Final Results
Screen PLC
26 April 2004
SCREEN PLC:
PRELIMINARY RESULTS ANNOUNCEMENT
Screen Plc ('Screen' or the 'Group'), which focuses on the development and
supply of security and surveillance solutions, announces preliminary results for
the year ended 31 December 2003, a period of progress towards recovery for the
Group.
In his Statement Tim Wightman, Screen Executive Chairman, said:
'In 2003, Screen made significant progress in recovering from its difficulties
of the previous year, but we also fell well short of the financial and operating
objectives which we had set ourselves.
As will be clear from the financial results reported below, Screen has now
reached a crucial stage in its recovery. The Group operates in attractive
growing markets; it has the people, skills and products and most importantly,
the customers to thrive. The Group continues to have the support of its bankers,
Bank of Scotland; but our business plans have been hampered by a lack of capital
resources. The Directors acknowledge that to achieve all the ambitions set out
in this report, additional funding will be required.'
Financial Highlights
• Turnover of £21.253m (2002: £18.686m)
• Gross profit of £8.718m (2002: £8.206m)
• Operating Loss (before exceptionals) reduced to £1.419m (2002: £3.651m
loss)
• Exceptional charge of £0.543m (2002: £10.064m)
• Pre-tax loss of £1.958m (2002: £15.149m loss)
• Loss per share of 2.9p (2002: 27.8p)
• Bank borrowings at 31 December 2003 were £5.569m (2002: £4.080m)
• No dividend
Other highlights
• Disposal of Petards Emergency Services Ltd for £0.866m in March 2004 -
proceeds to reduce borrowings
• Immediate recovery plan to focus on internal systems and controls
• Staff costs and directors' emoluments reduced by £2.395m in the year
• Group consolidated into two divisions: Petards and Joyce-Loebl
2003 contract gains - Petards
• £1.600m contract with the Metropolitan Police for CCTV control
facilities
• Orders from 19 police forces for the Provida ANPR system, inc. £1.000m
contract with the Metropolitan Police
• Petard's Swift camera and Provida mobile police video evidence unit
now being sold in the US
2003 contract gains - Joyce- Loebl
• £1.500m contract with RAF to equip fleet of AWACS aircraft with new
computer displays
• £1.100m contract with Alvis Vickers to manufacture engine/transmission
control systems for defence vehicles
• £2.700m order for CCTV systems for Portuguese trains, to be delivered
between May 2004 and September 2005
• £15.000m total year end order book
Regarding Outlook, Tim Wightman said:
'The improvements now being introduced will lead to a leaner, more focussed and
more commercial organisation than before. Nevertheless, such improvements do
take time to implement and even longer to take effect, especially when they
involve changes in long established practices and attitudes. Accordingly, I
would not expect the financial benefits until the second half of 2004, but by
then I expect the Group to be on a sounder footing.'
Contacts:
Screen Plc Binns & Co PR Ltd
Tim Wightman, Executive Chairman Tel: 01789 262 664 Paul McManus
Peter Binns
info@screenplc.com Tel: 020 7786 9600
http://www.screenplc.com Mob: 07980 541 893
Editor's notes:
Screen Plc is an advanced Engineering, Security Systems, and Information
Technology (IT) Company developing solutions for use in its primary markets of
Security & Surveillance, Transport and Defence. It is a recognised industry
leader in its core fields of video processing, mobile data and complex
electronics for demanding environments. With over 200 staff in the UK and
Europe, Screen delivers solutions into more than 40 countries, supporting both
governments and major corporations across the world.
Screen Plc supplies
• confidential security solutions to government departments and
agencies
• video evidence & enforcement and mobile data solutions to police and
security forces
• passenger information systems and onboard CCTV security solutions to
the rail transport industry
• complex electronic solutions for demanding military environments
CHAIRMAN'S STATEMENT
INTRODUCTION
In 2003, Screen made significant progress in recovering from its difficulties of
the previous year, but we also fell well short of the financial and operating
objectives which we had set ourselves. Turnover grew satisfactorily, but because
of a change in product mix Gross Profit grew by only £0.512m (6%). Overheads
were reduced by £1.521m (15%) and this contributed to a fall in Operating Loss
before exceptional items of £2.232m (61%). However, we did not move into profit
in the second half as we had originally projected, and as a result of this and
an increase in working capital, borrowings and gearing increased.
