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VIANET GROUP PLC — Earnings Release 2015
Jun 4, 2015
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Earnings Release
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RNS Number : 1670P
Vianet Group PLC
04 June 2015
| Press Release | 4 June 2015 |
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 2015.
Financial highlights
| · | Revenue for the year of £18.53 million (2014: £18.34 million) |
| · | Recurring revenues at 71% (2014: 78%) |
| · | Gross margin increased to 59.4% (2014: 58.8%) |
| · | Operating profit before amortisation of goodwill, share option and exceptional costs up 4.3% at £3.18 million (2014: £3.05 million) |
| · | Profit before tax up 9.6% at £1.71 million (2014: £1.56 million) |
| · | Proposed final dividend of 4.00 pence per share giving a full year total of 5.70 pence per share (2014: 5.70 pence per share) |
| · | Vending operating profit up 60% at £0.56 million (2014: £0.35 million) |
| · | Fuel Solutions into profit at £0.03 million (2014: £0.19 million loss) |
| · | Operational cash generation up 78% at £2.87 million (2014: £1.61 million) |
| · | Underlying basic earnings per share (pre deferred tax adjustment) up 9.3% at 6.33 pence (2014: 5.79 pence) |
Operational highlights
| · | 5,702 new vending units (2014: 2,067) |
| · | High calibre appointment to the role of Managing Director of Vending solutions |
| · | 555 new beer monitoring installations of which 526 were higher value iDraughtTM (2014: 416 and 296 units respectively) |
Commenting on the final results, James Dickson, Chairman of Vianet Group plc, said: "Against a background of uncertainty related to the introduction of the Statutory Code for Pub Companies, Vianet's results for the full year show that encouraging progress has been made. Our focused approach to exploiting growth opportunities such as in vending telemetry has returned the Group to modest growth."
"Vianet's growth and profitability remains strongly influenced by external factors be they legislative, socio-economic, or corporate activities affecting the UK pub sector. We continue to make good progress in offsetting the impact of this through successful diversification, continued investment and innovation in products and services to deliver highly relevant customer solutions, and actions taken to reduce costs and improve efficiency."
"The Board remains confident that Vianet's long term strategy is appropriate, that the Group is well positioned, within the parameters of its influence, to deliver sustained earnings growth, which in doing so should also expand the future strategic options for Vianet."
- 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 Thursday, 4 June 2015 on the Group's website www.vianetplc.com with the link also being distributed by Abchurch Communications.
Enquiries:
| Vianet Group plc | |
| James Dickson, Chairman | Tel: +44 (0) 1642 358 800 |
| [email protected] | www.vianetplc.com |
| Cenkos Securities plc | |
| Stephen Keys / Mark Connelly | Tel: +44 (0) 20 7397 8900 |
| www.cenkos.com |
Media enquiries:
| Abchurch Communications | |
| Henry Harrison-Topham / Quincy Allan [email protected] |
Tel: +44 (0) 207 398 7702 www.abchurch-group.com |
Chairman's Statement
Against a background of uncertainty related to the introduction of the Statutory Code for Pub Companies, Vianet's results for the full year show that encouraging progress has been made. The focused approach to exploiting growth opportunities such as in vending telemetry has returned the Group to modest growth.
Those parts of the Group which are considered to have lower potential have been optimised to produce steady cash flow and Vianet's beer flow monitoring operations are evolving to address external market pressures. Innovative new solutions are being developed and introduced to ensure we remain relevant to our core pub industry customers who are adapting to market changes
In June 2014, the Government lifted some of the uncertainty by publishing its proposed Statutory Code for Pub Companies which the Board regarded as a fair outcome, greeting it with cautious optimism. Subsequently traction in iDraught™ sales started to develop until further uncertainty was introduced in December 2014 with the House of Commons' narrow vote in favour of a Bill to introduce a market rent only ("MRO") option to the Statutory Code.
The Bill has now progressed through the parliamentary process, with likely implementation by Summer 2016. Whilst there may be limited long term impact, the current uncertainty for pub companies has held back further investment in this area, leading to an increase in pub disposals and closures. Although there have been no lost contracts, this has resulted in a net loss of almost 900 beer monitoring installations at a time when the Group was starting to witness a pickup in trading.
