RNS Number:6537R
Danka Business Systems PLC
04 November 2003
Embargoed until: 13.30 4th November 2003
DANKA BUSINESS SYSTEMS PLC
("DANKA", "THE GROUP" OR "THE COMPANY")
DANKA REPORTS INTERIM AND SECOND QUARTER RESULTS FOR THE HALF YEAR AND
THREE MONTHS ENDED 30th SEPTEMBER, 2003
Financial and operational highlights for half year ended 30th September,
2003:
- Operating profit* was #3.0m (H1 2002: #11.0m)
- Pre-tax loss* of #8.0m (H1 2002: #3.9m profit)
- Adjusted basic (loss)/earnings per share were (1.3)p (H1 2002: 3.6p)
- Margin performance recovery; second quarter gross margins were 37.2%
(Q1 2003: 36.7%, H1 2002: 37.3%)
- Strong cash position; increased by #22.8m from first quarter
- Growth in European retail equipment and related sales
- Strong liquidity positions maintained despite high net capital
expenditure of #17.8m (H1 2002: #10.5m) which included Oracle
implementation and headquarters consolidation
* before exceptional items
With regard to the second quarter, Danka's Chairman and Chief Executive
Officer, Lang Lowrey, commented:
"I am pleased that we were able to recover from our disappointing first
quarter margin performance and return to more reasonable gross margins,
particularly in our U.S. retail equipment and related sales business
which generated margins of 35.0% versus 27.9% in the first quarter. I am
also encouraged by positive signs in the performance of our retail
equipment and related sales business, particularly in Europe, which
increased year over year. More importantly, we achieved the substantial
completion of the most important and, by far, the most expensive phase of
our Oracle 11i ERP system in the U.S. For the first time in our history,
we have all of our U.S. customers and employees operating from a single
integrated IT system. We will now focus on leveraging this investment to
improve our customer service and significantly reduce costs. Of course,
we are also excited to be substantially done with the sizeable Vision 21
project and related ancillary expenses, and related capital expenditures
we have been experiencing each quarter."
Danka's Chief Financial Officer, Mark Wolfinger, commented:
"We are pleased with the significantly improved net working capital
performance during the second quarter. Improvements in our accounts
receivable, inventory and accounts payable were largely responsible for
an increase in cash of #22.8 million from the first quarter. Much of this
improvement can be attributed to a very strong worldwide focus on working
capital management and a particularly strong performance in our European
operation, which generated significantly greater cashflow this quarter.
We were burdened with large capital expenditures relating to our Oracle
implementation and headquarters consolidation in the first half of fiscal
year 2004, but were nevertheless able to maintain strong cash and
liquidity positions. We expect capital expenditures to decrease
significantly in the second half of the year."
Second Half Cost Savings Plan
The company announces that management is formulating a plan to
significantly reduce costs substantially beginning in the second half of
its fiscal year. Now that the Oracle implementation in the U.S. is
substantially complete, the company will be consolidating back-office
functions in the U.S., and exiting non-strategic real estate facilities
and reducing headcount in the U.S., European and International
businesses. The Board of Directors has approved an initial phase of the
plan which will result in approximately #6.8 million of annual cost
savings and is expected to result in a restructuring charge of
approximately #3.1 million which will be paid in connection with
headcount reductions. Management expects that this plan will ultimately
result in recommendations to reduce costs by a minimum of #18.6 million
annually. These additional recommendations will be made to the company's
board of directors in the third quarter and, if accepted, would result in
additional restructuring charges being taken for some or all of the cost
reductions.
Second Half Outlook
The company continues to expect that Fiscal Year 2004 revenue will
approach that of Fiscal Year 2003. Due to the lower than expected
Adjusted EBITDA (earnings before interest, taxes, depreciation,
amortisation and exceptional loss on refinancing of debt - see
reconciliation to GAAP at page 15) in the first half of Fiscal Year 2004
and the above-referenced cost reduction plan, the company no longer
expects that Adjusted EBITDA for Fiscal Year 2004 will be substantially
in line with Fiscal Year 2003. However, the company does expect Adjusted
EBITDA excluding restructuring costs and credits in the second half to be
stronger than Adjusted EBITDA in the first half of the year.
For further information please contact:
Danka Business Systems PLC
Paul Dumond, Company Secretary (UK) 020 7605 0150
Don Thurman, Senior VP (USA) 001 707 280 3990
Weber Shandwick Square Mile 020 7067 0700
Katie Hunt
Embargoed until: 13.30 4th November, 2003
DANKA BUSINESS SYSTEMS PLC
("DANKA", "THE GROUP" OR "THE COMPANY")
DANKA REPORTS INTERIM AND SECOND QUARTER RESULTS FOR THE HALF YEAR AND
THREE MONTHS ENDED 30th SEPTEMBER, 2003
Danka Business Systems PLC today announced its first half and second
quarter results for the six and three months ended 30th September, 2003.
