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| Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
|---|---|---|---|---|---|
| Goindustry | LSE:GOI | London | Ordinary Share | GB00B5V5DB07 | ORD 1P |
| Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
|---|---|---|---|---|---|---|---|---|---|---|
| 0.00 | 0.00% | 71.50 | 0.00 | 01:00:00 |
| Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
|---|---|---|---|---|---|
| 0 | 0 | N/A | 0 |
From Jun 2019 to Jun 2024
TIDMGOI
RNS Number : 9766C
GoIndustry-DoveBid PLC
09 May 2012
GoIndustry-DoveBid plc / Index: AIM / Epic: GOI / Sector: Support Services
9 May 2012
GoIndustry-DoveBid plc ('GoIndustry DoveBid' or 'the Group')
2011 Preliminary results
GoIndustry DoveBid, the AIM quoted global provider of asset management, disposition and valuations services for industrial and financial clients, announces its preliminary results for the year ended 31 December 2011.
Overview
GoIndustry-DoveBid plc ("GoIndustry DoveBid", or the "Group") is the global market leader in the provision of asset management, auction and valuation services relating to industrial equipment.
The Group delivers innovative solutions that help to value assets accurately, optimise asset utilisation and reduce costs. The Group combines asset, industry and market expertise, with eCommerce technology to service the needs of multinational corporations, financial institutions, insolvency practitioners, used equipment dealers and asset based lenders around the world.
Summary results
For the year ended 31 December 2011
Hot Features
Premium
2011 2010
GBP000's GBP000's
Direct Profit 22,095 27,811
--------------------------------------------- --------- ---------
Adjusted* loss before taxation (2,933) 613
Exceptional items (224) (409)
Other charges (837) (893)
Loss before taxation (3,994) (689)
--------------------------------------------- --------- ---------
Adjusted* (loss)/earnings per share (31.6p) 9.6p
Adjusted* diluted (loss)/earnings per share (31.6p) 9.6p
Loss per share, basic and fully diluted (42.5p) (3.7p)
* Adjusted loss before tax and adjusted loss per share are before exceptional charges, amortisation of acquired intangible assets and share based payment charges.
Chairman's Statement
During the period under review, the Group has continued to make strong strategic progress on a number of fronts, however we are yet to see the tangible results of this progress at the Group level. The Group reported a Direct Profit of GBP22.1m, which is down 20.6% on the prior year. During 2011 we continued to leverage our global strengths by continuing to focus largely on multinational corporate accounts that are increasingly focused on efficiently managing and realising value from both under-utilised and redundant assets. To this end we were delighted to have signed 21 new corporate 'forward flow' accounts, bringing the number of clients with repeat business to 60 at year end. This represents over a 50% growth in the number of forward flow accounts and includes some of the world's largest companies from the USA, UK, France, Germany, Sweden and China.
In particular, large corporates understand the need to better manage their industrial asset base through 'asset recovery' programmes. This allows us to partner with them on a global basis to help maximise their returns on assets. Consequently, this affords the Group the opportunity to generate higher margin repeat business to deliver greater future revenues and earnings visibility.
The Group's global footprint, across twenty countries, and globally accessible online auction platform, which enables buyers and sellers of industrial equipment to interact and obtain the best market price for their equipment, is helping the Group shift from the traditional model of asset disposal. This global footprint gives GoIndustry-DoveBid a significant competitive advantage which enables the Group to capture business from global corporations. This has resulted in GoIndustry DoveBid winning over 80% of the Requests for Proposal in 2011 from global companies and continuing its extremely strong retention rate with over 97% of the Group's key corporate clients remaining contracted throughout the year.
The transition to an online global solution provider has been driven by several key trends:
-- Increased value: Most large corporations now understand there is substantial added value in proactively managing surplus assets, as it generates cash, while reducing costs and capital expenditures.
-- Need for greater transparency: Changing regulations, including rules pertaining to the Sarbanes Oxley Act in the USA, have created a need for improved transparency and accountability for asset sales and asset valuations.
-- Greater acceptance of a global outsourced approach: Large manufacturers increasingly appreciate the cost, control, planning, and reporting advantages provided by a global, knowledgeable, expert partner.
-- Sustainability: Global companies have seen how a well implemented surplus asset management program can significantly improve their sustainability results.
The Group's aim is to sign multi-year contracts for the ongoing disposal of a corporation's surplus assets. Additionally the Group seeks to provide information and technology tools to facilitate asset redeployment and provide asset valuation services for reporting and lending purposes. These multi-year contracts typically result in recurring revenue and generate a significant ROI for corporate customers through increases in sales and asset productivity and reduction of capital expenditure. Building these corporate relationships is also important as they provide the Group with intimate knowledge of potential large transactions arising from facility closures that typically might not otherwise be public.
We believe that this strategic progress will in due course result in improved Group profitability.
Financial performance
The Group delivered Direct Profit of GBP22.1.m (2010: GBP27.8m). In particular, our North American operations were adversely impacted due to a reduced number of large plant closures and general economic uncertainty in 2011 which caused many corporations to be exceptionally cautious about investment. The extent of this caution was unprecedented as was widely reported in the financial press as 'Corporate America sitting on a massive $2 trillion of cash'. As a consequence, the Group reported an adjusted EBITDA loss of GBP2.0m (2010: profit GBP1.5m). The adjusted loss before tax was GBP2.9m (2010: adjusted profit before tax GBP0.6m), before charges for amortisation of acquired intangibles of GBP0.7m (2010: GBP0.7m), share based payments of GBP0.2m (2010: GBP0.2m), net financing costs of GBP0.3m (2010: GBP0.3m) and exceptional charge of GBP0.2m (2010: GBP0.4m) which relates to the restructuring of the operations to better align the business with the strategic direction and the costs of securing forward flow contracts off-set by a net credit on settlement of legal cases. Loss before tax was GBP4.0m (2010: GBP0.7m).
At 31 December 2011 the Group's net debt position (cash and bank less borrowings and client funds) was GBP4.2m (2010: net cash GBP0.5m).
Basic loss per share was 42.5p (2010: 3.7p). Adjusted loss per share for the year was 31.6p (2010: earnings per share of 9.6p), where the adjustments to the loss attributable to equity holders of the company are exceptional costs, amortisation of acquired intangible assets and an IFRS 2 charge for share-based payments.
