TIDMBRU
RNS Number : 9498H
Brulines Group PLC
07 June 2011
Press Release 07 June 2011
Brulines Group plc
("Brulines" or "the Group")
Final Results
Brulines Group plc (AIM:BRU), the leading provider of real time
monitoring systems and data management services for the leisure and
forecourt services sectors, is pleased to announce its final
results for the year ended 31 March 2011.
Trading and financial highlights
-- Turnover for the year increased by 22.4% to GBP24.28 million
(2010: GBP19.83 million) with Leisure and Fuel Solutions
divisions contributing GBP18.16 million (2010: GBP19.33
million) and GBP6.12 million (2010: GBP0.50 million),
respectively
-- 761 new beer flow monitoring installations, of which 677
were higher value iDraught(TM)
-- Operating profit before amortisation of goodwill, share
option and exceptional costs of GBP3.96 million (2010:
GBP5.07 million), in line with Trading Update of March
2011
-- Gross margin at 54% (2009: 59%) reflecting a combination
of Leisure division at 58% and Fuel Solutions division
at 42%
-- Profit before tax of GBP3.02 million (2010: GBP4.03 million)
-- Final dividend of 3.98 pence per share giving a full year
increase of 2.7% to 5.65 pence per share (2010: 5.50 pence
per share)
Strategic development highlights
-- Established Brulines Fuel Solutions division with
three successful acquisitions to create a 'one
stop' integrated service and product offering
which was formally launched in February 2011,
comprising: -- Energy Level Systems Ltd - acquired
April 2010 -- Retail and Forecourt Solutions Ltd -
acquired June 2010 -- LBI Installations Ltd -
acquired July 2010
-- Acquisition and integration of trade and assets of Amscreen
M2M Limited for an initial consideration of GBP2.00 million,
creating ViaTelemetry(TM) , the Group's leading edge data
gathering and transmission provider
Since period end
-- Vianet secured a five year contract extension and replacement
programme for vending telemetry with a leading drinks brand
-- Launched Nucleus Smart Till electronic point of sale system
to the Leisure sector gaining roll out to 500 new sites
during 2012
Commenting on the final results, James Newman, Chairman of
Brulines Group plc, said:
"Despite the ongoing difficult economic conditions, this has
been a transformational year for the Group. We have made a total of
four acquisitions, three of which strengthen our Fuel Solutions
division in particular, where the Board sees considerable
opportunity for growth. The Group has made good progress in terms
of both developing its products and enhancing its market
positioning, ensuring that our offering is highly targeted for the
significant markets that are available.
"With our expanded offering across all four of our sectors,
leisure, vending telemetry, forecourt operations and telemetry
solutions, the Board believes that the Group is well positioned to
continue to gain market share and achieve market leadership in each
of these areas. We look forward to updating shareholders on our
progress in achieving that strategy over the coming year."
- Ends -
Enquiries:
Brulines Group plc
James Dickson, Chief Executive
Mark Foster, Finance Director Tel: +44 (0) 1642 358
800
mark.foster@brulines.com www.brulines.com
Cenkos Securities plc Tel: +44 (0) 207 397
Stephen Keys / Camilla Hume 8900
chume@cenkos.com
Media enquiries:
Abchurch
Sarah Hollins / Joanne Shears / Mark Tel: +44 (0) 207 398
Dixon 7729
mark.dixon@abchurch-group.com www.abchurch-group.com
Chairman's Statement
The past year has been a mixed one for the Group. Whilst the
trading background within the Leisure division has remained
difficult, with pub sell-offs and delayed commitment to new
activity from our core leisure customers, the acquisitions during
the year have transformed our fledgling Fuel Solutions division
into a leading player in the market and have also secured and
enhanced our technology platform and capability.
Results
On 4 March 2011, we issued a trading update stating that the
operating profits for the year (before amortisation of intangible
assets, share based payments and exceptional costs) would be around
GBP4.0 million. The actual operating profits for the year ended 31
March 2011 amounted to GBP3.96 million.
Turnover for the year was GBP24.28 million, an increase of 22.4%
ahead of the GBP19.83 million recorded in 2010, due to the
contributions from the acquisitions in the Fuel Solutions division,
where turnover increased from GBP0.50 million to GBP6.12 million.
Turnover in the Leisure division decreased from GBP19.33 million to
GBP18.16 million, largely due to our pub company customers reducing
their estates and delaying projects for a number of reasons,
including waiting for the positive results from Brulines' NMO
testing.
The fall in the number of new installations of beer monitoring
systems was a significant factor in the decrease in Leisure
division turnover.
The level of contractual and recurring revenues remains high at
just over 70% of Group turnover, although this has decreased from
the equivalent figure for 2010 of 84% due to the current lower
level of contracted business in the Fuel Solutions division.
The Group's gross margins decreased to 54% from 59% in 2010,
impacted by lower margins in the acquired businesses: the Leisure
division gross margin remained broadly level with last year at 58%,
and Fuel Solutions is currently 42% with good prospects for
increase.