Danka also announced that it has scheduled a conference call for Tuesday,
4th November to discuss these results.
Half-Year Results
Turnover for the half year declined by 11.4% to #407.2 million from
#459.4 million in the prior year half year. Foreign currency movements
negatively affected the Group's turnover by approximately #0.4 million
during the half year, despite the euro movement alone positively
affecting turnover by #13.3 million. Retail equipment and related
revenues for the half year declined 6.8% to #141.4 million from #151.7
million in the prior year half year which includes a #0.8 million
negative foreign currency movement in the current half year. This
decrease in retail equipment and related revenues was due to reduced
sales in all segments. Retail maintenance revenues for the half year
declined by 14.9% to #199.2 million from #234.0 million in the prior year
half year which includes a #1.7 million negative foreign currency
movement in the current half year. This decline was largely due to the
continuing industry-wide conversion from analogue-to-digital equipment.
Retail supplies and rental revenues for the half year declined by 19.0%
to #38.6 million from #47.6 million in the prior year half year, which
includes a #0.8 million negative foreign currency movement in the current
half year, primarily due to the past downsizing of the capital intensive
U.S. and European rental business. The European wholesale business
increased by 7.7% to #28.1 million from #26.1 million in the prior year
half year.
Overall gross margins declined to 37.0% in the half year from 37.3% in
the comparable half year. Total North American gross margins decreased to
40.7% from 40.8% in the comparable half year while the European gross
margins were flat at 32.3% and International gross margins increased to
36.1% from 34.0%. The North American business gross profit percentage for
the comparable half year was adversely affected by a #2.3 million charge
that consisted primarily of inventory and residual write-downs in Canada.
The retail equipment and related sales margin decreased to 33.4% from
33.9% in the comparable half year primarily due to a shift in the mix of
our sales toward lower margin equipment sales in the first quarter
offset, in part, by higher margin sales in the second quarter and the non-
recurrence of a #1.3 million write-down of retail equipment inventory in
our Canadian operations in the prior half year. The half year retail
equipment and related sales revenue gross margin was also negatively
affected by a #4.8 million decrease in lease and residual payments from a
diminishing external lease funding programme which contributed #5.4
million to gross margin in the prior year half year. Gross margins for
maintenance increased slightly to 41.3% from 40.6% due to lower costs, as
a percentage of revenue, especially in the European division. Gross
margins for retail supplies and rentals decreased to 40.5% from 42.0%.
The European wholesale gross margins decreased to 19.1% from 19.4%.
Recurring operating expenses decreased by #13.0 million or 8.1% to #147.5
million for the half year ended 30th September, 2003 from #160.5 million
for the half year ended 30th September, 2002. The decrease was due in
part, to a negative foreign currency movement of #2.1 million. The
Company incurred #3.2 million in Vision 21 and ancillary expenses during
the half year as well as almost #0.5 million in expenses on the new
corporate headquarters building. Recurring operating expenses increased
to 36.2% of turnover in the half year from 34.9% of turnover in the prior
year half year.
The Group reported an operating profit, excluding exceptional items, of
#3.0 million for the half year ended 30th September, 2003 as compared to
an operating profit of #11.0 million for the half year ended 30th
September, 2002. In the current half-year, there was an exceptional
credit of #0.4 million related to restructuring and the comparable prior
year period included an exception credit of #2.7 million related to
restructuring and the disposal of certain properties. Including this
exceptional item, the operating profit was #3.4 million for the current
first half-year compared to #13.6 million for the comparable prior year
period.
The Group recorded a pre-tax loss, excluding exceptional items, of #8.0
million for the half-year ended 30th September, 2003 compared to a pre-
tax profit of #3.9 million for the half-year ended 30th September, 2002.
In the current year's first half, there was an exceptional loss on the
refinancing of debt of #12.8 million. Including this exceptional item and
the exceptional credits for the current year and prior year periods, the
pre-tax loss would be #20.5 million for the current year compared to a
pre-tax profit of #6.6 million in the prior year period.
The Group reported a basic loss of 4.8 pence per share in the half year
ended 30th September, 2003 compared to earnings of 4.3 pence per share in
the corresponding period of the prior year and adjusted basic loss of 1.3
pence per share and earnings of 3.6 pence per share for the respective
half year.
Net cash inflow from operations in the half year was #29.3 million
compared to #55.6 million in the first half of the prior year. Free cash
flow (defined as net cash flow before use of resources and financing,
less net cash inflow from acquisitions and disposals) was a positive #4.9
million in the half year compared to a positive #30.3 million in the
prior half year (see reconciliation to U.K. GAAP at note 6). Net capital
expenditure in the half year was #17.8 million compared to #10.5 million
in the prior half year. Capital expenditure in the period related to the
Vision 21 project and the new corporate headquarters building were #6.3
million and #3.7 million, respectively.
