GoIndustry-DoveBid plc / Index: AIM / Epic: GOI / Sector: Support Services

 

3 May 2011

GoIndustry-DoveBid plc ('GoIndustry DoveBid' or 'the Group')

Preliminary results

 

GoIndustry DoveBid, the global provider of asset management, disposition and valuations services for industrial and financial clients, announces its preliminary results for the year ended 31 December 2010.

 

Overview

 

GoIndustry DoveBid delivers innovative solutions that value assets accurately, optimise asset utilisation, properly dispose of surplus assets 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.

 

Results Summary

For the year ended 31 December 2010

                                                                                                       

	2010 �000's	2009 �000's
Direct Profit	27,811	25,274
Adjusted* profit/(loss) before tax	613	(1,442)
Exceptional items	(409)	(2,187)
Other charges	(893)	(1,036)
Loss before taxation	(689)	(4,665)
Adjusted* earnings per share	9.6p	(26.9p)
Adjusted* diluted earnings per share	9.6p	(26.9p)
Loss per share basic and fully diluted	(3.7p)	(78.2p)

 

* Adjusted profit/ (loss) before tax and adjusted profit/ (loss) per share are before exceptional charges, amortisation of acquired intangible assets and an IFRS charge for share-based payments

*2009 numbers have been restated to account for the share consolidation.

 

Chairman's Statement

 

I am pleased to report on the progress GoIndustry DoveBid has made during 2010.  The Group delivered a robust trading performance for the year ended 31 December 2010 and reported adjusted profits before tax for the third consecutive six month period.  We have developed a number of corporate initiatives, which we believe will enhance the future performance of the Group.     

 

In September 2010, we launched Go-Optimize�, which is a managed one-stop service solution to help clients achieve a better return on their equipment.  In addition, we have continued to increase our emphasis on our multinational corporate accounts utilising our global presence and our understanding of used equipment markets.  Large corporations are increasingly focused on efficiently managing and realising value from both under-utilised and redundant assets.  Our global footprint of thirty-six offices across twenty countries, combined with our online auction platform and extensive industry experience, provides us with a significant competitive advantage in servicing global corporations. We believe this streamlined corporate focus will provide the Group with additional opportunities to generate repeat business that will give GoIndustry DoveBid greater earnings visibility going forward.

 

In 2010, we continued to provide the highest level of service to our growing list of clients.  I am pleased to report that the excellence of our services has been recognised during the period with the following awards:

 

• Proctor and Gamble Supplier of Excellence Award 2010 (also 2009)
• Pepsi Supplier of the Year 2010 (also 2009)
• Intercontinental Finance Magazine 'Asset Valuation & Appraiser of the Year' for 2010
• Finance Monthly Magazine 'Asset Appraiser Firm of the Year' for 2010
• ACQ Asset Appraiser of the Year 2010 (also 2009 and 2008)

 

Financial performance

 

The financial results for the year ended 31 December 2010 highlight the incisive actions taken in 2009.  These actions significantly reduced fixed costs and focused on higher margin trading activities.  This has resulted in sustained revenue generation and margin expansion, which in turn has helped improve profitability.

 

The continued focus on margin improvement and cost control resulted in an improvement in most of the key operating metrics.  The Group increased Direct Profit by 10.0% from �25.3m in 2009 to �27.8m in 2010.  Adjusted profit before tax improved from an adjusted loss before tax in 2009 of �1..4m to an adjusted profit before tax of �0.6m, before charges for amortisation of acquired intangibles of �0.7m (2009: �0.7m), share based payments of �0.2m (2009: �0.3m), and an exceptional charge of �0.4m (2009: �2.2m) which related primarily to the changes to the Board and to the restructuring of the North American legal entities.  The Group's loss before tax improved significantly from a loss in 2009 of �4.7m to a loss of �0.7m in 2010.

 

At 31 December 2010 the Group had sufficient liquidity with a positive cash position (excluding client funds on deposit) of �3.7m and headroom of �5.1m on its working capital facilities.  In addition, at 31 December 2010 the Group had �12.2m (2009: �16.2m) of client funds on deposit.  Short term borrowings amounted to �2.1m.

 

Basic earnings per share showed a loss of 3.7p (2009: loss of 78.2p after adjusting for the share consolidation).  Adjusted basic earnings per share for the year was 9.6p (2009: loss 26.9p), 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.