As will be clear from the financial results reported below, Screen has now
reached a crucial stage in its recovery. The Group operates in attractive
growing markets; it has the people, skills and products and most importantly,
the customers to thrive. Our staff, customers, suppliers, bankers - and
shareholders - have shown loyalty and patience, often under trying circumstances
and we are extremely grateful. The Group continues to have the support of its
bankers, Bank of Scotland; but our business plans have been hampered by a lack
of capital resources. The Directors acknowledge that to achieve all the
ambitions set out in this report, additional funding will be required.
PROFIT & LOSS ACCOUNT
Group turnover for the year ended 31 December 2003 was £21.253m, an increase of
13% over the figure of £18.686m in the previous year. However, Gross Profit grew
by only 6% to £8.718m (2002: £8.206m) because of a change in product mix.
Although the Group continued to make an operating loss before exceptional items
in 2003, at £1.419m this was significantly reduced from the loss of £3.651m
experienced in 2002. Exceptional items were £0.543m. These consisted of
reorganisation costs of £0.065m, the impairment of goodwill amounting to £0.229m
and executive severance payments of £0.249m. The total of exceptional items in
2002 was £10.064m.
The Operating Loss amounted to £1.962m (2002: £13.715m loss). After a net
interest gain of £0.004m the loss before tax was £1.958m (2002: £15.149m loss).
The loss per share was 2.9 pence (2002: 27.8 pence).
BALANCE SHEET
Consolidated Net Assets at 31 December 2003 were £2.212m (31 December 2002:
£3.028m).
BORROWINGS
At 31 December 2003, the Group had total net borrowings of £5.751m. (31st
December 2002: £4.323m. The Group has continued to receive support from its
bankers and a new medium term loan facility is being finalised.
CASH FLOW
During the period under review the Group had a net cash outflow from operating
activities of £2.729m (2002: £4.080m). Net Capital Expenditure in the period was
£0.317m (2002: £0.366m). During May and June the Group raised funds of £1.092m
before expenses, by means of placings of new shares which were used to reduce
the Group's borrowings.
POST BALANCE SHEET EVENTS
On 12th March 2004 we disposed of the business and assets of Petards Emergency
Services Limited ('PESL') for a net cash consideration of £0.866m. PESL develops
and supplies software used within the Fire Services. In 2003 its turnover was
£2.754m on which it made profit before tax of £0.243m. PESL's net assets were
£0.109m. The proceeds were used to reduce the Group's borrowings.
DIVIDENDS
The Board is not recommending the payment of a dividend.
THE BOARD
Following the Annual General Meeting in June, having achieved the first stage of
the Group's reorganisation, Ian Taylor became non-executive Deputy Chairman and
I succeeded him as non-executive Chairman. Adrian Merryman stepped down from the
Board and the position of Chief Executive on 25th November 2003 and I became
executive Chairman. On 22nd January 2004 Chris Langridge was appointed Finance
Director and David Mills a non-executive director. On 15th March 2004 David
Hayes was appointed an executive director responsible for the Petards division,
which embraces most of the Group's security and surveillance software and
hardware products.
THE CURRENT POSITION
In the past, the Group failed to meet its management responsibilities to
integrate, develop and add value to the businesses it had acquired. These
businesses progressed as best they could, almost independently, with
inexperienced management, incomplete strategies and poor systems. The Group
lacked focus; lost opportunities for synergies; incurred excessive costs and
absorbed cash. The time and cost of rectifying these shortcomings have to be met
before the eventual benefits can be realised. Already, there are some positive
signs, for example, between 2002 and 2003 staff costs and directors' emoluments
fell by £2.395m (23%).