This loss of sites held back financial performance in H2 2015 and into the H1 2016, but continued investment in Vending division growth, innovation in the Leisure division, and the Fuel division moving into profit have offset this drag and help provide an encouraging outlook for the Group as a whole.
Good performance has been achieved in the Vending division, where coffee market solutions, including development of supply into machine manufacturers, contributed significantly to results. A significant contract with a multinational coffee company has been rolling out through the period.
Group turnover of £18.53 million was marginally ahead of last year, whilst operating profit of £3.18 million was up by 4.3%. In particular, the Vending division's operating profits increased by 60% to £0.56 million (2014: £0.35 million).
The Group's overall operating gross margins of 59.4% (2014: 58.8%) benefitted from an improved product mix and planned reductions in the cost base across the business.
Group profit before taxation amounted to £1.71 million (2014: £1.56 million) and was impacted by reduced exceptional costs of £0.6 million (2014 £0.71 million) incurred largely from implementation of the cost base reduction programme and further rationalisation of the Group's structure, which has now been largely completed. The Board expects to see a further reduction in exceptional costs in FY 2016.
Basic earnings per share post-exceptional costs (pre-deferred tax asset movements) increased to 6.33 pence from 5.79 pence in 2014.
Against this improving backdrop and the continued strength of recurring income, the Board is proposing to maintain the final dividend at 4.00 pence which, if approved by shareholders, would give a total dividend for the year of 5.70 pence (2014: 5.70 pence).
Subject to approval from shareholders at the Annual General Meeting, to be held on 29 June 2015, the final dividend will be paid on 24 July 2015 to shareholders on the register as at 12 June 2015.
Board and Staff
The Board is pleased to announce the appointment of Matt Lane to the new role of Managing Director for the Vending Solutions division, reporting directly to Stewart Darling, Group CEO. Matt is a high calibre individual with extensive experience in the vending sector having recently held the roles of Head of Beverage Solutions and Head of Vending at Nestle Professional UK.
The Group's culture, values and frameworks, whereby everyone at Vianet collectively and individually always 'seeks to do the right thing', have been fundamental in gaining support and strengthening the Group's position and reputation, 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.
Across the Group, we have been engaged on a number of large development projects and change programmes and our people have again responded with their usual enthusiasm, demonstrating commitment which continues to build the Group's reputation with customers.
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
Vianet's growth and profitability remains strongly influenced by external factors be they legislative, socio-economic, or corporate activities affecting the UK pub sector.
Whilst the backdrop to trading in the pub sector will likely remain challenging, the Group continues to make good progress in offsetting the impact of this through successful diversification, continued investment and product innovation to deliver highly relevant customer solutions, and actions taken to reduce costs and improve efficiency.
| · | The UK beer flow monitoring business continues to evolve and innovate to deliver relevant solutions in a changing business environment and to sustain its strong earnings from long term contracts. |
| · | Vending Solutions has delivered further strong profits growth and has made excellent progress in developing significant new sales opportunities with major global customers. Its prospects remain excellent and there is real focus on developing our capability to take advantage of our leading position in coffee vending and of our vending contactless payment solutions. |
| · | The self-contained Fuel Solutions division is now profitable, has built an excellent reputation with customers and has a good sales pipeline into FY 2016. The effort and commitment to executing our strategy over the past 18-24 months is now paying off and I am confident that our relevance to convenience, a stronger forecourt services pipeline and new opportunities for recurring income contracts in fuel management solutions, will ensure good growth for this division in FY 2016. |
The Board remains confident that Vianet's long term strategy is appropriate, that the Group is well positioned, within the parameters of its influence, to deliver sustained earnings growth, which in doing so should also expand the future strategic options for Vianet.
James W Dickson
Chairman
4 June 2015
Chief Executive Officer's Statement (Including Chairman's Review of Fuel Solutions)
Introduction and approach
Vianet's focus on building a business that is durable for the long term has continued at pace. The Group continues to make good progress in engaging customers to develop and deliver solutions which unlock value in their business and ultimately lead to their increased profitability. We are also increasingly cognisant that the solutions we offer are part of a new industrial revolution commonly referred to as the 'Internet of Everything'.