 

Board

 

In July 2010, we were delighted to welcome Leslie-Ann Reed to the Board as Chief Financial Officer. Leslie-Ann has significant experience in senior executive financial management roles for several multi-national public companies. Prior to joining GoIndustry DoveBid, she was the CFO at Metal Bulletin plc, a quoted business-to-business information service organisation.

 

Outlook

 

2010 has been an important year for GoIndustry DoveBid. We have put the 2009 restructuring behind us and taken actions to better position the Group for future growth.  We have leveraged our global strengths, realised market opportunities and have made a marked move to focus on corporate-led business as the core basis of a growing, resilient, scalable and geographically diverse business. We expect, in light of a strong pipeline of contracted business and other opportunities, to see continued improvement in the Group's performance in FY2011, despite softness of the first quarter sales in North America.

 

Looking ahead, we will continue to focus on the existing corporate-led business and on winning new multi-year global corporate accounts. This will bring greater visibility to revenue, and will help improve both profits and cash flow.  I believe we are in a stronger position, and anticipate continuing improvement in the Group's performance.

 

Finally, I would like to thank the Board and all of our employees for their hard work and commitment over the period, and our shareholders for their continued support of our strategy which I believe will continue to serve us well in the coming years.

 

Neville Davis

Non-Executive Chairman

3 May 2011

 

Business Review

 

GoIndustry DoveBid is the global market leader in the provision of surplus asset management, online auction and valuation services for the industrial & financial marketplaces.  These financial results show the significant improvement that has been made by the Group in 2010.  We believe the market opportunity should be great, and 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 disposal needs of corporations.

 

Business objectives and strategy

 

GoIndustry DoveBid's key strategy is focused on delivering sustainable and growing profits for the Group by providing a complete set of services to assist corporate clients in maximising the value of their surplus industrial assets.  We believe the corporate market will provide a solid environment for medium term growth and will deliver long term benefits for the Group, as it provides more recurring revenues than the traditional auction business which is more transactional in nature.  We aim to deliver sustainable profit growth in our key vertical markets by:

 

• accelerating growth of corporate accounts by improving the breadth and depth of existing client relationships as well as signing new accounts;
• focusing investment on our proprietary online auction platform and our AssetZone� asset management tools to manage our business and our clients transactions more efficiently;
• continually increasing the effectiveness of our sales and marketing capabilities to access new market opportunities;
• constantly improving the global quality of our services to clients; and
• penetrating the corporate Investment Recovery services space by providing a comprehensive superior solution.

 

The Group has several compelling differentiators upon which to build. Our exceptional professional knowledge of the used equipment market, combined with a broad service offering and global coverage, has put the Group at the forefront of assisting large corporations to pro-actively manage their surplus industrial assets.  In September 2010, GoIndustry DoveBid launched Go-Optimize�, which offers a complete set of managed services and tools to recover value from used assets through utilising our:

 

• valuation and appraisal services;
• online or webcast auctions;
• AssetZone� asset management and redeployment tool; and
• Industry specific online marketplaces, such as the highly successful BioPharma Exchange.

 

The objective of Go-Optimize� is to achieve outstanding results for clients by generating cash from asset sales, cash savings from reduced capital expenditure, and delivering a highly focused, highly efficient and transparent asset management programme.

 

Operational highlights

 

The continued focus on margin improvement and cost control ensured that the Group achieved an improvement across all income streams, and as a result, Direct Profit increased by 10.0% to �27.8m (2009: �25.3m).

 

We increased our focus on commission sales, especially multi-year service arrangements with large global corporations ('Corporate Forward Flow' or 'CFF' accounts).  In addition, we continued to reduce our principal business, which exposes the Group to financing commitments and fluctuations in asset values.  As a result, Direct Profit on Commission Sales of �20.8m (2009: �17.7m) accounted for 75% of total Direct Profit compared to 70% in 2009. The proportion of sales conducted online also changed significantly, increasing to 86% (2009: 70%).  This was primarily due to more corporate activity, as well as the growing popularity of the Group's Industry Exchanges, which are increasingly becoming a recurring destination site for buyers and sellers of used equipment.

