Final Results
Screen PLC
8 May 2002
For Release 8 May 2002
SCREEN PLC:
PRELIMINARY RESULTS ANNOUNCEMENT
for the year ended 31 December 2001
Screen Plc ('Screen'), a leading provider of advanced security and communication
systems, announces preliminary results for the year ended 31 December 2001.
Screen develops and supplies security and surveillance solutions utilising
mobile, wireless and video technologies including provision of mission critical
video processing software applications.
Screen's provides technologies and products through four key markets: Petards
Emergency Services (Police and Fire Services), Petards Vision (Advanced Security
and Surveillance), Joyce-Loebl Defence and Joyce-Loebl Transport. Petards
International provides an increasingly important conduit for sales abroad;
distribution is through 40+ countries in Europe, Africa, the Middle East and
Australasia.
Highlights of the Results
• Record Revenues up 180% to £14.2m (2000: £5.1m)
• Acquisitions contributed £4.9m; Continuing operations up 83% to £9.3m
(2000: £5.1m)
• 75% Group turnover from the public sector
• Operating Profit (before goodwill) of £1.0m (2000: Loss £0.3m), in
line with January trading statement
• Pre-tax profit £0.7m (2000: Loss £0.3m)
• Basic EPS 1.6p (2000: Loss 0.8p)
• Balance sheet strengthened - Net Assets of £17.8m
• No dividend, as previously, since flotation
Operational
• 3 Acquisitions: Civil Systems Division of BAE Systems (Feb), Pentyre
Ltd (July), Joyce-Loebl Group Ltd (Dec)
• £6.5m (net) equity funding via 2 successful placings; £1.2m 7 yr bank
loan; further £3.4m (gross) post yr end
• Collins Stewart appointed joint broker
• Joyce-Loebl received £5.6m orders since acquisition (Dec 2001)
• Board Appointments - Chairman and CEO roles split; new non-executive
• Introduction of performance related Long Term Incentive Plan
Regarding Current Trading and Prospects, Owen Williams, Chairman of Screen said:
'The Directors continue to view the Group's prospects with great confidence.
'The year has started well with the first quarter trading in line with our
expectations, and with orders and prospective orders continuing to look
promising. We anticipate ongoing growth in all our key activities during 2002
and beyond. The two specific areas that we believe offer the greatest
opportunity in the immediate short term include the International Police market
for Mobile Data and Video Evidence products and the On Board CCTV market in the
rail industry both in the UK and rest of Europe.
'We have a strong balance sheet, focused businesses together with relevant
products and services. In other words, the ingredients for a period of strong
and sustained growth are in place. I look forward, therefore, to being able to
report to you in due course that in 2002 our success continued apace.'
Contacts:
Screen Plc Binns & Co PR Ltd
Owen Williams, Chairman Peter Binns, Paul McManus
James Shand, Finance Director Tel: 01628 820011
info@screenplc.com http://www.screenplc.com Tel: 020 7786 9600
CHAIRMAN'S REPORT
Introduction
I am very pleased to present our results for the financial year ended 31st
December 2001, another period of considerable progress for the Group, one in
which our revenues grew by some 180% and the Group generated a creditable
operating profit.
Since writing to you at the half year stage and subsequently when seeking your
approval in January 2002 for the fund raising in support of the working capital
needs of the Joyce-Loebl acquisition and the enlarged Group, further significant
advances has been made.
During the period we extended our reach into important additional application
and industry areas and continued our drive into new international markets. In
line with the trading statement of the 30th January 2002, acquisitions have been
completed and successfully integrated into the Group and the organisation
rationalised and streamlined in order to realise benefits of scale.
The events of 11th September 2001 heightened the awareness of security needs
worldwide adding impetus to our already growing markets. We consider we are
well positioned to challenge for our share of the additional business arising
from these changed circumstances.
The Directors continue to view the Group's prospects with great confidence.