Outlook
The Board has been continuing to implement its strategy to position the Group for growth by signing more large corporate forward flow accounts. The Board believes that this will bring greater visibility to revenue, and will help improve both profits and cash flow. The Board also has had an ongoing focus on efficiency, having reduced costs substantially during the latter part of 2011, whilst continuing to improve business processes. In addition the Board expected the Group to benefit from improved performance as the investment climate recovers in North America and momentum within its markets improves.
Whilst the Group is making strategic progress on a number of fronts, it has yet to see tangible results of this progress in terms of profitability and market value of the company. The Company has received an offer from Liquidity Services, Inc. to acquire the issued share capital of the Company at 73pence per share.After considering the Company's progress, the opportunities that lie ahead and the resources available to realise such opportunities, the Board recommends shareholders to vote in favour of a proposed Scheme of Arrangement which would result in the issued share capital of the Company being acquired at 73 pence per share in cash by Liquidity Services Inc. Further information will be sent to Shareholders shortly.
Finally, I would like to thank the staff for their continuing commitment through a challenging year.
Neville Davis
Non-Executive Chairman
9 May 2012
Business Review
GoIndustry DoveBid is the global market leader in the provision of surplus asset management, online auction and valuation services for the industrial and financial marketplaces. We believe there is a strong and growing market opportunity for our services. We have implemented a strategy that will leverage our industrial equipment knowledge, our global presence and our online sales platform to address the equipment valuation, redeployment and surplus asset disposal needs of corporations.
Business objectives and strategy
GoIndustry DoveBid's key strategy is focused on delivering repeatable revenue and growing profits for the Group by providing a comprehensive set of services to assist corporate clients in maximising the value of their industrial assets. We believe the corporate market will provide a solid environment for growth and will deliver long term benefits for the Group. This will provide more recurring revenues than the traditional auction business which is more transactional in nature. We aim to deliver sustainable profit growth by:
-- Expanding our volume of business with existing corporate accounts by further implementing our unique services and technology across their global locations;
-- Continuing to sign new corporate accounts as we have in 2011, where we successfully opened both the European and Asian markets to our comprehensive Go-Optimize(R) service offering;
-- Continue to leverage our proprietary online auction platform, Industry Exchanges and AssetZone(R) asset management tools to manage our business and our clients' surplus assets more effectively;
-- Continually increasing the effectiveness of our sales and marketing capabilities to access new buyers across the world and new market opportunities; and
-- Constantly improving the global quality of our services to clients.
The Group has several compelling differentiators upon which to build. Our exceptional professional knowledge of the used equipment market, combined with a comprehensive service offering coupled with global coverage, has put the Group at the forefront of assisting large corporations to pro-actively manage their surplus industrial assets. Our Go-Optimize(R) services suite offers a complete set of managed services and tools to recover value from used assets through utilising our:
-- AssetZone(R) asset management and redeployment tool; -- valuation and appraisal services; -- online global auction capabilities; and
-- Industry Exchanges - regularly scheduled online marketplaces for specific industries, such as the highly successful BioPharma Exchange.
The objective of Go-Optimize(R) is to achieve outstanding results for clients by generating cash from asset sales and cash savings from reduced capital expenditure, whilst delivering a proactive, structured, transparent and efficient surplus asset management programme.
Operational highlights
Direct Profit for the Group was down 20.6% to GBP22.1m (2010: GBP27.8m). Trading was particularly weak in North America. This was primarily due to general economic uncertainty causing many companies to postpone major capital expenditure decisions and focus on maximising productivity from their existing capital assets. The economic uncertainty in 2011 made companies reluctant to buy new assets or dispose of unused ones until there was greater clarity regarding future needs and trends. Nevertheless, we did see a gradual improvement in our North American performance in the second half of 2011 which has continued into 2012.
The trends experienced in North America underline the important rationale behind our strategic shift of increasing the number of corporate 'forward flow' agreements with large global companies for the provision of surplus industrial asset management, auction and valuation services. These agreements, which typically are multi-year service agreements, deliver significant recurring revenues and give the Group greater visibility and scalability over the medium term.
Indeed, the Group continues to make solid progress delivering on this key strategic aim. It has won 21 new global corporate forward flow accounts in 2011, taking our total number of active forward flow accounts to 60 at the year end. This has extended our global lead in the corporate surplus industrial asset management segment. We are also in advanced contract negotiations with many other multinational companies and look forward to updating the market on these developments in due course. These agreements should provide significant additional revenues to the Group in 2012 and in subsequent years. For example, the top 15 forward flow accounts averaged over GBP450k each in Direct Profit during 2011, evidencing strong asset flow despite fewer large plant closures. It should be noted that many of our new corporate forward flow clients quickly began using our services and four new accounts made the Top 15 in 2011. In addition, over 97% of our key corporate contracts have been renewed in 2011 or remain in effect, demonstrating further evidence of the customer satisfaction our service delivers. Including non-forward flow accounts our top three clients delivered more than GBP900k each in Direct Profit, demonstrating the quantum of the opportunity for the Group to penetrate the market. The Group continued its investment in growing its delivery capabilities, such as the Go-Optimize(R) services suite, which helps large corporations pro-actively manage their surplus assets. We believe it will be an important contributor to future growth and it continues to be well received in the market.
Whilst we are making strong progress in pursuing our strategic objectives this is yet to be reflected in an upturn in our financial performance.
Overview of the Group's financial performance
In the year ended 31 December 2011, Direct Profit was generated as follows:
2011 2010 Change
GBPm GBPm
Commission sales 16.6 20.8 (20.1%)
Professional services 4.4 4.2 5.0%
Principal deals 1.1 2.8 (61.8%)
22.1 27.8 (20.5%)
----- ----- --------
The Direct Profit from Commission Sales from auction transactions accounted for 75% (2010: 75%) of total Direct Profit. The proportion of sales conducted online remained robust increasing to 71% from 70% in 2010. This was in part due to the growing popularity of the Group's Industry Exchanges, which are becoming a recurring destination site for buyers and sellers of used equipment. Our online sales are a strong endorsement for showing that corporations are embracing the transparent and efficient online method for obtaining the best value for resale equipment.
