Alphameric plc ( Alphameric or the Group )

Transcription

1 Embargoed until 07:00 8 February 2005 Alphameric plc ( Alphameric or the Group ) Preliminary Results for the year ended 30 November 2004 Alphameric, the provider of end to end solutions for the Leisure and Hospitality sectors, is pleased to announce Preliminary Results for the year ended 30 November Highlights The Group is now focused on the Hospitality and Leisure sectors, following divestment of the Retail business in November 2004 Pre-tax profit from continuing operations, before goodwill amortisation and exceptional items, was 5.8 million (2003: 3.9 million) on turnover from continuing operations of 41.1 million (2003: 35.1 million), in line with market expectations As a result of the trading losses for the Retail business and the loss on its disposal, arising largely through writing off goodwill balances, the Group made a loss for the year of 60 million The Leisure Division returned a strong performance with significant sales made to most of the major bookmakers; sales to the independent sector were particularly strong. A contract for the supply of EPoS and display system solutions to William Hill, worth 25 million, was signed in the second half The Hospitality Division performed well, enjoying success with its web based enterprise resource planning system, Caterwide, which was awarded contracts worth almost 24 million in 2004 The Group acquired Timewave Holdings Limited in December for 4.13 million, which will enable the Hospitality business to widen the scope of its offering into the food and beverage market and give greater depth to Alphameric s Caterwide offering Commenting on outlook, Rodney Hornstein, Chairman, said: We started the new financial year with an impressive order book focused on two substantial market sectors where we are enjoying considerable success. Projects involving the delivery and implementation of our existing contracts are running according to plan. The Group is financially sound, cash generative and we will continue to review earnings enhancing acquisitions within our chosen market sectors to further strengthen the positions we already hold. The Group is well placed to deliver a successful 2005 and the outlook for 2006 and beyond is positive. For further information, please contact: - ends - Alphameric plc Alan Morcombe, Chief Executive Today: Martin Randall, Finance Director Thereafter: Weber Shandwick Square Mile Nick Oborne / Susanne Walker of 1

2 8 February 2005 Alphameric plc ( Alphameric or the Group ) Preliminary Results for the year ended 30 November 2004 CHAIRMAN S STATEMENT Introduction This has been a year of significant progress for the Group. Following a review of the Group s strategy, the Board concluded that delivery of superior returns to our shareholders required significant change. Consequently in November we obtained shareholder approval to sell the Retail Division and this was completed shortly before the financial year-end. This combined with the disposal earlier in the year of our keyboard manufacturing operation means that the Group is now focussed on strong growth markets with businesses that have amply demonstrated their capacity to exploit the opportunities these markets provide. The overall financial results for the year were unsatisfactory because of the very negative effect of the results in the Retail Division. With the sale of the Retail Division concluded, the continuing businesses of the Group are in robust shape to build on their current and past success. I am pleased to report that both the Leisure and Hospitality businesses performed strongly during the year, producing results in line with revised market expectations, and well ahead of last year. A number of significant new contracts were won and we made further progress in increasing the levels of long-term repetitive revenues. The continuing businesses generate cash and we finished the year with a cash balance of 13 million ( 9.1 million net of loan note commitments). Results Sales for the Group for the year to 30 November 2004 were 70.0 million (2003: 62.9 million), an increase of 11%. Excluding Retail, the continuing businesses achieved sales of 41.1 million (2003: 35.1 million), an increase of 17%. Profit before tax (and the amortisation of goodwill and exceptional items) for the continuing group was 5.8 million (2003: 3.9 million), an increase of 47%. Earnings per share for the continuing business were 3.7 pence (2003: 2.7 pence), an increase of 37%. As a result of the trading losses for Retail and the loss on its disposal, arising largely through writing off goodwill balances, the Group made a loss for the year of 60 million. This equates to a loss per share of 50.9 pence (2003: 3.5 pence loss). The Group is financially strong. The continuing businesses generated operating cash flows of 9.3 million, some 164% of their operating profits before the amortisation of goodwill. Retail had a negative operating cash flow of some 8.4 million. The proceeds from the sale of Retail of 10 million (before expenses) contributed to the year end cash balance of 13 million. Dividend As a result of the exceptional losses incurred on the disposal of the Retail Division, the Company has a deficit in distributable reserves. This prevents the Board from recommending the payment of a final dividend for the year despite the strength of the continuing business. To address this issue, shareholders will be asked to approve a capital reconstruction that will extinguish this deficit on reserves. If shareholders agree, and subject to approval by the Courts, this will allow the Group to recommence the payment of dividends. In these circumstances, given the strong financial position and prospects of the Group, the Board expects to declare a special dividend in 2005 equal to the final dividend that would have been proposed for the year to 30 November of 11

