Final Results
Diagonal PLC
21 February 2002
21 FEBRUARY 2002
DIAGONAL PLC
PRELIMINARY RESULTS ANNOUNCEMENT
FOR THE 52 WEEKS ENDED 30 NOVEMBER 2001
Key highlights include:
2001 2000
Turnover £82.2 million £82.7 million
Profit before Tax* £7.5 million £7.5 million
Adjusted Diluted Earnings per share* 5.92p 6.44p
Final Dividend per share 1.20p 1.00p
*All figures are before amortisation of goodwill arising from acquisitions
• SAP Consulting revenue grown by 30% and operating profit by 37%
in challenging market conditions.
• Continued focus on higher margin consulting business.
• Acquisition of Claritas.
• Restored margins in Secure Networks.
• Strong order books in both divisions.
• Offices opened in US and Singapore backed by client demand.
Enquiries:
Graham Creswick, Chief Executive Tel: +44 (0) 1252 733 711
Steve Fleming, Finance Director
Ian Seaton, Bankside Consultants Limited Tel: +44 (0) 20 7444 4157
Notes to Editors
Diagonal PLC provides a broad range of IT consulting services. The Consulting
Division is one of the UK's leading implementers of SAP systems and has been
awarded SAP Partner of Excellence on each occasion it has been presented. It
also specialises in Enterprise Application Integration and e-commerce skills.
The Secure Networks Division provides network and remote access security and
consultancy.
CHAIRMAN'S STATEMENT
2001 has been a challenging year for many in the IT sector and Diagonal has been
no exception.
Turnover and pre tax profit (prior to the amortisation of goodwill) remained
broadly static at £82m and £7.5m respectively. The strong performance from our
SAP Consulting division was partly offset by the slowdown in the network
infrastructure part of our Secure Networks division during the summer. However,
I am pleased to report that the management and operational changes made in that
business in the last quarter of the year are already showing benefits.
A final dividend of 1.2p is recommended by the Directors, making the total for
the year of 1.8p per share, an increase of 20% on 2000. The final dividend will
be paid on 26 April 2002 to those shareholders on the register on 8 March 2002.
There have been a number of board changes during and since the year end. David
Thompson was appointed to the Board in January 2001 and resigned in October
2001. Alan Hunter resigned as Finance Director in August 2001 and Stephen
Fleming was appointed to replace him in December 2001.
I should like to thank all my colleagues for their support and unstinting
efforts during the year and believe that we are well placed to take advantage of
market conditions when they improve and continue the Group's development.
Mark Samuels
Chairman
OPERATING AND FINANCIAL REVIEW
OPERATING REVIEW
GROUP
Challenging economic factors contributed to the need for a year of consolidation
and integration for Diagonal. In April we disposed of MAPP, a contract computer
personnel agency, for £1.4m through a management buyout. In addition we
enhanced the Secure Networks division in July through the acquisition of
Claritas Information Security Limited for £1.5m. The Secure Networks
acquisitions have now been integrated into a single entity, enabling the Group
to capitalise on its breadth of knowledge and expertise and deliver cost
effective, quality solutions.
Consolidated Group revenue is £82.2m, compared with £82.7m in 2000. Whilst
these headline figures show little change it is important to note that,
excluding MAPP and Claritas, Group turnover increased by 8%. Significantly, our
Consulting business has grown by nearly 20% despite the uncertainty in the IT
sector this year.
Gross profit has increased to £23.6m (2000: £23.1m) and the gross profit margin
has risen by 0.8 percentage points to 28.7%.
Operating profit (stated before amortisation of goodwill) at £7.1m (margin of
8.7%) is slightly lower than last year (£7.3m; margin of 8.8%). We reported in
October that the Secure Networks division suffered a fall in demand throughout
the summer in the network infrastructure segment of the business. This
depressed margins in the third quarter of 2001 but the corrective action put in
place at the time has led to an immediate improvement in margins.
The Group is clearly focused on its Consulting and Secure Networks divisions.
We continue to develop the potential for cross-selling between the two divisions
and look forward to reporting solid progress in this area in the coming year.