Whether in industry or the home, embedding intelligence in a growing network of devices will increasingly connect people and machines, leading to new insights, improved decision making and ultimately new business models to challenge existing ones. This gives a great stimulus to evolving the way we think about markets and the needs of our customers, and is also shaping our thinking around what is required to compete even more effectively in the future, whether it be developing new partnerships in a changing industry ecosystem or focusing on a few highly relevant key competencies that will differentiate us.
Long term established relationships with blue chip customers give us a deep understanding of what drives value in their business, and enables Vianet to stay focused on identifying and providing solutions that best meet those needs. With the growth in the Internet of Everything we recognise that the competitive forces in the Group's markets are changing, giving Vianet attractive opportunities although it also means that we may be increasingly exposed to regulatory environments which do not always lend themselves to rapid progress.
The Group's success continues to be rooted in three core strengths in which we continue to invest:
(i) providing customer solutions which create a platform to make better business decisions;
(ii) working collaboratively with customers to identify innovations which will drive a material shift in business performance; and
(iii) developing and retaining great talent in an organisation that is focused on those things that add value.
Leisure Solutions
Leisure Solutions, comprising core beer monitoring and gaming machine monitoring, inclusive of Vianet Americas costs, achieved an operating profit pre-amortisation and exceptional costs of £4.14 million (2014: £4.26 million).
The introduction of the MRO option to the Statutory Code, following a last minute intervention in Parliament, has once again cast a shadow of uncertainty over leased and tenanted pub companies and therefore has an adverse impact on industry confidence. With this legislation having passed through Parliament to become law, and likely to be implemented by June 2016, we estimate that it will be a further 12-18 months before its true impact can begin to be assessed.
Whilst pub companies continue to deliberate on how best to approach this change, it is clear that the uncertainty has caused investment expenditure to be postponed together with further pub disposals. Despite these challenges, good progress was made in the adoption of the higher value iDraught™ product and service with 526 additional sites gained during the year. However, this was more than offset by acceleration in the number of pub disposals, which resulted in a loss of approximately 1,400 standard beer monitoring installations over the financial year. This loss of operating contribution from a reduced number of sites being serviced, combined with the full year impact of contract extension negotiations has more than offset the positive effect of new iDraught sales in the financial year.
The commercial trials of iDraught™ solutions for some key managed pub retailers has the objective of determining how best to unlock the value lost through sub optimal draught beer dispense. The trials have proved successful in terms of the results yielded, but progress to contract and roll out has been held back by M&A activity in that sector of the market. Despite this setback in timing, we are optimistic for progress this year.
Overall, the Board remains cautiously confident that the outlook for further growth in the higher value iDraught™ product and service remains promising but the implementation of the MRO option and the resultant accelerated pubs closures will dampen this effect.
Vianet Americas Inc.
Vianet Americas has continued to make progress following strengthening of the commercial team. Whilst this change initially slowed down sales traction, the team has developed an approach to the market that is starting to deliver the necessary sales growth.
The pre-exceptional loss for the year was reduced to £0.33 million (2014: £0.40 million). Increased focus on national chains, partially offset by withdrawal from several smaller outlets, resulted in the number of contributing sites increasing to 143 (2014: 121 sites).
Market analysis clearly indicates that Vianet's iDraught™ solution is substantially ahead of all competitors in the USA, and this advantage, combined with our strategic alliance with Micro Matic USA for nationwide installation, service and sales support, leaves the Board cautiously optimistic that we will begin to the see the progress in sales and reduction in trading losses that our efforts to date have merited.
Vending Solutions
The Vending Solutions division continued to make very good progress in the period, resulting in a profit of £0.56 million (2014: £0.35 million). This progress can be attributed to the alignment of its vending proposition with key strategic drivers in the marketplace and securing contracts with major blue chip customers. The successful implementation of this strategy is particularly pleasing when factoring in the impact of vending estate rationalisation which is an inevitable outcome of installing our solution.
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 generally immediate in terms of sales growth and reduced operating cost, which in turn drive increased adoption. Although Vianet's cashless solutions have developed throughout the year, it is a complex environment which itself is changing as a result of European banking regulation, new market entrants such as Apple Pay, and consumer habits amongst other factors. The decision to partner with payment industry specialists to develop our solutions initially slowed deployment, however we expect that Vianet's cashless payment solutions portfolio and significant experience developed in this new and dynamic space could offer exciting growth opportunities for the Group in years to come.