Administrative overheads increased by GBP2.03 million to GBP9.10
million, largely arising from the acquisitions made within the Fuel
Solutions division. Action has been taken to reduce costs in the
Leisure division, and the integration of the acquisitions is
yielding anticipated synergies, with the benefit of these coming
through in the current financial year. Exceptional and amortisation
costs were similar to 2010 at GBP0.90 million (2010: GBP0.96
million) and are outlined in the Financial Review. Group profit
before taxation amounted to GBP3.03 million, compared to GBP4.03
million in 2010.
Basic earnings per share pre-exceptional costs decreased to 9.06
pence from 12.68 pence in 2010.
Dividend
At the time of the trading update on 4 March 2011, the Board
anticipated that it would maintain the progressive dividend policy
and, in line with this, it is recommending the payment of a final
dividend of 3.98 pence per share in respect of the year ended 31
March 2011.
Together with the interim dividend of 1.67 pence per share paid
in January 2011, this makes a total dividend of 5.65 pence per
share, an increase of 2.7% over the 5.5 pence per share paid in
respect of the year ended 31 March 2010.
Subject to the approval of shareholders at the Annual General
Meeting to be held on 12 July 2011, the final dividend will be paid
on 28 July 2011 to shareholders on the register as at 17 June
2011.
Acquisitions
During the last financial year, the Fuel Solutions division has
been transformed by three acquisitions as follows:
-- In April 2010, the Group acquired Energy Level Systems
Limited ("ELS") for an initial cash consideration of
GBP0.7 million, together with potential further deferred
consideration of a maximum of GBP1.35 million dependent
on the earnings before interest and tax of ELS for the
two years ending 31 March 2012. ELS provide fuel management
systems, tank gauging and lining solutions and liquefied
petroleum gas ("LPG") system support, and other forecourt
maintenance services.
-- In June 2010, the Group acquired Retail & Forecourt
Solutions Limited ("RFS") for an initial cash consideration
of GBP1.2 million together with an earn-out in respect
of the year ending 31 July 2011. RFS is the UK market
leader in fuel dispense calibration and legal verification,
as well as compliance services.
-- In July 2010, the Group completed the acquisition of
LBI Installations Limited ("LBI") for an initial cash
consideration of GBP0.36 million, together with potential
further performance related deferred consideration.
LBI operates in web-based facilities and contract management
solutions, as well as engineering and project management
solutions, for forecourt operations.
Following these acquisitions, the Fuel Solutions division now
offers an integrated toolbox of best-in-class information
management and associated products and services for fuel operators.
This commercial proposition was formally launched to the
marketplace in February 2011 at the International Forecourt Show
and initial reaction from major supermarkets and leading forecourt
operators has been extremely encouraging. The Board believes that
the Fuel Solutions division is now in a position to replicate, in
the forecourt market, the success enjoyed by the Leisure
division.
In December 2010, the Group announced the acquisition of the
machine-to-machine business of Amscreen Limited for an initial cash
consideration of GBP2.0 million, together with the potential for
further deferred consideration, dependent on the business achieving
certain milestones. This business, which now operates within the
Group as ViaTelemetry(TM) , is involved in delivering patented
next-generation data collection and monitoring platforms and had
been providing the Group with products and services for two years.
This acquisition enables the Group to underpin its leading edge
technology and also provides a dedicated technology business, not
only to develop further its products and services, but also to
provide expansion opportunities through its telemetry product lines
and customers.
All of these acquisitions have been financed from the Group's
own cash and overdraft resources.
Board and senior management
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 in these difficult economic conditions and in
the transformation of the Group over the past year.
Proposed change of Group name
Your Board is proposing to change the name of the Group from
Brulines Group plc to Vianet plc.
The Group has evolved significantly from when it was floated on
the Alternative Investment Market in October 2006, when the
activities of Brulines Limited represented virtually all of the
Group's business. Whilst Brulines Limited is still the largest
company within the Group, the name "Brulines" is very much
associated with the beer dispense products and has little relevance
to other parts of the Group.
Your Board believes that the name "Vianet" more accurately
describes the fundamental business of the Group, which is the
delivery of solutions (be they leisure, fuel or vending related)
primarily by way of networks and web-based reporting. Your
Directors currently intend to rename the Group as Vianet plc when
the name becomes available or, if not, to select another name that
is more reflective of the strategic direction and capability of the
Group as a whole. Consequently a resolution to grant the Directors
the power to change the name of the Group is being proposed at the
Annual General Meeting to be held on 12 July 2011.
Outlook
The Group's strategic intent remains to extend its data
management and support services presence in each of the leisure,
vending and fuel forecourt sectors where there is considerable
technical and operational overlap.
Within the Leisure division, the relaunch of iDraught(TM) has
been received very positively by customers and increased
penetration is being achieved within the on-premise draught beer
market. Vianet, the Group's Vending Solutions business is making
excellent progress in developing significant new sales
opportunities, including trials of its cashless and contactless
solutions with major international companies.
Despite the difficult economic backdrop, your Board believes
that there are significant opportunities for all its services and
that the current financial year will benefit from both a full
year's contribution from the recently acquired businesses as well
as from a number of exciting new business opportunities.
James H Newman
Chairman
7 June 2011
Chief Executive's Statement
Financial performance
Despite good progress with iDraught(TM), Vianet and the Fuel
Solutions division, the difficult economic conditions and well
documented commercial pressures affecting some customers in the
core Leisure division resulted in the Group's trading for H2 being
lower than initially anticipated.