Diagonal continues to develop globally with almost 13% (2000: 8%) of turnover by
destination being outside the United Kingdom. We have opened offices in
Singapore and USA and will continue to review the need for further expansion
during 2002 and subsequent years.
CONSULTING
Diagonal Consulting is engaged in two principal areas: SAP Consulting and
Enterprise Application Integration (EAI) Consulting.
Diagonal Consulting revenue was £44.6m (2000: £37.4m), an increase of 19.2%, and
represents 54% (2000: 45%) of total Group revenue. Gross profit increased from
£11.4m to £13.3m (an increase of 16.7%) and the operating margin before
amortisation of goodwill increased from 9.7% to 11.1%.
DIAGONAL SAP CONSULTING
Financial Overview
Diagonal SAP Consulting focuses on delivering Corporate IT systems based on the
SAP suite of applications. Against a flat UK market and with 5% SAP worldwide
licence growth year on year, the business performed strongly, with revenue
growing by 30% to £36.4m (2000: £28.0m). Our forward order book continues to be
strong and is ahead of the comparable period last year.
Gross profit for the year has increased to £10.3m (2000: £7.5m), and
represents an overall gross margin of 28.4% (2000: 26.8%). Operating margin
before amortisation of goodwill also increased to 11.1% (2000: 10.5%). These are
excellent results given the uncertain economic environment and continued
competitive pressures.
Operational Overview
The success of the business is attributable to the emphasis we place on our
client relationships, from research and development, through to delivery and
support.
In 2001, we served over 100 clients. Most are longstanding; over 70% of our
clients from five years ago still work with us today. Our success is built upon
our track record of delivering on time, on budget and to an agreed scope with
our clients, many of whom are global companies.
In recognition of our client commitment, we were delighted to be presented with
the 'Partner of Excellence' award by the SAP User community. The award is the
industry's ultimate recognition for customer service. We continue to be the only
partner in the world to have received this award on each occasion that it has
been granted.
All of our services are tailored to complement our clients' needs at both a
strategic and tactical level, and throughout 2001 we have extended our service
offerings to include new technologies. We have worked closely with clients to
launch new initiatives in hosting, supply chain management and customer
relationship management. Our efforts were recognised when Pilkington was
presented with the award for the 'most innovative e-Business project' for our
implementation spanning eleven factories across Europe.
Diagonal SAP Consulting is demonstrably a global business. In 2001 we worked
with clients in over 20 countries in Asia, North America and Europe. Our
commitment to supporting clients globally is enhanced through our investment in
offices in Philadelphia, USA and Singapore. We now provide 24-hour worldwide
support to major clients such as Huntsman.
In July, our dedicated Helpdesk was awarded Support Accreditation in recognition
of our commitment to supporting and servicing client requirements. We recognise
that SAP is a long-term investment which requires a committed partner, and our
global investment clearly demonstrates that commitment.
Diagonal's philosophy is built on the recognition that people are critical to
the success of any business, and we have invested heavily in employee
development and training in 2001. Our excellent project management skills were
highlighted at Waterford Crystal with the 'SAP Consulting Partner Hero' award.
This award was nominated by all SAP UK customers and is a tribute to our strong
team working approach.
Our aim is to help clients ensure that all IT investments are cost effective and
aligned with corporate strategy. We will continue to focus on client success,
constant innovation, and global support to our existing and targeted clients.
Through the continuous training and development of our people and the
identification of high growth opportunities, we intend to enhance our leading
position in our chosen markets.
EAI CONSULTING
Financial Overview
Revenue for EAI Consulting is £8.1m (2000: £9.4m). The decrease is due to the
change in emphasis placed on the contracting side of the business. In 2000, a
significant proportion of revenues within the managed projects part of the
business was derived from single contractors on long-term assignments. This
year, the business has moved to using more own staff on projects with a
resultant fall in revenue but improvement in margin.
Gross profit is £2.8m (2000: £3.0m); however this represents a gross margin of
35.0%, an improvement of 3.3 percentage points over the previous year, and a
direct result of management's strategy to concentrate on the use of own staff in
outsourced development projects.
Operating margin before amortisation of goodwill also improved, with a reduction
in the overall cost base contributing to an increased margin of 10.8% (2000:
7.3%).