Vianet Fuel Solutions ("VFS")
VFS, the Group's Fuel Solutions division made good progress during the period, benefitting from increased adoption of its range of solutions in the forecourt convenience market, which resulted in improved revenue and margin mix, and importantly, a strong pipeline of activity and opportunities into FY2016.
Turnover of £4.17 million (2014: £4.19 million) was held back by several projects being delayed into FY2016.
The cost base rationalisation and focus on higher margin activity resulted in margins improving to 25.7% (2014: 23.8%). Full year profits in the financial year were £0.03 million (2014: £0.19 million loss).
VFS comprises two distinct business areas:
| · | Fuel Management Solutions ("FMS") which designs, develops, supports and operates fuel management applications and web-based mission critical data services for forecourt operators; and |
| · | Construction and Forecourt Services ("CFS") which provides added value field based services to complement and support FMS. |
Development of our fuel management solutions, together with specialised facilities and compliance management solutions, has created a leading suite of web-based tools which together with the CFS products, provides forecourt operators with the only one-stop shop for what are increasingly essential services.
Against this background, VFS now has an excellent reputation for strong solution innovation, professional execution and standout customer care, all of which we consider fundamental to delivering its growth aspirations. Testimony to VFS success are the number of customers, such as Co-operative groups, Henderson Group, Central Stores, Asda and Morrisons, who commence with a single solution and add further services from the portfolio. This is particularly the case in the forecourt convenience market where VFS's solutions enable operators to increase their focus on higher margin convenience sales.
VFS is now well placed to expand its long term relationships with national operators and the growing convenience sector, whilst building a robust and exclusive distribution of its products to the independent sector. We therefore expect VFS to make good progress in 2016.
Strategy for Growth
The Group's strategic intent remains to extend the footprint of 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 remains an 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.
Whilst the Group has continued to invest in acquiring and developing its product set, much work has been implemented to ensure that the legacy flow monitoring business stays fit for purpose in relation to the changing needs of our customers, the impact of legislative change and the uncertainty that will create as customers rethink their business models, and the emergence of big data and its potential to transform decision making. Key developments that have been addressed are:
| · | next generation beer monitoring technology for the wider licensed trade; |
| · | machine to machine transmission technology and cutting edge data capture that are both tried and tested and have the potential for application across multiple sectors of which vending telemetry is an outstanding example; and |
| · | people and management capability to ensure the Group takes those steps forward. |
Outlook
Vianet continues to invest in the competencies, skills and behaviours essential to delivering success in the various industries in which the Group operates. Developing great people, culture and values is at the core of what we do and my straightforward philosophy for managing the business is that great people always develop great strategies, plans and products - not the other way around. For that reason, we have again invested in the recruitment and development of high calibre individuals to take the business forward, particularly in sales, and in people development and technology.
Building on that theme, and given the need to have an individual solely focused on realising the exciting opportunities in the vending market, I am delighted that we will be joined in May 2015 by a new Managing Director, Matt Lane, to lead our Vending Solutions business.
As a result of continuing uncertainty due to the implementation of the industry MRO option, Vianet's traditional beer monitoring business will remain under pressure from pub closures and disposals, and reduced investment expenditure, however the Board expects this to be at least partially offset by continued growth in iDraught™ installations plus other initiatives such as growth of Casio EPOS system sales under our distribution agreement with Casio.
Despite these challenges in Vianet's core business, vending and gaming machine solutions will contribute strongly to the growth of the Group and we are cautiously optimistic of making progress with iDraught™ in the USA after a year of change. VFS should also have a much improved 2016 both in terms of sales and profitability.
Looking to the development of Vianet, there is no doubt that the competitive landscape is changing in a way that will require the Group to concentrate its efforts on the competencies and capabilities key to driving value for our customers in chosen markets, and accept that partnering with scale providers for some services may well be a critical part of this fast changing landscape.
Focusing on the drivers of growth combined with rigorous cost management of Vianet's legacy business should deliver the desired benefits and performance for customers and 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 well for future profitable growth.
