REG - Vianet Group PLC - Final Results <Origin Href="QuoteRef">VNET.L</Origin>
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Vianet Group PLC
10 June 2014
Press Release 10 June 2014
Vianet Group plc
("Vianet" or "the Group")
Final Results
Vianet Group plc (AIM:VNET), the leading provider of real time monitoring
systems and data management services for the leisure, vending and forecourt
services sectors, is pleased toannounce its final results for the year ended
31 March 2014.
Financial highlights
· Revenue for the year of £18.34 million (2013: £21.09 million)
· Recurring revenues at 78% (2013: 71%)
· Gross margin increased to 59% (2013: 51%)
· Operating profit before amortisation of goodwill, share option and exceptional costs of £3.05 million (2013: £3.30 million)
· Profit before tax of £1.6 million (2013: £1.8 million)
· Final dividend of 4.00 pence per share giving a full year total of 5.70 pence per share (2013: 5.70 pence per share)
· Vending profit of £0.35 million (2013: £0.05 million loss)
· Fuel Solutions reduced losses by c£0.2 million to £0.2 million, and was profitable from August 2013 (excluding seasonality impact of December)
Operational highlights
· 2,067 new vending units (2013: 475) with Q1 2015 pipeline for 1,200 new units
· 416 new beer monitoring installations(2013: 864), of which 296 were higher value iDraughtTM (2013: 828)
· Leisure margins improved by 15% as a result of product mix and efficiencies
· Several major customer contract extensions including Enterprise Inns, Heineken, Charles Wells and Daniel Thwaites
· Balanced outcome for beer flow monitoring in the Government's planned Statutory Code for Pub Companies announced last week
Commenting on the final results, James Dickson, Chairman of Vianet Group plc,
said: "I am pleased to report that good progress has been made across the
Group's businesses, and by focussing resources on the growth opportunities
that we have been developing over the last few years, the positive momentum
has helped offset the detrimental effect of the proposed Statutory Code.
"The uncertainty of the past several years is about to be lifted as the
Government last week published a balanced response to the Pub Company
consultation, although we suspect that its implementation will remain a
customer distraction for some time. However, the Group is confident that the
on-going high growth Vending opportunities, higher margin activity, and
further efficiencies provide an encouraging outlook for 2015. The Group's
markets, products, customers and people are now in place to deliver earnings
growth and there is a solid foundation for future profitability."
- Ends -
An audio cast of the final results presentation given by James Dickson,
Chairman, Stewart Darling, Chief Executive, and Mark Foster, Chief Financial
Officer, was released this morning at 07.00hrs on Tuesday, 10 June 2014 on the
Group's website www.vianetplc.com with the link also being distributed by
Abchurch Communications and Cenkos Securities plc.
Enquiries:
Vianet Group plc
James Dickson, Chairman Tel: +44 (0) 1642 358 800
james.dickson@vianetplc.com www.vianetplc.com
Cenkos Securities plc
Stephen Keys / Camilla Hume Tel: +44 (0) 20 7397 8900
www.cenkos.com
Media enquiries:
Abchurch Communications
Sarah Hollins / Alistair de Kare-Silveralistair.dks@abchurch-group.com Tel: +44 (0) 207 398 7715www.abchurch-group.com
Chairman's Statement
I am pleased to report that during the period, Vianet has focussed resources
on the growth opportunities that we have been developing over the last few
years.
In particular, whilst modest at this stage, the opportunity for high growth
and good profitability exists in our Vending division, as shown by the
progress during the year where the vending telemetry business produced
operating profit of £0.35 million (2013: £0.05 million loss).
We have reduced, or cut substantially, those parts of our business which are
considered low growth or low margin whilst re-calibrating our beer flow
monitoring operations to mitigate against external market pressures and we
continue to develop more innovative solutions for our core pub industry
clients. During the period, these changes have held back turnover and
operating profit but Vianet is a stronger company as a result.
Last week the Government published a long-awaited response to the consultation
on its proposed Statutory Code for Pub Companies. In essence, the Government
plans to legislate to put the existing voluntary code onto a statutory footing
which, for beer flow monitoring, is a continuance of our existing operating
procedures. The Board is pleased that the uncertainty of the past several
years is now being lifted and considers this a satisfactory outcome although
we suspect that the legislative implementation of the wider Statutory Code may
remain a distraction for our customers for a period of time yet.
