FORM 6-K
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
REPORT OF FOREIGN PRIVATE ISSUER
PURSUANT TO RULE 13A-16 OR 15D-16
OF THE SECURITIES EXCHANGE ACT OF 1934
For the month of April, 2003
VI GROUP PLC
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(Translation of registrant's name into English)
THE MILL, BRIMSCOMBE PORT, STROUD, GLOUCESTERSHIRE GL-52QG, U.K.
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(Address of principal executive offices)
Indicate by check mark whether the registrant files or will file annual reports
under cover Form 20-F or Form 40-F.
Form 20-F X Form 40-F
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Indicate by check mark whether the registrant by furnishing the information
contained in this Form is also thereby furnishing the information to the
Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934.
Yes No X
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If "Yes" is marked, indicate below the file number assigned to the registrant in
connection with Rule 12g3-2(b): 82- ________
EXPLANATORY NOTE
PURPOSE OF FILING
The purpose of this report is to make public in the United States the
preliminary financial report for the Registrant and its subsidiaries for the
year ended December 31, 2002. The summary financial statements included herein
are based on United States generally accepted accounting principles ("US GAAP").
However, they omit footnote disclosures required under US GAAP.
The Company has released results to the London Stock Exchange which have been
prepared in accordance with United Kingdom generally accepted accounting
principles which are presented in pounds sterling (the "UK Results"). The UK
Results have been distributed to the Company's shareholders.
This Report includes forward-looking statements within the meaning of Section
27A of the Securities Act of 1933, as amended (the "Securities Act"), and
Section 21E of the Securities Exchange Act of 1934, as amended (the "Exchange
Act"). All statements regarding the Registrant's expected future financial
position, results of operations, cash flows, financing plans, business strategy,
budgets, projected costs and capital expenditures, competitive positions, growth
opportunities, plans and objectives of management for future operations and
words such as "anticipate," "am confident", "believe," "plan," "estimate,"
"expect," "intend" and other similar expressions are forward-looking statements.
Such forward-looking statements are inherently uncertain, and actual future
results and trends for the Registrant may differ materially depending on a
variety of factors.
The enclosed press release, which is presented in dollars, has been released to
the American Stock Exchange and in the United States as follows:
FRIDAY 4TH APRIL 2003
VI GROUP PLC.
(AIM (VIG) AND AMEX (GVI))
PRELIMINARY RESULTS FOR THE YEAR ENDED 31ST DECEMBER 2002
VI Group Plc. ("VI" or "the Company"), one of the leading software providers to
the mold and die industry, today announces another year of significant growth in
its revenues for the year ended 31st December 2002. Profits have been impacted
by the investments made in acquiring a new product line during the year and
other investments designed to position the Company for future growth, but are
ahead of recent expectations.
SUMMARY
- Revenue up 21.1% to $11.3m (2001: $9.3m)
- EBITDA of $778,000 (2001: $1,492,000)
- Pre tax profits reduced to $376,000 (2001: $1,010,000), but ahead of
recent expectations
- Acquisition of Vero Tooling Systems of Canada completes the VI
presence in the North American market around the "Detroit mold and die
area"
- Acquisition of Machining Strategist business adds 3D CAM distribution
and provides a foundation for enhanced future CAM sales
- Very strong growth in North America, plus continued expansion in
Germany and Italy despite economic uncertainties in all areas
Don Babbs, Chief Executive of VI, commented:
"In a very busy year for VI, we have grown revenues faster than our competitors
and against the background of a poor economic climate. As we envisaged, we have
taken part in the consolidation of the CAM market and invested heavily in the
future expansion of our business. We are confident that product sales will
continue to grow substantially."
