Interim Results

Screen PLC 5 September 2001 SCREEN PLC: Interim Statement Announcement Half Year Ended 30 June 2001 Sales up 173%; Demand for Products and Services Remains Buoyant Screen Plc ('Screen'), a leading provider of advanced security and communication systems, announces its interim results for the six months ended 30 June 2001. Screen develops and supplies mobile data, in-car video, control by touch command and control systems, mobilising and management information systems, wireless CCTV cameras and Customer Relationship Management software solutions. Screen's technologies and products provide solutions for the Police and Fire Services, and prison, local authority, utilities and commercial sectors. International distribution is through 46 countries in Europe, Africa, the Middle East and Australasia. Highlights of the Results * Results on target and confirm Chairman's optimism in his letter to Shareholders in May * Positive progress in extending the product range and value of the IPR embedded in products * All businesses contributed positively, except one division due to a switch from the old product range to the new ProGenie range * Revenues, including acquisitions, more than doubled to £5.6m (2000: £2.1m) * Improved operating profit before goodwill amortisation of £44,000 (2000: loss £247,000) * Reduced net loss before tax of £95,000 (2000: loss £210,000) * No dividend is being paid, as forecast * Completion of two acquisitions took effect, one making a good contribution to results * Splitting of Chairman and CEO roles, appointment of a new Group Chief Executive * Net cash of £1.8m in significantly larger balance sheet of £14.6m Operational * Growth in branded products and availability of such products internationally * Sales/installations of wireless based mobile rapid deployment camera exceeded whole of 2000 * Focus on larger more profitable customers in fixed mobile CRM Solutions * Contract gains, new products, innovations in mobile computing and control systems * Sales, profits exceeded expectations in software and systems solutions to Emergency Services * Strong order books Regarding the Outlook, Owen Williams, Screen's Chairman said: 'Expansion of our Group of companies continues apace. The drivers for our growth being the increases in our product range and our market development in the industry sectors and international markets we address. Demand for our products and services remains, as we thought it would, buoyant. Our order books are developing well and we see no diminution in the demand for our products and services.' For further information, please contact: Screen Plc Binns & Co PR Ltd Owen Williams Peter Binns/Caroline Anderson Tel: 01628 820 011 Tel: 020 7786 9600 www.screenplc.com Chairman's Statement Introduction I am very pleased to present our results for the six month period ended 30 June 2001. They confirm that the optimism of my last letter to shareholders, on 3 May 2001, was well founded. At the time I described the very positive progress being made in extending our range of products following strong internal development activity and investment. I also highlighted the value of the Intellectual Property Rights embedded in products owned by us as a result of the acquisitions we had made. Together with the extensive marketing and distribution channels being opened to make these and derivative products more widely available, particularly internationally, this range will power our growth for the foreseeable future. All businesses contributed positively to the result except Petards Mobile Intelligence (PMI) where the switch from the old product range to the new ProGenie product range caused a short term impact on sales and operating profit. The new ProGenie product range prospects remain strong and the Directors are fully confident of its long term potential. These results, therefore, have been achieved despite below expectation results of PMI, illustrating the strength and resilience of the Group's overall product range. Results Revenues for the 6 months to 30 June 2001, including acquisitions, more than doubled to £5,601,000 (to 30 June 2000: £2,050,000) exceeding the full year revenues of 2000. Operating profits for the period improved from a loss of £247,000 to a profit of £44,000. Net loss before tax for the period was £95,000 (2000: £210,000). Your Board is not recommending the payment of a dividend. The acquisition of the Civil Systems Division of BAe Systems Plc, described in our last annual report and accounts, was completed in February 2001. These results therefore reflect the contribution it made for that part of the period in which it was in our ownership. Board Appointment On 1 August 2001 we announced the appointment of Claes Bergstedt as Chief Executive of Screen Plc. Mr Bergstedt has held a number of senior positions in the technology industry including from 1995-1997 general manager, business solutions at Cable & Wireless and more recently deputy managing director of Psion Teklogix where he played a key role in integrating the Canadian company into Psion following its acquisition by that company. The range of products and services we have now assembled has worldwide application across a range of private and public sector markets. To realise this potential rapidly, effectively and safely requires a blend of skills and experience within the executive management team, which, with the arrival of Claes Bergstedt, is now considerably enhanced. Acquisition On 16 July 2001 we announced the acquisition of Pentyre Limited, a company providing systems for surveillance, imaging, real time control and communications having amongst its customers London Underground, BT, Bosch and several local authorities. We believe this will prove to be an important addition to our Group as it brings highly skilled personnel with relevant industry and application knowledge; an excellent range of products and an additional and largely complementary customer set. We take great care in the selection, integration and control of businesses coming into the Group. Pentyre Limited is in the process of being re-branded Petards Projects and whilst we do not anticipate it making a substantial contribution to the Group this year, it represents a key element of the Group's development strategy. As this company was acquired after