31 Jul 2008 15:00
Danka Business Systems PLC Group Income Statement For the Year Ended 31st March, 2008
| | | | | | | |
| Note | Income Statement Residual Group 2008 $000 | Discontinued Operations 2008 $000 | Total 2008 $000 | Income Statement Residual Group 2007 $000 | Discontinued Operations 2007 $000 | Total 2007 (Restated – Note 2) $000 |
Revenue | 3, 4 | — | 418,168 | 418,168 | — | 883,435 | 883,435 |
Cost of sales | | — | (276,341) | (276,341) | — | (596,753) | (596,753) |
Gross profit | - | — | 141,827 | 141,827 | — | 286,682 | 286,682 |
| | | | | | | |
Distribution costs | | — | (71,826) | (71,826) | — | (114,601) | (114,601) |
Administrative expenses | | | | | | | |
Administrative expenses | | (4,268) | (68,275) | (72,543) | (4,167) | (160,024) | (164,191) |
Provision for future losses | | (1,425) | (6,131) | (7,556) | — | — | — |
Total administrative expenses | | (5,693) | (74,406) | (80,099) | (4,167) | (160,024) | (164,191) |
Other operating income | | 933 | — | 933 | — | — | — |
Other operating expense | | — | — | — | — | (112) | (112) |
Restructuring cost expense | | — | (2,454) | (2,454) | (71) | (8,735) | (8,806) |
(Loss)/profit from operations before tax and finance items | | (4,760) | (6,859) | (11,619) | (4,238) | 3,210 | (1,028) |
Investment revenue | | 5,433 | 20 | 5,453 | 7,593 | 908 | 8,501 |
Finance costs | | | | | | | |
Finance costs | | (68,669) | (358) | (69,027) | (60,008) | (3,673) | (63,681) |
Loss on early extinguishment of debt | | (9,711) | — | (9,711) | — | — | — |
Provision for future finance costs | | (17,504) | — | (17,504) | — | — | — |
Total finance costs | | (95,884) | (358) | (96,242) | (60,008) | (3,673) | (63,681) |
(Loss)/profit from operations before tax | | (95,211) | (7,197) | (102,408) | (56,653) | 445 | (56,208) |
Tax | | 2,691 | 132 | 2,823 | 3,292 | — | 3,292 |
(Loss)/profit from operations after tax | | (92,520) | (7,065) | (99,585) | (53,361) | 445 | (52,916) |
(Loss)/gain on sale of discontinued operations | 4 | — | (6,280) | (6,280) | — | 148,165 | 148,165 |
(Loss)/profit from operations for the year | | (92,520) | (13,345) | (105,865) | (53,361) | 148,610 | 95,249 |
Result from discontinued operations | | (13,345) | | | 148,610 | | |
(Loss)/profit from operations for the year and attributable to equity holders of the parent | | (105,865) | | | 95,249 | | |
| | | | | | | |
(Loss)/earnings per share: | 5 | | | | | | |
Basic loss from residual group | | $(0.36) | | | $(0.21) | | |
Basic (loss)/earnings from discontinued operations | | | $(0.05) | | | $0.58 | |
Basic (loss)/earnings from total operations | | | | $(0.41) | | | $0.37 |
| | | | | | | |
Diluted loss from residual group | | $(0.36) | | | $(0.21) | | |
Diluted (loss)/earnings from discontinued operations | | | $(0.05) | | | $0.58 | |
Diluted (loss)/earnings from total operations | | | | $(0.41) | | | $0.37 |
| | | | | | | |
Average exchange rate $1= | | | | ₤0.498 | | | ₤0.528 |
Average exchange rate $1= | | | | €0.705 | | | €0.779 |
Danka Business Systems PLC Group Balance Sheet As at 31st March, 2008
| | | | | |
| Note | 2008 $000 | | | 2007 (Restated – Note 2) $000 |
Non-current assets | | | | | |
Intangible assets and goodwill | | — | | | 484 |
Property, plant and equipment | | — | | | 31,880 |
Other | | — | | | 8,014 |
| | — | | | 40,378 |
Current assets | | | | | |
Inventories | | — | | | 31,681 |
Prepaid expenses | | — | | | 1,474 |
Trade and other receivables | | — | | | 60,842 |