GROUP STRUCTURE
In future, the Group will focus on the development and supply of security and
surveillance solutions. Since the end of last year, we have moved rapidly to
consolidate the Group into two divisions which trade as Petards and Joyce-Loebl.
Both of these divisions recorded some notable contract gains in 2003, which I
refer to in the highlights of our Operations Report.
Petards design, manufacture and supply a range of advanced security and
surveillance solutions for customers in the UK and overseas. Four operating
locations have been rationalised into two. Petards Emergency Services Ltd was
sold, as it did not fit with our core activity. We have introduced experienced
management and are currently in the process of strengthening the underlying
business systems. We are also investigating opportunities to combine with other
businesses in this sector in order to achieve critical mass, synergies and
opportunities for rationalisation.
As I reported in November, the cost of developing our Advantage.Net+ software
has been considerable in terms of staff resources and lost sales. This is our
core command and control software product and it is an essential part of our
future plans. The changes that we have made improve its functionality and
importantly its user friendliness. In the second half of the current year, we
should see the benefits of this, but significant costs and disruption have been
incurred in the current half year.
Joyce-Loebl is a European defence sub-contractor and developer and supplier of
passenger information and CCTV systems for use on trains in the UK and Europe.
We are currently carrying out a thorough strategic review to decide how best
these activities can contribute to the Group's future core business. The outcome
of this review will be known during May and I will report further about it to
shareholders at the Annual General Meeting in June. We are also strengthening
the underlying business systems at Joyce-Loebl to reduce working capital and
improve delivery performance.
AREAS FOR IMPROVEMENT In his report last year, Ian Taylor identified four areas
of emphasis for improvement within the Group:
• Implement appropriate accounting and cash management processes to
reflect more accurately our trading position and conserve our working
capital resources.
• Tackle in the operational divisions, the cultural change required to
inject commercial controls alongside commitment to strong technology
development.
• Focus on maximising the significant potential of our current product
and service offerings, and those emerging from our product development
pipeline.
• Expand our selling efforts in the United States where the homeland
security market is embryonic.
Whilst some progress has been made in these aspects, I am disappointed that not
more has been achieved. Nevertheless, they remain important and we will continue
to concentrate on them.
BALANCE SHEET We are engaged in steps to strengthen the balance sheet and the
Bank of Scotland is being constructive and supportive in this process.
Internally, we are continually reviewing cost and cash saving measures,
evaluating non-core elements of the business and, if appropriate, we will
realise assets. Finally, we are also in discussions with our advisers about the
options for increasing the company's equity capital base.
STAFF
I should like to express my thanks to all the Group's employees who have shown
their strong commitment during another difficult year. After a period of
transition, the strengthened team are beginning to settle down and I am
confident that they will soon see the fruits of their labours in the form of a
more vibrant and financially successful organisation.
OUTLOOK FOR 2004
The improvements now being introduced will lead to a leaner, more focussed and
more commercial organisation than before. Nevertheless, such improvements do
take time to implement and even longer to take effect, especially when they
involve changes in long established practices and attitudes. Accordingly, I
would not expect the financial benefits until the second half of 2004, but by
then I expect the Group to be on a sounder footing.
Tim Wightman
26 April 2004
OPERATIONS REPORT
INTRODUCTION
In 2004, Screen will become increasingly focussed on security and surveillance.
In terms of its experience, reputation and customer base it will be a leading
player in its market niche. I believe that it will be attractive to current and
future employees, customers, end-users and technology investors.
Our immediate challenges are nearly all internal, resulting from weak systems
and controls, which have caused the lack of profitability. Our priorities in
dealing with these issues are referred to in the Chairman's Statement.
Our vision is to:
Create the bench-mark as a world-class developer and supplier of security and
surveillance solutions, in terms of product design, service, customer
relationships and financial performance.
• We intend to focus on the sophisticated end of the market where our
technical expertise and market knowledge will earn us a good financial
return, rather than at the simpler, lower cost, more competitive end.