 

Our North American business showed strong momentum, and delivered a robust performance, with Direct Profit up 18.7% at �15.6m (2009: �13.1m).  Commission Sales experienced strong growth with Direct Profit up 20.6% to �11.0m (2009: �9.1m) representing 70% (2009: 69%) of total Direct Profit.  Much of this increase was due to greater penetration of existing accounts.  This overall strong performance more than compensated for the weaker market conditions experienced in Professional Services where Direct Profit from valuations was down 19.5% to �2.0m (2009: �2.5m).  The Principal Deals business delivered growth of �1.1m over 2010 to �2.6m (2009: �1.5m).

 

Our business in Europe showed solid improvement over the previous year, delivering Direct Profit of �9.2m, up 4.8% (2009: �8.8m).  As in North America, we saw an improvement in Commission Sales, with Direct Profit up 19.7% to �7..3m (2009: �6.1m), which more than offset the slight decline in Direct Profit from Professional Services, down �0.5m on 2009 to �1.8m.  Again, this was mainly due to challenging conditions in the asset based lending market.  Towards the end of the year valuations work recovered in Europe mainly due to greater demand in the UK.  Direct Profit on Principal Deals was �0.1m down from �0.3m compared with 2009.

 

The demand for our services from sellers of assets in the Asia Pacific region ('APAC'), where we continue to invest for future growth, recovered more slowly than anticipated.  This resulted in a decrease in Direct Profit of 10.3% to �3.0m (2009: �3.3m).  Activity from buyers and sellers in APAC, however, is now increasing, particularly in China. We view this as a strong growth opportunity where we are very well positioned compared to any competitors.

 

The Group derives more than half of its Direct Profit in US dollars, so movements in the Sterling-US dollar rate affect our reported Direct Profit.  The average Sterling-US dollar exchange rate for 2010 was US$1.547, against US$1.561 a year ago.  The impact of exchange rates in 2010, although not significant, has reinforced the improvement in North American Direct Profit.

 

The Group continues to actively manage its cash flow and at 31 December 2010 reported a net positive cash position (excluding client funds on deposit and borrowings) of �0.5m, an improvement on the positive net cash balance of �0.2m at 31 December 2009.  In 2010, the Group disposed of a warehouse in Germany for �0.5m, which was no longer required due to the increasing number of online auctions.

 

GoIndustry DoveBid is committed to continually improving the quality of services to clients, and improving operational excellence, efficiency and financial results.  In 2010 the Group released major upgrades to customer-facing systems to improve user experience for both new and existing clients.  These enhancements continue on a monthly basis, and are an important focus in 2011 and beyond.

 

Overview of the Group's financial performance

 

For the year ended 31 December 2010 the Group generated Revenues of �40.1m down 4.5% from �42.0m in 2009, mainly due to a change in the mix of business.  However, due to improved margins across the board, our key measure of top line performance, Direct Profit, was up a very creditable 10..0% to �27.8m (2009: �25.3m) with an increased margin up from 60.2% in 2009 to 69.3% in 2010.  The main driver of growth within Direct Profit was Commission Sales where Direct Profit was up 17.3% to �20.8m (2009: �17.7m).  The overall softness in the financial lending markets, adversely affected Professional Services. This resulted in valuations fees being down 21.0% to �4.2m (2009: �5.3m).  Principal Deals, which are transactional in nature, saw Direct Profit increase by 26.3% to �2.8m (2009: �2.2m).

 

During the year, the Group invested in its selling capabilities.  This investment, together with the associated increase in sales commissions, primarily led to adjusted administration costs increasing by 4.1% to �26.9m (2009: �25.9m).  The combined effect of Direct Profit increasing by 10.0% and Administration costs rising by 4.1% resulted in Adjusted EBITDA of �1..5m compared to �0.1m in 2009. Margin on Direct Profit was 5.5% compared to 0..3% in 2009.

 

The Adjusted Profit before Tax was �0.6m, a significant improvement over the loss of �1.4m in 2009.

 

Reported Loss before Tax was �0.7m compared to a loss before tax of �4.7m in 2009, reflecting the exceptional costs of �0.4m (2009: �2.2m), amortisation of acquired intangibles of �0.7m (2009: �0.7m) and share based payment charges of �0.2m (2009: �0.3m).

