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For immediate release                                                                                                                   9 June 2009

NIPSON DIGITAL PRINTING SYSTEMS PLC ('Nipson' or 'the Company')

ANNUAL REPORT AND ACCOUNTS 2008 

The Annual Report and Accounts 2008 have been posted to Shareholders, and are available, together with a copy of this announcement, on the Company's website www.nipson.com ('Investors - AIM Rule 26') and from the Company's offices.

CHAIRMAN'S STATEMENT

Overview

The Board has announced on a number of occasions in different communications and trading updates the effect the worldwide economic crisis is having on the Company's results. These external factors have affected equipment sales and this especially in the fourth quarter of 2008, which coupled with the effect of a declining dollar reduced revenue as well as margin. However, due mainly to currency changes, reported revenue for the twelve months of 2008 remained stable at £27.3m (2007: £27.3m). With the movement of the GB Pound from an average to the Euro of £0.68433 to 1€ in 2007 to an average of £0.79654 to 1€ in 2008 (a drop of approximately 15%), the effect is to give an inflated impression of the Group's revenues such that after currency adjustments revenues in 2008 were in fact more than 15% lower than in 2007.  We remind shareholders that 2007 was already a difficult year for the Company.

Total revenues into the Americas in 2008 in local currency increased by 7%, but due to the depreciation of the GB Pound against the US Dollar, the reported increase is 17% rising to £8.8m (2007: £7.5m). All other markets showed a decline in revenues mainly due to lower equipment sales and a generalised dip in recurrent revenues in the fourth quarter. 

Equipment revenues were down by 16.8% ending at £6.8m for the year (2007: £8.1m), whereas equipment revenues in Euros, the principal trading currency of the Group, dropped by more than 27%.  Recurrent revenues for 2008 were 7% higher at £20.5m (2007: £19.2m), but this hides a drop of nearly 10% in Euros.  Lower equipment sales in the last quarter led to a significant fall in revenues.  Worldwide, the recent economic climate has lead to a reduction in equipment sales as existing and potential customers delay investment decisions either due to lack of appropriate finance or due to lack of significant vision concerning future demand. The economic climate has also led to a reduction in general volumes of printed matter, such that sales by the Group both to distributors and direct customers alike of consumables and other activity related recurrent revenues have fallen.

Change in Control

Whilst the Group had shown some improvement in sales in the first half of the year compared to 2007, cash had been tight and the working capital requirement was beyond the levels agreed with the Group's bankers and the major shareholder, the Polar Group. In the light of the financial position of Nipson SAS and taking into account the severe market conditions which made it extremely difficult for businesses to raise any new equity or debt finance from external sources, the Board considered alternatives to avoid an insolvent liquidation of the Group. 

As such, on the 14 October 2008 and as announced on the same day (the announcement in full detail can be seen in the Investors AIM RULE 26 section of the Nipson website), Polar Communications Ltd ('Polar') and Polar's affiliate, Koonras BV BVBA, ('Koonras' and together with Polar, the 'Polar Group'), the then majority shareholder of Nipson Digital Printing Systems Plc ('Nipson' or the 'Company') entered into an agreement with Creacorp NV, a Belgian incorporated company ('Creacorp'), whereby Polar Group agreed:

• To assign for 1€ the benefit of loans and accrued interest value of approximately €14.7 million owed to it by Nipson and its subsidiaries, to Creacorp (the 'Loan Assignments'), 

• To grant Creacorp a call option to acquire for 1€ up to 22,992,709 ordinary shares held by the Polar Group in the capital of Nipson representing 43.96% of the issued and outstanding ordinary shares, subject to the Polar Group maintaining an interest of 10% of the issued share capital of Nipson for 3 years at the time the call option is exercised, less any shares sold by Polar before such exercise;

• with Nipson's consent to transfer to Creacorp €564,500 in nominal value of 5% unsecured convertible loan notes issued by Nipson to Polar on 12 May 2008, in accordance with an agreement dated 30 January 2008 (the 'Loan Notes'). Furthermore, Nipson also agreed (on more favourable terms to the Company) to an amendment to the terms of the remaining €2,200,000 in nominal value of the Loan Notes held by Polar following such transfer, such that the loan became interest free and repayable over a period of five years starting in October 2009 but without any conversion right by either party to capitalise the debt into Ordinary Shares.

In connection with the above call option, Polar agreed to vote the Ordinary Shares in accordance with the instructions of Creacorp.  The call option has been taken-up by Creacorp, but at the time of approval of these accounts the option was not fully executed.  Creacorp also agreed to acquire Polar's remaining shareholding, subject to certain conditions. 

As explained in the announcement to shareholders made last year on the 6 February 2008, the Company continued to work with Polar for some time to secure additional sources of financing for the business. These efforts included discussions with banks within and outside France and negotiations with a number of funds and investment institutions and included discussions with industry partners and competitors. No other concrete proposals were made to the Company committing to potential funding of the Company's operations other than Creacorp and since the proposition made to shareholders and carried at the EGM of 29 February 2008 (and mentioned as a post balance sheet event in the 2007 Annual Report & Accounts), until the said agreement made between Polar and Creacorp of the 14 October 2008.  The Board considered other alternatives, but concluded that the transaction as set-out in the announcement represented the only realistic way of avoiding an insolvent liquidation of the Group.  The Board took into account that to facilitate the transaction Polar agreed to pay the sum of €2,200,000 to Bank Hapoalim to clear the debt owed to Bank Hapoalim by Nipson SAS, the main French trading subsidiary of the Company.  As mentioned above, an equivalent value of this debt, due to Hapoalim and paid-off by Polar, was retained as being owed to Polar by the Company but at revised terms more favourable to the Company. Other than this amount, Polar agreed to give up the remainder of its debt and equity interests in the Group to Creacorp for a nominal consideration. 