Results
Group revenue for the year ended 31 December 2001, including acquisitions,
almost trebled to £14.2m (2000: £5.1m) with continuing operations up £4.2m on
2000, as a result of investment in product development and market expansion.
Acquisitions contributed £4.9m of turnover during 2001. UK revenues increased
to £10.7m (2000: £4.1m) whilst non-UK revenues grew to £3.5m or 25% of total
revenues (2000: £1.0m, 20%). Approximately 75 per cent of the Group's turnover
came from the public sector, with sales derived from each of our four main
markets: Emergency Services, Local and Central Government, Defence and
Transport. Gross Profit increased by £4.2m to £6.4m, and the Gross Profit
percentage improved to 45.1% (2000: 44.2%).
Operating Profit (before goodwill) was in line with our earlier trading update
at £1.0m and was £1.3m better than 2000 (2000: Operating Loss of £0.3m).
Acquisitions contributed £1.2m towards Operating Profit, whilst ongoing
operations (including central costs and goodwill) recorded a loss of £0.6m.
Pre-tax Profit was £1.0m better than 2000 at £0.7m (2000: Pre-tax loss of
£0.3m). Basic earnings per share increased by 2.4 pence to 1.6 pence per share
(2000: loss per share of 0.8 pence, restated for the 10 for 1 share
consolidation affected in February 2001). Basic earnings per share before
goodwill amortisation improved by 2.9 pence to 2.5 pence per share (2000: loss
per share of 0.4 pence).
Operating Cashflow continued to lag profits, as overseas tenders, although
typically Government or World Bank funded, are sold on extended credit terms.
Funding of £6.5m (net) was raised through two equity placings and this, together
with a 7 year bank term loan of £1.2m, was used to complete three acquisitions,
namely the Civil Systems Division of BAE SYSTEMS in February, Pentyre Limited in
July and Joyce-Loebl Group Limited in December, all in 2001, and to fund working
capital requirements. Post year end a further £3.4m (gross) has been raised to
complete the funding of the acquisition of Joyce-Loebl Limited and to provide
for working capital for this acquired company and the enlarged Group. The March
placing was managed by our new joint brokers, Collins Stewart, which
substantially helped towards our twin objectives of introducing new investors to
the stock, and increasing our institutional shareholding.
The Balance Sheet has been strengthened by £7.6m to £17.8m through the post tax
profit earned together with the placings mentioned above. Total Net Assets of
£3.5m were acquired with companies purchased during the year, with goodwill
increasing by £3.0m, resulting from these acquisitions.
Your Board does not recommend the payment of a dividend, as in previous
financial periods since the Company's flotation in 1997, because growth of the
business continues to create working capital demands.
Operations Review
We now address our major UK markets through four businesses - Petards Emergency
Services, Petards Vision, Joyce-Loebl Defence and Joyce-Loebl Transport with
Petards International providing the increasingly important conduit for our sales
abroad.
Petards Emergency Services
The UK Petards Emergency Services business unit based in Leicester develops and
promotes the Mobile Data, In-Car Video evidence and Command and Control systems
sold to the Police and Fire market.
In the Police market the very successful ProVida product range (as seen on TV's
'Police Camera Action' programme) continued to grow during the year.
Significant expansion in our international sales division in Denmark has seen
our number of international distributors increase and volume of business grow to
the current position where 75% of our business into the police market is
generated from outside of the UK. We believe that there are some 1 million
police vehicles within our key target markets (excluding North America). Screen
has supplied in excess of 5,000 systems of which approximately 1,000 are in the
UK where we deal with the majority of police forces. New major orders were
received including one in respect of the Carabinieri in Italy and others
including Turkey with ongoing business flowing from our key markets including
UK, Denmark, Hong Kong and Germany
The ProVida product range has now been extended to include the intelligent video
processing application Automatic Number Plate Recognition (ANPR). Following the
initial UK orders for ProVida ANPR systems during 2001 we are now starting to
build the international localised versions to satisfy the requirement of our 40+
country distribution network.
