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Regenersis PLC (RGS)

  Print          Annual reports

Thursday 14 March, 2013

Regenersis PLC

Half Yearly Report

RNS Number : 9625Z
Regenersis PLC
14 March 2013
 

 

 

14 March 2013

 

REGENERSIS PLC

 

INTERIM RESULTS

 

Regenersis plc (AIM: RGS.L) ("Regenersis" or the "Group"), a strategic outsourcing partner to many of the world's leading consumer technology companies, is pleased to announce its interim results for the six months to 31 December 2012, which show a strong financial performance and the continuing benefits of the Board's growth strategy.

 

Financial Highlights

Revenue increased by 29% to £90.2 million (2011: £69.9 million)

Headline operating profit (*) increased by 21% to £4.6 million (2011: £3.8 million)

Operating profit increased by 27% to £3.7 million (2011: £2.9 million)

Revenue and profit progress in all divisions, particularly strong in Advanced Solutions in which revenues rose 73% and operating profit increased 100% over prior year

Headline operating cash flow (*) improved to £3.8 million (2011: £2.7 million), although H2 is traditionally the stronger half for cash generation

Operating cash flow increased by 44% to £2.3 million (2011: £1.6 million)

Net debt of £7.7 million (2011: £4.1 million), despite cash payments of £5.9 million in the period  in relation to acquisitions, compared with £2.9 million net debt at the year end

Interim dividend of 0.67 pence per Ordinary Share, demonstrating the Board's commitment to a progressive new dividend policy as announced in the final results

Adjusted EPS up 18% to 7.96p (2011: 6.76p) and basic EPS up 16% to 5.88p (2011: 5.08p)

 

Operational Highlights

In-Field Tester (IFT) units rolled out to Virgin Media and royalty revenues commenced December 2012. Recurring royalty revenues expected from the US during H2 of the current year; prospects and sales activities are developing well.

In order to capitalise on these and other US opportunities the group has centred its sales and marketing operations in the US with the senior hiring of Bryce Boothby as Group Sales and Marketing Director and President of US.  He also has an acquisition based remit.

Strong organic sales growth continues - up 17% on the same period last year, as a result of sales team performance and larger business opportunities.

HDM, the business acquired in July 2012, continues to perform well and in line with the Board's expectations.

 

Outlook

Current trading is in line with market expectations for the year ending 30 June 2013.

Opportunities for global growth both organically and by acquisition remain strong. Some of these new developments should emerge shortly. The pace of progress is expected to be sustained, as the senior management team continues to strengthen.

Growth in profits in 2014 is expected from the strategically important divisions of Emerging Markets and Advanced Solutions. Growth in Advanced Solutions is again expected to be significant.

 

Matthew Peacock, Executive Chairman of Regenersis, said:  "The strategy and financial plan are established and working well. Our focus is extending our geographic reach, filling out our operating matrix (*), deepening our strategic relationships with major clients and continuing to innovate and roll out margin enhancing services."

 

(*) Headline operating profit excludes exceptional restructuring costs, exceptional deal costs, amortisation and impairment of acquired intangible assets and share-based payments.

(*) Headline operating cash flow excludes exceptional deal costs.

(*) The operating matrix is shown on the Regenersis website www.regenersis.com.

 

Enquiries:

Regenersis Plc

Matthew Peacock, Executive Chairman

Jog Dhody, Chief Financial Officer

+44 (0) 20 3657 7000

Arden Partners plc (Nomad and Joint Broker)

Steve Douglas

+44 (0) 121 423 8900

Panmure Gordon (UK) Limited (Joint Broker)

Dominic Morley / Charles Leigh-Pemberton

+44 (0) 20 7886 2500

Tavistock Communications

Catriona Valentine / Matt Ridsdale / Keeley Clarke

+44 (0) 20 7920 3150

 

About Regenersis

www.regenersis.com

With its core business in repairing consumer electronics, Regenersis helps companies like HTC, Nokia, Samsung, Everything Everywhere, John Lewis, LG and others deliver the best possible after market service to its customers.  Through the provision of technical call centres or managing returns and repairs, the company supports a wide range of products including mobile phones, laptops and tablets, set top boxes, televisions and other electronic equipment.  Regenersis also operates in the business-to-business environment where it offers high quality and secure repair and refurbishment solutions for chip and pin devices, ATMs and even MRI scanners.