Takeover Code

Although the Company is incorporated in England, the place of central management of the Company is currently located outside of the UK, the Channel Islands and the Isle of Man because the main place of business is in France. Accordingly, the Company is one to which paragraph 3(a)(ii) of the Takeover Code does not apply, and the Panel has confirmed that the Company is not subject to the Takeover Code and shareholders will not be afforded any protection under the Code. 

Information on Creacorp

Creacorp is a private Belgian company controlled by the Belgian Dumarey family.  The Directors of Creacorp are Guido Dumarey and Brigitte Dumolijn.  Creacorp holds a diversified portfolio of technology, property and entertainment companies.  It has been involved in a number of successful restructurings in the graphics, automotive and entertainment business.  At the end of 2007, Creacorp held assets of more than 100m€.  Creacorp holds a 31% shareholding in the Euronext (Brussels) listed conglomerate, Punch International NV ('Punch'), of which Guido Dumarey is Executive Chairman.  Punch International NV owns automotive, telematics and property business activities and is a major manufacturer of printing equipment. Punch last reported profits on ordinary activities before taxation of 28.5m€ on sales turnover of 331.7m€ and assets of 315m€.

Guillaume Dumarey, Marc Maes and Ghislain Segard, all of whom are affiliated to Creacorp, were appointed as Directors of Nipson with effect from 14 October 2008. Collectively, the new Directors have held responsibilities in reorganising companies in industries as diverse as automotive, electronics, dairy equipment, entertainment and others. 

Restructuring of the Group's Operations

Nipson SAS, as the Group's main operating subsidiary based in France, experienced difficulties in meeting its obligations in respect of on-time payments which was aggravated by continuing losses in the business due to lower production volumes and inflationary pressure from various raw material price increases. The difficult financial situation of Nipson SAS led to the withdrawal of credit insurance by a number of providers of insurance and rating services in the second half of the year which, cumulated with the financial market's generally tighter credit restrictions over the last 4 months of the year, led to reduced flexibility in the day to day operating of its working capital. The economic crisis caused delayed customer payments especially from countries where capital was not so free flowing and also reduced the possibility of obtaining fresh funding from other sources.

As indicated above, the Board made an announcement on 14 October 2008 relating to a change in control and a proposed financial restructuring of the Group and board changes.  The first task of the new directors was to evaluate and assess the operational and financial situation of the Group and make recommendations to the Board which would lead to appropriate actions and procedures to be considered.  The new Board evaluated and assessed the operational and financial situation of the group and as a result of this assessment concluded that the French Subsidiary required urgent restructuring; both at the operations level, including subcontracting out the non-core part of its production, and at the economic level by reducing fixed costs and operating expenses.

The Board decided unanimously to confer to the newly appointed President of Nipson SAS, Mr. Ghislain Segard, all powers to carry through the necessary changes including filing for the French 'Redressement Judiciaire' which was filed for on 27 October 2008. Following the filing for Redressement Judiciaire, the French Commercial Courts nominated an administrator who has been and is still supervising the President in the process of the restructuring. The restructuring plan also included a sizeable reduction of more than 40% in the number of employees. The administrator also has and is supervising the payment of creditors, thus protecting the company during the period of restructuring. The government insurance scheme has allowed the company an additional delay in paying redundancy payments, certain salaries and related social charges.  

On 7 April 2009, Nipson announced that the reorganisation plan would necessitate the forgiveness/conversion of debt and that this was likely to be a Related Party Transaction under the AIM Rules.  In the meantime a reorganization plan was negotiated between Ghislain Segard and the administrator, and was formally presented to the French Commercial Courts on 21 April 2009.

On 14 May 2009 the Board agreed a restructuring plan with Creacorp, which the French Court has presented to the creditors of Nipson SAS. Accordingly, Nipson anticipates that the Redressement Judiciaire procedure relating to Nipson SAS could be concluded within the timetable set by the Court, being at or shortly after the next scheduled meeting with the French Court on 23 June 2009, and that the Group could thereafter be able to resume its operations under the full control of the Board.

As part of the reorganisation, the French Court has required additional financial commitments from Creacorp to Nipson SAS. Creacorp has committed to provide funds as highlighted in the below notes (see: Post Balance Sheet Events & Going Concern).

Parallel to the restructuring of the French operations the other Group companies were also reorganised. Reductions were made in the number of employees as well as in the fixed costs and operating expenses in the Nipson subsidiaries based in the UK and in the US. The Italian subsidiary is in the process of voluntary winding-up and the Singapore and Belgium branches of the Group are in the process of being closed.