In addition, the severe weather conditions caused travel
disruption to compound the impact of the usually lower levels of
activity for the Group's field-based services in December 2010 and
January 2011 and, taken together, these factors have also impacted
the Group's outcome for the year.
In line with the Trading Update issued on 4 March, operating
profits were GBP3.96 million (2010: GBP5.07 million)
Whilst trading in the core beer monitoring business remains
challenging, the progress in reducing the losses associated with
Vianet, integrating the recent acquisitions in the Fuel Solutions
division, and developing Brulines' key products has been
encouraging and the Group is confident that these factors will
drive a return to growth in the coming year.
Group turnover was up by 22.4% at GBP24.3 million (2010: GBP19.8
million) primarily arising from the acquisitions made in the Fuel
Solutions division, whilst on a comparable year-on-year basis, the
core leisure business turnover decreased by 6.7% to GBP18.10
million (2010: GBP19.40 million) as a consequence of a number of
installations being delayed due to the tighter availability of
finance for our customers.
Whilst Leisure division gross margins are broadly steady at 58%,
the overall consolidated gross margin declined to 54% (2010: 59%)
as a result of the increased contribution from the Fuel Solutions
division where the gross margin was 41.4%, impacted by a
transitional year of acquisition integration and delayed tank
lining activity. On a consolidated basis, management anticipates
that Group gross margins are sustainable at around 55%.
The Leisure division, incorporating Vianet, accounted for 75% of
Group revenues and although Leisure revenues are expected to grow
in 2012, the share of the total will fall under 70% as revenues
from the Fuel Solutions division continue to grow.
The revenue mix continues to be weighted towards recurring
revenue as income from support service contracts in beer monitoring
and Vianet is sustained, whilst the Group is moving to longer term
contracts for the provision of forecourt services. Recurring
revenue currently accounts for over 70% of Group revenue and
management expects this to remain broadly similar for the
foreseeable future as we develop the contribution of Fuel Solutions
and Vianet.
Diversification strategy is making strong commercial gains
The Group now has three divisions; Leisure, Fuel Solutions, and
Technology Solutions, encompassing four key product areas each with
the potential to expand further and generate good levels of growth
for the Group.
Although the benefits of diversification and the development of
newer businesses have not yet been fully realised, the Board is
confident that the strategy is firmly on track and that each of the
four key product areas will contribute significantly to earnings
over the medium term.
The Leisure division consists of the current core business,
draught beer monitoring solutions, as well as the Vianet vending
telemetry solutions. The beer monitoring solutions, DMS and
iDraught(TM), provide recurring income streams which underpin the
Group's growth strategy. The Group continues to invest in people,
processes and technology to protect this position and its market
leadership. With Vianet, the Group's turnaround of this business is
almost complete and we are now exploiting our unique telemetry and
contactless payment solutions to establish market leadership.
The new Fuel Solutions division has now successfully integrated
three recent acquisitions into the original Edensure fuel stock
management business. This division now has a highly relevant
product portfolio focussed on driving return on investment for
forecourt and commercial operators from fuel stocks and the assets
used for fuel supply and sale.
ViaTelemetry(TM) provides enabling technology for the Group and
beyond
The recently acquired Amscreen M2M, which provides next
generation data capture and transmission technology, has been
integrated into existing Group resources to create ViaTelemetry(TM)
, the Group's Technology division.
This acquisition was extremely complementary as it strengthened
the leading edge technology the Group has in relation to the
services it provides for its iDraught(TM), fuel and vending
telemetry solutions, whilst also providing horizontal market
opportunities for its telemetry solutions.
This acquisition will also improve procurement and reduce the
time to market for the Group's technology solutions, as it seeks to
develop global markets.
LEISURE DIVISION
The Group's core market is the Leisure sector, where our primary
offerings provide operational transparency through data capture and
associated services for draught beer, vending machines, and gaming
machines.
The Group has experienced a continuation of the well-documented
economic conditions and commercial pressures affecting some core
leisure customers, resulting in pub sell-offs and delayed
commitment to new activity. At the same time, customers have
deferred committing to projects for a number of reasons, including
waiting for results from Brulines' National Measurement Office
("NMO") testing, as well as increased clarity on the Business,
Innovation and Skills Committee ("BISC") pub industry enquiry, and
also carrying out extensive evaluation of iDraught(TM) as a
replacement for standard Dispense Monitoring Services. The Board
feels that the positive results from the NMO testing, as well as
successful evaluation of iDraught puts the Group in a stronger
position going forward.
Core beer monitoring service customers and contracts
The re-launch of iDraught(TM) in March 2011 has been received
very positively by customers, and increased penetration is being
achieved across the on-premise draught beer market.
The iDraught(TM) system offers pub licensees a vital tool to
monitor the quality and yield of beer served, providing valuable
intelligence about their business, helping them to improve beer
quality, reducing wastage and cost on draught products, all of
which drive an increase in retail profit.
The core beer monitoring business which underpins the Leisure
division's strong recurring revenues, delivered 761 new
installations, of which 677 were the higher value iDraught(TM).
This takes iDraught(TM) penetration to over 8% of the active
installation base which, factoring in pub closures, fell to around
20,000 sites. Although it was disappointing that new installations
fell over the year the fact that nearly 90% of these were higher
value iDraught(TM) was highly encouraging.
