Interim Results
Screen PLC
23 September 2003
For Release 23rd September 2003
SCREEN PLC
Interim Results for Six Months to 30 June 2003
Progress, Revenue Growth expected to continue Second Half; Operational
Improvements to continue
Screen Plc ('Screen' or the 'Group'), which serves the homeland security related
markets, with technology and products in security and surveillance, emergency
services and defence, announces interim results for the six months ended 30 June
2003.
In his first Statement to shareholders as Chairman, Tim Wightman said: 'I am
pleased to report about progress in the first half of 2003. The new management
has stabilised the business and introduced a sense of direction to the Group.
This stabilisation process, which was begun in the last quarter of 2002,
continued into the first quarter of 2003 and the results for the six month
period ending 30 June 2003, reflect the costs of this. New products are being
brought to market and the benefits began to come through in a significantly
stronger second quarter.'
Financial Highlights
• Revenues of £11.24m (2002: £9.72m).
• Like-for-like increase of 15.8% indicates positive start to year by
all businesses.
• Operating loss before net interest receivable and other income and
goodwill of £715,000 (2002: loss: £1.11m).
• Loss after tax of £583,000 (2002 loss: £11.9m).
• Consolidated net assets increased to £3.45m (2002: £3.02m).
• Borrowings reduced from peak of £6.00m to £4.00m (2002: £2.65m).
• Net cash outflow from operating activities of £1.06m (2002: £2.99m).
Operational Highlights
• Revenue and operating profit marginally ahead of expectations, in line
with cash flow projections.
• Continued progress in new business generation and product development.
• £1.6m Metropolitan Police contract to provide CCTV control facilities.
• Automatic Number Plate Recognition product launched in February;
orders from 19 UK police forces.
• Record order book at Defence and Transport business; further £6m from
3 contract gains: Portuguese Rail, Royal Norwegian Air Force, MoD.
Progress in Q3 2003
• Momentum has continued since end June.
• Delivery of mobile police Video Evidence/Enforcement system to US in
volume.
• New product for US and UK enforcement, security surveillance and
mobile police markets.
• New desert version of wireless remote camera system for Middle East
market.
• Board progressing its stated acquisition strategy.
• Change of auditors to KPMG LLP.
Regarding the Outlook, Mr. Wightman said:
'Costs associated with the Iraqi war have eroded homeland security spending in
the US and UK and continuing difficulties in the rail transport industry are
causing slippages in orders. We are pleased with the progress made in the first
half of the year and the operational improvements achieved so far in 2003. While
we expect to continue this progress, the revenue slippage that we are
experiencing will not enable us to meet the performance levels that we expected
at the AGM in June. The Board currently expects the Company to make a further,
albeit significantly reduced, operating loss in the second six months.'
Contacts:
Screen Plc
Adrian Merryman, Chief Executive
Andrew Lane, Chief Financial Officer Tel: 01932 753 970
info@screenplc.com
www.screenplc.com
Binns & Co PR Ltd
Peter Binns/Sam Allen/Jacqui Graves Tel: 020 7786 9600
Chairman's Statement
In this, my first opportunity to address the shareholders of Screen plc as
Chairman, I am pleased to be able to report on the progress made in the first
half of 2003 and to discuss the current state of our businesses.
As you may be aware, during 2002 Screen experienced extensive difficulties,
which led, inter alia, to the change of the entire executive board of the
company. The new management has stabilised the business and introduced a sense
of direction to the group. This stabilisation process, which was begun in the
last quarter of 2002, continued into the first quarter of 2003 and the results
for the six month period ending 30 June 2003, reflect the costs of this. New
products are being brought to market and the benefits began to come through in a
significantly stronger second quarter.
Results for the Period
Profit & Loss Account
Revenue for the six months to 30 June 2003 was £11,244,000 compared with
£9,718,000 in the previous year. This period on period increase of 15.8%
highlights the positive start to the year made by all our businesses.
The Group returned an operating loss before net interest receivable and other
income and goodwill of £715,000 for the period to 30 June 2003, compared with an
operating loss of £1,110,000 in the comparative period.