- Ends -
FOR FURTHER INFORMATION PLEASE CONTACT:
VI GROUP PLC IN THE UK TEL: +44 (0)1453 732 900
Don Babbs, Chief Executive
Julie Randall, Chief Accountant
VI GROUP PLC IN THE US TEL: +(203) 254 8912
Elliot Miller, Vice Chairman
Attached : Chairman's Statement
Operating and Financial Review
Unaudited Consolidated Balance Sheets
Unaudited Consolidated Statement of Operations
Unaudited Consolidated Statements of Cash Flows
CHAIRMAN'S STATEMENT
VI Group is reporting its financial results for 2002 against a background of
unprecedented world uncertainty - record stock market lows, a further year of
falling UK manufacturing production, US economic difficulties and another
problematic year for the automotive sector. Despite this background, VI has
achieved a 21% growth in revenues to $11.3m (2001: $9.3m) and invested heavily
for its future prosperity, resulting in a pre-tax profit of $0.4m (2001: $1.0m).
We have been quick to put the $4.6m of funds raised in the Spring to good use in
structuring for further growth and in the acquisition of the Machining
Strategist product line. Few companies in our sector have managed to grow sales
significantly during 2002 and these investments have provided for an
acceleration of our future growth plans. There is a lag between the timing of
the investments and the return, and the result was an initial reduction in
profit in the financial year prior to achieving the full sales benefit.
The Company successfully listed on the American Stock Exchange (AMEX) in New
York in October 2002 and this development provides further currency for future
acquisition possibilities in North America where valuations are now more
inviting than before. With this strategy in mind, the Company has entered into
an agreement with Hemisphere Capital to initially provide a convertible loan of
$1.0m with the availability of further acquisition finance in the future.
The Machining Strategist acquisition is an important step in providing a shop
floor based 3D CAM product as part of our mold and die offering and will be a
fundamental element in the portfolio for developing our OEM channels.
The acquisition of the Canadian company of our former distributor Vero Tooling
also provided an opportunity to address seamlessly the important mold and die
corridor between Detroit and Toronto.
Once again, the efforts and sacrifices of our staff in expanding our business
that have been paramount to the year's growth should not be overlooked. Much of
our success has resulted from the efforts of product managers and developers to
provide ever improving products that match customer requirements. These
endeavors have been complemented by the diligence and dedication of our customer
support staff, resulting in further improvements in our software maintenance
business.
The Company continues its twin strategy of broadening the product offering to
achieve organic growth and market share whilst taking an opportunistic approach
to the consolidation of the CAM market.
The current year is, once again, a difficult year to forecast but I am confident
that we will see significant growth following the investments made in 2002.
Stephen Palframan
Chairman
4th April 2003
OPERATING AND FINANCIAL REVIEW
VI Group has produced yet another year of strong revenue growth, an increase of
21% on 2001, against a difficult economic background. The Company grew
particularly strongly in the two highly competitive markets of North America
(where sales more than doubled) and Germany (+18%), thanks to well organized
local sales activities and improved product capabilities. With the exception of
the UK, where the continuing engineering recession had a negative effect on
sales (-3%) our more traditional market strongholds of Italy (+6%) and Japan
(+8%) also grew despite their own market uncertainties.
Following the investment by new and existing institutional investors in April
the Company embarked on a plan to further accelerate growth - in development
terms, completing its product line by providing end to end design- to- build
capabilities; and in sales terms, by the expansion of resources for our direct
sales offices. This foundation for accelerated growth had the short term effect
of keeping earnings before interest, tax, depreciation and amortization (EBITDA)
lower at $778,000 (2001: $1,492,000), and reducing pre-tax profits to $376,000
(2001: $1,010,000).
New Operations
The Company opened new branch offices in France near Lyon and Lille with the
objective of directly addressing the second largest European mold and die
software market. This operation should improve our market presence in a country
where our technology has already been widely acknowledged. Similarly the
purchase of our Canadian distributor, Vero Tooling also provides us with an
opportunity to build on their experience in the important 'border' mold and die
sector by integrating the operation with our existing Detroit office. Since the
acquisition in July, the two offices have been working closely together on some
of the largest mold builder accounts in North America.