Building upon its success in repair, the company is already proving its pioneering range of services known as Advanced Solutions, which include in-field testing, where Regenersis is partnering with cable operators across the world to diagnose set-top box faults in the home, reducing unnecessary returns.  The Company has also recently set up a Digital Care offering, which provides extended warranty and insurance services to end customers; and Recommerce, which offers client led buy back, refurbishment and onward resale of devices.

 

Summary

In the six months to 31 December 2012 the Group made pleasing progress on all fronts both financially and operationally.

First half revenues grew by 29% to £90.2 million (2011: £69.9 million), headline operating profit increased by 21% to £4.6 million (2011: £3.8 million) and operating profit rose by 27% to £3.7 million (2011: £2.9 million).  Headline operating margins were slightly lower at 5.1%, compared to 5.4% in the same period last year. 

Progress in revenue and profit was delivered in all the divisions but was particularly strong in Advanced Solutions, in which revenues rose by 73% and operating profit increased 100% over the prior period.  

Double digit growth in organic revenue and profit was achieved, which is particularly pleasing against a backdrop of a mixed market and client performances.

Headline operating cash flow improved to £3.8 million (2011: £2.7 million) although H2 is traditionally the stronger half for cash generation.   Net debt at 31 December 2012 was £7.7 million (2011: £4.1 million), despite cash payments of £5.9 million in H1 in relation to acquisitions, compared with £2.9 million at the year end.

Operating cash flow increased by 44% to £2.3 million (H1 2012: £1.6 million).

Adjusted EPS is up 18% to 7.96p (2011: 6.76p) and basic EPS is up 16% to 5.88p (2011: 5.08p).

 

Results


6 months ended

31 December 2012

£'million

6 months ended
31 December 2011

£'million

Revenue

Emerging Markets

Western Europe

Advanced Solutions

 

25.0
51.0
14.2


21.3
40.4
8.2

Total

90.2

69.9




Headline Operating Profit

Emerging Markets

Western Europe

Advanced Solutions


2.8
1.4
1.4


2.7
1.3
0.7

Corporate Costs

 (1.0)

 (0.9)

Total

4.6

3.8

 

Emerging Markets

Revenue rose by 17.4% to £25.0 million (2011: £21.3 million) during the period, while headline operating profit increased 3.7% to £2.8 million (2011: £2.7 million), generating a margin, prior to corporate costs, of 11.2% (2011: 12.7%).  There has been some pressure transmitted from certain clients who have themselves been under pressure. We have secured higher market shares with these clients but at slightly lower margins.

Poland and Romania remain key markets in this segment.  The new territories opened in 2010/11, comprising Turkey and South Africa, continue to grow.  We continue to focus on both organic and acquisitive routes into new markets. 

The acquisition of the HDM business gave the Group access to two new markets, Mexico and Argentina.  Both of these operations gave their first profit contribution during the period and are performing in line with the Board's expectations.

As announced in our pre-close trading update on 17 January, the Group has won a very significant multi-geography, multi-year contract, that is in the late stages of negotiation.  This contract will contribute mostly to the Emerging Market Depot Solutions division from next financial year.

Western Europe

Revenue increased by 26.2% to £51.0 million (2011: £40.4 million).  Headline operating profit increased 7.7% to £1.4 million (2011: £1.3 million), generating a margin, before corporate costs, of 2.7% (2011: 3.2%).

While Western Europe mainly comprises activities in the UK and Germany, our acquisition of the HDM business gave the Group access to the Spanish market, which made its first profit contribution during the period and is also performing in line with the Board's expectations.