Results

Gross profit for the full year to 31 December 2008 was £2.9m (2007: £3.5m), a reduction of 17% mainly due to the lower volumes of equipment manufactured and sold. Gross margins decreased to 10.5% (2007: 12.7%) due to the lower machine production levels, the pressure on prices and hence margins from the US Dollar to Euro rate and the incremental costs required to implement the new technology.  In 2008 some of the technical issues from 2007 continued to provoke specific production difficulties which were in the main resolved but at extensive additional costs than expected.

The operating loss for 2008 was £13.4m (2007: loss of £4.7m). The loss before tax in 2008 was £14.7m (2007: £6.2m).  The operating loss and the loss before tax for 2008 are both after charging exceptional costs totalling £7.1m. These exceptional costs cover the Social Plan (4m€), the restructuring of the Group and certain additional provisions related mainly to the reduction in activity. The operating loss and the loss before tax for 2007 include the book loss on the sale of Land & Buildings of £0.5m. 

The losses experienced by the Group from low production volumes, low margins from the US operations due to the weakness of the Dollar and the restructuring costs will require the Company to review the value of the subsidiaries in the Nipson SAS balance sheet. The projected plan for taking Nipson SAS out of administration will require virtually all debts owed by Nipson SAS both to the Company and to the controlling shareholder Creacorp (as transferred to Creacorp following the agreements with the Polar Group), to be either capitalised or forgiven (see details under Note: Post Balance Sheet Events & Going Concern). 

Cash and Working Capital

The year end Euro to GB Pounds conversion rates used by the Group was £0.97087 to 1€ (2007: £0.73593 to 1€), movement of more than 30%. This change should be taken into account whilst looking at the balance sheet figures.  Cash balances were £2.2m as of 31 December 2008 (2007: £1.3m).  Year-end stocks decreased from £9.7m to £9.3m mainly related to the lower production volume and call-off from suppliers. Debtors dropped markedly down to £6.7m (2007: £9.5m) due essentially to the reduced level of equipment revenues in the last quarter of 2008 against a high level of activity in December 2007. The outstanding amounts owed to the company by the French Treasury Department in last year balance were also settled during 2008. 

Early on in the year 2008 new cash of 0.75m€ was received from the previous majority shareholder, the Polar Group, and following the announcement on 6 February 2008 and the passing of the necessary resolutions at the General Meeting of 28 February 2008, the Company issued approximately £1.5m of 5% unsecured convertible loan notes to new investors and issued, in exchange for the equivalent amount in debt, approximately £2.1m of 5% unsecured convertible loan notes to Nipson's major shareholder, Polar Communications (the remaining amount of the Polar loans and accruing interest following this issue was 11.9m€). Further to these arrangements the Company issued 1,255,234 warrants to D. Roseman as broker to the issue. 

Despite these new funds, the cash situation of the Company became too tight as indicated above (under the section entitled Restructuring of the Group's Operations). 

Research & Development Projects

During 2008 £3.0m was spent on R&D (2007: £3.0m). The projects covered mainly finalising the development of the new generation writing heads, technological advances related to developing higher speed print engines and new developments for the Nipson Spot Colour machine.  A number of new features to the VaryPress range were presented by Nipson in June 2008 at the DRUPA International printing industry exposition which is held every 4 years. R&D expenses totalling £1.1m net were capitalised during 2008 (2007: £1.2m net). These intangible R&D assets are amortised over 4 to 6 years. An additional amortisation of £0.5m related to all capitalised projects from 2006, 2007 and 2008 was charged to the accounts in 2008. In 2009, the Group expects to continue a relatively high level of expenditure on R&D, this being essential to the Group's strategic development and growth.

Prospects

The reorganisation of the production facilities, including the transfer of the machine assembly to a specialised plant in Germany, has enabled the cost structure of the French facilities to be drastically reduced.  The restructuring of the Group by eliminating fixed overhead charges in all the subsidiaries will improve operating results.  

In 2006 Nipson won a major contract with the French Government's Treasury Department (Direction Générale de la Comptabilite Publique or DGCP).  Following the successful installation of the first production line delivered in December 2006, a second line was installed towards the end of 2007.  The third line was delayed, but is now planned for delivery in 2009.

Despite the ongoing restructuring of the Group, the worldwide economic crisis has had an effect on prospects in the immediate future. The reductions in orders for new machines and the reduction in customer's printed volumes thus affecting recurrent revenues has reduced the probability of the Group successfully coming out of its difficult economic situation which therefore cannot be guaranteed by any means. 

Buyback arrangement for outside shareholders

In order to provide some certainty for the shareholders of the Company, Creacorp NV has agreed to make an offer to acquire all of the actually existing pre-dilution shares, excluding any such shares not in public hands under the AIM Rules as at 1 April 2009 (i.e. excluding any shares held by Creacorp or over which Creacorp holds the voting rights, or held by any director of the Company). Also to be excluded are any shares that will be created in future capital increases or conversion transactions. The purchase price will be 1.25 pence per share subject to the fact that the Company or Nipson SAS will not go bankrupt, to be purchased at the date of 18 months after the AGM for which Notice is hereby given for 11:00 a.m. on 30 June 2008. 