During the period, the Group continued the roll-out of
iDraught(TM) to several customers including the Greene King Pub
Partners estate. Further iDraught(TM) progress is expected through
2012, both in the tenanted and managed arenas as commercial pilot
tests and contract negotiations are concluded, although the impact
of this could be offset to some extent by further pub disposals
that certain pub companies are evaluating.
As part of its long term business strategy, the Group continues
to invest carefully in developing iDraught(TM) internationally,
with initial focus on the on-trade channels in the Denver
metropolitan area, USA, and in France where we have a distribution
agreement and installations in a range of pubs and bars.
Despite a particularly tough consumer environment for pubs and
bars in the USA, the Group now has over 46 sites in the Denver,
including Denver International Airport, with prospects for a
further 65 during H1 2012. We anticipate the USA operations
achieving breakeven in 2011/12.
In March 2011, the Group launched its Nucleus Smart Till
electronic point of sale system ("EPOS") which has been developed
as a standalone product which interfaces directly to iDraught(TM)
to provide till variance analysis.
This new product is currently undergoing commercial pilots in
several leading pub companies and recently commenced an initial 100
system full roll out.
Business, Innovation and Skills Committee (formerly BEC) Report
on the leased Pubco model
The Business, Innovation and Skills Committee (BISC) has
confirmed that follow up oral hearings will be held on 28 June 2011
and 6 July 2011 to review the progress which the industry has made
since publishing of the initial two reports and
recommendations.
The Group has had open dialogue with the appropriate committees
and industry bodies, and in its submissions and accompanying
evidence has validated its flow monitoring equipment and
procedures, supported by reviews conducted by independent national
authorities and regulatory bodies, such as the National Measurement
Office, Trading Standards, and the OFT.
The Board believes that the Government will find little merit in
further political intervention given the significant progress that
the industry has made in addressing the concerns raised by the two
reports, especially after the UK and EU competition authorities
both cleared the tied model in 2010.
Gaming machine monitoring
Brulines has a leading data capture and machine management
proposition in the leisure sector, where the product offering
allows gaming machine operators and owners to monitor the financial
performance of their gaming sites and assets both accurately and
constantly in real time.
In a particularly difficult gaming machine market the
consolidated revenue was flat at GBP612,000, delivering a net
profit of GBP61,000.
Key contract wins and retentions in SNPC, Moto and Welcome Break
have consolidated performance in line with last year.
Whilst this continues to be a difficult period for the gaming
machine industry, the Group believes that its offering, as a result
of increased Leisure division cross-selling, will provide some
incremental growth.
Vianet vending telemetry solutions set for break out
The losses associated with Vianet have been further reduced to
GBP21,000 in H2, and there has been excellent progress in
developing significant new sales opportunities for the Group's
vending telemetry, including trial of the Group's cashless and
contactless payment, including Near Field Communications ("NFC")
solutions with major international companies.
The Group has made excellent progress in re-engineering products
and infrastructure, and in revamping both the commercial
organisation and customer proposition, to ensure the unique
solutions it provides are fit for purpose in addressing the
significant global markets which are available. Vianet's market
leading end-to-end vending telemetry solutions became fully
available to the market during H2 2011, and have gained excellent
traction through several successful technical and commercial pilots
with large international brand owners, with some already planning
orders for full commercial application.
The vending market place provides the Group with considerable
growth opportunities in the UK and internationally. With a product
capable of global sales and with no dominant competitor, the Board
remains confident that there are opportunities to achieve market
leadership in this sector. Vianet's solutions provide customers
with the insight and means required to substantially increase the
profitability of vending operations through reducing the cost of
machine servicing and restocking, and driving rate of sale growth
through improved machine, product and transaction availability.
Vianet achieved approximately 2,700 unit sales in the year, but
with customers taking the opportunity to rationalise their vending
parks in H2 2011, the overall installation base remains at just
over 10,000 units.
The operation was close to monthly breakeven during H2 2011, and
the Board believes that Vianet will gain sufficient new business to
make a positive contribution during 2012, allowing the Group to
begin utilising the c. GBP16 million of accumulated tax losses
which were inherited on acquisition.
FUEL SOLUTIONS DIVISION
The long term trend of increasing fuel prices, driven by a
combination of the ongoing escalation in crude oil extraction
costs, and increased taxation, means that it is becoming more
important to ensure integrity and efficiency of the forecourt
retail supply chain. Leaks, evaporation, fraud, over dispense, and
poor stock management can have a significant impact on forecourt
profits. Furthermore, failure to manage fuel stocks properly can
result in costly environmental impacts and brand damage resulting
from negative publicity.
The ongoing consolidation in the fuel sector also means that
managers are gaining responsibility for more sites which require
increased visibility and dependable control.
Fuel Solutions acquisitions successfully integrated and gaining
sales traction
The Group's recent acquisitions in the forecourt services market
have been successfully integrated, so that the Fuel Solutions
division now has a fully integrated, one stop service solution, and
information toolbox for forecourt operators. This integrated
commercial proposition was launched at the International Forecourt
Show in the NEC in late February 2011, and customer reaction from
major supermarkets through to leading independent forecourt
operators has been very encouraging. This positive reaction
underpins the Group's decision to replicate the Group's success in
the leisure sector in the forecourt market.