Stewart Darling
Chief Executive Officer
4 June 2015
Financial Review
Group trading result
The financial year under review featured very good growth in Vending Solutions, a reasonable performance from Machine Insite within Leisure, Fuel Solutions moving into a small profit, and reduced losses in the US where work to unlock value continues with some potentially large customers. The penetration of iDraught™ in the UK in the year has progressed, which was pleasing to see post what was thought to be a satisfactory outcome from the Statutory Code consultation in June 2014. This gain, however, has been more than offset by both pub disposals and the uncertainty re-introduced in December 2014 by the MRO option emanating from the Statutory Code debate. Overall, this has slowed trading progress in H2 2015.
The Group has continued with an ongoing cost rationalisation programme, maintained margins, invested for growth, and added key people where needed.
Total revenue for the year was £18.53 million (2014: £18.34 million). Operating profit (before amortisation of intangible assets, share based payments, and exceptional items) was up by 4.3% to £3.18 million (2014: £3.05 million) in line with expectations as reported in December 2014. The results are after absorbing reduced US losses of £0.33 million but with the Fuel division moving in to a small profit.
Blended recurring revenues for the Group are slightly behind last year at 71% (2014: 78%), core beer remaining robust at 83% and Fuel Solutions maintaining a level of around 40%.
Modestly reduced exceptional costs of £0.6 million (2014: £0.7 million) largely result from a lower level of staff reduction and changes during the year, a trend which should improve further in FY2016. We continue to ensure Vianet is positioned with the right management in place for growth, a process which has taken time to effect. That transition was responsible for the bulk of these exceptional costs, resulting in Group operating profit (pre intangible asset amortisation and share based payments) being up by 10.1% to £2.58 million (2014: £2.34 million).
Divisional performance
The Leisure division, consisting of the core beer monitoring business (including the US), and gaming machine monitoring, achieved revenue of £12.15 million (2014: £12.45 million) and gross margins pre the cost of data management of 70% (2014: 69%). The divisional results were positively impacted by higher iDraught™ sales than the previous financial year and the benefits of continued cost rationalisation programmes, but faced a strong headwind of pub disposals of circa 1,400 (net circa 900) during the year under review.
The core beer monitoring business delivered 555 (2014: 416) new installations of which 526 (2014: 296) were the higher value iDraught™ systems, as well as 29 traditional Brulines beer monitoring systems. The active installation base after pub company disposals, change of use and uplifted systems is approximately 15,500 (2014: 16,400) systems. Against this background, the core beer monitoring business remains resilient with iDraught™, which is currently 19.6% (2014: 16.6%) of the installation base, extending its footprint.
The final part of the Leisure division is Machine Insite brand which contributed a robust £0.22 million (2014: £0.22 million) this year.
Vending made significant progress in the year with unit sales of 5,702 (2014: 2,067). This helped improve turnover to £2.1 million (2014: £1.5 million) and a pre-exceptional and amortisation profit of £0.56 million (2014: £0.35 million). Although good headway was made on unit sales, one consequence of our service is that customers use the operational transparency to manage their estates more efficiently including the rationalisation and removal of vending machines that are not viable. Accordingly, the net configured units in the field increased by c. 2,500 to c. 14,500 (2014: c. 12,000) with a higher level of hardware sales impacting the revenue mix of c. 45% recurring this year (2014: c. 70%). Vending continues to be well positioned for growth as outlined in the Chief Executive Officer's statement and further investment in this area is being made to move it forward.
The Fuel Solutions division made some significant steps forward this financial year, moving to a small profit for the year, despite delayed starts to several large contract order wins. Turnover was £4.17 million (2014: £4.19 million). Whilst not yet at the level desired, the division delivered a profit before exceptional items and amortisation of £0.03 million (2014: £0.19 million loss) with gross margins of c. 26% (2014: c. 24%). Over the year, underlying performance improved with increased recurring income, higher margins and a reduced cost footprint. The developments referred to in the Chief Executive Officer's statement should result in an increased contribution from this division in FY 2016.
Overall Group results
Group results overall, before amortisation of intangible assets, share based payments, option costs, and exceptional costs, were a profit of £3.18 million as compared to £3.05 million in the financial year ended 31 March 2014.
