Psion plc : 2011 Annual Results
03/01/2012| 02:42am US/Eastern
Recommend:
For immediate release1 March 2012
PSION PLC
Results for the year ended 31 December 2011
Psion PLC, the mobile computing solutions company,
today announces audited results for the year ended 31
December 2011.
|
FINANCIAL OVERVIEW
|
£m (except per share amounts)
|
2011
|
2010
|
|
Revenue
|
176.0
|
174.5
|
|
Gross margin %
|
38.2%
|
38.2%
|
|
Adjusted EBITDA3
|
11.9
|
10.6
|
|
Normalised operating profit/(loss)3
|
-
|
(1.9)
|
|
Profit before tax
|
0.1
|
5.7
|
|
Adjusted EPS (Diluted) 3
|
1.8
|
2.1
|
|
EPS (Diluted)
|
(1.3)
|
1.8
|
|
Dividend Per Share (pence)
|
4.0
|
4.0
|
|
Cash
|
25.2
|
36.9
|
|
HIGHLIGHTS
|
· Revenue growth in H2 2011 of 16.2%
over H1 2011 was driven by successful impact of new
products.
|
|
|
· Proportion of sales through
indirect channel increased to 63% in 2011 (2010: 54%
indirect). First OEM framework established with major
industrial partner.
|
|
|
· Actions taken to reduce costs in
H1 2012 will provide annualised reduction of £6m when
complete. £4m expected benefit in 2012, before
restructuring costs.
|
|
|
· New lower cost PDA device (EP10)
successfully launched in first half opens up
addressable market.
|
|
|
· XT15 and RT15 variants of Omnii
modular products launched in Q1 2012.
|
|
|
· Settlement of largest element of
Japanese legal actions dating back to 2008 reduces
potential liability by £13.6m to only £1.8m at net cash
cost of £3.9m to the Group.
|
|
|
· Cash balances at 31 December 2011
of £25.2m (2010: £36.8m) in line with
expectations.
|
|
|
· Full year dividend maintained at
4.0p per share (2010: 4.0p).
|
John Conoley, Psion Chief Executive Officer,
said:
"We recovered significant ground in the
second half of the year and grew the business. This
improvement was driven mainly by growing sales of our new
products, allied to our ongoing focus on efficiency. The
stronger second half result was achieved despite the
weakening economic situation and represents a substantial
improvement over the first half performance. We anticipate
continuing challenging market conditions in
2012.
Early in 2012, we launched a new addition to the Omnii™
family, the XT15, a highly rugged, modular, handheld device
for the Supply Chain. New product releases are critical to
driving growth and market share, especially in the US market.
To take the Group forward with the right resources we are
significantly reducing our cost base, primarily in support
functions. These actions will enable us to maintain or
improve our profit levels.
As such we expect that our performance will, in all but
the severest of recessionary conditions, improve. Our
investors and our staff deserve
success."
For further enquiries, please contact:
|
Psion
John Conoley - CEO
Adrian Colman - CFO
|
+44 (0) 207 025 6860
|
|
Buchanan
Charles Ryland
Suzanne Brocks
Louise Hadcocks
|
+44 (0) 207 466 5000
psion@buchanan.uk.com
|
Notes
|
1.
|
Psion is a pioneer in quality mobile handheld
computers and their application in industrial markets
around the world. We've innovated in the field of
mobile computing since 1980, starting with the
invention of the PDA; through to helping our global
customers solve their business problems today. Our
clients include Volkswagen, RWE nPower, E.ON, BMW,
Goodyear, Copenhagen Airports, and many others.
Through our open innovation business model, we
have the ability to work directly with our customers
and partners to co-create new variants of our mobile
hardware, software and services that meet the specific
needs of the marketplace. This collaboration is made
possible by our open innovation community site,
www.ingenuityworking.com
.
Psion PLC is a public company on the London Stock
Exchange. It is headquartered in London with corporate
offices located in Europe, North America, Asia, Latin
America, Africa and the Middle East.
|
|
2.
|
Certain statements in this announcement are
forward looking statements. Such statements are based
on current expectations and by their nature are subject
to a number of risks and uncertainties that could cause
actual results and performance to differ materially
from any expected future results or performance
expressed or implied by the forward-looking statement.
The information does not assume any responsibility or
obligation to update publicly or revise any of the
forward-looking statements contained herein.
|
|
3.
|
Definitions
Adjusted EBITDA is calculated as profit before
interest, taxation, depreciation, amortisation,
profit/loss on disposal of property, plant and
equipment, share based payments charge and exceptional
items.
Adjusted EPS is based on profit after tax before
share based payments charge, net of tax and exceptional
items, net of tax.
Normalised operating profit is defined as
operating profit before exceptional operating costs and
share based payments charges and after deducting the
net capitalisation of development expenditure. The
reconciliation of operating profit to normalised
operating profit/(loss) from continuing operations is
presented below:
|
|
|
Year
ended 31.12.11
£m
|
|
|
Year ended 31.12.10
£m
|
|
|
Operating profit from continuing
operations
|
0.2
|
|
|
5.7
|
|
|
Add back share based payments charge / (deduct
share based payments credit)
|
0.6
|
|
|
(0.1)
|
|
|
Add back/(deduct) exceptional operating costs /
(credit) related to Japan legal settlement
|
3.9
|
|
|
(0.2)
|
|
|
Add back other exceptional operating costs
|
-
|
|
|
0.5
|
|
|
Deduct capitalised development costs net of
amortisation
|
(4.7)
|
|
|
(7.8)
|
|
|
Normalised operating profit/(loss)
|
-
|
|
|
(1.9)
|
|
|
|
|
|
|
|
|
|
The reconciliation of (loss)/profit from continuing
operations to adjusted EBITDA is presented below:
|
|
Year
ended 31.12.11
£m
|
|
|
Year
ended 31.12.10
£m
|
|
(Loss)/profit from continuing operations
|
(2.0)
|
|
|
2.7
|
|
Tax
|
2.1
|
|
|
3.0
|
|
Net finance costs
|
0.1
|
|
|
-
|
|
Profit/(loss) on disposal of fixed assets
|
-
|
|
|
(0.1)
|
|
Share based payments
|
0.6
|
|
|
(0.1)
|
|
Depreciation and amortisation
|
7.2
|
|
|
4.8
|
|
Exceptional operating costs
|
3.9
|
|
|
0.3
|
|
Adjusted EBITDA
|
11.9
|
|
|
10.6
|
Chairman's statement
Introduction
In 2011 Psion made significant strides forward to
enable growth through the launch of a new rugged PDA product,
the Psion EP10, which addresses the fastest growing segment
in our market place. Product and partnership launches in the
US will also enable the Group to address this major market
for rugged mobile devices. Against this good progress we
observed a deteriorating economic environment in the second
half of the year across the territories that we serve,
leading to longer customer decision cycle times and elongated
deployment timetables. Despite that, we were very pleased
that our new products drove 16.2% revenue growth half over
half in 2011.
Financial results
Revenues in 2011 were £176.0m (2010 - £174.5m)
representing growth of 0.9% year over year (1.6% in constant
currency terms). The business demonstrated more significant
revenue growth in the second half of 4.6% over the same
period in 2010 which is an encouraging sign, driven by the
prospects that we have from an increasingly refreshed product
set. The normalised operating result for the year was
breakeven (2010 - loss of £1.9m). The profit before tax was
£0.1m (2010 - profit £5.7m). The Group's cash balances at
the end of the year were £25.2m (2010 - £36.9m).