• We want to work closely with the end-user and our channel partners,
bringing expertise, experience, professionalism and innovation to
define and develop solutions to meet the end-user's security and
surveillance requirements.
• Within the area of our focus, we want to be seen as the best developer
and supplier of security and surveillance solutions world wide.
OUR PRODUCTS AND SERVICES
The Group uses its technology to address Homeland Security related issues in a
variety of ways. Petards are acknowledged as innovators in the design,
manufacture and supply of advanced security and surveillance solutions such as
the Advantage range of CCTV command and control systems and the Swift rapid
deployment wireless CCTV system. Petards are pioneers in the use of digital
video technology and the application of sophisticated software and database
technologies to make threat identification and response far more efficient and
effective. Petards supplies local and central government, police forces and
commercial customers, both in the UK and abroad and counts among its customers
HM Prison Service, the British Library, the Metropolitan Police Service, the
Inland Revenue and the Port of London Authority.
Our police mobile video evidence systems have helped increase conviction rates
and our new Provida ANPR solution, a mobile automatic number plate recognition
('ANPR') system, is providing police with an important and effective new tool
for threat identification.
Joyce-Loebl develops sophisticated on-board CCTV security and surveillance
solutions for the rail transportation industry. It also provides the rail
industry with passenger information systems. As a defence sub-contractor, it
supplies European defence forces with aircraft counter measures against incoming
missile threats. It also manufactures sophisticated vehicle electronics and
ruggedised communications and IT equipment that can operate in the harshest
operating environments.
MARKETS
The Group's products and services are used by the security services and a wide
range of commercial and governmental organisations. Given the current global
terrorist threats, the markets we address are growing and critical to our
collective future. Although the Group is not involved in the manufacture of
conventional CCTV cameras, the CCTV market is important to us because our
software is used to integrate and control CCTV networks.
The UK market can be divided into central government, local government and
commercial. With the high level of terrorist awareness, central government
spending has been strong and high-end projects, which can cost up to £3.000m,
are more resilient to competition. Government organisations are prepared to pay
a premium for bespoke systems that can be integrated into their existing
security networks. Recently, it was announced by the Home Office that £15.000m
has been allocated to specialist police forces to improve surveillance and
intelligence gathering.
Local government spending has been subdued as previous central government funded
projects have come to an end and local government budgets have come under
pressure. We have noticed a weakness in demand for our Advantage.Net software in
this market, but sales of our Swift rapid-deployment camera have remained
strong. These cameras can be easily moved between different locations and used
without the requirement for wiring or infrastructure, hence making the most of
tight budgets.
In the commercial sector, a return to more positive economic conditions should
lead many companies to review their current security infrastructure. A recent
report showed that while 3 out of 4 companies felt security to be a top
priority; most companies have only looked at their IT assets and have done
nothing to improve security for their employees or premises. One opportunity to
penetrate this sector is the growing convergence of IT and CCTV equipment. The
entry of the IT systems integrators provides scope for Petards to introduce its
market-leading software expertise to wider end-users by forming partnerships
with these companies and leveraging off their marketing power and distribution
networks to break into new markets.
There are several technological developments in the market which are expected to
strengthen future demand. Networked CCTV systems provide increased features and
economies of scale in capital and operating costs. One monitoring centre (or
several networked centres) is able to control a large number of surveillance
systems, regardless of their distance or location. Around 90% of CCTV systems
currently in use are analogue, but there is an increasing shift from analogue to
digital, which provides a clearer image that can be further enhanced through the
use of imaging software. Petards is currently a partner in the DTI RETRIEVE
research project aimed to maximise the effectiveness of the transmission,
storage and retrieval of digital CCTV images. Another trend is to the growing
use of recognition software, particularly ANPR. The technical expertise required
to design and maintain these more complex systems is a particular strength of
Petards.