3 Review of operations Alphameric Leisure Alphameric Leisure s strong first half performance continued into the second half, with sales for the year up 15% to 30.3 million (2003: 26.4 million) and operating profits (before the amortisation of goodwill) up 44% to 4.2 million (2003: 2.9 million). The contract for the supply of EPoS and display system solutions to William Hill, worth 25 million, was signed in the second half of the financial year. We are continuing to make good progress on this contract and we expect to complete the delivery of the systems relating to this contract by the end of this calendar year. Winning the William Hill contract has further established our position as the leading supplier of software solutions to bookmakers. Underlying sales growth in 2004 without the William Hill contract was over 5%. Significant sales were made to most of the major bookmakers and sales were especially strong to the independent sector which accounts for around 40% of the market. We now supply all the major bookmakers, as well as many of the smaller independent bookmakers both in the UK and Ireland. New product developments in response to changing market requirements, together with replacement cycles for existing customers and new orders from prospects will continue to generate growth over the coming years. Hospitality Our Hospitality business performed particularly well, with sales increasing to 10.9 million (2003: 8.7 million), an increase of 24%. Operating profits (before the amortisation of goodwill) more than doubled to 1.5 million (2003: 703,000). A key feature of our strategy in this business is to offer our clients a very competitive, economic and efficient fully managed service, typically on a contract of up to 5 years duration. We deliver substantial operational and financial benefits to our clients whilst at the same time ensuring secure long-term revenue and profit streams to Alphameric. Our service is offered under the brand name Caterwide TM, the Web based enterprise resource planning system that we have specifically created for the hospitality sector. This service includes the provision of electronic point of sale terminals and software in the pubs, restaurants or cafes of our clients. Information on transactions in the outlets is automatically transferred via the Web to central systems hosted by Alphameric, that then produces and transmits to our clients the management information they require to efficiently run their businesses. Amongst the notable long term contracts won this year were an 8.2 million five year contract for Caterwide with a large restaurant chain, and contracts worth some 4.3 million and 1.5 million with Yates and Spirit respectively. All these contracts are for managed services and revenues will be recognised over the length of the contract. Since the year end, the business has won an order for almost 1 million to supply tills to Pret a Manger. Managed service contracts are significantly improving the visibility of our secure earnings going forward and contracts awarded during 2004 totalled almost 24 million. Acquisition In December we further strengthened the Hospitality business by acquiring the entire issued share capital of Timeweave Holdings Limited ('Timeweave'). Timeweave is the holding company of a group that specialises in the provision of the Microsoft TM Navision TM suite of enterprise solutions into a range of food and beverage organisations within the United Kingdom. Timeweave was awarded Microsoft Gold Partner status in July The total consideration paid was 4,125,000, comprising 3,000,000 in cash and 1,554,054 Alphameric plc Ordinary Shares. The Alphameric plc shares comprised within the consideration are to be held by the vendors of Timeweave for a minimum period of twelve months from completion. 2 of 11