Although this uncertainty and further pub closures remained a detrimental
factor on financial performance during FY 2014, the Board is confident that
the ongoing focus on developing the Vending division, together with change
programs in our beer flow monitoring and fuel businesses, are now proving
beneficial and provide an encouraging outlook for 2015.
Against this improving backdrop and the strength of recurring income, the
Board is proposing to maintain the final dividend at 4.00 pence which would
give a total dividend for the year of 5.70 pence.
Subject to approval from shareholders at the Annual General Meeting, to be
held on 15 July 2014, the final dividend will be paid on 1 August 2014 to
shareholders on the register as at 20 June 2014.
Results
Full year pre-exceptional operating profit, before amortisation and share
based payments, of £3.05 million (2013: £3.3 million) was in line with the
revised market expectations following Vianet's trading update on 9 October
2013.
Revenue for the year was £18.34 million (2013: £21.09 million) with the
decline primarily due to the full year impact of withdrawing from lower margin
work in the Leisure and Fuel Solutions divisions and a reduced number of new
installations in the UK pub market.
Several successful contract extensions, both in the Group's beer monitoring
and vending sectors, ensured that the level of contractual and recurring
revenues remained at over 70% of Group revenue.
The Group's overall operating gross margins of 59% (2013: 51%) benefitted from
an improved product mix and reductions in the cost base across the business.
Group profit before taxation amounted to £1.56 million (2013: £1.82 million)
and was impacted by £0.71 million of exceptional costs incurred in responding
to the Government's proposed statutory code for pub companies, the cost base
reduction programme, and further rationalisation of the Group structure.
Basic earnings per share post-exceptional costs (pre-deferred tax asset
recognition) decreased to 5.79 pence from 7.12 pence in 2013.
Corporate Governance
Vianet has successfully addressed significant challenges and opportunities in
its marketplaces over the past year or so. The Group's culture, values and
frameworks, whereby everyone at Vianet collectively and individually always
'seeks to do the right thing' has been fundamental in gaining support and
strengthening our position, whether dealing with customers, politicians,
suppliers or other stakeholders.
Living and breathing 'doing the right thing' not only underpins Vianet's ethos
and corporate governance but also the reputation for integrity and
transparency which is a key component of the Group's solutions for customers.
Board
The Board has been transformed over the period and is functioning well. The
transfer of Chief Executive Officer's responsibilities to Stewart Darling has
gone to plan with Stewart now fully focussed on Vianet's key growth
opportunity in the Vending Solutions division, together with iDraught USA, and
the management and development of the Group's substantial UK beer flow
monitoring business.
To enable this focus to be effective, the Board felt it important that, in
addition to the Chairman's role, I should retain executive responsibility for
Fuel Solutions, as well as dealing with the Government's Proposed Statutory
Code. During the period there has also been increased time invested in
improving communication with institutional and private investors.
Chris Williams, independent Non-Executive Director, was appointed Chairman of
the Audit Committee. Chris was formerly Strategic Development Director with
the Whitbread Beer Company, and joined the Board in May 2013.
In February 2014, Mike McGoun was appointed to the Board as its third
independent Non-Executive Director. Having developed and sold listed
technology businesses, Mike brings a wealth of experience whilst also
improving the balance of the Board.
Stewart Gilliland, who joined the Board prior to flotation, became our senior
independent Non-Executive Director in April 2013 and is Chairman of the
Remuneration Committee. Stewart's other board memberships include Mitchells &
Butler, C&C and Nature's Way.
All three of our Non-Executive Directors are members of the Audit,
Remuneration and Nominations board sub-committees.
I would like to thank all of my Board colleagues, senior management and staff
for their continued efforts and commitment on behalf of the Group over the
past year.
Outlook
Whilst trading in the pub sector will remain challenging despite a
satisfactory introduction of a Statutory Code, Vianet has made good progress
and prospects are encouraging, particularly for telemetry solutions for the
coffee vending market. The benefits of the actions taken to reduce costs are
being realised and further efficiency initiatives are being implemented.
· The UK beer flow monitoring business has been recalibrated to sustain
its strong earnings from long term contracts and to ensure it continues to
deliver relevant solutions.