During the period, the Group extended its relationship with Samsung, having been selected as one of the manufacturer's strategic partners on a range of after-sales support services in the UK.  The UK contract includes the repair, refurbishment and customer call centre support for the full range of Samsung's mobile devices.

Advanced Solutions

Revenue rose by 73.2% to £14.2 million (2011: £8.2 million).  Headline operating profit increased 100% to £1.4 million (2011: £0.7 million), generating a margin, before central costs, of 9.9% (2011: 8.5%).

The Advanced Solutions division, which includes our innovative services in set top box repair and repair avoidance, as well as technically driven solutions in other markets, has delivered particularly strong growth.  During the period, the In-Field Tester (IFT) units roll out to Virgin Media was completed and the first recurring royalty revenues were received during December 2012.  

Sales activities for the IFT in the US continue to be very promising. It is expected that recurring royalty revenues from the US will commence during the second half of the current year.

The senior appointment of Bryce Boothby as Group Sales and Marketing Director and President of US in January enhances our presence, growth and selling capability on the ground in the US.  Bryce has been given an acquisition based remit.

The newly formed operations established in the previous financial year continue to grow and have started making revenue and profit contributions:

ReCommerce - where we offer a buy back, refurbishment, repair and onward resale or disposition of mobile devices for a range of new and existing clients;

Digital Care - where we provide a range of extended warranty and insurance services to end customers through intermediaries covering mobile, media and other portable consumer electronic equipment.  This is progressing well; and

Business Process Outsourcing - where we provide our vendor management service, which runs the repair function for our customers' retail network on their behalf.

 

 

 

Cash and Working Capital


 


Six months ended   31 December 2012

Six months ended   31 December

2011

£'million

£'million

Profit for the period

2.5

2.2

Net finance charges and tax

1.2

0.7

Depreciation and amortisation

1.0

1.2

Acquisition fee payments

0.7

0.5

Other exceptional payments (restructuring payments)

0.8

0.6

Share based payments

0.2

0.1

Movement in working capital

 (2.0)

 (2.2)

Net interest payments and tax paid

 (0.6)

 (0.4)

Headline operating cash flow

3.8

2.7

Acquisition fee payments

(0.7)

(0.5)

Other exceptional payments (restructuring payments)

(0.8)

(0.6)

Operating cash flow

2.3

1.6

Purchase of PPE and intangible assets

 (1.4)

 (1.3)

Acquisition of subsidiary

 (5.2)

 -

Other movements

 (0.5)

 (0.6)

Total

 (4.8)

 (0.3)

Opening net debt

 (2.9)

 (3.8)

Closing net debt

 (7.7)

 (4.1)

 

Headline operating cash flow improved to £3.8 million (2012: £2.7 million).  Operating cash flow improved to £2.3 million (2012: £1.6 million). 

The working capital outflow in the period was £2.0 million.  Whilst this represents a marginal improvement against the same period last year (2011: £2.2 million outflow), when set against a backdrop of 29% revenue growth, this represents a very significant improvement and is the result of continued close management of working capital.

Net debt of £7.7 million at 31 December 2012 comprised gross debt of £13.5 million (2011: £8.7 million) and cash and cash equivalents of £5.8 million (2011: £4.6 million).

 

Acquisitions

Acquisition of HDM

On 25 July 2012, we agreed to acquire the trade and assets of the HDM Group of Companies ("HDM") for an initial consideration of €6.5 million on a cash and debt-free basis. Completion took place on 31 August 2012.

The key highlights of the acquisition were:

HDM provides aftermarket services including, reverse logistics and repair to network operators and mobile telephone manufacturers in Spain, Mexico and Argentina;

Key customers include Samsung and Nokia; and

HDM employs more than 600 staff across its three facilities.

 

The HDM business continues to perform well and in line with the Board's expectations.

Acquisition of DC Sweden

On 1 November 2012, the Group completed its acquisition of all of the issued share capital of Digital Care Sweden for £5,000.   This new entity was created through a hive out of the Digital Care business that previously existed within the joint venture in Sweden. 