The table below shows the performance of the Group (under IFRS), pre and post exceptional costs, as follows:
| FY2015 £'000 |
FY2014 £'000 |
|
| Revenue | 18,530 | 18,335 |
| Gross Profit | 11,010 | 10,778 |
| 59.4% | 58.8% | |
| Operating Profit pre amortisation, share based payments and exceptional costs | 3,176 | 3,048 |
| Profit before tax post exceptional costs | 1,709 | 1,563 |
| Profit before tax pre-exceptional costs | 2,309 | 2,272 |
Divisional Performance
| FY2015 | £'000 Leisure |
£'000 Vending |
£'000 Technology |
£'000 Fuel Solutions |
£'000 Corporate |
£'000 Total |
| Revenue | 12,146 | 2,105 | 107 | 4,172 | - | 18,530 |
| Gross profit | 8,568 | 1,291 | 77 | 1,074 | - | 11,010 |
| 70% | 61% | 72% | 26% | - | 59% | |
| Operating profit/(loss) pre amortisation, share based payments and exceptional costs | 4,136 | 559 | (176) | 26 | (1,369) | 3,176 |
Taxation
The Group has continued to utilise available tax losses during the year resulting in no tax being paid (2014: a refund of £0.11 million was received). The Group will continue to utilise the available tax losses carried forward into FY2016. In the financial year under review, the tax line includes a deferred tax asset provision release of £0.42m (2014: £1.57 million asset provision) recognising the impact of the tax losses available and being utilised.
Earnings per share
Earnings per share has been impacted by the recognition of the deferred tax assets provision referred to above, realising the losses carried by the Group and the unwinding of that provision in FY2015. This reduced overall basic earnings per share before exceptional costs to 7.00 pence for FY2015 as compared to 14.23 pence for FY2014 (which benefitted from the provision being made).
The underlying earnings per share pre the deferred tax asset provision and exceptional items is 8.55 pence for FY2015 compared to 8.42 pence for FY2014. Fully diluted earnings per share (before exceptional costs), which takes account of all outstanding share options, amounted to 8.54 pence in FY2015 which compares to 8.40 pence in the prior financial year.
Balance sheet and cash flow
The Group balance sheet remains consistently strong.
The Group generated operating cash flow of £2.87 million (2014: £1.61 million) with working capital movement largely neutral. Despite the effects of a challenging core beer market and more aggressive pub company disposal programmes, coupled with losses in the US, the Leisure business overall was a very healthy generator of cash at c. £4.4 million.
The funds generated in FY2015 were utilised to invest in the Group's technology through research and development, service borrowings and fund dividends. The two year £1 million term loan taken in January 2013 was replaced with a new three year £1 million term loan taken in July 2014. At the year end, the Group had borrowings of £2.1 million (2014: £2.4 million), and net debt is marginally lower than last year at £ 2.09 million (2014: £2.25 million).
The balance sheet and cash generating capacity of the Leisure division remains robust and with the Vending and Fuel divisions now contributing operating cash, Vianet has a solid platform to pursue the significant growth opportunities that will generate shareholder value.
