RNS Number:3974D
Screen PLC
28 September 2004
SCREEN PLC
Interim Results for Six Months to 30 June 2004
Successful Rationalisation; Strong Order Book; Expected move into profitability
in 2005
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
2004.
In his statement to shareholders, Tim Wightman, Chairman, said:
The Group is making good progress towards becoming a leaner, more commercially
competitive and financially stronger business. The financial results reported
belie progress being made but the time and cost of rectifying shortcomings in
the Group's operations have to be met before the eventual benefit can be
realised. We continue to receive support from our bankers.
Financial Highlights
* Revenue of #11.0m (6 months to June 2003: #11.2m)
* Revenue up by 10% on like-for-like basis after adjusting for disposal.
* Operating loss before exceptional items and goodwill of #825,000
(2003: loss: #715,000).
* Loss after tax of #944,000 (2003 loss: #583,000).
* Consolidated net assets decreased to #1.32m (31.12.2003: #2.21m).
* Borrowings increased to #8.39m (31.12.2003: #5.58m).
* Net cash outflow from operating activities of #3.34m (2003: #1.07m).
* No dividend.
Operational Highlights
* Strong contribution from Joyce-Loebl Division with record sales (up 42%)
and profits. Main driver was Defence Systems; Transport Systems CCTV sales
strong; Passenger Information Systems disappointing.
* Joyce-Loebl order book at end June of #18.2m (2003: #16.6m).
* #2m orders for systems on Royal Navy helicopters since half year end.
* Petards Division rationalisation continuing: integration of 6
businesses at 6 locations into 1 division at 1 location.
* Initiatives at Petards should achieve sustainable first ever profits
in 2005.
* #1.60m bespoke software project for Metropolitan Police on schedule.
* Rapidly deployable Swift camera used by New York Police Dept. at
Republican Convention.
* Further Metropolitan Police order for Provida mobile video evidence
system incorporating automatic number plate recognition.
* Board appointments and change. New senior management appointment.
* Working capital requirements being progressed.
Regarding the Outlook, Mr. Wightman said:
"The first half of the year has been difficult, with further basic operational
faults being rectified. We expect to see some improvements coming through in
the second half, although we expect there to be another, albeit reduced,
operating loss. We expect the Group to move into profitability in 2005. Our
discussions with our advisers about a capital fundraising are continuing. We are
also in constructive talks with a business in our sector in order to achieve
faster market penetration and synergies. The sectors that we serve in the
security and the surveillance market remain buoyant."
Continues:
Contacts:
Screen Plc Binns & Co PR Ltd
Tim Wightman, Chairman Peter Binns
Paul McManus
Tel: 01789 262 664 Tel: 020 7153 1485
Mob: 07980 541 893
Chairman's Statement
As reported in June, the Group is making good progress towards becoming a
leaner, more commercially competitive and financially stronger business.
Progress has been described in more detail in the Operational Update below. The
financial results reported below belie the progress that is being made, but I
have previously warned shareholders that the time and cost of rectifying the
shortcomings in the Group's operations have to be met before the eventual
benefits can be realised.
Results for the Period
Profit & Loss Account
Revenue for the six months to 30 June 2004 was #11.0m, compared with #11.2m in
the previous year. On a like-for-like basis, after adjusting the comparable
period for the revenue accountable to Petards Emergency Services Limited
("PESL") which was sold in March 2004, revenue grew by 10%.
The Continuing Businesses returned an operating loss before exceptional items
and goodwill of #772,000 for the period to 30 June 2004, against a loss of
#993,000 in the comparative period. Administrative expenses of #4.78m were 6%
below the comparative figure. Exceptional items were #895,000 (2003: Nil)
reflecting redundancy and relocation charges.
After an interest charge of #206,000 (2003: #131,000), other interest receivable
and similar income of #294,000 (2003: #287,000), the loss after tax in the
period was #944,000 compared with a loss of #583,000 in 2003.