After an interest charge of £131,000 (2002: £91,000), other interest receivable
and similar income of £287,500 (2002: nil), goodwill amortisation of £24,000
(2002: £7,106,000) and exceptional items of £nil (2002: £3,602,000), the loss
after tax in the period was £583,000 compared with a loss of £11,909,000 in
2002.
The other interest receivable and similar income of £287,500 included in the
period relates to the gain made on the cancellation of the £450,000 loan note
acquired by management earlier in the year, which was repaid for £162,500 in
June 2003.
Balance Sheet
Consolidated net assets increased in the 6 months to 30 June 2003 to £3,451,000
(31 December 2002: £3,028,000) following the placing of 7,740,805 new shares in
May, generating net proceeds of £885,000 and the cancellation of the £450,000
loan note referred to above, partly offset by the retained loss for the period.
Borrowings
The Group's total borrowings at 30 June 2003 were £4,000,000 (30 June 2002:
£2,655,000), having reduced from a peak of more than £6,000,000 during the
period. The Group continues to receive the full support of its bankers and we
have agreed to postpone the finalisation of new banking documentation until
later in the year when the Group's requirements will be clearer.
Cash Flow
During the period under review the Group had a net cash outflow from operating
activities of £1,066,000 (2002: £2,992,000). Capital expenditure was £79,000
(2002: £211,000).
Dividend
Your Board is not recommending the payment of a dividend.
Operational Update
We completed the first half of 2003 marginally ahead of our revenue and
operating profit expectations and in line with our cash flow projections. We are
also pleased to report continued progress in the areas of new business
generation and product development.
First half highlights include:
* Petards Vision, in partnership with NTL, was selected by the Metropolitan
Police to provide CCTV control facilities for three new control centres.
These centres will have an Integrated Communications Platform developed by
Screen (based on our Advantage software product) that will enable the
Metropolitan Police to integrate and control the whole London area audio and
public area CCTV video. The value of this contract to Screen will exceed
£1.6 million
* PMI International launched its Provida ANPR (Automatic Number Plate
Recognition) system in February, and has so far received orders from 19 UK
police forces. This includes a £1 million order from the Metropolitan
Police.
* At Joyce-Loebl, which represents Screen's Defence and Transport
businesses, the order book remained at a record level as new orders offset
deliveries to customers.
Since the end of June, Screen has continued to build momentum.
* We are accelerating our marketing efforts to promote the use of our
Advantage Security & Surveillance Command & Control software for the
protection of major infrastructure projects and the assets of large
corporations. Advantage integrates and automates critical security and
surveillance functions, resulting in earlier identification of threats and
automated real-time notification of responders.
* We have also begun a concerted push to sell our Provida ANPR and SWIFT
wireless remote camera system globally. Both products are market leaders in
the United Kingdom, and with the UK being a recognised leader in the
application of leading edge anti-terrorist and anti-crime technologies, we
believe they have excellent prospects abroad.
* We remain committed to serving our customers with the most effective,
functional and user friendly products available in their respective markets.
We are currently:
- Beginning delivery of the Provida 3000 mobile police Video Evidence
and Enforcement system to the US in volume. This unit, which has been specially
designed to meet the needs of the US market, is being sold through our
distribution partner, Applied Concepts Inc., the US leader in police radar.
- Introducing the Provida iCAR. We believe that this will be the mobile
police platform of the future, integrating (on a modular basis) the capabilities
required in a police car within one unit, which has a minimal footprint.
- Developing a desert version of the successful SWIFT product to be used
in the Middle East.
* The Joyce-Loebl order book has increased further following orders
totalling more than £6m from CP (Portuguese Rail) , the Royal Norwegian Air
Force and the Ministry of Defence.
* To enhance our ability to grow, we are augmenting our management team and
investing in additional training.
At the AGM in June we committed to rebuilding shareholder value over the medium
to long term through, inter alia, making acquisitions which compliment our
strengths. The Board has actively progressed this strategy and has identified a
number of suitable candidates. It is in the early stages of discussion with the
preferred prospect.