"We are pleased with the significantly improved net working capital
performance during the second quarter," stated Mark Wolfinger, Danka's
Chief Financial Officer. "Improvements in our accounts receivable,
inventory and accounts payable were largely responsible for an increase
in cash of #22.8 million from the first quarter. Much of this improvement
can be attributed to a very strong worldwide focus on working capital
management and a particularly strong performance in our European
operation, which generated significantly greater cashflow this quarter.
We were burdened with large capital expenditures relating to our Oracle
implementation and headquarters consolidation in the first half of fiscal
year 2004, but were nevertheless able to maintain strong cash and
liquidity positions. We expect capital expenditures to decrease
significantly in the second half of the year."
Second Quarter Results
Turnover for the second quarter declined by 9.3% to #200.9 million from
#221.5 million in the prior year second quarter. Foreign currency
movements positively affected the Group's turnover by approximately #3.5
million during the second quarter, with the euro movement positively
affecting turnover by #6.0 million. Retail equipment and related revenues
for the second quarter declined 6.1% to #71.6 million from #76.3 million
in the prior year second quarter, which includes a #1.1 million positive
foreign currency movement in the current quarter. This decrease in retail
equipment and related revenues was primarily due to reduced sales in the
United States offset, in part, by increases in the European and
International segments. Retail maintenance revenues for the second
quarter declined by 13.1% to #96.6 million from #111.2 million in the
prior year second quarter which includes a #1.1 million positive foreign
currency movement in the current quarter. Retail supplies and rental
revenues for the second quarter declined by 14.9% to #18.9 million from
#22.2 million in the prior year second quarter, which includes a #0.2
million positive foreign currency movement in the current quarter,
primarily due to the past downsizing of the capital intensive U.S. and
European rental business. Wholesale revenues for the second quarter
increased by 15.6% to #13.8 million from #11.9 million in the prior year
second quarter due, in part, to a #1.2 million positive foreign currency
movement in the current quarter.
Overall gross margins increased to 37.2% in the second quarter from 35.9%
in the prior year second quarter. Total North American gross margins
increased to 41.3% from 38.6% in the prior year second quarter while the
European gross margins increased to 32.4% from 32.2% and International
gross margins increased to 35.1% from 33.8%. The North American business
gross profit percentage for the year-ago period was adversely affected by
a #2.2 million charge that consisted primarily of inventory and residual
write-downs in Canada.
The retail equipment and related sales margin increased to 36.0% from
32.6% in the prior year second quarter primarily due to a shift in the
mix of our sales toward higher margin equipment sales and the non-
recurrence of a #1.2 million charge of retail equipment stock in the
North American business in the year-ago period. The second quarter retail
equipment and related sales revenue gross margin was achieved in spite of
a #2.1 million decrease in lease and residual payments from a diminishing
external lease funding programme which contributed #2.3 million to gross
margin in the prior year second quarter. Gross margins for maintenance
increased to 40.8% from 39.0% primarily due to favorability in the
European and International divisions and due to the non-recurrence of a
#0.5 million charge of supplies and rental stock in the North American
business in the year-ago period. Gross margins for retail supplies and
rental sales decreased slightly to 37.4% from 40.4%. The European
wholesale gross margins decreased to 18.1% from 20.7%.
Recurring operating expenses decreased by #4.4 million or 5.6% to #74.4
million for the quarter ended 30th September, 2003 from #78.8 million for
the quarter ended 30th September, 2002. This decrease was offset, in
part, by a positive foreign currency movement of #0.4 million. During the
quarter, the Company incurred #1.3 million in Vision 21 and ancillary
expenses. Recurring operating expenses increased to 37.0% of turnover in
the second quarter from 35.6% of turnover in the prior year second
quarter. Total capital expenditures in the quarter were #9.2 million and
were largely related to the Company's Vision 21/Oracle implementation and
the consolidation of the corporate headquarters.
The Group reported an operating profit, excluding exceptional items, of
#0.4 million for the second quarter ended 30th September, 2003 as
compared to an operating profit of #0.8 million for the second quarter
ended 30th September, 2002. In the prior year second quarter, there were
exceptional credits of #2.7 million, being the release of surplus
restructuring reserves and an adjustment to the expected liability
arising on the disposal of certain properties. Including these
exceptional items, the operating profit was #3.5 million for the prior
year second quarter.
The Group recorded a pre-tax loss, excluding exceptional items, of #4.7
million for the quarter ended 30th September, 2003 compared to a pre-tax
loss for the quarter ended 30th September, 2002 of #1.3 million. In the
current year, there was an exceptional loss on the refinancing of debt of
#12.8 million. Including this exceptional item for the current year's
second quarter and the exceptional credits for the prior year's second
quarter, the pre-tax loss for the quarter ended 30th September, 2003 was
#17.5 million compared to a pre-tax profit of #1.4 million for the
quarter ended 30th September, 2002.