Cash and cash equivalents including restricted cash for the group of 2007—$168,979,000 | | — | | | 186,573 |
Assets classified as held for sale—residual group. | | | | | |
Property, plant and equipment | | 10 | | | |
Prepaid expenses | | 36 | | | |
Other receivables | | 707 | | | |
Cash and cash equivalents including restricted cash for the group of $5,250,000 | | 14,869 | | | |
Total assets classified as held for sale—residual group | | 15,622 | | | — |
Assets classified as held for sale—U.S. operations | 4 | 105,817 | | | — |
| | 121,439 | | | 280,570 |
Total assets | | 121,439 | | | 320,948 |
Current liabilities | | | | | |
Trade and other payables | | — | | | (68,384) |
Corporation tax liabilities | | — | | | (6,317) |
Obligations under finance leases | | — | | | (602) |
Current portion of long-term borrowings | | — | | | (183,009) |
Derivative financial instruments | | — | | | (2,242) |
Deferred revenue | | — | | | (5,875) |
Accrued expenses | | — | | | (42,179) |
Short-term provisions | | — | | | (3,691) |
Liabilities classified as held for sale—residual group | | | | | |
Other payables | | (444) | | | |
Corporation tax liabilities | | (9,841) | | | |
Borrowings | | (125,330) | | | |
Accrued expenses | | (20,592) | | | |
Convertible participating shares | | (372,077) | | | |
Total liabilities classified as held for sale—residual group | | (528,284) | | | — |
Liabilities classified as held for sale—U.S. operations | 4 | (90,282) | | | — |
| | (618,566) | | | (312,299) |
Non-current liabilities | | | | | |
Bank and other loans | | — | | | (63,941) |
Convertible participating shares | | — | | | (331,104) |
Long-term provisions | | — | | | (1,768) |
Obligations under finance leases | | — | | | (423) |
Other | | — | | | (3,328) |
| | — | | | (400,564) |
Total liabilities | | (618,566) | | | (712,863) |
Net liabilities | | (497,127) | | | (391,915) |
Equity | | | | | |
Capital | | 319,340 | | | 319,238 |
Share options | | 7,315 | | | 6,764 |
Retained earnings | | (823,782) | | | (717,917) |
Total equity | | (497,127) | | | (391,915) |
Closing exchange rate $1= | | ₤0.504 | | | ₤0.508 |
Closing exchange rate $1= | | €0.633 | | | €0.748 |
| | | | |
| 2008 $000 | | | 2007 $000 |
(Loss)/income for the year | (105,865) | | | 95,249 |
Income and expense taken directly to equity: | | | | |
Exchange translation differences in the year | — | | | 9,081 |
Exchange translation differences related to disposals recycled to the income statement | — | | | (3,861) |
Actuarial gains on defined benefit pension plans | — | | | 4,270 |
Tax on items taken directly to or transferred from equity | — | | | — |
Total of income and expense taken directly to equity | — | | | 9,490 |
Total recognised (loss)/income and expense for the year and attributable to equity holders of the parent | (105,865) | | | 104,739 |
Danka Business Systems PLC Group Cash Flow Statement For the Year Ended 31st March, 2008
| | | | |
| | 2008 | | 2007 (Restated – Note 2) |
| Note | $000 | | $000 |
Cash flows from operating activities | | | | |
Loss before tax | | (102,408) | | (56,208) |
Adjustments to reconcile loss before tax to net cash flows from operating activities | | | | |
Restructuring charges | | 2,454 | | 8,806 |
Cash paid in respect of restructuring charges | | (4,949) | | (12,041) |
Depreciation and amortisation | | 12,883 | | 19,161 |
Gain on sale of property, plant and equipment and equipment on operating leases | | (808) | | (1,157) |
Share-based payments and shares issued for nil consideration | | 653 | | 297 |