Dividend
The Board is cognisant of the importance of the
dividend to shareholders and seeks to apply a progressive
dividend policy, taking into account the performance of
Psion's business and underlying growth, as well as its
capital requirements and cash flows, while looking to build
an appropriate level of dividend cover. The Board believes
that the beneficial impact on the trading prospects of the
Group from the increasingly refreshed product set and the
positive actions taken to reduce operating costs in early
2012 will support the future sustainability of the dividend.
The proposed final dividend is 2.7p per share for the year
ended 31 December 2011, which will be paid, subject to
shareholder approval, on 11 May 2012 to shareholders on the
register at 13 April 2012. This will bring the total proposed
dividend for 2011 to 4.0p per share (2010: 4.0p per
share).
Board
In May Adrian Colman was appointed to the Board as
Chief Financial Officer. In December we further strengthened
our Board with the addition of Peter Bertram and Gotthard
Haug who both bring significant additional technology
industry knowledge and experience, particularly in the area
of service businesses. In March, Toby Redshaw resigned as a
non-executive director of the Company following his
appointment as the CIO of American Express and move to the
US.
As Chairman, my principal responsibility is to ensure
that the Board operates effectively in meeting its primary
responsibilities to develop and agree strategy, to hold the
executive team accountable for execution of that strategy and
to set the tone for governance, culture, vision and values
for the Group.
During the year the Board conducted a rigorous process
for evaluating the performance of individual directors, the
Board and its Committees. This process confirmed that the
Board operates in a culture of openness and transparency
which enables better quality debate and decision making and
highlighted that directors remain wholly committed and
enthusiastic in supporting the Group's progress.
Our People
The success of the Group rests on the skills and
dedication of our people, particularly as we adapt to
changing market conditions. They have played an active role
in the Group's progress during the year and I would take
this opportunity to extend my thanks to our employees who
have played such a vital role in our progress during the
year.
Psion Transformation
The business has been substantially transformed over
the last three years with a major focus on:
· Introducing new products to market more
quickly
· Enhancing the technical capabilities,
reliability and quality of our products
· Streamlining and centralising group
operations and processes to deliver efficiency savings
· Leveraging our ability to access new
customers and markets by moving to an increasingly indirect
sales model
· Improving collaboration, openness and
access with our partners through channels such as
IngenuityWorking.com
The effectiveness of this transformation will be judged
by the Group's ability to grow revenues, capture market
share, deliver improved financial performance going forward
and the standing of the Group within the industry through its
thought leadership and innovation.
Performance in the year
Throughout 2011 we continued to evolve and
differentiate our business. Our Omnii™ modular platform
continues to stimulate opportunities to provide customisable
solutions for our customers, particularly in our core supply
chain logistics markets.
In 2011 we successfully launched our high performance,
low cost PDA device (EP10). This opens up significant new
markets for the Group. The worldwide market for smaller form,
handheld PDA style devices for mobile workers is recognised
to be a fast growing segment in the rugged computing market.
In the second half of 2011 the Group also launched an EP10
product with CDMA (roaming technology for the USA). For the
first time this will enable Psion to address the US market
place for such products.
In addition to the new product launches we have
continued to develop new partnerships through which we can
access our marketplace. In 2011 these included an OEM
(Original Equipment Manufacturer) framework agreement with a
major industrial partner. This will facilitate the sale of
Psion products, carrying this partner's brand into areas
of the market such as the US Government and Defence sectors
where there is little overlap with Psion's existing
customers.
Cost reduction actions
Notwithstanding our aspirations for growth in 2012, the
operational progress we have made in the past two years has
enabled us to deliver significant additional efficiency
savings in our support functions in the first half of 2012 to
mitigate against weak economic scenarios. These are expected
to reduce the cost base by approximately £6m on an annualised
basis. The restructuring costs to be incurred in the first
half of 2012 are expected to represent a cash cost of
approximately £4m. Together with the anticipated savings this
programme is expected to be cash neutral by the end of 2012
and deliver a full year of benefit in 2013.
Outlook
We believe that the Group will achieve growth in 2012
even in the anticipated challenging macro economic
conditions, primarily as a result of the introduction of new
products such as the EP10 which are accessing markets that we
have not previously addressed, particularly in the US.
John Hawkins
Chairman
CEO's Statement
We recovered significant ground in the second half of
the year and grew the business. This improvement was driven
mainly by growing sales of our new products, allied to our
ongoing focus on efficiency. Despite the improved second half
performance, our sales were compromised by the weakening
economic situation and the lower than anticipated performance
in the first half of the year, principally attributable to
the supply issues which affected sales of one legacy
product.
We have invested in improving processes and
performance, reshaping the Group for the future and launching
important new products, services and software.
New product development will continue to receive
investment. In 2011, we launched the EP10 PDA device which,
for the first time, included full wireless network coverage
for the US market. The launch of the Psion EP10 was
particularly significant due to its ability to strengthen our
position in the important US market, and also globally, by
ensuring that we have a stronger foothold in the critical PDA
product category.
Early in 2012, we launched a new addition to the Omnii™
family, the XT15, a highly rugged, modular, handheld device
for the Supply Chain. New product releases are critical to
driving growth and market share, especially in the US
market.
Another achievement was Psion's first OEM
agreement. Our customer is a major American multinational
company, which primarily serves markets where we have little
existing presence. It will now sell, under its own brand, a
version of our EP10 and XT15 devices. This OEM agreement is a
major endorsement of our strategy and products, and we
anticipate doing more of this business in the years
ahead.
Our Open Source Mobility (OSM) strategy has three
elements, each of which are realising tangible benefits:
Modularity, Customisation and Open Innovation;
Modularity
The EP10 PDA product shares a substantial amount of
technology with both the Omnii™ XT10 and the new Omnii™ XT15.
This allows us to bring products to market more
quickly.
"Customers are looking for mobile business
solutions that will continue to drive productivity and extend
product life beyond 3 years. Psion's Omnii XT15 provides
customers with the flexibility to adapt their handheld
devices in the future, by replacing modules with the latest
technology available, thus extending the life of the
product."David Krebs, Vice-President,
Mobile & Wireless VDC Research.
Customisation
We helped the international transportation
and logistics company, Dachser, by co-developing a
tailor-made version of the Omnii™ XT10 keyboard for use in
their business. Dachser uses the worldwide standard Systems
Application Architecture (SAA) software from IBM. This
includes a uniform assignment of twelve function keys on all
devices. They needed new handheld computers from Psion, used
for warehouse picking, to follow exactly the same SAA key
arrangement.
"Our employees are used to dealing with the twelve
function keys so it was important to us that we made it easy
for them to do their work by adapting our mobile hardware.
The modularity and flexibility of Omnii XT10 enabled us to
adapt our new hardware to our existing systems and not vice
versa." Thomas von Jan, Head of IT
Front-End Systems, Dachser.
Open Innovation
This is most easily demonstrated by our open, online,
community, IngenuityWorking.com where customers, partners,
employees and resellers support each other by designing
solutions and evaluating choices. It has become a
critical part of our support infrastructure, as well as the
place where new solutions are launched. Here are two
examples:
In September 2011, Blackroc Technology announced a new
range of integrated Global Navigation Satellite System (GNSS)
handheld devices by integrating a high
specification positioning receiver into the Psion Workabout
Pro™ 3 handheld computer.This product,
the Blackroc Technology Procyon™ can achieve location
accuracy of up to 1 to 2 centimetres. This product is now
available via IngenuityWorking's own "app
store", called IngenuityLive! and is evidence of our
ability to access new markets through Open Innovation.
In December 2011, theU.S. Forest Service
selected Psion Workabout Pro™ 3 as the mobile platform for
the National Forest System.