 

Dividend

The Board is pleased to announce an interim dividend of 0.67 pence per ordinary share, which demonstrates its commitment to a progressive new dividend policy, as previously announced in the final results.  This will be paid on 7 June 2013 to shareholders on the register on 10 May 2013.

Outlook

Current trading is in line with market expectations for the year ending 30 June 2013.

Opportunities for global growth both organically and by acquisition remain strong. Some of these new developments should emerge shortly. The pace of progress is expected to be sustained, as the senior management team continues to strengthen.

Growth in profits in 2014 is expected from the strategically important divisions of Emerging Markets and Advanced Solutions. Growth in Advanced Solutions is again expected to be significant.

 

 

 

Condensed Consolidated Income Statement


 



for the six months ended 31 December 2012


 





 





6 months ended

6 months ended

Year ended

31 December 2012

31 December 2011

30 June 2012



(unaudited)

(unaudited)

(audited)


Note

£'000

£'000

£'000

Group revenue

2

90,190

69,878

139,857






Headline operating profit

3

4,563

3,819

7,754

Exceptional restructuring costs


 -

 -

 (4,945)

Acquisition costs

3

 (673)

 (600)

 -

Amortisation of acquired intangible assets


 (34)

 (205)

(239)

Share-based payments


 (194)

 (130)

 (281)






Group operating profit


3,662

2,884

2,289

Share of results of jointly controlled entity


23

34

 (163)

Operating profit from continuing operations


3,685

2,918

2,126

Finance income


13

41

110

Finance costs


 (504)

 (231)

 (552)

Profit before tax


3,194

2,728

1,684

Taxation

4

 (662)

 (560)

 (261)

Profit for the period


2,532

2,168

1,423






Attributable to:





Equity holders of the Company


2,532

2,168

1,423






Profit for the period


2,532

2,168

1,423






Earnings per share





Basic

5

5.88 p

5.08p

3.33p

Diluted

5

5.62 p

5.00p

3.31p

 

 

 

Consolidated Statement of Comprehensive Income


 



for the six months ended 31 December 2012


 





6 months ended

6 months ended

Year

ended

31 December 2012

31 December 2011

30 June 2012



(unaudited)

(unaudited)

(audited)



£'000

£'000

£'000

Profit for the period


2,532

2,168

1,423

Other comprehensive income/(expense):





Exchange differences arising on translation of foreign entities


98

 (1,268)

 (1,454)

Total comprehensive income/(expense) for the period


2,630

900

 (31)






Attributable to:





Equity holders of the Company


2,630

900

 (31)






Total comprehensive income/(expense) for the period


2,630

900

 (31)

 

 

Condensed Consolidated Balance Sheet


 



as at 31 December 2012


 





31 December 2012

31December 2011

 

30 June 2012




(unaudited)

(unaudited)

(audited)


Note

£'000

£'000

£'000

Assets





Non-current assets





Goodwill


38,067

26,936

26,936

Other intangible assets


3,032

1,895

1,631

Investments in jointly controlled entities


136

53

98

Property, plant and equipment


4,311

3,160

3,405

Deferred tax


2,020

874

1,543



47,566

32,918

33,613

Current assets





Inventory


8,703

7,611

6,556

Trade and other receivables


26,758

16,513

18,608

Cash

7

5,750

4,629

2,727



41,211

28,753

27,891

Total assets


88,777

61,671

61,504






Current liabilities





Trade and other payables


 (28,902)

 (18,675)

 (20,885)

Current tax liability


 (1,714)

 (208)

 -

Provisions


 (1,164)

 (589)

 (816)



 (31,780)

 (19,472)

 (21,701)

Non-current liabilities





Borrowings

7

 (13,495)

 (8,751)

 (5,604)

Deferred consideration


 (6,824)

-

-

Provisions


 (2,922)

 (1,671)

 (3,270)



(23,241)

(10,422)

(8,874)

Total liabilities


 (55,021)

 (29,894)

 (30,575)