Net finance costs | | 90,789 | | 55,180 |
Defined benefit pension scheme charges | | — | | 1,829 |
Defined benefit pension scheme contributions | | — | | (1,413) |
Decrease/(increase) in inventories | | 4,480 | | (17,023) |
Decrease in receivables | | 2,566 | | 20,493 |
Decrease in payables | | (11,825) | | (34,039) |
Tax recovered/(paid) | | 735 | | (2,102) |
Net cash from operating activities | | (5,430) | | (18,217) |
Cash flows from investing activities | | | | |
Interest received | | 3,211 | | 2,335 |
Capital expenditure | | (5,744) | | (16,616) |
Net proceeds from sale of operations/investments | 4 | 6,220 | | 168,636 |
Held for sale cash and cash equivalents | 4 | (4,900) | | — |
Proceeds from sale of property, plant and equipment and equipment on operating leases | | 1,822 | | 2,195 |
Net cash from investing activities | | 609 | | 156,550 |
Cash flows from financing activities | | | | |
Repayment of 11% senior notes and 10% notes | | (248,908) | | — |
Proceeds of GECC term loans | | 104,550 | | — |
Payment of debt issue costs | | (6,899) | | — |
Net borrowings under line of credit agreements | | 10,335 | | 311 |
Capital payments under finance leases | | (602) | | (1,376) |
Interest paid | | (25,359) | | (30,416) |
Proceeds from new shares issued | | — | | 598 |
Net cash from financing activities | | (166,883) | | (30,883) |
Net (decrease)/increase in cash and cash equivalents | | (171,704) | | 107,450 |
Cash and cash equivalents at 1st April | | 186,573 | | 74,997 |
Effect of exchange rate fluctuations on cash held | | — | | 4,126 |
Cash and cash equivalents at 31st March | | 14,869 | | 186,573 |
Included above in respect of discontinued operations: | | | | |
Net cash (outflow)/inflow from operating activities | | (6,928) | | 7,873 |
Net cash from investing activities | | (16,588) | | 148,791 |
Net cash from financing activities | | 24,497 | | 2,441 |
1. Statement of compliance with IFRSs | Danka Business Systems PLC (the “company”) is a public limited company incorporated in England and Wales. The company is domiciled in England and Wales. The company’s shares are listed on the London Stock Exchange and registered with the Securities and Exchange Commission (“SEC”) in the United States. In accordance with European Union (“EU”) regulations, the group financial statements have been prepared in accordance with International Financial Reporting Standards (“IFRS”) issued by the International Accounting Standards Board as adopted for use in the EU effective at 31st March, 2008. |
2. Significant accounting policies | Basis of preparation The consolidated financial statements for the years ended 31st March, 2008 and 2007 comprise the financial statements of the company and its subsidiaries (together the “group”) for the periods during which they were members of the group. |
3. Revenue and gross profit | Revenue disclosed in the income statement is analysed as follows: |
| | | | | | |
| Year ended 31st March, 2008 | Year ended 31st March, 2007 | ||||
| Residual group | Discontinued operations | Total operations | Residual group | Discontinued operations | Total operations |
| $000 | $000 | $000 | $000 | $000 | $000 |
Revenue | — | 418,168 | 418,168 | — | 883,435 | 883,435 |
Investment revenue | 5,433 | 20 | 5,453 | 7,593 | 908 | 8,501 |
Total revenue | 5,433 | 418,188 | 423,621 | 7,593 | 884,343 | 891,936 |
Included within revenue is $189,565,>000 (2007—$429,166,000) in respect of the sale of goods to customers, all of which relates to discontinued operations.