Operational Overview
The division's historic strength within the public sector was built upon the
sale of its records management solution, IMPReS. Diagonal's most recent
development, Wisdom, is intended to support the drive towards e-government and
it is anticipated that the number of opportunities will increase as Government
approaches the 2004 modernising government targets.
In 2001, we continued to develop our reputation in the EAI arena, particularly
in respect of Microsoft BizTalk Server deployment. Our relationship with
Microsoft is a key aspect of future growth and we aim to achieve Microsoft Gold
Partner accreditation in the coming year.
Our consultant teams are multi-disciplinary and this flexibility enables us to
scale a project team depending on the size and complexity of any given project.
We continue to invest heavily in the training and development of our staff.
Although we have seen an increased presence from offshore developers in the
European market during 2001, we believe that our quality control, local
visibility and ability to evidence our commitment to deliver to agreed
timescales more than negate their initial price advantage. We will however
continue to monitor developments and are able to offer a hybrid onshore/offshore
model if demand dictates.
We are continuing the development of propositions which are complementary to
those in the SAP consulting practice, enabling Diagonal to develop further our
relationships with existing clients.
SECURE NETWORKS
Recognising the growing requirements of corporate clients for robust and secure
data and voice communications, Diagonal undertook a series of targeted
acquisitions between November 1999 and April 2000. These companies were
specialists in the fields of local and wide area networking, implementation of
firewall and content checking solutions and secure remote access technologies.
These were complemented in July 2001 by the acquisition of Claritas Information
Security Limited, a specialist security consultancy dedicated to providing high
quality information security services to Government, Commerce and Industry and
we have been pleased with performance to date.
Financial Overview
Secure Networks revenue has increased to £21.4m (2000: £20.3m). Gross margin
has improved to 35.5% (2000: 33.6%). This is as a result of the focus on 'Total
Security' which is the delivery of integrated projects building upon the
expertise of each of the acquisitions and the decision taken by management
during the year to focus only on higher margin projects, rejecting business
which did not meet our criteria.
Secure Networks made an operating profit before amortisation of goodwill of
£2.1m (2000: £2.9m) and an operating margin of 9.8% (2000: 14.4%). The
reduction in operating profit is due to the initially high operating costs prior
to the programme of integration explained below.
In October 2001, we reported that the slowdown in the network infrastructure
segment of our business had continued past the historically quiet period of July
and August. However, the recovery in the fourth quarter was highly encouraging
with enhanced margins achieved. The anticipated benefits from the integrated
operation, along with the impetus gained from the formation of a substantially
new management team (comprising expertise drawn from senior staff within
existing operations) give us confidence for 2002 as IT spend on security
increases. In addition, 15% (2000:7%) of 2002 revenues are already booked in
our forward load comprising maintenance and support contracts over a twelve
month period and we anticipate this percentage rising to 25% during 2002.
Operational Overview
During 2001, we commenced a programme to integrate the acquired businesses into
Diagonal Secure Networks. This has already brought many benefits such as the
elimination of duplicated processes, standardisation of systems and the ability
to use the strength of the Diagonal brand. The most recent acquisition,
Claritas, trades under the Secure Networks umbrella, whilst retaining its own
brand.
Secure Networks differentiates itself from its competitors through its direct
focus on the network and security area, promoting the concept of 'Total
Security'. It is more than a reseller of niche third party technologies; the
deployment of appropriate technology needs to take place in the light of an
understanding of the people and process issues within a business and not in
isolation.
In late 2001, we launched the Lifetime Partnership Programme which is intended
to deliver the continuous assessment of internal and external threats and to
provide the ongoing enhancement of security infrastructure to ensure the highest
levels of defence against those threats. The process evolves from risk
assessment, through design and implementation of appropriate solutions, to
monitoring of performance and ongoing account management.
We are proud to have been accredited to the highest level by partners such as
Check Point, RSA, Nokia, ISS and iPass in 2001. In particular, the addition of
the iPass solution for global remote access significantly strengthened our
proposition in the Virtual Private Network (VPN) arena. We anticipate this
being an area of strong growth in the future.