The Group reported a basic loss of 5.7 pence per share in the second
quarter ended 30th September, 2003 compared to earnings of 1.1 pence per
share in the corresponding period of the prior year and adjusted basic
loss of 2.1 pence per share and adjusted basic earnings of 0.4 pence per
share for those respective quarters.
With regard to the second quarter, Danka Chairman and Chief Executive
Officer, Lang Lowrey, commented, "I am pleased that we were able to
recover from our disappointing first quarter margin performance and
return to more reasonable gross margins, particularly in our U.S. retail
equipment and related sales business which generated margins of 35.0%
versus 27.9% in the first quarter. I am also encouraged by positive signs
in the performance of our retail equipment and related sales business,
particularly in Europe, which increased year over year. More importantly,
we achieved the substantial completion of the most important and, by far,
the most expensive phase of our Oracle 11i ERP system in the U.S. For the
first time in our history, we have all of our U.S. customers and
employees operating from a single integrated IT system. We will now focus
on leveraging this investment to improve our customer service and
significantly reduce costs. Of course, we are also excited to be
substantially done with the sizeable Vision 21 project and related
ancillary expenses, and related capital expenditures we have been
experiencing each quarter."
Second Half Cost Savings Plan
The company announces that management is formulating a plan to
significantly reduce costs substantially beginning in the second half of
its fiscal year. Now that the Oracle implementation in the U.S. is
substantially complete, the company will be consolidating back-office
functions in the U.S., and exiting non-strategic real estate facilities
and reducing headcount in the U.S., European and International
businesses. The Board of Directors has approved an initial phase of the
plan which will result in approximately #6.8 million of annual cost
savings and is expected to result in a restructuring charge of
approximately #3.1 million which will be paid in connection with
headcount reductions. Management expects that this plan will ultimately
result in recommendations to reduce costs by a minimum of #18.6 million
annually. These additional recommendations will be made to the company's
board of directors in the third quarter and, if accepted, would result in
additional restructuring charges being taken for some or all of the cost
reductions.
Second Half Outlook
The company continues to expect that Fiscal Year 2004 revenue will
approach that of Fiscal Year 2003. Due to the lower than expected
Adjusted EBITDA (earnings before interest, taxes, depreciation,
amortisation and exceptional loss on refinancing of debt - see
reconciliation to GAAP at page 15) in the first half of Fiscal Year 2004
and the above-referenced cost reduction plan, the company no longer
expects that Adjusted EBITDA for Fiscal Year 2004 will be substantially
in line with Fiscal Year 2003. However, the company does expect Adjusted
EBITDA excluding restructuring costs and credits in the second half to be
stronger than Adjusted EBITDA in the first half of the year.
Conference Call
A conference call to discuss Danka's Second quarter and half year results
has been scheduled for Tuesday, 4th November at 4:00 p.m. (U.K. time).
U.S. and Canada callers please dial + 1-800-901-5218 and callers from
outside the U.S. or Canada please dial 1-617-786-4511 to participate in
the call and enter conference ID number 89253463. If you are unable to
participate in the call, you may access a recorded audio playback. U.S.
and Canada callers should dial + 1-888-286-8010 and callers from outside
the U.S. and Canada should dial 1-617-801-6888 and enter conference ID
number 50358433. The recording will be available via an instant replay
service until Tuesday, 11th November at 8:00pm (U.K. time).
The financial information for the quarter and half year ended 30th
September, 2003 and 2002 is unaudited and does not constitute full
accounts within the meaning of Section 240 of the Companies Act 1985.
The financial information for the year ended 31st March, 2003 has been
extracted from the audited accounts for that year which have not been
filed with the Registrar of Companies. The full accounts for the year
ended 31st March, 2003 have been given an unqualified audit report, which
did not contain a statement under Section 237(2) or (3) of the Companies
Act 1985.
-Ends-
For further information please contact:
Danka Business Systems PLC
Paul Dumond, Company Secretary (UK) 020 7605 0150
Don Thurman, Senior VP (USA) 001 707 280 3990
Weber Shandwick Square Mile
Katie Hunt 020 7067 0700
About Danka
Danka delivers value to clients worldwide by using its expert technical
and professional services to implement effective document information
solutions. As one of the largest independent providers of office imaging
systems and services, Danka enables choice, convenience, and continuity.
Danka's vision is to empower customers to benefit fully from the
convergence of image and document technologies in a connected
environment. This approach will strengthen Danka's client relationships
and expand its strategic value.
