Geoffrey Charles White
Non-executive Chairman
appointed March 30, 2005
Dirk Willem Jacob Tilanus
Chief Executive Officer (passed away January 9, 2006)
appointed March 24, 2005
Dick Tilanus (Chief Executive Officer) – aged 57.
Dick passed away on January 9, 2006. Dick was
appointed Chief Executive Officer of the company on
its formation in March 2005, having joined the graphics
division of Punch International in November 2004. Prior
to this, he spent 30 years at Royal Philips Electronics BV
working in The Netherlands, France, Italy, Japan and Hong
Kong. His career encompassed senior management
positions in operations, business process re-engineering,
change management, supply chain management and
human resources, most recently as senior vice president
of Philips People Services from 2002 to 2004.
Geoffrey Charles White - aged 53.
Geoff was a Managing Director within the W. Canning
plc Group and was Chief Executive Officer of Pressac
plc from 1989 to 2001, where he previously held the
position of Finance Director between 1986 and 1989.
Geoff is currently non-executive Deputy Chairman of
iSoft Group plc and a non-executive of Tekdata
Distribution Ltd. and Tekdata Interconnect Ltd. He is a
Fellow of the Institute of Chartered Accountants. He was
appointed as Chairman and non-executive director of
Patientline plc on April 3, 2006.
12
Jan Agnes Jozef Smits
Chief Financial Officer
appointed March 24, 2005
Jan Smits (Chief Financial Officer) – aged 47.
Jan was appointed Chief Financial Officer of the
company on its formation. He joined Punch
International as Financial Director in 1990 and in 1999
became Managing Director whilst retaining responsibility
for finance and administration. Jan was involved
in the initial public offering of Punch International in
1999. He was previously head of accounting at Pluma
Vleeswarenbedrijf and worked in a senior financial role
at Massive International. He graduated as a Commercial
Engineer at the University of Antwerp and Tax Science
at Sint-Aloysius College in Brussels.
Kenneth Humphreys
Non-executive Director
appointed March 30, 2005
Kenneth Humphreys - aged 59.
Ken spent 35 years with Royal Philips Electronics BV
working in the UK, the Netherlands, Belgium and Austria
in a range of senior positions including that of Executive
Vice President of the Consumer Electronics Division.

Henry Nigel Pakenham McCorkell
Non-executive Director
appointed March 30, 2005
Henry Nigel Pakenham McCorkell - aged 59.
Nigel held positions of seniority during 12 years at
Meggitt plc including those of Finance Director,
Managing Director and Deputy Chairman. He was
previously Finance Director of Flight Refuelling
(Holdings) plc (now Cobham plc) and was Chairman of
Cork Industries Ltd. for three years. Nigel is currently V
Chairman of Aero Inventory plc and Deputy Chairman
of Ffastfill plc. He is a fellow of the Institute of Chartered
Accountants and was elected a Companion of the
Institute of Management in 1994.
Non-independent non-executive director
Registered office
Chestnut House
Hackness Road
Northminster Business Park
Upper Poppleton
York YO26 6QR - UK
Nominated advisor and broker
Altium Capital Limited
30 St. James’s Square
London SW1Y 4AL - UK
Auditors
BDO Stoy Hayward LLP
8 Baker Street
London W1U 3LL - UK
Legal advisors to the company
Allen & Overy LLP
One New Change
London EC4M 9QQ - UK
Philip Ashworth & Co
121 The Mount
York YO24 1DU - UK
Guido Pieter Lieven Dumarey
Non-executive Director
appointed March 30, 2005
Guido Pieter Lieven Dumarey – aged 46.
In 1982 Guido initiated the growth of New Impriver nv,
a Ghent-based company that laid the foundations for
Punch International. Guido founded Punch International
in 1983 and has led the growth of that company since.
He became Managing Director and was appointed
Chairman of its Board in 1998.
Registrars
Capita Registrars
The Registry
Beckenham Road
Beckenham
Kent BR3 4TU - UK
Company Number
5403372
13

7
DIRECTORS’ REPORT
14
Directors’ report
The directors present their report and the financial
statements for the year ended December 31, 2005.
The company was incorporated on March 24, 2005.
The company’s shares were admitted to the Alternative
Investment Market on May 26, 2005, at the price of 98p.
Activities
The company and its principal operating subsidiaries
focus on the provision of digital and prepress printing
systems. It also provides ongoing consumables and
services to its installed base.
A review of the group’s trading during the year and of its
prospects is contained in the Chairman’s statement and
the operating and financial review and in the notes to
the financial statements.
Details of significant events since the balance sheet date
are contained in the operating and financial review.
Financial results and dividends
The profit after tax for the year was €12.9m (2004:
€7.5m). The amount attributable to the equity interest of
€12.4m (2004: €7.1m) has been transferred to reserves.
The directors are recommending a dividend of 2.35 euro
cent per share (2004: €0)
Directors’ interests
The interests of the directors, including the interests
of their spouses and infant children and the interests
of any persons connected with them within the
meaning of section 346 of the Companies Act 1985
(“the Act”) (“Connected Person”), all of which are
beneficial (save where otherwise stated) which (i) have
been notified to the company pursuant to sections 324
or 328 of the Act or (ii) are required to be entered in the
register maintained under section 325 of the Act, or (iii)
are interests of a Connected Person which would, if the
Connected Person were a director, be required to be
disclosed under (i) or (ii) above, and the existence of
which is known or could with reasonable diligence
be ascertained by the director, at December 31, 2005,
are as follows:
Name
Geoffrey White
Dick Tilanus*
Jan Smits*
Guido Dumarey
Kenneth Humphreys
Nigel McCorkell
31/12/2005
Ordinary
shares
20,408
157,706
140,783
% of issued
share capital
0.02
0.15
0.14
*On admission of its company’s shares to AIM, Dick Tilanus
and Jan Smits, through their respective interests in Tilanus
Consulting BVBA and SWAP nv, were granted awards over
157,706 and 140,183 Ordinary Shares respectively, pursuant
to the terms of the LTIP as further described in the
Remuneration Report.
Following the death of Dick Tilanus on January 9, 2006
and in accordance with the Rules of the LTIP plan, the
Board of Directors decided, on February 27, 2006, to
grant with immediate effect the total award of shares
to Tilanus Consulting BVBA.
Directors’ responsibilities in respect of the
preparation of financial statements
The directors are required by the Companies Act 1985
to prepare financial statements for each financial year
which give a true and fair view of the state of affairs of the
company and Group as at the end of the financial
year and of the profit or loss for the financial year. The
directors are required to prepare the financial statements
on a going concern basis, unless it is inappropriate to
presume that the company will continue in business
The directors consider that in preparing the financial
-
10,204
8,163
-
0.01
0.008

statements on pages 30 to 63 the company has used
suitable accounting policies, which have been
consistenly applied. They also confirm that reasonable
and prudent judgements and estimates have been
made in preparing the financial statements for the
year ended December 31, 2005 and that applicable
accounting standards have been followed.
The directors have responsibility for ensuring that the
company keeps proper accounting records which disclose
with reasonable accuracy at any time the financial
position of the company and Group and which enable
them to ensure that the financial statements comply
with the Companies Act 1985.
The directors have general responsibility for taking such
steps as are reasonably open to them to safeguard the
assets of the company and Group and to prevent and
detect fraud and other irregularities.
International Financial Reporting Standards
(IFRS)
Following admission to the Alternative Investment
Market in 2005, the company has applied IFRS
as adopted in the EU for its financial reporting and
accounting.
2. Where practical, to continue the employment of
and arrange appropriate training for employees of
the company who become disabled during their
employment with the company.
3. To encourage training and career development for all
personnel employed by the company, including
disabled persons.
Payments to suppliers
It is the company’s policy to agree the terms of
payment at the start of business with a supplier. The
company seeks to abide by the payment terms agreed
with suppliers whenever it is satisfied that the supplier
has provided the goods or services in accordance with
the agreed terms and conditions.
Charitable donations
No charitable donations were made in the year 2005.
Post balance sheet events
Post balance sheet events are disclosed in note 32 to the
financial statements.
Directors’ remuneration
The Directors’ remuneration is described in the Remuneration
Report.
Financial instruments
Details of financial instruments are set out in note 25 to
the financial statements.
Employee participation
It is the company’s policy to provide employees of
the group, on a regular basis, with financial and other
information on matters of concern to them, by means
of in-house communications and during meetings with
employee delegations.
Every endeavour is made to consult, wherever possible,
with employees, so that their views can be taken into
account in making decisions which are likely to affect
their interests.
Research and development
The group engages in research and development
activity.
Auditors
The auditors, BDO Stoy Hayward LLP, have indicated their
willingness to continue in office and a resolution concerning
their re-appointment will be proposed at the
Annual General Meeting.
Employment of disabled persons
The company’s policy on employment of disabled persons
is:
Geoffrey C. White
Chairman of the Board
1. To give full and fair consideration to applications
for employment with the company made by disabled
persons, having regard to their particular aptitudes
and abilities.
15

8
CORPORATE GOVERNANCE REPORT
Introduction
The group is committed to high standards of corporate
governance and the Board believes that this is a key
element to continuing to deliver the group’s strategy.
While the group is not required to comply with the
provisions of the 2003 FRC Combined Code, the group
complies wherever possible with principles of good
governance.
Statement of directors’ responsibilities
The Board are responsible for leading and controlling
the group and is accountable to the shareholders for
the operational and financial performance for the group.
The directors are responsible for internal controls and
company law requires the directors to prepare financial
statements for each financial year which give a true and
fair view of the state of affairs of the company and group
and of the profit or loss for that period.
A more detailed description of the directors responsibilities
in respect of the financial statements can be found in the
Directors’ report.
Going concern
Having made due enquiries the directors have a
reasonable expectation that the group has adequate
resources to continue in operational existence for
the foreseeable future. For this reason, they continue
to adopt the going concern basis in preparing the
financial statements.
The Board
The Board meets regularly throughout the year and met
five times during 2005. It is responsible for:
• Overall group strategy;
• Approving revenue and capital budgets and material
expenditure plans;
• Approving substantial acquisitions and disposals of
businesses, subsidiaries or material assets;
• Determining the financial and corporate structure of
the group (including financing and dividend policy);
• Approving material or extraordinary contracts;
• Setting the company’s values and standards and
ensuring that its obligations to its shareholders and
others are understood and met; and
• Ensuring appropriate training of directors and other
senior executives.
Day to day management of the company’s business
is delegated to the management team. At each
meeting the Board reviews comprehensive financial
information produced by management each month
and considers the trends in the company’s business
and their performance against strategic objectives and
plans. It also regularly reviews the work of its formally
constituted standing committees as described below
and compliance with the group’s management policies
and compliance with legal requirements.
All members of the Board and its committees attended
all scheduled meetings held in 2005 except that Dick
Tilanus was absent on one occasion due to illness and
Guido Dumarey was absent on one occasion.
Details of the service contracts of the executive
directors are shown in the Remuneration report. The
non-executive directors do not have service contracts
but have appointment letters, which can be renewed
or extended.
In furtherance of the principles of good corporate
governance, the Board has appointed the Audit,
Remuneration and Nomination Committees.
16

Audit committee
The Audit Committee has primary responsibility for
monitoring the quality of internal controls and ensuring
that the financial performance of the company is
properly measured and reported on. In particular,
the Audit Committee shall make recommendations
as to the appointment, reappointment or removal of
external auditors and shall monitor the expertise and
independence of such auditors. It will receive and
review reports from Punch Graphix’s management and
auditors relating to the interim and annual accounts
and the accounting and internal control systems in
use throughout the company. The Audit Committee
expects to meet at least twice a year and will have
unrestricted access to the company’s auditors. The
chairman of the Audit Committee is Nigel McCorkell. The
Audit Committee met once in 2005.
Remuneration committee
Chaired by Kenneth Humphreys, the Remuneration
Committee will review the performance of the Executive
Directors and make recommendations to the Board
on matters relating to their remuneration and terms
of employment. The Remuneration Committee
will also make recommendations to the Board on
proposals for the granting of share options and other equity
incentives pursuant to any share option scheme or
equity incentive scheme in operation from time to time.
The Remuneration Committee expects to meet at least
twice a year. The Remuneration Committee met once in
2005.