Throughout 2002, we will continue to research and develop relationships with
potential partners who are introducing emerging technologies in the security
market. Through this and by building on the key relationships already
established, we will ensure that the division is well positioned to meet demand
in the coming year.
RESOURCING
Revenue, excluding MAPP, has reduced from £15.8m in 2000 to £13.4m in 2001 (a
fall of 15%).
Gross margin for the year is 16.9%, compared to 19.4% in 2000, as a result of
competitive pressures in the Resourcing marketplace which have had a subsequent
impact on operating margins.
Following an internal review, the Board decided to re-align its activities using
existing management expertise within the Consulting division. This change was
effective from 1 December 2001.
FINANCIAL REVIEW
EARNINGS PER SHARE
Basic earnings per share has fallen by 32% from 3.32p to 2.26p. Adjusted
earnings per share (after taking account of the amortisation of goodwill) has
fallen by 8% from 6.48p to 5.93p.
DIVIDENDS
The Board has proposed a final dividend of 1.2p per ordinary share (2000: 1.0p)
bringing the total for the year to 1.8p per ordinary share (2000: 1.5p).
TREASURY AND CASH FLOWS
At 30 November 2001 the Group had net cash of £10.1m (2000: £6.1m). The
improved cash flows are the result of greater control imposed over cash
collection. The cash balance is held on overnight deposit earning interest at
market rates which approximate to 1% below base rate.
It is the Group's policy not to trade in financial instruments. At the year
end, it had an unutilised overdraft facility of £5m with interest applied at 1%
above base rate on overdrawn balances.
TAX
The Group's effective rate of taxation, based on profits before tax and
amortisation of goodwill, is 30.5% (2000: 27.4%). This differs from the
standard rate of UK corporation tax due to the disallowance of certain costs.
Short term timing differences are provided in full.
BALANCE SHEET
Net assets at 30 November 2001 were £46.6m (2000: £44.6m). At the balance sheet
date the number of days of annual sales, represented by trade debtors, were 86
(2000: 96) reflecting the improved credit control procedures.
Graham Creswick
Chief Executive
CONSOLIDATED PROFIT AND LOSS ACCOUNT
52 weeks ended 30 November 2001
Unaudited Audited
52 weeks ended 53 weeks ended
30 November 2001 1 December 2000
Note £'000s £'000s
TURNOVER 1
Continuing operations 79,000 73,462
Acquisitions 481 -
79,481 73,462
Discontinued operations 2,701 9,273
Total turnover 82,182 82,735
COST OF SALES (58,580) (59,641)
GROSS PROFIT 23,602 23,094
ADMINISTRATIVE EXPENSES
Amounts written off goodwill 5 (3,210) (2,661)
Other administrative expenses (16,490) (15,835)
Total administrative expenses (19,700) (18,496)
OPERATING PROFIT 1,2
Continuing operations 3,776 4,409
Acquisitions 149 -
3,925 4,409
Discontinued operations (23) 189
Total operating profit 3,902 4,598
Interest receivable 365 265
Interest payable and similar charges (11) (23)
PROFIT ON ORDINARY
ACTIVITIES BEFORE TAXATION 4,256 4,840
TAX ON PROFIT ON
ORDINARY ACTIVITIES (2,278) (2,054)
PROFIT ON ORDINARY
ACTIVITIES AFTER TAXATION 1,978 2,786
EQUITY DIVIDENDS (1,584) (1,305)
RETAINED PROFIT
FOR THE FINANCIAL PERIOD 12 394 1,481
Earnings per ordinary share 4 2.26p 3.32p
Adjusted earnings per ordinary share 4 5.93p 6.48p
Diluted earnings per ordinary share 4 2.26p 3.30p
Adjusted diluted earnings per
ordinary share 4 5.92p 6.44p
Equity dividends per ordinary share 1.80p 1.50p
CONSOLIDATED BALANCE SHEET
30 November 2001
Unaudited Audited
30 November 1 December
2001 2000