· Vending Solutions has delivered strong profits growth and has made
excellent progress in developing significant new sales opportunities with
major global customers. The prospects are good and there is real focus on
developing our capability to ensure we take advantage of our leading position
in coffee vending, and of our contactless payment solutions for vending.
· The Fuel Solutions division is now totally self-contained and I am
confident that the efficiency program, together with a stronger forecourt
services pipeline and new opportunities for recurring income contracts in fuel
management solutions, will ensure a profitable outcome for this division in
2014/15.
The Group's markets, products, customers and people are now in place to
deliver earnings growth from all of these areas, which should finally
demonstrate the benefits from our diversification and in doing so also expand
the future strategic options for Vianet.
James W Dickson
Chairman
10 June 2014
Chief Executive Officer's Statement (Including Chairman's Review of Fuel
Solutions)
Vianet's aim is to build a business that is durable for the long term through
providing customers with solutions which unlock value in their business and
ultimately lead to increased profitability.
Vianet brings disruptive technologies which compel customers to think
differently about their markets, customers and operations. Achieving
sustainable success in our chosen markets is fundamentally about having an
appetite for change and a commitment to constant renewal in all that we do.
Philosophy and approach
The Group's success is rooted in three core strengths: providing customer
solutions which create a platform to make better business decisions; working
collaboratively with customers to identify innovations which will drive a
material shift in business performance; and developing and retaining great
talent in an organisation that is focused on those things that add value.
The Group has also established long-term relationships with major blue-chip
customers across the UK and Continental Europe and is using these strong
relationship development skills to build alliances with partners and customers
in the USA. These relationships give us a deep understanding of what our
customers want, and enable us to stay focused on identifying and providing
solutions that best meet their needs. We also recognise that many of our
solutions are 'disruptive' in the sense that they compel customers to change
the way they do things in order to improve business performance.
Because we understand our customers, we know that the main reason they choose
our solutions is to make better decisions that will result in enhanced
business performance. Our task is to ensure that we identify and develop the
very best solutions at a level of cost that drives a compelling return on
investment and short to medium term payback for the customer and value for our
shareholders.
In a fast-changing and complex environment we believe it is the combination of
these three strengths that gives us the edge over competitors, and our
continued focus and investment in them provides us with a durable source of
value and competitive advantage.
Leisure Solutions
The Leisure Solutions division (excluding US) achieved an operating profit
pre-amortisation and exceptional costs of £4.7 million.
Core beer monitoring / Machine Insite
Whilst the uncertainty over the Government's Proposed Statutory Code had an
adverse impact on pub industry confidence and expenditure, modest progress
was still made in the adoption of the higher value iDraughtTM product and
service with 296 additional sites gained during the year. However, this was
more than offset by an acceleration and increase in the number of in pub
disposals which exceeded approximately 1,500 in the year. Whilst there has
been increased iDraughtTM penetration and good progress in gaining new
contracts to monitor gaming machines in the pub sector, these were not enough
to offset the revenue loss arising from pub disposals and closures.
Following extensive contract negotiations, the Board was delighted that
Enterprise Inns agreed a four year contract extension for the provision of
beer monitoring services and the opportunity to pilot our second generation
gaming machine solution to determine its potential.
The Group commenced commercial trials of our iDraughtTM solutions for four
managed pub retailers to determine how best to unlock the value being lost
through not optimising draught beer dispense. Initial results have been
positive and, whilst this is a new capability and toolset for the managed
sector, the Board is optimistic about the potential for progress this year.
Overall, the Board remains confident that the outlook for further growth in
the higher value iDraughtTM product and service remains promising with many
pub retailers now conducting extensive evaluations, however timing of adoption
is difficult to predict.
Vianet Americas Inc.
Vianet Americas has made progress in securing pilot trials with national
multiple retailers across the USA and continues to operate an effective
strategic alliance with Micro Matic USA for nationwide iDraughtTM
installation, service and sales support.
The total loss for the year was £0.35 million and, as announced at the time of
the Group's final results in June 2013, a review of the business was
undertaken in February 2014. This resulted in a decision to focus on a few
significant pilots and create a cost structure to support this initiative.
By the end of the summer 2014, the Board should have a good understanding of
the scale of opportunity for iDraughtTM and be in a position to confirm our
strategy for Vianet Americas.