 

Exceptional costs

 

During the year the Group incurred exceptional costs of �0.4m mainly due to the changes to the Board, and the restructuring of the legal entities within the North American structure.  The objective of the restructuring was to make the Group more efficient for both management and administrative purposes.  In 2009 the Group incurred exceptional costs of �2.2m, in relation to reorganisation of the Board, the Group and its financing, as well as the disposal of an associated entity.

 

Taxation

 

In recent years the Group has not recognised any deferred tax asset arising from tax losses as there was no certainty that these losses would be utilised in the foreseeable future.  With improved results, it is now considered that this situation has changed, and so a deferred tax asset has been recognised, and will be available to offset any taxable gains.  Not all countries warrant recognition of a deferred tax asset as yet, but the Group regularly reviews this situation.

 

Earnings per share

 

Adjusted basic Earnings per Share was 9.6p against an adjusted loss of 26.9p in 2009 after adjusting for the effect of the share consolidation.

 

Basic Loss per Share was 3.7p (2009: loss 78.2p).  Earnings and Adjusted Earnings per Share are calculated on the weighted average number of New Ordinary Shares in issue of 9,790,481 for the year ended 31 December 2010 (2009: 628,415,117 Ordinary Shares equivalent to 6,284,151 New Ordinary Shares).

 

Dividend

The Board does not recommend a dividend for the year (2009: nil).

 

Balance sheet and net cash

 

At 31 December 2010 the Group had net cash, after borrowings, of �0.5m (2009: Net cash: �0.2m).  The Group ended the year with bank borrowings of �2.2m (2009: �3.4m) drawn against total facilities of �7.3m.  Other borrowings comprised convertible loan notes of �0.5m (2009: �0.5m) and subordinated loan notes of �0.5m (2009: �0.5m).  Since the end of the financial year the Group has renewed its main bank facilities for another year.  The Group's cash balance and borrowing capacity are expected to provide sufficient liquidity for operations.

 

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 principally comprised of bank borrowings, cash, and various other items that arise directly from its 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, 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, 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 denominated in US dollars, the Board has chosen a credit facility with a floating rate of interest linked to US Prime Rate with a margin of 0.75% and for borrowings denominated in Sterling the 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$1.9m and �0.3m, subordinated debt of �0.5m.  There are also revolving credit facilities for Principal Deals of US$3.5m and Working Capital of US$5.5m, both of which are committed until April 2012.

 

c) Foreign currency risk

The Group has a substantial overseas customer base and maintains bank accounts in foreign currency converting this currency 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.  This year the Group delivered an improved performance against the majority of financial and operational targets.  By continuing to focus on these essential benchmarks, the Group has been able to concentrate on mitigating the adverse effects of the global recession and produce creditable results whilst establishing a more resilient and efficient platform to support future growth.

 

Revenue measures

 

Gross asset sales ('GAS') for 2010 was �145.6m, 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 level 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 2010, Adjusted Profit before Tax improved significantly turning the 2009 loss of �1.4m into a profit of �0.6m.

 

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 2010, Adjusted basic Earnings per Share was 9.6p per share (2009: Adjusted basic loss of 26.9p after adjusting for the share consolidation during the year.  The increase reflects the improved overall performance of the Group.

 

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 entities to realise the value of redundant assets
• specialist professional valuation and appraisal services;
• AssetZone� - proprietary web-based portal for managing corporate assets;
• Industry Exchanges - providing recurring online B2B global marketplaces.

 

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.  Reflecting the improved Direct Profit and improved operational efficiency, our Adjusted Operating Margin for 2010 increased to 3.2%, compared to a negative margin of 2.3% in 2009.

 

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 the 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.

 

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 where we operate.

 

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.  Data published by The Economist shows that 25% of global manufacturing output is still produced in North America, and the major economies of the European Union follow close behind.