4 The acquisition of Timeweave will enable the Hospitality business to widen the scope of its offering into the food and beverage markets and adds greater depth to its Caterwide TM Enterprise Solution that it currently provides to many of the United Kingdom's most successful restaurant, pub and brewing groups. Our first major contract for Navision was won from S. A. Brains, a Welsh brewery, for 600,000. The hospitality business is expected to continue to grow strongly in the next few years through winning further long term service contracts from a lively and growing customer base. Disposal of Retail Following the strategic review undertaken during the year, the Board concluded that success in the retail market required scale at a level that we were unlikely to achieve organically. Our analysis showed that the returns we would get from investing in the growth of our Leisure and Hospitality businesses were likely to outstrip those from investing further in acquisitions for our Retail business. We completed the sale of Retail at the end of November to TorexRetail plc, for a maximum consideration of 30 million, comprising initial consideration of 15 million and a further 15 million dependent on the financial performance of the Retail business for the 14 months to December The initial consideration included cash of 10 million and shares to the value of 5 million in TorexRetail plc. These shares were sold after the financial year-end, for 5.1 million. Although the transaction generated a considerable inflow of cash, the book loss on the sale of the business was 56 million principally reflecting the write off of goodwill acquired during the technology boom in the late 1990 s. Outlook We started the new financial year with an impressive order book focused on two substantial market sectors where we are enjoying considerable success. Projects involving the delivery and implementation of our existing contracts are running according to plan. The Group is financially sound, cash generative and we will continue to review earnings enhancing acquisitions within our chosen market sectors to further strengthen the positions we already hold. The Group is well placed to deliver a successful 2005 and the outlook for 2006 and beyond is positive. For further information, please contact: - Ends - Alphameric plc Alan Morcombe, Chief Executive Today: Martin Randall, Finance Director Thereafter: Weber Shandwick Square Mile Nick Oborne / Susanne Walker of 11

5 ALPHAMERIC PLC CONSOLIDATED PROFIT AND LOSS ACCOUNT FOR THE YEAR ENDED 30 NOVEMBER 2004 Turnover 30 November 30 November Note Continuing operations 41,143 35,112 Discontinued operations 28,830 27, ,973 62,897 Operating costs Operating costs excluding amortisation of goodwill and exceptional administrative expenses (67,608) (58,580) Exceptional administrative expenses 3 (883) (1,409) Amortisation of goodwill (5,436) (5,010) (73,927) (64,999) Operating profit before amortisation of goodwill and exceptional administrative expenses: Continuing operations Discontinued operations 5,705 (3,340) 3,619 2,365 4,317 Amortisation of goodwill and exceptional administrative expenses (6,319) (6,419) 698 Operating profit /(loss) Continuing operations 4,337 1,816 Discontinued operations (8,291) (3,918) 2 (3,954) (2,102) Loss on disposal of discontinued operations (55,633) (1,714) Net interest receivable Loss on ordinary activities before taxation (59,487) (3,530) Tax on loss on ordinary activities 4 - (289) Loss for the financial year (59,487) (3,819) Dividends 5 (760) (2,960) Retained loss for the financial year (60,247) (6,779) (Loss) / earnings per share 6 Basic (50.9)p (3.5)p From continuing businesses and before amortisation of goodwill and exceptional administrative expenses 3.7p 2.7p Diluted (50.9)p (3.5)p There is no difference between the loss on ordinary activities before taxation and the retained loss for the years stated above, and their historical cost equivalents. There are no recognised gains or losses other than the loss above and therefore no separate statement of total recognised gains and losses has been presented. 4 of 11

6 ALPHAMERIC PLC CONSOLIDATED BALANCE SHEET AS AT 30 NOVEMBER 2004 Fixed assets 30 November 30 November Note Intangible assets 17,134 85,072 Tangible assets 8,265 10,190 Current assets 25,399 95,262 Stocks 3,825 6,034 Debtors (including 8m due after more than one year 22,852 22,636 (2003: nil)) Investment 5,000 - Cash held to secure loan notes - 3,485 Cash at bank and in hand 13,001 10,109 44,678 42,264 Creditors (amounts falling due within one year) (23,395) (29,563) Net current assets 21,283 12,701 Total assets less current liabilities 46, ,963 Creditors (amounts falling due after more than one year) - (479) Net assets 46, ,484 Capital and reserves Called up share capital 2,923 2,923 Shares to be issued Share premium account 102, ,393 Merger reserve 8,856 16,125 Profit and loss account deficit (67,802) (14,824) Total equity shareholders funds 7 46, ,484 5 of 11