Nomination committee
The Nominations Committee will meet as and when
necessary to assess the suitability of candidates
proposed for appointment by the Board and to
prepare a description of the role and capabilities
required for a particular appointment. The chairman
of the Nomination Committee is Geoffrey White.
Relationships with shareholders
The Board recognises the importance of maintaining
regular dialogue with institutional shareholders to
ensure that its strategy and any concerns can be
addressed. In addition, all shareholders have the
opportunity to attend the Annual General Meeting
where the group’s operations can be discussed with
the directors. The Chairman and Chief Financial Officer
make themselves available for meetings with
analysts and representatives of the major shareholders on
the day of the preliminary announcement of the
annual results and half year results or shortly thereafter
and upon request at other times of the year. They
report to the Board on shareholders’ views.
Relationship with the auditor
During the reported year BDO Stoy Hayward LLP
provided tax advice to the company and its principal
subsidiaries. The Board has considered the effect on
independence of the auditor and the objective criteria on
which any decisions to appoint BDO Stoy Hayward LLP
should be made. It was concluded that in the
circumstances its appointment as tax advisors was the
most cost-effective means of securing appropriate
advice without a serious risk of affecting the
independence of the auditor. BDO Stoy Hayward
LLP has confirmed that it does not consider its
independence to be affected. The Board has developed
policies to safeguard the independence of the auditor
based on:
• Internal BDO Stoy Hayward LLP processes to
prevent information being shared between
teams except where it is appropriate;
• Separate consideration of each category or major
item of work, including the cost effectiveness of any
proposed work and the suitability of competing
advisors; and
• Consideration of the total level of fees payable
to BDO Stoy Hayward LLP and other member firms.
18

Internal controls
The Board of directors is responsible for the group’s
system of internal controls and has established a
framework of financial and other controls.
The Board has taken and will continue to take
appropriate measures to ensure that the chances of
financial irregularities occurring are reduced as far as
possible by improving the quality of information at all
levels in the group, fostering an open environment and
ensuring that financial analysis is rigorously applied.
Any system of internal control can, however, only
provide reasonable, but not absolute, assurance
against material misstatement or loss.
The major elements of the system of internal control are
as follows:
1. Major commercial, strategic and financial risks are
formally identified, quantified and assessed by
each operating unit during the annual budgeting
exercise and presented to and discussed with
executive directors, after which they are
considered by the Board.
2. There is a comprehensive system of planning,
budgeting, reporting and monitoring of the
group’s operating units. This includes monthly
management reporting and monitoring of
performance and forecasts. The reports are reviewed
by group staff and are also submitted to the
Board for review. Monthly and quarterly reviews
are embedded in the internal control process
and cover each principal operating unit. Monthly
reviews require each operating unit to consider,
inter alia, business development, financial
performance against budget and forecast, and
capital expenditure proposals. Quarterly reviews of
operating units also include a review of longer
term business development performance against
budget and forecast and all other aspects of the
business. They are attended by executive directors
and other group staff as appropriate.
3. There is a structure which clearly defines lines of
responsibility and delegation of authority.
4. Each operating unit is required to comply with
defined policies, financial controls and procedures
and authorisation levels which are clearly
communicated.
By order of the Board
Filip Beernaert
Secretary
19

9
REMUNERATION REPORT
Introduction
The Remuneration Committee deals with all aspects
of remuneration of the executive directors and certain
other senior executives. The committee reporting to the
Board is composed of Ken Humphreys, Geoffrey White,
Nigel McCorkell, all non executives, and is chaired by
Ken Humphreys.
The Committee is responsible for:
• Establishing and recommending to the Board the
policy for executive remuneration;
• Determining on behalf of the Board and shareholders
the level and structure of the remuneration packages
of the executive directors and selected senior
executives; and
• Reviewing and ensuring the alignment of executive
remuneration throughout the organisation, including
company share schemes.
During the reported year, the committee received advice
and was assisted by the Hay Group - a global company
providing a range of HR services to companies - on
training, evaluation and salary levels.
Policy
The Remuneration Committee aims to ensure the
packages offered are competitive and designed to
attract, retain and motivate executive directors of the
highest calibre. The committee seeks to reward the
delivery of challenging targets over the long term
for both growth and profitability. A base salary,
a bonus scheme and a Long Term Incentive Plan (shares),
are designed to ensure the delivery of best-in-class
performance and align interests of shareholders
and executives.
Packages
The basic salary is set using external market data
for similar jobs in companies of comparable size
and complexity.
Incentives scheme
The executive directors participate in an annual cash
bonus scheme which is designed to reward the
delivery of challenging business targets, growth,
profitability, cash and individual personal targets. The
Committee ensures that these are aligned with
shareholders interests. The maximum bonus achievable
for the CEO is 50% of salary and for the CFO 30%
of salary.
Long Term Incentive Plan
The Long Term Incentive Plan (hereafter LTIP) is intended
to offer an effective incentive over the longer term to
executive directors and certain other senior executives.
Further details of the LTIP can be found in the company’s
admission document.
The LTIP plan was adopted by the company on April 28,
2005. The LTIP plan allows the Board to grant awards
of shares in the company to employees of Punch
Graphix group companies or to service companies
the Board determines to be eligible for such grant.
The total number of new ordinary shares that may be
issued pursuant to the LTIP over a 10 year period may
not exceed five percent of the total share capital of
the company.
20

A participant receiving an award under the LTIP will
have full legal and beneficial ownership of the
ordinary shares from the date of grant, subject to certain
restrictions. Participants will have voting rights and are
entitled to dividends and other distributions in relation
to these ordinary shares.
The ordinary shares of an award may not be disposed
of before the end of the vesting period, which is, for the
current awards granted, 3 years from the date of grant.
The awards granted are subject to performance
conditions. These conditions are linked to the growth
and performance of the company in relation to the
AIM UK 50 and to a peer group of companies such
as Xerox, Océ, Eastman Kodak, Hewlett Packard,
Agfa, Nipson, Domino, Heidelberg, Konika Minolta.
If a participant is an employee who ceases employment
within any of the Punch Graphix group companies
either due to retirement, disability, illness, injury,
redundancy or as a result of the sale of the business
or subsidiary by which the participant is employed,
the award will continue to vest. If employment
ceases for other reasons, the award will be forfeited.
If the participant (employee) dies, the award will
vest immediately.
Pension and gratuities for directors
The Board may exercise all the powers of the company
to pay, provide or procure the grant of pensions or
other retirement or superannuation benefits and death,
disability or other benefits, allowances or gratuities to
any person who is or has been at any time a director of
the company or in the employment or service of the
company or of any company which is or was a subsidiary
of or associated with the company or the predecessors
in business of the company or any such subsidiary or
associated company or the relatives or dependants of
any such person.
Non-executive directors
Fees of non-executive directors are determined by
the Board with regard to market rates. The Board may
pay additional remuneration outside the scope of
the ordinary duties of a non-executive director. The
non-executives do not have service agreements and
there are no provisions for early termination payments.
If a participant is a service company and ceases to
provide services to the Punch Graphix group
companies, the award will be forfeited, unless the Board
determines otherwise.
On the lapse of an award, the ordinary shares subject
to an award will be transferred to a third party specified
by the company, unless the participant transfers to the
company a cash amount equal to the market value of
such number of ordinary shares.
The following awards were granted at the moment of
admission to AIM:
Grantee Provision of management services by N o of ordinary shares
Tilanus Consulting BVBA
SWAP nv
Herault BVBA 1
Wimel BVBA 1&2
FDVV Consult BVBA
Mathias Business Consulting BVBA
Aurelius BVBA 1
Horst Steppat
Dick Tilanus
Jan Smits
Koenraad Van der Elst
Wim Deblauwe
Frank Deschuytere
Véronique Mathias
Piet de Paepe
n/a
157,706
140,183
94,623
84,110
84,110
84,110
43,807
43,807
1
The awards of Herault BVBA, Wimel BVBA, Aurelius BVBA have lapsed.
2
The award of Wimel BVBA has been re-awarded by the Board to Mr. Siegfried Trinker, Chief Sales Officer.
As the scheme is in its first year, the committee have no
plans to change the terms of the scheme.
21

Directors’ emoluments
Remuneration and
emoluments paid 2005
Bonus fees 2005
Allowances
Total
Executive director
Dick Tilanus
€219,375
€40,000
€12,000
€271,375
Jan Smits
€195,000
€30,000
€12,000
€237,000
Non - executive director
Geoffrey White
£45,000
Nil
None
£45,000
Nigel McCorkell
£22,500
Nil
None
£22,500
Ken Humphreys
£22,500
Nil
None
£22,500
Guido Dumarey
£22,500
Nil
None
£22,500
Notes
Consultancy agreements
The consultancy agreements with the service companies for the provision of management services by the executive
directors are entered into without time limit and may be terminated by either party by a three months’ notice or by paying
equivalent compensation.
Letters of appointment
The letters of appointment of the non-executive directors are entered into for a three year period, can be renewed and may be
terminated by either party on a one month’s written notice.
Reimbursements
The executive directors receive reimbursement for mobile phone costs and travel costs by plane.
The consultancy agreement for management services provides for reimbursement of expenses incurred on company business.
Allowances
The service companies providing management services through the executive directors receive a monthly car allowance
of €1.000.
Save as set out above, there are no existing or proposed service or consultancy contracts between any member of the Group of
Punch Graphix companies and any of the directors.
22

10
SOCIAL RESPONSIBILITY REPORT
Safety, health and environment
Punch Graphix is committed to building, implementing
and ensuring working practices and production
processes that pay need to the safety, health and
environmental protection of its employees, products,
customers and stakeholders. It constantly strives to
ensure its products have the largest possible positve
impact on the local and global environment.
An example of this was the Belgian Environment Award
that Punch Graphix received in 2003-2004 for the
development of its new generation of digital colour
printing presses. This Award is an initiative of the
Federation of Enterprises of Belgium, the Federation
of Flemish Enterprises, the Federation of Walloon
Enterprises and the Federation of Enterprises
in Brussels. It rewards enterprises and institutions who
have distinguished themselves in the last five years by
taking actions concerning enduring development and,
more specifically, environmental technology or strategy.
Punch Graphix’s commitment to the safety, health and
environmental protection of its products covers all
phases of the production process:
Conception
The Punch Graphix product range keeps the
environment in mind even at the conceptual stage of the
product. Its digital presses are environmentally friendly
in three different aspects:
• Xeikon presses allow printing on demand thanks to
the low set-up times. Only those items that are
actually required are printed. This is a revolutionary
concept for fully personalised marketing campaigns,
but it is also extremely important in terms of
environmental friendliness, since this means that
there is no need for keeping a stock of printed matter.
The printer will only use the exact amount of paper
and ink needed at that moment.
• Digital technology makes it possible for the digital
master of the document to be transferred via the
Internet and then printed locally. Hence, there are no
transportation costs involved in the document
transfer, and this helps reduce CO2 emissions in road or
air transport.
• Punch Graphix makes sure that the marking material
used for its products, such as toner particles, makes
for environmentally friendly digital presses. With
traditional printing methods volatile organic
compounds (VOCs), harmful to the environment and
to human health, are released into the air. Xeikon
digital presses use a quick, clean and environmentally
friendly printing method and thus do not release VOCs.
Moreover, the marking material the company selects
is totally recyclable.
In the conception of the pre-press product range,
environmental friendliness is also given high priority:
• When using basysPrint prepress technology in a
traditional printing process, there is no need for the
usual intermediate step illumination-to-film. The
removal of the film lessens the environmental stress
of the printing process.
• The fact that basysPrint allows the use of conventional
plates is highly beneficial to the environment and is,
moreover, energy-efficient. Other CtP technologies
require the newer digital plates and, thus, need
hazardous developing liquids. Conventional plates
do not use hazardous developing liquids and do not
require as much energy.
24

Design
The RoHs Directive is a European regulation that restricts
the use of certain hazardous substances in electrical and
electronic equipment. A program is defined for all Punch
Graphix products to comply with this Directive and the
new generation of pre-press and digital products is,
furthermore, designed to optimise energy efficiency.
At the toner production plant in Heultje (Belgium),
substantial investment plans have been undertaken to
optimise energy consumption. Also, this year special
investment programmes are underway to implement
recycling in the production process, which will increase
yield and reduce waste.
Production
In all three production plants special care has been
taken to comply with the WEEE (waste from electronic
and electrical equipment) regulation, which limits the
total quantity of waste that may go to final disposal, and
the M.A.P. (Milieu Actie Plan – Environmental Action Plan)
regulation on energy efficiency. At these plants, waste
water is separated from the pluvial water to reduce the
stress on the waste water treatment.
25