We believe we now have all the core building blocks necessary to deliver a fully
integrated mobile environment for police vehicles significantly improving
productivity of the police officer and we are European market leader for these
product ranges, where there are significant major barriers to entry.
In the fire services market our offerings include the support and maintenance of
central command and control systems providing recurring revenue streams, and new
installations and upgrades for our despatching and MIS systems. Success in 2001
came from Sussex fire service with the replacement of a complete Command and
Control system and the supply and installation of Mobile Data to Lancashire fire
service.
Petards Vision
Under the direction of the Petards Vision business unit we continue to deliver
advanced security and surveillance solutions, which now also include software
applications for intelligent video processing of live and captured images.
The activities of Pentyre Limited, which we acquired in July 2001, have now been
successfully merged with Petards Vision to form a single business unit and the
anticipated efficiencies of scale are expected to flow in the second half of
2002.
The combined Petards Vision unit now enjoys an enlarged product range of
advanced security and surveillance software applications. The product line has
been rationalised and re-branded under the Advantage name to provide a
structured family of products from small low-end video monitoring applications
through to high-end fully-scaleable network surveillance solutions, together
with important supporting analytical and management information applications.
Our command and control applications continue to grow within both public sector
and commercial markets throughout the UK. It is anticipated that many of our
existing 400 user installations will wish to upgrade to the newer technology
platforms now available through this enlarged Advantage product range during the
course of the next 12 - 24 months.
In the IP-video market, our Advantage-IP (formerly Argus-IP) Digital video
monitoring and recording product range is now being promoted through a number of
major surveillance product distributors in the UK, and is attracting growing
interest from overseas. The product has been enhanced to incorporate
compatibility with third party IP digital camera devices including those for
market leading products such as Axis, JVC, Baxall and Indigo Vision. Work is
also underway to incorporate the core IP technology into our analogue video
control system products to enable full integration of both digital IP-video and
analogue control system environments that we believe will become of growing
importance to our customers.
We achieved excellent growth during 2001 for our SWIFT range of
wireless-operated mobile CCTV cameras with revenues from this product in the
year more than double those achieved in 2000.
Demand for the product continues to be strong in the UK Local Authority and
Police markets, with sales in the 1Q 2002 over 50% up on the same period last
year, and have now also secured our first sale for deployment of SWIFT onto a
Fire Brigade appliance. In addition, through our Petards International
subsidiary we have also started to make the product available to our 40+ strong
international distribution network.
Joyce-Loebl - Transport
The acquisition of Joyce-Loebl at the end of 2001 provided Screen with access to
the transport sector.
Joyce-Loebl brings within its Rail Transport division a range of highly relevant
and related products to our current security and surveillance focus in the shape
of on-board CCTV surveillance systems (covert and overt) and on-board Passenger
Information Display systems.
Success has come from both the UK market with deliveries to customers such as
Bombardier Transportation as well as in the International arena with deliveries
to ALSTOM Belgium. A healthy pipeline of opportunities is building right across
UK and Europe, with orders this year to date, for both transport and defence
totalling £5.6m.
Working with key suppliers of rolling stock to the rail industry such as
Bombardier and ALSTOM, we believe the rail transport division is well positioned
to take advantage of the increased demand for on board CCTV systems. These
systems are increasingly being implemented to provide both passenger security as
well as providing a surveillance record of people and events.
Joyce-Loebl - Defence
The Defence arm of Joyce-Loebl brings with it a significant recurring revenue
base from supplying a number of core products and components to the UK MOD on a
long term contract basis. We continue to develop and build key electronic
components for both airborne and ground based military vehicles. Our
manufacturing agreement with BAE SYSTEMS North America Inc (formerly Tracor Inc)
provides us with a unique position to supply the MOD with chaff and flare
dispensers for military aircraft. Our focus as one of only a few UK based
TEMPEST (high security computers) suppliers has during 2001 won us an initial
component of the Bowman project.
The current defence business of Joyce-Loebl provides a solid business base with
the opportunity to develop this market for Screen's broader range of Security
and Surveillance products.