£'000s £'000s
Note
FIXED ASSETS
Intangible assets 5 26,062 28,783
Tangible assets 6 2,508 2,772
Investments - own shares 10 877 293
29,447 31,848
CURRENT ASSETS
Stocks - 333
Debtors 7 22,234 23,315
Cash at bank and in hand 10,155 6,145
32,389 29,793
CREDITORS - AMOUNTS FALLING
DUE WITHIN ONE YEAR 8 (15,065) (16,949)
NET CURRENT ASSETS 17,324 12,844
TOTAL ASSETS
LESS CURRENT LIABILITIES 46,771 44,692
CREDITORS - AMOUNTS FALLING
DUE AFTER MORE THAN ONE YEAR 9 (139) (21)
PROVISIONS FOR LIABILITIES
AND CHARGES - (58)
NET ASSETS 1 46,632 44,613
CAPITAL AND RESERVES
Called up share capital 10 8,832 8,475
Share premium account 12 28,503 21,782
Shares to be issued 11 138 5,591
Other reserves 12 600 600
Profit and loss account 12 8,559 8,165
EQUITY SHAREHOLDERS' FUNDS 46,632 44,613
RECONCILIATION OF MOVEMENTS IN SHAREHOLDERS' FUNDS
52 weeks ended 30 November 2001
52 weeks ended 53 weeks ended
30 November 1 December
2001 2000
£'000s £'000s
Profit for the financial period 1,978 2,786
Equity dividends (1,584) (1,305)
394 1,481
Issue of shares 1,487 18,007
Expenses of share issues - (166)
Shares to be issued 138 5,591
Net additions to shareholders' funds 2,019 24,913
Opening shareholders' funds 44,613 19,700
Closing shareholders' funds 46,632 44,613
CONSOLIDATED CASH FLOW STATEMENT
52 weeks ended 30 November 2001
52 weeks ended 53 weeks ended
30 November 1 December
2001 2000
Note £'000s £'000s
Net cash inflow from operating activities a 8,394 7,039
Returns on investments and servicing of finance b 354 242
Taxation paid (3,745) (2,002)
Capital expenditure and financial investment c (657) 1,365
Acquisitions and disposals d 881 (12,168)
Equity dividends paid (1,401) (1,254)
Cash inflow/(outflow) before financing 3,826 (6,778)
Financing
Issues of ordinary share capital 146 10,500
Expenses of share issues - (166)
Net increase/(repayment) of borrowings e 62 (2,169)
208 8,165
Increase in net cash in the period f 4,034 1,387
NOTES TO CONSOLIDATED CASH FLOW STATEMENT
52 weeks ended 30 November 2001
52 weeks ended 53 weeks ended
30 November 1 December
2001 2000
£'000s £'000s
a. Reconciliation of operating profit to net cash inflow from
operating activities
Operating profit 3,902 4,598
Amortisation of goodwill 3,210 2,661
Depreciation 968 1,247
(Profit)/loss on sales of tangible fixed assets (73) 79
Decrease/(increase) in stock 333 (275)
Decrease/(increase) in debtors 426 (1,081)
Decrease in creditors (372) (108)
Decrease in provisions - (82)
Net cash inflow from operating activities 8,394 7,039
b. Returns on investments and servicing of finance
Interest received 369 206
Interest paid - (23)
Interest element of finance lease payments (15) 59
Net cash inflow from returns on investments and servicing
of finance 354 242
c. Capital expenditure and financial investment
Purchases of tangible fixed assets (1,029) (1,203)
Proceeds of disposals of fixed assets 372 2,568
Net cash (outflow)/inflow from capital expenditure and
financial investment (657) 1,365
d. Acquisitions and disposals
Purchase of subsidiary undertaking (note 13) (662) (13,744)
Net cash acquired with subsidiary 143 1,576
Sale of subsidiary undertaking (note 14) 1,400 -
Net cash inflow/(outflow) from acquisitions and disposals 881 (12,168)
NOTES TO THE CONSOLIDATED CASH FLOW STATEMENT
52 weeks ended 30 November 2001
52 weeks ended 53 weeks ended
30 November 1 December
2001 2000
£'000s £'000s
e. Reconciliation of net cash flow to movement in net funds
Increase in cash in the period 4,034 1,387
Net repayment of lease financing (62) 2,169
Changes in net funds resulting from cash flows 3,972 3,556
New finance leases (36) (618)