For further information, please contact:

Nipson Digital Printing Systems PLC

Marc Maes, Chairman                          Tel: +32 (0)494 500 423

Robert Cahill, Director                         Tel: +33 (0)384 54 52 50

Beaumont & Cornish Ltd (Nomad): 

Roland Cornish                                     Tel: +44 (0)20 7628 3396

Rosalind Hill Abrahams

NIPSON DIGITAL PRINTING SYSTEMS PLC

Audited Results for the Year Ended 31 December 2008

CONSOLIDATED INCOME STATEMENT	2008 £'000	2007 £'000
Continuing Operations
Revenue	27,312	27,335
Cost of Sales	(24,443)	(23,872)
Gross Profit	2,869	3,463
Operating Expenses	(9,100)	(7,667)
Other Operating Expenses	(7,140)	(453)
Loss on Continuing Operations before interest	(13,371)	(4,657)
Finance Income Finance Costs	470 (3,009)	191 (1,743)
Loss from Continuing Operations before taxation	(15,910)	(6,209)
Taxation	-	-
Loss from Continuing Operations after taxation	(15,910)	(6,209)
Loss per Ordinary Share (Basic and Diluted)	(30.4p)	(11.9p)

	2008 No. of Shares	2007 No. of Shares
Weighted average number of shares
For basic and diluted earnings per share	52,303,581	52,303,581

CONSOLIDATED STATEMENTS OF RECOGNISED INCOME AND EXPENDITURE	2008 £'000	2007 £'000
Exchange Difference on Translation of Foreign Operations	(1,494)	234
Net (Expense)/Income Recognised Directly in Equity	(1,494)	234
Loss for the Year	(15,910)	(6,209)
Total Recognised Income and Expense for the Year	(17,404)	(5,975)

NIPSON DIGITAL PRINTING SYSTEMS PLC

Audited Results for the Year Ended 31 December 2008

CONSOLIDATED BALANCE SHEET	2008 £'000	2007 £'000
Assets
Non-Current Assets
Intangible Assets	5,514	4,391
Property, Plant & Equipment	2,988	3,645
Deferred Tax Asset	424	597
Other Non-Current Assets	239	498
	9,165	9,131
Current Assets
Inventories	9,325	9,679
Trade and Other Receivables	7,454	9,545
Cash and Cash Equivalents	2,164	1,348
	18,943	20,572
Liabilities
Current Liabilities
Trade and Other Payables	(17,233)	(7,696)
Borrowings	(18,780)	(12,870)
	(36,013)	(20,566)
Net Current (Liabilities)/Assets	(17,070)	6
Non-Current Liabilities
Borrowings	(4,145)	(3,776)
Deferred Tax Liabilities	(424)	(597)
Retirement Benefit Liability	(689)	(1,016)
	(5,258)	(5,389)
Net (Liabilities)/Assets	(13,163)	3,748
Shareholder's (Deficit)/Equity
Ordinary Share Capital	523	523
Share Premium	13,915	13,915
Equity Portion of Convertible Loans Notes	493	-
Reverse Acquisition Merger Reserve	3,057	3,057
Translation Reserve	(1,328)	166
Retained Earnings	(29,823)	(13,913)
Total (Deficit)/Equity Attributable to Equity Holders	(13,163)	3,748

  NIPSON DIGITAL PRINTING SYSTEMS PLC

Audited Results for the Year Ended 31 December 2008

CONSOLIDATED CASH FLOW STATEMENT	2008 £'000	2007 £'000
Net Cash Increase/(Decrease) from Operating Activities	2,179	(1,444)
Cash Flows from Investing Activities
Purchase of Intangible Assets	(1,414)	(2,480)
Purchase of Property, Plant & Equipment	(63)	(188)
Disposal of Non Current Assets	98	2,100
Interest Received	-	75
Net Cash Used in Investing Activities	(1,379)	(493)
Cash Flows from Financing Activities
Interest Paid	(409)	(541)
Capital Repayments on Finance Leases	(234)	(2,388)
Borrowings Raised - from Third Party	1,562	215
- from Related Party Undertakings	565	5,203
Borrowings Repaid	(1,468)	(1,796)
Net Cash Generated from Financing Activities	16	693
Net Increase/(Decrease) in Cash & Cash Equivalents	816	(1,244)
Cash & Cash Equivalents at 1 January	1,348	2,592
Cash & Cash Equivalents at 31 December	2,164	1,348

CASH FLOWS DETAILS	2008 £'000	2007 £'000
Continuing Operations
Loss before Taxation	(15,910)	(6,209)
Adjustments for :
Depreciation and Amortisation	2,330	1,618
Disposal of Non Current Assets	-	542
Finance Income	(470)	(191)
Finance Expense	3,009	1,743
Increase in Retirement Benefit Obligation	134	97
Share Based Payment Charge	-	-
Changes in Working Capital
Decrease/(Increase) in Inventories	518	(874)
Decrease in Trade & Other Receivables	4,519	576
(Decrease)/Increase in Payables	(175)	976
Increase in provisions	8,224	278
Cash Generated from/(Used in) Continuing Operations	2,179	(1,444)
Corporation Tax Paid	-	-
Net Cash Increase/(Decrease) from Continuing Operations	2,179	(1,444)

  NIPSON DIGITAL PRINTING SYSTEMS PLC

Audited Results for the Year Ended 31 December 2008

Notes

These notes are only an extract of the full notes to the 2008 Annual Report & Accounts.  It is therefore, recommended to view or download the full Report & Accounts available in .pdf form at Nipson's website: http://www.nipson.com/investors/rule26.php - under the section 'Company Reports.