Mark H Foster
Chief Financial Officer
4 June 2015
Consolidated Statement of Comprehensive Income
for the year ended 31 March 2015
| Before Exceptional 2015 £000 |
Exceptional 2015 £000 |
Total 2015 £000 |
Total 2014 £000 |
||
| Note | |||||
| Continuing operations | |||||
| Revenue | 18,530 | - | 18,530 | 18,335 | |
| Cost of sales | (7,520) | - | (7,520) | (7,557) | |
| Gross profit | 11,010 | - | 11,010 | 10,778 | |
| Administration and other operating expenses | (7,834) | (600) | (8,434) | (8,439) | |
| Operating profit pre amortisation and share based payments | 3,176 | (600) | 2,576 | 2,339 | |
| Intangible asset amortisation | (757) | - | (757) | (734) | |
| Share based payments | (45) | - | (45) | 10 | |
| Operating profit post amortisation and share based payments | 2,374 | (600) | 1,774 | 1,615 | |
| Finance costs | (65) | - | (65) | (52) | |
| Profit before taxation | 2,309 | (600) | 1,709 | 1,563 | |
| Income tax (expense)/income | 1 | (419) | - | (419) | 1,570 |
| Profit after tax and total comprehensive income for the year attributable to the owners of the parent | 1,890 | (600) | 1,290 | 3,133 | |
| Earnings per share | |||||
| - Basic | 3 | 7.00p | (2.22)p | 4.78p | 11.60p |
| - Diluted | 3 | 6.99p | (2.22)p | 4.77p | 11.59p |
Consolidated Balance Sheet
at 31 March 2015
| 2015 £000 |
2014 £000 |
||||
| Assets | |||||
| Non-current assets | |||||
| Goodwill | 17,723 | 17,723 | |||
| Other intangible assets | 2,436 | 2,486 | |||
| Property, plant and equipment | 3,537 | 3,700 | |||
| Investments | - | - | |||
| Total non-current assets | 23,696 | 23,909 | |||
| Current assets | |||||
| Inventories | 1,897 | 1,851 | |||
| Trade and other receivables | 4,187 | 3,835 | |||
| Tax asset | 1,024 | 1,443 | |||
| Cash and cash equivalents | 548 | 183 | |||
| 7,656 | 7,312 | ||||
| Total assets | 31,352 | 31,221 | |||
| Equity and liabilities | |||||
| Liabilities | |||||
| Current liabilities | |||||
| Trade and other payables | 3,947 | 3,841 | |||
| Borrowings | 1,043 | 1,183 | |||
| 4,990 | 5,024 | ||||
| Non-current liabilities | |||||
| Borrowings | 1,594 | 1,245 | |||
| Deferred tax | - | - | |||
| 1,594 | 1,245 | ||||
| Equity attributable to owners of the parent | |||||
| Share capital | 2,831 | 2,827 | |||
| Share premium account | 11,198 | 11,182 | |||
| Share based payment reserve | 209 | 293 | |||
| Own shares | (1,381) | (1,381) | |||
| Merger reserve | 310 | 310 | |||
| Retained profit | 11,601 | 11,721 | |||
| Total equity | 24,768 | 24,952 | |||
| Total equity and liabilities | 31,352 | 31,221 |
Consolidated Statement of Changes in Equity
for the year ended 31 March 2015
| Share capital |
Share premium account |
Own shares |
Share based payment reserve |
Merger reserve |
Retained profit |
Total | |
| £000 | £000 | £000 | £000 | £'000 | £000 | £000 | |
| 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 |
| At 1 April 2014 | 2,827 | 11,182 | (1,381) | 293 | 310 | 11,721 | 24,952 |
| Dividends | - | - | - | - | - | (1,539) | (1,539) |
| Issue of shares | 4 | 16 | - | - | - | - | 20 |
| Share based payments | - | - | - | 45 | - | - | 45 |
| Share option forfeitures | - | - | - | (129) | - | 129 | - |
| Transactions with owners | 4 | 16 | - | (84) | - | (1,410) | (1,474) |
| Profit and total comprehensive income for the year | - | - | - | - | - | 1,290 | 1,290 |
| Total comprehensive income less owners transactions | 4 | 16 | - | (84) | - | (120) | (184) |
| At 31 March 2015 | 2,831 | 11,198 | (1,381) | 209 | 310 | 11,601 | 24,768 |
Consolidated Cash Flow Statement
for the year ended 31 March 2015
| Note | 2015 £000 |
2014 £000 |
|
| Cash flows from operating activities | |||
| Profit for the year | 1,290 | 3,133 | |
| Adjustments for | |||
| Interest payable | 65 | 52 | |
| Income tax expense | 419 | (1,570) | |
| Amortisation of intangible assets | 757 | 734 | |
| Depreciation | 492 | 522 | |
| Profit on disposal of investment | - | (90) | |
| Payment of deferred consideration | (20) | (20) | |
| Loss on sale of property, plant and equipment | 14 | 26 | |
| Share based payments | 45 | (10) | |
| Operating cash flows before changes in working capital and provisions | 3,062 | 2,777 | |
| Change in inventories | (46) | 24 | |
| Change in receivables | (352) | (174) | |
| Change in payables | 205 | (1,020) | |
| (193) | (1,170) | ||
| Cash generated from operations | 2,869 | 1,607 | |