Note to Editors:
Danka Business Systems PLC, headquartered in London, and St. Petersburg,
Florida, is one of the world's leading suppliers of office imaging
equipment, supplies and services. Danka provides office products and
services globally in 24 countries around the world. Danka's ordinary
shares are listed on the London Stock Exchange and its ADSs are listed on
NASDAQ. For additional information about copier, printer and other
office imaging products, and information regarding the Group's U.S.
filings with the Securities and Exchange Commission, please visit Danka's
web site at www.danka.com.
The following statement is included pursuant to US securities laws:
Forward-Looking Statements: Certain statements contained in this press
release, or otherwise made by our officers, including statements related
to our future performance and our outlook for our businesses and
respective markets, projections, statements of our plans or objectives,
forecasts of market trends and other matters, are forward-looking
statements, and contain information relating to us that is based on our
beliefs as well as assumptions, made by, and information currently
available to, our management. The words "goal", "anticipate", "expect",
"believe" and similar expressions as they relate to us are intended to
identify forward-looking statements, although not all forward looking
statements contain such identifying words. No assurance can be given
that the results in any forward-looking statement will be achieved. For
the forward-looking statements, we claim the protection of the safe
harbor for forward-looking statements provided for in the Private
Securities Litigation Reform Act of 1995, Section 27A of the Securities
Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Such
statements reflect our current views with respect to future events and
are subject to certain risks, uncertainties and assumptions that could
cause actual results to differ materially from those reflected in the
forward-looking statements. Factors that might cause actual results to
differ materially from those reflected in any forward-looking statements
include, but are not limited to, the following: (i) any inability to
successfully implement our strategy; (ii) any inability to comply with
the financial or other covenants in our debt instruments; (iii) any
material adverse change in financial markets, the economy or in our
financial position; (iv) increased competition in our industry and the
discounting of products by our competitors; (v) new competition as the
result of evolving technology; (vi) any inability by us to procure, or
any inability by us to continue to gain access to and successfully
distribute, new products, including digital products, color products,
multifunction products and highvolume copiers, or to continue to bring
current products to the marketplace at competitive costs and prices;
(vii) any inability to arrange financing for our customers' purchases of
equipment from us; (viii) any inability to successfully enhance and unify
our management information systems; (ix) any inability to record and
process key data due to ineffective implementation of business processes
and policies; (x) any negative impact from the loss of a key vendor or
customer; (xi) any negative impact from the loss of any our senior
management or key personnel; (xii) any change in economic conditions in
domestic or international markets where we operate or have material
investments which may affect demand for our products or services; (xiii)
any negative impact from the international scope of our operations; (xiv)
fluctuations in foreign currencies; (xv) any inability to achieve or
maintain cost savings; (xvi) any incurrence of tax liabilities beyond our
current expectations, which could adversely affect our liquidity; (xvii)
any delayed or lost sales and other impacts related to the commercial and
economic disruption caused by past or future terrorist attacks, the
related war on terrorism and the fear of additional terrorist attacks;
and (xviii) other risks including those risks identified in any of our
filings with the Securities and Exchange Commission. Readers are
cautioned not to place undue reliance on these forward-looking
statements, which reflect our analysis only as of the date they are made.
Except as required by applicable law, we undertake no obligation, and do
not intend, to update these forward-looking statements to reflect events
or circumstances that arise after the date they are made. Furthermore,
as a matter of policy, we do not generally make any specific projections
as to future earnings nor do we endorse any projections regarding future
performance which may be made by others outside our company.
Danka is a registered trademark and Danka @ the Desktop is a trademark of
Danka Business Systems PLC. All other trademarks are the property of
their respective owners.
This press release contains information regarding EBITDA that is
calculated as earnings from continuing operations before income taxes,
interest expense, depreciation and amortisation and free cash flow that
is calculated as net cash provided by operating activities less net
capital expenditure. These measures are non-GAAP financial measures,
defined as numerical measures of our financial performance that exclude
or include amounts so as to be different than the most directly
comparable measure calculated and presented in accordance with GAAP in
our profit and loss account, balance sheet or statement of cash flows.
We have provided a reconciliation of these non-GAAP financial measures to
the most directly comparable GAAP financial measures.
Although EBITDA and free cash flow represent non-GAAP financial measures,
management considers these measures to be key operating metrics of our
business. Management uses these measures in its planning and budgeting
processes, to monitor and evaluate its financial and operating results
and to measure performance of its separate divisions. Management also
believes that EBITDA and free cash flow are useful to investors because
they provide an analysis of financial and operating results used by
management in evaluating Danka. Management expects that such measures
provide investors with the means to evaluate our financial and operating
results against other companies within our industry. In addition,
management believes that these measures are meaningful to investors in
evaluating our ability to meet our future debt service requirements, to
fund our capital expenditure and working capital requirements. Our
calculation of EBITDA and free cash flow may not be consistent with the
calculation of these measures by other companies in our industry. EBITDA
and free cash flow are not measurements of financial performance under
GAAP and should not be considered as an alternative to operating income
(loss) as an indicator of our operating performance or cash flows from
operating activities as a measure of liquidity or any other measures of
performance derived in accordance with GAAP.