The Group is also involved with mobile surveillance systems and these specialist
areas are growing strongly in the European and US markets that we serve. The
introduction of ANPR applications into our Provida police mobile video evidence
systems has proved popular with police forces in the UK and abroad. Our train-
based CCTV systems are also in strong demand both for driver and track
monitoring and for in-carriage security. The Cullen Report, following the
Paddington rail accident, and the recent bombing in Madrid have both served to
reinforce the important part that CCTV systems can play within a rail
infrastructure. It is unfortunate that delays in new rolling stock programmes
and track upgrades meant that in 2003, shipments of CCTV systems in the UK were
deferred.
Finally, the sectors of the defence market in which we are involved continued to
be strong in 2003, particularly the demand for aircraft counter measure systems
associated with the Iraq war. Sub-contract demand for fighting vehicle
electronics is healthy with several major projects in hand.
2003 HIGHLIGHTS
• Petards, in partnership with NTL's Public Safety Group, was selected
by the Metropolitan Police Service to provide CCTV control facilities for
its three new C3i control centres. C3i - command, control, communication
and information - is the biggest business change programme ever undertaken
by the Metropolitan Police Service and has been introduced to develop an
improved command and control service for London. These super-centres will
have the capability to operate as one unit that will become the largest
Operational Command Unit in the United Kingdom. The system will give over
540 control room positions integrated access to 3,500 networked CCTV
cameras. The super-centres will use an Integrated Communications Platform
(ICP) developed by Petards based on our Advantage software. The value of
this contract exceeds £1.600m.
• Work has now been completed on a revised version of the Advantage.Net
software. As reported last November, this work proved to be more expensive
and time-consuming than originally planned. A programme to upgrade existing
customer sites is now almost complete.
• Since launching its Provida ANPR mobile video evidence system Petards has
received orders from 19 UK police forces and abroad. This includes a £1.000m
order from the Metropolitan Police Service where it has become their mobile
ANPR standard. The system has successfully supported security and national
intelligence, the detection of crime, disqualified drivers and unlicensed
and unregistered vehicles.
• Petard's rapidly deployable Swift camera and the Provida 3000 mobile
police video evidence and enforcement unit are now being sold in the U.S.A.
We see a big opportunity for both these products internationally and we are
strengthening our distributor network accordingly.
• Joyce-Loebl's total order book at the year end remained strong at
£15.000m, as new orders offset deliveries to customers although £1.000m
revenue on Rail Transport projects was deferred into 2004. For example:
1. Joyce-Loebl Defence won a contract to equip the RAF fleet of AWACS
aircraft with new computer displays. The contract, worth approximately
£1.500m (with potential for a further £0.500m to support the equipment)
is for the replacement of all mission data displays on the aircraft.
More than 100 displays will be provided under the contract and will be
fitted to all aircraft by April 2005.
2. Joyce-Loebl Defence won Phase 3 of a contract from Alvis Vickers to
manufacture the VICS engine/transmission integrated control systems for
Trojan and Titan vehicles. The order is worth £1.100m.
3. An order, worth £2.700m was received in September from Caminhos de Ferro
Portugueses, EP (Portuguese Rail) for the provision of 90 train sets of
CCTV equipment for the Lisbon Suburban Line. The order is for delivery
between May 2004 and September 2005.
SUMMARY
In 2004, we will be concentrating on getting the basics right, to capitalise on
our strong products and market positioning. We shall be placing a strong
emphasis on customer service and improved delivery performance.
Tim Wightman
26 April 2004
FINANCIAL REVIEW
Trading
The turnover for the Group for the year ended 31 December 2003 totalled £21.253m
compared to £18.686m for 2002, an increase of 13.7%. Although gross profits rose
£0.512m to £8.718m in 2003, the gross margin decreased from 43.9% in 2002 to
41.0% in 2003 due to changes in the mix of products sold.
These changes particularly affected our defence division, Joyce-Loebl , where an
increase in sales of products containing a higher element of bought-in
sub-assemblies significantly reduced the gross margin achieved.
The drive to reduce the costs of running the Group, to the level which could be
reasonably expected for an organisation of similar size, achieved some success
in 2003. A £1.521m annual saving on administration expenses, to £10.088m in
2003, represents a decrease of 13.1% from the £11.609m incurred in 2002.