Fuel Solutions division now has all the components of the end to
end solution
Our management solutions are central to driving higher profits
for forecourt operators
Fuel Solutions division offers an integrated toolbox of
best-in-class information management and associated products and
services that allow managers of fuel installations to maximise
return on investment from fuel stocks and the assets which store,
control and issue fuels.
The division's high calibre team is actively cross-selling to
its existing customer base, which currently controls c.60% of
forecourt fuel sales in a UK market. The Group estimates potential
annual recurring UK revenues to be worth over GBP30 million, over
GBP200 million across Europe, and many times that globally.
During what has been a transformational year, these acquisitions
added GBP6.1 million to Group turnover, and helped the Fuel
Solutions division progress towards profitability. During the past
year, the Group has invested further to ensure that the business
infrastructure and capacity is capable of supporting the division's
growth aspirations. This has included carrying overhead and
building stock in anticipation of increased activity.
The increased commercial traction is expected to begin enhancing
earnings in H1 2012, and thereafter contributing significantly to
Group performance.
STRATEGY FOR GROWTH
The Group's strategic intent is to extend market presence in
data handling and monitoring systems in the four sectors of
leisure, vending, forecourt management solutions, and telemetry
solutions, where there is considerable skill and operational
overlap. There is also a considerable opportunity for the Group to
achieve market leading positions in each using its core
capabilities and market leading products.
The Group is focused on three highly complementary divisions
which are Leisure, Fuel Solutions, and Technology Solutions. These
divisions operate in markets in which:
-- the need for improved data and controls will grow;
-- integrated data provision is sought and can be backed up with
associated services;
-- there is no other dominant competitor;
-- market leadership is available;
-- good margins are available from increasing customer return on
investment; and
-- The Group's products are globally scalable.
The Leisure division on its own has the products and market
potential to achieve growth for several years, underpinned by
iDraught(TM) in the core beer monitoring business and supplemented
by the vending telemetry opportunities. The Group's strong customer
and recurring revenue base provides a solid foundation for this
strategy as we commercialise development products, extend into new
markets and make selective acquisitions.
For the pub and bar market, the Group's ability to provide a
wider range of effective operational and market data increases its
value to existing customers and their own operational control
within tenanted/leased and managed sectors. These same benefits are
available to other channels such as hotels, clubs, and the
independent sectors, both in the UK and internationally.
The integration of Vianet's vending telemetry offering into the
Leisure division is a natural extension of the Group's core
capabilities into a growing and significant adjacent remote data
capture and management market. Vianet has leading, globally
scalable products and operates in international markets with no
dominant competitor, giving an opportunity to establish a leading
presence.
Whilst maintaining its investment in the core Leisure market,
the Group has had the opportunity through selective acquisitions to
establish a market leading data handling position for the Forecourt
Solutions division's 'information toolbox' in the forecourt sector
where it has identified considerable technology, operational and
commercial overlap.
With the Group well placed to sustain its organic path for
growth within the Leisure sector, the Directors believe that the
Group's cash generation, together with the December 2008 Placing
funds and competitive debt financing, will enable the Group to take
advantage of further complementary acquisition and commercial
opportunities as and when they arise.
Management and employees
The Group continues to develop the calibre of its people and
leadership so that it is able to capitalise on the significant
growth opportunities available across all its sectors.
In July 2010, Phil Prow was appointed Sales and Marketing
Director of Fuel Solutions. He brings over 20 years of experience
in the retail petroleum equipment and services industry.
Additionally, with the three acquisitions in this division we have
strengthened the overall calibre of the team, and have now
assembled a high quality senior management team capable of
delivering the Fuel Solution division's growth aspirations.
In August 2010, Steve Alton was appointed Commercial Director
for the core beer monitoring business, where the Board believes
there are still very attractive growth opportunities.
Outlook
The Group's investment decisions have been made with a three to
five year horizon whilst also committing to short term delivery of
shareholder value.
Following the integration of recent acquisitions and weathering
of the challenging economic environment, the Group is particularly
well placed to drive earnings growth through achieving market
leading positions, using its core capabilities and products,
through growth in iDraught(TM) and vending solutions in the Leisure
division and through profitable extension of the Fuel Solutions
division footprint.
Over the medium term the Group's intent is to deliver:
-- organic growth from core beer monitoring solutions
-- Vianet vending telemetry solutions to global markets, and
Fuel Solutions division each contributing over 25% of Group
profit
-- profit contribution from ViaTelemetry(TM) in excess of GBP1
million
The Group aims to become the market leader in the UK and beyond
for the provision of telemetry, data management analysis, software
and support services across the leisure, vending and telemetry
sectors, and in petrol forecourt solutions where the opportunity
exists to become a 'one stop shop' provider for customers.
Despite the difficult leisure sector trading environment, future
growth prospects are very encouraging and management continues to
view the future with confidence.