| Income taxes refunded | - | 110 | |
| Net cash generated from operating activities | 2,869 | 1,717 | |
| Cash flows from investing activities | |||
| Proceeds on disposal of property, plant and equipment | 21 | 19 | |
| Proceeds on disposal of investment | - | 623 | |
| Purchases of property, plant and equipment | (363) | (455) | |
| Purchases of intangible assets | (787) | (708) | |
| Disposal of intangible assets | - | - | |
| Net cash used in investing activities | (1,129) | (521) | |
| Cash flows from financing activities | |||
| Interest payable | (65) | (52) | |
| Issue of share capital | 20 | - | |
| Repayments of borrowings | (1,067) | (900) | |
| New borrowings | 1,000 | - | |
| Dividends paid | 2 | (1,539) | (1,540) |
| Net cash used in financing activities | (1,651) | (2,492) | |
| Net increase/(decrease) in cash and cash equivalents | 89 | (1,296) | |
| Cash and cash equivalents at beginning of period | (100) | 1,196 | |
| Cash and cash equivalents at end of period | (11) | (100) |
Notes to the financial statements
1. Taxation
Analysis of charge/(credit) in period
| 2015 £000 |
2014 £000 |
|
| Current tax expense | ||
| - UK corporation tax on profits of the period | - | - |
| - Amounts in respect of prior periods | 1 | 30 |
| 1 | 30 | |
| Deferred tax charge/(credit): | ||
| - Temporary differences | 418 | (1,600) |
| Income tax charge/(credit) | 419 | (1,570) |
Reconciliation of effective tax rate
The tax for the 2015 period is higher (2014 was lower) than the standard rate of corporation tax in the UK (2015: 21% and 2014: 23%). The differences are explained below:
| 2015 £000 |
2014 £000 |
|
| Profit before taxation - Continuing operations |
1,709 | 1,563 |
| Profit before taxation multiplied by rate of corporation tax in the UK of 21% (2014:23%) | 359 | 359 |
| Effects of: | ||
| Other expenses not deductible for tax purposes | 15 | (66) |
| Amortisation of intangibles | 24 | 159 |
| Utilisation of losses | (228) | (806) |
| Losses recognised | - | (1,531) |
| Adjustments for prior years | 1 | 30 |
| Research and development | (178) | (167) |
| Movement on losses not recognised | 426 | 452 |
| Total tax charge/(credit) | 419 | (1,570) |
2. Ordinary dividends
| 2015 £000 |
2014 £000 |
|
| Proposed final dividend for the year ended 31 March 2015 of 4.0p (year ended 31 March 2014: 4.0p) | 1,081 | 1,082 |
| Interim dividend paid in respect of the year of 1.70p (2014: 1.70p) | 458 | 458 |
| Amounts recognised as distributions to equity holders | 1,539 | 1,540 |
The directors are proposing a final dividend in respect of the year ended 31 March 2015 of 4.0p per share. If approved by shareholders, it will be paid on 24 July 2015 to shareholders who are on the register of members on 12 June 2015. Total dividend payable 5.70p (2014: 5.70p).
3. Earnings per share
Earnings per share has been impacted by the reversal of a deferred tax asset provision realised in previous years. This has decreased the overall basic earnings per share for the year ended 31 March 2015 before exceptional costs amounted to 7.00 pence compared to 14.23 pence at March 2014.
Basic earnings per share are calculated by dividing the earnings attributable to ordinary shareholders (£1,290k) 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.
| 2015 | 2014 | |||||
| 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 | 1,709 | 6.33p | 6.33p | 1,563 | 5.79p | 5.78p |
| 2015 Number |
2014 Number |
|
| Weighted average number of ordinary shares | 26,996,763 | 26,993,694 |
| Dilutive effect of share options | 36,977 | 34,575 |
| Diluted weighted average number of ordinary shares | 27,033,740 | 27,028,269 |
4. Exceptional items
| 2015 £000 |
2014 £000 |
|
| Corporate restructuring and transitional costs | 600 | 709 |
| 600 | 709 | |
Exceptional costs have reduced year on year. The primary background being the tail end of the transition of people and management 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 Statutory Code costs, has impacted one off costs at this year's level.
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 2015 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 2014 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 29 June 2015 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
The company news service from the London Stock Exchange
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