Leases acquired - (83)
Movement in net funds 3,936 2,855
Net funds at 1 December 2000 6,005 3,150
Net funds at 30 November 2001 9,941 6,005
f. Movement in period
At 1 Non At 30
December Cash cash November
2000 Flows changes 2001
£'000s £'000s £'000s £'000s
Cash 6,145 4,010 - 10,155
Overdrafts (24) 24 - -
Increase in net cash 4,034
Lease financing (116) (62) (36) (214)
6,005 3,972 (36) 9,941
NOTES TO THE ACCOUNTS
30 November 2001
1. ANALYSIS OF TURNOVER, OPERATING PROFIT AND NET ASSETS
Analysis by class of business by turnover, operating profit and net assets is stated below
Turnover Operating profit (1) Net assets (2)
52 weeks 53 weeks 52 weeks 53 weeks
ended 30 ended 1 ended 30 ended 1 30 November 1 December
November December November December 2001 2000
2001 2000 2001 2000 £'000s £'000s
£'000s £'000s £'000s £'000s
Class of business
Continuing operations
Consultancy 44,623 37,413 4,288 3,174 19,305 14,542
Secure Networks 20,964 20,327 (606) 817 23,274 26,518
Resourcing 13,413 15,722 94 418 1,850 3,553
79,000 73,462 3,776 4,409 44,429 41,060
Acquired operations
Secure Networks 481 - 149 - 2,203 -
Discontinued operations
Resourcing 2,701 9,273 (23) 189 - 3,553
82,182 82,735 3,902 4,598 46,632 44,613
(1) Operating profit is stated after charging amortisation of goodwill
(2) All commonly held assets and liabilities of the Group have been allocated to segments
An analysis of the Group's turnover by geographical market by destination is set out below
52 weeks ended 53 weeks ended
30 November 1 December
2001 2000
£'000s £'000s
UK 71,535 75,747
Other European countries 5,792 6,428
Rest of the world 4,855 560
82,182 82,735
All of the Group's turnover originates in the United Kingdom
NOTES TO THE ACCOUNTS
30 November 2001
2. OPERATING PROFIT 52 weeks ended 53 weeks ended
30 November 1 December
2001 2000
£'000s £'000s
The operating profit is stated after charging/(crediting):
Depreciation - owned assets 916 780
- leased assets 52 467
(Profit)/loss on sales of tangible fixed assets (73) 79
Auditors' remuneration - audit fees 96 123
- other services 181 56
Operating lease charges - other 828 1,085
Losses on foreign exchange 42 4
In addition, £22,000 (2000 - £118,000) in respect of fees paid to the auditors have been capitalised as
part of the cost of acquisitions
3. EMPLOYEES 52 weeks ended 53 weeks ended
30 November 2001 1 December 2000
The average number of employees, including Directors, employed
by the Group during the period was as follows
Number Number
Operating 307 311
Sales and administration 154 151
461 462
The costs incurred in respect of these employees were as
follows
£'000s £'000s
Wages and salaries 25,755 24,154
Social security costs 3,168 2,889
Other pension costs 307 286
29,230 27,329
NOTES TO THE ACCOUNTS
30 November 2001
4. EARNINGS PER SHARE
Earnings per share have been computed in accordance with Financial Reporting
Standard 14 'Earnings per Share'.
Basic earnings per share is calculated by dividing the Profit on Ordinary
Activities after Taxation by the weighted average number of Ordinary shares, to
be issued and in issue, during the period. Diluted earnings per share is
calculated by adjusting the weighted average number of shares on the assumption
of conversation of all dilutive potential Ordinary shares. The Group has one
category of dilutive potential Ordinary shares, being share options where the
exercise price is lower than the average market price of the Company's Ordinary
shares during the period.
A reconciliation of the earnings and weighted average number of shares used in
the calculation is set out below.