Professional services, comprised primarily of valuation fees, accounted for 20% of total Direct Profit up from 15% in 2010, based mostly on increased business with large global financial services clients.
Other Direct Profit, comprised primarily of principal deals, declined from 10% to 5%. These deals are no longer regarded as a core activity as they increase the Group's exposure to financing commitments and fluctuations in asset values.
As explained above, North America had a disappointing year with Direct Profit down GBP5.0m on 2010 to GBP10.6m. A key factor was the reduction of Direct Profit from Principal deals, down GBP1.6m to GBP1.0m. Commission Sales in North America experienced weakness and were down GBP2.9m to GBP8.0m as corporations had fewer plant closures than in 2010 and deferred major capital expenditure decisions. Professional Services, decreased by GBP0.4m to GBP1.6m. As a consequence, North America accounted for 48% of the Group Direct Profit, down from 56% in 2010.
Europe delivered a Direct Profit of GBP8.7m, down 6% on 2010. In particular, Professional Services had a strong year with Direct Profit up 25.5% to GBP2.3m mostly due to greater demand in the UK. Commission Sales were GBP6.4m, down 12.5% on 2010, following the postponement of a number of major auctions. However, improvements in the overall mix of business led to a significant increase in the European margin up from 63% in 2010 to 74% in 2011.
Direct Profit in Asia was GBP2.8m, 3.7% below last year. Despite a large contract in Korea to close 3 factories in the first half, Direct Profit from Commissions Sales was GBP2.2m, down GBP0.3m, due to delays of expected plant closures in the second half. Professional Services grew by 25% from GBP0.4m to GBP0.5m principally driven by companies requiring asset valuations due to restructuring, liquidations and mergers. Other Direct Profit was GBP0.1m (2010: GBP0.1m)
The Group derives more than half of its revenues in US dollars, so movements in the Sterling-US Dollar rate affect our reported revenues. Although the US dollar finished 2011 only one tenth of a cent stronger against Sterling than it began the year, for most of 2011 it was weaker against Sterling, at one stage it was more than 8% down, so that the impact of exchange rates, although not significant, has tended to lower the reported revenues.
The Group continues to monitor its cash flow requirements and at 31 December 2011 the Group's net debt position was GBP4.2m (2010: net cash GBP0.5m). The main increase in net debt is due in part to funding the trading activity, an increase in net working capital of GBP2.8m (of which the reduction in amounts due to clients was GBP3.0m), payments to the defined benefit pension scheme of GBP0.75m and capital expenditure of GBP0.7m.
In May 2012, the Group agreed to a renewal of its main banking facilities. The maturity date of the $2.4m term loan was altered to July 2013. Each of the Working Capital and Principal Deal facilities were extended until April 2013, with the Working Capital facility being reduced by quarterly repayments of $0.25m, and the Principal Deal facility being decreased from $5.5m to $2.5m. At December 2011 the combined headroom on the above facilities was GBP4.3m, which is sufficient for our present requirements.
During 2011 the Group undertook a reorganisation to better align the operations with the strategic focus of acquiring and servicing Corporate Forward Flow accounts. As a consequence, adjusted Administration costs were down GBP2.2m to GBP24.7m, primarily due to lower staffing levels, lower sales commissions and continued cost controls across the Group.
The combined effect of Direct Profit decreasing by GBP5.7m and Administration costs decreasing by GBP2.2m resulted in adjusted EBITDA loss of GBP2.0m compared to an adjusted EBITDA profit of GBP1.5m in 2010.
The adjusted Loss before Tax was GBP2.9m, compared to a adjusted Profit before Tax of GBP0.6m in 2010.
Reported Loss before Tax was GBP4.0m compared to a loss before tax of GBP0.7m in 2010, reflecting exceptional costs of GBP0.2m (2010: GBP0.4m), amortisation of acquired intangibles of GBP0.7m (2010: GBP0.7m) and share based payment charges of GBP0.2m (2010: GBP0.2m).
Exceptional costs
During the year the Group incurred exceptional costs of GBP0.2m which related to headcount reduction, the restructuring of the business to align operations with the Group's overall strategic direction off-set by a net credit on settlement of legal cases and costs associated with securing forward flow contracts. The objective of the restructuring is to make the Group more efficient for both management and administrative purposes. In 2010 the Group incurred exceptional costs of GBP0.4m mainly due to the changes to the Board and the restructuring of the legal entities within North American.
Taxation
In 2010 the Group recognised deferred tax assets arising from tax losses in the United Kingdom and North America. Other countries do not warrant recognition of a deferred tax asset as yet, but the Group regularly reviews this situation.
Earnings per share
Adjusted basic loss per share was 31.6p against an adjusted earnings per share of 9.6p in 2010.
Basic loss per share was 42.5p (2010: loss 3.7p). Earnings and Adjusted earnings per share are calculated on the weighted average number of Ordinary Shares in issue of 9,798,494 for the year ended 31 December 2011 (2010: 9,790,481 Ordinary Shares).
Balance sheet and net cash
At 31 December 2011 the Group had a net debt position, after borrowings, of GBP4.2m (2010 Net cash: GBP0.5m). The Group ended the year with bank borrowings of GBP5.0m (2010: GBP2.2m) drawn against total bank facilities of GBP9.3m. Other borrowings comprised convertible loan notes of GBP0.5m (2010: GBP0.5m). Since the end of the financial year the Group has renewed its main bank facilities for another year.
