RNS Number:0518P
Bell Group PLC
27 August 2003
27th August 2003
BELL GROUP PLC
Half Year Results to 30 June 2003
Bell Group plc, the leading international supplier of high-tech security and
associated management information systems, announces its results for the six
months to 30 June 2003.
FINANCIAL OVERVIEW
6 months 6 months
to June to June
#m 2003 2002
Turnover 33.8 31.7
International turnover * 8.9 6.5
Operating profit before goodwill amortisation * 3.0 3.0
Operating profit 1.9 2.0
PBT before goodwill amortisation * 2.7 2.7
Profit before tax 1.7 1.7
EPS - diluted and before goodwill amortisation * 3.47p 3.35p
EPS - diluted 1.48p 1.46p
OPERATIONAL OVERVIEW
* Solid performance in core UK banking business
* Collaborative agreement signed with Lloyds TSB
* Important new UK contract wins with major London City Institution and
retailers
* Bell ID secures major US corporate card project against strong
international competition and secures second phase of German bank project
* Macau National ID card project wins international award
* First French campus card system
* Successful trials of new Pacom Witness - integrated digital CCTV, access
control and alarm system - in banking and retail sector
* Integration of Maas Systems acquisition
* Reseller agreement with Diebold extended for further 5 years
* Non statutory results before goodwill amortisation are presented to
demonstrate the underlying financial performance.
Commenting on the results, Bob Speirs, Chairman, said:
"We are pleased to report that we have maintained our results at the same level
as last year, despite increased competition in our major markets. Our UK retail
banking business continues to perform solidly. Significant progress has been
made in several other areas, including Ireland, France and Australia and we have
continued to invest in key areas of our business. This is reflected in a
stronger order book at 30 June, when compared to 31 December 2002. This should
underpin our results in the second half of this year. Our recent acquisition of
the business of Maas Systems, now renamed as Bell Systems, has been integrated
and is performing in line with our expectations. We have suffered from adverse
exchange rate movements and delayed installation completions caused by the Iraq
war and SARS. These events are now behind us and we are focused on improving
full year operating profits by maximising opportunities in rapidly developing
smart card markets and by securing new commercial business."
Enquiries
Bell Group Edwin Strang, Finance Director 020 8553 5932
Financial Dynamics Rob Gurner 020 7269 7221
CHIEF EXECUTIVE'S REVIEW
FINANCIAL SUMMARY
In the six months to 30 June 2003, turnover increased by 6.6% to #33.8m and
gross profit increased by 8.5% to #13.7m with a gross margin of 40.4% (2002:
39.7%).
Administration expenses increased 10.5% to #11.7m including goodwill
amortisation of #1.1m.
Operating profit before goodwill amortisation was #3.0m, almost identical to the
first half of 2002. Operating profit was #1.9m (2002: #2.0m).
Net interest payable was #0.3m (as 2002), as the capital invested in the
acquisition of Bell Systems in February offset the benefits of a further
repayment of our bank term loan.
Profit on ordinary activities before taxation was #1.7m (2002: #1.7m). Basic EPS
before goodwill amortisation was 3.55p (2002: 3.45p). Basic EPS was 1.51p (2002:
1.48p).
The Board continues to review the reinstatement of a dividend when appropriate.
However the Board has not declared an interim dividend and will continue to
channel investment into growth opportunities.
Net assets increased by #1.3m to #24.3m (Dec 2002: #23.0m). The latest capital
repayment of #0.8m on the bank loan was made during the period, further reducing
the balance payable to #3.3m. We acquired the operating capability and assets of
Bell Systems in February for #1.1m in cash, plus acquisition expenses. Overall
net debt increased to #3.9m at 30th June 2003, through utilisation of our
revolving loan facility.
OPERATIONAL SUMMARY
UK and Ireland
The Group's core, UK retail banking business continues to perform solidly. Our
standing in this market was further consolidated by the signing of a
collaborative agreement with Lloyds TSB Bank, announced in March. Under this
agreement, Bell Security is acting, on a rolling contractual basis, as a single
supply partner for provision of systems and service relating primarily to
intruder alarm, access control and CCTV technologies. VISEC, our high-tech CCTV
acquisition of 2002, performed profitably within this sector.
Non-banking business having completed a number of high-value, single-site
installation projects, have achieved two important new business wins near to
half-year, for multi-discipline security systems at a major City of London
institution and the headquarters of one of the UK's leading retailers.