Quality
The entire Punch Graphix product range meets
international quality standards thanks to the
rigorous quality programme the company implements
in its production processes. Its production plants in
Ieper (Belgium) and Boizenburg (Germany) are
ISO 9001:2000 certified and its production plant in
Lier (Belgium) is expected to gain the ISO 9001 by
the end of 2006.
Human resources
People are Punch Graphix’s most precious asset,
which is why its human resources (HR) strategy is a key
element that flows from and supports the company’s
business strategy. Good HR management is essential
to succeed in business and it is only through its
employees that the company will build on its
current competitive advantages. With an HR policy
that goes beyond legal requirements, Punch Graphix
takes care that it is and is seen as an attractive,
transparent and honest organisation that encourages
employee development and provides a safe, pleasant
working environment.
Family support
Punch Graphix recognises that its future depends
on the ability to recruit and retain the right people.
The company has an open approach to flexible
working conditions and concurs with its employees
in their requests and concerns about supporting
a healthy family life. Its employee-friendly policies cover
maternity leave, paternity pay and leave, among others.
Initiatives
In the past two years, Punch Graphix has been
committed to supporting the Plato Initiative in the
Mechelen region (Antwerp). Plato is an intensive
counselling and supporting programme that helps
SMEs grow and prosper. Plato seeks to professionalise
the management of SMEs by means of work experience
exchanges and networking under the supervision
of large companies in order to achieve SME growth
and development.
Equal opportunities
The Punch Graphix policy rigorously stipulates that all
persons should be treated fairly irrespective of their colour,
race, sexual orientation, age, religious or political
beliefs. The company is committed to the principles of
equal opportunity; it specifically prohibits discrimination
of any type; and it ensures that employees who are
physically impaired can work for the company wherever
and whenever this is reasonably possible.
26

11
AUDITORS’ REPORT
Independent auditors’ report to the
shareholders of Punch Graphix plc
We have audited the group and parent company financial
statements (the “financial statements”) of Punch
Graphix plc for the year ended 31 December 2005 which
comprise the Consolidated Income Statement, the
Consolidated and Company Balance Sheets, the
Consolidated and Company Cash Flow Statement,
the Consolidated and Company Statement of Change
in Shareholders’ Equity and the related notes. These
financial statements have been prepared under the
accounting policies set out therein.
Respective responsibilities of directors and
auditors
The directors’ responsibilities for preparing the Annual
Report and the financial statements in accordance with
applicable law and International Financial Reporting
Standards (IFRSs) as adopted by the European Union are
set out in the Statement of Directors’ Responsibilities.
Our responsibility is to audit the financial statements
in accordance with relevant legal and regulatory
requirements and International Standards on Auditing
(UK and Ireland).
We report to you our opinion as to whether the
financial statements give a true and fair view and
whether the financial statements have been properly
prepared in accordance with the Companies Act 1985.
We also report to you if, in our opinion, the Directors’
Report is not consistent with the financial statements,
if the company has not kept proper accounting records,
if we have not received all the information and
explanations we require for our audit, or if information
specified by law regarding directors’ remuneration and
other transactions is not disclosed.
We read other information contained in the Annual
Report and consider whether it is consistent with the
audited financial statements. The other information
comprises only the Financial Highlights, the
Business Strategy, Chairman’s Statement, the
Operational Review, the Directors’ Report and the
Remuneration Report, the Financial Review, the Social
Responsibility Report, Directors and Advisors and the
Corporate Governance Report. We consider the
implications for our report if we become aware of any
apparent misstatements or material inconsistencies
with the financial statements. Our responsibilities do not
extend to any other information.
28

Our report has been prepared pursuant to the
requirements of the Companies Act 1985 and for no
other purpose. No person is entitled to rely on this
report unless such a person is a person entitled to rely
upon this report by virtue of and for the purpose of the
Companies Act 1985 or has been expressly authorised
to do so by our prior written consent. Save as above,
we do not accept responsibility for this report to any
other person or for any other purpose and we hereby
expressly disclaim any and all such liability.
Basis of audit opinion
We conducted our audit in accordance with
International Standards on Auditing (UK and Ireland)
issued by the Auditing Practices Board. An audit includes
examination, on a test basis, of evidence relevant to the
amounts and disclosures in the financial statements.
It also includes an assessment of the significant
estimates and judgments made by the directors in the
preparation of the financial statements, and of
whether the accounting policies are appropriate to
the group’s and company’s circumstances, consistently
applied and adequately disclosed.
Opinion
In our opinion:
• The group financial statements give a true and fair
view, in accordance with IFRSs as adopted by the
European Union, of the state of the group’s affairs as
at 31 December 2005 and of its profit for the year
then ended;
• The parent company financial statements give a true
and fair view, in accordance with IFRSs as adopted
by the European Union as applied in accordance
with the provisions of the Companies Act 1985,
of the state of the company’s affairs as at
December 31, 2005; and
• The financial statements have been properly
prepared in accordance with the Companies Act
1985.
BDO Stoy Hayward LLP
Chartered Accountants and Registered Auditors
London, April 28, 2006
We planned and performed our audit so as to obtain all
the information and explanations which we considered
necessary in order to provide us with sufficient
evidence to give reasonable assurance that the financial
statements are free from material misstatement,
whether caused by fraud or other irregularity or error.
In forming our opinion we also evaluated the overall
adequacy of the presentation of information in the
financial statements.
29

12 FINANCIAL STATEMENTS
Consolidated income statement
31/12/04
Note € '000
31/12/05
€ '000
Sales
1/2
105,198
153,210
Other operating income
3,056
5,053
Total revenues
108,254
158,263
Change in inventories
5,775
2,952
Purchases
(44,792)
(69,066)
Salaries & employee benefits
4
(23,026)
(29,963)
Depreciation & amortisation
9/11
(6,221)
(10,167)
Impairment losses on current assets
3
(766)
(3,117)
Other operating charges
3
(25,605)
(27,425)
Total operating expenses
94,635
136,786
Operating result
13,619
21,477
Finance income
5
545
1,329
Finance cost
5
(3,239)
(4,084)
Share of results of associates
12
81
(269)
Result before tax
11,006
18,453
Taxes
6
(3,492)
(5,594)
Net result
7,514
12,859
Net result - equity interest
7,071
12,424
Net result - minority interest
443
435
Earnings per share - basic (euro cent per share)
7
8.84
13.32
Earnings per share - diluted (euro cent per share)
7
8.84
13.26
30
The notes on pages 43 to 63 are part of the financial statements.

Consolidated balance sheet
31/12/04 31/12/05
Note € '000 € '000
Non current assets
82,190
84,817
Intangible assets
9/10
20,422
25,152
PPE: Property, Plant & Equipment
11
54,364
49,973
Investments in associates
12
2,240
2,171
Receivables
13
2,536
6,497
Deferred tax assets
23
2,628
1,024
Current assets
70,070
108,962
Inventories
14
28,092
32,491
Trade receivables
15
30,330
34,995
Other amounts receivable
15
6,590
11,409
Cash and cash equivalents
17
5,058
30,029
Financial instruments
25
0
38
Total assets
152,260
193,779
Shareholders equity
53,605
95,403
Ordinary shares
18
11,746
15,027
Share premium account
23,558
50,378
Consolidated reserves
18,076
30,604
Other reserves
3,300
3,300
Translation differences
(3,075)
(3,906)
Minority interests
20
604
624
Total equity
54,209
96,027
Non current liabilities
45,595
46,187
Interest bearing loans & borrowings
21
40,567
40,932
Deferred tax liabilities
23
3,356
4,180
Other liabilities
1,672
1,075
Current liabilities
52,456
51,565
Trade payables
24
21,351
21,457
Other current payables
24
24,772
20,715
Current tax liabilities
2,910
4,025
Borrowings
21
1,375
2,848
Provisions
22
2,048
2,190
Financial instruments
25
0
330
Total liabilities and equity
152,260
193,779
The financial statements on were approved by the Board of Directors and authorised for issue on April 28, 2006 and were
signed on its behalf by Jan Smits, CFO. The notes on pages 43 to 63 are part of these financial statements.
31

Company balance sheet
Note
31/12/05
€ '000
Non current assets
Investments
Current assets
Trade receivables
Other amounts receivable
Deferred charges and accruals
Cash and cash equivalents
Total assets
Shareholders equity
Ordinary shares
Share premium account
Retained earnings
Other reserves
Translation differences
Total equity
Current liabilities
Trade payables
Other current payables
Current tax liabilities
Total liabilities and equity
12
15
15
17
40,394
40,394
31,615
851
16,099
127
14,538
72,009
71,361
15,027
50,378
3,518
3,300
(862)
71,361
648
191
184
273
72,009
The financial statements were approved by the Board of Directors and authorised for issue on April 28, 2006, and were signed
on its behalf by Jan Smits, CFO.
32
The notes on pages 43 to 63 are part of these financial statements.

Consolidated cash flow statement
31/12/04
€ '000
31/12/05
€ '000
Cash flow from operating activities
Profit before taxation
Adjustments for:
Impairment losses
Depreciation
Change in provisions
Profit on sale of fixed assets
Share of results of associated undertakings
Net finance charges
Change in trade & other receivables
Change in inventories
Change in trade & other payables
Interest paid
Income taxes paid
Net cash used in operating activities
Cash flow from investing activities
Investment in associates
Purchase of property, plant & equipment
Proceeds from sale of equipment
Purchase of intangible assets
Own production of intangible fixed assets
Acquisitions
Interest received
Net cash used in investing activities
Cash flow from financing activities
Proceeds from the issue of share capital
Proceeds from new leasings
Payment of finance lease liabilities
Dividend paid
Net cash from financing activities
Foreign exchange
Net increase in cash & cash equivalents
Cash and cash equivalents at beginning of period
Cash and cash equivalents at end of period
11,006
6,221
493
(81)
2,694
20,333
(8,657)
(5,163)
10,391
16,904
(2,645)
(653)
13,606
(2,104)
(3,472)
592
(878)
(4,846)
441
260
(10,007)
236
(694)
(193)
(651)
164
2,925
1,916
5,058
18,453
265
10,167
143
(257)
269
2,753
31,793
(13,482)
(4,398)
(4,202)
9,711
(3,792)
(1,975)
3,944
(497)
(7,951)
4,352
(901)
(5,386)
1,329
(9,054)
28,311
6,440
(4,798)
29,953
128
24,971
5,058
30,029
33

Company cash flow statement
Cash flow from operating activities
Profit before taxation
From incorporation to
31/12/05
€ '000
3,737
Adjustments for:
Net interest received
(638)
3,099
Change in trade & other receivables
Change in trade & other payables
(17,509)
429
(13,981)
Income taxes paid
Net cash used in operating activities
(219)
(14,200)
Cash flow from investing activities
Investment in subsidiary undertakings
Interest received
Net cash used in investing activities
(22)
449
427
Cash flow from financing activities
Proceeds from the issue of share capital
Net cash used in financing activities
Net increase in cash & cash equivalents
Cash and cash equivalents at beginning of period
Cash and cash equivalents at end of period
28,311
28,311
14,538
-
14,538
34

Consolidated statement of equity
Ordinary
shares
Share
premium
account
Consolidated
reserves
Translation
differences
Other
reserves
Shareholders
equity
€ '000
€ '000
€ '000
€ '000
€ '000
€ '000
At January 1, 2005
11,746
23,558
18,076
(3,075)
3,300
53,605
New share capital issued
3,281
28,957
32,238
Share issue costs
(2,137)
(2,137)
Result of the year
12,424
12,424
LTIP (1)
104
104
Translation differences
(831)
(831)
At December 31, 2005
15,027
50,378
30,604
(3,906)
3,300
95,403
(1) LTIP: Long Term Incentive plan (see note 19).
The only movement in shareholders’ equity in the year ended December 31, 2004 was the result of the year of € 7,071,000 and
translation differences of € (975,000).
Company statement of equity
Called-up
share capital
Share
premium
account
Other
reserves
Consolidated
reserves
Translation
differences
Total
€ '000
€ '000
€ '000
€ '000
€ '000
€ '000
At January 1, 2004 and 2005
11,746
23,558
3,300
38,604
New shares issued
3,281
28,957
32,238
Share issue costs
(2,137)
(2,137)
Result of the year
3,518
3,518
Translation differences
(862)
(862)
At December 31, 2005
15,027
50,378
3,300
3,518
(862)
71,361
As permitted by s230 of the Companies Act 1985 a separate income statement for Punch Graphix plc has not been presented.
The company’s profit after tax for the year ended December 31, 2005 was €3,518,000.
35