"We looked at more than 25 devices from 12
companies for the U.S. Forest Service, and the Workabout Pro
was the clear choice not only for its technical
capabilities, but also because of the service
and support that Psion offers. As an active participant in
Psion's online community,
IngenuityWorking, I can attest to the
outstanding support that Psion delivers to partners and that
is exactly the type of partnership we need for this
relationship with the USFS." Mike Berg,
president of Handheld Systems, Inc.
In the last three years we have driven out a
significant amount of complexity and workload from the
business which has substantially reduced the cost base. These
actions now provide us with the opportunity to take further
steps to reduce costs mainly in support functions in early
2012. These reductions, in the first half of 2012, will
deliver an expected £6m of full year benefit from 2013, with
approximately two thirds of this amount delivered in 2012.
These actions will enable us to maintain or improve our
profit levels.
In 2012, we will continue to build on these
achievements. We will get better at commercialising the
unique opportunities enabled by our Open Source Mobility
strategy. There will be a growing shift to our new products
as partners, customers, developers and software vendors
become more familiar with our strategy and the compelling
value it creates. To grow our channel, we will develop more
reseller partner agreements.
Finally, we should all expect that our performance
will, in all but the severest of recessionary conditions,
improve. Our investors and our staff deserve success.
At Psion, we are all highly motivated, encouraged and
ready for the challenge of 2012.
John Conoley
Chief Executive Officer
Financial Review
Financial Performance Summary
|
|
2011
|
2010
|
+/-
|
2010 Constant Currency
|
+/-
|
|
£m
|
£m
|
£m
|
£m
|
£m
|
|
Revenue
|
176.0
|
174.5
|
1.5
|
173.2
|
2.8
|
|
Gross profit
|
67.2
|
66.7
|
0.5
|
68.6
|
(1.4)
|
|
Gross profit %
|
38.2%
|
38.2%
|
-
|
39.6%
|
(1.4)%
|
|
Normalised operating profit/(loss) (see note
4)
|
-
|
(1.9)
|
1.9
|
0.2
|
(0.2)
|
|
Adjusted EBITDA (see note 1)
|
11.9
|
10.6
|
1.3
|
|
|
|
Operating profit
|
0.2
|
5.7
|
(5.5)
|
|
|
|
Basic EPS (Pence)
|
(1.35)
|
1.81
|
(3.16)
|
|
|
|
Adjusted EPS (Pence) (see note 2)
|
1.77
|
2.07
|
(0.30)
|
|
|
|
Net cash (see note 3)
|
22.5
|
34.8
|
(12.3)
|
|
|
Note 1 - Adjusted EBITDA is defined as profit before
interest, taxation, depreciation, amortisation, share based
payments charge and exceptional items.
Note 2 - Adjusted EPS is based on profit after tax
before share based payments charge, net of tax and
exceptional items, net of tax.
Note 3 - Net cash includes loans and obligations under
finance leases.
Note 4 - Normalised operating profit is defined as
operating profit before exceptional operating costs and share
based payments charge and after deducting the net
capitalisation of development expenditure.
Group revenue for the year increased by 0.9% to £176.0m
(2010: £174.5m). On a constant currency basis this was
equivalent to growth of 1.6% year over year. The second half
of 2011 showed significant growth over the first half of the
year with revenues increasing 16.2% principally due to
shipments of the EP10 rugged PDA. Other contributing factors
were the impact on first half revenues of supply issues and
the slight seasonal weighting in the Group's results
towards the second half. The second half of 2011 also
demonstrated growth against the second half of 2010 of 4.6%
on a constant currency basis, again predominantly reflecting
the impact of new products gaining traction in the market
place.
Orders represent bookings received for all lines of
business, except for ad hoc service repairs not covered by
maintenance agreements. In 2011 the level of orders received
increased 5.7% from £158.4m to £167.4m driven by orders for
new products in the year, primarily in EMEA where the new
EP10 product was first released. On a constant currency basis
this represents an increase of 6.9% compared to 2010. The
closing value of the order book at 31 December 2011 was
£30.4m, an increase of 10.5% over the prior year (2010:
£27.5m).
Adjusted EBITDA for the year increased by 12.3% to
£11.9m from £10.6m in 2010.
Normalised operating profit is an important operational
performance measure for the Group. This states Group
performance before the impact of development costs
capitalisation, amortisation of previously capitalised
development costs, share based payment charges and
exceptional items. In 2011 the Group's normalised
operating result was breakeven, an improvement on the
normalised operating loss of £1.9m reported in 2010. Total
operating expenses charged in calculating normalised
operating profit were 2.0% lower than the prior year at
£67.2m (2010: £68.6m).
The Group reported an operating profit from continuing
operations of £0.2m (2010: £5.7m). The reduction year over
year was primarily attributable to the £3.9m (2010: credit of
£0.2m) settlement of Japanese litigation arising from
unauthorised transactions in 2008 and higher amortisation of
development costs of £3.0m (2010: £0.6m). A reconciliation
from normalised operating profit to operating profit from
continuing operations is set out below:
|
|
|
2011
£m
|
|
2010
£m
|
|
Normalised operating profit/(loss)
|
|
-
|
|
(1.9)
|
|
|
|
|
|
|
|
Development costs capitalised in year
|
7.7
|
|
8.4
|
|
|
Amortisation of capitalised development
costs
|
(3.0)
|
|
(0.6)
|
|
|
Net capitalisation of development costs
|
|
4.7
|
|
7.8
|
|
Japan litigation settlement
|
|
(3.9)
|
|
0.2
|
|
Restructuring
|
|
-
|
|
(0.5)
|
|
Share based payment charges
|
|
(0.6)
|
|
0.1
|
|
Operating profit from continuing
operations
|
|
0.2
|
|
5.7
|
The tax charge for the year of £2.1m (2010: £3.0m
charge) results in a loss from continuing operations of £2.0m
(2010: profit of £2.7m).
Segmental operating performance
The Group is organised around three regional segments
supported by the Group's global functions. Each region
has a Vice President who is primarily responsible for growing
revenue and profitability and who reports directly to the
Chief Executive.
|
|
2011
|
20101
|
+/-
|
|
2010 Constant Currency
|
+/-
|
|
Revenue
|
£m
|
£m
|
£m
|
|
£m
|
£m
|
|
EMEA
|
106.1
|
101.9
|
4.2
|
|
103.2
|
2.9
|
|
Americas
|
53.2
|
56.2
|
(3.0)
|
|
54.0
|
(0.8)
|
|
Asia
|
16.7
|
16.4
|
0.3
|
|
16.0
|
0.7
|
|
Total
|
176.0
|
174.5
|
1.5
|
|
173.2
|
2.8
|
|
|
2011
|
20101
|
|
|
2010 Constant Currency
|
|
|
Gross profit
|
£m
|
£m
|
+/-
|
|
£m
|
+/-
|
|
EMEA
|
47.6
|
45.2
|
2.4
|
|
47.8
|
(0.2)
|
|
Americas
|
19.9
|
22.4
|
(2.5)
|
|
21.7
|
(1.8)
|
|
Asia
|
7.4
|
6.7
|
0.7
|
|
6.7
|
0.7
|
|
Corporate
|
(7.7)
|
(7.6)
|
(0.1)
|
|
(7.6)
|
(0.1)
|
|
Total
|
67.2
|
66.7
|
0.5
|
|
68.6
|
(1.4)
|
|
|
2011
|
20101
|
+/-
|
|
2010 Constant Currency
|
+/-
|
|
Normalised operating profit
|
£m
|
£m
|
£m
|
|
£m
|
£m
|
|
EMEA
|
28.2
|
26.1
|
2.1
|
|
28.4
|
(0.2)
|
|
Americas
|
9.3
|
11.6
|
(2.3)
|
|
11.3
|
(2.0)
|
|
Asia
|
5.4
|
4.8
|
0.6
|
|
4.7
|
0.7
|
|
Corporate
|
(42.9)
|
(44.4)
|
1.5
|
|
(44.2)
|
1.3
|
|
Total
|
-
|
(1.9)
|
1.9
|
|
0.2
|
(0.2)
|
Note 1: Due to changes in the management of the
operating segments of the Group the results for operations in
Dubai have transferred in 2011 from EMEA to Asia. The impact
of this change to present the 2010 results on this basis is a
transfer of £1.9m of revenue, gross margin of £0.6m and
normalised operating profit of £0.3m from EMEA to Asia in the
comparative results. There was no impact on consolidated
revenue, gross profit, normalised operating profit or net
assets as a result of this reclassification.
