Interim Results
Harrier Group PLC
4 September 2000
CHAIRMAN'S STATEMENT
I am pleased to report that we successfully completed the acquisition of
Zeuros Limited on 12 May 2000. This has firmly positioned the Group as a
leading provider and enabler of secure e-business solutions.
The turnover for the six months to 30 June 2000 amounted to £4.87 m
(1999:£2.53 m) and the loss before tax and goodwill was £173,785 (1999:£20,488
profit).
The loss for the half year reflects the increase in the Group's overheads
comprising a move to larger premises and the recruitment of additional
employees to cope with increased organic opportunities in a rapidly growing
market, the benefits of which will be reflected in the second half of the year
and 2001.
The first quarter's trading was disappointing with many projects being
deferred, but this was followed by a significant improvement in order intake
in the second quarter, which has continued during the third quarter,
particularly in respect of managed and professional services. The current
level of business under negotiation is at an all time high having grown
continuously month on month throughout the period.
The operating business of Zeuros Limited and the smaller Renet Limited
acquisition have been fully integrated together with Harrier Network Solutions
and Harrier Storage Solutions into a new operating entity, Harrier Zeuros
Limited, with a consequent saving in management costs giving a total focus on
our chosen market sector of e-business and internet security.
Harrier Zeuros Limited is focussing on developing a higher margin managed and
professional services business and building an increasing contract base, with
deferred income having grown to £984,900 as at 30 June 2000 (1999:£288,700).
The Board is focussing on organic growth and has decided with effect from 4
September 2000, to promote the key directors of Harrier Zeuros Limited to the
Group Board, namely David Cheesman, Chief Operating Officer; Colin Bradley,
Sales Director and Sarah Carter, Marketing Director. Trevor Meredith, a co-
founder of the Group, is retiring from the Board with effect from 4 September
2000 and we are all indebted to him for his hard work and support in helping
create the exciting future, which the Group enjoys today and wish him every
success and good health in the future.
Our employee numbers have grown from 43 as at 31 December 1999 to 79 as at 30
June 2000 and will continue to grow in line with the organic development of
the business.
We have made significant progress since our flotation in November 1999 and
will continue to grow the business organically utilising strategic alliances
and acquisitions where appropriate. Current trading is excellent and well
ahead of last year and we look forward to the future with confidence.
A L R Morton
Chairman
1 September 2000
CONSOLIDATED PROFIT AND LOSS ACCOUNT
SIX MONTHS ENDED 30 JUNE 2000
Unaudited
Six months to 30 June 2000 Audited Audited
Continuing Six months Year ended
Activities Acquisitions TOTAL to June 1999 December 1999
£ £ £ £ £
Turnover 2,827,454 2,040,983 4,868,437 2,534,314 5,437,201
Cost of sales (1,774,300) (1,165,749) (2,940,049) (1,415,966) (3,146,552)
Gross profit 1,053,154 875,234 1,928,388 1,118,348 2,290,649
Administrative 1,873,145 250,438 2,123,583 961,273 2,229,011
expenses
Exceptional 30,000 - 30,000 - -
Redundancy
costs
Operating (loss) (849,991) 624,796 (225,195) 157,075 61,638
/profit
Interest receivable 52,780 - 14,832
Interest payable (1,370) (135,470) (229,148)
(Loss)/Profit on ordinary
activities before taxation (173,785) 21,605 (152,678)
Taxation - - -
(Loss)/Profit on ordinary
activities after taxation (173,785) 21,605 (152,678)
Additional finance costs - (1,117) (1,851)
of non-equity
minority interest
Loss on ordinary (173,785) 20,488 (154,529)
activities
before goodwill
Goodwill (136,073) - -
Retained (loss)/profit (309,858) 20,488 (154,529)
for the period
BASIC LOSS PER SHARE (1.36p) N/A (0.5p)
DILUTED LOSS PER SHARE (1.26p) N/A (0.49p)
CONSOLIDATED BALANCE
SHEET
AS AT 30 JUNE 2000
30 June 30 June 31 Dec
2000 1999 1999
Unaudited Audited Audited
£ £ £
Fixed Assets
Tangible assets 659,798 358,317 346,333
Goodwill 19,366,749 - -
20,026,547 358,317 346,333
Current Assets
Stock 94,913 23,400 55,538
Debtors 4,940,746 1,364,504 2,133,925
Term deposit 14,000,000 61 2,106,779
Cash and bank balances 1,753,003 - -
20,788,662 1,387,965 4,296,242
Creditors
Amounts falling due (4,533,338) (1,386,780) (1,532,488)
within one year
Net Current assets 16,255,324 1,185 2,763,754