the end of the period about which we are reporting it made no contribution to the results being reviewed. Petards Vision This company provides systems and products supporting CCTV and other electronic surveillance applications. Sales and installations of Swift, our wireless based mobile rapid deployment camera, continued to grow with revenues in the six months from this source exceeding those of the entire 2000 year albeit at slightly lower margins to our conventional business. During the period we introduced new models to the Swift range increasing transmission technology and deployment options. We also completed the groundwork to ensure the entire Swift range can be successfully marketed internationally. A new video system, Gemini, was introduced to the range of products now offered by the company. This enables multiple concurrent video signals to be run over a single video transmission channel giving customers the ability to make more effective and greater economical use of their fibre, microwave or copper network communications infrastructure. This provides the ability to feed the video signal from a Swift camera into an existing fixed location camera network, facilitating the onward long-haul transmission of video signals. A new version of our successful COBYT command and control system has been introduced, for which the first order has already been received. This latest offering, COBYTNet, operates on the Microsoft Windows operating system platform and further extends the functionality of our control system offerings. With CCTV coverage increasing, it is becoming important to our users that they can, at all times, monitor the use of their CCTV systems. Therefore, a new version of our management information product, COBYT Management Tool (CMT), has been developed and released. This product provides management information and analysis concerning the usage and operation of our COBYT command and control systems. We anticipate that this will become an essential tool for many, if not all, our existing users - particularly those in the public sector - and thus opens up further upgrade opportunities. With the growing focus on public safety issues and confirmation of the value of urban center CCTV coverage further funds are being made available from central government to extend their use. Petards Vision expects to benefits from this development and as a result the prospects for this company continue to look promising. Petards Corporate Knowledge Petards Corporate Knowledge (PCK) develops and supports fixed mobile Customer Relationship Management (CRM) solutions that markedly improve an organisation's ability to find, win and retain customers. Its leading product CRMsoft can be deployed as a corporate knowledge delivery system making company information wherever contained, available to all. We believe that the combination of this product together with our ProGenie hand held product, referred to in more detail later, will open up considerable new business opportunities. During the period under review the company has strengthened its senior management team and implemented a new business model in which it focuses on large and more profitable customers with sales of lower value or less complexity being re-directed towards our growing number of resellers. Performance in the period was good with notable sales successes including a contract approaching £0.5m for the Computer Patents Annuities in Jersey where it is working alongside the international IT consultancy Perot Systems. Another recent win was the contract to supply IT Direct, the recently privatised IT support arm of Lloyds of London. Petards Mobile Intelligence Petards Mobile Intelligence (PMI) designs and supplies mobile computing and control systems. During the first half of 2001, PMI has successfully augmented its core skills and products to address not only the Emergency Services but also the commercial sector for mobile computing. The development activities required to maintain our strong market position have continued throughout the full range of Mobile Data Terminals (MDTs) and hand held PC products. The product development capabilities of the company have also been enhanced by the recruitment of an experienced team of software development engineers to supplement existing staff. This enabled the rapid launch of new variants of the ProGenie hand held PC with GSM and shortly GPRS capability; a 1GHz Pentium III option of the 'in-vehicle' PC and Automatic Number Plate Recognition (ANPR) software applications. We consider that the prospects for the whole of this product range are excellent, with customer requirements driving product enhancements and new product development. The police market for MDTs has been slow due to delay in the introduction of their new voice and data system. However, the development of the new high speed MDT for the ANPR market has provided PMI with another leap in technology that will establish a new standard for others to follow. With the Emergency Services starting to emerge with new mobile requirements, the MDT and ProGenie platforms provide a wide range of solutions ready to supply immediately. The company has established a good UK reference base for the ProGenie hand held PC and has achieved above expectation success in establishing a distributor base in other European countries. The chosen distribution partners have extensive experience in selling enterprise solutions to their own vertical sectors. Marketing attention is now focused on the support of the indirect channel to introduce ProGenie into high-volume mobile worker based projects through these distributors. An in-house development support team capable of adapting ProGenie's core software to achieve project specific requirements back this up. The forecasts of the ProGenie sales are steadily increasing with new potential projects appearing on a weekly basis. Our in-car video system, ProVida, is in a very positive development phase. The sales organisation has been enhanced and trained to meet the increasing and fast-growing demands from the export markets. A further 4 countries have granted approvals for the use of our in-car vehicle products. Major bids have been submitted where we are expecting successful outcomes. We anticipate further growth in the use of this technology over the next