EMEA showed constant currency revenue growth of 2.8%
year over year despite the tough trading environment in the
Euro zone in the second half of 2011. The growth was
primarily driven by new product introductions, in particular
the EP10 rugged PDA device launched at the end of the first
half, which helped to eliminate the impact of the supply
issues which had affected shipments of one legacy product in
the first half. France remains our largest country in revenue
terms within EMEA and globally. EMEA also encompasses other
European operations plus Africa and Middle East.
Americas revenues were 1.5% lower in constant currency
when compared to 2010 which largely reflects the half over
half shortfall in the first half of the year. Our core
customers in North America have been focused around the
Supply Chain Logistics markets. North America represents the
largest single growth opportunity area for Psion,
particularly in the mobile product arena for products such as
the EP10 rugged PDA. New channel partners and routes to
market together with the new sales management team should
allow Americas to return to growth going forward. North
America is the largest territory within Americas however we
also trade successfully in Brazil, Argentina, Mexico and
other Latin and South American countries.
Asia experienced solid constant currency revenue growth
of 4.4%. Similar to North America the Asian business has been
primarily focused on Supply Chain Logistics customers with
particular strength in solutions for ports and yards. China
is our largest market within Asia with broad coverage of
other key countries in Asia Pacific.
Gross margins in the year were consistent with 2010 at
38.2% (2010 - 38.2%) resulting in gross profits of £67.2m
(2010: £66.7m).
Operating expenses
Operating expenses (before exceptional operating costs)
were £63.1m (2010: £60.7m). The increase is largely
attributable to the additional marketing efforts in launching
the new EP10 PDA product, higher amortisation of development
costs, higher share based payments charges and costs
associated with minor reshaping of overhead functions to
drive further efficiencies going forward.
Research and development
Research and development costs (excluding amortisation)
recorded in the income statement in the year amounted to
£8.5m (2010: £8.7m). Total research and development expenses
(including amounts capitalised) were £16.2m (2010: £17.1m).
Capitalised product development amounted to £7.7m (2010:
£8.4m) and principally related to the development of the
Omnii XT15, the Omnii RT15 and the EP10 rugged PDA device.
Amortisation of capitalised development costs amounted to
£3.0m (2010 £0.6m).
Exceptional operating costs
Exceptional operating costs in the period of £3.9m
(2010: £0.3m) reflect the settlement cost and legal fees, net
of insurance proceeds, associated with the Japanese legal
actions initiated against the Group in 2008 in relation to
unauthorised trades and a guarantee of third party
obligations. The settlement paid in June 2011 reduced the
maximum level of potential claims against the Group from
£15.4m at 31 December 2010 to £1.8m (at 31 December 2011
exchange rates). No further negotiations have taken place in
relation to the remaining claims since that date. An analysis
of exceptional costs is set out below;
|
|
2011
|
2010
|
|
Exceptional operating costs
|
£m
|
£m
|
|
|
|
|
|
Settlement costs
|
5.4
|
0.9
|
|
Insurance settlement
|
(1.5)
|
(1.0)
|
|
Japan costs - net
|
3.9
|
(0.1)
|
|
Restructuring costs (inc board changes)
|
-
|
0.4
|
|
Total exceptional operating costs
|
3.9
|
0.3
|
Revenue analysis by type
|
|
2011
|
20101
|
+/-
|
|
2010 Constant Currency
|
+/-
|
|
Line of business
|
£m
|
£m
|
£m
|
|
£m
|
£m
|
|
Hardware
|
129.3
|
128.7
|
0.6
|
|
127.9
|
1.4
|
|
Customer Service
|
37.8
|
37.3
|
0.5
|
|
36.9
|
0.9
|
|
Software & Professional Services
|
8.9
|
8.5
|
0.4
|
|
8.4
|
0.5
|
|
Total
|
176.0
|
174.5
|
1.5
|
|
173.2
|
2.8
|
Note 1 - The comparative analysis has been re-presented
to reflect the change in management's own categorisation
of revenues, with Software now reported within Software and
Professional Services.
Hardware revenues of £129.3m for 2011 are £0.6m above
prior year. Unit volumes grew 11% from approximately 108,000
units in 2010 to approximately 120,000 units with the lower
revenue growth reflecting the sales mix change to new
products such as the EP10 rugged PDA device which is a
smaller and lower priced product addition to the Psion
product portfolio.
Customer service revenues increased by £0.5m compared
to 2010 reversing the trend from the first half of
2011.
New products continued to gain momentum with EP10 and
Omnii representing 19.8% of total volume (2010: 1.3%). In the
final quarter these two product families accounted for 30.9%
of product shipments.
Interestand taxation
Finance costs in the year were £0.2m (2010 - £0.1m)
arising mainly from interest on obligations under finance
leases which offset interest received on cash balances of
£0.1m (2010 - £0.1m).
The taxation charge for 2011 was £2.1m (2010: £3.0m).
The Group recorded a profit before tax of £0.1m. The £2.1m
charge arises as a result of taxable profits in a number of
jurisdictions, whilst the Group's reported profit before
tax of £0.1m reflects the offsetting impact of losses before
tax in other jurisdictions, where deferred tax assets have
not been recognised. In particular the impact of the
exceptional item of £3.9m in respect of the settlement with a
major claimant regarding unauthorised transactions in Japan
in 2008 on the results has not given rise to a corresponding
tax credit. Additionally, the charge reflects £0.4m (2010:
£2.6m) relating to deferred tax, being the net effect of
utilisation of losses, additional deferred tax assets
recognised, and a reduction in deferred tax assets arising
from tax rate changes.
Profit/(loss) after taxand earnings/(loss)
per share
The Group's loss after tax from continuing
operations for the year was £2.0m (2010: profit of £2.7m).
Basic and diluted earnings per share in 2011 was a loss of
1.35p (2010: earnings 1.81p for basic and diluted). For
continuing operations only, basic and diluted earnings per
share in 2011 was a loss of 1.42p (2010: earnings 1.90p). The
Board believes that a better appreciation of the continuing
operations of the Group is given by adjusting for the charge
for share based payments and exceptional operating costs.
Adjusted basic earnings per share on this basis was 1.77p
(2010 - earnings 2.07p).
Dividends
The Board has recommended a final dividend for 2011 of
2.7p, to bring the total dividend for 2011 to 4.0p (2010:
4.0p).
Post balance sheet events
On 12 January 2012, the Group announced that management
had completed a detailed formal plan to make further
efficiency savings in its administrative and support
functions in the first half of 2012. Implementation commenced
in January 2012 and is expected to reduce the Group's
cost base by approximately £6.0m on an annualised basis. In
2012, the Group expects to deliver approximately two thirds
of these savings, with the full impact expected to come
through in 2013. Restructuring costs of approximately £4.0m
when taken together with the anticipated savings are expected
to be cash neutral in 2012. The restructuring charge and cash
impact of £4.0m will be recorded in the first half
2012.
Employees
The number of employees at 31 December 2011 was 895, a
reduction of 51 from 31 December 2010 as a result of general
staff attrition rates and some minor reshaping of overhead
functions undertaken during the year to drive further
efficiencies from operations.