James Dickson
Chief Executive
7 June 2011
Financial Review
Group trading result
This year has been very much a transitional one for the Group
with the acquisition of four businesses, three of which were
combined with our existing Edensure business to form the Fuel
Solutions division. The commercial proposition for this division
was launched towards the end of February 2011. The pub market has
continued to face challenges which, coupled with what has continued
to be a very difficult general economic environment, have led to a
difficult trading year. Revenue increased by 22.4% to GBP24.3
million with GBP6.1 million of that generated by the Fuel Solutions
division. Operating profit (before amortisation of intangible
assets, share based payments, and exceptional items) amounted to
GBP4.0 million (2010: GBP5.1 million). The results are after
absorbing transitional losses of Vianet (which approached break
even in the second half), ViaTelemetry(TM) and Fuel Solutions, as
well as US costs of operation, in all totalling GBP0.8 million.
Blended recurring revenues for the Group are over 70%, with Leisure
over 80% and Fuel Solutions near 20%. Exceptional costs of GBP0.2
million principally relate to acquisition costs resulting in Group
operating profit (pre intangible asset amortisation and share based
payments) of GBP3.8 million (2010: GBP4.6 million).
Divisional performance
The Leisure division, consisting of the core beer monitoring
business, Vianet and Machine Insite (including Coin Metrics),
achieved turnover of GBP18.16 million (2010: GBP19.3 million) and
achieved gross margins of 58% (2010: 59%). The core business
delivered 761 new installations of which 677 were the higher priced
iDraught(TM) systems, as well as 99 new and replacement Dispense
Monitoring Services systems. Overall, a gross total of 776
installations were achieved. The active installation base after pub
company disposals and uplifted systems is approximately 20,000
systems. The Group did not achieve all the new and replacement
installations that were originally targeted, but opportunities in
this new financial year appear encouraging.
Machine Insite and Coin Metrics were merged during the year
reflecting the combined commercial proposition now on offer to
customers.
In the Fuel Solutions division, where we have successfully
completed three acquisitions, it has been very much a transitional
and consolidation year as we have integrated the acquisitions and
developed the commercial proposition which was formally launched
towards the end of the financial year in February 2011. Revenues
were GBP6.1 million and gross margins 41% which resulted in a small
net trading loss, before exceptional and bad debt costs, of around
GBP0.2 million. For the financial year to March 2012 we expect both
margin improvement and significant profit contribution.
Overall Group results
Group results overall, before amortisation of intangible assets,
share based payments, and option costs, and exceptional costs, were
a profit of GBP4.0 million as compared to GBP5.1 million at March
2010, but after absorbing the transitional losses as referred to
above of GBP0.8 million. The results are in line with the Trading
Update issued on 04 March 2011.
The table below shows the performance of the Group, pre and post
exceptional costs, as follows:
FY 2011 FY 2010
GBP'000 GBP'000
Revenue 24,282 19,834
11,638
Gross Profit 12,886 (53%) (59%)
EBIT 3,058 4,039
PBT post exceptional
costs 3,028 4,034
PBT pre exceptional
costs 3,204 4,540
Divisional Performance
FY 2011 GBP'000 GBP'000 GBP'000
Leisure Fuel Central
Revenue 17,955 6,124 204
Gross Profit 10,339 2,478 69
(58%) (41%) (34%)
EBIT pre exceptional
costs 4,843 (377) (1,232)
PBT post exceptional
costs 4,797 (468) (1,301)
PBT pre exceptional
costs 4,800 (378) (1,218)
Gross margin
Blended gross margin was 54%, with the Leisure division being
broadly level with last year at 58% and Fuel Solutions at 41%. Fuel
Solutions margin improvement should be achieved in 2012 as we
progress from this transitional year.
Actual Group profit
The Group pre-tax profit, after exceptional costs, is GBP3.028
million (2009: GBP4.034 million), reflecting the comments made
above.
Taxation
The taxation charge of GBP0.597 million represented an effective
tax rate of 19.72% on the reported profit before taxation of
GBP3.028 million post group relief and deferred tax
adjustments.
Earnings per share
Basic earnings per share for the year ended 31 March 2011 before
exceptional costs amounted to 9.06 pence compared to 12.68p at
March 2010. Fully diluted earnings per share (before exceptional
costs), which takes account of all outstanding share options,
amounted to 8.69 pence which compares to 12.27 pence last year.
Balance sheet and cash flow
The balance sheet has been strengthened by the trading
performance achieved.
Operationally, the Group generated cash returns at GBP1.8
million which were lower than normal as they were impacted by
investment in stock in Brulines and Fuel Solutions (GBP0.7
million), financial support for parts of Fuel Solutions as we
addressed its consolidation and supplier base (GBP0.9 million), and
support for development of ViaTelemetry(TM) our Technology division
(GBP0.2 million). The funds generated in the year, coupled with our
opening substantial cash funds from both prior years' trading and
the December 2008 Placing, were utilised to invest in the four
acquisitions, service borrowings, dividends and taxation. Despite
these expenditures, at the year-end, the Group had net borrowings
of only GBP1.2 million (2010: net cash of GBP3.9 million).
It is anticipated, given the strength of the Group's balance
sheet, and cash generating capacity, that this strong base will
continue to provide an advantageous position to seek further growth
opportunities.