few years. A re-designed in-car video system, based on NTSC technology, is expected to be introduced to the North American market during the fourth quarter. The announcement of the first order for Automatic Number Plate Recognition (ANPR) in April 2001 has been followed by a steady flow of UK orders. We have launched the product through our international distribution network and have already received considerable non-UK interest for ANPR. The level of integration and ease of use qualities provided by the ProVida ANPR system has, in our view, positioned the product well ahead of any competitive offering. Petards Civil Systems This business supplies software and systems solutions to the Emergency Services and in particular the Fire Service where they are seen as market leaders in Management Information Systems (MIS) solutions. Sales, revenue and profits have exceeded our expectations and the outstanding order book remains at a high level. The company has been relocated to strategically placed new premises where it also hosts the sales and demonstration facilities for all the products of the Group. Petards Civil Systems (PCS) progress under our ownership has been excellent and we remain confident of the value of the recent acquisition. Outlook Expansion of our Group of companies continues apace. The drivers for our growth being the increases in our product range - the results of skilled development on the part of our technical staff - and our market development in the industry sectors and international markets we address. Our strategy remains that of providing advanced technological solutions to business users in market sectors where we are or believe we can become dominant players. Demand for our products and services remains, as we thought it would, buoyant. Furthermore the geographical diversity of our activities and the preponderance of sales to the more stable public sectors will underpin our future prospects, which we view with considerable confidence. Our order books are developing well and we see no diminution in the demand for our products and services. Following the Placing in February to raise the funds for the purchase of the Civil System Division of BAe Systems Plc, our balance sheet stands at £14.5m. We have net cash of £1.8m and anticipate operating cashflow, excluding acquisitions, to be positive during the second half of the year. Owen Williams Executive Chairman 5 September 2001 Group Summary Profit and Loss Account Unaudited Unaudited Audited 6 months 6 months 12 months ended ended ended 30 June 30 June 31 December 2001 2000 2000 £000's £000's £000's Turnover Continuing operations 3,939 1,845 3,351 Acquisitions 1,662 205 1,731 5,601 2,050 5,082 Cost of sales (3,231) (1,192) (2,835) Gross profit 2,370 858 2,247 Administrative expenses (2,326) (1,105) (2,549) Operating profit/(loss) before goodwill Continuing operations (304) (295) (758) Acquisitions 348 48 456 44 (247) (302) Net interest receivable 30 50 85 Goodwill amortisation (169) (13) (126) Profit/(loss) before taxation (95) (210) (343) Taxation - - - Profit/(loss) after taxation (95) (210) (343) Minority interest - equity - 23 64 Profit/(loss) for the financial (95) (187) (279) period Earnings/(loss) per share (0.23)p (0.56)p (0.80)p Group Balance Sheet Unaudited Unaudited Audited as at as at as at 30 June 30 June 31 December 2001 2000 2000 £000's £000's £000's Fixed assets Intangible assets 8,323 2,797 6,834 Tangible assets 821 465 628 9,144 3,262 7,462 Current assets Stocks 1,376 552 910 Debtors 4,745 2,047 2,585 Cash at bank 2,313 2,067 1,527 8,434 4,666 5,022 Creditors: amounts falling due within one year Bank overdraft (513) - (95) Other creditors (2,433) (1,858) (2,186) Net current assets 5,488 2,808 2,741 Creditors: amounts falling due after more than one year (53) (10) (64) Net assets 14,579 6,060 10,139 Capital and reserves Called up share capital 17,599 9,034 13,122 Reserves (3,020) (2,956) (2,925) Equity shareholders' funds 14,579 6,078 10,197 Minority interest - equity - (18) (58) 14,579 6,060 10,139 Notes 1. Non Statutory Accounts These statements do not constitute financial statements within the meaning of section 240 of the Companies Act 1985. These statements have not been audited. No financial statements will be filed for the six months ended 30 June 2001. 2. Basis of preparation The statements have been prepared in accordance with the accounting policies set out in the Group's 2000 annual report and accounts. 3. Taxation No provision for taxation has been made in profit and loss account for the six months to 30 June 2001. No provision was required in the six months to 30 June 2000. 4. Earnings/(loss) per share The loss per share for the six months to 30 June 2001 is based on the weighted average number of ordinary 1 pence shares of 41,275,877. The loss per share for the six months to 30 June 2000 is based on the weighted average number of ordinary 1 pence shares of 33,512,543, formerly reported as 335,125,436 ordinary 0.1 pence shares, but now restated following the 1-for-10 consolidation effected 26 February 2001. 5. Intangible assets Intangible assets have risen by £1,489,000 since 31 December 2000, mainly due to the goodwill acquired with the purchase of the Civil Systems Division of BAe Systems Plc in February 2001, together with the purchase of the remaining minority interest in Petards Mobile Intelligence Ltd. 6. Further copies Copies of the interim statement will be sent to shareholders. Further copies will be available from the Company's registered office at Stubbings Barn, Burchetts Green Lane, Burchetts Green, Maidenhead, Berks, SL6 3QP for the next 14 days. Audit Committee Report The Audit Committee consists of the Non-Executive Directors, Mr Ian Taylor MBE and Mr Charles Hughes. It reviews the Group's financial controls, accounting policies and financial reporting. The Audit Committee has reviewed the unaudited interim financial statements and is satisfied that they have been prepared using accounting policies consistent with those adopted by Screen Plc in its financial statements for the year ended 31 December 2000. The Committee in the course of its review has not become aware of any material modifications that should be made to the interim financial statements as presented.
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