36
Significant accounting policies
Basis of preparation
These financial statements have been prepared in
accordance with International Financial Reporting
Standards (IFRS and IFRIC interpretations) issued by
the International Accounting Standards Board (IASB)
as adopted by the EU and with those parts of the
Companies Act 1985 applicable to companies preparing
their accounts under IFRS.
These are the first financial statements presented by the
group. The transition date for IFRS 1 has been taken as
January 1, 2004. The only exemption taken under IFRS 1
is the transition date for IAS39 and IAS32 which has been
taken as January 1, 2005.
The company was incorporated in the United Kingdom
as Punch Graphix Limited on March 24, 2005 and
re-registered as a public limited company with the
name Punch Graphix plc on April 29, 2005. On April 20,
2005 the company acquired Xeikon International nv
(‘Xeikon’), Strobbe Graphics nv (‘Strobbe’), basysPrint
GmbH (‘basysPrint’), and certain other companies, in
which Punch International nv (‘Punch International’)
had an investment immediately prior to April 20, 2005.
Following the company’s Admission onto AIM on May
26, 2005, its issued share capital was £10,282,922 divided
into 102,829,220 fully paid ordinary shares. This is the first
period that the company has presented consolidated
financial statements.
The company’s controlling interest in its directly held
subsidiaries was acquired through a transaction under
common control, as defined in IFRS 3 Business
Combinations. The directors note that transactions
under common control are outside the scope of IFRS 3
and that there is no guidance elsewhere in IFRS covering
such transactions.
IFRS contain specific guidance to be followed where a
transaction falls outside the scope of IFRS. This guidance
is included at paragraphs 10 to 12 pf IAS 8 Accounting
Policies, Changes in Accounting Estimates and Errors.
This requires, inter alia, that where IFRS does not include
guidance for a particular issue, the directors should also
consider the most recent pronouncements of other
standard setting bodies that use a similar conceptual
framework to develop accounting standards. In this
regard, it is noted that the United States Financial
Accounting Standards Board (FASB) has issued an
accounting standard covering business combinations
(FAS 141) that is similar in a number of respects to IFRS
3. Further, there is currently a major project being run
jointly by the IASB and FASB to converge IFRS and
US GAAP.
In contrast to IFRS 3, FAS 141 does include, as an
Appendix, limited accounting guidance for transactions
under common control which, as with IFRS 3, are outside
the scope of that accounting standard. The guidance
contained in FAS 141 indicates that a form of accounting
that is similar to pooling of interests accounting, which
was previously set out in Accounting Principles Board
(APB) Opinion 16, may be used when accounting for
transactions under common control.
Having considered the requirements of IAS 8, and the
guidance included within FAS 141, it is considered
appropriate to use a form of accounting which is
similar to pooling of interests when dealing with
the transaction in which the company acquired its
controlling interest in its subsidiaries.
In consequence, the Financial Information for Punch
Graphix plc reports the result of operations for the
period as though the acquisition of its controlling
interest through a transaction under common control
had occurred on January 1, 2004. The effects of
intercompany transactions have been eliminated in
determining the results of operations for the period
prior to the acquisition of the controlling interest,
meaning that those results are on substantially the same
basis as the results of operations for the period after the
acquisition of the controlling interest.
Similarly, the consolidated balance sheets and other
financial information have been presented as though
the assets and liabilities of the combining entities had
been transferred on January 1, 2004.
A summary of the more important accounting policies
is set out below. The accounting principles have been
applied consistently for all years presented.
Basis of consolidation
Where the company has the power, either directly or
indirectly, to govern the financial and operating policies
of another entity or business so as to obtain benefits
from its activities, it is classified as a subsidiary. The
consolidated financial statements present the results
of the company and its subsidiaries (“the group”) as if
they formed a single entity. Intercompany transactions
and balances between group companies are therefore
eliminated in full.
Business combinations
The consolidated financial statements incorporate the
results of business combinations using the purchase
method. In the consolidated balance sheet, the
acquiree’s identifiable assets, liabilities and contingent
liabilities are initially recognised at their fair values
at the acquisition date. The results of acquired
operations are included in the consolidated income
statement from the date on which control is obtained.

Goodwill
Goodwill represents the excess of the cost of a business
combination over the interest in the fair value of
identifiable assets, liabilities and contingent liabilities
acquired. Cost comprises the fair values of assets given,
liabilities assumed and equity instruments issued, plus
any direct costs of acquisition.
Goodwill is capitalised as an intangible asset with any
impairment in carrying value being charged to the
income statement.
Where the fair value of identifiable assets, liabilities
and contingent liabilities exceeds the fair value of
consideration paid, the excess is credited in full to the
income statement.
Intangibles
Research and development costs
Expenditure on research activities, undertaken with
the prospect of gaining new scientific or technical
knowledge, is recognised in the income statement as
an expense as incurred. Costs incurred on development
projects (relating to the design and testing of new or
improved products) are recognised as intangible assets
to the extent that such expenditure is expected to
generate future economic benefits and meets the
recognition criteria set out in IAS 38 ‘Intangible Assets’.
Other development expenditures are recognised as
an expense as incurred. Development costs previously
recognised as an expense are not recognised as assets in
a subsequent period. Development costs that have been
capitalised are amortised from the commencement
of the commercial production of the product on a
straight-line basis over the period of its expected benefit.
The amortisation periods adopted do not exceed
five years. The capitalised development costs are assessed
for impairment whenever events or changes in
circumstances indicate that their carrying amount may
not be recoverable.
Computer software development costs
Generally, costs associated with developing or
maintaining computer software programmes are
recognised as an expense as incurred. However,
costs that are directly associated with identifiable
and unique software products controlled by the group
that have probable economic benefits exceeding
the cost beyond one year, are recognised as assets.
Direct costs include staff costs of the software
development team. Computer software costs that
have been capitalised are amortised on a straight-line
basis over the period of their expected useful lives, not
exceeding a period of five years.
Other intangible assets
Expenditure on acquired patents, trademarks and
licences are capitalised and amortised on a straight-line
basis over their useful economic lives, but not exceeding
20 years. Amortisation of intangible assets is included
within depreciation and amortisation expenses in the
income statement.
Impairment of non-financial assets
Impairment tests on goodwill and other intangible
assets with indefinite useful economic lives are
undertaken annually on December 31. Other nonfinancial
assets are reviewed for impairment whenever
events or changes in circumstances indicate that their
carrying amount may not be recoverable. Whenever
the carrying amount of an asset exceeds its recoverable
amount (being the higher of its fair value less cost to
sell and its value in use), an impairment loss is recognised
within other operating charges. The fair value less cost
to sell is the amount obtainable from the sale of an asset
in an arm’s length transaction while value in use is the
present value of estimated future cash flows expected
to arise from the continuing use of an asset and from
its disposal at the end of its useful life. Recoverable
amounts are estimated for individual assets or, if this is
not possible, for the cash generating unit to which the
assets belong. Reversal of impairment losses recognised
in prior years is recorded in income when there is an
indication that the impairment losses recognised for
the assets no longer exist or have decreased. As an
exception, impairment losses recognised for goodwill
are not reversed.
Property, plant and equipment
Items of property, plant and equipment are stated at
purchase price or production cost including directly
attributable costs less accumulated depreciation and
impairment losses. Expenses for the repair of property,
plant and equipment are usually charged as an expense
when incurred. They are, however, capitalised when
they increase the future economic benefits expected to
arise from the item of Property, plant and equipment.
Property, plant and equipment are depreciated on a
straight-line basis over the estimated useful life of the
item. Land is not depreciated. Assets under construction
represent plant and properties under construction and
are stated at cost. This includes cost of construction,
plant and equipment acquired and other direct costs.
Assets under construction are not depreciated until
such time as the relevant assets are available for their
intended use.
37

The estimated useful lives of the various identified asset
categories are as follows:
Buildings
Machinery and equipment
Furniture and fixtures
Other fixed assets
25 to 40 years
3 to 8 years
5 to10 years
3 to 5 years
The depreciation is calculated to write off the carrying
value of items on a straight-line basis starting from the
month of purchase. Where the carrying amount of an
asset is greater than its estimated recoverable amount,
it is written down immediately to its recoverable value.
Government grants
Government grants relating to the purchase of property,
plant and equipment are included in non-current
liabilities as deferred income and are credited to the
income statement on a straight-line basis over the
expected lives of the related assets.
Leases
As lessee
Finance leases
Leases of property, plant and equipment, where the
group substantially has all the risks and rewards of
ownership, are classified as finance leases. Finance leases
are capitalised at the inception of the lease at the lower
of the fair value of the leased property or the present
value of the minimum lease payments. Each lease
payment is allocated between the liability and the
finance charges so as to achieve a constant rate on the
finance balance outstanding. The corresponding rental
obligations, net of finance charges, are included as
borrowing. The interest element of the finance cost is
charged to the income statement over the lease term.
The leased assets are depreciated over their expected
useful lives on a basis consistent with similar owned
property, plant and equipment. If there is no reasonable
certainty that ownership will be acquired by the end of
the lease term, the asset is depreciated over the shorter
of the lease term and its useful life.
the sale occurs.
Operating leases
Assets leased out under operating leases are included
in property, plant and equipment in the balance sheet.
They are depreciated over their expected useful lives
on a basis consistent with similar owned property,
plant and equipment. Rental income (net of any
incentives given to the lessee) is recognised on a
straight-line basis over the lease term or in accordance
with usage as appropriate.
Inventories
Inventories are initially valued at cost, and subsequently
at the lower of cost or net realisable value, fixed according
to the weighted average cost method. Work in progress
and finished goods are valued at direct production cost.
The cost of production comprises the direct cost of
materials, direct manufacturing expenses, appropriate
allocation of material and manufacturing overhead,
and an appropriate share of the depreciation and
write-downs of assets used for production. If the
purchase or production cost is higher than the net
realisable value, inventories are written down to net
realisable value. Net realisable value is the estimated
selling price in the ordinary course of business, less the
estimated costs of completion and selling expenses.
Trade receivables
Trade receivables are carried at original invoice amount
less impairment losses as a result of a past event that occurred
subsequent to the assets’ recognition.
Operating leases
Lease payments under operating leases are recognised
as an expense on a straight-line basis over the lease
term.
38
As lessor
Finance leases
When assets are leased under a finance lease, the present
value of the lease payment is recognised as a receivable.
Financial income is recognised over the term of the
lease using the net investment method, which reflects a
constant periodic rate of return. Profits arising on sales
under finance leases are recognised in the period that

Taxation including deferred tax
Deferred income tax is provided in full using the
balance sheet liability method, on temporary differences
between the carrying amount of assets and liabilities for
financial reporting purposes and the tax bases.
Deferred taxes are not calculated on the following
temporary differences:
• Initial recognition of goodwill;
• Goodwill for which amortisation is not tax
deductible; and
• The initial recognition of assets or liabilities that are
not a business combination and at the time of
the transaction affects neither the accounting nor
taxable profit.
The amount of deferred tax provided is based on the
expected manner of realisation or settlement of the
carrying amount of assets and liabilities, using tax
rates enacted or substantially enacted at the balance
sheet date. A deferred tax asset is recognised only to
the extent that it is probable that future taxable profits
will be available against which the unused tax losses
and credits can be utilised. Deferred tax assets are
reduced to the extent that it is no longer probable
that the related tax benefit will be realised. Deferred tax
balances are not discounted.
Deferred tax assets and liabilities are offset when the
group has a legally enforceable right to offset current
tax assets and liabilities and the deferred tax assets and
liabilities relate to the taxes levied by the same tax
authority on either:
• The same taxable group company; or
• Different group entities which intend either to settle
current tax assets and liabilities on a net basis, or to
realise the assets and settle the liabilities simultaneously,
in each future period in which significant
amounts of deferred tax assets or liabilities are
expected to be settled or recovered.
Investments in Associates
An associate is an entity over which the Group is in a
position to exercise significant influence, but not control
or joint control, through participation (but not control
of ) in the financial and operating policy decisions of
the investee.
The results and assets and liabilities of associates are
incorporated in these financial statements using the
equity method of accounting except when classified
as held for sale. Investments in associates are carried
in the balance sheet at cost as adjusted by postacquisition
changes in the group’s share of the net
assets of the associate, less any impairment in the value
of individual investments. Losses of the associates in
excess of the group’s interest in those associates are not
recognised unless there is an obligation to make good
those losses.
Any excess of the cost of acquisition over the group’s
share of the fair values of the identifiable net assets of
the associate at the date of acquisition is recognised
as goodwill and included in the carrying value of the
investment. Any deficiency of the cost of acquisition
below the group’s share of the fair values of the identifiable
net assets of the associate at the date of acquisition
(i.e. discount on acquisition) is credited in profit and loss
in the period of acquisition.
Where a group company transacts with an associate of
the group, profits and losses are eliminated to the extent
of the group’s interest in the relevant associate. Losses
may provide evidence of an impairment of the asset
transferred in which case appropriate provision is made
for impairment.
Cash and cash equivalents
For the purposes of the cash flow statement, cash and
cash equivalents comprise cash on hand, deposits
held on call with banks, other short-term highly liquid
investments, and bank overdrafts. In the balance
sheet, bank overdrafts are included in borrowings in
current liabilities.
Share capital and share premium
External costs directly attributable to the issue of
new shares, other than on a business combination,
are shown as a deduction, net of tax, in equity from
the proceeds. Share issue costs incurred directly in
connection with a business combination are included in
the cost of acquisition.
39