Mark Foster
Finance Director
7 June 2011
Consolidated Statement of Comprehensive Income
for the year ended 31 March 2011
Post
Before Exceptional Exceptional Total
Exceptional 2011 Total 2011 2010
2011 GBP000 GBP000 GBP000 GBP000
Note
Continuing
operations
Revenue 24,282 - 24,282 19,834
Cost of Sales (11,396) - (11,396) (8,196)
Gross profit 12,886 - 12,886 11,638
Administration
and other
operating
expenses (8,928) (176) (9,104) (7,071)
Operating
profit pre
amortisation
and share
based
payments 3,958 (176) 3,782 4,567
Intangible
asset
amortisation (696) - (696) (456)
Share based
payments (28) - (28) (72)
Operating
profit post
amortisation
and share
based
payments 3,234 (176) 3,058 4,039
Finance income 36 - 36 81
Finance costs (66) - (66) (86)
Profit before
taxation 3,204 (176) 3,028 4,034
Income Tax
expense 1 (646) 49 (597) (969)
Profit after
tax and total
comprehensive
income for the
year
attributable
to the owners
of the parent 2,558 (127) 2,431 3,065
---------------- ----- ------------- ------------ -------------- --------
Earnings per
share
- Basic 3 9.06p (0.45)p 8.61p 10.89p
- Diluted 3 8.69p (0.43)p 8.26p 10.57p
---------------- ----- ------------- ------------ -------------- --------
The accompanying accounting policies and notes form an integral
part of these financial statements.
Details of the exceptional items which principally relate to
corporate finance acquisition costs in the year are included in
note 4.
Consolidated Balance Sheet
at 31 March 2011
2011 2010
Note GBP000 GBP000
Assets
Non-current assets
Goodwill 17,618 13,523
Other Intangible Assets 1,638 969
Property, plant and equipment 3,643 3,397
Investments 533 556
Total non-current assets 23,432 18,445
--------------------------------------- -------- --------
Current assets
Inventories 2,674 1,556
Trade and other receivables 4,553 3,785
Cash and cash equivalents 2,517 6,892
--------------------------------------- -------- --------
9,744 12,233
-------------------------------------- -------- --------
Total assets 33,176 30,678
--------------------------------------- -------- --------
Equity and liabilities
Liabilities
Current liabilities
Trade and other payables 6,198 5,804
Borrowings 1,756 448
Tax liabilities 324 302
Provisions 89 89
--------------------------------------- -------- --------
8,367 6,643
Non-current liabilities
Borrowings 1,992 2,495
Provisions 75 156
Deferred tax 303 340
2,370 2,991
-------------------------------------- -------- --------
Equity attributable to owners
of the parent
Share capital 2,825 2,825
Share premium account 11,174 11,174
Shares to be issued 276 248
Own shares (1,154) (1,154)
Merger reserve 310 310
Retained profit 9,008 7,641
--------------------------------------- -------- --------
Total equity 22,439 21,044
--------------------------------------- -------- --------
Total equity and liabilities 33,176 30,678
--------------------------------------- -------- --------
The Group financial statements were approved by the Board of
Directors on 7 June 2011 and were signed on its behalf by:
J Dickson
Director
The accompanying accounting policies and notes form an integral
part of these financial statements. Consolidated Statement of
Changes in Equity
for the year ended 31 March 2011
Share Profit
Share based and
Share premium Own payment Merger loss
capital Account Shares reserve reserve account Total
GBP000 GBP000 GBP000 GBP000 GBP'000 GBP000 GBP000
At 1 April
2009 2,813 11,126 (864) 176 310 6,500 20,061
Dividends - - - - - (1,924) (1,924)
Exercised
options re
own shares - - 13 - - - 13
Purchase of
own shares - - (303) - - - (303)
Share based
payments - - - 72 - (1,924) (2,082)
Share capital
issued 12 48 - - - - 60
Transactions
with owners 12 48 (290) 72 - (1,924) (2,082)
-------------- ------- ------- ------- ------- -------- ------- -------
Total
comprehensive
income for
the year - - - - - 3,065 3,065
Total
comprehensive
income less
owners
transactions 12 48 (290) 72 - 1,141 983
-------------- ------- ------- ------- ------- -------- ------- -------
At 31 March
2010 2,825 11,174 (1,154) 248 310 7,641 21,044
-------------- ------- ------- ------- ------- -------- ------- -------
At 1 April
2010 2,825 11,174 (1,154) 248 310 7,641 21,044
Dividends - - - - - (1,064) (1,064)
Exercised
options re own
shares - - - - - - -
Purchase of
own shares - - - - - - -
Share based
payments - - - 28 - - 28
Share capital
issued - - - - - - -
Transactions
with owners - - - 28 - (1,064) (1,036)
-------------- ------- ------- ------- ------- -------- ------- -------
Total
comprehensive
income for
the year - - - - - 2,431 2,431
Total
comprehensive
income less
owners
transactions - - - 28 - 1,367 1,395
-------------- ------- ------- ------- ------- -------- ------- -------
At 31 March
2011 2,825 11,174 (1,154) 276 310 9,008 22,439
-------------- ------- ------- ------- ------- -------- ------- -------
Consolidated Cash Flow Statement
for the year ended 31 March 2011
2011 2010
GBP000 GBP000
Cash flows from operating activities
Profit for the year 2,431 3,065
Adjustments for
Interest receivable (36) (81)
Interest payable 66 86
Income tax expense 597 969
Amortisation of intangible assets 696 456
Depreciation 480 391
Gain pre-existing contract on acquisition (200) -
Profit on sale of property, plant
and equipment (80) (41)
Share based payments 28 72
-------------------------------------------- -------- --------
Operating cash flows before changes
in working capital and provisions 3,982 4,917
Change in inventories (510) (185)
Change in receivables 13 861