Investment has been made to develop our non-banking activity. This is
particularly focused on winning on-going business from multi-site customers.
Retailers and logistics companies are our main target market and similar
business has also been won from criminal justice-related property estates. The
benefits of this investment will start to flow through in the second half of
2003.
Our businesses in Ireland and Scotland grew strongly. A significant prison
contract and business wins in retail and leisure played a major part in this
success.
International
Positive progress was made across our international activities, but was impeded
due to the situation in the Far and Middle East. Hong Kong suffered delays in
its multi-site, bank security installation roll-out programme due to SARS and
the flagship, combined ANDiS/Pacom installation at Saudi Arabia's King Fahd
University of Petroleum & Minerals was suspended for a period due to the war in
Iraq.
Europe
Bell ID, within a consortium, won a major global employee smart card management
project for a USA-headquartered international corporation. Bell ID has now also
commenced the second phase of its project with Deutscher Sparkassen Verlag
(announced in March 2002), for the management of 45 million payment smart cards.
In May, the ANDiS-based, Macau SAR National ID smart card implementation won
an international high-tech security award.
Our announcement, in April, of a formal global partnership agreement with
Giesecke & Devrient GmbH is further evidence of the strong reputation of ANDiS.
The 'pipeline' of tenders involving Bell ID is currently at its highest level to
date.
An important opportunity to further our European business strategy was secured
with the formation of a new, Netherlands-based, access control business, Bell
Systems BV, created from the acquisition of the business of Maas Systems
(announced in late February). The integration of this business into our European
operations is in-hand and it is performing in line with our expectations. Two,
large target orders pending at the time of acquisition were successfully secured
and further, blue chip corporate client business has been won.
This acquisition brought us access to two, important USA-sourced security
technologies that are favoured by the European operations of many US businesses.
We also gained an associated portfolio of existing blue chip customers in other
European countries. We envisage a special synergy between Bell Systems and Bell
ID, both based in the Netherlands. A Dutch card production facility within the
acquired asset base offers additional sales potential for other Group companies.
Integration, within our London-based business, of the UK operations of this
acquisition has delivered cost savings.
Business wins leveraging synergies between individual European operations and
the Pacom and ANDiS businesses are now beginning to emerge.
Reorganised and refocused under a new managing director in 2002, Bell Security
France has made inroads with our high-tech solutions. In addition to a small,
breakthrough order in the banking sector and the first university campus smart
card scheme, won with Bell ID, an initial, digital CCTV parcel tracking system
for a leading French logistics business has led to additional business.
Having gained significant credibility for Pacom with the Nordea bank group, Bell
Security Sweden has now completed its fourth Pacom-based, state casino
installation, the first in Stockholm. Customer satisfaction with this highly
sophisticated integrated system, delivering high-density, digital CCTV coverage,
has created a valuable new reference site highlighting the potential of our
technology in monitoring gaming activities in parallel with premises control.
Australia
The streamlined Bell Technology Services installation and service business is
now focused on major markets in the states of Victoria and New South Wales. It
has had a sustained period of increasing its order book, winning non-banking
business, spanning corporate headquarters, leisure and healthcare sites. While
margins are tight in this very competitive sector, steady progress has been made
to improve productivity, reduce overheads and stop operating losses.
Americas and Rest of World
Our Pacom reseller agreement with Diebold, Inc, covering the banking sector, was
formalised for a further five years. During the reporting period, Diebold
started the roll-out of a bank branch introduction of Pacom as part of a
security systems refit programme for one of its existing customers. Orders have
also been received from the smaller, regional, non-banking resellers being
appointed in North America. Pacom systems have been ordered by a reseller in
Chile for both a major multi-site bank security project and a multi-site public
transport installation. A further four, new banking prospects are now
branch-trialling Pacom in Chile.
Pacom
Launched in 2002, the new Pacom Witness system is in the process of trials, with
a positive reaction from customers at this point, in both banking and,
importantly, retail sites. This combination of integrated digital CCTV, access
control and intruder alarm capabilities is opening new opportunities within
market sectors where our acknowledged expertise can now be combined with greater
cost-competitiveness.
Summary and Outlook
We enter the second half of 2003 with a stronger order book and with a solid
banking base. Our strategy to grow our non-banking business in the UK and to
expand our international presence is maintained. We are well-positioned to
capitalise on continued growth in our markets and to maximise opportunities in
the rapidly developing smart card sector.