Going concern

This annual report includes a copy of the notice (see also the end of this announcement) calling a general meeting to discuss the serious loss of capital as stipulated by s142 of the 1985 Companies Act. The main operating subsidiary, Nipson SAS based in France, is still under protective administration at the time of this announcement. Nevertheless the directors believe that following the restructuring plan presented to the French Courts on the 21 April 2008 and the decision of both the Company and Creacorp NV to waive 94% of the debt owed to them by Nipson SAS capitalising the remaining 6%, and the deed signed between the Company, Creacorp and Nipson SAS, that Nipson SAS has a high probability of coming out of the administration process, giving back full control to the Group and every chance to succeed. However, although this hope cannot be guaranteed in any way especially in the current worldwide economic climate, the Board has satisfied itself that the Group has adequate resources to continue in operational existence for the foreseeable future, and for this reason the financial statements continue to be prepared on a going concern basis. See the note below 'Post Balance Sheet Events & Going Concern'.

The main points underlying this position are covered in the above Chairman's statement and under the note concerning Post Balance Sheet Events & Going Concern. Other important announcements are:

- 28 February 2008 an Extraordinary General Meeting was held during which three resolutions pertaining to the financing of the Group were made and carried.

- 14 October 2008 an announcement was made concerning the change in control of the Group from Polar to Creacorp.

- 28 October 2008 an announcement was made concerning the filing by Nipson SAS for protective administration 'Redressement Judiciaire'.

- 14 May 2009 an announcement was made concerning the financial restructuring of the Group.

Nature of Financial Information

The financial information contained within this announcement does not constitute statutory accounts for the year ended 31 December 2008. The financial information for the year ended 31 December 2007 is derived from the statutory accounts for that year which has been delivered to the Registrar of Companies.  

Audit Opinion and Emphasis

The following is an extract from the audit opinion where the auditors gave their 'opinion' and declaration of 'emphasis of matter' regarding 'going concern'.

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 affairs of the group as at 31 December 2008 and of the group's loss for the year then ended;

• the financial statements have been properly prepared in accordance with the Companies Act 1985; and

• the information given in the Director's Report is consistent with the financial statements.

Emphasis of matter - Going concern

In forming our opinion on the financial statements, which is not qualified, we have considered the adequacy of the disclosure made in Note 23 to the consolidated financial statements (replicated here below under the note 'Post Balance Sheet Events & Going Concern') concerning the Group's ability to continue as a going concern which is reliant on support of the ultimately controlling party Creacorp NV. This support, which includes agreements to write off certain loans and provide further finance, is contingent on successful completion of the Redressment Judiciaire process for Nipson SAS in France, for which a decision is not expected until 23 June 2009. These conditions indicate a material uncertainty which may cast significant doubt about the Group's ability to continue as a going concern. The consolidated financial statements do not include the adjustments that would result if the Group was unable to continue as a going concern.

Glossary: Redressement Judiciaire: the English equivalent might be considered to be 'receivership under protective administration'

  NIPSON DIGITAL PRINTING SYSTEMS PLC

Audited Results for the Year Ended 31 December 2008

RESERVES	Reverse Acquisition Reserve £'000	Convertible Loans Equity Component # £'000	Share Premium Reserve £'000	Profit and loss account £'000	Foreign Exchange Reserve £'000	Total £'000
GROUP
At 1 January 2007	3,057	-	13,915	(7,704)	(68)	9,200
Loss for the year	-	-	-	(6,209)	-	(6,209)
Foreign exchange movement	-	-	-	-	234	234
31 December 2007	3,057	-	13,915	(13,913)	166	3,225
Loss for the year	-	-	-	(15,910)	-	(15,910)
Equity Component # of Convertible Loans:
- Issued - Repaid	- -	913 (420)	- -	- -	- -	913 (420)
Foreign exchange movement	-	-	-	-	(1,494)	(1,494)
31 December 2008	3,057	493	13,915	(29,823)	(1,328)	(13,686)

REVENUE BY GEOGRAPHICAL REGION	2008 £'000	2007 £'000
France	4,806	5,331
Rest of Europe	8,762	8,786
United States of America and Canada	6,330	5,685
Asia	2,704	3,255
Latin America	2,463	1,828
Other	2,247	2,450
Total Sales Revenue	27,312	27,335

The Group's revenue was all derived from its principal activity.

Based on risks and returns, the directors consider that the primary reporting format is by business segment. The directors consider that there is only one business segment being the manufacture and distribution of digital printing systems together with all related consumables, spare parts, maintenance and service.  

The secondary reporting format is by geographical analysis by origination.  Segments where the Group has its principle operations are France, USA, Germany and United Kingdom.

SEGMENTAL ANALYSIS	France		Rest of Europe		USA		Plc		Total
	2008	2007	2008	2007	2008	2007	2008	2007	2008	2007
	£'000	£'000	£'000	£'000	£'000	£'000	£'000	£'000	£'000	£'000
Revenue	22,562	23,126	2,101	2,805	2,649	1,404	-	-	27,312	27,335
Assets	12,997	17,399	3,301	3,468	2,247	2,568	9,563	6,268	28,108	29,703
Capital Expenditure	1,443	2,486	1	9	31	17	2	-	1,477	2,512

NIPSON DIGITAL PRINTING SYSTEMS PLC

Audited Results for the Year Ended 31 December 2008

The Group's main operations, including Marketing, Research & Development, Manufacturing and Administration were located at Belfort in France from where also all exports are made to the Group's other principle markets such as Asia, Latin America and MEA (Middle East Africa). 