 

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 statement of comprehensive income
		Year ended 31 December 2010						Year ended 31 December 2009
		Before exceptional items and other charges	Exceptional items (note 5)	Other charges (note 6)		Total		Before exceptional items and other charges	Exceptional items (note 5)	Other charges (note 6)	Total
		�'000	�'000	�'000		�'000		�'000	�'000	�'000	�'000
	Note	(unaudited)					(audited)
Revenue		40,094	-		-	40,094		41,990	-	-	41,990
Cost of sales		(12,283)	-		-	(12,283)		(16,716)	-	-	(16,716)
Direct profit		27,811	-		-	27,811		25,274	-	-	25,274
Administrative expenses		(26,926)	(409)		(893)	(28,228)		(25,857)	(1,773)	(1,036)	(28,666)
Operating profit/(loss)		885	(409)		(893)	(417)		(583)	(1,773)	(1,036)	(3,392)
Finance costs
Interest income		82	-		-	82		141	-	-	141
Finance costs		(354)			-	(354)		(972)	(414)	-	(1,386)
		(272)	-		-	(272)		(831)	(414)	-	(1,245)
Share of loss of associate		-	-		-	-		(28)	-	-	(28)
Profit /(loss) before income tax		613	(409)		(893)	(689)		(1,442)	(2,187)	(1,036)	(4,665)
Income tax credit/(charge)	7					227					(170)
Loss for the year						(462)					(4,835)
Other comprehensive income
Currency translation differences						(235)					(2,130)
Actuarial gains/(losses) on defined benefit pension fund						687					(2,150)
Other comprehensive income for the year						452					(4,280)
Total comprehensive income for the year						(10)					(9,115)
Loss attributable to:
Equity holders of the Company						(359)					(4,916)
Non-controlling interests						(103)					81
						(462)					(4,835)
Total comprehensive loss attributable to:
Equity holders of the Company						93					(9,196)
Non-controlling interests						(103)					81
						(10)					(9,115)
Loss per share
Loss per share attributable to owners of the parent during the year
Basic *	8					(3.7p)					(78.2p)
Diluted *	8					(3.7p)					(78.2p)
* 2009 loss per share restated for the share restructuring (see note 11)

 

Consolidated statement of financial position
As at 31 December 2010
		2010			2009
	Note		�'000		�'000
			(unaudited)		(audited)
Non-current assets
Property, plant and equipment			350		1,026
Intangible assets			32,178		32,335
Deferred tax asset			327		-
			32,855		33,361
Current assets
Inventories			334		597
Trade and other receivables			5,515		6,649
Cash and cash equivalents			15,920		20,751
			21,769		27,997
Total assets			54,624		61,358
Current liabilities
Trade and other payables			9,185		9,375
Due to clients			12,237		16,236
Borrowings	9		2,053		2,317
			23,475		27,928
Non-current liabilities
Trade and other payables			10		358
Borrowings	9		1,162		2,048
Retirement benefit obligations			3,358		4,581
			4,530		6,987
Total liabilities			28,005		34,915
Net assets			26,619		26,443
Equity
Share capital	11		98		9,745
Share premium	11		22,983		22,495
Shares to be issued			-		542
Capital redemption reserve			28,609		18,908
Other reserves			54,278		54,327
Accumulated losses			(79,508)		(79,836)
Capital and reserves attributable to owners of the parent			26,460		26,181
Non-controlling interests			159		262
Total equity			26,619		26,443
Jack Reinelt	Leslie-Ann Reed
Chief Executive Officer	Chief Financial Officer
Registered in England No. 5381812

 