Financial position
The Group's balance sheet at 31 December 2011 can
be summarised as set out below
|
|
|
|
|
|
2011
|
|
2010
|
|
Change
|
|
|
|
|
|
|
£m
|
|
£m
|
|
£m
|
|
Property, plant and equipment
|
|
|
|
11.9
|
|
11.5
|
|
0.4
|
|
Goodwill
|
|
|
|
103.5
|
|
103.1
|
|
0.4
|
|
Intangible assets
|
|
|
|
20.4
|
|
15.4
|
|
5.0
|
|
Other non-current assets and liabilities
|
|
(0.9)
|
|
(1.2)
|
|
0.3
|
|
Current assets and liabilities
|
|
|
|
11.1
|
|
11.2
|
|
(0.1)
|
|
Deferred tax
|
|
|
|
|
3.3
|
|
3.7
|
|
(0.4)
|
|
Total excluding net cash
|
|
|
|
149.3
|
|
143.7
|
|
5.6
|
|
Cash and cash equivalents
|
|
|
|
25.2
|
|
36.9
|
|
(11.7)
|
|
Finance lease obligations
|
|
|
|
(2.0)
|
|
(2.1)
|
|
0.1
|
|
Grant funding loan
|
|
|
|
(0.7)
|
|
-
|
|
(0.7)
|
|
Net cash
|
|
|
|
22.5
|
|
34.8
|
|
(12.3)
|
|
Net assets
|
|
|
|
171.8
|
|
178.5
|
|
(6.7)
|
The main movements in the balance sheet items were
principally due to additional capitalised development costs
and the change in net cash driven by the Japan settlement and
the dividend payments discussed below.
Capital structure
The Group has no bank debt or other borrowings save for
limited finance lease obligations of £2.0m (2010: £2.1m) and
a small interest free loan received as part of a Spanish
Government grant initiative of £0.7m (2010: £nil). The Group
held cash balances of £25.2m at the end of 2011 (2010:
£36.9m). The directors believe that maintaining a sound
capital structure based around access to liquid assets
provides support to the Group's share price and the
ability to fund any necessary investments to meet the
Group's objectives.
The share capital structure of the Group remains
unchanged in the year.
Cash flow
The primary cash outflows in the year were in respect
of dividends paid of £5.6m (2010: £5.5m) and the net
settlement costs related to the Japanese legal actions of
£3.9m (2010: credit of £0.1m).
Net cash from operations amounted to £5.6m (2010:
£9.9m) with a net working capital outflow of £0.4m (2010:
outflow of £0.4m). Debtors days outstanding at 31 December
2011 reduced by 2 days to 70 days (2010: 72 days).
Intangible asset purchases relating to capitalised
product development costs, primarily in relation to the EP10
product launched in the first half and the new modular
variants in the Omnii family, as well as other intangibles
such as software and patents amounted to £8.9m (2010:
£10.2m). Cash outflows from property, plant and equipment
purchases amounted to £2.3m (2010: £2.6m) principally related
to production tooling equipment.
The Group had net obligations under finance leases at
31 December 2011 of £2.0m (31 December 2010: £2.1m).
Additionally the Group received loan financing of £0.7m
(2010: £nil) as part of its participation in a Spanish
Government grant funded project into RFID development. Net of
these obligations the Group's net cash position at 31
December 2011 was £22.5m (2010: £34.8m).
Cash balances in excess of the day to day working
capital needs of the business are deposited in Liquidity
Funds managed by HSBC plc to spread the counterparty risk
across a number of institutions.
Foreignexchange exposures and group
hedging strategy
The Group's financial transactions are heavily
weighted towards EUR (Euro) denominated revenues with USD (US
Dollar) and CAD (Canadian Dollar) denominated expenses
constituting the majority of the cost structure.
The key foreign exchange rate movements that impacted
the Group year over year are as set out below.
|
Exchange rate
|
2011
Average
|
2010
Average
|
+/-
|
2011
Closing
|
2010
Closing
|
+/-
|
|
EUR:GBP
|
0.87
|
0.86
|
1%
|
0.84
|
0.86
|
(3)%
|
|
USD:GBP
|
0.62
|
0.65
|
(4)%
|
0.64
|
0.64
|
0%
|
|
CAD:GBP
|
0.63
|
0.62
|
1%
|
0.63
|
0.64
|
(2)%
|
|
EUR:USD
|
1.40
|
1.33
|
(5)%
|
1.30
|
1.32
|
(2)%
|
When looking at average rates revenues were principally
affected by the year over year depreciation of the USD
against GBP partly mitigated by the year over year
appreciation of EUR against GBP.
As can be seen from the currency analysis of revenue
and costs the Group generates a net excess of EUR revenues
over EUR costs and has a net shortfall of USD and CAD
revenues relative to USD and CAD costs. The Group uses short
term forward contracts to manage this transactional exposure
that exists by selling forward a proportion of its six month
expected net EUR cash receipts to buy USD and CAD in even
quantities. The Group believes this six month timeframe is
appropriate as it broadly matches the overall transaction
cycle from publication of price list through to order,
shipment and cash collection. The Group regularly reviews the
impact of currency movements on its costs of operations and
the currencies in which transacts as part of the periodic
process of refreshing its price lists which allows further
mitigation of the impact of currency movements.
Given the current uncertainty over economic conditions
the Group seeks to maintain only necessary levels of surplus
funds in Euros to meet Euro denominated expenses. At 31
December 2011 these Euro denominated balances amounted to
£6.2m (2010: £7.4m).