Group Profit and Loss Account
For the Half-Year Ended 30th September, 2003
30th September
----------------------
2003 2002
#000 #000
Note (Unaudited) (Unaudited)
------ ----------- ------------
Turnover 2 407,235 459,408
Cost of sales (256,712) (287,946)
----------- ------------
Gross profit 2 150,523 171,462
Distribution costs (54,497) (65,077)
Administrative expenses
----------- ------------
Recurring (93,028) (95,429)
Exceptional 367 2,672
----------- ------------
(92,661) (92,757)
----------- ------------
Profit on ordinary activities before interest 3,365 13,628
Interest receivable and similar income 390 2,982
Interest payable and similar charges (11,413) (10,044)
Exceptional loss on refinancing of debt (12,807) -
----------- ------------
(Loss)/profit on ordinary activities
before taxation (20,465) 6,566
Tax credit/(charge) on (loss)/profit on
ordinary activities 8,595 (1,576)
----------- ------------
(Loss)/profit for the financial period (11,870) 4,990
Additional financial costs of non-equity shares (87) 5,594
----------- ------------
Retained (loss)/profit for the financial period (11,957) 10,584
=========== ============
(Loss)/earnings per share: 4
----------- ------------
Basic (after exceptional items) (4.8)p 4.3p
Diluted (after exceptional items) (4.8)p 4.1p
Adjusted basic (before exceptional items) (1.3)p 3.6p
Adjusted diluted (before exceptional items) (1.3)p 3.5p
Average exchange rate #1= $1.613 $1.504
----------- ------------
Group Profit and Loss Account
For the Quarter Ended 30th September, 2003
30th September
--------------------------
2003 2002
#000 #000
Note (Unaudited) (Unaudited)
----- -------------- -------------
Turnover 2 200,852 221,532
Cost of sales (126,083) (141,914)
-------------- -------------
Gross profit 2 74,769 79,618
Distribution costs (24,519) (31,166)
Administrative expenses
-------------- -------------
Recurring (49,893) (47,648)
Exceptional - 2,672
-------------- -------------
(49,893) (44,976)
-------------- -------------
Profit on ordinary activities before interest 357 3,476
Interest receivable and similar income 34 2,592
Interest payable and similar charges (5,124) (4,684)
Exceptional loss on refinancing of debt (12,807) -
-------------- -------------
(Loss)/profit on ordinary activities
before taxation (17,540) 1,384
Tax credit/(charge) on (loss)/profit on
ordinary activities 6,986 (571)
-------------- -------------
(Loss)/profit for the financial period (10,554) 813
Additional financial costs of non-equity
shares 3,780 1,886
-------------- -------------
Retained (loss)/profit for the financial
period (14,334) 2,699
============== =============
(Loss)/earnings per share: 4
-------------- -------------
Basic (after exceptional items) (5.7)p 1.1p
Diluted (after exceptional items) (5.7)p 1.1p
Adjusted basic (before exceptional items) (2.1)p 0.4p
Adjusted diluted (before exceptional items) (2.1)p 0.4p
Average exchange rate #1= $1.608 $1.549
-------------- -------------
Group Balance Sheet
At 30th September 2003
30th September 31st March
2003 2003
#000 #000
(Unaudited) (Audited)
------------- ------------
Fixed assets
Intangible assets 1,517 1,717
Tangible assets 67,040 67,966
------------- ------------
68,557 69,683
Current assets
------------- ------------
Stocks - finished goods and goods for resale 64,217 70,780
Debtors (of which #53,586,000 (March 2003 -
#55,430,000) fall due after more than one year) 207,328 238,361
Investments (of which nil (March 2003 -
#3,492,000) fall due after more than one year) 1,022 4,022
Cash at bank and in hand 58,184 51,215
------------- ------------
330,751 364,378
Creditors: amounts falling due within one year
------------- ------------
Bank and other loans (2,266) (35,452)
Other creditors (216,585) (236,764)
------------- ------------
(218,851) (272,216)
Net current assets 111,900 92,162
------------- ------------
Total assets less current liabilities 180,457 161,845
Creditors: amounts falling due after more than
one year ------------- ------------
Bank and other loans (136,208) (106,425)
Other creditors (10,231) (10,182)
------------- ------------
(146,439) (116,607)
Provisions for liabilities and charges (7,721) (7,426)
------------- ------------
Net assets 26,297 37,812
------------- ------------
Capital and reserves
Called up share capital 3,291 3,289
Share premium account 324,123 331,220
Profit and loss account (301,117) (296,697)
------------- ------------
Equity shareholders' deficit (146,755) (135,153)
Non-equity shareholders' funds 173,052 172,965
------------- ------------
Shareholders' funds 26,297 37,812
------------- ------------
Closing exchange rate #1= $1.660 $1.575
------------- ------------
Group Cash Flow Statement
For the Half-Year Ended 30th September, 2003
30th September
-----------------------