Net assets


33,756

31,777

30,929






Equity





Ordinary share capital


908

896

896

Share premium


20,219

19,702

19,702

Merger reserve


3,088

3,088

3,088

Translation reserve


266

354

168

Retained earnings


9,275

7,737

7,075

Total equity


33,756

31,777

30,929

 

 

 

Condensed Consolidated Statement of Changes in Equity

 



for the six months ended 31 December 2012


 





 





6 months ended

6 months ended

Year

ended

31 December 2012

31 December 2011

30 June 2012



(unaudited)

(unaudited)

(audited)



£'000

£'000

Balance at the start of the period


30,929

30,810

30,810

Total comprehensive income/(expense) for the period


2,630

900

(31)

Equity settled share-based payments


144

67

 150

Issue of shares related to business combination


529

 -

 -

Dividends paid


 (476)

 -

 -

Balance at the end of the period


33,756

31,777

30,929

 

 

Consolidated Cash Flow Statement





for the six months ended 31 December 2012







6 months ended

6 months ended

Year ended

31 December 2012

31 December 2011

30 June 2012



(unaudited)

(unaudited)

(audited)



£'000

£'000

£'000

Profit for the period


2,532

2,168

1,423

Adjustments for:





Net finance expenses


491

190

442

Tax expense


662

560

261

Depreciation on property, plant and equipment


706

724

1,507

Impairment of property, plant and equipment


 -

 -

242

Amortisation of intangible assets


313

221

570

Impairment of intangible assets


 -

 -

549

Amortisation of acquired intangible assets


34

205

239

Share of JV loss


 (23)

 -

163

Acquisition fee payments


673

531

576

Other exceptional payments


821

635

1,681

Loss on disposal of property, plant and equipment


 -

1

29

Loss on disposal of intangible fixed assets


 -

10

 -

Share-based payments expense


194

130

281

Operating cash flows before movement in working capital


6,403

5,375

7,963

Increase in inventories


 (1,566)

 (1,302)

 (291)

Increase in receivables


 (2,501)

 (300)

 (2,798)

Increase/(decrease) in payables and accruals


2,858

 (681)

1,431

(Decrease)/increase in provisions


 (794)

 -

1,816

Cash flows from operating activities


4,400

3,092

8,121

Interest received


13

41

111

Interest paid


 (194)

 (180)

 (259)

Tax paid


 (426)

 (236)

 (775)

Headline cash flows from operating activities


3,793

2,717

7,198

Acquisition fee payments


(673)

(531)

(576)

Other exceptional payments


(821)

(635)

(1,681)

Net cash inflow from operating activities


2,299

1,551

4,941






Cash flows from investing activities





Purchase of property, plant and equipment


 (818)

 (843)

 (2,220)

Purchase and development of intangible assets


 (668)

 (434)

 (1,103)

Acquisition of subsidiaries, net of cash acquired


 (5,216)

 -

 -

Net cash used in investing activities


 (6,702)

 (1,277)

 (3,323)






 



6 months ended

6 months ended

Year ended



31 December 2012

31 December 2011

30 June 2012



(unaudited)

(unaudited)

(audited)



£'000

£'000

£'000






Cash flows from financing activities





Dividends paid


 (476)

-

-

Repayment of borrowings


 -

 -

 (1,236)

Drawdown of borrowings


7,780

2,000

 -

Net cash inflow from financing activities


7,304

2,000

 (1,236)






Net increase in cash and cash equivalents


2,901

2,274

382

Other non cash movements - exchange rate changes


122

 (521)

 (531)

Cash and cash equivalents at the beginning of period


2,727

2,876

2,876

Cash and cash equivalents at end of period


5,750

4,629

2,727

Bank borrowings


 (13,495)

 (8,751)

 (5,604)

Net debt


 (7,745)

 (4,122)

 (2,877)

 

 

 

Notes to the Interim Report

for the six months ended 31 December 2012

1.   Basis of preparation

This interim report has been prepared on the basis of the accounting policies expected to be adopted for the year ended 30 June 2013.  These are in accordance with the Group's accounting policies as set out in the latest audited annual financial statements for the year ended 30 June 2012.  The Group's accounting policies can also be found on the Group's website.