Research and Development
Expenditure on Research and Development reduced in 2003 to £1.195m (2002:
£1.982m) as major product developments completed.
Exceptional Costs
The two elements of Exceptional Costs were; the severance payments to two senior
executives amounting to £0.249m and the decision to centralise the operations of
Petards Mobile Intelligence (PMI), except for technology development, in Hemel
Hempstead in 2004. The costs associated with this consolidation include the
closure of the PMI offices in Copenhagen, (£0.046m), and Yorkshire (£0.019m).
The balance of goodwill of £0.229m relating to PMI A/S, the Danish subsidiary,
could not be supported on the basis of trading and deficiency of net assets and
has been eliminated.
Net Interest Receivable
Net Interest Receivable of £0.004m includes a gain of £0.288m on the disposal of
the £0.450m Lloyds TSB plc loan notes. Other net interest payable of £0.284m is
comparable with the 2002 charge of £0.228m, allowing for the increase in bank
borrowings over the course of the year.
Taxation
The taxation rebate for 2003 amounts to £0.144m. The two components of this are
the receipt of Research and development credits amounting to £0.215m offset by
unforeseen pre-acquisition corporation tax assessments on Joyce-Loebl Limited.
Balance Sheet
The main components of the £0.816m reduction in net assets, were as follows:
Intangible Assets - a reduction of £0.278m which, as noted under Exceptional
costs above, is primarily driven by the writing off of the remaining balance of
the goodwill in PMI A/S.
Fixed Assets - the prudent accounting policy on depreciation, where all fixed
assets are written off over 4 years, means that unless there are significant
additions to fixed assets every year depreciation charges will result in a net
annual reduction of asset value. In 2003, the net reduction amounted to
£0.308m.
Increases in creditors over one year and provisions of £1.066m partially offset
by an overall improvement of £0.836m in net current assets, accounted for the
remainder of the reduction in net assets.
Borrowings
Borrowings with HBOS, which are all on a fully secured basis, increased by
£1.939m, to stand at £5.569m at the end of 2003. Management are in discussions
with HBOS to turn £5.000m of this facility into a Term Debt.
Other borrowings reduced by £0.511m in the year, due, primarily, to the
cancellation of the £0.450m debt due to Lloyds TSB plc.
Cash flow
The Group had a net outflow of funds in 2003 of £2.729m (2002 £4.080m). This was
mainly attributable to delays in finalising the contractual paperwork for two
significant contracts at Joyce-Loebl, which resulted in the collection of trade
debts of £2.400m being postponed until after the year-end.
In May 2003, Screen plc issued shares that realised gross proceeds of £1.092m.
Net proceeds of the issue were applied to repaying part of the Lloyds TSB debt -
management also subscribed to the debt repayment. - and the balance utilised for
ongoing working capital requirements.
Pension Scheme
Prior to acquisition by the Group in 2001, Joyce-Loebl Limited operated a
pension scheme providing benefits based on final pensionable pay. The scheme was
closed in August 1999 and winding up proceedings commenced. All investments have
been liquidated and remaining assets held as cash. The actuaries have confirmed
that the scheme is in surplus and there will be no further liability against the
Group. Although not included in previous accounts, the Directors consider that
disclosure should be made on the grounds of best practice.
Post balance sheet events
In March 2004, the net assets and business of Petards Emergency Services Ltd
were sold for a gross consideration of £1.250m. After apportioning pre-invoiced
post-sale maintenance contracts, net proceeds of £0.866m were obtained, the
substantial part of which was used to reduce bank borrowings.