Current Trading and Outlook
The year has started well with the first quarter trading in line with our
expectations, and with orders and prospective orders continuing to look
promising. We anticipate ongoing growth in all our key activities during 2002
and beyond. The two specific areas that we believe offer the greatest
opportunity in the immediate short term include the International Police market
for Mobile Data and Video Evidence products and the On Board CCTV market in the
rail industry both in the UK and rest of Europe.
In the current security-conscious environment in which we live, we see
ever-increasing demand for software products that can deal with image
processing. Our focus on development during 2002 will, therefore, be on
enhancing and developing our core Video Processing and Image recognition
applications in both the Command & Control centre and Mobile space.
In addition we see significant cross selling opportunities starting to emerge
from across the enlarged Group during 2002 from which we should benefit further
in 2003.
The Board
The previously combined role of Chairman and Chief Executive was split with the
appointment on 1st August 2001 of Claes Bergstedt as Chief Executive.
The structure of the Board changed further in February 2002 with the appointment
of Ian Taylor as Deputy Chairman and Major General Tim Sulivan joining to assist
us in planning our approach to the defence market as well as playing a full role
in the overall development of the business. Charles Hughes stepped down from
the Board at this time.
The Board believes it is important that the link between its interests and those
of shareholders be reinforced. Accordingly, the Board has recently adopted a
share ownership guideline for Directors, calling for them to own shares equal in
value to three times their annual base remuneration within five years of the
later of joining the Board or adoption of this guideline.
In connection with this new guideline, we intend to introduce arrangements that
will enable us to provide equity in lieu of salary, Directors' fees and bonus to
those Screen Board Directors (executive and non-executive) who wish to be paid
in this way. Where shares are held in an Employee Benefit Trust as part of
these arrangements, they will be counted towards the share ownership guideline.
Long Term Incentive Plan
Once again the progress made by the Group would not have been possible without
the continued enthusiastic support of our highly competent staff. We consider
it important to retain key staff and to maintain the highest levels of
motivation. To which end we will be seeking shareholders' approval of a
long-term incentive plan or LTIP. In developing the terms of the LTIP we have
consulted with the Association of British Insurers (ABI). The Directors
consider that the terms of the LTIP are broadly in line with the ABI guidelines.
In short, the LTIP will enable the Remuneration Committee to provide equity to
Directors and senior management subject to satisfactorily achieving challenging
performance targets. Currently the Remuneration Committee envisage that awards
under the LTIP will be subject to a performance target based on growth in the
Group's normalised earnings per share (EPS) exceeding the growth in the retail
prices index by 60% over a fixed three year period commencing from the date of
the award. For EPS growth of less than this, a sliding scale will determine the
number of shares deliverable to participants although no shares will be
delivered if real EPS growth is less than 30% over the performance period. A
comparable scheme will be introduced for non-executive Directors.
Summary
We have a strong balance sheet, focussed businesses together with relevant
products and services. In other words, the ingredients for a period of strong
and sustained growth are in place. I look forward, therefore, to being able to
report to you in due course that in 2002 our success continued apace.