OPERATING EXPENSES	2008 £'000	2007 £'000
Research and development expenses (see also Note 9)	2,984	1,744
Selling and marketing expenses	3,619	3,581
Administration expenses	2,497	2,342
	9,100	7,667

LOSS ON CONTINUING OPERATIONS	2008 £'000	2007 £'000
Loss on ordinary activities before taxation is stated after charging/(crediting):
Inventory expensed to Cost of Sales	12,683	13,145
Inventory Provision (Reversals)/Write-Offs	(429)	408
Depreciation on Tangible Non Current Assets:
Owned assets	640	520
Leased assets	157	260
Leased assets purchase and disposal (net impact)	-	453
(Profit)/Loss on disposal of Property Plant & Equipment	(98)	2,791
Amortisation of Intangible Non Current Assets:
Acquired Patent Rights	71	143
Capitalised Research & Development Expenditure:	1,461	526
Operating lease rentals:
Motor vehicles and equipment	113	73
Land and buildings	922	251
Research and development expenditure	2,984	1,744
Retirement Provision Actuarial Costs	135	85
Retirement Provision reversed for Leavers	(644)	(73)
Legal Costs of defending Patent Court Case	-	(56)
Restructuring Plan Provision	3,228	-
Exceptional Inventory Provision	2,992	-
Provision for risk (litigation)	933	-
Losses on Currency	1,857	720
Gains on Currency	(412)	(103)

FINANCE INCOME AND FINANCE COST	2008 £'000	2007 £'000
Exchange rate gain	(412)	(103)
Interest receivable and discount	(58)	(88)
Total Finance Income	(470)	(191)
Bank interest payable	383	483
Group interest payable	608	322
Other interests from financing operations	88	65
Exchange rate difference	1,857	720
Interest payable on finance leases	73	153
Total Finance Costs	3,009	1,743
Net Finance Costs	2,539	1,552

  NIPSON DIGITAL PRINTING SYSTEMS PLC

Audited Results for the Year Ended 31 December 2008

BORROWINGS At amortised cost:			2008 £'000	2007 £'000
Bank loans			2,068	4,381
Other loans			3,696	1,677
Loans from related parties (note 20)			16,697	10,020
Obligations under finance leases and hire purchase contracts	(note 14d)		464	568
Total borrowings			22,925	16,646
Amounts due for settlement within 12 months			18,780	12,870
Amounts due for settlement after 12 months			4,145	3,776

The amount of bank loans dropped significantly in 2008 compared to 2007 following the repayment of the Hapoalim Bank loan by the Polar Group on behalf of Nipson SAS.  However, this increased the debts due by the Company to related parties by the same amount of 2.2m Euros.  The line 'Other loans' includes the 5% Convertible Loan Notes concluded with Roseman, the details of which are in the note below. Loans from related parties also include the remainder of the 5% Convertible Loan Notes concluded with Polar and hence Creacorp, the details of which are also under the note on 5% Convertible Loan Notes below. 

BORROWINGS	2008 £'000			2007 £'000
Analysis of bank and other loans and including loans from related parties:	Total		of which Secured	Total	of which Secured
Repayable within one year	18,562		3,464	12,654	9,112
Repayable in more than one but less than two years	357		-	3,306	343
Repayable in more than two but less than five years	2,344		-	76	-
Repayable in five years or more	1,198		-	42	-
Total Loans	22,461		3,464	16,078	9,455

5% CONVERTIBLE LOAN NOTES

At the EGM of the 28 February 2008, the shareholders passed a resolution authorising the issue of 2,014,500 Euros of 5% convertible loan notes to D.R. Investments Ltd. The convertible loans mature the 11 May 2011, 3 years from the issue date the 12 May 2008. Under the terms of the agreement and in certain circumstances, D.R. Investments Ltd. has the possibility to convert the loan notes to a maximum of 25,821,956 ordinary shares of 1 pence each.  Further to these arrangements the Company issued 1,255,234 warrants to D. Roseman as broker to the issue.

At the same EGM, the shareholders passed a resolution authorising the Company to offer to the then majority shareholder, Polar Communications Ltd, 2,764,500 Euros of 5% convertible loan notes in exchange for loans at the same face value being part of the total loans given to the Nipson Group by Polar during 2006 and 2007. The convertible loans mature the 11 May 2011, 3 years from the issue date the 12 May 2008. Under the terms of the agreement and in certain circumstances, Polar had the possibility to convert the loan notes to a maximum of 35,434,492 ordinary shares of 1 pence each. Following the agreement signed between Polar and Creacorp of the 14 October 2008, Polar cancelled 2,200,000 Euros of the aforementioned 5% convertible loan notes. These loan notes were replaced by an interest free non-convertible loan repayable over 5 years starting in October 2009. The remaining 564,500 Euros of 5% Convertible Loan Notes were transferred to Creacorp for a nominal consideration giving Creacorp, under the terms of the agreement and in certain circumstances, the possibility to convert the 'remaining' loan notes to a maximum of 7,235,787 ordinary shares of 1 pence each.