52 weeks ended 53 weeks ended
30 November 1 December
2001 2000
£'000s £'000s
Profit on ordinary activities after taxation 1,978 2,786
Amounts written off goodwill 3,210 2,661
_________ _________
Adjusted profits 5,188 5,447
_________ _________
Number Number
Weighted average number of shares 87,466,859 83,998,301
Effect of options 122,693 542,232
_________ _________
Total shares 87,589,532 84,540,533
_________ _________
Pence Pence
Basic EPS
Unadjusted 2.26 3.32
Goodwill 3.67 3.16
_________ _________
5.93 6.48
_________ _________
Diluted EPS
Unadjusted 2.26 3.30
Goodwill 3.66 3.14
_________ _________
Adjusted 5.92 6.44
_________ _________
NOTES TO THE ACCOUNTS
30 November 2001
5. INTANGIBLE FIXED ASSETS
Group £'000s £'000s
Goodwill arising on consolidation
Cost at 2 December 2000 32,660
Goodwill arising on acquisitions (note 13) 1,228
Adjustment to goodwill arising in prior year (note 13) 45
Disposals (1,954)
_________
Cost at 30 November 2001 31,979
Amortisation at 2 December 2000 (3,877)
Amortisation provided in the period (3,210)
Disposals 1,170
_________
Amortisation at 30 November 2001 (5,917)
_________
Net book value at 30 November 2001 26,062
_________
Net book value at 1 December 2000 28,783
_________
6. TANGIBLE FIXED ASSETS
Furniture
fixtures and
Land fittings
and Motor Office Computer
buildings vehicles equipment equipment Total
£'000s £'000 £'000 £'000 £'000 £'000
Cost
At 2 December 2000 272 461 1,447 646 2,610 5,436
Acquired with subsidiary - - - 55 - 55
Reclassifications (31) - 28 3 - -
Additions - 36 117 241 673 1,067
Disposals (208) (240) (5) (36) (165) (654)
Disposed of with subsidiary - - (139) (30) (79) (248)
_______ _______ _______ _______ _______ _____
At 30 November 2001 33 257 1,448 879 3,039 5,656
_______ _______ _______ _______ _______ _____
Depreciation
At 2 December 2000 31 184 708 351 1,390 2,664
Acquired with subsidiary - - - 45 - 45
Charge for the period 6 83 201 117 561 968
Reclassification (6) - 5 1 - -
Disposals (12) (149) (5) (36) (153) (355)
Disposed of with subsidiary - - (89) (27) (58) (174)
_______ _______ _______ _______ _______ _____
At 30 November 2001 19 118 820 451 1,740 3,148
_______ _______ _______ _______ _______ ______
Net book value
At 30 November 2001 14 139 628 428 1,299 2,508
_______ _______ _______ _______ _______ _____
At 1 December 2000 241 277 739 295 1,220 2,772
_______ _______ _______ _______ _______ _____
NOTES TO THE ACCOUNTS
30 November 2001
7. DEBTORS
30 November 2001 1 December
2000
£'000s £'000
Amounts recoverable within one year
Trade debtors 19,452 21,845
Corporation tax 420 -
Other debtors 679 201
Prepayments and accrued income 1,683 1,269
_______ _______
22,234 23,315
_______ _______
8. CREDITORS - AMOUNTS FALLING DUE WITHIN ONE YEAR
30 November 2001 1 December
2000
£'000s £'000
Bank overdraft - 24
Obligations under finance leases 75 95
Trade creditors 4,130 5,686
Corporation tax 946 1,909
Other taxation and social security 2,342 3,244
Other creditors 444 331
Accruals and deferred income 6,072 4,787
Dividends payable 1,056 873
_______ _______
15,065 16,949
_______ _______
9. CREDITORS - AMOUNTS FALLING DUE AFTER MORE THAN ONE YEAR
30 November 2001 1 December
2000
£'000s £'000
Obligations under finance leases
Due between one and two years 139 21
_______ _______
10. CALLED UP SHARE CAPITAL
30 November 2001 1 December
2000
£'000s £'000
Authorised
Equity
120,000,000 (2000 - 120,000,000) Ordinary shares of 10p each 12,000 12,000
_______ _______
Called up, allotted and fully paid
Equity
88,322,520 (2000 - 84,745,936) Ordinary shares of 10p each 8,832 8,475
_______ _______
Nominal
Value Consideration
Date Number £ £
Shares issued in the period were
Acquisition of CenturyCom
- additional consideration 12.01.01 1,885,720 188,572 3,488,582
Acquisition of Interop
- additional consideration 19.02.01 996,956 99,696 2,143,455
Shares issued to Qualifying Employee
Share Ownership Trust 10.05.01 50,000 5,000 147,500
Shares issued to Diagonal
Employee Benefit Trust* 01.06.01 207,228 20,723 583,347
Acquisition of Claritas 23.07.01 300,318 30,032 522,553
Acquisition of Claritas
- additional consideration 21.09.01 136,362 13,636 192,884
________ _______ ________
3,576,584 357,659 7,078,321
________ _______ ________
* Investments - own shares
The shares issued to the Diagonal Employee Benefit Trust are funded by a loan
to the Trust from the Company. The shares are held by the Trust, for the
benefit of the Company, to settle any future national insurance liability
arising on the exercise of share options issued to employees. The Trust was set
up to administer the Company's Executive Share Option Scheme and Long Term
Incentive Plan. The total value of the loan to the Trust at 30 November 2001
was £877,185 (2000: £293,838).