OWEN WILLIAMS
Chairman
8 May 2002
CONSOLIDATED PROFIT AND LOSS ACCOUNT
For the year ended 31 December 2001
Unaudited Audited
Year ended Year ended
Note 31 December 2001 31 December 2000
£'000 £'000
Turnover
Continuing operations 9,296 5,082
Acquisitions 4,954 -
14,250 5,082
Cost of sales (7,816) (2,835)
Gross profit 6,434 2,247
Administrative expenses (after exceptional costs 3
of £74,000) (5,414) (2,549)
Goodwill amortisation (397) (126)
Total administrative expenses (5,811) (2,675)
Operating profit / (loss)
Continuing operations (590) (428)
Acquisitions 1,213 -
623 (428)
Net interest receivable 33 85
Profit / (loss) on ordinary activities before taxation 656 (343)
Taxation - -
Profit / (loss) on ordinary activities after taxation 656 (343)
Minority interest - equity - 64
Profit / (loss) for the financial year 656 (279)
Earnings/(loss) per share
Basic 5 1.6p (0.8)p
Diluted 5 1.5p (0.8)p
Basic before goodwill amortisation 5 2.5p (0.4)p
RECONCILIATION OF OPERATING PROFIT BEFORE GOODWILL
For the year ended 31 December 2001
Unaudited Audited
Year ended Year ended
Note 31 December 2001 31 December 2000
£'000 £'000
Operating profit/(loss) as above 623 (428)
Goodwill amortisation 397 126
Operating profit/(loss) before goodwill 1,020 (302)
CONSOLIDATED BALANCE SHEET
As at 31 December 2001
Unaudited Audited
Note 31 December 2001 31 December 2000
£'000 £'000
Fixed assets
Intangible assets 10,847 6,834
Tangible assets 1,435 628
12,282 7,462
Current assets
Stocks 5,303 910
Debtors 9,332 2,584
Cash at bank and in hand 554 1,527
15,189 5,021
Creditors: amounts falling due within
one year (7,609) (2,280)
Net current assets 7,580 2,741
Total assets less current liabilities 19,862 10,203
Creditors: amounts falling due after
more than one year (2,093) (64)
Net assets 6 17,769 10,139
Capital and reserves
Called up share capital 472 379
Share premium account 19,225 12,743
Other reserves 423 -
Profit and loss account deficit (2,351) (2,925)
Equity shareholders' funds 17,769 10,197
Minority interest - equity - (58)
17,769 10,139
CONSOLIDATED CASH FLOW STATEMENT
For the year ended 31 December 2001
Unaudited Audited
Year ended Year ended
31 December 2001 31 December 2000
Note £'000 £'000 £'000 £'000
Operating profit / (loss) 623 (428)
Amortisation of intangible fixed assets 783 341
Depreciation of tangible fixed assets 325 188
Loss/(profit) on sale of tangible fixed assets 6 (4)
Increase in stocks (763) (196)
Increase in debtors (4,731) (786)
Increase/(decrease) in creditors 1,551 (139)
Net cash outflow from operating activities (2,206) (1,024)
Returns on investments and servicing of finance
Interest received 104 154
Interest paid (53) (54)
Finance lease interest paid (18) (15)
Net cash inflow from returns on investments and
servicing of finance 33 85
Taxation
UK corporation tax - -
Capital expenditure
Purchase of intangible fixed assets (1,900) (852)
Purchase of tangible fixed assets (396) (322)
Sale of tangible fixed assets 46 27
Net cash outflow from capital expenditure (2,250) (1,147)
Acquisitions and disposals
Purchase of businesses (4,526) (4,397)
Overdraft acquired with subsidiary (91) 35
(4,617) (4,362)
Net cash outflow before financing (9,040) (6,448)
Financing
Issue of shares 6,503 8,252
Repayment of principal under finance leases 7b (166) (103)
Bank loan 1,202 -
Net cash inflow from financing 7,539 8,149
(Decrease)/increase in cash in the year 7a (1,501) 1,701
STATEMENT OF TOTAL RECOGNISED GAINS AND LOSSES
For the year ended 31 December 2001
31 December 31 December
2001 2000
£'000 £'000
Profit/(loss) for the financial year 656 (279)
Currency translation difference on foreign current net investments (82) 100
Total recognised gains and losses relating to the year 574 (179)
RECONCILIATION OF MOVEMENTS IN EQUITY SHAREHOLDERS' FUNDS
For the year ended 31 December 2001
31 December 2001 31 December 2000
£'000 £'000
Profit/(loss) for the financial year 656 (279)
Other recognised gains and losses for the year (82) 100
New share issues 7,475 9,183
Expenses of share issues (900) (266)
Deferred equity consideration 423 -
Opening equity shareholders' funds 10,197 1,459
Closing equity shareholders' funds 17,769 10,197
NOTES TO THE PRELIMINARY ANNOUNCEMENT
For the year ended 31 December 2001
1. Basis of preparation
These financial statements do not constitute financial statements within the
meaning of Section 240 of the Companies Act 1985.