Consolidated Statement of Comprehensive Income
For the year ended 31 December 2011
|
|
|
|
2011
£m
|
|
2010
£m
|
|
CONTINUING OPERATIONS
|
|
|
|
|
|
|
Revenue
|
2
|
|
176.0
|
|
174.5
|
|
Cost of sales
|
|
|
(108.8)
|
|
(107.8)
|
|
GROSS PROFIT
|
|
|
67.2
|
|
66.7
|
|
|
|
|
|
|
|
|
Distribution costs
|
|
|
(36.3)
|
|
(34.4)
|
|
Administrative expenses
|
|
|
(26.8)
|
|
(26.3)
|
|
Exceptional operating costs
|
3
|
|
(3.9)
|
|
(0.3)
|
|
Total administrative expenses
|
|
|
(30.7)
|
|
(26.6)
|
|
OPERATING PROFIT
|
|
|
0.2
|
|
5.7
|
|
|
|
|
|
|
|
|
Investment income
|
|
|
0.1
|
|
0.1
|
|
Finance costs
|
|
|
(0.2)
|
|
(0.1)
|
|
PROFIT BEFORE TAX
|
|
|
0.1
|
|
5.7
|
|
|
|
|
|
|
|
|
Tax charge
|
4
|
|
(2.1)
|
|
(3.0)
|
|
(LOSS) / PROFIT FROM CONTINUING OPERATIONS
|
|
|
(2.0)
|
|
2.7
|
|
|
|
|
|
|
|
|
DISCONTINUED OPERATIONS
|
|
|
|
|
|
|
Profit / (loss) for the year from discontinued
operations
|
|
|
0.1
|
|
(0.2)
|
|
(LOSS) / PROFIT FOR THE YEAR ATTRIBUTABLE TO
EQUITY HOLDERS OF THE PARENT
|
|
|
(1.9)
|
|
2.5
|
|
|
|
|
|
|
|
|
OTHER COMPREHENSIVE INCOME
|
|
|
|
|
|
|
Exchange gain on translation of goodwill in
foreign operations
|
|
|
0.4
|
|
3.5
|
|
Exchange (loss) / gain on translation of foreign
operations
|
|
|
(0.2)
|
|
0.3
|
|
TOTAL COMPREHENSIVE INCOME
|
|
|
(1.7)
|
|
6.3
|
|
|
|
|
|
|
|
|
(LOSS) /EARNINGS PER SHARE
|
|
|
|
|
|
|
From continuing operations
|
|
|
|
|
|
|
Basic
|
6
|
|
(1.42p)
|
|
1.90p
|
|
Diluted
|
6
|
|
(1.42p)
|
|
1.90p
|
|
|
|
|
|
|
|
|
From continuing and discontinued
operations
|
|
|
|
|
|
|
Basic
|
6
|
|
(1.35p)
|
|
1.81p
|
|
Diluted
|
6
|
|
(1.35p)
|
|
1.81p
|
Consolidated Balance Sheet
As at 31 December 2011
|
|
|
2011
£m
|
|
2010
£m
|
|
NON-CURRENT ASSETS
|
|
|
|
|
|
Goodwill
|
|
103.5
|
|
103.1
|
|
Other intangible assets
|
|
20.4
|
|
15.4
|
|
Property, plant and equipment
|
|
11.9
|
|
11.5
|
|
Prepayments
|
|
0.6
|
|
0.9
|
|
Deferred tax assets
|
|
3.3
|
|
3.7
|
|
|
|
139.7
|
|
134.6
|
|
CURRENT ASSETS
|
|
|
|
|
|
Inventories
|
|
18.2
|
|
18.2
|
|
Trade and other receivables
|
|
48.5
|
|
47.4
|
|
Current tax assets
|
|
0.4
|
|
0.6
|
|
Derivative financial assets
|
|
0.5
|
|
-
|
|
Cash and cash equivalents
|
|
25.2
|
|
36.9
|
|
|
|
92.8
|
|
103.1
|
|
TOTAL ASSETS
|
|
232.5
|
|
237.7
|
|
|
|
|
|
|
|
CURRENT LIABILITIES
|
|
|
|
|
|
Trade and other payables
|
|
53.8
|
|
52.3
|
|
Tax liabilities
|
|
1.3
|
|
1.2
|
|
Obligations under finance leases
|
|
0.7
|
|
0.6
|
|
Derivative financial instruments
|
|
-
|
|
0.1
|
|
Provisions
|
|
1.4
|
|
1.5
|
|
|
|
57.2
|
|
55.7
|
|
NON-CURRENT LIABILITIES
|
|
|
|
|
|
Tax liabilities
|
|
-
|
|
0.2
|
|
Other loans
|
|
0.7
|
|
-
|
|
Obligations under finance leases
|
|
1.3
|
|
1.5
|
|
Provisions
|
|
1.5
|
|
1.8
|
|
|
|
3.5
|
|
3.5
|
|
TOTAL LIABILITIES
|
|
60.7
|
|
59.2
|
|
NET ASSETS
|
|
171.8
|
|
178.5
|
|
|
|
|
|
|
|
EQUITY
|
|
|
|
|
|
Share capital
|
|
21.1
|
|
21.1
|
|
Share premium
|
|
15.7
|
|
15.7
|
|
Capital reserve
|
|
98.7
|
|
98.7
|
|
Translation reserve
|
|
22.7
|
|
22.5
|
|
Retained earnings
|
|
13.6
|
|
20.5
|
|
TOTAL EQUITY
|
|
171.8
|
|
178.5
|
Consolidated Statement of Changes in Equity
For the year ended 31 December 2011
|
|
|
|
|
|
|
|
|
2011
£m
|
|
2010
£m
|
|
SHARE CAPITAL
|
|
|
|
|
|
Balance at start and end of year
|
|
21.1
|
|
21.1
|
|
|
|
|
|
|
|
SHARE PREMIUM
|
|
|
|
|
|
Balance at start of year
|
|
15.7
|
|
15.6
|
|
Exercise of equity share options
|
|
-
|
|
0.1
|
|
Balance at end of year
|
|
15.7
|
|
15.7
|
|
|
|
|
|
|
|
CAPITAL RESERVE
|
|
|
|
|
|
Balance at start and end of year
|
|
98.7
|
|
98.7
|
|
|
|
|
|
|
|
TRANSLATION RESERVE
|
|
|
|
|
|
Balance at start of year
|
|
22.5
|
|
18.7
|
|
Exchange difference on translation of goodwill in
foreign operations
|
|
0.4
|
|
3.5
|
|
Exchange difference on translation of foreign
operations
|
|
(0.2)
|
|
0.3
|
|
Balance at end of year
|
|
22.7
|
|
22.5
|
|
|
|
|
|
|
|
RETAINED EARNINGS
|
|
|
|
|
|
Balance at start of year
|
|
20.5
|
|
23.6
|
|
(Loss) / profit for the year
|
|
(1.9)
|
|
2.5
|
|
Recognition of share based payment expense /
(credit)
|
|
0.6
|
|
(0.1)
|
|
Dividends (note 5)
|
|
(5.6)
|
|
(5.5)
|
|
Balance at end of year
|
|
13.6
|
|
20.5
|
|
|
|
|
|
|
|
TOTAL
|
|
|
|
|
|
Balance at start of year
|
|
178.5
|
|
177.7
|
|
Exercise of equity share options
|
|
-
|
|
0.1
|
|
Exchange difference on translation of goodwill in
foreign operations
|
|
0.4
|
|
3.5
|
|
Exchange difference on translation of foreign
operations
|
|
(0.2)
|
|
0.3
|
|
(Loss) / profit for the year
|
|
(1.9)
|
|
2.5
|
|
Recognition of share based payment expense /
(credit)
|
|
0.6
|
|
(0.1)
|
|
Dividends (note 5)
|
|
(5.6)
|
|
(5.5)
|
|
Balance at end of year
|
|
171.8
|
|
178.5
|
Consolidated Cash Flow Statement
For the year ended 31 December 2011
|
|
|
|
2011
£m
|
|
2010
£m
|
|
|
|
|
|
|
|
|
OPERATING PROFIT FOR THE YEAR
|
|
|
0.2
|
|
5.7
|
|
Adjustments for:
|
|
|
|
|
|
|
Depreciation of property, plant and
equipment
|
|
|
3.0
|
|
3.1
|
|
Amortisation of other intangible assets
|
|
|
4.2
|
|
1.7
|
|
Share-based payment expense charge /
(credit)
|
|
|
0.6
|
|
(0.1)
|
|
Loss on disposal of property, plant and
equipment
|
|
|
-
|
|
(0.1)
|
|
Decrease in provisions
|
|
|
(0.3)
|
|
(0.5)
|
|
Cash impact of discontinued operations
|
|
|
-
|
|
(0.9)
|
|
Operating cash flows before movements in working
capital
|
|
|
7.7
|
|
8.9
|
|
(Increase) / decrease in inventories
|
|
|
(0.4)
|
|
0.2
|
|
Increase in receivables
|
|
|
(1.5)
|
|
(2.3)
|
|
Increase in payables
|
|
|
1.5
|
|
1.7
|
|
Cash generated by operations
|
|
|
7.3
|
|
8.5
|
|
Tax received
|
|
|
0.2
|
|
3.8
|
|
Tax paid
|
|
|
(1.7)
|
|
(2.3)
|
|
Interest paid
|
|
|
(0.2)
|
|
(0.1)
|
|
NET CASH FROM OPERATING ACTIVITIES
|
|
|
5.6
|
|
9.9
|
|
INVESTING ACTIVITIES
|
|
|
|
|
|
|
Interest received
|
|
|
0.1
|
|
0.1
|
|
Proceeds on disposal of property, plant and
equipment
|
|
|
-
|
|
0.2
|
|
Purchases of intangible assets
|
|
|
(8.9)
|
|
(10.2)
|
|
Purchases of property, plant and equipment
|
|
|
(2.3)
|
|
(2.6)
|
|
NET CASH USED IN INVESTING ACTIVITIES
|
|
|
(11.1)
|
|
(12.5)
|
|
|
|
|
|
|
|
|
FINANCING ACTIVITIES
|
|
|
|
|
|
|
Dividends paid (note 5)
|
|
|
(5.6)
|
|
(5.5)
|
|
Loans received
|
|
|
0.7
|
|
-
|
|
Repayment of capital element of finance
leases
|
|
|
(0.7)
|
|
(0.7)
|
|
Proceeds from issue of new shares
|
|
|
-
|
|
0.1
|
|
NET CASH USED IN FINANCING ACTIVITIES
|
|
|
(5.6)
|
|
(6.1)
|
|
NET DECREASE IN CASH AND CASH EQUIVALENTS
|
|
|
(11.1)
|
|
(8.7)
|
|
CASH AND CASH EQUIVALENTS AT BEGINNING OF
YEAR
|
|
|
36.9
|
|
45.3
|
|
Effect of foreign exchange rate changes
|
|
|
(0.6)
|
|
0.3
|
|
CASH AND CASH EQUIVALENTS AT END OF YEAR
|
|
|
25.2
|
|
36.9
|
Notes to the Consolidated Financial Statements
for the year ended 31 December 2011
1. Basis of Preparation
The preliminary results have been prepared under the
historical cost convention. Whilst the information included
in this preliminary announcement has been computed in
accordance with International Financial Reporting Standards
(IFRS), this announcement does not itself contain sufficient
information to comply with IFRS. The Group expects to publish
full financial statements that comply with IFRS in March
2012.