7 ALPHAMERIC PLC CONSOLIDATED CASHFLOW STATEMENT FOR THE YEAR ENDED 30 NOVEMBER November 30 November Note Net cash inflow from operating activities before exceptional administrative expenses Continuing operations 9,343 6,284 Discontinued operations (8,401) 2, ,554 Exceptional administrative expenses (883) (1,636) Net cash inflow from operating activities ,918 Returns on investments and servicing of finance Interest paid (193) (8) Interest received Taxation UK Corporation tax paid (net) (795) (394) Capital expenditure and financial investment Purchase of tangible fixed assets (5,055) (5,308) Disposal of tangible fixed assets - 20 Acquisitions and disposals (5,055) (5,288) Purchase of subsidiaries - (5,422) Net cash acquired with subsidiary Sale of businesses 9, Net cash in disposed businesses (883) - 8,759 (4,733) Equity dividends paid (3,040) (2,562) Management of liquid resources (Increase) / decrease in short term deposits (5,750) 6,750 Net cash (outflow) / inflow before financing (5,723) 972 Financing Net cash received from issue of share capital - 2,759 Repayments of capital element of finance leases - (30) Loan note repayments (620) (50) Release of loan note escrow funds 3,485 - Net cash inflow from financing 2,865 2,679 (Decrease) / increase in cash for the year (2,858) 3,651 6 of 11

8 ALPHAMERIC PLC NOTES TO THE PRELIMINARY FINANCIAL INFORMATION 1. BASIS OF REPORTING This preliminary statement of annual results, which covers the year to 30 November 2004, has been agreed by the Group s auditors and is consistent with the full financial statements. The preliminary financial information for the year ended 30 November 2004, does not constitute statutory accounts and has been extracted from the full statutory accounts for the year ended 30 November The full statutory accounts for the year on which the auditor s report is unqualified will be delivered to the Registrar of Companies in due course. The comparative figures for the year to 30 November 2003 are abridged from the accounts for that year and do not constitute full accounts within the meaning of Section 240 of the Companies Act 1985 (as amended). Statutory accounts for that year on which the auditors gave an unqualified opinion have been delivered to the Registrar of Companies. 2. SEGMENTAL ANALYSIS Turnover Class of Business Continuing Leisure 30,259 26,363 Hospitality 10,884 8,749 41,143 35,112 Discontinued Retail 28,830 26,394 Logistics - 1,391 28,830 27,785 Total 69,973 62,897 Operating profit/(loss) by Class of Business Continuing Before exceptional administrative expenses and amortisation of goodwill Exceptional administrative expenses Before amortisation of goodwill Amortisation of goodwill Leisure 4,208-4,208 (504) 3,704 Hospitality 1,497-1,497 (864) 633 5,705-5,705 (1,368) 4,337 Discontinued Retail (3,340) (883) (4,223) (4,068) (8,291) 2,365 (883) 1,482 (5,436) (3,954) 7 of 11

9 Continuing Before exceptional administrative expenses and amortisation of goodwill Exceptional administrative expenses Before amortisation of goodwill Amortisation of goodwill Leisure 2,916 (106) 2,810 (444) 2,366 Hospitality 703 (389) 314 (864) (550) 3,619 (495) 3,124 (1,308) 1,816 Discontinued Retail 1,194 (873) 321 (3,702) (3,381) Logistics (496) (41) (537) - (537) 698 (914) (216) (3,702) (3,918) 4,317 (1,409) 2,908 (5,010) (2,102) 3. EXCEPTIONAL ADMINISTRATIVE EXPENSES Exceptional administrative expenses (883) (1,636) Exceptional administrative gains (883) (1,409) Exceptional administrative expenses include reorganisation costs of 883,000 (2003: 1,636,000) relating to the continuing reorganisation of the Retail Division, prior to disposal. These primarily comprise of redundancy and other related costs. The exceptional gain in 2003 relates to the release of the remaining provision in respect of the alleged unpaid licence fee claim. 4. TAX ON LOSS ON ORDINARY ACTIVITIES The taxation charge is made up as follows: Analysis of charge in the period Current tax: UK Corporation tax on profits of the period 468 1,124 Loss on sale of discontinued operations - (510) Adjustments in respect of previous periods (428) (299) Deferred tax: Origination and reversal of timing differences (40) (26) Tax on loss on ordinary activities of 11