The most significant event of the year was our largest acquisition to date. The
Company purchased the Machining Strategist business belonging to NC Graphics
(Cambridge) Ltd.: Machining Strategist is a 3D computer aided manufacturing
(CAM) product with a good reputation as a fast and easy to use CAM system. The
development team now forms our Cambridge based Technology Center from which we
will further develop Machining Strategist as an automated shop floor programming
system. Many of Machining Strategist's techniques will be incorporated in our
VISI-Series products during this year.
Operating Expenses
Gross profit increased to $8.9m, representing 79% of revenue (2001: $7.3m and
78%) after deducting the cost of product sales and providing maintenance
services.
Selling expenses rose 51% to $4.4m attributable in part to the new activities
outlined above as well as the inclusion of the first full financial year of
operation of the Detroit office. Administrative expenses were 47% higher at
$2.5m for similar reasons. The Company also strengthened its information
technology infrastructure to one more appropriate for its expanded activities
and this contributed to increased administration costs.
Product Development and Other Operating Income
The last quarter saw a new release of VISI-Series which includes a large number
of additional design capabilities for the production of electrodes, automatic
drilling of complex mold plates, the parametric design of progressive die strips
and numerous 3D modeling features. These additions have been well received by
distributors and customers alike and place VISI-Series very firmly in the lead
as a premier mold design package. Product development costs increased slightly
at $1.2m but this fails to reflect an underlying growth of about 37% when the
effects of development grants are excluded and are the result of additional
investments made in expanding the breadth of the product.
The Company finally received approval of its application for a Eureka grant
based on a collaborative European research and development project for mold
making software. The project started in July 2001 and is scheduled to continue
until the end of December 2003. This grant has been partially recognized as a
reduction of development costs.
Taxation and Earnings per Share
The Company made a loss of $74,000 (2001: Profit of $595,000) after applying a
tax charge of $450,000. Most of this tax charge originates in Italy. It includes
taxes not relating directly to current profitability and so distorts any
calculation of a tax rate as measured against pre-tax profits.
Basic and fully diluted losses per share were 0.2 cents (2002: Earnings per
share 2.9 cents) reflecting the tax charge and reduced pre-tax profit.
Cash flow and net funds
Cash outflow from operations was $0.5m compared to $0.1m in 2001 as a result of
the additional spending in the expansion of sales outlets and the product line.
Cash balances at the year end were $1.9m (2001: $0.7m), with $0.7m of short-term
borrowings (2001: $0.6m), giving a net cash figure of $1.2m (2001: $0.1m). The
increase in net funds reflects the residual amount of cash remaining from the
funds raised earlier in the year.
FINANCE RAISING AND INVESTOR ACTIVITIES
The Company raised $4.6m of funds from institutional investors in May against
the issue of 14.7 million new shares. Both new and existing institutional
shareholders participated in this placement which has undoubtedly assisted the
Company in accelerating its growth.
The Company proceeded with its plan to list American Depositary Receipts
("ADR's") on the American Stock Exchange and trading commenced on October 28th
2002 with each ADR representing twenty underlying common shares.
In conclusion, 2002 has been a growth year in which we have invested for future
returns. Naturally, not all of these activities could bear their full fruit
during 2002 and we expect still further growth during the coming year.
Don Babbs
Chief Executive
4th April 2003
Note: As the Company is listed on both the London Stock Exchange AIM market and
the American Stock Exchange (AMEX) it is issuing two simultaneous announcements
concerning the results. The results will appear differently in each announcement
as they are made in UK and US$ and according to the differing UK and US
accounting standards ("GAAP").
VI GROUP PLC.
