Final Results
November 26 2003 - 2:00AM
UK Regulatory
RNS Number:4832S
Eurocopy PLC
26 November 2003
Eurocopy PLC
Preliminary results for the year ended
30 September 2003
RESULTS SUMMARY
* Operating profit #2.60 million (2002: #2.57 million).
* Pre-tax profit #2.55 million (2002: #2.52 million).
* Basic earnings per share up by 9% to 4.14 pence (2002: 3.80 pence).
* In five years since 1998 basic earnings per share has increased by 89%.
* Final dividend of 1.13 pence per share recommended making a total of 1.68
pence per share (2002: 1.58 pence per share), an increase of 6%.
CHAIRMAN'S STATEMENT
RESULTS
Revenues from the core service division were satisfactory but machine sales were
lower than in the previous year, reflecting the weakened economy and general
uncertainties. With trading in our market therefore more difficult than it has
been for some years, it is pleasing to be able to report a set of results that
are an improvement on last year. Operating profit was #2.60 million (2002: #2.57
million) and pre-tax profit at #2.55 million (2002: #2.52 million). I believe
that these results vindicate the strength of our business model and demonstrate
the stability provided by our contracted service revenue base.
Basic earnings per share increased by 9% from 3.80 pence in 2002 to 4.14 pence.
The share buy-back achieved in the second half of 2002 made a significant
contribution towards this increase in basic earnings per share.
DIVIDEND
Your Board recommends an increased final dividend of 1.13 pence per share (2002:
1.07 pence) making a total of 1.68 pence per share (2002: 1.58 pence per share),
an increase of 6% over the prior year. The proposed dividend reflects the
Board's stated and continuing policy of maintaining a dividend cover of 2.5
times.
ACQUISITIONS
A small infill acquisition of a customer base in West London was made in the
year with the cash purchase of Cannonade Limited for a consideration of #116,000
net of cash acquired with the business. This is the first acquisition made in
our programme since the purchase of County Business Machines Limited in June
2001.
We will continue to expand the business both organically and through the
acquisition of suitable businesses that meet our criteria and have the potential
to be earnings enhancing within a relatively short timescale. Given the
structure of our industry and the need to ensure that integration can be
successfully achieved with minimum business disruption or capital investment,
such acquisitions are, individually, likely to be relatively small.
OUTLOOK
Trading this year was marked by the disappointing level of new machine sales,
due, we believe, to economic circumstances causing existing customers to defer
their purchasing decisions. In the short term the resultant elongation of the
renewal cycle has no adverse impact on our service revenues, a factor that
provides a significant degree of stability to the service division from which
the majority of the Group's profit is derived. However, this increases the
importance of ensuring high customer service levels and, in the longer term, can
hold back opportunities to achieve organic growth in print volumes through the
placement of linked digital equipment into integrated IT network environments.
Nevertheless, the stability provided by our contracted service revenue base
enables us to look ahead confident that, in the short term at least, we can
maintain current levels of business. We believe that we also have the financial
resources to continue to grow the business once more favourable market
conditions prevail.
CYRIL GAY
Chairman
26 November 2003
FURTHER INFORMATION FOR THE PURPOSE OF ASSESSING THE RESULTS
1. TRADING
--------------
2003 2002
#m #m
Turnover
Machine sales 7.2 9.1
Metered income 10.5 10.3
Other 5.0 4.9
___ ___
22.7 24.3
___ ___
The mixed fortunes in trading activity which we reported in the
first half of the year have continued into the second half.
Turnover from the machine sales division fell by #0.6 million in the
first half of the year and by #1.3 million in the second half of the year
compared to the respective periods in the prior financial year. Consequently,
after a small improvement in metered income and other turnover, total turnover
for the year fell by #1.6 million to #22.7 million. Much of the shortfall came
in the second and third quarters of the year, the fourth quarter experiencing,
as expected, lower sales levels due to the seasonal drop over the July and
August holiday period.
We believe that economic uncertainties, in the mid part of the year in
particular, caused the deferral of purchasing decisions in a number of customer
situations. The resulting extension of the renewal cycle within our customer
base is still being worked through. Tight control of direct costs has
nevertheless enabled the machine sales division to come close to achieving its
target of breaking even after absorption of its direct costs. A small operating
loss of #0.16 million in the second half contributed to a total operating loss
for the year of #0.19 million from the machine sales division.
The service division, from which the majority of the Group's profit is derived,
has however continued to perform in line with expectations. Print volumes
increased by 2% to 83.5 million per month for the year (2002: 82 million) and
consequently turnover from metered income also rose by 2% to #10.5 million.
Operating profit generated by the service division improved by 7.5% to #1.25
million in the second half of the year and by 5% to #2.41 million for the full
year (2002: #2.30 million).
Any deferral of machine renewals by existing customers effectively extends their
service maintenance contracts with us. This usually results in a small increase
in service margins due to scheduled increases in the charge per copy within
those contracts. However, such deferrals also increase the need to ensure high
levels of customer satisfaction.
Tight control of materials and direct labour costs in the service division has
been achieved this year, despite the increasing age of our machine base, without
any dilution of the high quality service delivered to our customers. This has
helped to sustain the important net contribution from this division.
2. BALANCE SHEET
The balance sheet at 30 September 2003 includes as Fixed asset
investment properties, two properties classified in the prior year as properties
in the course of disposal within current assets.
These properties were professionally valued at #750,000, an increase
of #192,000 on the previous carrying value. In accordance with accounting rules,
#162,000 of the increase has been treated as an exceptional credit, representing
the write back of an exceptional charge in relation to the write down of these
properties in 1998. The balance of #30,000 has been credited to an investment
revaluation reserve.