The value of the liability component and the equity component were determined at the same time as the issue of the notes. The fair value of the liability component included in non-current borrowings, was calculated using a market interest rate based upon equity venture capital loans at 20%. The residual amount representing the value of the equity conversion option (Equity Component) is included in Shareholder's Equity in 'Other Reserves'. Following the cancellation by Polar of part of the Loan Notes, the remaining 5% Convertible Loan Notes in the balance sheet are calculated in the table below.

  NIPSON DIGITAL PRINTING SYSTEMS PLC

Audited Results for the Year Ended 31 December 2008

5% CONVERTIBLE LOAN NOTES	'Roseman' £'000	'Polar' &  'Creacorp' £'000	2008 Total £'000		2007 Total £'000
Proceeds of Issue of Convertible Loan Notes	1,434	1,969	3,403
Equity Component	(385)	(528)	(913)
Liability Component on Initial Recognition 12/05/08	1,049	1,441	2,490		-
Finance Charge	83	38	121		-
Amounts Repaid	-	(1,161)	(1,161)		-
Foreign exchange retranslation of liability	450	126	576		-
Liability Component at 31 December	1,582	444	2,026		-

Ultimate parent undertaking

As at the 31 December 2008, the majority shareholder of Nipson Digital Printing Systems Plc was 'Polar' an Israeli Group quoted on the Tel Aviv stock exchange with 54.15% of Nipson's shares held by Polar Communications Ltd a company incorporated in Israel and its direct and indirect subsidiaries, notably Koonras BV BVBA, a company incorporated in Holland with its principal place of business in Belgium.  However, since the 14 October 2008 and as announced to the stock exchange on the same day the Polar Group handed over control of the Nipson Group to the Belgian company Creacorp NV following an agreement signed between Polar and Creacorp, which among other conditions gave Creacorp the right to instruct Polar to exercise its vote according to its wishes.  As part of this same agreement, Polar gave a call option to Creacorp for 22,992,709 shares (43.96% of the Group's shares) out of the 28,323,067 shares held by Polar at that time.  The call option has been taken-up by Creacorp, but at the time of this announcement the option was not fully executed.  Creacorp did not hold Nipson shares as at 31 December 2008 and will not be consolidating the Nipson figures. 

The registered address of Creacorp NV is Palepelstraat 27, 9830 Sint-Martens-Latem, Belgium and is registered at the Tribunal de Commerce de Gent, Belgium under N°. BE 0451 683 765.

POST BALANCE SHEET EVENTS & GOING CONCERN

Background

As indicated in the Chairman's Statement, following the change in control of the Company from Polar to Creacorp announced on 14 October 2008 and the subsequent announcement on 28 October 2008 concerning the filing for the French 'Redressement Judiciaire' by its main operating subsidiary, Nipson SAS, the French Administrator and the Court overseeing the procedure required a commitment from the Company and Creacorp (resulting from the loans assigned to Creacorp by Polar on the 14 October 2008) to restructure the capital and debt position of Nipson SAS as part of the overall reorganisation plan, and in order to continue the procedure with a view to returning the restructured business back to the control of the Company. The administrator also required confirmation from the Company confirming the nullity of the return to better fortune clauses, which remained off balance sheet, relating to the 'Forgiveness of loans' contracts between the Company and its subsidiary Nipson SAS for a total of 15.5m€ contracted as follows:

• Forgiving loans owed by Nipson SAS to the Company of 5.0m€ signed 15 December 2004

• Forgiving loans owed by Nipson SAS to the Company of 5.0m€ signed 21 September 2005

• Forgiving loans owed by Nipson SAS to the Company of 3.0m€ signed 14 December 2006

• Forgiving loans owed by Nipson SAS to the Company of 2.5m€ signed 19 December 2007

On 7 April 2009, Nipson announced that the reorganisation plan would necessitate the forgiveness/conversion of debt and that this was likely to be a Related Party Transaction under the AIM Rules.

Going Concern

At the time of the announcement of 14 May 2009 the Board agreed a restructuring plan with Creacorp, which the French Court has presented to the creditors of Nipson SAS. Accordingly, Nipson anticipates that the Redressement Judiciaire procedure relating to Nipson SAS could be concluded within the timetable set by the Court, being at or shortly after the next scheduled meeting with the French Court on 23 June 2009, and that the Group could thereafter be able to resume its operations under the full control of the Board.

  NIPSON DIGITAL PRINTING SYSTEMS PLC

Audited Results for the Year Ended 31 December 2008

The Company entered into an agreement with its main operating subsidiary, Nipson SAS, based in France, and Creacorp, pursuant to which:

• of the total amount owed by Nipson SAS to the Company of 7.6m€, the Company has agreed to capitalise 6% (0.45m€) and waive the remaining 94% (7.15m€); and

• of the total amount owed by Nipson SAS to Creacorp of 14.6m€, Creacorp has agreed to capitalise 6% (0.9m€) and waive the remaining 94% (13.7m€).