All International Financial Reporting Standards ('IFRS'), International Accounting Standards ('IAS') and interpretations currently endorsed by the International Accounting Standards Board ('IASB') and its committees as adopted by the EU and as required to be adopted by AIM listed companies have been applied.  AIM-listed companies are not required to comply with IAS 34 'Interim Financial Reporting' and accordingly the Company has taken advantage of this exemption.

The financial information in this interim report does not constitute statutory accounts for the six months ended 31 December 2012 and should be read in conjunction with the Group's annual financial statements for the year ended 30 June 2012. Financial information for the year ended 30 June 2012 has been derived from the consolidated audited accounts for that period which were unqualified.

The condensed consolidated interim financial statements for the six months to 31 December 2012 have not been audited or reviewed by auditors pursuant to the Auditing Practices Board guidance on Review of Interim Financial Information.

This unaudited interim report was approved by the Board of Directors on 13 March 2012.

 

2.   Segmental reporting

Internal reporting uses three reporting segments - Emerging Markets, Western Europe and Advanced Solutions, which reflect the way the business is managed and reviewed.

 

Emerging Markets include the Depot Solutions operations in Poland, Romania, Turkey, South Africa, Argentina and Mexico.  Western Europe includes the Depot Solutions UK (excluding Glenrothes), Spain and German businesses.  Advanced Solutions aggregates the Group's businesses promoting its technology, Intellectual property and Intellectual capital in remote diagnostics, automation, mitigation, avoidance of repair, digital care and Recommerce.

 

The Group continues to deliver world class services to its customers in the fields of service and repair of smart phones and other consumer electronic devices, coupled with associated services.



6 months ended

6 months ended

Year ended


31 December 2012

31 December 2011

30 June 2012



(unaudited)

(unaudited)

(audited)



£'000

£'000

£'000

Revenue from external customers





Total Emerging Markets


25,620

21,835

42,318

Less: share of jointly controlled entity


 (598)

 (552)

 (1,002)

Total Western Europe


54,895

 40,419

83,938

Less: share jointly controlled entity


 (3,893)

 -

 (4,204)

Emerging Markets


25,022

21,283

41,316

Western Europe


51,002

40,419

79,734

Advanced Solutions


14,166

8,176

18,807

Total


90,190

69,878

139,857

Headline segment profit





Emerging Markets


2,769

2,652

4,580

Western Europe


1,403

1,340

2,091

Advanced Solutions


1,351

737

2,905



5,523

4,729

9,576

Corporate costs


 (960)

 (910)

 (1,822)

Headline operating profit    


4,563

3,819

7,754

Exceptional restructuring costs


 -

 -

 (4,945)

Acquisition costs


 (673)

 (600)

 -

Amortisation of acquired intangible assets


 (34)

 (205)

 (239)

Share-based payments


 (194)

 (130)

 (281)

Group operating profit


3,662

2,884

2,289

Share of results of jointly controlled entity


23

34

 (163)

Operating profit from continuing operations


3,685

2,918

2,126

Net finance expense


 (491)

 (190)

 (442)

Profit before tax


3,194

2,728

1,684

 
3.   Headline and adjusted figures

'Headline operating profit' is the key profit measure used by the Board to assess the underlying financial performance of the operating divisions and the Group as a whole. 'Headline operating profit' is stated before amortisation or impairment of acquired intangible assets, acquisition costs, exceptional costs, share-based payments and share of results of jointly controlled entities.

'Headline operating cash flow' is the key operating cash flow measure used by the board to assess the underlying cash flow of the Group.   'Headline operating cash flow' is the headline net cash flow from operating activities, and is stated before payments relating to exceptional costs, and acquisition costs.

'Adjusted earnings per share' is the key earnings per share measure used by the Board.   'Adjusted earnings per share' is stated before amortisation or impairment of acquired intangible assets, exceptional restructuring costs, acquisition costs, and share-based payments.