Treasury policy
Treasury policies are approved by the Board, and the Executive Directors have the delegated authority to approve financial transactions within agreed terms of reference. The Group's financial instruments are principally comprised of bank borrowings, cash, and various other items that arise directly from trading operations. The cash includes significant amounts of client cash held in the normal course of conducting sales. The main purpose of these financial instruments is to ensure that finance is available for the Group's operations. The main risks arising from the Group's financial instruments are interest rate risk, credit risk, liquidity risk and foreign currency risk. The Board reviews and agrees policies for managing each of these risks and they are summarised below. These policies are unchanged from the previous year.
a) Interest rate risk
The Group finances its operations through a mixture of retained profits, operational cashflow and bank and subordinated debt. Historically the Group has expanded its operations both organically and by acquisition which has led to the need for external finance. For borrowings dominated in US dollars, the Board has chosen a credit facility with a floating rate of interest linked to LIBOR with a margin of 3.25%, and for borrowings dominated in Sterling the interest rate is 2.5% over base rate.
b) Liquidity risk
The Group's policy throughout the year has been to ensure continuity of funding by the use of term loan facilities of US$3.85m and GBP0.3m, and convertible loan notes of GBP0.5m. There are also revolving credit facilities for Principal Deals and Working Capital of US$5.5m each. The maturity date for the US Term Loan is 31 July 2013, the maturity date for the GBP Term Loan 30 June 2012. A renewal of both the Working Capital and Principal Deal Facilities has been agreed to 30 April 2013. The Working Capital Facility will be reduced by quarterly repayments of US$0.25m to US$4.5m, starting 31 July 2012, and the Principal Deal Facility will be reduced from US$5.5m to US$2.5m.
c) Foreign currency risk
The Group has a substantial overseas customer base and maintains bank accounts in foreign currencies. These currencies are converted to Sterling at the appropriate times minimising the exposure to exchange rate fluctuations.
Key Financial and Operational Targets
At a Group level there are a number of key financial and operational targets. In addition, each of the operating divisions monitors a number of key performance indicators. In the first quarter of 2011 the Group's performance was seriously impacted by the global recession. However, during 2011, the Group has been concentrated on mitigating the adverse effects of the global recession, whilst at the same time, establishing a more resilient and efficient platform to support future growth.
Revenue measures
Gross asset sales ("GAS") for 2011 was GBP107.7m (2010: GBP145.6m), which represents the level of activity handled by the operations and measures the sum of the proceeds of all assets sold at auction or in a negotiated sale.
Direct Profit, which represents gross profit before administrative expenses is the key operating metric that is used for measuring levels of business activity and growth in each business unit. Direct Profit is used rather than Revenue as reported on the Consolidated Statement of Comprehensive Income, because Revenue can be skewed from one year to the next depending on the volume of Principal Deals undertaken. In each of the three revenue streams, Direct Profit is measured as follows:
-- Commission Sales - GoIndustry DoveBid acts as an agent and sells equipment on behalf of a seller. Direct Profit represents the sum of the buyer's premium, seller's commission and expenses billed to the seller, less the cost of expenses incurred and any commissions paid to third parties.
-- Professional Services - GoIndustry DoveBid provides Professional Services (such as appraisals and valuations) to its clients. Direct Profit represents the professional fees and expenses billed, less expenses incurred, and any commissions paid to third parties.
-- Principal Deals - GoIndustry DoveBid acts as principal, either purchasing the equipment for sale outright or guaranteeing a minimum price to the seller. In the event of a Purchase Deal, Direct Profit represents the sum of GAS achieved and buyer's premium, less the cost of the assets purchased, expenses incurred and any commissions paid to third parties. In the event of a Guarantee Deal, Direct Profit represents the sum of GAS achieved and buyer's premium, less the guaranteed value of the assets, the seller's share of any upside realised above the guarantee, expenses incurred and any commissions paid to third parties. In both cases, should GAS fall below the purchase or guarantee amount, then it will be deducted from the buyer's premium; if GAS is significantly lower, a loss is recorded against Direct Profit.
Adjusted Profit before Tax
This measure indicates the trading profits of the Group, after bank and interest charges, but before amortisation and impairment of acquired intangible assets and goodwill, exceptional items, and share based payments. In the year ended 31 December 2011, Adjusted Loss before Tax was GBP2.9m (2010: Profit GBP0.6m).
Adjusted earnings per share
This key measure indicates the underlying profit attributable to shareholders. It measures not only trading performance, but also the impact of treasury management, bank and interest charges. Our business and financial strategy is directed at delivering consistent Adjusted Earnings Per Share growth. In the year ended 31 December 2011, Adjusted Basic Loss Per Share was 31.6p per share (2010: Adjusted Basic Earnings Per Share 9.6p).
Consistent and Sustainable Revenue Streams
The strategy to provide a range of managed services solutions has allowed the Group to focus on the global corporate market. This push towards more robust and sustainable revenue streams has resulted in a strong portfolio of offerings, which includes:
-- professional disposal and related services to enable corporate bodies to realise the value of redundant assets specialist professional valuation and appraisal services;
-- AssetZone(R) - proprietary web-based portal for managing corporate assets; -- Industry Exchanges - providing recurring online B2B global market places.
The Group continued to improve its online product and service offering, with enhancements to the website which included improved payment mechanisms and customer experiences. The Group has also invested in the improvement of its operating systems and online services, so as to deliver ongoing benefits.
Adjusted operating margin
Improving and maintaining the Adjusted Operating Margin (as a percentage of Direct Profit) is a key goal for the Group. The decline in Direct Profit experienced in 2011 compared to 2010 of 20.6% to GBP22.1m, resulted in the Group reporting an adjusted operating loss of GBP2.6m (2010: profit GBP 0.9m).