The other interest receivable and similar income of #294,000 included in the
period relates to a hedging gain.
Balance Sheet
Consolidated net assets decreased in the 6 months to 30 June 2004 to #1.32m (31
December 2003: #2.21m).
Borrowings
The Group's total net borrowings at 30 June 2004 were #8.39m (31 December 2003:
#5.75m). 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 #3.34m (2003: #1.07m). Capital expenditure was #118,000 (2003:
#79,000). The cash outflow reflects the build up in working capital at
Joyce-Loebl to support record levels of business and trading losses at Petards.
Dividend
Your Board is not recommending the payment of a dividend.
Operational Update
Joyce-Loebl
Joyce-Loebl made a strong contribution to the Group in the period with record
sales and profits. Sales in the period of #7.05m were 42% above the comparative
period last year. The main driver was Defence Systems, where sales of electronic
warfare, communications and IT systems were particularly strong. Transport
Systems' CCTV sales were also strong, but Passenger Information System sales
were disappointing. The order book at the end of June stood at #18.3m (2003:
#16.6m).This included an order for Vehicle Integrated Control Systems for
Challenger 2 tanks worth #6.1m. Since the period end Joyce-Loebl has received
orders for systems to be installed on Royal Navy Lynx helicopters totalling in
excess of #2m. It is also seeing increasing interest in its rail transport CCTV
systems in the Asia-Pacific region.
The downside to the strong growth at Joyce-Loebl has been the demand for working
capital. The division began the year with exceptionally high creditor levels and
these have been normalised during the period. The size and protracted nature of
some of the rail transport CCTV contracts are placing heavy demands on the
Group's cash resources. Major contracts for Docklands light rail, and two large
European contracts, which have been reported on previously, have all been the
subject of delays, mainly outside our own control.
In the 2003 Annual Report I referred to a strategic review to decide how best
Joyce-Loebl can contribute to the Group's future core business, now focused on
the development and supply of security and surveillance solutions. The review
has given rise to a number of changes in Joyce- Loebl and to the introduction of
improved information systems. We are also actively pursuing closer cooperation
between Joyce-Loebl's rail industry team and Petards' software team to
strengthen our capability in the rail infrastructure market.
As mentioned below, Geoff Carswell resigned from his position of Managing
Director of Joyce-Loebl earlier this month. We have appointed as his successor,
Bill Conn, who has many years experience in the rail transport and aerospace
industries. We are fortunate to gain a person of Bill's experience and I am
optimistic that he will be able to take Joyce-Loebl forward from its current
strong position while also achieving synergy with the other activities of the
Group.
Petards
The Petards rationalisation is continuing according to plan. At the beginning of
September it was announced that the division's operations will be centred at
Sunbury and the Hemel Hempstead office will be closed, which will involve some
redundancies. By the year end six businesses and six locations will have been
integrated into one division at one location, trading under one name with one
accounting and information system. The rationalisation costs of these moves
amount to #227,000 with annual savings of #548,000.
The Petards management team has been strengthened under David Hayes. He has
brought in experienced software development and customer services management.
Numerous operational tasks are being dealt with to improve the way the division
operates. Fewer of these now fall into the fire fighting category and we are
able to spend our time on making strategic business decisions and following them
through. Our main focus is on supply chain, customer service and quality issues.
These changes have inevitably been disruptive and the division has lost sales as
a result. However, the main challenge during the period has been to regain the
reputation for quality software solutions that Petards held three to four years
ago This has involved significant software development and engineering resource
which otherwise would have been put to use generating new revenue. The
investment in time and resource has now been made and we expect to see the
benefits in increased revenue from packaged software products and maintenance in
2005. The losses incurred at Petards during the period have been significant,
but we expect the business to achieve sustainable profits for the first time
ever in 2005.