Consolidated statement of changes in equity
For the year ended 31 December 2010
	Attributable to owners of the parent
	Share capital	Share premium	Capital redemption reserve	Shares to be issued	Own shares held in trust	Acquisition reserve	Share options reserve	Foreign currency reserve	Accumulated losses	TOTAL	Non-controlling interest	TOTAL Equity
	�'000	�'000	�'000	�'000	�'000	�'000	�'000	�'000	�'000	�'000	�'000	�'000
At 1 January 2010 (audited)	23,583	18,872	-	542	(974)	47,649	1,322	7,236	(71,882)	26,348	181	26,529
Comprehensive income:
Loss for the period	-	-	-	-	-	-	-	-	(4,916)	(4,916)	81	(4,835)
Other comprehensive income:
Actuarial loss on defined benefit pension scheme	-	-	-	-	-	-	-	-	(2,150)	(2,150)	-	(2,150)
Currency translation differences	-	-	-	-	-	-	-	(2,130)	-	(2,130)	-	(2,130)
Total comprehensive income:	-	-	-	-	-	-	-	(2,130)	(7,066)	(9,196)	81	(9,115)
Transactions with owners:
Cancellation of shares	(18,908)	-	18,908	-	888	-	-	-	(888)	-	-	-
New shares issued	2,657	2,126	-	-	-	-	-	-	-	4,783	-	4,783
Conversion of loan notes	2,413	1,923	-	-	-	-	-	-	-	4,336	-	4,336
Cost of share issue	-	(426)	-	-	-	-	-	-	-	(426)	-	(426)
Share based payments	-	-	-	-	-	-	250	-	-	250	-	250
Transfer of shares	-	-	-	-	86	-	-	-	-	86	-	86
Total transactions with owners:	(13,838)	3,623	18,908	-	974	-	250	-	(888)	9,029	-	9,029
At 1 January 2010 (audited)	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 period	-	-	-	-	-	-	-	-	(359)	(359)	(103)	(462)
Other comprehensive income:
Actuarial gain on defined benefit pension scheme	-	-	-	-	-	-	-	-	687	687	-	687
Currency translation differences	-	-	-	-	-	-	-	(235)	-	(235)	-	(235)
Total comprehensive income:	-	-	-	-	-	-	-	(235)	328	93	(103)	(10)
Transactions with owners:
New shares issued	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 31 December 2010 (unaudited)	98	22,983	28,609	-	-	47,649	1,758	4,871	(79,508)	26,460	159	26,619

 

Consolidated statement of cash flows
For the year ended 31 December 2010
		Year ended 31 December
		2010	2009
	Note	�'000	�'000
		(unaudited)	(audited)
Cash flows from operating activities
Cash (used by)/generated from operations	10	(3,550)	3,212
Interest paid		(354)	(1,116)
Income tax paid		(31)	(156)
Interest received		82	141
Net cash  (used in)/generated from operating activities		(3,853)	2,081
Cash flows from investing activities
Purchases of property, plant and equipment		(64)	(94)
Proceeds from sale of property, plant and equipment		542	91
Purchases of intangible assets		(615)	(394)
Net cash used in investing activities		(137)	(397)
Cash flows from financing activities
Proceeds from issuance of ordinary shares		-	4,087
Decrease in borrowings		(1,150)	(1,815)
Net cash (used in)/generated from financing activities		(1,150)	2,272
Net (decrease)/increase in cash and cash equivalents		(5,140)	3,956
Cash and cash equivalents at the beginning of the year		20,751	18,037
Effect of foreign exchange rate changes		309	(1,242)
Cash and cash equivalents at the end of the year		15,920	20,751

 

 

Notes to the condensed consolidated financial statements

 

1.       General information

GoIndustry-DoveBid plc ('the company') and its subsidiaries (together 'the Group') is the global market leader in the provision of asset management, auction and valuation services relating to industrial equipment.

The Group has offices in locations across Europe, North America, and Asia.

The company is a public limited company incorporated and domiciled in the United Kingdom.  The address of its registered office is 1-6 Lombard Street, London, EC3V 9JU.

The company is listed on the Alternative Investment Market (AIM) of the London Stock Exchange (GOI).

 

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 2010 have been extracted from the unaudited financial statements for the year ended 31 December 2010, 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. The figures for the year ended 31 December 2009 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.

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 2009.

 

4.       Segmental analysis

Management has determined the operating segments based on the reports reviewed by the Board, acting as the strategic steering committee that are used to make strategic decisions. The Board considers the business both from a geographical and a revenue stream 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, 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 and Operating Profit levels.

(a)        Geographical analysis

Year ended 31 December 2010	Europe	North America		Asia Pacific		Corporate		Consolidated
(Unaudited)	�'000	�'000		�'000		�'000		�'000
Revenue	14,649	21,534		3,911		-		40,094
Direct  profit	9,218	15,616		2,977		-		27,811
Segment result	1,375	2,865		(206)		(3,169)		885
Exceptional items	(48)	-		(66)		(295)		(409)
Other costs	-	-		-		(893)		(893)
Operating profit/(loss)	1,327	2,885		(272)		(4,357)		(417)
Finance (costs)/income - net	(58)	(220)		22		(16)		(272)
Profit/(loss) before income tax	1,269	2,665		(250)		(4,373)		(689)
Income tax (expense)/credit	(20)	216		31		-		227
Profit/(loss) for the year	1,249	2,881		(219)		(4,373)		(462)
Depreciation and amortisation	277	472		153		451		1,353
Segment assets	12,711	34,753		3,632		3,528		54,624
Segment liabilities	11,127	12,078		1,857		2,943		28,005
Capital expenditure:
Property, plant and equipment	8	34		22		-		64
Intangible assets	154	-		-		461		615