Principal risks
The main risks, which affect the Group as a whole, include the following:
-- GoIndustry DoveBid operates in a market where many deals are awarded on an individual basis. Although the strength of customer relationships often mean deals are awarded to the Group on a regular basis, there are few guaranteed revenue streams and it can be difficult to forecast the business results more than 3 - 6 months into the future. The strategy to provide a range of managed solutions to global corporate clients is designed to reduce this risk and to increase visibility over future revenue streams;
-- The impact of major auction sales can be significant on the Group's results, although the regularly scheduled Industry Exchange auctions, which are mainly sourced from Corporate Forward Flow clients, help to mitigate this risk;
-- When the Group takes a principal position in assets that are being offered for sale, either by buying directly from the seller or by guaranteeing a minimum sale price to the seller, the Group will then sell those assets on its own account and recognise the full financial impact from that transaction. This represents an additional risk for the Group in return for the expectation of a higher profit. GoIndustry DoveBid's ability to bid for and win Principal Deals is predicated on continued access to credit facilities. In order to control the risks and protect the Group from downside exposure, all principal transactions require the approval of the Investment Committee, which is made up of both equipment experts from across the Group and business professionals;
-- The expertise of our valuers and appraisers is critical to the success of the Group when assessing whether to take a principal position. Our knowledge of the assets and the global markets for disposing of those assets is a key resource, as is our global valuation database;
-- One of the Group's key competitive advantages is its database of potential buyers located in over 200 countries. Guidelines and regulations about marketing practices and data protection laws vary from country to country and may change. Substantial changes may prohibit us from direct marketing or increase the risk of lawsuits;
-- There are a number of other organisations that offer similar services to those of GoIndustry DoveBid. Such organisations may be better funded or operate with a lower cost base than GoIndustry DoveBid. Aggressive competition from such organisations could have a negative impact on the financial performance of the Group;
-- GoIndustry DoveBid is a people based business. Failure to attract or retain key employees could seriously impede future growth. To ensure staff retention the Group operates competitive remuneration packages for key individuals. The retention and motivation of key personnel is fundamental in the future success of GoIndustry, as is the ability to recruit new personnel to support future growth;
-- GoIndustry DoveBid's business is increasingly dependent on IT infrastructure, electronic platforms and the internet for delivery of its services. Any downtime can disrupt sales and undermine buyer confidence. Short-term service interruptions may affect sales realisations on individual jobs, whilst long-term service interruptions would materially affect the financial results of the Group. Whilst our businesses could be adversely affected from such disruption, the Group is sufficiently diversified to minimise such impact. During the year under review the Group has continued to invest in new systems and electronic platforms with greater protection against failure;
-- The success of the Group's businesses is in part dependent on the success of its branded services. Damage to reputation and/or brand could lead to an adverse impact on the Group. GoIndustry DoveBid is conscious of the need to ensure the careful management of services to reduce this risk; and
-- GoIndustry DoveBid is operating in an international environment. While this provides growth in new territories, it comes coupled with risks in terms of cultural and political conditions, foreign laws and legislations, tax changes, currency fluctuations, language barriers, and differing regulatory requirements. GoIndustry DoveBid engages with local professionals to seek advice, as appropriate, in the countries in which we operate.
-- GoIndustry DoveBid operates in many geographical areas where our services are impacted by local economic factors which can have an adverse impact on our ability to achieve projected results and therefore the growth targets set. The budgets set by the Board support the carrying value of goodwill and therefore there is a risk that a shortfall in budgeted trading results may impact the carrying value of this goodwill.
Future developments
The shifting of industrial production from developed western economies to China, India and the emerging economies of Eastern Europe is set to continue for many years. With its operations in Asia Pacific (APAC), the Group is well placed to benefit from this shift.
Growing acceptance of the internet as a medium for transacting business around the world will also play a significant part in the future growth of the Group, and the Group's regularly scheduled Industry Exchange auctions are a key engine for future growth and improved visibility of earnings.
Consolidated Income Statement
Year ended 31 December 2011 Year ended 31 December
2010
Before Before
exceptional Exceptional Other exceptional Exceptional Other
items items charges items items charges
and other (note (note and other (note (note
charges 5) 6) Total charges 5) 6) Total
GBP000's GBP000's GBP000's GBP000's GBP000's GBP000's GBP000's GBP000's
Revenue 33,465 - - 33,465 40,094 - - 40,094
Cost of sales (11,370) - - (11,370) (12,283) - - (12,283)
Direct profit 22,095 - - 22,095 27,811 - - 27,811
----------------- ----- ------------ ------------ --------- --------- ------------ ------------ ----------- ---------
Administrative
expenses (24,735) (224) (837) (25,796) (26,926) (409) (893) (28,228)
Operating
(loss)/profit (2,640) (224) (837) (3,701) 885 (409) (893) (417)
----------------- ----- ------------ ------------ --------- --------- ------------ ------------ ----------- ---------
Finance costs
Finance income 41 - - 41 82 - - 82
Finance expense (334) - - (334) (354) - - (354)
Net finance
expense (293) - - (293) (272) - - (272)
----------------- ----- ------------ ------------ --------- --------- ------------ ------------ ----------- ---------
(Loss)/profit
before income
tax (2,933) (224) (837) (3,994) 613 (409) (893) (689)
Income tax (168) - - (168) 227 - - 227
Loss for the
year (4,162) (462)
----------------- ----- ------------ ------------ --------- --------- ------------ ------------ ----------- ---------
Loss
attributable
to:
Equity holders
of the Company (4,161) (359)
Non-controlling
interests (1) (103)
(4,162) (462)
----------------- ----- ------------ ------------ --------- --------- ------------ ------------ ----------- ---------
Revenue and operating (loss)/profit are derived from the Group's
continuing operations.
Loss per share attributable to equity holders of the Company
during the year
(expressed
in pence per
share) Note 2011 2010
Basic 8 (42.5p) (3.7p)
Diluted 8 (42.5p) (3.7p)
Consolidated Statement of Comprehensive Income
For the year ended 31 December 2011
2011 2010
GBP000's GBP000's
Loss for the year (4,162) (462)
----------------------------------------------- --------- ---------
Other comprehensive income:
Exchange losses on translation of foreign
subsidiaries (225) (235)
Actuarial (losses) / gains on defined benefit
pension scheme (42) 687
Other comprehensive income for the year,
net of tax (267) 452
----------------------------------------------- --------- ---------
Total comprehensive income for the year (4,429) (10)
----------------------------------------------- --------- ---------
Total comprehensive income attributable to:
Equity holders of the Company (4,428) 93