The #1.6 m bespoke software project to develop an Integrated Communications
Platform for the Metropolitan Police is progressing according to schedule. Three
new control centres will enable the Metropolitan Police to integrate and control
the entire London area audio and public CCTV video using Petards' command and
control software. We expect the satisfactory completion of this project to lead
to further related work. We are also progressing well with our strategy to work
with channel partners to define and develop solutions to meet end-users'
security and surveillance requirements. Discussions are underway with several
parties. Our emphasis is to use our surveillance systems expertise, in
particular the control of video feeds to and from remote devices, to add value
to third parties' offerings. Our rapidly deployable Swift camera was in service
with the New York Police Department at the recent Republican Convention. We hope
this will provide a valuable reference in the USA. In the UK, the Metropolitan
Police added a further #250,000 order to that placed last year for the Provida
mobile video evidence system which incorporates Automatic Number Plate
Recognition. Several new products were successfully demonstrated at the recent
Police Fleet Management Show.
The sectors that we serve in the security and surveillance market are continuing
to be buoyant. In particular, Automatic Number Plate Recognition systems are
becoming increasingly widely utilised for applications ranging from security to
traffic management both in the UK and in the USA. Petards has wide experience
incorporating such systems into static and mobile security applications and in
integrating security and traffic related systems within one control room
environment.
Capital Fund Raising
I have reported previously that our recovery and business plans are hampered by
a lack of capital resources and that to achieve all our ambitions additional
funding will be required. We are continuing to receive support from our bankers,
Bank of Scotland, but the present position cannot be sustained indefinitely
without additional equity capital.
We are having discussions with our advisers about a capital fund raising and I
hope that we will soon be able to bring proposals forward for shareholder
approval. We are also in constructive talks with a business in our sector in
order to achieve faster market penetration and synergies.
Board and Management Changes
In January Chris Langridge was appointed Finance Director and David Mills a
non-executive director. In March 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.
On 14 September Geoff Carswell resigned as a director and Managing Director of
Joyce-Loebl Limited. He has been succeeded as Managing Director of Joyce-Loebl
by Bill Conn, who was previously Managing Director of the Electrical Drives
Worldwide Division of ALSTOM, the transport Group. Bill has many years
experience in the rail transport and aerospace industries and we are fortunate
to gain a person of his background and experience. I am optimistic that he will
take Joyce-Loebl forward from its current strong position, while also achieving
synergy with other Group activities.
Outlook
The first half of the year has been difficult but we have been correcting
further basic operational faults. We expect to see some improvements coming
through in the second half, although we expect there will be another, albeit
significantly reduced, operating loss. Following the proposed strengthening of
the Group's balance sheet referred to above, we expect the Group to move into
profitability in 2005.
Tim Wightman
Chairman
27 September 2004
Group Summary Profit and Loss Account
Unaudited Unaudited Audited
6 months 6 months 12 months
ended ended ended
30 June 2004 30 June 2003 31 Dec 2003
Note #'000s #'000s #'000s
Turnover
Continuing operations 10,542 9,585 18,499
Discontinuing operations 443 1,659 2,754
10,985 11,244 21,253
Cost of sales (6,848) (6,458) (12,535)
Gross profit 4,137 4,786 8,718
Administrative expenses (4,962) (5,501) (10,088)
Exceptional items (895) - (314)
Goodwill (14) (24) (278)
Total administrative expenses (5,871) (5,525) (10,680)
Operating Profit / (Loss)
Continuing operations (1,681) (1,017) (2,205)
Discontinuing operations (53) 278 243