That said, challenges remain. The costs associated with the Iraqi war have
eroded homeland security related spending in the United States and the United
Kingdom. Continuing difficulties in the rail transport industry, which have been
fully reported in the press, are expected to cause £1.6 million of revenue
slippage into 2004. These are both important markets for Screen and uncertainty
over customers' spending plans makes it difficult for us to forecast our
activity levels, especially as some of the projects are sizeable for a company
like Screen.
We are also facing a deterioration in gross margins. This results from a
depreciation in the value of the US dollar, which will affect US sales of the
new Provida 3000 product, a change in business mix at both Joyce-Loebl and
Petards Vision, and increased competitive pressures at Petards Datax Limited
(the Group's security & surveillance integration company). There is, therefore,
much work to be done to make the Group's businesses more robust before they can
truly capitalise on the products and market opportunities that we have
identified.
Change of Auditors
In September, Deloitte & Touche resigned as auditors and KPMG LLP were appointed
in their place.
Board Changes
On 1 April 2003 I joined the Board as a non-executive Director. Following the
Annual General Meeting, on 12 June 2003, Mr Ian Taylor stepped down to the post
of non-executive Deputy Chairman and I succeeded him as Chairman. Mr Taylor
became executive Chairman subsequent to the suspension of Screen's shares in
September 2002 to lead the turnaround and recovery of the Company.
Outlook
We are pleased with the progress made in the first half of the year and the
operational improvements achieved so far in 2003. While we expect to continue
this progress in the second half, the revenue slippage that we are experiencing
will not enable us to meet the performance levels that we had expected at the
time of the Annual General Meeting in June. The Board currently expects the
Company to make a further, albeit significantly reduced, operating loss in the
second six months.
Tim Wightman
Chairman
23 September 2003
Group Summary Profit and Loss Account
Unaudited Unaudited Audited
6 months 6 months 12 months ended
ended 30 June ended 30 June 31 December
2003 2002 2002
Note £'000s £'000s £'000s
Turnover 11,244 9,718 18,686
Cost of sales (6,458) (5,237) (10,480)
---------- ---------- ----------
Gross profit 4,786 4,481 8,206
Administrative expenses (5,501) (5,591) (11,609)
Exceptional items - (3,602) (4,781)
Goodwill (24) (7,106) (5,531)
---------- ---------- ----------
Total administrative expenses (5,525) (16,299) (21,921)
---------- ---------- ----------
Total operating loss (739) (11,818) (13,715)
Loss on disposal of
discontinued operations - - (1,206)
---------- ---------- ----------
Loss on ordinary
activities before interest (739) (11,818) (14,921)
Net interest payable (131) (91) (228)
Gain on loan note
redemption 3 287
---------- ---------- ----------
Loss on ordinary
activities before taxation (583) (11,909) (15,149)
Taxation on loss on
ordinary activities - - -
---------- ---------- ----------
Loss for the period (583) (11,909) (15,149)
---------- ---------- ----------
Loss per share - basic
and diluted (pence) (1.0) (22.6) (27.8)
Group Balance Sheet
Unaudited Unaudited Audited
as at as at as at
30 June 30 June 31 December
2003 2002 2002
£'000s £'000s £'000s
Fixed assets
Intangible assets 869 919 894
Tangible assets 1,042 1,473 1,250
---------- --------- ---------
1,911 2,392 2,144
Current assets
Stocks 5,478 5,359 6,178
Trade debtors 3,702 3,328 2,842
Other debtors 2,095 2,735 773
Cash at bank 1 19 1
---------- --------- ---------
11,276 11,441 9,794
Creditors: amounts falling due within one
year
Bank overdraft and loans (4,000) (2,205) (3,630)
Other creditors (5,403) (5,253) (4,909)
---------- --------- ---------
Net current assets 1,873 3,983 1,255
Total assets less current liabilities 3,784 6,375 3,399
Creditors: amounts falling due after more
than one year (137) (169) (175)
Provisions for liabilities and charges (196) - (196)
---------- --------- ---------
Net assets 3,451 6,206 3,028
---------- --------- ---------
Capital and reserves
Share capital 24,314 23,083 23,266
Profit and loss reserves (20,863) (16,877) (20,238)
---------- --------- ---------
Equity shareholders' funds 3,451 6,206 3,028
---------- --------- ---------
Group Cash Flow
Unaudited Unaudited Audited
6 months 6 months 12 months
ended ended ended
30 June 30 June 31 December
2003 2002 2002
£'000s £'000s £'000s
Net cash outflow from operating
activities (1,066) (2,992) (4,080)
Net cash outflow from returns on
investments and servicing
of finance (67) (91) (228)
UK corporation tax - - -
Net cash outflow from capital
expenditure (79) (211) (366)
Net cash outflow from
acquisitions and disposals - (461) (419)
---------- --------- ---------
Net cash outflow before
financing (1,212) (3,755) (5,093)
Net cash inflow from
financing 842 2,921 2,934
---------- --------- ---------
Decrease in cash in the
period (370) (834) (2,159)
---------- --------- ---------
Notes
1. Non Statutory Accounts
The interim results which are unaudited, have been prepared in accordance with
applicable United Kingdom Accounting Standards using accounting policies
consistent with those set out in the accounts for the year ended 31 December
2002.