2003 2002
#000 #000
(Unaudited) (Unaudited)
------------ ------------
Net cash inflow from operating activities 29,280 55,647
Net cash outflow from returns on investments
and servicing of finance (6,475) (15,344)
Total taxes (paid)/received (201) 469
Net cash outflow for capital expenditure (17,752) (10,492)
------------ ------------
Net cash inflow before use of resources and
financing 4,852 30,280
Management of liquid resources 2,875 (271)
Net cash inflow/(outflow) from financing 2,160 (44,678)
------------ ------------
Increase in cash 9,887 (14,669)
============ ============
Group Cash Flow Statement
For the Quarter Ended 30th September, 2003
30th September
------------------------
2003 2002
#000 #000
(Unaudited) (Unaudited)
------------- ------------
Net cash inflow from operating activities 25,555 25,997
Net cash outflow from returns on investments
and servicing of finance (391) (7,966)
Total taxes received 290 458
Net cash outflow for capital expenditure (9,165) (5,095)
------------- ------------
Net cash inflow before use of resources and
financing 16,289 13,394
Management of liquid resources (179) (257)
Net cash inflow/(outflow) from financing 7,215 (12,706)
------------- ------------
Increase in cash 23,325 431
============= ============
Notes to the Group Profit and Loss Account
1. The financial information for the quarter and half-year ended 30th September,
2003 and 2002 is unaudited and does not constitute full accounts within the
meaning of Section 240 of the Companies Act 1985. The financial information for
the year ended 31st March, 2003 has been extracted from the audited accounts for
that year which have not been filed with the Registrar of Companies. The full
accounts for the year ended 31st March, 2003 have been given an unqualified
audit report, which did not contain a statement under Section 237(2) or (3) of
the Companies Act 1985.
2. Analysis of Turnover and Gross Profit
Quarter Ended 30th September
------------------------
2003 2002
#000 #000
(Unaudited) (Unaudited)
------------ -------------
Turnover
Retail equipment and related sales 71,646 76,271
Retail maintenance 96,590 111,188
Retail supplies and rental sales 18,861 22,174
Wholesale sales 13,755 11,899
------------ -------------
200,852 221,532
------------ -------------
Gross profit
Retail equipment and related sales 25,821 24,829
Retail maintenance 39,405 43,381
Retail supplies and rental sales 7,049 8,949
Wholesale sales 2,494 2,459
------------ -------------
74,769 79,618
------------ -------------
Half-Year Ended
30th September
------------------------
2003 2002
#000 #000
(Unaudited) (Unaudited)
------------ -------------
Turnover
Retail equipment and related sales 141,378 151,722
Retail maintenance 199,183 234,006
Retail supplies and rental sales 38,548 47,568
Wholesale sales 28,126 26,112
------------ -------------
407,235 459,408
------------ -------------
Gross profit
Retail equipment and related sales 47,196 51,504
Retail maintenance 82,358 94,915
Retail supplies and rental sales 15,600 19,983
Wholesale sales 5,369 5,060
------------ -------------
150,523 171,462
------------ -------------
Year Ended
31st March
2003
---------------
#000
(Audited)
---------------
Turnover
Retail equipment and related sales 308,503
Retail maintenance 451,052
Retail supplies and rental sales 91,696
Wholesale sales 54,705
---------------
905,956
---------------
Gross profit
Retail equipment and related sales 107,317
Retail maintenance 181,563
Retail supplies and rental sales 39,247
Wholesale sales 10,423
---------------
338,550
---------------
3. Reconciliation of the weighted average number of basic and diluted
ordinary shares in issue
Quarter Ended Half-Year Ended Year Ended
30th September 30th September 31st March
--------------- --------------- --------
2003 2002 2003 2002 2003
-------- -------- -------- -------- --------
Average
number
of ordinary
shares in
issue -
basic 250,344,722 248,105,357 249,780,883 248,095,046 248,562,732
Average
outstanding
share
options 6,297,742 6,331,625 7,229,819 7,537,289 7,737,187
--------- --------- --------- --------- ---------
Average
number
of ordinary
shares in
issue -
diluted 256,642,464 254,436,982 257,010,702 255,632,335 256,299,919
=========== =========== =========== =========== ===========
4. The calculations of the earnings per share are based on the profit on
ordinary activities after taxation and the finance costs on non-equity shares
and the basic and diluted weighted average number of ordinary shares in issue
during the period. In order to provide a trend measure of underlying
performance, Group profit on ordinary activities after taxation and the finance
costs on non-equity shares has been adjusted to exclude exceptional items and
basic earnings per share recalculated.