Vending Solutions
The Vending Telemetry business made good progress in H2 resulting in a full
year profit of £0.35 million. This progress can be attributed to the
alignment of our vending proposition with key strategic drivers in the
marketplace and securing contracts with key blue chip customers, whom we
identified as thought leaders and winners in the vending market, with
particular emphasis on quality coffee and cashless payment systems.
Consumer demand for quality coffee is driving growth in the market with key
retailers aiming to create a consumer experience in vending that is now
commonly found in High Streets throughout the UK and Continental Europe.
Delivering this level of experience requires that quality and machine
availability are maintained to the highest possible standard, both of which
require real time data and alerts. Combined with the platform to create and
implement shared business models, the market is now opening up to new
participants and exciting growth opportunities.
Cash only payment has long been an inhibitor of consumption and the consumer
experience in the vending industry. The evolution and growth of cashless
payment solutions provides a material opportunity to change this dynamic and
attract more consumers to the vending space.
For retailers adopting and deploying cashless payment solutions, the benefits
are immediate in terms of sales growth and reduced operating cost which in
turn drive increased adoption. The Board expects that our cashless payment
solutions portfolio and significant experience developed in this new and
dynamic space could offer material growth opportunities for the Group in years
to come.
Vianet Fuel Solutions ("VFS")
The Group's Fuel Solutions Division ("VFS") made progress during the period as
it benefitted from a reduced cost base and higher margin activity, achieving
reduced losses compared with the prior period and is now trading profitably
into 2014/15.
Turnover of £4.2 million was down £0.6 million as a direct result of the full
year effect of the decision taken to exit lower margin Liquefied Petroleum Gas
("LPG") work in 2013.
The cost base rationalisation and focus on higher margin activity resulted in
margins improving to 24% (2013: 21%).
VFS losses for the full year were £0.19 million (2013: £0.35 million loss).
However, it is encouraging that, with the exception of seasonal losses in
December, the division has traded profitably for the past nine months.
As the market's only end-to-end provider of fuel asset management solutions
and services, VFS has been gaining incremental new business with existing
customers.
Additionally, the VFS Clearview wet stock analysis, margin management
solutions, together with specialised Facilities and Compliance Management
solutions has created a leading suite of web-based tools. The market response
to this capability has been very positive with new business being gained with
partners such as Midlands Co-op, Lincolnshire Co-op, Intake, Brobot, Penny
Petroleum, ML Richardson, and post year end, Henderson Group with sixty sites
in Northern Ireland, and opportunities being created with major supermarket
groups.
Whilst the Group's long term strategic partnership with BigOil, the Petrol
Retailer Association's vehicle, is in its early days, there has been good
groundwork completed in establishing the foundations for future growth. This
should provide VFS with direct access to members who control approximately
3,500 independent forecourts.
VFS is well placed to expand its long term relationships with national
operators whilst building a robust and exclusive distribution of its products
to the independent sector.
Strategy for Growth
The Group's strategic intent remains to extend its solution development and
support services in selected sectors where there is considerable technical and
operational overlap, and to respond to new opportunities as they arise. There
is absolute focus on working in partnership with key customers to introduce
solutions which drive compelling and sustainable returns on investment and, in
turn, cement a profitable long term trading relationship with Vianet.
Value innovation and solutions that drive value to the customer are key
drivers for our people together with delivery being executed with focus and
discipline.
Utilising the solid financial platform provided by the core beer monitoring
business, the Group has invested in acquiring and developing its product set
in the following areas:
• Next generation beer monitoring technology for the wider licensed
trade;
• Machine to machine transmission technology and cutting edge data
capture that are both battle tested and have the potential for application
across multiple sectors of which vending telemetry is an outstanding example.
Outlook
The Board believes that the right team is in place with the competencies,
skills and behaviours aligned to delivering success in the various industries
in which we operate.
Responding to the increasing demands of dealing with international blue chip
customers, the Group continues to attract and develop high calibre individuals
to take the business forward, particularly in sales and delivery execution.
Whilst Vianet's traditional beer monitoring business may remain under pressure
during the general market decline, iDraughtTM in the UK, and vending telemetry
and cashless payment, and gaming machine telemetry are poised to drive the
growth of the Group.