Change in payables (1,602) (1,234)
Change in provisions (80) (76)
-------------------------------------------- -------- --------
(2,179) (634)
Cash generated from operations 1,803 4,283
Income taxes paid (834) (1,015)
-------------------------------------------- -------- --------
Net cash generated from operating
activities 969 3,268
-------------------------------------------- -------- --------
Cash flows from investing activities
Interest payable (66) (86)
Interest received 36 81
Proceeds on disposal of property,
plant and equipment 121 62
Purchases of property, plant and equipment (608) (371)
Purchases of intangible assets (735) (377)
Purchase of subsidiary undertakings (4,380) -
Purchase of minority shareholdings - (175)
Purchase of investment - (556)
Cash acquired with subsidiary 547 -
-------------------------------------------- -------- --------
Net cash used in investing activities (5,085) (1,422)
-------------------------------------------- -------- --------
Cash flows from financing activities
Repayments of borrowings (452) (498)
Dividends paid 2 (1,064) (1,924)
Options exercised/Purchase of own
shares - (290)
Issue of ordinary share capital - 60
-------------------------------------------- -------- --------
Net cash used in financing activities (1,516) (2,652)
-------------------------------------------- -------- --------
Net (decrease)/increase in cash and
cash equivalents (5,632) (805)
Cash and cash equivalents at beginning
of period 6,892 7,697
-------------------------------------------- -------- --------
Cash and cash equivalents at end of
period 1,260 6,892
-------------------------------------------- -------- --------
Notes to the financial statements
1. Taxation
Analysis of charge in period
2011 2010
GBP000 GBP000
Current tax expense
- UK corporation tax on profits of the period 804 1,067
- Amounts in respect of prior periods - (98)
804 969
Deferred tax expense:
- Temporary differences (207) -
Income tax expense 597 969
----------------------------------------------- -------- --------
Reconciliation of effective tax rate
The tax for the period is lower (2010: lower) than the standard
rate of corporation tax in the UK (28%). The differences are
explained below:
2011 2010
GBP000 GBP000
Profit before taxation
- Continuing operations 3,028 4,034
Profit before taxation multiplied by rate
of corporation tax in the UK of 28% (2009:28%) 848 1,130
Effects of:
Other expenses not deductible for tax purposes 39 90
Goodwill amortisation 145 117
Sch 23 deduction - (34)
Depreciation in excess of capital allowances 35 (11)
Disposal of investment (22) -
Adjustments for prior years - (98)
Rate difference - (3)
Research and development (184) (185)
Other timing differences (57) (37)
Total tax expense 804 969
------------------------------------------------- -------- --------
2. Ordinary dividends
2011 2010
GBP000 GBP000
Final dividend for the year ended 31 March
2010 of 2.24p (year ended 31 March 2009:
3.80p) 610 1,040
(1st) interim dividend paid in respect of
the year of 1.67p (2010:1.63p) 454 441
2(nd) interim dividend paid in respect of
the year of nil (2009:1.63p) - 443
----------------------------------------------- -------- --------
Amounts recognised as distributions to equity
holders 1,064 1,924
----------------------------------------------- -------- --------
In addition, the directors are proposing a final dividend in
respect of the year ended 31 March 2011 of 3.98p per share. If
approved by shareholders, it will be paid on 28 July 2011 to
shareholders who are on the register of members on 17 June
2011.
3. Earnings per share
Basic earnings per share are calculated by dividing the earnings
attributable to ordinary shareholders 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
Reconciliations of the earnings and weighted average number of
shares used in the calculations are set out below.
2011 2010
Basic Diluted Basic Diluted
earnings earnings earnings earnings
Earnings per per Earnings per per
GBP000 share share GBP000 share share
Profit
attributable
to equity
shareholders 2,431 8.61p 8.26p 3,065 10.89p 10.57p
2011 2010
Number Number
Weighted average number of ordinary shares 28,248,164 28,153,878
Dilutive effect of share options 1,522,203 1,439,036
--------------------------------------------- ----------- -----------
Diluted weighted average number of ordinary
shares 29,770,367 29,592,914
--------------------------------------------- ----------- -----------
4. Exceptional items
2011 2010
GBP000 GBP000
Corporate finance acquisition costs 176 506
176 506
------------------------------------- -------- --------
The above costs principally relate to costs incurred resulting
from the acquisitions made during the year.
5. Basis of preparation
The financial information set out in this preliminary
announcement does not constitute statutory accounts as defined in
s495(2) or s495(3) of the Companies Act 2006 of the Companies Act
2006. The consolidated statement of comprehensive income, the
consolidated statement of changes in equity, the consolidated
balance sheet at 31 March 2011 and the consolidated cash flow
statement have been extracted from the Group's financial statements
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 2010
have been delivered to the registrar, contained an unqualified
audit report and did not include a statement under section 495(2)
or (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 12 July 2011 at
9:00am 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
END
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