Bell Group plc
Consolidated Profit and Loss Account
for the six months ended 30 June 2003
Unaudited Unaudited Audited
6 months 6 months 12 months
June 2003 June 2002 Dec 2002
#'000 #'000 #'000
Turnover
Continuing operations 32,135 31,742 63,581
Acquisitions 1,715 - -
Turnover 33,850 31,742 63,581
Cost of sales (20,166) (19,126) (37,942)
Gross Profit 13,684 12,616 25,639
Administrative expenses (11,737) (10,619) (21,762)
Operating Profit/(Loss)
- Continuing operations 1,984 1,997 3,877
- Acquisitions (37) - -
- Operating profit before amortisation of goodwill 3,033 3,025 5,906
- Amortisation of goodwill (1,086) (1,028) (2,029)
Group operating profit 1,947 1,997 3,877
Loss on disposal of subsidiary - - (184)
Interest receivable 19 20 47
Interest payable (310) (329) (726)
Profit on ordinary activities before taxation 1,656 1,688 3,014
Taxation on ordinary activities (868) (923) (1,689)
Profit on ordinary activities after taxation 788 765 1,325
Minority interest 15 27 40
Retained profit for the period 803 792 1,365
Earnings per ordinary share
- basic 1.51 1.50 2.58
- diluted 1.48 1.46 2.51
Earnings per Ordinary Share before goodwill amortisation
- basic 3.55 3.45 6.41
- diluted 3.47 3.35 6.24
Bell Group plc
Consolidated Balance Sheet
as at 30 June 2003
Unaudited Audited
June December
2003 2002
#'000 #'000
Fixed Assets
Intangible assets 22,319 21,665
Tangible assets 1,825 1,472
24,144 23,137
Current assets
Stocks 5,018 4,299
Debtors 15,795 13,538
Cash at bank and in hand 3,421 4,385
24,234 22,222
Creditors: amounts falling due within one year (18,001) (17,167)
Net current assets 6,233 5,055
Total assets less current liabilities 30,377 28,192
Creditors: amounts falling due after more than one year (5,736) (5,029)
Provisions for liabilities and charges (366) (146)
24,275 23,017
Capital and reserves
Called up share capital 2,664 2,664
Share premium account 11,826 11,822
Capital reserve 11 11
Profit and loss account 9,829 8,560
Equity shareholders' funds 24,330 23,057
Minority interest (55) (40)
Capital employed 24,275 23,017
Bell Group plc
Consolidated Cash Flow Statement
for the six months ended 30 June 2003
Unaudited Unaudited Audited
6 months 6 months 12 months
June 2003 June 2002 Dec 2002
#'000 #'000 #'000
Net cash inflow from operating activities 755 2,398 8,682
Returns on investments and servicing of finance
Interest received 19 20 47
Interest paid (267) (266) (605)
Interest paid on finance leases (1) (12) (10)
Loan expenses - - (40)
Net cash outflow from returns on investments and
servicing of finance (249) (258) (608)
Taxation
UK corporation tax paid (90) (1,513) (2,690)
Tax paid attributable to overseas operations (200) (67) (69)
Net cash outflow relating to taxation (290) (1,580) (2,759)
Capital expenditure
Expenditure on intangible assets (413) (298) (742)
Purchase of tangible fixed assets (506) (232) (563)
Sale of tangible fixed assets 1 17 24
Net cash outflow relating to capital expenditure (918) (513) (1,281)
Acquisitions
Purchase of acquired assets / subsidiary undertaking (1,090) - (224)
Net cash acquired with subsidiary undertakings - - 5
Disposal of subsidiary undertakings - - 31
Net cash disposed of with subsidiary undertakings - - (18)
Net cash outflow relating to acquisitions and disposals (1,090) - (206)
Net cash (outflow)/inflow before financing (1,792) 47 3,828
Financing
Issue of shares 4 291 340
Bank loan 659 (1,337) (2,682)
Repayment of principal under finance leases (8) (22) (52)
Net cash inflow (outflow) from financing 655 (1,068) (2,394)
(Decrease)/increase in net cash (1,137) (1,021) 1,434
Bell Group plc
Notes to the Financial Statements
for the six months ended 30 June 2003
1. The interim results have been prepared under the historical cost
convention and are in accordance with the company's accounting policies as set
out in the financial statements for the year ended 31 December 2002.
The financial information contained in this Interim Statement does not
constitute accounts as defined by Section 240 of the Companies Act 1985.