 

 

 

Year ended 31 December 2009	Europe	North America		Asia Pacific		Corporate		Consolidated
(audited)	�'000	�'000		�'000		�'000		�'000
Revenue	15,165	22,016		4,809		-		41,990
Direct  profit	8,798	13,158		3,318		-		25,274
Segment result	321	766		499		(2,169)		(583)
Exceptional items	(620)	4		(223)		(934)		(1,773)
Other costs	-	-		-		(1,036)		(1,036)
Operating (loss)/profit	(299)	770		276		(4,139)		(3,392)
Finance (costs)/income - net	(57)	(590)		18		(202)		(831)
Convertible loan note restructuring interest	-	-		-		(414)		(414)
Share of loss of associate	-	(28)		-		-		(28)
(Loss)/profit before income tax	(356)	152		294		(4,755)		(4,665)
Income tax expense	(6)	(45)		(119)		-		(170)
(Loss)/profit for the year	(362)	107		175		(4,755)		(4,835)
Depreciation and amortisation	290	511		240		328		1,369
Segment assets	15,348	38,456		3,682		3,872		61,358
Segment liabilities	9,487	20,015		1,551		3,862		34,915
Capital expenditure:
Property, plant and equipment	32	50		12		-		94
Intangible assets	150	-		-		244		394

 

 (b)       Revenue stream analysis

	2010	2009
	�'000	�'000
	(unaudited)	(audited)
Revenue
Commission sales	29,874	28,296
Professional services	4,746	6,930
Principal deals	5,474	6,764
	40,094	41,990
Direct profit
Commission sales	20,812	17,745
Professional services	4,186	5,301
Principal deals	2,813	2,228
	27,811	25,274

 

(c)        Revenue from external customers

	2010	2009
	�'000	�'000
	(unaudited)	(audited)
Entity's country of domicile - United Kingdom	8,379	10,407
Foreign countries from which the Group derives revenue:
USA	21,247	22,016
Germany	6,034	3,592
Other Europe	523	1,166
Asia Pacific	3,911	4,809
	40,094	41,990

 

5.       Exceptional costs

 

	Year ended 31 December
	2010	2009
�'000	(unaudited)	(audited)
Reorganisation costs	(91)	(1,140)
Costs associated with Zetabid	-	(265)
Board change costs	(200)	(368)
Legacy costs associated with legal cases	(118)	-
Convertible loan note restructuring interest	-	(414)
	(409)	(2,187)

6.       Other charges

	Year ended 31 December
	2010	2009
�'000	(unaudited)	(audited)
Equity-settled share-based payments	(186)	(336)
Amortisation of acquired intangible fixed assets	(707)	(700)
	(893)	(1,036)

 

7.       Income tax expense

The charge for income tax is accrued using the estimated average annual effective income tax rate for each tax jurisdiction, applied individually to the pre-tax income of each jurisdiction for the year. However, as the Group has tax losses in most jurisdictions, no meaningful average annual effective income tax rate can be calculated. Previously, no deferred tax asset has been recognised in respect of tax losses. However, this year a deferred tax asset has been recognised, as it is now considered that there is sufficient certainty over the recoverability of this asset.

 

8.        Earnings per share

	Year ended 31 December
	2010	2009
	(unaudited)	(audited)
Earnings per share:
Loss for the year attributable to equity holders of the Company - �'000	(359)	(4,916)
Weighted average number of new ordinary shares in issue in thousands*	9,790	6,284
Basic / diluted loss per share - pence per share *	(3.7p)	(78.2p)
As there is a loss for the year, there are no dilutive new ordinary shares
Adjusted earnings per share:
Loss for the year attributable to equity holders of the Company - �'000	(359)	(4,916)
Add back:
Exceptional items	409	2,187
Other costs	893	1,036
Total adjustments	1,302	3,223
Adjusted profit/(loss) attributable to equity holders of the Company - �'000	943	(1,693)
Adjusted basic earnings/(loss) per share - pence per share *	9.6p	(26.9p)
Weighted average number of new ordinary shares in issue in thousands*	9,790	6,284
Dilutive effect of share options in thousands*	56	-
Weighted average number of new ordinary shares for diluted earnings per share	9,846	6,284
Adjusted diluted earnings/(loss) per share - pence per share *	9.6p	(26.9p)
* 2009 loss per share restated for the share restructuring