In the six month period ending 31 December 2012, the Group incurred acquisition costs of £0.7 million in relation to the acquisitions of HDM, these were paid in the same period in which they were incurred.

In the year ended 30 June 2012, exceptional costs of £4.9 million related to redundancy and restructuring costs incurred following the strategic and operations review carried out by the Directors, plus an onerous lease and dilapidations provision.   Payments in relation to these costs have been made within the six month period ending 31 December 2012.

 

4.   Taxation

The tax charge for the six months to 31 December 2012 is based on the estimated tax rate for the full year in each jurisdiction.

 

5.   Earnings per share (EPS)

 

 

 

6 months ended

31 December 2012

6 months ended

31 December 2011

Year ended

30 June 2012

 


(unaudited)

(unaudited)

(audited)



pence

pence

pence

EPS Summary





Basic earnings per share


5.88

5.08

3.33

Diluted earnings per share


5.62

5.00

3.31

Adjusted earnings per share


7.96

6.76

13.85

Diluted adjusted earnings per share


7.60

6.66

13.75

 

Number of shares

 

'000s

'000s

'000s

Weighted average number of shares used to calculate earnings per share





-       Basic


43,060

42,670

42,670

-       Diluted


45,070

43,345

43,005

 

On 22 February 2013, all the share options under the ISP long term incentive arrangement vested.  The details of the ISP scheme have been previously outlined in the financial statements for the year end 30 June 2012.    If the vesting had occurred on 31 December 2012, the basic number of shares in issue at that date would have been approximately 45.2 million.

 

 

 

 

6 months ended

31 December 2012

6 months ended

31 December 2011

Year ended

30 June 2012

 


(unaudited)

(unaudited)

(audited)

 


£'000

£'000

£'000

Profit for the period


2,532

2,168

1,423

Reconciliation to adjusted profit:

 





Exceptional restructuring costs


-

-

3,637

Acquisition costs


673

438

394

Amortisation of acquired intangible assets (net of tax)


27

150

177

Share-based payments


194

130

281

 


3,426

2,886

5,912

 

 

6.   Dividends

The Group will pay an interim dividend of 0.67 pence per Ordinary Share in respect of the six months to 31 December 2012 (H1 2011: nil) on 7 June 2013 to shareholders on the register on 10 May 2013.

 

7.   Net debt

 


 

6 months ended

31 December 2012

6 months ended

31 December 2011

Year ended

30 June 2012


 

(unaudited)

(unaudited)

(audited)


 

£'000

£'000

£'000

Cash


5,750

4,629

2,727

Bank borrowings


(13,495)

(8,751)

(5,604)

Net debt


(7,745)

(4,122)

(2,877)

 

The facility available to the Group is £23.25 million (30 June 2012: £23.25 million; 31 December 2011: £16.25 million). The facility expires on 31 October 2015.

 

 

8.   Acquisition of HDM Group of Companies

On 31 August 2012, the Group completed its acquisition of all of the issued share capital of Plataforma HDM Técnologica S.A. and Plataforma HDM Tecnologica S.A. de C.V and the trade and assets of HDM Plataforma Logística S.L., HDM Soluciones Integrales de Reparacion S.L. and HDM Moviltech Servicio Técnico S.L. together comprising the entire operations of the HDM Group of Companies ("HDM").

 

HDM is a leading provider of aftermarket services, including reverse logistics and repair, to network operators and mobile telephone manufacturers in Spain, Mexico and Argentina. HDM's key customers include Telefonica, Samsung and Nokia.

 

The addition of high-quality business in Spain, where HDM has a 20% market share in mobile repair, significantly enhances Regenersis' European customer proposition. The acquisition also provides a strong exposure to new Emerging Markets and a platform for further future expansion into Latin America.

 

In the four months to 31 December 2012, this acquisition has contributed total revenue of £8.7 million, headline operating profit of £0.4 million, and operating profit of £0.2 million. If the acquisition had been completed on the first day of the financial year, management estimates that consolidated revenue for the six month period to 31 December 2012 would have been £13.1 million, consolidated headline operating profit would have been £0.6 million, and consolidated operating profit would have been £0.3 million. 