UNAUDITED CONSOLIDATED BALANCE SHEETS
YEAR ENDED
31 DECEMBER
2002 2001
$'000 $'000
ASSETS:
CURRENT ASSETS:
Cash and cash equivalents 1,907 746
Accounts Receivable, net of allowance
For doubtful accounts of $376, $115 6,673 4,347
Inventory 32 40
Prepaid expenses and other assets 2,343 1,173
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TOTAL CURRENT ASSETS 10,955 6,306
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Property Plant and Equipment net 1,024 573
Accounts and loan note 118 536
Other assets 3,285 731
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TOTAL ASSETS 15,382 8,146
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LIABILITIES AND SHAREHOLDERS EQUITY
CURRENT LIABILITIES:
Bank overdraft and other short term debt 758 627
Current portion of long term debt 122 86
Accounts payable 923 766
Accrued liabilities and other creditors 2,506 1,524
Income taxes 396 251
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TOTAL CURRENT LIABILITIES 4,705 3,254
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Capital lease obligations 224 56
Bank & Mortgage loans 13 29
Accrued liabilities 389 280
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TOTAL LIABILITIES 5,330 3,619
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SHAREHOLDERS' EQUITY
Common stock 292 175
Additional paid-in capital 8,922 4,286
Retained earnings (accumulated defecit) 646 720
Accumulated other comprehensive income (loss) 192 (654)
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TOTAL SHAREHOLDERS' EQUITY 10,052 4,527
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TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY 15,382 8,146
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VI GROUP PLC.
UNAUDITED CONSOLIDATED STATEMENT OF OPERATIONS
YEAR ENDED
31 DECEMBER
2002 2001
$'000 $'000
NET REVENUE
Product Revenue 8,599 7,770
Service Revenue 2,678 1,538
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TOTAL NET REVENUE 11,277 9,308
COST OF REVENUE
Cost of Product (1,501) (1,412)
Cost of service (884) (595)
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TOTAL COST OF REVENUE (2,385) (2,007)
GROSS PROFIT 8,892 7,301
OPERATING EXPENSES
Selling Expenses 4,362 2,886
General and administration 2,520 1,719
Product development 1,232 1,204
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Total operating expenses excluding depreciation and 8,114 5,809
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amortization
EARNINGS BEFORE INTEREST, TAX, DEPRECIATION AND 778 1,492
AMORTIZATION ('EBITDA')
Depreciation 292 234
Amortization of goodwill and other intangible assets 145 250
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TOTAL OPERATING EXPENSES 8,551 6,293
Income from operations 341 1,008
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Continuing operations 66 1008
Acquisitions 275
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341 1008
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Other Income
Net interest income 35 2
INCOME BEFORE INCOME TAXES 376 1,010
Income tax (450) (415)
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NET INCOME (LOSS) (74) 595
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Earnings (loss) per share
- Basic $(0.002) $ 0.029
- Diluted $(0.002) $ 0.029
VI GROUP PLC.
UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS
YEAR ENDED
31 DECEMBER
2002 2001
$'000 $'000
CASH FLOWS FROM OPERATING ACTIVITIES (74) 595
Net Income
Income charges not affecting cash:
Depreciation and amortization 437 484
(Profit) loss on disposal of property, plant and (28) 12
equipment
Exchange differences 593 102
Movements in working capital:
Increase in accounts receivable and prepaid expenses (2,418) (1764)
Decrease (increase) in inventory 14 (2)
Increase in accounts payable and other liabilities 1,018 452
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CASH FLOW FROM OPERATING ACTIVITIES (458) (121)
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CASH FLOWS FROM INVESTING ACTIVITIES
Additions to property, plant and equipment (701) (281)
Additions to software licenses (1,328) (20)
Proceeds from sale of property, plant and equipment 75 22
Purchase of businesses (1,357) (398)
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CASH FLOW FROM INVESTING ACTIVITIES (3,311) (677)
CASH FLOW FROM FINANCING ACTIVITES
Issue of share capital 4,753 367
Bank overdraft increase 19 183
Mortgage loans repayments (66) (58)
Capital lease repayments 224 (20)
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CASHFLOWS FROM FINANCING ACTIVITIES 4,930 472
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Net increase (decrease) in cash and cash equivalents
1,161 (326)
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CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR 746 1,072
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CASH AND CASH EQUIVALENTS, END OF YEAR 1,907 746
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
VI GROUP PLC
By /s/ Elliot I. Miller
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Elliot I. Miller
Director and Deputy Chairman
of VI Group plc
Date: April 10, 2003