10 5. DIVIDENDS An interim dividend of 0.65p per share (2003: 0.65p), amounting to 760,000 was paid during the year (2003: 680,000). No final dividend is proposed for the year (2003: 1.95p per share, amounting to 2,280,000). 6. (LOSS) / EARNINGS PER SHARE Basic loss per share is calculated by dividing the loss attributable to Ordinary Shareholders by the weighted average number of Ordinary Shares in issue during the year as follows: Loss ( 000) (59,487) (3,819) Weighted average shares in issue (m) Basic loss per share (p) (50.9) (3.5) Earnings per share from continuing operations before goodwill amortisation and exceptional administrative expenses have been presented in addition to the earnings per share as defined in FRS14 since, in the opinion of the Directors, this provides Shareholders with a more meaningful representation of the earnings derived from the Group s on-going businesses. It can be reconciled from basic earnings per share as follows: 000 Pence per Pence per share 000 share Basic loss per share (59,487) (50.9) (3,819) (3.5) Amortisation of goodwill 5, , Exceptional administrative expenses , Loss / (profit) from discontinued operations 3, (698) (0.7) Loss on disposal of discontinued operations 55, , Taxation in respect of above items (1,451) (1.2) (688) (0.6) Earnings per share from continuing operations before amortisation of goodwill and exceptional administrative expenses 4, , Diluted earnings per share for 2004 and 2003 are the same as the basic earnings per share. 7. RECONCILIATION OF MOVEMENTS IN SHAREHOLDERS' FUNDS Group Company (Loss) / profit for the financial year as reported (59,487) (3,819) (87,807) 4,826 Dividends (760) (2,960) (760) (2,960) Share capital issued Reduction in share capital to be issued (555) 9 (555) 9 Share premium arising on share issues - 2,617-2,617 Merger relief arising on acquisition - 4,026-4,026 Net change in shareholders funds (60,802) 182 (89,122) 8,827 Opening shareholders funds 107, , , ,913 Closing shareholders funds 46, ,484 47, ,740 9 of 11

11 8. NOTES TO THE CASHFLOW STATEMENT Continuing Discontinued 2004 operations operations Reconciliation of operating profit to net cash inflow / (outflow) from operating activities: Operating profit before amortisation of goodwill and exceptional administrative expenses 5,705 (3,340) 2,365 Depreciation on tangible fixed assets Increase in stocks Increase in debtors Increase / (decrease) in creditors 2, ,655 (1,229) (207) (1,436) (2,996) (2,935) (5,931) 4,978 (2,689) 2,289 Net cash inflow / (outflow) from operating activities before exceptional items 9,343 (8,401) 942 Exceptional administrative expenses - (883) (883) Net cash inflow / (outflow) from operating activities 9,343 (9,284) 59 Continuing Discontinued 2003 operations operations Reconciliation of operating profit to net cash inflow from operating activities: Operating profit before amortisation of goodwill and exceptional administrative expenses 3, ,317 Depreciation on tangible fixed assets (Increase)/decrease in stocks Decrease in debtors (Decrease) / increase in creditors 1, ,599 (297) 205 (92) 6, ,543 (5,829) 16 (5,813) Net cash inflow from operating activities before exceptional items 6,284 2,270 8,554 Exceptional administrative expenses (495) (1,141) (1,636) Net cash inflow from operating activities 5,789 1,129 6,918 Reconciliation of net cash flow to movement in net funds: (Decrease) / increase in cash in the year (2,858) 3,651 Cash outflow / (inflow) from change in short term deposits 5,750 (6,750) Cash inflow from escrow to pay loan notes (3,485) (1,366) Cash outflow to pay loan notes 620 1,416 Change in net funds resulting from cash flows 27 (3,049) Cash outflow from lease financing - 30 Loan notes acquired with subsidiaries - (1,069) Net cash inflow / (outflow) 27 (4,088) Net funds at 1 December ,090 13,178 Net funds at 30 November ,117 9, of 11

12 9. POST BALANCE SHEET EVENTS On 1 December 2004, the Group acquired the entire share capital of Timeweave Holdings Limited, for a total consideration of million comprising cash of 3 million and 1,554,054 Alphameric shares. On 20 December 2004, the Group sold its shares in Torex Retail plc which had been acquired as part of the initial consideration for the Retail business with a value of 5 million. The sale, net of expenses, realised 5.1 million. 11 of 11