The financial information in the preliminary
announcement does not constitute the Group's statutory
financial statements for the years ended 31 December 2011 or
2010, but has been extracted from the audited financial
statements for the year ended 31 December 2011 and the
audited financial statements for the year ended 31 December
2010, and, as such, does not contain all information required
to be disclosed in the financial statements prepared in
accordance with IFRS. Statutory financial statements for 2010
have been delivered to the Registrar of Companies and the
statutory financial statements for 2011 will be delivered
following the Company's Annual General Meeting. The
auditors have reported on these financial statements; their
reports were unqualified and did not contain statements under
section 498 (2) or (3) of the Companies Act 2006 but their
report on the 2010 financial statements drew attention to
uncertainty related to ongoing litigation in Japan.
The preliminary announcement is prepared on the basis
of the accounting policies set out in previous annual
financial statements.
The preliminary announcement was approved by the Board
of Directors on 29 February 2012.
2. Segmental Analysis
The Group is managed on a geographical basis using a
regional structure. The geographical segments are the basis
on which the Group reports its results within its internal
reporting to the Chief Executive Officer (the chief operating
decision maker) and the Board for the purposes of resource
allocation and assessment of segmental performance.
Inter-segment revenues are eliminated in such internal
reporting prior to reporting the regional performance.
Segment balance sheet information is not included in the
Group's internal reporting.
The Psion corporate activity segment comprises the
Group's development centre to which goodwill is
attributed, together with expensed development costs,
amortisation of capitalised development costs and associated
staff costs, together with costs of Group functions.
The 2010 analyses have been re-presented to conform
with the current year presentation. The Dubai market has been
moved from EMEA to Asia, reallocating £1.9m revenue and £0.3m
operating profit.
|
Revenue by geographical market
|
2011
£m
|
|
2010 £m
|
|
EMEA
|
106.1
|
|
101.9
|
|
Americas
|
53.2
|
|
56.2
|
|
Asia Pacific
|
16.7
|
|
16.4
|
|
Total revenue from continuing operations
|
176.0
|
|
174.5
|
Revenue earned from sales made to the UK amount to
£8.3m (2010: £11.1m)
|
Results by geographical market
|
|
|
|
|
|
|
|
|
|
Operating profit before exceptional items
|
|
|
|
|
EMEA
|
28.2
|
|
26.1
|
|
Americas
|
9.3
|
|
11.6
|
|
Asia Pacific
|
5.4
|
|
4.8
|
|
|
42.9
|
|
42.5
|
|
Corporate activities
|
(38.8)
|
|
(36.5)
|
|
Exceptional operating costs (Note 4)
|
(3.9)
|
|
(0.3)
|
|
Operating profit from continuing
operations
|
0.2
|
|
5.7
|
|
Investment income
|
0.1
|
|
0.1
|
|
Finance costs
|
(0.2)
|
|
(0.1)
|
|
Profit before tax
|
0.1
|
|
5.7
|
|
Tax
|
(2.1)
|
|
(3.0)
|
|
(Loss) / profit for the year from continuing
operations
|
(2.0)
|
|
2.7
|
|
Non-current assets by segment (excluding deferred
tax)
|
|
|
|
|
EMEA
|
0.7
|
|
0.7
|
|
Americas
|
0.5
|
|
0.5
|
|
Asia Pacific
|
0.2
|
|
-
|
|
Corporate activities
|
135.0
|
|
129.6
|
|
|
136.4
|
|
130.8
|
|
Within EMEA UK comprise £0.1m (2010:
£0.2m).
|
|
|
|
|
|
|
|
|
|
Depreciation and amortisation
|
|
|
|
|
EMEA
|
0.4
|
|
0.2
|
|
Americas
|
0.2
|
|
0.4
|
|
Asia Pacific
|
0.1
|
|
-
|
|
Corporate activities
|
6.5
|
|
4.2
|
|
|
7.2
|
|
4.8
|
Additional voluntary disclosures
The following disclosures are provided for additional
information purposes only and do not form part of the
Group's segmental reporting under IFRS 8.
The Group segregates revenue into three main categories
- hardware, software and professional services and customer
services and support which arise in all geographical
segments. The following table provides an analysis of the
Group's revenue according to these categories.
The 2010 analyses have been re-presented to conform
with the current year presentation. This has reduced 2010
Hardware by £2.1m, increased Software and Professional
services by £4.8m and decreased Customer service by
£2.7m
|
|
2011 £m
|
|
2010 £m
|
|
Hardware
|
129.3
|
|
128.7
|
|
Software and Professional services
|
8.9
|
|
8.5
|
|
Customer services and support
|
37.8
|
|
37.3
|
|
|
176.0
|
|
174.5
|
3. Exceptional operating costs
|
|
2011
£m
|
|
2010
£m
|
|
Restructuring costs (a)
|
-
|
|
0.5
|
|
Japanese costs / (credit) (b)
|
3.9
|
|
(0.2)
|
|
|
3.9
|
|
0.3
|
|
|
|
|
|
(a) A redundancy programme in various
countries undertaken to realign costs in light of revenue
reductions and Board changes.
(b) The charge to profit or loss for
Japanese costs in 2011 comprised £5.4m of settlement and
other costs relating to claims relating to unauthorised
trades in the Japanese business offset by an insurance
recovery of £1.5m. See note 7 for more detail, including
outstanding contingencies.
4. Tax charge
|
|
|
Continuing operations
|
|
Discontinued operations
|
|
Total
|
|
|
|
|
2011
|
|
2010
|
|
2011
|
|
2010
|
|
2011
|
|
2010
|
|
|
|
|
£m
|
|
£m
|
|
£m
|
|
£m
|
|
£m
|
|
£m
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current tax
|
1.7
|
|
0.4
|
|
-
|
|
-
|
|
1.7
|
|
0.4
|
|
|
Deferred tax
|
0.4
|
|
2.6
|
|
-
|
|
-
|
|
0.4
|
|
2.6
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
2.1
|
|
3.0
|
|
-
|
|
-
|
|
2.1
|
|
3.0
|
|
|
|
|
|
|
|
|
|
|
UK corporation tax is calculated at 26.5% (2010 -
28.0%) of the estimated assessable profit for the year.