11. SHARE TO BE ISSUED
On 1 February 2002, 134,438 Diagonal PLC Ordinary 10p shares were issued to
satisfy the contingent consideration in respect of the earn-out provisions of
the Sale and Purchase Agreement of Claritas Information Security Limited.
NOTES TO THE ACCOUNTS
30 November 2001
12. STATEMENT OF MOVEMENTS ON RESERVES
Share Capital Profit
premium Merger redemption and loss
account reserve reserve account
£'000s £'000s £'000s £'000s
Balances at 2 December 2000 21,782 22 578 8,165
Premium on issue of shares 6,721 - - -
Retained profit for the financial period - - - 394
_______ _______ _______ _______
Balances at 30 November 2001 28,503 22 578 8,559
_______ _______ _______ _______
Goodwill of £3,653,000 was previously written off to the merger reserve and
goodwill of £2,070,000 was written off to the profit and loss reserve.
13. ACQUISITIONS AND GOODWILL
The acquisition of Claritas Information Security Limited has been accounted for
using the acquisition method of accounting:
Claritas Total
2001 2000
£'000s £'000s
Tangible fixed assets 10 736
Debtors 281 3,930
Stock 44 58
Net cash 143 1,576
Creditors (amounts falling due within one year) (191) (5,552)
_______ _______
Book and fair value 287 748
Goodwill 1,228 25,802
_______ _______
1,515 26,550
_______ _______
Satisfied by:
Shares including premium 715 7,215
Cash paid 662 13,744
Shares to be issued 138 5,591
_______ _______
1,515 26,550
_______ _______
Claritas Information Security Limited was acquired on 16 July 2001. The
goodwill arising on acquisition is to be amortised over 10 years.
Comparative figures relate to the acquisition of Eurostar Network Systems
Limited, CenturyCom Limited, Interop Technologies Limited and Datel. The
goodwill arising on the acquisition of Interop has been adjusted to reflect
additional deferred consideration payable.
NOTES TO THE ACCOUNTS
30 November 2001
14. DISPOSAL OF SUBSIDIARY UNDERTAKING
2001
£'000s
Tangible Fixed Assets 75
Goodwill 784
Debtors 1,396
Creditors (805)
Taxation (5)
_______
Profit/(loss) on disposal -
_______
1,445
_______
Satisfied by:
Cash 1,400
Deferred Consideration 45
_______
1,445
_______
MAPP was disposed of on 18 April 2001. The results of the company have been
shown under discontinued operations.
15. FINANCIAL INFORMATION
The financial information set out in the announcement does not constitute the
Group's statutory accounts for the 52 weeks ended 30 November 2001 or the 53
weeks ended 1 December 2000. The financial information for the period ended 1
December 2000 is derived from the statutory accounts for that period which have
been delivered to the Registrar of Companies. The auditors reported on those
accounts; their report was unqualified and did not contain a statement under
S237(2) or (3) Companies Act 1985. The statutory accounts for the 52 weeks
ended 30 November 2001 will be finalised on the basis of the financial
information presented by the Directors in this preliminary announcement and will
be delivered to the Registrar of Companies following their publication. This
financial information has been prepared on the basis of the accounting policies
as stated in the previous year's financial statements.
This information is provided by RNS
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