CONSOLIDATED PROFIT AND LOSS ACCOUNT
For the year ended 31 December 2003
Before Exceptional After
exceptional Items (note exceptional
items 2) items
Year ended Year ended Year ended Year ended
Note 31 December 31 December 31 December 31 December
2003 2003 2003 2002
£'000 £'000 £'000 £'000
Turnover
Continuing operations 18,499 - 18,499 15,973
Discontinued operations 2,754 - 2,754 2,713
21,253 - 21,253 18,686
Cost of sales (12,535) - (12,535) (10,480)
Gross profit 8,718 - 8,718 8,206
Exceptional items 2 - (314) (314) (4,781)
Goodwill amortisation and 2 (49) (229) (278) (5,531)
impairment
Other administrative expenses (10,088) - (10,088) (11,609)
Total administrative expenses (10,137) (543) (10,680) (21,921)
Operating loss
Continuing operations (1,662) (543) (2,205) (12,818)
Discontinued operations 243 - 243 (897)
Total operating loss (1,419) (543) (1,962) (13,715)
Loss on disposal of - (1,206)
discontinued operations
Loss on ordinary activities (1,962) (14,921)
before interest
Net interest (payable)/ 4 (228)
receivable
Loss on ordinary activities (1,958) (15,149)
before taxation
Taxation 144 -
Loss on ordinary activities (1,814) (15,149)
after taxation being loss for
the financial year
Loss per share
Basic & diluted 4 (2.9p) (27.8p)
CONSOLIDATED BALANCE SHEET
As at 31 December 2003
31 December 2003 31 December 2002
£'000 £'000
Fixed assets
Intangible assets 616 894
Tangible assets 942 1,250
1,558 2,144
Current assets
Stocks 6,490 6,178
Debtors 5,927 3,615
Cash at bank and in hand - 1
12,417 9,794
Creditors: amounts falling due within one year (11,605) (8,539)
Net current assets 812 1,255
Total assets less current liabilities 2,370 3,399
Creditors: amounts falling due after more than one (158) (175)
year
Provisions for liabilities and charges - (196)
Net assets 2,212 3,028
Capital and reserves
Called up share capital 654 563
Share premium account 23,660 22,703
Profit and loss account deficit (22,102) (20,238)
Equity shareholders' funds 2,212 3,028
CONSOLIDATED CASH FLOW STATEMENT
For the year ended 31 December 2003
Year ended Year ended
31 December 2003 31 December 2002
Note £'000 £'000 £'000 £'000
Net cash outflow from operating activities 5 (2,729) (4,080)
Returns on investments and servicing of finance
Interest received 288 81
Interest paid (259) (282)
Finance lease interest paid (25) (27)
Net cash inflow from returns on investments and 4 (228)
servicing of finance
Taxation
UK corporation tax 144 -
Capital expenditure
Purchase of intangible fixed assets - (51)
Purchase of tangible fixed assets (333) (422)
Sale of tangible fixed assets 16 107
Net cash outflow from capital expenditure (317) (366)
Acquisitions and disposals
Purchase of businesses - (419)
- (419)
Net cash outflow before financing (2,898) (5,093)
Financing
Issue of shares 1,048 3,163
Repayment of principal under finance leases (137) (229)
Net cash inflow from financing 911 2,934
Decrease in cash in the year 6 (1,987) (2,159)
CONSOLIDATED STATEMENT OF TOTAL RECOGNISED GAINS AND LOSSES
For the year ended 31 December 2003
Year ended 31 Year ended 31
December December
2003 2002
£'000 £'000
Loss for the financial year (1,814) (15,149)
Currency translation difference on foreign currency net (50) 58
investments
Total recognised gains and losses relating to the year (1,864) (15,091)
RECONCILIATION OF MOVEMENTS IN EQUITY SHAREHOLDERS' FUNDS
For the year ended 31 December 2003
Year ended Year ended
31 December 2003 31 December 2002
£'000 £'000
Loss for the financial year (1,814) (15,149)
Other recognised gains and losses (50) 58
New share issues 1,092 3,822
Expenses of share issue (44) (253)
Deferred equity consideration - (423)
Opening equity shareholders' funds 3,028 14,973
Closing equity shareholders' funds 2,212 3,028
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 31 December 2003
1. Basis of preparation
These financial statements do not constitute financial statements within the
meaning of Section 240 of the Companies Act 1985.