The Group believes that by focusing on growth areas and rigorous cost
management of our legacy business, Vianet will deliver the desired benefits
and performance for customers and good returns for shareholders. In what has
continued to be a challenging business environment, the Group has continued to
make good underlying progress and build a solid foundation which positions
Vianet for future profitable growth.
Stewart Darling
Chief Executive Officer
10 June 2014
Financial Review
Group trading result
The Group now reports its results in the distinct segments of Leisure
(including US), Vending, Technology and Fuel. The current year saw positive
growth in Vending, reduced losses moving into ongoing profit in Fuel, solid
performance in Machine Insite within Leisure, and the expected losses in the
US. However positive momentum has been more than offset by the continued
challenges in the core beer market coming from the uncertainty of the proposed
Statutory Code together with pub company disposal plans being accelerated
beyond market expectation. In addition, the Group has continued with an
ongoing cost rationalisation program, maintained margins, invested for growth,
and added key people where needed.
This backdrop has led to the results achieved for 2013/14, with some good
underlying progress that gives us confidence as the Group enters the new
financial year.
Total revenue for the year was £18.34 million (2013: £21.09 million).
Operating profit (before amortisation of intangible assets, share based
payments, and exceptional items) amounted to £3.05 million (2013: £3.3
million) in line with the Trading Update announced in October 2013. The
results are after absorbing the reduced losses in the Fuel Division which has
traded profitably since August 2013 (bar the seasonality of December 2013),
and Vianet America's £0.4 million of losses, the combined impact of which is
c£0.6 million.
Blended recurring revenues for the Group are slightly ahead of last year at
78% (2013: 71%), core beer remaining robust at 82% and Fuel Solutions
maintaining a level of around 40%.
Exceptional costs of £0.7 million (2013: net £0.7 million) principally relate
to significant staff changes and reductions during the year as we position
Vianet for growth with the right management in place. That transition
incurred the bulk of these exceptional costs, together with Statutory Code and
lobbying costs, resulting in Group operating profit (pre intangible asset
amortisation and share based payments) of £2.3 million (2013: £2.5 million).
Divisional performance
The Leisure division, consisting of the core beer monitoring business
(including US), and gaming machine monitoring achieved revenue of £12.45
million (2013: £14.5 million) and achieved gross margins pre the cost of data
management of 69% (2013: 60%), impacted by cost rationalisation programme.
The core beer monitoring business delivered 416 (2013: 864) new installations
of which 296 (2013: 828) were the higher priced iDraughtTM systems (although
the previous period had the benefit of a major roll out with Spirit Group), as
well as 120 traditional Brulines beer monitoring systems. The active
installation base after pub company disposals, change of use and uplifted
systems is approximately 16,400 (2013: 17,600) systems.
The pub market has faced well documented challenges with the proposed delay in
the announcement of the Statutory Code implementation for the tenanted sector.
This significantly impacted both growth of new core beer monitoring sales
which can be seen from the iDraughtTM sales numbers as well as impacting pub
company disposal plans which saw a net c1,200 reduction in the estate to
16,400. Despite this background the core beer monitoring business remains
resilient with several major customers such as Enterprise Inns, Heineken,
Charles Wells and Daniel Thwaites extending their contracts, and iDraughtTM,
which is currently 16.6% (2013: 14%) of the installation base, extending its
footprint.
The final part of the Leisure division is Machine Insite brand which
contributed a robust c£0.2 million (2012: £0.2 million) this year.
Vending made significant progress in the year with unit sales of 2,067 (2013:
475). This helped improve turnover to £1.5 million (2013: £0.9 million) and a
pre-exceptional and amortisation profit of £0.35 million (2013: loss £0.05
million). Vending is now well positioned for growth as outlined in the Chief
Executive Officer's statement. The configured units in the field increased to
c12,000 (2013: c10,000) resulting in a revenue mix this year of c70% recurring
(2013: c85%).
The Fuel Solutions division made some significant steps forward this year
having removed distracting product segments such as LPG which accounted for
£0.6 million of the turnover difference, turnover being £4.2 million (2013:
£4.8 million). While not at the pace desired, the division delivered reduced
losses before exceptional items and amortisation of £0.2 million (£2013: 0.3
million) with enhanced margins of c24% (2013: c21%). Since August 2013
(barring the seasonal month of December 2013), the division was in profit of
£0.03 million pre-exceptional and amortisation with improving margins and
increasing recurring income. The developments referred to in the Chairman's
report for the forthcoming financial year inject a belief that the division
will be in profit for 2015.