4. Disposals of operations | Year ended 31st March, 2008 |
| U.S. operations $000 | | Prior year disposals $000 | Total $000 |
Revenue | 450,204 | | 433,231 | 883,435 |
Gross profit | 155,639 | | 131,043 | 286,682 |
Distribution costs and administrative expenses | (156,419) | | (118,206) | (274,625) |
Amortisation | (112) | | — | (112) |
Restructuring cost expense | (5,773) | | (2,962) | (8,735) |
(Loss)/profit from operations before tax and finance items | (6,665) | | 9,875 | 3,210 |
Net finance costs | (213) | | (2,552) | (2,765) |
(Loss)/profit from operations before tax | (6,878) | | 7,323 | 445 |
| 31st March,2008 $000 |
Assets | |
Cash and cash equivalents | 4,900 |
Trade and other receivables | 39,459 |
Inventories | 27,201 |
Other current assets | 609 |
Equipment on operating leases | 6,803 |
Property and equipment | 16,914 |
Goodwill | 484 |
Other assets | 9,447 |
Total assets | 105,817 |
Liabilities | |
Trade and other payables | (53,271) |
Accrued expenses and other current liabilities | (20,032) |
Provision for future losses | (6,131) |
Current and non-current provisions | (2,964) |
Current and non-current obligations under finance leases | (423) |
Taxes payable | (121) |
Deferred revenue | (5,135) |
Other current liabilities | (893) |
Non-current liabilities | (1,312) |
Total liabilities | (90,282) |
| Year ended 31st March, 2007 |
| Date of disposal $000 |
Assets | |
Cash and cash equivalents | 32,636 |
Trade and other receivables | 122,649 |
Inventories | 65,074 |
Other current assets | 8,188 |
Equipment on operating leases | 8,048 |
Property and equipment | 6,731 |
Goodwill | 1,187 |
Other assets | 7,086 |
Total assets | 251,599 |
Liabilities | |
Trade and other payables | (98,880) |
Accrued expenses and other current liabilities | (35,311) |
Current and non-current provisions | (6,923) |
Current and non-current obligations under finance leases | (106) |
Taxes payable | (875) |
Deferred revenue | (20,571) |
Retirement benefit obligations | (27,291) |
Non-current liabilities | (913) |
Total liabilities | (190,870 ) |
5.(Loss)/earnings per share | The following reflects the (loss)/earnings and share data used in the basic and diluted (loss)/earnings per share computations: |
| | |
| 2008 $000 | 2007 $000 |
Basic and diluted (loss)/earnings attributable to equity holders of the parent | | |
—residual group | (92,520) | (53,361) |
—discontinued operations | (13,345) | 148,610 |
Total | (105,865) | 95,249 |
The basic and diluted (loss)/earnings per ordinary share calculations are based on a weighted average of ordinary shares outstanding in the year ended 31st March, 2008 of 259,122,479 (2007—257,450,387).
| Year Ended 31st March 2008 | | Year Ended 31st March 2007 | ||
| $000 | U.S. dollars Per Share | | $000 | U.S. dollars Per Share |
Basic and diluted loss for the residual group | (92,520) | $(0.36) | | (53,361) | $(0.21) |
Basic and diluted (loss)/earnings from discontinued operations | (13,345) | $(0.05) | | 148,610 | $0.58 |
Basic and diluted (loss)/earnings from total operations | (105,865) | $(0.41) | | 95,249 | $0.37 |
6. Post balance sheet events | On 27th June, 2008, Danka Business Systems PLC completed the sale of its U.S. operating subsidiary, DOIC. Pursuant to the share purchase agreement, the group sold its U.S. operations to Konica Minolta in a sale of all the outstanding share capital of DOIC for a purchase price of $240 million in cash, subject to an upward or downward adjustment of $10 million. The purchase price adjustment cannot exceed $10 million. The sum of $10 million was held back by Konica Minolta from the amount paid at closing as security for the group’s purchase price adjustment obligations. $25 million of the purchase price paid by Konica Minolta at closing will be held in escrow for a period of four years following closing to satisfy any and all claims by Konica Minolta which may be made under the share purchase agreement. After the repayment of the group’s outstanding indebtedness, including repayment of approximately $146 million under the group’s credit facilities provided by GECC, including additional borrowings of $15 million since 31st March, 2008, and early termination fees and accrued and unpaid interest of approximately $6 million, the payment of certain change-of-control and severance obligations and the fees and expenses incurred in connection with the sale transaction and minus the holdback and escrow amounts set forth above, the net sale proceeds received by the group were approximately $40 million. In connection with the sale of DOIC, as described above, the credit facilities provided by GECC were repaid and terminated. |
7. Director’s Responsibility Statement | The directors confirm to the best of their knowledge: |
8. Financial Information | This announcement does not comprise the statutory accounts of the group, as defined in section 240 of the Companies Act 1985. The financial information for the year ended 31st March, 2008 has been extracted from statutory accounts on which an unqualified audit report has been issued. Those accounts are yet to be delivered to the Registrar of Companies. The auditors, Ernst & Young LLP, reported on those accounts in accordance with section 235 of the Companies Act 1985 and their report was unqualified and did not contain a statement under section 237(2) or (3) of the Companies Act 1985. This announcement was approved by a duly appointed and authorised committee of the Board of Directors on 31st July, 2008. |
9. Full Set of Accounts | Copies of this announcement and the full set of accounts will be available from Danka's registered office at Masters House, 107 Hammersmith Road, London W14 0QH and on Danka’s website at www.dankabusinesssystemsplc.com. |