Dividends on ordinary shares are recognised in equity
in the period in which they are declared. Where
the company or its subsidiaries purchase its own or
its parent company’s equity share capital, the
consideration paid, including any attributable
transaction costs, net of income taxes, is deducted from
the total shareholders’ equity as treasury shares until
they are cancelled. Where such shares are subsequently
sold or reissued, any consideration received is included
in shareholders’ equity.
Provisions
Provisions are recognised when the group has a present
legal or constructive obligation as a result of past
events, it is probable that an outflow of resources will be
required to settle the obligation, and a reliable estimate
of the amount can be made.
Warranty
The operating group recognises the estimated liability
to repair or replace its products still under warranty
at the balance sheet date. This provision is calculated
based on the past history of the level of repairs and
replacements or on a basis of best estimates.
Onerous contracts
The operating group recognises a provision for onerous
contracts when the expected benefits to be derived
from a contract are less than the unavoidable costs of
meeting the obligations under the contract.
Restructuring
Restructuring provisions mainly comprise lease termination
penalties and employee termination payments, and
are recognised in the period in which the group becomes
legally or constructively committed to payment.
A constructive obligation to restructure arises only when
an entity:
• has a detailed formal plan for restructuring; and
• has raised a valid expectation in those affected that
it will carry out the restructuring by starting to
implement that plan or announcing its main features
to those affected by it.
Capitalisation of borrowing costs and interest
Borrowings are recognised initially at the proceeds
received, net of transaction costs incurred. In subsequent
periods, borrowings are stated at amortised cost using
the effective yield method; any difference between
proceeds (net of transaction costs) and the redemption
value is recognised in the income statement over the
period of the borrowing. When borrowings are
repurchased or settled before maturity, any difference
between the amount repaid and the carrying amount is
recognised immediately in the income statement.
Revenue recognition
Revenue is recognised when significant risks and rewards
have been transferred to the buyer, when the group no
longer retains significant management involvement in
the sold item, when it is probable that the economic
benefits associated with a transaction will flow to the
enterprise, when the amount of the revenue can be
measured reliably and when the costs incurred can be
reliably measured.
Sales are recognised net of sales tax and discounts.
Revenue from rendering services is recognised by
reference to the stage of completion when this can
be measured by reference to labour hours incurred
prior to the year end as a percentage of total estimated
labour hours for the contract. When the outcome of the
transaction involving the rendering of services cannot
be estimated reliably, revenue is recognised only to the
extent of the expenses recognised that are recoverable.
No revenue is recognised on barter transactions involving
the exchange of similar goods and services. Interest
is recognised on a time proportion basis that reflects
the effective yield of the asset. Royalties are recognised
on an accrual basis in accordance with the terms of
agreements. Dividends are recognised when the
shareholders’ right to receive payment is established.
Employee benefit costs
Employees benefits are generally paid in cash and
expensed to the income statement.
Costs relating to the ongoing activities of the group are
not provided for in advance. Any fixed assets that are no
longer required for their original use are transferred to
current assets and carried at the lower of the carrying
amount or the fair value less costs to sell.
40

Foreign currency
Transactions entered into by group entities in a currency
other than the currency of the primary economic
environment in which it operates (the “functional
currency”) are recorded at the rates ruling when the
transactions occur. Foreign currency monetary assets
and liabilities are translated at the rates ruling at the
balance sheet date. Exchange differences arising on the
retranslation of unsettled monetary assets and liabilities
are similarly recognised immediately in the income
statement, except for foreign currency borrowings as a
hedge of a net investment in a foreign operation.
On consolidation, the results of overseas operations are
translated into euros at rates approximating to those
ruling when the transactions took place. All assets and
liabilities of overseas operations, including goodwill
arising on the acquisition of those operations, are
translated at the rate ruling at the balance sheet
date. Exchange differences arising on translating the
opening net assets at opening rate and the results of
overseas operations at actual rate are recognised directly
in equity (the “foreign exchange reserve”). The company
balance sheet has been translated at a rate of 0,6843€/£.
On disposal of a foreign operation, the cumulative
exchange differences recognised in the foreign
exchange reserve relating to that operation up to the
date of disposal are transferred to the income statement
as part of the profit or loss on disposal.
Financial instruments
Financial assets
The group classifies its financial assets into one of the
following categories, depending on the purpose for
which the asset was acquired. Other than financial
assets in a qualifying hedging relationship (see below), the
group’s accounting policy for each category is as follows:
Fair value through profit or loss
This category comprises only in-the-money derivatives.
They are carried in the balance sheet at fair value
with changes in fair value recognised in the income
statement. The group does not have any assets held for
trading nor does it voluntarily classify any financial assets
as being at fair value through profit or loss.
Loans and receivables
These assets are non-derivative financial assets with fixed
or determinable payments that are not quoted in an
active market. They arise principally through the
provision of goods and services to customers (trade
debtors), but also incorporate other types of contractual
monetary asset. They are carried at cost less any
provision for impairment.
Held-to-maturity investments
These assets are non-derivative financial assets with
fixed or determinable payments and fixed maturities
that the group’s management has the positive
intention and ability to hold to maturity. These assets are
measured at amortised cost, with changes through the
income statement.
Available-for-sale
Non-derivative financial assets not included in the
above categories are classified as available-for-sale and
comprise the group’s strategic investments in entities
not qualifying as subsidiaries, associates or jointly
controlled entities. They are carried at fair value with
changes in fair value recognised directly in equity. Where
a decline in the fair value of an available-for-sale financial
asset constitutes objective evidence of impairment,
the amount of the loss is removed from equity and
recognised in the income statement.
41

Financial liabilities
The group classifies its financial liabilities into one of two
categories, depending on the purpose for which the
liability was acquired. Other than financial liabilities in a
qualifying hedging relationship, the group’s accounting
policy for each category is as follows:
Fair value through profit or loss
This category comprises only out-of-the-money derivatives.They
are carried in the balance sheet at fair
value with changes in fair value recognised in the
income statement.
Other financial liabilities
Other financial liabilities include the following items:
Trade payables and other short-term monetary
liabilities, which are recognised at amortised cost. Bank
borrowings drawn by the group are initially recognised
at the amount advanced net of any transaction costs
directly attributable to the issue of the instrument.
Such interest bearing liabilities are subsequently
measured at amortised cost using the effective
interest rate method, which ensures that any interest
expense over the period to repayment is at a constant
rate on the balance of the liability carried in the balance
sheet. “Interest expense” in this context includes initial
transaction costs and premiums payable on redemption,
as well as any interest or coupon payable while the
liability is outstanding.
Share-based payments
Where share options are awarded to employees, the fair
value of the options at the date of grant is charged to the
income statement over the vesting period. Non-market
vesting conditions are taken into account by adjusting
the number of equity instruments expected to vest at
each balance sheet so that, ultimately, the cumulative
amount recognised over the vesting period is based
on the number of options that eventually vest. Market
vesting conditions are factored into the fair value
of the options granted. As long as all other vesting
conditions are satisfied, a charge is made irrespective of
whether the market vesting conditions are satisfied. The
cumulative expense is not adjusted for failure to achieve
a market vesting condition.
Where the terms and conditions of options are modified
before they vest, the increase in the fair value of the
options, measured immediately before and after the
modification, is also charged to the income statement
over the remaining vesting period.
On December 31, 2005 the group did not apply the
principles of hedge accounting.
42

NOTES TO THE ACCOUNTS
1A. Business segment reporting
The group’s operating businesses are organised and managed separately according to the nature of products and services
provided, with each segment representing a distinct business line that offers different products and serves different markets.
Unallocated costs, mainly represent corporate expenses. Segment assets consist primarily of property, plant and equipment,
intangible assets, inventories, receivables and operating cash and exclude financial assets. Segment liabilities comprise operating
liabilities and corporate borrowings. Capital expenditures comprise additions to property, plant and equipment (see note 11) and
intangible assets (see note 9), including additions resulting from acquisitions. For the primary reporting format, the two business
segments are CtP (Computer to Plate) and DP (Digital Printing).
Business segment reporting
31/12/04 31/12/05 31/12/04 31/12/05 31/12/04 31/12/05 31/12/04 31/12/05
CtP CtP DP DP Other Other Total Total
€ '000 € '000 € '000 € '000 € '000 € '000 € '000 € '000
Total revenues
27,061
49,876
78,137
103,334
105,198
153,210
Other operating income
1,162
6,356
1,894
(1,303)
3,056
5,053
Total revenues
28,223
56,232
80,031
102,031
108,254
158,263
Operating result
4,660
8,883
9,084
12,594
(125)
13,619
21,477
Finance income / (cost)
(2,694)
(2,755)
(2,694)
(2,755)
share of results of associates
81
(269)
81
(269)
Result before tax
11,006
18,453
Taxes
(3,492)
(5,594)
Net result
7,514
12,859
Net result - minority interest
443
435
443
435
Total assets
28,608
31,579
103,379
107,272
20,273
54,928
152,260
193,779
Total liabilities
9,989
4,723
32,803
29,395
58,558
63,634
101,350
97,752
Total capital expenditure
819
2,662
6,655
13,925
7,474
16,587
Total depreciation and amortisation
797
1,437
5,309
8,730
115
6,221
10,167
Total impairment losses on current assets
0
(392)
(766)
(2,725)
(766)
(3,117)
Total other non cash expenses
(1,468)
(2,397)
(1,751)
(367)
(3,219)
(2,764)
Investment in associates
2,240
2,171
2,240
2,171
1B. Revenue
An analysis of the revenue is as follows :
Sale of parts and options
Sale of consumables
Sale of printing systems
Revenue from service arrangements
Equipment leasing income
Other operating income
31/12/04
9,992
40,040
37,965
9,926
7,275
105,198
3,056
31/12/05
9,588
41,081
86,021
10,353
6,167
153,210
5,053
108,254
158,263
43

2. Geographical segment reporting
The group’s manufacturing facilities are based in Europe. The group conducts its selling activities on a global basis through sales
companies. The following table provides an analysis of the group’s sales by geographic market irrespective of the origin of the
goods and services.
31/12/04 31/12/05 31/12/04 31/12/05 31/12/04 31/12/05 31/12/04 31/12/05
Europe Europe US US Asia Asia IFRS IFRS
€ '000
€ '000
€ '000
€ '000
€ '000
€ '000
€ '000
€ '000
Total revenues
79,980
102,576
22,130
42,594
3,088
8,040
105,198
153.210
Segment assets
124,987
158,253
11,671
16,806
15,602
18,720
152,260
193,779
Total capex
6,849
13,371
165
3,191
460
25
7,474
16,587
3. Other operating charges
31/12/04
31/12/05
€ '000
€ '000
Rental, leasing and maintenance of land, property and equipment
Utility and service costs of land, property and equipment
Insurance costs
Research and development costs
Sales, marketing and representation costs
Other fees and expenses
Foreign exchange gain/loss
3,138
6,085
597
7,023
6,264
2,498
1,538
4,976
7,180
742
6,107
7,261
1,159
(215)
BDO Stoy Hayward LLP audit renumeration: €139,000 for which €139,000 was for Punch Graphix plc. BDO Stoy Hayward
LLP and affiliates non-audit services including tax advice, corporate finance services: €460,000 (2004: €0)
of which €460,000 for Punch Graphix plc. Of the total amount of non-audit fees, €308,000 were incurred in connection with the
issue of share capital and, accordingly, the amount has been offset against the share premium account.
The total group audit fee payable to BDO Stoy Hayward LLP and other member firms amounted to €209,000 (2004: € nil)
Impairment losses on current assets comprice €1,472,000 (2004: €470,000) in respect of inventory and €1,381,000
(2004 : €296,000) in respect of trade receivables.
44

4. Personnel costs
Employees and directors
31/12/04
31/12/05
Staff costs of the year
Wages and salaries
Social security costs
Other staff costs
Pension costs
Share based payment - equity settled
Salaries & employee benefits
Average number of people employed by business unit
Digital Printing (DP)
Computer to Plate (CtP)
Other
Average number of people employed by business unit
€ '000
17,379
4,803
145
699
23,026
312
203
515
€ '000
23,412
5,289
323
835
104
29,963
403
235
3
641
Aggregate emoluments paid to directors during the period amounted to €672,000. Emoluments comprise short-term benefits
only. The aggregate emoluments of the highest paid director was €271,375 and the highest paid director received 157,706
ordinary shares under the long term incentive plan with a total value of €138,000.
In addition, €104,000 was expensed during the year in respect of the LTIP scheme (2004: €0). Directors received 732,456 shares
under the LTIP with a value of €520,000. The company had no employees.
5. Financial income and charges
Net finance cost
31/12/04
31/12/05
Interests on bank borrowings
Interest on finance leases
Other financial expenses
Finance cost
Interests on bank accounts
Interest income from finance leases
Other financial income
Finance income
Net finance cost
€ '000
(401)
(2,505)
(333)
(3,239)
177
100
268
545
(2,694)
€ '000
(834)
(2,247)
(1,003)
(4,084)
782
285
262
1,329
(2,755)
45