At the year end, the directors have reassessed provisions for
onerous property leases, which have been increased by #165,000. In aggregate,
these two items have had no material impact on the profit for the year.
3. INVESTMENT AND CASH FLOW
The Company continues to enjoy strong operating cash flows. Before
cash invested in our three main cash investments, acquisitions, finance leases
and share repurchases, the business generated #1.5 million. Reduced levels of
reinvestment of cash which saw only #0.1 million invested in acquisitions, #0.1
million invested in repurchasing shares, and the finance leasebook remaining at
a constant level, left a net increase in cash of #1.3 million for the year and a
net cash position of #0.4 million at the end of the year (2002: #0.8 million
overdraft).
4. SHARE REPURCHASE PROGRAMME
During the year to 30 September 2003 the Company repurchased 205,000
Ordinary shares (0.5% of the issued capital at 1 October 2002) at an average
price of 40 pence per share, all of which have been subsequently cancelled. This
completes the share repurchase programme. The Board will review in the future
whether it is appropriate to seek authority for a renewed programme.
EUROCOPY PLC
GROUP PROFIT AND LOSS ACCOUNT
FOR THE YEAR ENDED 30 SEPTEMBER 2003
2003 2002
#'000 #'000
Turnover from continuing operations 22,551 24,307
Turnover from acquisitions 142 -
---------- ----------
Total turnover 22,693 24,307
---------- ----------
Operating profit from continuing operations 2,564 2,570
Operating profit from acquisitions 38 -
---------- ----------
Total operating profit 2,602 2,570
Net interest payable (48) (51)
---------- ----------
Profit on ordinary activities before tax 2,554 2,519
Tax on profit on ordinary activities (804) (822)
---------- ----------
Profit for the financial year 1,750 1,697
Dividends (708) (672)
---------- ----------
Amount transferred to reserves 1,042 1,025
---------- ----------
Dividend per share 1.68p 1.58p
Earnings per share - Basic 4.14p 3.80p
- Diluted 4.07p 3.75p
CONSOLIDATED STATEMENT OF TOTAL RECOGNISED GAINS AND LOSSES
FOR THE YEAR ENDED 30 SEPTEMBER 2003
2003 2002
#'000 #'000
Profit for the financial year 1,750 1,697
Unrealised surplus on revaluation of 30 -
investment properties
---------- ---------
Total recognised gains and losses relating to the year 1,780 1,697
---------- ---------
EUROCOPY PLC
SUMMARISED GROUP BALANCE SHEET
AT 30 SEPTEMBER 2003
2003 2002
#'000 #'000
Tangible assets 3,005 3,305
Intangible assets 5,352 5,641
Investment properties 750 -
--------- ---------
9,107 8,946
--------- ---------
Stock and debtors 9,171 8,947
Properties in course of disposal - 558
Cash at bank and in hand 432 306
--------- ---------
Current assets 9,603 9,811
--------- ---------
Current liabilities (6,177) (7,218)
--------- ---------
Provisions (436) (415)
--------- ---------
NET ASSETS 12,097 11,124
--------- ---------
Share capital 2,113 2,123
Share premium 74 74
Investment revaluation reserve 30 -
Capital redemption reserve 363 353
Profit and loss account 9,517 8,574
--------- ---------
SHAREHOLDERS' FUNDS 12,097 11,124
--------- ---------
EUROCOPY PLC
SUMMARISED CASH FLOW STATEMENT
FOR THE YEAR ENDED 30 SEPTEMBER 2003
2003 2002
#'000 #'000
Net cash inflow from operating activities 3,519 2,873
---------- ---------
Net cash outflow from returns on investment and servicing
of finance (48) (51)
---------- ---------
Tax paid (1,065) (1,006)
---------- ---------
Capital expenditure
Purchase of fixed assets (396) (474)
Sale of fixed assets 152 146
---------- ---------
Net cash outflow from capital expenditure (244) (328)
---------- ---------
Acquisitions (net of cash and cash equivalents) (116) -
---------- ---------
Equity dividends paid (685) (646)
---------- ---------
Net cash inflow before financing 1,361 842
---------- ---------
Net cash outflow from financing (repurchasing shares) (99) (1,448)
---------- ---------
Increase/(decrease) in cash 1,262 (606)
---------- ---------
NOTES
1. The final dividend of 1.13p per ordinary share recommended by the
Directors will, if approved, be paid on 6 April 2004 to shareholders on the
register at the close of business on 5 March 2004.
2. Basic earnings per share are calculated on 42,293,624 ordinary shares
being the weighted average number in issue during the year ended 30 September
2003 (30 September 2002: 44,699,364). Diluted earnings per share are calculated
on 42,945,121 ordinary shares being the adjusted weighted average number of
shares in issue during the year ended 30 September 2003 after deemed issue of
shares for no consideration under share option schemes (30 September 2002:
45,310,829).
3. The financial information for the year ended 30 September 2003
contained herein does not constitute statutory accounts within the meaning of
Section 240 of the Companies Act 1985 and has not been audited, but it has been
prepared on the basis of accounting policies used in the financial statements
for the year ended 30 September 2002.
4. The financial information for the year ended 30 September 2002
contained herein is an abridged version of the accounts filed with the Registrar
of Companies. The incumbent Auditors reported upon those accounts; their report
was unqualified and did not contain a statement under section 237(2) or (3) of
the Companies Act 1985.
Ends
For further information, please contact:
Cyril Gay, Chairman
Eurocopy PLC 01924 823455
Martin McCarney, Chief Executive
Eurocopy PLC 01924 823455
Matthew Burton, Group Finance Director
Eurocopy PLC 01924 823455
This information is provided by RNS
The company news service from the London Stock Exchange
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