Overall Group results
Group results overall, before amortisation of intangible assets, share based
payments, option costs, and exceptional costs, were a profit of £3.05 million
as compared to £3.3 million at March 2013.
The table below shows the performance of the Group (under IFRS), pre and post
exceptional costs, as follows:
FY 2014£'000 FY 2013£'000
Revenue 18,335 21,085
Gross Profit 10,778 10,810
(59%) (51%)
Operating Profit pre amortisation, share based payments and exceptional costs 3,048 3,265
PBT post exceptional costs 1,563 1,820
PBT pre exceptional costs 2,272 2,558
Divisional Performance
FY 2014 £'000Leisure £'000 £'000 £'000 £'000 £'000
Vending Technology Fuel Solutions Corporate Total
Revenue 12,451 1,509 187 4,188 - 18,335
Gross Profit 8,678 1,004 101 995 - 10,778
(70%) (67%) (54%) (24%) - (59%)
Operating profit/(loss) pre amortisation, share based payments and exceptional costs 4,264 353 (139) (190) (1,240) 3,048
Taxation
The Group has continued to utilise available tax losses during the year
resulting in no tax being paid and a refund of £0.11 million being received.
The Group continues to utilise the tax losses available. This year the tax
line includes a deferred tax asset provision of £1.6 million (2013: £nil)
based on the losses available.
Earnings per share
Earnings per share has been impacted by the recognition of a deferred tax
assets provision realising the losses carried by the Group. This has
increased the overall basic earnings per share for the year ended 31 March
2014 before exceptional costs which amounted to 14.23 pence as compared to
9.84 pence at March 2013.
The underlying earnings per share pre the deferred tax asset provision and
exceptional items is 8.42 pence compared to 9.84 pence at March 2013. Fully
diluted earnings per share (before exceptional costs), which takes account of
all outstanding share options, amounted to 8.40 pence which compares to 9.79
pence last year.
Balance sheet and cash flow
The Group carries a consistently strong balance sheet.
The Group generated operating cash flow at £1.6 million (2013: £4.6 million)
impacted by the level of advance customer payments of 2013 not being repeated
in 2014. The challenging core beer market has led to the weaker cash
generation than would have otherwise been enjoyed given the uncertainty of the
proposed Statutory Code and more aggressive pub company disposal programmes
coupled with a full year of US costs. Overall the Leisure business continued
to be a healthy generator of cash at c£4.0 million continuing to help fund the
Corporate and Technology segments, US operations and the reduced losses of the
Fuel division.
In addition to the above, the funds generated in the year were utilised to
invest in the Group's technology through research & development, service
borrowings and fund dividends. At the year-end, the Group had borrowings of
£2.4 million (2013: borrowings of £3.0 million), however net debt is
marginally higher than last year.
The balance sheet and cash generating capacity of the Leisure division remains
robust with Vending and Fuel now starting to contribute, giving the Board
confidence to pursue the growth opportunities that exist.