The financial information set out in the announcement does not constitute the
company's statutory accounts for the years ended 31 December 2003 or 2002. The
financial information for the year ended 31 December 2002 is derived from the
statutory accounts for that year, 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 year ended 31 December 2003 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 statements have been prepared on a going-concern basis, which
assumes the group will continue to operate for the foreseeable future. The
appropriateness of the going-concern basis of preparation is dependent upon the
group operating within its cash resources.
The directors have prepared cashflow forecasts for the period ending 30 June
2005. Although currently repayable on demand, the group's banking arrangements
are in the process of being formalised, and the group's bankers have confirmed
their willingness to continue for at least 12 months to provide the level of
financial facilities that the directors' forecasts show will enable the group to
continue to operate for the foreseeable future.
Whilst there can be no certainty as to the achievement of financial forecasts,
the directors have, at present, no reason to believe that the group will be
unable to continue to trade within the cash resources made available under the
present and anticipated banking arrangements.
Accordingly, the financial statements have been prepared on a going-concern
basis and do not include any adjustments that would result from the
circumstances of the group's current cash resources not being adequate.
2. Exceptional costs
2003 2002
£'000 £'000
Goodwill impairment 229 5,283
Inventory provisions - 2,333
Debtor provisions - 1,526
Reorganisation costs 314 783
Other provisions - 139
543 10,064
The exceptional charges were incurred following the review of the business in
2003 as described in the Chairman's Statement. Rationalisation of the Group has
resulted in the closure of two offices and the associated costs of this and
other restructuring are included in Reorganisation costs. The Director's annual
review of valuations carried in the Group's Balance Sheet has resulted in an
exceptional write-down of goodwill because of reduced market valuations of net
worth.
3. Dividend
The Board of directors does not recommend the declaration of a dividend for the
year ended 31 December 2003.
4. Loss per share
The calculation of the basic loss per share for is based on the loss for the
year on ordinary activities after taxation of £1.814m (2002: loss £15.149)
divided by the weighted average number of ordinary 1p shares of 61,777,457
(2002 - 54,511,705).
Due to the Group's loss for the year the diluted loss per share is the same as
the basic loss per share.
5. Net cash outflow from operating activities
2003 2002
£'000 £'000
Operating loss (1,962) (13,715)
Goodwill amortisation and provision for impairment 278 5,531
Depreciation of tangible fixed assets 613 610
Loss on sale of tangible fixed assets 9 21
Increase in stocks and work in progress (312) (875)
(Increase)/decrease in debtors (2,312) 5,619
Increase/(decrease) in creditors 957 (1,271)
Net cash outflow from operating activities (2,729) (4,080)
6. Reconciliation of net cash flow to movement in net debt
2003 2002
£'000 £'000 £'000 £'000
Decrease in cash in the year (1,987) (2,159)
Cash outflow from debt 137 229
Change in net debt resulting from cash flows (1,850) (1,930)
Other movements/non cash items:
- new finance leases (76) (183)
- other loans 450 300
Translation difference 47 (169)
Movement in net cash in the year (1,429) (1,982)
Net debt at 1 January 2003 (4,322) (2,340)
Net debt at 31 December 2003 (5,751) (4,322)
7. Analysis of net cash
At 1 January Cash flow Other non cash Exchange movement At 31 December 2003
2003 changes
£'000 £'000 £'000 £'000 £'000
Cash at bank and in hand 1 (1) -
Overdrafts (2,421) (1,986) 47 (4,360)
(2,420) (1,987) 47 (4,360)
Debt due within 1 year (1,659) 450 (1,209)
Debt due after 1 year - -
Finance leases (243) 137 (76) (182)
137
Total (4,322) (1,850) 374 47 (5,751)
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, Wood Street, London, EC2V 7QR for 14 days from the
date of this announcement.
--------------------------
This information is provided by RNS
The company news service from the London Stock Exchange
Monday, 3rd February 2025
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