6. Income taxes
31/12/04
Analysis of charge arising in year € '000
31/12/05
€ '000
UK (at 30%)
Belgium (at 34%)
Other (between 22% and 40%)
Total current tax
Deferred tax
Taxation
153
621
221
995
2,497
3,492
518
1,876
708
3,102
2,492
5,594
31/12/04
31/12/05
Current tax charged to P&L € '000
€ '000
Corporation tax
Total current tax liabilities
995
995
3,102
3,102
31/12/04
31/12/05
Tax in profit & loss account € '000
€ '000
Current tax
995
3,102
Deferred tax
2,497
2,492
Taxes
3,492
5,594
Reconciliation of tax charge
Result before tax
11,006
18,721
Income tax using the Belgian tax rate
3,742
34%
6,365
34%
Tax effect of non deductable expenses
314
3%
490
3%
Tax effect of tax exempt revenues
(276)
(3%)
(116)
(1%)
Tax effect of unrecognised tax losses
(280)
(3%)
(783)
(4%)
Under/over-provided in prior years
15
(6)
Effect of tax rates in foreign jurisdictions
(44)
(286)
(2%)
Other tax effects
21
(70)
Total tax reconciliation
3,492
32%
5,594
30%
46

7. Earnings per share
31/12/04
31/12/05
Profit for the year (€ '000)
Average number of shares
Shares issued under LTIP - number
Average number of shares - diluted
EPS (euro cent per share)
EPS - diluted (euro cent per share)
7,071
80,000,000
80,000,000
8,84
8,84
12,424
93,258,058
444,472
93,702,530
13,32
13,26
The shares used in the EPS calculation from January 1, 2004, to the date of the admission to AIM in May 2005 of 80 million shares
represent the shares issued both on the company’s incorporation and to acquire the company’s subsidiary undertakings from
Punch International nv.
8. Dividends
On March 20, 2006 the Board proposed a final dividend payment of 2.35 euro cent per share, totalling €2,416,000, for the year
ended December 31, 2005. This dividend has not been accrued for in these financial statements.
9. Intangible assets
Development costs
Software licenses
Goodwill
Intangibles
Acquisition value € '000
€ '000
€ '000
€ '000
At January 1, 2005
10,013
1,155
13,106
24,274
Additions - acquisitions
5,433
178
2,011
7,622
Additions - internally generated
996
996
Disposals
(60)
(248)
(308)
Transfers
(319)
319
Currency translation adjustments
33
33
At December 31, 2005
15,386
1,762
15,469
32,617
Amortisation
At January 1, 2005
(969)
(577)
(2,306)
(3,852)
Charge for the year
(3,143)
(574)
(114)
(3,831)
Disposals
17
206
0
223
Other movements
17
(17)
Currency translation adjustments
(4)
(1)
(5)
At December 31, 2005
(4,095)
(932)
(2,438)
(7,465)
Net book value
At January 1, 2005
9,044
578
10,800
20,422
At December 31, 2005
11,291
830
13,031
25,152
Capitalised development costs principally comprise internally generated expenditure on major projects where it is reasonably
anticipated that the costs will generate future economic benefits. All amortisation charges have been determined in accordance
with the accounting policies described on page 37.
47

The movement table of 2004 is as follows :
Development costs
Software licenses
Goodwill
Intangibles
Acquisition value € '000
€ '000
€ '000
€ '000
At January 1, 2004
5,167
981
10,163
16,311
Additions - acquisitions
199
2,943
3,142
Additions - internally generated
4,846
4,846
Currency translation adjustments
(25)
At December 31, 2004
10,013
1,155
13,106
24,274
Amortisation
At January 1, 2004
(340)
(1,809)
(2,149)
Charge for the year
(907)
(241)
(497)
(1,645)
Disposals
22
22
Currency translation adjustments
(62)
(19)
1
(80)
At December 31, 2004
(969)
(577)
(2,306)
(3,852)
10. Goodwill
At December 31, 2005, goodwill can be allocated to the group's business segments as follows:
CtP
Digital Printing
Other
Total
31/12/05
€ '000
9,699
3,317
15
13,031
Management have assessed the carrying value of this goodwill on a value in use basis, using cash flow projections from
formally approved budgets covering a five year period to 2010. The discount rate applied to the cash flow projections is the
weighted average cost of capital. The projected gross profit margin is a key assumption and is based on the management’s past
experience. Forecast profit margins have been set in a conservative manner. The impairment test demonstrated that no loss
should be recognised.
48

11. Property plant & equipment
Acquistion values
Land &
buildings
€ '000
Machinery
& equipment
€ '000
Furniture
& fixtures
€ '000
Other fixed
assets
€ '000
PPE
€ '000
At January 1, 2005
47,932
15,811
1,989
4,046
69,778
Additions
172
5,821
487
1,488
7,968
Sales and disposals
(3,764)
(579)
(1,550)
(5,893)
Other movements
211
648
1
(1,026)
(166)
Currency translation adjustments
16
205
56
(3)
274
At December 31, 2005
44,567
21,906
2,533
2,955
71,961
Depreciation
At January 1, 2005
(3,911)
(10,008)
(1,251)
(244)
(15,414)
Disposals
355
355
Charge for the year
(1,345)
(4,290)
(366)
(335)
(6,336)
Other movements
(30)
(263)
(248)
(541)
Currency translation adjustments
(5)
(3)
(44)
(52)
At December 31, 2005
(4,936)
(14,564)
(1,661)
(827)
(21,988)
Net book value
At January 1, 2005
44,021
5,803
738
3,802
54,364
At December 31, 2005
39,631
7,342
872
2,128
49,973
The movement table of 2004 is as follows:
At January 1, 2004
43,735
12,864
2,187
1,798
60,584
Acquisitions
3,245
714
51
4,010
Additions
1,123
2,933
511
2,224
6,791
Sales and disposals
(171)
(684)
(544)
(28)
(1,427)
Currency translation adjustments
(16)
(165)
1
(180)
At December 31, 2004
47,932
15,811
1,989
4,046
69,778
Depreciation
At January 1, 2004
(1,850)
(7,997)
(1,451)
(13)
(11,311)
Disposals
264
502
766
Charge for the year
(2,061)
(1,936)
(348)
(231)
(4,576)
Currency translation adjustments
(339)
46
(293)
At December 31, 2004
(3,911)
(10,008)
(1,251)
(244)
(15,414)
Assets held under finance lease can be analysed as follows:
Net book value
2004
€ '000
2005
€ '000
Land & buildings
38,027
33,774
Machinery & equipment
614
38,641
868
34,642
49

12. Fixed assets investments
Interests in associated undertakings
At January 1
- Net assets excluding goodwill
- Goodwill
Share of profits retained
Additions
Impairments
At December 31
- Net assets excluding goodwill
- Goodwill
Total assets
Total liabilities
Revenue
Profit after tax
31/12/04
€ ‘000
81
2,159
2,240
1,150
1,090
2,240
15,383
10,814
12,124
322
31/12/05
€ ‘000
1,150
1,090
2,240
(269)
472
(272)
2,171
1,081
1,090
2,171
20,371
14,744
9,508
(1,355)
Xeikon Shenzhen Digital Printing Equipment Ltd. was founded in August 2005 in cooperation with Shenzhen Zhongsheng
Electronic Stock Co., Ltd. The total capital of the company amounted to €1,000,000 of which €472,000 was contributed
by Punch Graphix Hong Kong Ltd. Details of investments in associates are disclosed in note 29. During the year ended
December 31, 2005, the Company impaired its investment in Xeramics nv by €95,000 and its investment in Stora Enso Digital
Solutions nv by €170,000.
In 2005, the company acquired for €40,394,000 new investments in subsidiairies
13. Non current receivables
Finance lease receivables (see note 16)
Other financial assets
Receivables
31/12/04
€ '000
2,320
216
2,536
31/12/05
€ '000
5,963
534
6,497
Other financial assets comprise principally deposits with the Belgian social security authorities.
50

14. Inventories
Raw materials & components
Work in progress
Finished goods
Inventories
31/12/04
€ '000
13,161
2,059
12,872
28,092
31/12/05
€ '000
15,570
2,387
14,534
32,491
During the year an impairment loss of €1,472,000 (2004: €470,000) was recognised in the income statement following the
Director’s assessment of the carrying value of the inventory.
15. Trade and other receivables
Trade debtors excluding related parties
Less provision for impairment of receivables
Trade debtors to related parties (see note 28)
Finance lease receivables
Advances received
Trade debtors net
Other amounts receivable
Other amounts receivable from related parties (see note 28)
Deferred charges and accruals
Total other receivables
Total trade and other receivables
31/12/04
€ '000
26,938
(718)
1,131
1,147
1,832
30,330
1,247
4,471
872
6,590
36,920
31/12/05
€ '000
32,695
(1,387)
1,891
1,632
164
34,995
4,347
6,044
1,018
11,409
46,404
Related parties consist of members of the Punch International group, Linomedia, Xeramics and Stora Enso Digital Solutions.
The amounts in the balance sheet are net of doubtful debts, estimated by the management, based on prior experience and
assessment of the current economic environment. In 2005, the average period of credit taken in respect of trade receivables
was 73 days. Credit risk is primarily attributable to the group’s trade and finance lease receivables. The group has no significant
concentration of credit risk, with exposure spread over a large numbers of counterparties and customers.
The trade and other amounts receivable in the company’s balance sheet concerns mainly subsidiary undertakings.
51

16. Finance lease receivables
Minimum lease payments
Present value of minimum lease payments
31/12/04 31/12/05 31/12/04 31/12/05
€ '000
€ '000
€ '000
€ '000
Within one year
1,318
1,972
1,147
1,632
Second to fifth year
2,407
6,532
2,252
5,963
After five years
126
68
3,851
8,504
3,467
7,595
Finance charges
384
909
3,467
7,595
Current finance lease receivables
1,632
Non current finance lease receivables
5,963
Total
7,595
The group enters into finance lease arrangements in respect of certain of its print systems. The average term of finance leases
entered into is five years. The interest rate inherent in the leases is fixed at the contracts date for all of the lease term. The average
effective interest rate contracted at December 31, 2005 approximates to 6,5 per cent.
Future finance charges falling due within one year at 31 December 2005 were €340,000 (2004: €171,000), within the second to
fifth year were €569,000 (2004: €155,000) and after five years were €nil (2004: €58,000).
17. Cash and cash equivalents
Short term bank deposits
31/12/04 31/12/05
€ '000
€ '000
957
11,026
Cash at bank and in hand
Cash and cash equivalents
4,101
5,058
19,003
30,029
At December 31, 2005 the company had €14,538,000 held in short term bank deposits. The weighted average effective interest
rate on short-term bank deposits variates between 2 and 4%. These deposits have an average maturity date of 7 days.
52

18. Share capital
Called-up share capital
2005
€ '000
Authorised
150,000,000 shares of 10p each
21,920
Issued and fully paid
102,829,220 ordinary shares of 10p each
15,027
Movement in share capital
Date
Transaction
N o shares
Capital
24/03/05
Incorporation
2
0
20/04/05
Acquisition of investments
79,999,998
11,691
26/05/05
New shares issued at Admission to AIM (1)
21,027,551
3,073
26/05/05
New shares issued to acquire minorities (2)
1,069,213
156
26/05/05
New shares issued pursuant to the LTIP (3)
732,456
107
Total
102,829,220
15,027
(1) On admission to AIM the company raised €28,311,000 in cash after share issue costs of €2,137,000.
(2) The Company entered into agreements with minorities shareholders of Punch Graphix France and Punch Graphix (UK) Ltd.
to acquire outstanding minorities at admission.
(3) The Company granted ordinary shares to key senior management, including Executive Directors, of the group in the
framework of the long term incentive plan (LTIP) (see note 19).
53