Total operating loss (1,734) (739) (1,962)
Profit on disposal of discontinued 702 - -
operations
Loss on ordinary activities before interest (1,032) (739) (1,962)
Net interest payable (206) (131) (283)
Other interest receivable and similar 294 287 287
income
Loss on ordinary activities before taxation (944) (583) (1,958)
Taxation on loss on ordinary activities - - 144
Loss for the period (944) (583) (1,814)
Loss per share - basic and diluted (pence) (1.4) (1.0) (2.9)
Group Balance Sheet
Unaudited Unaudited Audited
as at as at as at
30 June 2004 30 June 2003 31 Dec 2003
#'000s #'000s #'000s
Fixed assets
Intangible assets 375 869 616
Tangible assets 795 1,042 942
1,170 1,911 1,558
Current assets
Stocks 6,780 5,478 6,490
Trade debtors 4,441 3,702 5,321
Other debtors 355 2,095 606
Cash at bank 1 1 -
11,577 11,276 12,417
Creditors: amounts falling due within
one year
Bank overdraft and loans (8,306) (4,000) (5,569)
Other creditors (3,060) (5,403) (6,036)
Net current assets 211 1,873 812
Total assets less current liabilities 1,381 3,784 2,370
Creditors: amounts falling due after (66) (137) (158)
more than one year
Provisions for liabilities and charges - (196) -
Net assets 1,315 3,451 2,212
Capital and reserves
Share capital 24,314 24,314 24,314
Profit and loss reserves (22,999) (20,863) (22,102)
Equity shareholders' funds 1,315 3,451 2,212
Group Cash Flow
Unaudited Unaudited Audited
6 months ended 6 months ended 12 months ended 31
30 June 2004 30 June 2003 Dec 2003
#'000s #'000s #'000s
Net cash outflow from operating (3,338) (1,066) (2,729)
activities
Net cash inflow/(outflow) from returns 88 (67) 4
on investments and servicing of finance
UK corporation tax - - 144
Net cash outflow from capital (102) (79) (317)
expenditure
Net cash inflow from disposals 658 - -
Net cash outflow before financing (2,694) (1,212) (2,898)
Net cash (outflow) / inflow from (42) 842 911
financing
Decrease in cash in the period (2,736) (370) (1,987)
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 2003.
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 2004.
The financial information for the year ended 31 December 2003 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 2004.
3. Analysis of Results
Unaudited Unaudited Audited
6 months ended 30 June 2004 6 months ended 30 June 2003 12 months ended 31 Dec 2003
Dis- Dis- Dis-
Continuing continued Total Continuing continued Total Continuing continued Total
#'000s #'000s #'000s #'000s #'000s #'000s #'000s #'000s #'000s
Turnover 10,542 443 10,985 9,585 1,659 11,244 18,257 2,996 21,253
Cost of Sales (6,530) (318) (6,848) (5,499) (959) (6,458) (10,920) (1,615) (12,535)
Gross Profit 4,012 125 4,137 4,086 700 4,786 7,337 1,381 8,718
Administration (4,784) (178) (4,962) (5,079) (422) (5,501) (9,192) (896) (10,088)
Expenses
Sub-total (772) (53) (825) (993) 278 (715) (1,855) 485 (1,370)
Exceptional Items (895) - (895) - - - (314) - (314)
Goodwill amortisation (14) - (14) (24) - (24) (278) - (278)
and impairment
Operating Profit / (1,681) (53) (1,734) (1,017) 278 (739) (2,447) 485 (1,962)
(Loss)
4. Taxation
No provision for taxation has been made in the profit and loss account for
the six months to 30 June 2004. No provision was required in the six
months to 30 June 2003.
5. Loss per share
The loss per share for the six months to 30 June 2004 is based on the
weighted average number of ordinary 1 pence shares of 65,420,479. 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 58,073,820.
6. Recognised gains and losses
The only recognised gains or losses other than the loss for the six months
to 30 June 2004 relates to currency translation on foreign current net
investments amounting to a gain of #48,000 (six months to 30 June 2003 loss
of #42,000, and year to 31 December 2003 loss of #50,000).
7. Disposal
In March 2004, the net assets and business of Petards Emergency Services
Limited ("PESL") were sold to AssetCo Data Solutions Limited for a cash
consideration of #866,000. PESL's net assets less cash balances at 31
December 2003 were #109,000.
8. 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 2003. 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.
This information is provided by RNS
The company news service from the London Stock Exchange
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