Mark H Foster
Chief Financial Officer
10 June 2014
Consolidated Statement of Comprehensive Income
for the year ended 31 March 2014
Before Exceptional 2013£000 Exceptional2013£000 Total2013£000 Total2012£000
Note
Continuing operations
Revenue 18,335 - 18,335 21,085
Cost of sales (7,557) - (7,557) (10,275)
Gross profit 10,778 - 10,778 10,810
Administration and other operating expenses (7,730) (709) (8,439) (8,283)
Operating profit pre amortisation and share based payments 3,048 (709) 2,339 2,527
Intangible asset amortisation (734) - (734) (591)
Share based payments 10 - 10 (52)
Operating profit post amortisation and share based payments 2,324 (709) 1,615 1,884
Finance costs (52) - (52) (64)
Profit before taxation 2,272 (709) 1,563 1,820
Income tax expense 1 1,570 - 1,570 110
Profit after tax and total comprehensive income for the year attributable to the owners of the parent 3,842 (709) 3,133 1,930
Earnings per share
- Basic 3 14.23p (2.63)p 11.60p 7.12p
- Diluted 3 14.21p (2.62)p 11.59p 7.08p
Consolidated Balance Sheet
at 31 March 2014
2014£000 2013£000
Assets
Non-current assets
Goodwill 17,723 17,723
Other intangible assets 2,486 2,179
Property, plant and equipment 3,700 3,812
Investments - 533
Total non-current assets 23,909 24,247
Current assets
Inventories 1,851 1,875
Trade and other receivables 3,835 3,661
Tax asset 1,443 140
Cash and cash equivalents 183 1,196
7,312 6,872
Total assets 31,221 31,119
Equity and liabilities
Liabilities
Current liabilities
Trade and other payables 3,841 4,548
Borrowings 1,183 899
Tax liabilities - -
5,024 5,447
Non-current liabilities
Borrowings 1,245 2,146
Deferred tax - 157
1,245 2,303
Equity attributable to owners of the parent
Share capital 2,827 2,827
Share premium account 11,182 11,182
Share based payment reserve 293 345
Own shares (1,381) (1,381)
Merger reserve 310 310
Retained profit 11,721 10,086
Total equity 24,952 23,369
Total equity and liabilities 31,221 31,119
Consolidated Statement of Changes in Equity
for the year ended 31 March 2014
Share capital Share premiumaccount Ownshares Sharebasedpaymentreserve Mergerreserve Retained profit Total
£000 £000 £000 £000 £000 £000 £000
At 1 April 2012 2,825 11,174 (1,154) 333 310 9,730 23,218
Dividends - - - - - (1,547) (1,547)
Issue of shares 2 8 - - - - 10
Exercised options re own shares - - 134 (3) - (64) 67
Purchase of own shares - - (361) - - - (361)
Share based payments - - - 52 - - 52
Share option forfeitures - - - (37) - 37 -
Transactions with owners 2 8 (227) 12 - (1,574) (1,779)
Profit and total comprehensive income for the year - - - - - 1,930 1,930
Total comprehensive income less owners transactions 2 8 (227) 12 - 356 151
At 31 March 2013 2,827 11,182 (1,381) 345 310 10,086 23,369
At 1 April 2013 2,827 11,182 (1,381) 345 310 10,086 23,369
Dividends - - - - - (1,540) (1,540)
Share based payments - - - (10) - - (10)
Share option forfeitures - - - (42) - 42 -
Transactions with owners - - - (52) - (1,498) (1,550)
Profit and total comprehensive income for the year - - - - - 3,133 3,133
Total comprehensive income less owners transactions - - - (52) - 1,635 1,583
At 31 March 2014 2,827 11,182 (1,381) 293 310 11,721 24,952
Consolidated Cash Flow Statement
for the year ended 31 March 2014
2013£000 2013£000
Cash flows from operating activities
Profit for the year 3,133 1,930
Adjustments for
Interest payable 52 64
Income tax expense (1,570) (110)
Amortisation of intangible assets 734 591
Depreciation 522 410
Profit on disposal of investment (90) -
Payment of deferred consideration (20) (18)
Loss on sale of property, plant and equipment 26 19
Share based payments (10) 52
Operating cash flows before changes in working capital and provisions 2,777 2,938
Change in inventories 24 28
Change in receivables (174) 496
Change in payables (1,020) 1,166
(1,170) 1,690
Cash generated from operations 1,607 4,628
Income taxes refunded 110 183
Net cash generated from operating activities 1,717 4,811
Cash flows from investing activities
Proceeds on disposal of property, plant and equipment 19 18
Proceeds on disposal of investment 623 -
Purchases of property, plant and equipment (455) (597)
Purchases of intangible assets (708) (856)
Disposal of intangible assets - 76
Net cash used in investing activities (521) (1,359)
Cash flows from financing activities
Interest payable (52) (64)
Issue of share capital - 10
Purchase of own shares - (361)
Proceeds from disposal of own shares - 67
Repayments of borrowings (900) (435)
New borrowings - 1,500
Dividends paid 2 (1,540) (1,547)
Net cash used in financing activities (2,492) (830)
Net (decrease)/increase in cash and cash equivalents (1,296) 2,622
Cash and cash equivalents at beginning of period 1,196 (1,426)
Cash and cash equivalents at end of period (100) 1,196
Notes to the financial statements
1. Taxation
Analysis of credit in period
2014£000 2013£000
Current tax expense/(credit)