19. Share based payment
At January 1, 2005
Granted during the year
Forfeited during the year
At December 31, 2005
2005
Number of shares
732,456
(138,430)
594,026
No shares were exercisable at the end of the year. The Long Term Incentive Plan (“LTIP”) is intended to offer an effective
incentive over the longer term (3 years) to executive directors and certain other senior executives. Advice on the scheme
was taken from Allen & Overy LLP and Altium Capital Limited, prior to the AIM launch and is detailed in the launch data. The
LTIP plan was adopted by the Company on April 28, 2005. The LTIP plan allows the Board to grant awards of shares in the
company to employees of the group of Punch Graphix companies or to service companies, which the Board determines to be
eligible for such grant. The total number of new ordinary shares, which may be issued may not exceed, when aggregated
with ordinary shares issued pursuant to the LTIP in the previous 10 years, five percent of the total share capital of the
company. A participant receiving an award under the LTIP will have full legal and beneficial ownership of the ordinary shares
from the date of grant, subject to certain restrictions. Participants will have voting rights and are entitled to dividends and other
distributions in relation to these ordinary shares. The ordinary shares of an award, may not be disposed of before the end of
the vesting period, which is for the current awards granted, 3 years from the date of grant. The awards granted are subject
to a minimum of the earning per share per annum and to other preformance conditions, which are linked to the growth and
the performance of the company in relation to the AIM UK 50 and to a peer group of companies. If a participant, who is an
employee ceases to be in employment within the group of Punch Graphix companies, due to retirement, disability, illness,
injury, redundancy or as a result of the sale of the business or subsidiary, by which the participant is employed, the award will
continue to vest. If employment ceases for other reasons, the award will be forfeited. If the participant, who is an employee,
dies, the award will vest immediately. If a participant which is a servicecompany ceases to provide services to the Company or a
subsidiary, the award will be forfeited, unless the Board determines otherwise. On the lapse of an award the ordinary shares
subject to an award will be transferred to a third party specified by the Company, unless the participant transfers to the Company
a cash amount equal to the market value of such number of ordinary shares. The weighted average fair value of each share
award granted during the year was €0,87. This fair value has been based upon the IPO placing price taken into consideration a
discount for the applicable market conditions of the LTIP. An amount of €104,000 has been recognised as an expense in the year
in respect of the LTIP. This amount was calculated using the Black-Scholes model with following assumptions :
Current share price (in €)
Strike price (in €)
Risk free rate
Volatility
Dividend yield
Expected option life (years)
1.88
1.42
3.26%
50.10%
2%
3
54

20. Minority Interest
At January 1, 2005
Acquisitions
Share of profit
Exchange adjustments
At December 31, 2005
€ ‘000
604
(383)
435
(32)
624
On admission to AIM, the group acquired the minority interest of Punch Graphix France and Punch Graphix (UK) Ltd. ( see note 18).
55

21. Borrowings
Loans & borrowings
Leasings
debts
Total non
current
borrowings
Leasing
debts
Bank
debts and
overdrafts
Total current
borrowings
Total
Movements in the year € ‘000 € ‘000
€ ‘000 € ‘000 € ‘000 € ‘000
At January 1, 2005
40,567 40,567
703
672 1,375
41,942
New debts
6,440
6,440
64
64
6,504
Repayments
(3,741)
(3,741)
(707)
(350)
(1,057)
(4,798)
Other movements
(2,429)
(2,429)
2,429
2,429
Currency translation adjustment
95
95
37
37
132
At December 31, 2005
40,932
40,932
2,526
322
2,848
43,780
Analysed as:
At January 1, 2004
Within 1 year
703
672
1,375
1,375
Between 2 and 5 years
5,020
5,020
5,020
More than 5 years
35,547
35,547
35,547
At December 31, 2004
40,567
40,567
703
672
1,375
41,942
Within 1 year
2,526
322
2,848
2,848
Between 2 and 5 years
9,709
9,709
9,709
More than 5 years
31,223
31,223
31,223
At December 31, 2005
40,932
40,932
2,526
322
2,848
43,780
The minimum lease payments under finance leases fall due as follows:
31/12/04 31/12/05
€ ‘000 € ‘000
Not later than one year
Later than one year but not more than five years
More than five years
Finance charge
3,161
12,662
61,781
77,604
36,334
41,270
3,003
14,671
49,635
67,309
23,851
43,458
Future finance charges falling due within one year at 31 December 2005 were €477,000 (2004: €2,458,000), within the second to fifth
year were €4,962,000 (2004: €7,642,000) and after five years were €18,412,000 (2004: €26,234,000).
The Group has entered into finance leases for periods ranging from 4 to 40 years. The interest rate inherent in the leases is fixed at
the contract date for all of the lease term. The average effective interest rate contracted approximates to 6,25 per cent. All leases are
on a fixed repayment basis and no arrangements have been entered into for contingent rents. Obligations under finance leases are
secured by the lessor’s charge over the leased assets.
56

At December 31, 2004
882
66
13,465
1
50
2,196
16,660
22. Provisions
Pensions
Warranty
Other
Total
Current
€ ‘000
€ ‘000
€ ‘000
€ ‘000
At January 1, 2005
295
780
973
2,048
Charged to income statement - expensed
415
415
Charged to income statement - utilised
(97)
(184)
(281)
Currency translation adjustment
3
5
8
At December 31,2005
201
1,195
794
2,190
The warranty provision represents managements’ best estimate of the group’s liabilities under 12 month warranties granted on sale
of print systems based on past experience. The pension provision principally relates to the group’s obligation in connection with
certain early-retirement arrangements.
23. Deferred taxes
Deferred tax is calculated in full on temporary differences under the liability method using the local tax rate applicable in each
country. Deferred tax assets have been recognised in full on taxable losses as realisation of the tax benefit from these losses is
probable. The movements in gross deferred tax assets and liabilities (prior to the offsetting of balances within the same jurisdiction
as permitted by IAS12) during the period are shown below:
Deferred tax liabilities
Depreciation
& impairment
Provisions
Leasing
Intangibles
Other
Total
€ '000
€ '000
€ '000 € '000
€ '000
€ '000
At January 1, 2004
502
37
13,658
1,708
430
16,335
Charged to income statement
373
(5)
(292)
1,347
(330)
1,093
Exchange differences
(40)
(40)
At December 31, 2004
875
32
13,366
3,055
60
17,388
Charged to income statement
(311)
41
(2,181)
775
2,766
1,090
Exchange differences
25
25
At December 31, 2005
564
73
11,185
3,830
2,851
18,503
Deferred tax assets
Depreciation
& value reductions
€ '000
Provisions
€ '000
Leasing
€ '000
Intangibles
Other
€ '000 € '000
Tax losses
€ '000
Total
€ '000
57
At January 1, 2004
797
44
13,515
1
76
3,816
18,249
Charged to income statement
208
24
(50)
(23)
(1,563)
(1,404)
Exchange differences
(123)
(2)
(3)
(57)
(185)

Deferred tax assets
Depreciation
& value reductions
€ '000
Provisions
€ '000
Leasing
€ '000
Intangibles
Other
€ '000 € '000
Tax losses
€ '000
Total
€ '000
At January 1, 2004
797
44
13,515
1
76
3,816
18,249
Charged to income statement
208
24
(50)
(23)
(1,563)
(1,404)
Exchange differences
(123)
(2)
(3)
(57)
(185)
At December 31, 2004
882
66
13,465
1
50
2,196
16,660
Charged to income statement
(274)
12
(1,883)
(1)
2,258
(1,514)
(1,402)
Exchange differences
(2)
103
(12)
89
At December 31, 2005
608
76
11,582
2,411
670
15,347
Deferred taxes have been recognised in the balance sheet as follows :
Assets
Liabilities
Total
31/12/04
€ '000
2,628
(3,356)
728
31/12/05
€ '000
1,024
(4,180)
3,156
No deferred tax has been provided on the unremitted earnings on overseas subsidiary and associated undertakings.
Deferred tax assets and liabilities are only offset where there is a legally enforcable right of offset and there is an intention to
settle the balance net. Deferred tax assets have not been recognised in respect of tax losses when their recoverability is not
considered probable.
24. Trade and other payables
Trade payables (excluding related parties)
Trade payables to related parties (see note 28)
Total trade payables
Other tax and social security payables
Advances received
Other debts
Other debts to related parties (see note 28)
Accruals and deferred income
Total other payables
31/12/04
€ '000
18,765
2,586
21,351
3,582
1,585
5,868
7,135
6,602
24,772
31/12/05
€ '000
20,413
1,044
21,457
4,442
924
7,856
7,493
20,715
58

25. Financial instruments
(i) Financial risk factors
The Group seeks to minimise potential adverse effects on the financial performance of their local business, however,
fluctuations in market prices, foreign currency exchange rates on sales and purchases or inter-company loans are inherent
risks in the performance of the business. The Group uses derivative financial instruments to hedge its exposure arising from
its operational, financing and investment activities. The net exposure is managed on a central basis in accordance with the
principles laid down by the directors. As a policy, the Group does not engage in speculative or leveraged transactions,
nor does it hold or issue financial instruments for trading purposes.
(ii) Foreign exchange risk
Due to the international nature the Group’s business it is exposed to different foreign exchange risks arising from various
currency exposures primarily with respect to the $US and £UK. Companies in the Group use forward contracts or
other instruments, concluded with local banks to hedge their exposure to foreign currency risks in their local reporting
currency. The Groups financial liabilities and assets can be analysed by currency as follows :
Financial assets (€’000)
Finance leases
Trade & other receivables
Financial assets (€’000)
Finance leases
Trade Financial & other liabilities receivables (€’000)
Finance leases
Borrowings
Trade Financial & other liabilities payables(€’000)
Finance leases
€
5,923
25,248
31,171 €
5,923
25,248
€
31,171 43,458
22,533 €
65,991 43,458
£
216
1,496
1,712 £
216
1,496
£
1,712
630 £
630
10,615 $ CAD 326 1,139 SEK JPY 425 45,388 Total
1,456
9,159
326 1,139
425 37,793
$ CAD SEK JPY Total
10,615
$ CAD SEK JPY Total
326
1,139
425
7,595
45,388 43,458
17,045 $ CAD 23 SEK 729 JPY 289 41,249 Total
85,029 43,458
Borrowings
322
322
(iii) Credit risk
Trade The & other Group payables has no significant concentration 22,533 of credit 630 risks and 17,045 has policies in place 23 to monitor 729 the credit 289 risks on customers. 41,249
For major projects the intervention of credit insurance companies or similar organisations is requested.
65,991
630 17,367
23
729
289 85,029
(iv) Liquidity risk
Liquidity risk is linked to the evolution of the Group’s working capital and is managed centrally. The Group monitors the
change in working capital through focused actions.
1,456
9,159
322
17,367
326
23
1,139
729
425
289
7,595
37,793
322
(v) Fair value interest risk
The Group enters into lease arrangements as both lessee and lessor. These leases are transacted at fixed rate thereby
Financial assets years 31/12/2004 31/12/2005
exposing the Group to fair value interest rate risk. Currently, the Group does not hedge any of this risk. Finance leases to
which the Group is exposed to fair value risk can be analysed as follows:
€ '000
€ '000
0-1
1,147
1,632
Financial 1-2 assets years 31/12/2004 766
31/12/2005 1,637
2-3
€ '000 662
€ 1,588 '000
0-1 3-4
1-2 4-5
2-3 >5
3-4
4-5
>5
Financial liabilities years
1,147 430
766 394
662 68
3,467 430
394
68
31/12/2004 3,467
1,632 1,381
1,637 1,357
1,588
7,595 1,381
1,357
31/12/2005 7,595
€ '000
€ '000
0-1
703
2,526
Financial 1-2 liabilities years
31/12/2004 1,153
31/12/2005 2,328
2-3
€ 1,234 '000
€ 2,391 '000
0-1 3-4
1-2 4-5
2-3 >5
1,295 703
1,153 1,338
35,547 1,234
2,526 2,459
2,328 2,532
31,222 2,391
59

2-3
3-4
4-5
662
430
394
1,588
1,381
1,357
>5
68
Financial assets years 31/12/2004 3,467
31/12/2005 7,595
€ '000
€ '000
0-1
1,147
1,632
Financial 1-2 liabilities years
31/12/2004 766
31/12/2005 1,637
2-3
€ '000 662
€ 1,588 '000
3-4 0-1
703 430
1,381 2,526
4-5 1-2
1,153 394
1,357 2,328
>5 2-3
1,234 68
2,391
3-4
3,467 1,295
7,595 2,459
4-5
1,338
2,532
>5
35,547
31,222
Financial liabilities years
31/12/2004 41,270
31/12/2005 43,458
€ '000
'000
There Description is no significant difference between the book and fair value of Currency financial assets and Maturity liabilities. date Fair value € ‘000
0-1
703
2,526
Total options
$
26/06/06 38
Hedging 1-2 activities
1,153
2,328
At Total December 31, 2005, the Group held several foreign exchange contracts to hedge future cash inflows in US dollar. The hedged 38
2-3
1,234
2,391
items concern recognised transactions (sale orders) and highly probable future transactions (from anticipated orders). Hedging
activities 3-4 Description
were effected by combining forward exchange contracts and
Currency
currency options
Maturity
and swaps, 1,295
date
which combines
Fair value
a
€
call 2,459
‘000
and
put and aims to hedge future US dollar cash inflows. Since The Group does not apply the hedge accounting principles of IAS
4-5 Total forwards
$/€
26/06/06 1,338
2,532
39 Financial Instruments: Recognition and Measurement, the hedged items that are recognised at year-end, are included (217) in the
balance >5 Total options sheet at fair value and movements in fair value are taken directly to net $ profit or loss for 28/06/06 the 35,547 period. The following 31,222 foreign (79)
exchange contracts are outstanding.
Total swaps $/€
26/06/06 41,270
43,458 (34)
Description
Total
Currency Maturity date
(330)
Fair value € ‘000
Total options
Total
$
26/06/06 38
38
Description
Currency Maturity date Fair value € ‘000
Total forwards
Total options
Total swaps
Total
$/€
$
$/€
26/06/06
28/06/06
26/06/06
(217)
(79)
(34)
(330)
26. Pension commitments
The Group has established a number of pension schemes around the world covering many of its employees. The Group’s
pension arrangements are principally defined contributions in nature. Defined benefit arrangements are not significant,
covering just 9 employees. The assets of these schemes are held separately from those of the Group in funds administered and
under the control of trustees.
At December 31, 2005, no contributions were outstanding to these schemes (2004: €107,000).
Pension costs are disclosed in note 4.
60
27. Operating lease commitments
Commitments under non-cancellable
operating leases expiring :
Within one year
Later than one year and less than five years
After five years
Total
Property (€’000)
60
1,397
50
1,507
31/12/2004 31/12/2005
Vehicles, plant
and equipment (€’000)
735
622
1,357
Property (€’000)
863
2,811
947
4,621
Vehicles, plant
and equipment (€’000)
602
569
4
1,175