Quarter Ended 30th September
2003 2002
----------------- -----------------
Pence Pence
#000 Per Share #000 Per Share
--------- ---------- --------- ----------
Basic (loss)/earnings (14,334) (5.7) 2,699 1.1
Exceptional items arising in
respect of:
Restructuring of worldwide
operations - - (281) (0.1)
Reversal of liability on
disposal of property - - (1,450) (0.6)
Refinancing of debt 8,965 3.6 - -
--------- ---------- --------- ----------
Adjusted basic (loss)/earnings (5,369) (2.1) 968 0.4
--------- ---------- --------- ----------
Basic (loss)/earnings (14,334) (5.7) 2,699 1.1
Share options - - - -
--------- ---------- --------- ----------
Diluted (loss)/earnings (14,334) (5.7) 2,699 1.1
--------- ---------- --------- ----------
Adjusted basic (before
exceptional items) (5,369) (2.1) 968 0.4
Share options - - - -
--------- ---------- --------- ----------
Adjusted diluted (before
exceptional items) (5,369) (2.1) 968 0.4
--------- ---------- --------- ----------
Half-Year Ended 30th September
2003 2002
----------------- -----------------
Pence Pence
#000 Per Share #000 Per Share
--------- ---------- --------- ----------
Basic (loss)/earnings (11,957) (4.8) 10,584 4.3
Exceptional items arising in
respect of:
Restructuring of worldwide
operations (367) (0.1) (281) (0.1)
Reversal of liability on
disposal of property - - (1,450) (0.6)
Refinancing of debt 8,965 3.6 - -
--------- ---------- --------- ----------
Adjusted basic (loss)/earnings (3,359) (1.3) 8,853 3.6
--------- ---------- --------- ----------
Basic (loss)/earnings (11,957) (4.8) 10,584 4.3
Share options - - - (0.2)
--------- ---------- --------- ----------
Diluted (loss)/earnings (11,957) (4.8) 10,584 4.1
--------- ---------- --------- ----------
Adjusted basic (before
exceptional items) (3,359) (1.3) 8,853 3.6
Share options - - - (0.1)
--------- ---------- --------- ----------
Adjusted diluted (before
exceptional items) (3,359) (1.3) 8,853 3.5
--------- ---------- --------- ----------
Year Ended 31st March
-----------------
2003
-----------------
Pence
#000 Per Share
---------- ---------
Basic earnings 7,323 2.9
Exceptional items arising in respect of:
Restructuring of worldwide operations (281) (0.1)
Reversal of liability on disposal of property (1,450) (0.6)
---------- ---------
Adjusted basic earnings 5,592 2.2
---------- ---------
Basic earnings 7,323 2.9
Share options - -
---------- ---------
Diluted earnings 7,323 2.9
---------- ---------
Adjusted basic (before exceptional items) 5,592 2.2
Share options - -
---------- ---------
Adjusted diluted (before exceptional items) 5,592 2.2
---------- ---------
5. The following is a reconciliation of (Loss)/profit for the financial
period to Adjusted EBITDA (earnings before interest, taxes, depreciation,
amortisation and exceptional loss on refinancing of debt):
Quarter Ended 30th Half-Year Ended 30th
September September
------------------- ------------------
2003 2002 2003 2002
#000 #000 #000 #000
(Unaudited) (Unaudited) (Unaudited) (Unaudited)
----------- --------- --------- -----------
(Loss)/profit
for the
financial
period (10,554) 813 (11,870) 4,990
Interest
payable and
similar
charges 5,124 4,684 11,413 10,044
Tax
credit/
(charge)
on ordinary
activities (6,986) 571 (8,595) 1,576
Depreciation
and
amortisation 7,786 9,180 15,144 19,023
Exceptional
loss on
refinancing
of debt 12,807 - 12,807 -
----------- --------- --------- -----------
Adjusted EBITDA 8,177 15,248 18,899 35,633
----------- --------- --------- -----------
6. The following is a reconciliation of net cash flow before use of
resources and financing to free cash flow (net cash inflow before use of
resources and financing less net cash inflow from acquisitions and disposals):
Quarter Ended 30th Half-Year Ended 30th
September September
-------------------- ------------------
2003 2002 2003 2002
#000 #000 #000 #000
(Unaudited) (Unaudited) (Unaudited) (Unaudited)
---------- ----------- --------- ----------
Net cash
inflow before
use of
resources and
financing 16,289 13,394 4,852 30,280
Net cash
inflow from
acquisitions
and
disposals - - - -
---------- ----------- --------- ----------
Free cash flow 16,289 13,394 4,852 30,280
---------- ----------- --------- ----------
7. Copies of this report will be available from the Company's registered
office at Masters House, 107 Hammersmith Road, London W14 0QH.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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