- UK corporation tax on profits of the period - -
- Amounts in respect of prior periods 30 (110)
30 (110)
Deferred tax credit:
- Temporary differences (1,600) -
Income tax credit (1,570) (110)
Reconciliation of effective tax rate
The tax for the period is lower (2013 lower) than the standard rate of
corporation tax in the UK (23%/24%). The differences are explained below:
2014£000 2014£000
Profit before taxation- Continuing operations 1,563 1,820
Profit before taxation multiplied by rate of corporation tax in the UK of 23% (2013: 24%) 359 437
Effects of:
Other expenses not deductible for tax purposes (66) 38
Amortisation of intangibles 159 149
Utilisation of losses (806) (691)
Losses recognised (1,531) -
Adjustments for prior years 30 (110)
Research and development (167) (486)
Movement on losses not recognised 452 553
Total tax (credit)/expense (1,570) (110)
2. Ordinary dividends
2013£000 2012£000
Final dividend for the year ended 31 March 2013 of 4.0p (year ended 31 March 2012: 4.00p) 1,082 1,089
Interim dividend paid in respect of the year of 1.70p (2013: 1.70p) 458 458
Amounts recognised as distributions to equity holders 1,540 1,547
In addition, the directors are proposing a final dividend in respect of the
year ended 31 March 2014 of 4.00p per share. If approved by shareholders, it
will be paid on 1 August 2014 to shareholders who are on the register of
members on 20 June 2014. Total dividend payable 5.70p (2013: 5.70p).
3. Earnings per share
Earnings per share has been impacted by a deferred tax asset provision
realising the losses carried by the Group. This has increased the overall
basic earnings per share for the year ended 31 March 2014 before exceptional
costs amounted to 14.23 pence compared to 9.84 pence at March 2013.
Basic earnings per share are calculated by dividing the earnings attributable
to ordinary shareholders (£3,133k) by the weighted average number of ordinary
shares outstanding during the period.
Diluted earnings per share are calculated on the basis of profit for the year
after tax divided by the weighted average number of shares in issue in the
year plus the weighted average number of shares which would be issued if all
the options granted were exercised
The table below shows the earnings pre the impact of the deferred tax asset.
2014 2013
Earnings £000 Basic earnings per share Diluted earnings per share Earnings £000 Basic earnings per share Diluted earnings per share
Profit attributable to equity shareholders 1,563 5.79p 5.78p 1,930 7.12p 7.08p
2014Number 2013Number
Weighted average number of ordinary shares 26,993,694 27,098,352
Dilutive effect of share options 34,575 172,940
Diluted weighted average number of ordinary shares 27,028,269 27,271,292
4. Exceptional items
2014£000 2013£000
Corporate restructuring and transitional costs 709 738
709 738
This year has seen an unusually high level of exceptional costs, the primary
background being a transition of people and management (30 staff left between
January 2013 and March 2014) to ensure we have the succession and calibre of
people on board to deliver the strategic aims and aspirations of the Group.
This, coupled with the long overdue rationalisation of the group structure of
18 companies into a tax efficient 4 company base allowing the access to over
£16m of tax losses, as well as the adverse impacts of the Statutory Code costs
to ensure we do our utmost to achieve a fair outcome, has impacted one off
costs at an unusually higher level, not expected to be seen again.
5. Basis of preparation
The financial information set out in this preliminary announcement does not
constitute statutory accounts as defined in Sections 434 and 435 of the
Companies Act 2006.
The consolidated statement of comprehensive income, the consolidated statement
of changes in equity, the consolidated balance sheet and the consolidated cash
flow statement have been extracted from the Group's financial statements for
the year ended 31 March 2014 upon which the auditors opinion is unqualified
and does not include any statement under section 498(2) or 498(3) of the
Companies Act 2006. Those financial statements have not yet been delivered to
the Registrar.
The statutory accounts for the year ended 31 March 2013 have been delivered to
the registrar, contained an unqualified audit report and did not include a
statement under section s248(2) or s498(3) of the Companies Act 2006.
The audited accounts will be posted to all shareholders in due course and will
be available on request by contacting the Company Secretary at the Company's
Registered Office.
6. Annual General Meeting
The Annual General Meeting will be held on 15 July 2014 at 11.30am, at the
offices of Grant Thornton UK LLP, No 1 Whitehall Riverside, Leeds, LS1 4BN.
- Ends -
This information is provided by RNS
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