At December 31, 2005, the Group has lease agreements in respect of properties, vehicles, plant and equipment, for which
payments extend over a number of years.
Operating lease agreements relate to office premises, car leases and IT equipment.
Leases are negotiated for an average term of 3 years.
Included in property lease is the rent of the Heultje building from Punch Property International nv for a term of 9 years.
Future minimum lease payments under non-cancellable operating lease where the Group is lessor are primarily under
contingent rental agreements. Contingent rentals recognised in income for the year ended December 31, 2005 were €207,000
(2004 : €513,000). The average length of rental contracts is 5 years.
28. Related parties
Related parties transactions : Subsidiaries
2004 2005
Charges from:
Directors fee
€‘000 €‘000
605
Punch International and affliliates
Linomedia (associate undertaking)
Swap Invest Ltd.
Sales to:
Punch International and affiliates
Linomedia (associate undertaking)
Xeramics (associate undertaking)
Stora Enso Digital Solutions (associate undertaking)
Balance sheet receivables:
Punch International and affiliates
Linomedia (associate undertaking)
Xeramics (associate undertaking)
Stora Enso Digital Solutions (associate undertaking)
Balance sheet payables:
Punch International and affiliates (associate undertaking)
Stora Enso Digital Solutions (associate undertaking)
7,918
7,918
2,631
2,631
4,052
1,373
177
5,602
9,721
9,721
3,668
500
430
5,106
650
1,577
65
1,766
4,058
5,887
1,355
183
510
7,935
1,041
3
1,044
The charge from Swap Invest Ltd., a company controlled by Jan Smits, relates to the recharge of costs incurred by Swap
Invest Ltd. on behalf of the Group. During the year the Company paid €67,000 in respect of services of the directors. An amount of
€880,000 was recharged to subsidiary undertakings in respect of management charges. Dividends of €3,400,000 were received
from subsidiary undertakings. The total amount due from subsidiary undertakings at December 31, 2005 was €11,003,000.
These amounts do not bear interest and are unsecured.
61

29. List of companies
Operating group
Country of incorporation
% of ownership
31/12/05
% of ownership
31/12/04
Principal activity
Punch Graphix Plc
UK
Holding
Punch Graphix International nv
Belgium
100%
100%
(1)
Manufacturing
Punch Graphix Prepress Belgium nv
Belgium
100%
100%
(1)
Manufacturing
Punch Graphix Prepress Germany GmbH
Germany
100%
100%
(1)
Manufacturing
Punch Graphix Americas Inc.
United States
100%
100%
Sales & Marketing
Punch Graphix Japan
Japan
100%
100%
Sales & Marketing
Punch Graphix Deutschland GmbH
Germany
80%
80%
Sales & Marketing
Punch Graphix Nordic Oy
Finland
80%
80%
Sales & Marketing
Punch Graphix Scandinavia AB
Sweden
100%
100%
Sales & Marketing
Punch Graphix UK Ltd.
United Kingdom
100%
79%
(1)
Sales & Marketing
Punch Graphix Nederland B.V.
Netherlands
100%
100%
Sales & Marketing
Punch Graphix Italia
Italy
51%
51%
Sales & Marketing
Punch Graphix France S.A.
France
100%
51%
(1)
Sales & Marketing
Punch Graphix Austria GmbH
Austria
100%
100%
Sales & Marketing
Punch Graphix Hong Kong
China
100%
(1)
Sales & Marketing
Punch Participatiemaatschappij B.V.
Netherlands
100%
100%
(1)
Holding
Punch Graphix Canada
Canada
100%
Sales & Marketing
Basys Repro & Print
Canada
100%
100%
(1)
Sales & Marketing
Xeikon Ltd.
UK
100%
(1)
Sales & Marketing
Interests in associated
undertakings
Country of incorporation
% of ownership
31/12/05
% of ownership
31/12/04
Linomedia Integrated Publication Printing Systems,
Commercial and Industrie Co S.A.
Greece
15%
15%
(2)
Sales & Marketing
Xeramics International nv
Belgium
25%
25%
Sales & Marketing
Stora Enso Digital Solutions nv
Belgium
40%
40%
Sales & Marketing
Xeikon Shenzhen Digital Printing Equipment Ltd.
China
45%
Sales & Marketing
(1) Investments held by Punch Graphix Plc.
(2) The Group has Board representation and it is therefore considered that significant influence can be exercised.
In the course of 2005 following subsidiaries were founded:
Punch Graphix Canada as a 100% subsidiary of Punch Graphix Americas Inc.
Punch Graphix Hong Kong as a 100% subsidiary of Punch Graphix Plc.
62

30. Acquisitions
1. BasysPrint GmbH
On December 20, 2004 Punch International acquired 100% of the voting equity instruments of BasysPrint GmbH. The
company’s main activity is CtP, a digital technology that allows transferring content (text or image) directly onto the
printing plate by means of a specific light source. The name of BasysPrint was changed to Punch Graphix Prepress
Germany GmbH. The identifiable assets and liabilities of Punch Graphix Prepress Germany GmbH and their fair values are
set out below :
Total book & fair value
Fixed assets
Stock
Debtors
Cash at bank and in hand
Creditors
Provisions
Total
Consideration paid/cash
Goodwill
€ ‘000
5,154
2,920
2,131
192
(11,262)
(982)
(1,847)
0
1,847
The main factors leading to the recognition of goodwill are the presence of certain intangible assets, such as assembled
workforce, which do not qualify for separate recognition and synergistic cost savings. If the acquisition of BasysPrint GmbH
had occurred on January 1st, 2004, group turnover would have been €122,900,000 (unaudited) and group profit after taxes for
the period would have been € 490,000 (unaudited).
2. Punch Graphix Austria
During the year 2005, the Group paid an additional amount of €430,000 related to an onerous contract that was in existence
at the acquisition date in 2004 but had not been provided for on acquisition. Accordingly the payment has been recorded
as an adjustment to goodwill in 2005. In 2004, a goodwill of €875,000 arose on the acquistion of Punch Graphix Austria.
31. Contingent liabilities
At December 31, 2005, the Group had no contingent liabilities.
32. Post balance sheet date events
In January 2006, the Group founded Punch Graphix Brazil.
The Board decided that the shares of Tilanus Consulting, the company of Dick Tilanus who died on January 9, 2006, in
accordance with the LTIP plan, immediately were vested (a charge of €110,000).
In February 2006, Punch Graphix increased its shareholdings from 15% to 91,5% in Linomedia.
The Board appointed, on April 6, 2006, Ben Van Assche as Chief Executive Officer. On the annual meeting of May 24, 2006,
Ben will be proposed as an executive director of the company.
63

13
NOTICE OF ANNUAL GENERAL MEETING
PUNCH GRAPHIX PLC
Notice is hereby given that an Annual General Meeting of the company will be held on the 24 th of May 2006 at 10.00 a.m .
at Altium Capital Limited, 30 St. James’s Square, London SW1Y 4AL to transact the following business:
ORDINARY BUSINESS
1. To receive and consider the directors’ report and the accounts of the company for the year ended December 31, 2005
and the report of the auditors thereon.
2. To approve the recommended dividend of 2,35 euro cent per ordinary share.
3. To re-appoint BDO Stoy Hayward LLP as auditors of the company to hold office until the next general meeting at which
accounts are laid before the company and to authorise the directors to fix their remuneration.
4. To re-elect Geoffrey Charles White as director of the company.
5. To re-elect Jan Agnes Jozef Smits as director of the company.
6 To re-elect Guido Pieter Lieven Dumarey as director of the company.
7. To re-elect Kenneth Humphreys as director of the company.
8. To re-elect Henry Nigel Pakenham McCorkell as director of the company.
9. To elect Benoit Charles Julie Van Assche as director of the company.
SPECIAL BUSINESS
To consider and, if thought fit, pass the following resolutions which in the case of resolution numbered 10 shall be
proposed as an ordinary resolution of the company and in the case of the resolutions numbered 11 and 12 shall be
proposed as special resolutions of the company.
10. That the directors be generally and unconditionally authorised in accordance with section 80 of the Companies Act
1985, to exercise all powers of the company to allot relevant securities (as defined for the purposes of that section)
up to a maximum nominal amount of £3,472,640 provided that this authority shall expire on the day five years after
the passing of this resolution save that the company may, before this authority expires, make an offer or agreement
which would or might require relevant securities to be allotted after it expires. All previous authorities under
section 80 of the Companies Act shall cease to have effect.
64

11. That:
a. The directors be given power to allot for cash equity securities (as defined for the purposes of section 89 of
the Companies Act 1985) pursuant to the general authority under section 80 of that Act conferred on them by
resolution 10 above as if section 89(1) of the Act did not apply but this power shall be limited:
(i) To the allotment of equity securities in connection with an offer or issue to or in favour of ordinary
shareholders on the register on a date fixed by the directors where the equity securities respectively
attributable to the interests of all those shareholders are proportionate (as nearly practicable) to the
respective numbers of ordinary shares held by them on that date but the directors may make such
exclusions or other arrangements as they consider expedient in relation to fractional entitlements, legal
or practical problems under the laws in any territory or the requirements of any relevant regulatory body or
stock exchange; and
(ii) To the allotment (other than under (i) above) of equity securities having a nominal amount not exceeding in
aggregate £514,146;
b. This power shall expire on the day five years after the passing of this resolution;
c. All the previous authorities under section 95 of the Companies Act 1985 shall cease to have effect; and
d. The company may, before the power expires, make an offer or agreement which would or might require equity
securities to be allotted after it expires.
12. That the company be hereby authorised to purchase its own Ordinary Shares by way of market purchase (within the
meaning of section 163(3) of the Companies Act 1985) upon and subject to the following conditions:
a. The maximum number of shares which may be purchased under this authority is 10,282,922 ordinary shares of 10p;
b. The maximum price at which the shares may be purchased is an amount equal to 105% of the average of the middle
market quotations as derived from the London Stock Exchange’s Alternative Investment Market for the 5 business
days immediately preceding the day on which the shares are contracted to be purchased and the minimum price is
10p per share, in both cases exclusive of expenses; and
c. The authority to purchase conferred by this resolution shall expire at the conclusion of the Annual General
Meeting of the company to be held in 2007, or any adjournment thereof or 18 months from the date of this
Resolution (whichever is the earlier), provided that any contract for the purchase of any shares as aforesaid
which was concluded before the expiry of the said authority may be executed wholly or partly after the said
authority expires.
Registered office:
Chestnut House
Hackness Road
Northminster Business Park
Upper Poppleton
York YO26 6QR
UK
By order of the Board
Filip Beernaert
Secretary
April 28, 2006
Notes:
1. A member entitled to attend and vote at the meeting is entitled to appoint a proxy to attend and, on a poll, vote on
his behalf. A proxy need not be a member of the company. A form of proxy is enclosed herewith.
2. To be valid, form(s) of proxy must be lodged at the office of the company’s Registrars, Capita Registrars at the registry,
34 Beckenham Road, Beckenham, Kent, BR3 4TU no later than 48 hours before the time fixed for the meeting. Completion
and return of a form of proxy will not preclude a member from attending and voting in person if he so wishes.
3. In order to be entitled to attend and vote at the Annual General Meeting of the company a shareholder must be
entered into the Register of Shareholders of the company no later than 20 May 2006. Changes to the Register of
Shareholders after this time shall be disregarded in determining the rights of any person to attend or vote at the
meeting, notwithstanding any provision of law or the Articles of Association of the company. 65

Registered address:
Punch Graphix plc
Chestnut House
Hackness Road
Northminster Business Park
Upper Poppleton
York Y026 6QR
UK
Contact address:
Punch Graphix International nv
Duwijckstraat 17
2500 Lier
Belgium
Tel. +32 3 443 13 11
Fax +32 3 443 13 09
email: info@punchgraphix.com
www.punchgraphix.com