Total assets less current 36,281,871 359,502 3,110,087
liabilities
Creditors
Amounts falling due (14,015,119) (1,541,373) (10,731)
afterone year
Net assets/(liabilities) 22,266,752 (1,181,871) 3,099,356
Capital and reserves
Called up share capital 285,650 428,980 206,617
Share Premium account 23,946,311 104,724 4,548,112
Capital redemption 268,972 - 268,972
reserve
Profit and loss account (2,234,203) (1,749,328) (1,924,345)
Minority interest 22 33,753 -
Equity Shareholders' Funds 22,266,752 (1,181,871) 3,099,356
CONSOLIDATED CASHFLOW
SIX MONTHS ENDED 30 JUNE 2000
Unaudited Audited Audited
Six months Six months Year ended
ended ended
30 June 2000 30 June 1999 31 Dec 1999
NOTES £ £ £
Net cash outflow from operating
activities 4 (678,592) (88,051) (320,074)
Returns on investments and
servicing of finance
Interest received 52,780 - 14,832
Interest paid (1,370) (65,957) (229,148)
51,410 (65,957) (214,316)
Taxation
Corporation Tax paid - - -
Capital expenditure and
financial investment
Purchases of tangible fixed (214,822) (127,376) (131,651)
assets
Sales of tangible fixed asset 80,586 23,446 17,500
Purchase of minority interests - - (34,487)
Net cash outflow from investing (134,236) (103,930) (148,638)
Acquisitions and disposals
Purchase of subsidiary (112,500) - -
undertaking
Net cash acquired with 578,476 - -
subsidiaries
465,976 - -
Net cash outflow before (295,442) (257,938) (683,028)
financing
Financing
Issue of Ordinary Share Capital 14,758,343 450,000 5,459,621
Costs of Issue (581,111) - (519,624)
Issue of shares to minority 22 - -
Issue of discounted capital - 284,295 284,295
bond
Other loans - - (400,000)
Repurchase of Discounted - - (1,436,439)
Capital Bond
Hire purchase loans repaid - (19,690) (3,078) (133,238)
net
14,157,564 731,217 3,254,615
Increase in cash 13,862,122 473,279 2,571,587
Reconciliation of net cash flow to
movement in net funds/(debt)
Increase in cash in the period 13,862,122 473,279 2,571,587
Cash inflow from increase in (14,000,000) - -
debt
Cash outflow from decrease in lease 19,690 - -
financing
Change in net equity resulting from (118,188) (51,846) 1,685,382
cashflows
New finance leases - - (62,955)
Finance leases acquired with (19,276) - -
subsidiaries
Movement in net funds in period (137,464) 421,433 4,194,014
Net funds/(debt) at start of 1,871,803 (2,322,211) (2,322,211)
period
Net funds/(debt) at end of 1,734,339 (1,900,778) 1,871,803
period
NOTES TO THE INTERIM RESULTS
1. The interim figures for the six month period to 30 June 2000 are
unaudited and do not constitute statutory accounts.
2. The financial information set out in the interim statement has been
prepared in accordance with applicable accounting standards. The
accounting policies have been consistently applied both in 1999 and 2000
and are described in the 1999 financial statements.
3. The basic loss per share figure is based on the loss for the period and
the weighted average number of ordinary shares in issue during the
period of 22,828,725. Fully diluted loss per share includes share
options and the weighted average number of ordinary shares in the period
is 24,681,222.
4. Reconciliation of (loss)/profit to net cash flows from operating
activities after taking into account the acquisition of subsidiary
undertakings detailed in note 5.
6 months to 6 months to Year ended
June 2000 June 1999 Dec 1999
£ £ £
Operating(loss)/profit (225,195) 157,075 61,638
Depreciation 58,334 80,688 164,382
Loss on sale of fixed assets 30,420 6,022 7,488
Decrease/(increase in stock 573,780 13,839 (18,299)
(Increase)/decrease in debtors (2,600,928) 283,252 (486,169)
Increase/(decrease in creditors 1,484,997 (628,927) (49,114)
Net cash outflow from operating (678,592) (88,051) (320,074)
activities
5. Subsidiary undertakings were purchased in the period to 30 June 2000:
£
Net assets acquired
Fixed assets 267,982
Stock 613,155
Debtors 205,893
Cash at bank and in hand 578,476
Creditors (1,719,052)
Finance leases (19,276)
(72,822)
Goodwill 19,502,822
19,430,000
Satisfied by
Cash 112,500
Deferred consideration 17,500
Consideration shares 5,300,000
Loan notes 14,000,000
19,430,000
6. Minority interests represent new voting, non-participating shares in
the subsidiary company Harrier Corporation Limited.
7. The interim report was approved by the directors on 1 September 2000. A
copy of the interim report will be posted to shareholders and will also
be available from the Company's registered office at Pacific House,
Imperial Way, Reading, Berks RG2 0TD.