The financial information for the twelve months to 31 December 2002 is derived
from the statutory accounts which have been delivered to the Registrar of
Companies and on which the auditors gave an unqualified opinion.
2. The tax charge accrued in these accounts reflects an estimated tax rate of
32% (based on profit before amortisation of goodwill) for the six months to 30
June 2003 and the year to 31 December 2003.
3. No interim dividend is proposed.
4. Statement of Group total recognised gains and losses
Unaudited Unaudited Audited
6 Months 6 Months 12 months
June June Dec
2003 2002 2002
#'000 #'000 #'000
Profitable attributable to shareholders 803 792 1,365
Exchange adjustments 466 274 227
Prior year adjustment - - 111
Total recognised gains 1,269 1,066 1,703
5. Reconciliation of operating profit to net cash inflow
from operating activities
Unaudited
June Unaudited Audited
2003 June Dec
#'000 2002 2002
#'000 #'000
Continuing operations
Operating profit 1,947 1,997 3,877
Amortisation of goodwill 1,086 1,028 2,029
Amortisation of other intangibles 433 310 555
Depreciation of tangible assets 322 271 566
Loss on disposal of tangible fixed assets 4 - 8
Increase in stocks and work in progress (539) (359) (217)
(Increase)/decrease in trade debtors (259) (725) 636
Increase in prepayments, accrued income and other debtors (116) (779) (684)
(Decrease)/increase in trade creditors (348) 123 581
Increase/(decrease) in other taxation and social security 32 (54) 157
(Decrease)/increase in accruals and deferred income and other creditors (1,807) 586 1,174
Net cash inflow from operating activities 755 2,398 8,682
Reconciliation of movement in net funds/debt
At 1 Jan Exchange
2002 Cash rate At 30 Jun
#'000 flow Other movement 2003
#'000 #'000 #'000 #'000
Cash at bank and in hand 4,385 (1,148) - 184 3,421
Bank overdraft less than one year (34) 11 - - (23)
4,351 (1,137) - 184 3,398
Bank loan less than one year (1,591) 833 (833) - (1,591)
Bank loan more than one year (4,928) (1,492) 796 - (5,624)
Finance leases less than one year (15) 3 (18) - (30)
Finance leases more than one year (13) 5 (17) - (25)
(2,196) (1,788) (72) 184 (3,872)
6. Distribution
This Interim Report will be sent to all shareholders. Copies are available
from the Company Secretary at the registered office: Roding House, 970 Romford
Road, London, E12 5LP and on the company's website: www.BellGroupplc.com.
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INDEPENDENT REVIEW REPORT TO BELL GROUP PLC
Introduction
We have been instructed by the company to review the financial information which
comprises the consolidated profit and loss account, the statement of group total
recognised gains and losses, the consolidated balance sheet, the consolidated
cash flow statement, the comparative figures and the related notes. We read the
other information contained in the interim report and considered whether it
contains any apparent misstatements or material inconsistencies with the
financial information.
Directors' responsibilities
The interim report, including the financial information contained therein, is
the responsibility of, and has been approved by the directors. The directors
are responsible for preparing the interim report in accordance with the Listing
Rules of the Financial Services Authority which require that the accounting
policies and presentation applied to the interim figures should be consistent
with those applied in preparing the preceding annual accounts except where any
changes, and the reasons for them, are disclosed.
Review work performed
We conducted our review in accordance with guidance contained in Bulletin 1999/4
issued by the Auditing Practices Board. 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 excludes audit
procedures such as tests of controls and verification of assets, liabilities and
transactions. It is substantially less in scope than an audit performed in
accordance with United Kingdom 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. This report, including the conclusion, has
been prepared for and only for the company for the purpose of the Listing Rules
of the Financial Services Authority and for no other purpose. We do not, in
producing this report, accept or assume responsibility for any other purpose or
to any other person to whom this report is shown or into whose hands it may come
save where expressly agreed by our prior consent in writing.
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.
PricewaterhouseCoopers LLP
Chartered Accountants
London
26 August 2003
Notes:
(a) The maintenance and integrity of the Bell Group plc website is the
responsibility of the directors. The work carried out by the auditors does not
involve consideration of these matters and accordingly, the auditors accept no
responsibility for any changes that may have occurred to the interim report
since it was initially presented on the website.
(b) Legislation in the United Kingdom governing the preparation and
dissemination of financial information may differ from legislation in other
jurisdictions.
This information is provided by RNS
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