Non-controlling interests (1) (103)
(4,429) (10)
----------------------------------------------- --------- ---------
The tax effect on other comprehensive income is GBPnil (2010: GBPnil)
Consolidated Statement of Financial Position
Note 2011 2010
GBP000's GBP000's
Non-current assets
Property, plant and equipment 333 350
Intangible assets 31,442 32,178
Deferred tax asset 327 327
32,102 32,855
--------------------------------------- ----- -------------------- ---------
Current assets
Inventories 465 334
Trade and other receivables 4,936 5,515
Cash and cash equivalents 10,543 15,920
15,944 21,769
--------------------------------------- ----- -------------------- ---------
Total assets 48,046 54,624
--------------------------------------- ----- -------------------- ---------
Current liabilities
Trade and other payables 17,519 21,422
Borrowings 9 3,754 2,053
21,273 23,475
--------------------------------------- ----- -------------------- ---------
Non-current liabilities
Trade and other payables - 10
Borrowings 9 1,784 1,162
Retirement benefit obligations 2,854 3,358
4,638 4,530
--------------------------------------- ----- -------------------- ---------
Total liabilities 25,911 28,005
--------------------------------------- ----- -------------------- ---------
Net assets 22,135 26,619
--------------------------------------- ----- -------------------- ---------
Equity
Share capital 98 98
Share premium 22,983 22,983
Capital redemption reserve 28,609 28,609
Other reserves 54,209 54,278
Accumulated losses (83,711) (79,508)
Equity attributable to equity holders
of the Company 22,188 26,460
--------------------------------------- ----- -------------------- ---------
Non-controlling interests (53) 159
Total equity 22,135 26,619
--------------------------------------- ----- -------------------- ---------
Jack Reinelt Leslie-Ann Reed
Chief Executive Officer Chief Financial Officer
9 May 2012 9 May 2012
Consolidated Statement of Changes in Equity
Attributable to equity holders of the company
Capital Foreign
redemption Shares Acquisition Share options currency Accumulated Non-controlling
Share capital Share premium reserve to be issued reserve reserve reserve losses TOTAL interest TOTAL Equity
GBP000's GBP000's GBP000's GBP000's GBP000's GBP000's GBP000's GBP000's GBP000's GBP000's GBP000's
At 1 January
2010 9,745 22,495 18,908 542 47,649 1,572 5,106 (79,836) 26,181 262 26,443
Comprehensive
income:
Loss for the
year - - - - - - - (359) (359) (103) (462)
Other
comprehensive
income:
Actuarial gains
on defined
benefit pension
scheme - - - - - - - 687 687 - 687
Exchange losses
on translation
of foreign
subsidiaries - - - - - - (235) - (235) - (235)
Total
comprehensive
income - - - - - - (235) 328 93 (103) (10)
Transactions
with owners:
Issue of
deferred share
consideration 54 488 - (542) - - - - - - -
Cancellation of
redeemable
deferred shares
held (9,701) - 9,701 - - - - - - - -
Share based
payments - - - - - 186 - - 186 - 186
Total
transactions
with
owners (9,647) 488 9,701 (542) - 186 - - 186 - 186
----------------- ---------------------------- ---------------------------- ------------------------------ ---------------------------- ---------------------------- ---------------------------- ---------------------------- -------------------------------- ---------------------------- ------------------------------ ------------------------------
At 1 January
2011 98 22,983 28,609 - 47,649 1,758 4,871 (79,508) 26,460 159 26,619
----------------- ---------------------------- ---------------------------- ------------------------------ ---------------------------- ---------------------------- ---------------------------- ---------------------------- -------------------------------- ---------------------------- ------------------------------ ------------------------------
Comprehensive
income:
Loss for the
year - - - - - - - (4,161) (4,161) (1) (4,162)
Other
comprehensive
income:
Actuarial loss
on defined
benefit pension
scheme - - - - - - - (42) (42) - (42)
Exchange losses
on translation
of foreign
subsidiaries - - - - - - (225) (225) - (225)
Total
comprehensive
income - - - - - - (225) (4,203) (4,428) (1) (4,429)
----------------- ---------------------------- ---------------------------- ------------------------------ ---------------------------- ---------------------------- ---------------------------- ---------------------------- -------------------------------- ---------------------------- ------------------------------ ------------------------------
Transactions
with owners:
Share based
payments - - - - - 156 - - 156 - 156
Disposal of
non-controlling
interest - - - - - - - - (211) (211)
Total
transactions
with
owners - - - - - 156 - - 156 (211) (55)
At 31 December
2011 98 22,983 28,609 - 47,649 1,914 4,646 (83,711) 22,188 (53) 22,135
----------------- ---------------------------- ---------------------------- ------------------------------ ---------------------------- ---------------------------- ---------------------------- ---------------------------- -------------------------------- ---------------------------- ------------------------------ ------------------------------
Consolidated cash flow statement
For the year ended 31 December 2011
For the year ended
31 December
Note 2011 2010
GBP'000 GBP'000
Cash flows from operating activities
Cash used in operations (6,409) (3,550)
Interest paid (388) (354)
Income tax paid (178) (31)
Interest received 60 82
Net cash used in operating activities (6,915) (3,853)
--------------------------------------------------------- ---------- ---------
Cash flows from investing activities
Purchases of property, plant and equipment (203) (64)
Proceeds from disposal of subsidiary 132 -
Proceeds from sale of property, plant
and equipment 44 542
Purchases of intangible assets (498) (615)
Net cash used in investing activities (525) (137)
--------------------------------------------------------- ---------- ---------
Cash flows from financing activities
Repayments of Loan Notes (466) (28)
Drawdowns on bank loans 1,197 300
Repayments of bank loans (609) (413)
Increase/(decrease) in other banking facilities 2,201 (1,009)
Net cash generated by/(used in) financing
activities 2,323 (1,150)
Net decrease in cash and cash equivalents (5,117) (5,140)
--------------------------------------------------------- ---------- ---------
Cash and cash equivalents at beginning
of year 15,920 20,751
Effect of foreign exchange rate changes (260) 309
Cash and cash equivalents at end of year 10,543 15,920
--------------------------------------------------------- ---------- ---------
Notes to the condensed consolidated financial statements
1. General information
GoIndustry-DoveBid plc ('the company') and its subsidiaries (together 'the Group') is a global market leader in the service, management, and disposal of surplus industrial assets. The Group has offices in locations across Europe, North America, and Asia.
The company is a public limited company, which is listed on the AIM Market of the London Stock Exchange and incorporated and domiciled in the United Kingdom. The address of its registered office is St. Andrew's House, 18-20 St. Andrew Street, London, EC4A 3AG.
2. Basis of preparation
The financial information contained in this document does not constitute statutory accounts within the meaning of section 434 of the Companies Act 2006. The figures for the year ended 31 December 2011 have been extracted from the audited financial statements for the year ended 31 December 2011, which have been prepared in compliance with International Financial Reporting Standards (IFRS) issued by the International Accounting Standards Board (IASB) and with the standing interpretations issued by the International Financial Reporting Interpretations Committee of the IASB. Those financial statements have yet to be filed with the Registrar of Companies and received an unqualified audit report which did not contain a statement under section 498(2) or (3) of the Companies Act 2006.