Taxation for other jurisdictions is calculated at the
rates prevailing in the respective
jurisdictions.
|
|
|
|
|
|
|
The charge for the year can be reconciled to the
profit and loss as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2011
|
|
|
|
2010
|
|
|
|
|
|
|
£m
|
|
|
|
£m
|
|
|
|
|
Profit before tax
|
|
|
|
|
|
|
continuing operations
|
0.1
|
|
|
|
5.7
|
|
|
|
|
|
discontinued operations
|
0.1
|
|
|
|
(0.1)
|
|
|
|
|
|
|
0.2
|
|
|
|
5.6
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Tax at the domestic tax rate of 26.5% (2010 -
28.0%)
|
0.1
|
|
|
|
1.5
|
|
|
|
|
Tax effect of expenses / (income) that are not
deductible /(taxable) in determining taxable
profit
|
(0.2)
|
|
|
|
0.7
|
|
|
|
|
Tax effect of utilisation of tax losses
|
-
|
|
|
|
(2.0)
|
|
|
|
|
Losses carried forward
|
2.6
|
|
|
|
2.0
|
|
|
|
|
Timing differences
|
-
|
|
|
|
(0.1)
|
|
|
|
|
Reassessment of recognition of deferred tax
assets
|
(0.1)
|
|
|
|
2.6
|
|
|
|
|
Overseas withholding tax
|
-
|
|
|
|
(0.8)
|
|
|
|
|
Effect of different tax rates of subsidiaries
operating in
|
|
|
|
|
|
|
|
|
|
|
other jurisdictions
|
(0.2)
|
|
|
|
(0.4)
|
|
|
|
|
Prior year adjustments
|
(0.1)
|
|
|
|
(0.5)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Tax charge for the year
|
2.1
|
|
|
|
3.0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
A number of changes to the UK corporation tax system
were announced in the June 2010 Budget Statement. The Finance
(No 2) Act 2010 includes legislation to reduce the main rate
of corporation tax from 28% to 26% from 1 April 2011. Further
reductions to the main rate have been proposed to reduce the
rate to 24% by 1 April 2014. These further reductions in the
tax rate had not been substantively enacted at the balance
sheet date and, therefore, are not reflected in these
financial statements.
There was no significant effect on the tax charge from
changes in local rates of tax in jurisdictions where deferred
taxes were recognised.
5.Dividends
|
|
2011
£m
|
|
2010
£m
|
|
Amounts recognised as distributions to equity
holders in the year:
Paid final dividend for the year ended 31
December 2010 of 2.7p (2010 - final dividend for 2009 -
2.6p) per share
|
3.8
|
|
3.7
|
|
Paid interim dividend for 2011 of 1.3p per
share
|
1.8
|
|
1.8
|
|
|
5.6
|
|
5.5
|
|
|
|
|
|
|
Final dividend proposed for the year ended 31
December 2011 of 2.7p per share
|
3.8
|
|
|
|
Second interim dividend declared for the year
ended 31 December 2010 of 2.7p per share
|
|
|
3.8
|
|
|
|
|
|
The proposed final dividend has not been included as a
liability in these financial statements. The dividend,
subject to shareholder approval, will be paid on 11 May 2012
to shareholders on the register on 13 April 2012.
6. (Loss) / earnings per share
|
|
2011
Number
|
|
2010
Number
|
|
|
Number of shares
|
|
|
|
|
|
Weighted average number of ordinary shares for
the purposes of basic earnings per share
|
140,764,815
|
|
140,650,796
|
|
|
Dilutive effect of potential ordinary
shares:
|
|
|
|
|
|
Share options
|
119,123
|
|
66,773
|
|
|
Weighted average number of ordinary shares for
the purposes of diluted earnings per share
|
140,883,938
|
|
140,717,569
|
|
|
|
|
|
|
|
|
The denominators above are used for the purposes
of calculating basic and diluted earnings per
share.
|
|
|
|
|
|
|
|
FROM CONTINUING OPERATIONS
|
|
|
|
|
|
|
£m
|
|
£m
|
|
|
(Loss) / earnings for the purposes of basic and
diluted earnings per share from continuing
operations
|
(2.0)
|
|
2.7
|
|
|
|
|
|
|
|
|
(Loss) / earnings per share from continuing
operations
|
Pence
|
|
Pence
|
|
|
Basic (loss) / earnings per share
|
(1.42)
|
|
1.90
|
|
|
Diluted (loss) / earnings per share
|
(1.42)
|
|
1.90
|
|
|
FROM CONTINUING AND DISCONTINUED
OPERATIONS
|
|
|
|
|
|
|
£m
|
|
£m
|
|
|
(Loss) / earnings for the purposes
of basic and diluted earnings per share being net
(loss) / profit attributable to equity holders of the
parent
|
(1.9)
|
|
2.5
|
|
|
(Loss) / earnings per share from continuing and
discontinued operations
|
Pence
|
|
Pence
|
|
|
Basic (loss) / earnings per
share
|
(1.35)
|
|
1.81
|
|
|
Diluted (loss) / earnings per
share
|
(1.35)
|
|
1.81
|
|
|
ADJUSTED EARNINGS PER SHARE FROM CONTINUING
OPERATIONS
|
|
|
|
|
|
|
£m
|
|
£m
|
|
|
(Loss) / earnings from continuing
operations
|
(2.0)
|
|
2.7
|
|
|
Adjustment to exclude exceptional operating costs
net of tax
|
3.9
|
|
0.3
|
|
|
Adjustment to exclude share based payment charge
(credit) net of tax
|
0.6
|
|
(0.1)
|
|
|
Adjusted earnings from continuing
operations
|
2.5
|
|
2.9
|
|
|
|
|
|
|
|
|
Adjusted earnings per share from continuing
operations
|
Pence
|
|
Pence
|
|
|
Basic earnings per share
|
1.77
|
|
2.07
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
7. Japan
On June 2, 2011, the Group reached
agreement to settle the largest of the Japanese legal actions
initiated against the Group in 2008 in relation to
unauthorised trades and a guarantee of third party
obligations. The net cost in 2011 to the Group of this
settlement, including legal costs, is £3.9m (after insurance
proceeds of £1.5m). This net cost is reported as exceptional
operating costs in the Consolidated Statement of
Comprehensive Income (Note 3). In the 2010 Annual Report the
total contingent liability estimated in relation to such
claims and actions amounted to £15.4m (JPY 1.95bn at 31
December 2010 exchange rates). After this settlement the
remaining contingent liability is estimated at a maximum of
£1.8m (JPY 0.23bn at 31 December 2011 exchange rates). No
developments have taken place in relation to the remaining
claims in 2011 or since the year end.
8. Going Concern
The Group's business activities, together with the
factors likely to affect its future development, performance
and position are set out in the Financial Review. The
financial position of the Group, its cash flows and liquidity
position are also described in the Financial Review.
The Group has £25.2 million of cash and a strong
balance sheet, and its rigorous approach to operations and
working capital management will continue to provide
sufficient sources of liquidity to fund its business risks.
As a consequence, the directors believe that the Group is
well placed to manage its business risks successfully despite
the current economic outlook, which remains uncertain.
After reviewing the forecast cash flow and working
capital requirements for the period until March 2013, the
directors have a reasonable expectation that the Group has
adequate resources to continue in operational existence for
the foreseeable future. Accordingly, they continue to adopt
the going concern basis in preparing the revised annual
report and accounts
Recommend :