The statutory accounts for the year ended 31 December 2001 have not been
audited. They 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 the company's Annual General
Meeting.
The financial information for the year ended 31 December 2000 is extracted from
the statutory financial statements for the year, which have been delivered to
the Registrar of Companies. The auditors reported on those financial statements
and their report was unqualified and did not contain a statement under 237(2) or
(3) of the Companies Act 1985
2. Acquisitions
The consolidated Profit and Loss Account includes the results of three
acquisitions made during the year. The results for Petards Civil Systems
Limited are included for 11 months, Pentyre Limited for 6 months and Joyce-Loebl
Limited for just 10 days following their respective acquisition dates.
3. Exceptional costs
The exceptional costs of £74,000 relate to the reorganisation of the Group's
existing business units into the Petards Emergency Services and Petards Vision
Divisions.
4. Dividend
The Board of Directors does not recommend the declaration of a dividend for the
year ended 31 December 2001.
5. Earnings / (loss) per share
The basic earnings per share for the year ended 31 December 2001 is based on the
profit for the year on ordinary activities after taxation of £656,000 (2000:
loss £279,000) and on the weighted average number of ordinary 1p shares of
42,269,753 (2000 - 35,080,047, restated for the 1 for 10 share consolidation).
The basic earnings per share before goodwill amortisation was calculated on the
basic earnings above, adjusted to add back £397,000 (2000 - £126,000), being the
amortisation of goodwill in the year.
The diluted earnings per share for the year ended 31 December 2001 is based on a
profit on ordinary activities after taxation of £656,000 (2000: loss £279,000)
and on an adjusted weighted average number of ordinary 1p shares of 43,830,298
(2000 - 37,016,569, restated for the 1 for 10 share consolidation). The
difference between this weighted average number of shares and the weighted
average number of shares used for the basic earnings per share relates to the
share options.
6. Post Balance Sheet Events
The balance sheet has been further strengthened since the year end with the
share placings of £0.4m and £3m (before expenses) in January and March 2002
respectively, to conclude the financing of the purchase of Joyce-Loebl Limited
and providing for future working capital requirements.
7. Cash Flow Information
a) Reconciliation of net cash flow to movement in net cash/(debt)
Unaudited Audited
2001 2000
£'000 £'000 £'000 £'000
(Decrease)/increase in cash in the year (1,501) 1,701
Net cash (inflow)/outflow from debt (1,036) 103
Change in net debt resulting from cash flows (2,537) 1,804
Loans and finance leases acquired with subsidiary (109) (6)
Other movements/non cash items:
- new finance leases (182) (117)
- other loans (750) -
- other (7) -
Translation difference (24) -
Movement in net cash in the year (3,609) 1,681
Net cash/(debt) at 1 January 1,269 (412)
Net (debt)/cash at 31 December (2,340) 1,269
b) Analysis of net cash/(debt)
At 1 January Cash flow Acquisitions Other non Exchange At 31
cash movement December 2001
2001 changes
£'000 £'000 £'000 £ '000 £'000 £'000
Cash at bank and in 1,527 (973) - - - 554
hand
Overdrafts (94) (528) - - (24) (646)
1,433 (1,501) - - (24) (92)
Debt due after 1 year - (1,202) - (757) - (1,959)
Finance leases (164) 166 (109) (182) - (289)
(1,036)
Total 1,269 (2,537) (109) (939) (24) (2,340)
8. Report and Accounts
Copies of the Report and Accounts will be sent to shareholders in due course.
9. Announcement
Copies of this announcement will be available from the Nominated Adviser:
Collins Stewart, 9th Floor, 88 Wood Street, London, EC2V 7QR for 14 days from
the date of this announcement.
This information is provided by RNS
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