The figures for the year ended 31 December 2010 have been extracted from the audited statutory accounts for that year which have been filed with the Registrar of Companies and received an unqualified auditor's report which did not contain a statement under section 498 (2) or (3) of the Companies Act 2006.
3. Accounting policies
The condensed financial statements have been prepared under the historical cost convention.
Going Concern
The Board remains satisfied with the Group's funding and liquidity position. The main sources of debt funding are the bank facilities with Barclays Bank plc in the United Kingdom, PNC Bank in the United States and the convertible loan notes.
The Group meets its day-to-day working capital requirements from its cash and overdraft facilities. As at 31 December 2011, the Group had drawn down US$3.6m on the US$5.5m working capital facility, and had drawn down US$0.9m on the revolving credit facility for Principal Deals of US$5.5m. The US$3.85m term loan facility had a balance of US$3.2m outstanding at 31 December 2011. The amounts outstanding on these facilities at 30 April 2012 were US$5.5m on the working capital facility, US$2.2m on the facility for Principal Deals, and US$2.7m on the term loan.
PNC have extended the bank facilities for a further 12 months with revised terms. The Working Capital Facility of US$5.5m will be reduced to US$4.5m by 30 April 2013 by the repayment of US$250k every three months starting 31 July 2012. Given the low usage of the Principal Deal line, we have agreed a reduction in this facility to US$2.5m from US$5.5m which has been extended to 30 April 2013. The Term Loan will mature on 31 July 2013, with monthly repayments of US$100k as before but with the remaining balance of US$1.3m being paid in a lump sum on 31 July 2013. The covenant terms are also being revised and the Board are currently agreeing these new terms with PNC bank. The Group also has a term loan facility with Barclays Bank plc of GBP0.3m with a balance of GBP0.1m outstanding at 31 December 2011. This will be fully repaid by June 2012.
In addition to the above bank facilities, the Group operates with a significant amount of operational cash, which is generated from the gross asset sales made during the course of business. The amount of operational cash at 31 December 2011 was GBP9.2m. This operational cash is held in separate bank accounts, and is used in the ordinary course of business to pay amounts due to clients. The Group has always had the ability to use this operational cash as part of its working capital, should the need so arise, and the Board remains confident that the value of operational cash is sufficient to ensure the going concern status of the Group.
In considering the going concern position of the Group, the Board has applied reasonable sensitivities, which if realised would require the company to draw upon the operational cash to support the going concern position of the Group. Furthermore, the Board is cognisant that the revised covenant terms are currently being agreed with PNC, which will be based on the Group's projections and with a minimum EBITDA requirement. In the event that the Group were subsequently to breach any of the covenant terms, the Board has considered what the level of exposure on bank facilities would be and are satisfied that the Group would be able to draw upon the operational cash to settle the liabilities, if required to do so. All other debt funding is free of covenants. For the reasons set out above, the Board anticipates that should the recently announced transaction not complete, sufficient funding is in place to ensure the Group continues as a going concern for the foreseeable future.
Other than as noted above, the same accounting policies, presentation and methods of computation has been followed in these condensed financial statements as were applied in the preparation of the Group's financial statements for the year ended 31 December 2010.
4. Segmental analysis
Management has determined the operating segments based on the reports reviewed by the Group Board, acting as the strategic steering committee that is used to make strategic decisions.
The Board considers the business both from a geographic and from a services perspective. Geographically, management considers the performance in Europe, North America and Asia Pacific ("APAC").
The reportable operating segments derive their revenue from commissions arising from auctions and private treaty sales, fees from valuations and other professional services and from sales, commissions and billable expenses arising from principal deals, of both buy and guarantee types.
The performance of the operating segments is measured both at Direct Profit (gross profit) and Operating profit levels.
(a) Geographical analysis
North 2011
Europe America APAC Corporate Consolidated
GBP000's GBP000's GBP000's GBP000's GBP000's
Revenue 11,735 17,948 3,782 - 33,465
------------------------------- --------- --------- --------- ---------- --------------
Direct profit 8,664 10,565 2,866 - 22,095
------------------------------- --------- --------- --------- ---------- --------------
Segment result 330 179 102 (3,251) (2,640)
Exceptional items 343 (566) (1) - (224)
Other charges (78) (605) (20) (134) (837)
------------------------------- --------- --------- --------- ---------- --------------
Operating profit/(loss) 595 (992) 81 (3,385) (3,701)
Net finance expense (2) (225) 7 (73) (293)
------------------------------- --------- --------- --------- ---------- --------------
Profit/(loss) before
income tax 593 (1,217) 88 (3,458) (3,994)
Income tax (18) (9) (141) - (168)
------------------------------- --------- --------- --------- ---------- --------------
Profit/(loss) for the
year 575 (1,226) (53) (3,458) (4,162)
------------------------------- --------- --------- --------- ---------- --------------
Depreciation and amortisation 99 669 70 519 1,357
------------------------------- --------- --------- --------- ---------- --------------
Total assets 14,455 23,344 8,064 2,183 48,046
Total liabilities 9,988 13,648 1,187 1,088 25,911
------------------------------- --------- --------- --------- ---------- --------------
Capital expenditure:
Property, plant and equipment 90 35 27 13 165
Intangible assets 131 - - 367 498
------------------------------- --------- --------- --------- ---------- --------------
(b) Revenue stream analysis
2011 2010
GBP000's GBP000's
Revenue
Commission Sales 22,656 29,874
Professional Services 4,896 4,746
Principal Deals 5,913 5,474
Total 33,465 40,094
----------------------- --------- ---------
Direct profit
Commission Sales 16,624 20,812
Professional Services 4,396 4,186
Principal Deals 1,075 2,813
Total 22,095 27,811
----------------------- --------- ---------
(c) Revenue from external customers
2011 2010
GBP000's GBP000's
Entity's country of domicile - United Kingdom 8,444 8,379
Foreign countries from which the Group derives
revenue
USA 17,948 21,534
Germany 2,933 6,034
Other Europe 358 236
APAC 3,782 3,911
Total 33,465 40,094
------------------------------------------------ --------- ---------
(d) Non-current assets 2011 2010
GBP000's GBP000's
Located in the entity's country of domicile -
United Kingdom 4,259 14,792
Foreign countries from which the Group holds
assets
USA 15,565 6,593
Germany 591 9,360
Other Europe 5,960 1,958
APAC 5,727 152
Total 32,102 32,855
----------------------------------------------- --------- ---------
5. Exceptional costs
2011 2010
GBP000's GBP000's
Reorganisation costs 667 91
Board change costs - 200
Legacy costs associated with legal cases (570) 118
Costs Associated with securing forward flow 127 -
contracts
Total 224 409
--------------------------------------------- --------- ---------
Exceptional costs do not arise from the normal course of business.