 

 

 

9.        Borrowings

 

		2010	2009
		�'000	�'000
		(unaudited)	(audited)
Current
Bank loans and overdrafts		1,087	2,084
Convertible loan notes		500	-
Subordinated loan notes		466	233
		2,053	2,317
Non-current
Bank loans		1,162	1,287
Convertible loan notes		-	500
Subordinated loan notes		-	261
		1,162	2,048
Floating rate:
Expiring within one year		1,087	2,084
Fixed rate:
Expiring within one year		966	233
Expiring beyond one year		1,162	2,048
		3,215	4,365

 

 

The fair value of current and non-current borrowings equals their carrying amount, as the impact of discounting is not significant.

The bank loans totalling �2.2m are used to fund principal transactions and working capital and are secured by charges over the assets of the companies and a parent company guarantee from GoIndustry-DoveBid plc.  Subsequent to year-end these facilities were renewed and are in place until 30 April 2012.  There is also a term loan facility that matures on 30 April 2012.  These loans bear floating interest at a rate of 0.75% above US Prime Rate.

The convertible loan notes are held by GoIndustry-DoveBid plc, mature on 31 December 2011 and bear interest at 12% per annum.  The notes are convertible at any time into 1p Ordinary shares at a price of �2.80 per new ordinary share.  The notes may be redeemed by the company at par at any time after 31 December 2010.

The subordinated loan notes are held by DoveBid, Inc. and do not bear interest.  The loan notes are unsecured, subordinated to other debt of the Group and are repayable in 60 monthly instalments ending 30 November 2011.

 

10.    Net cash flow from operating activities

	Year ended 31 December
	2010	2009
	�'000	�'000
	(unaudited)	(audited)
Loss before income tax	(689)	(4,665)
Adjustments for:
Depreciation	256	434
Amortisation	1,097	935
Profit on disposal of PPE	(53)	-
Share based payments	186	336
Net retirement benefit cost	169	117
Finance costs - net	272	1,245
Share of loss from associate	-	28
Pension contributions by Company	(850)	(740)
Changes in working capital:
Inventories	284	1,943
Trade and other receivables	980	3,719
Due to clients	(4,193)	862
Trade and other payables	(1,009)	(1,002)
Cash (used in)/generated from operations	(3,550)	3,212

 

11.     Share capital and premium

 

On 25 February 2010, the Company issued 5,420,000 ordinary shares of 1 pence each in satisfaction of the deferred arrangement on the second anniversary of the acquisition of Dovebid, Inc.

At the Company's AGM on 23 June 2010, the Company announced a restructuring of its equity share capital by consolidating every 100 of its issued ordinary shares of 1 pence each into one new ordinary share of �1.00 each, immediately followed by a subdivision of each �1.00 ordinary share into one new ordinary share of 1 pence (the "New Ordinary Shares") and one deferred share of 99 pence.

On 22 December 2010, the company issued one New Ordinary Share of 1 pence to fund the repurchase of the 9,798,493 deferred shares of 99 pence each created on 23 June 2010. The deferred shares were then immediately cancelled.

 

 

**ENDS**

 

Jack Reinelt	GoIndustry-DoveBid plc	Tel: 020 7098 3700
Leslie-Ann Reed	GoIndustry-DoveBid plc	Tel: 020 7098 3700
Chris Fielding	WH Ireland Ltd (Nominated Adviser)	Tel: 020 7220 0470
Felicity Edwards	St Brides Media & Finance Ltd	Tel: 020 7236 1177

 

 

 

Felicity Edwards

St Brides Media and Finance Ltd

Chaucer House

38 Bow Lane

London

EC4M 9AY

 

Tel: +44 (0) 207 236 1177

Mob: +44 (0) 7748 843871

Fax: +44 (0) 207 236 1188

Email: felicity@sbmf.co.uk

Web: www.stbridesmedia.co.uk