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 2003.
The financial information for the year ended 31 December 2002 has been extracted
from the statutory accounts for that period which have been filed with the
Registrar of Companies. The auditors' report on those accounts was unqualified
and did not contain any statement under section 237(2) or (3) of the Companies
Act 1985.
2. Group Summary Profit and Loss Account
All operations are continuing as at 30 June 2003.
3. Gain on loan note redemption
£450,000 of repayable on demand loan notes, which were acquired by the
management of Screen plc on 28 March 2003, were repaid for £162,500 in June 2003
which resulted in a gain of £287,500.
4. Taxation
No provision for taxation has been made in the profit and loss account for the
six months to 30 June 2003. No provision was required in the six months to 30
June 2002.
5. Loss per share
The loss per share for the six months to 30 June 2003 is based on the weighted
average number of ordinary 1 pence shares of 58,073,820. The loss per share for
the six months to 30 June 2002 is based on the weighted average number of
ordinary 1 pence shares of 52,764,239.
6. Recognised gains and losses
The only recognised loss other than the loss for the six months to 30 June 2003
relates to currency translation on foreign current net investments of £42,000
(six months to 30 June 2002 gain of £164,000, and year to 31 December 2002 gain
of £58,000).
7. Further copies
Copies of the interim statement will be sent to shareholders. Further copies
will be available from the Company's registered office at 8 Windmill Business
Village, Brooklands Close, Sunbury on Thames, Middlesex TW16 7DY for the next 14
days.
Audit Committee Report
The Audit Committee consists of the Non-Executive Deputy Chairman, Mr Ian
Taylor, and the Non-Executive Director, Mr Tim Sulivan. 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 2002. 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.
Independent review report by KPMG LLP to Screen Plc
Introduction
We have been engaged by the company to review the financial information set out
on pages 5 to 8 and we have read the other information contained in the interim
report and considered whether it contains any apparent misstatements or material
inconsistencies with the financial information.
This report is made solely to the company in accordance with the terms of our
engagement. Our review has been undertaken so that we might state to the company
those matters we are required to state to it in this report and for no other
purpose. To the fullest extent permitted by law, we do not accept or assume
responsibility to anyone other than the company for our review work, for this
report, or for the conclusions we have reached.
Directors' responsibilities
The interim report, including the financial information contained therein, is
the responsibility of, and has been approved by, the directors.
Review work performed
We conducted our review having regard to the guidance contained in Bulletin 1999
/4: Review of interim financial information issued by the Auditing Practices
Board for use in the United Kingdom. A review consists principally of making
enquiries of Group management and applying analytical procedures to the
financial information and underlying financial data and, based thereon,
assessing whether the accounting policies and presentation have been
consistently applied unless otherwise disclosed. A review is substantially less
in scope than an audit performed in accordance with Auditing Standards and
therefore provides a lower level of assurance than an audit. Accordingly we do
not express an audit opinion on the financial information.
Review conclusion
On the basis of our review we are not aware of any material modifications that
should be made to the financial information as presented for the six months
ended 30 June 2003.
KPMG LLP
Chartered Accountants
Reading
23 September 2003
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