 

The HDM business continues to perform well and in line with the Board's expectations

In determining these amounts, management has assumed that the fair value adjustments, determined provisionally, that arose on the date of acquisition would have been the same if the acquisition had occurred on the 1 July 2012.

The provisional book value and fair value of the assets acquired and liabilities assumed were as follows:

 


Book Value

£'000

Fair Value

£'000

Intangible assets

438

438

Intangible assets - customer contracts

-

607

Property, plant and equipment

1,528

758

Other long term assets / guarantees paid

387

387

Inventory

608

419

Trade and other receivables

5,544

5,411

Trade and other payables

(2,484)

(5,433)

Net assets acquired

6,021

2,587

Goodwill


10,849

Total consideration


13,436

 

 

 

Satisfied by:



Cash paid in H1 FY13


5,470

Cash payable in H2 FY13


812

Equity instruments issued


529

Deferred cash


6,625

Total consideration


13,436

 

 

Equity Instruments issued

The fair value of the Ordinary Shares issued was based on the listed share price on the 31 August 2012 which was 90p.

Deferred cash consideration

The acquisition includes an earn-out based on the EBIT as at 30 June 2015, and to be paid on 30 September 2015.  A deferred liability of £6.6 million has been established which represents the fair value at the acquisition date, using a discount rate of 12%. At 31 December 2012 the deferred liability had increased to £6.8 million.

 

Under IFRS 3, "Business Combinations" the only separately identifiable intangible asset arising from the acquisition relates to customer contracts and relationships valued at £0.6 million. The remaining goodwill of £10.8 million can be attributed to the anticipated profitability through the growth of the enlarged group and synergistic benefits and workforce in place.

 

9.   Acquisition of Digital Care Sweden

On 1 November 2012, the Group acquired the effective 50% shareholding in Digital Care Sweden which it did not already own. Prior to this acquisition it was a wholly owned subsidiary of an equity accounted JV (Regenersis Sweden Ltd) with an investment value of £NIL.

In the two months to December 2012, this acquisition has contributed total revenue of £0.1 million.

The provisional book value and fair value of the assets acquired and liabilities assumed were as follows:

 



Book Value & Fair Value

£'000

Intangible assets


14

Property, plant and equipment


1

Cash


253

Inventory


104

Trade and other receivables


163

Trade and other payables


(818)

Net liabilities acquired


(283)

Goodwill


288

Total Consideration


5

 

 

 

Satisfied by:



Cash


5

Total Consideration


5

 

There is not considered to be a material difference between book value and fair value of the assets and liabilities acquired. No gain or loss was recognised on the disposal of the non controlling equity interest in DC Sweden.

 

10.  Cash flow - Acquisition of subsidiaries, net of cash acquired

Within the consolidated cash flow statement, the cash flow relating to acquisition of subsidiaries, net of cash acquired is reconciled as per the table below:

 



£'000

HDM acquisition - initial cash consideration


4,643

HDM acquisition - payment in H1 FY13 for working capital adjustments


821

DC Sweden acquisition - cash consideration


5

DC Sweden acquisition - cash acquired


(253)

Net cash flow - acquisition of subsidiaries, net of cash acquired


5,216

 

 

11.  Cautionary statement

This document contains certain forward-looking statements with respect of the financial condition, results, operations and businesses of Regenersis plc. These statement and forecasts involve risk and uncertainty because they relate to events and depend on circumstances that will occur in the future. There are a number of factors that could cause the actual result or developments to differ materially from those expressed or implied by these forward looking statements and forecasts. Nothing in this document should be construed as a profit forecast.

 

12.  Copies of the interim report

Further copies of the interim report are available from the registered office, Regenersis Plc, 4th Floor, 32 Wigmore Street, London, W1U 2RP or on the Company's website - www.regenersis.com.

 


This information is provided by RNS
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