Reorganisation costs arise from the restructuring of the North American and European businesses following headcount reductions as part of efficiency savings (2010: restructuring of North American legal structure).
The credit in 2011 for legacy costs results from the release of a provision no longer required following the settlement of a long-standing legal dispute.
6. Other Charges
2011 2010
GBP000's GBP000's
Equity settled share based payments 156 186
Amortisation of customer relationships and brand
acquired 681 707
Total 837 893
-------------------------------------------------- --------- ---------
7. Income tax expense
2011 2010
GBP000's GBP000's
Current tax:
Overseas corporation tax charge/(credit) on profits
in the year 168 (227)
----------------------------------------------------- --------- ---------
168 (227)
----------------------------------------------------- --------- ---------
2011 2010
GBP000's GBP000's
Loss before income tax (3,994) (689)
Tax at the UK corporation tax rate of 26.5% (2010:
28%) (1,059) (193)
Effect of lower income tax rate of other countries (83) 53
Deferred tax not recognised 1,005 1,056
Tax losses not utilised - (1,466)
Unprovided tax losses now utilised 127 -
Share based payments expense not deductible 44 52
Expenditure not allowable for income tax purposes 134 271
----------------------------------------------------- --------- ---------
168 (227)
----------------------------------------------------- --------- ---------
8. Earnings per share
2011 2010
GBP000's GBP000's
Loss for the year attributable to equity holders
of the Company (4,161) (359)
Number Number
000's 000's
Weighted average number of ordinary shares in issue 9,798 9,790
Basic and diluted loss - pence per share (42.5p) (3.7p)
----------------------------------------------------- --------- ---------
GBP000's GBP000's
Loss for the year attributable to equity holders
of the Company (4,161) (359)
Add back:
Exceptional items (note 5) 224 409
Other charges (note 6) 837 893
----------------------------------------------------- --------- ---------
Adjusted (loss)/earnings attributable to equity
holders of the Company (3,100) 943
Weighted average number of ordinary shares in issue 9,798 9,790
Adjusted basic (loss)/earnings - pence per share (31.6p) 9.6p
----------------------------------------------------- --------- ---------
Number Number
000's 000's
Weighted average number of ordinary shares in issue 9,798 9,790
Dilutive effect of share options n/a 56
Weighted average number of ordinary shares for
diluted earnings per share 9,798 9,846
----------------------------------------------------- --------- ---------
Adjusted diluted (loss)/earnings - pence per share (31.6p) 9.6p
----------------------------------------------------- --------- ---------
Potentially dilutive shares include 178,570 ordinary shares from convertible loan notes (31 December 2010: 178,570) and 495,102 ordinary share options (31 December 2010: 556,235). As there is a loss (and an adjusted loss) for the year, there are no dilutive ordinary shares.
2011 2010
GBP000's GBP000's
Current
Bank loans and overdrafts 3,754 1,087
Convertible loan notes - 500
Subordinated loan notes - 466
Total 3,754 2,053
--------------------------- --------- ---------
Non-current
Bank loans and overdrafts 1,284 1,162
Convertible loan notes 500 -
Total 1,784 1,162
--------------------------- --------- ---------
9. Borrowings
2011 2010
GBP000's GBP000's
Floating rate:
Expiring within one year 3,754 1,087
Expiring beyond one year 1,284 -
Fixed rate:
Expiring within one year - 966
Expiring beyond one year 500 1,162
Total 5,538 3,215
-------------------------- --------- ---------
The fair value of current and non-current borrowings is not materially different to their carrying amount, as the impact of discounting is not significant.
Of the bank loans totalling GBP5.0m, GBP2.9m relates to loans used to fund principal transactions and working capital which are secured by charges over the assets of those companies and a parent company guarantee from GoIndustry-DoveBid plc. Subsequent to year-end it was agreed to renew these facilities until 30 April 2013. There is also a term loan facility of GBP2.1m that is due to mature on 31 July 2013. These US loans have a floating interest rate of 3.25% above LIBOR.
An additional loan held of GBP0.1m is repayable on demand, bears interest at a floating rate of 2.5% above UK Base Rates and is secured by a guarantee over the assets of GoIndustry (UK) Limited.
The convertible loan notes issued by GoIndustry-DoveBid plc were due to mature at 31 December 2011. During the year the terms were renegotiated and the notes now mature on 30 June 2014 and bear interest at 12% per annum. The notes are convertible at any time into 1p New Ordinary shares at a price of GBP2.80 per share but they may also be redeemed at any time by the Company upon payment of 120% of their face value. If the company were to be sold the loan notes would be redeemed at 130% of their face value.
10. Net cash flow from operating activities
For the year ended 31 December 2011
2011 2010
GBP'000's GBP'000's
Loss before income tax (3,994) (689)
Adjustments for:
Depreciation 188 256
Amortisation 1,169 1,097
Gain on disposal of property, plant and
equipment (19) (53)
Release of provision for legacy legal costs (707)
Share based payments 156 186
Net retirement benefit cost 72 169
Net finance expense 293 272
Pension contributions by the Company (750) (850)
Changes in working capital:
(Increase)/decrease in inventories (130) 284
(Increase)/decrease in trade and other
receivables 244 980
Decrease in trade and other payables (2,931) (5,202)
--------------------------------------------- ---------- ----------
Cash used in operations (6,409) (3,550)
--------------------------------------------- ---------- ----------
Contacts
Jack Reinelt GoIndustry-DoveBid Tel: 020 7098 3700
plc
Leslie-Ann Reed GoIndustry-DoveBid Tel: 020 7098 3700
plc
Chris Fielding WH Ireland Ltd Tel: 020 7220 1650
(Nominated Adviser)
Felicity Edwards St Brides Media & Tel: 020 7236 1177
Finance Ltd
**ENDS**
This information is provided by RNS
The company news service from the London Stock Exchange
END
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