As a result of the capitalisation of debt set out in the Debt Restructuring Agreement, Nipson's percentage holding of shares in the capital of Nipson SAS would be reduced from 100% to 52.3%, and Creacorp would hold the remaining 47.7%.

As part of the reorganisation, the French Court has required additional financial commitments from Creacorp to Nipson SAS. Creacorp has committed to provide those funds as follows:

• a commitment letter to Nipson SAS, and a commitment in the Debt Restructuring Agreement, stating it is willing to supply a loan of 1.0m€ to Nipson SAS in 2009 when requested by the board of Nipson SAS, subject to leaving the procedure of Redressement Judiciaire and subject to any insolvency of Nipson SAS or Nipson; 

• a commitment letter to Nipson SAS from Nipson International NV, a 100% subsidiary of Creacorp, stating it is willing to supply a loan of 1.0m€ to Nipson SAS in 2010 and a further 0.5m€ in 2011, when requested by Nipson SAS, subject to leaving the procedure of Redressement Judiciaire and subject to any insolvency of Nipson SAS or Nipson; 

• additional funding to the Company in the form of an interest-free, unsecured loan with no fixed repayment date of €275,000, of which €175,000 has been paid as at 31 May 2008.

• Nipson International NV who has invested in a production facility in Germany to provide a production facility for the future production of Nipson equipment in order to secure the continuity of Nipson SAS has committed to buy stock from Nipson SAS for €800,000 cash, which represents the book value of the stock. Nipson International NV will undertake production as a sub-contractor of Nipson SAS.

No other alternatives were available for the Board to restructure the capital and debt position than the proposed restructuring set out above. As a result of this transaction all principal activities of the Nipson Group will stay with Nipson SAS and the Company retains its majority position in Nipson SAS, which secures management fees to flow from Nipson SAS to the Company. 

In the light of the present financial position of the Company and Nipson SAS and taking into account the severe market conditions which has made it impossible for the business to raise any new equity or debt finance from external sources, the Board considers that the transactions as set out above represent the only realistic way of avoiding an insolvent liquidation of the Group. 

The above proposals are contingent of successful conclusion of the Redressment Judiciaire procedure which would result in the return of control of Nipson SAS. If the process was to prove unsuccessful then the Group may not be able to continue as a going concern as it is reliant on the continued support of Creacorp NV.  The directors are confident that their proposals will be approved and therefore continue to prepare the financial statements on the going concern basis.

  NOTICE IS HEREBY GIVEN that the annual general meeting of the Company will be held at 110 Cannon Street, London EC4N 6AR on 30 June 2009 at 11 am for the purpose of considering in accordance with section 142 of the Companies Act 1985 whether any, and if so what, steps should be taken to deal with the situation that the net assets of the Company are less than half of its called up share capital and the transaction of the following ordinary business:

• To receive and adopt the report of the directors and the audited accounts for the year ended 31 December 2008 together with the report of the auditors thereon.

• To re-elect David Gestetner, who retires by rotation, as a director.

• To confirm Marc Maes as a director, following his appointment the 14 October 2008. 

• To confirm Guillaume Dumarey as a director, following his appointment the 14 October 2008.

• To confirm Ghislain Segard as a director, following his appointment the 14 October 2008.

• To appoint Messrs RSM Bentley Jennison as auditors of the Company to hold office until the conclusion of the next general meeting at which accounts are laid before the Company and to authorise the directors to agree their remuneration.

  Date:    4th June 2009 Registered Office: 110 Cannon Street, London EC4N 6AR

  By Order of the Board Robert Cahill Director

Notes:

• Pursuant to regulation 41 of the Uncertificated Securities Regulations 2001, the Company specifies that only those shareholders entered in the register of members of the Company at 11.00 am on 28 June 2009 (or, if the meeting is adjourned, at 11.00 am on the day which is two days prior to the adjourned meeting) shall be entitled to attend or vote at the meeting in respect of the number of shares registered in their name at the relevant time. Changes to entries in the register of members after the relevant time will be disregarded in determining the rights of any person to attend or vote at the meeting.

• A member is entitled to appoint one or more proxies to exercise all or any of his rights to attend and to speak and vote at the meeting. A proxy need not be a member of the Company. If a member appoints more than one proxy in relation to the meeting, each proxy much be appointed to exercise the rights attached to a different share or shares held by the member. A member wishing to appoint more than one proxy should contact the Company's registrars, Computershare, The Pavilions, Bridgwater Road, Bristol BS13 8AE. 

• A form of proxy for use in relation to the meeting is enclosed. Completion and return of the form of proxy will not prevent a member from attending and voting at the meeting in person.

• To be effective, the form of proxy and any power of attorney or other authority under which it is signed (or a notarially certified copy of such power or authority) must be deposited with the Company's registrars, Computershare, The Pavilions, Bridgwater Road, Bristol BS13 8AE not less than 48 hours before the time appointed for the holding of the meeting or any adjourned meeting.

• The following documents will be available for inspection at the registered office of the Company during normal business hours on any weekday (Saturdays, Sundays and public holidays excepted) from the date of this notice of meeting up to and including the date of the meeting and also at the place of the meeting from at least 15 minutes prior to the meeting until its conclusion:

a) copies of the Directors' service contracts;

b) copies of the terms of appointment of the nonߛexecutive Directors.

ENDFR UKUNRKURNRAR