RNS Number:9080I
LTG Technologies PLC
19 March 2003
19 March 2003
LTG Technologies PLC
Final results for the year ending 31 December 2002
LTG Technologies PLC suffered a higher than expected pre-tax loss of #18.6
million (2001: #9.9 million). This was due in part to a number of significant
one-off items relating to the write-down and - in 2003 - sale of the Crabtree
operation, which during 2002 performed below expectations. In addition,
Imagelinx did not achieve the expected level of sales despite significant new
client wins, and incurred higher than expected expansion costs.
At an operating level, the LTG Mailaender Division recovered strongly from a
poor first half, breaking even at the operating profit level for the full year.
A much improved demand for both the SprintSystem technology and conventional
equipment was accompanied by a strong recovery in gross margins to 25.2% (2001:
16.3%). Order book, enquiry levels and margins are now better than at this time
last year.
Imagelinx top line growth has been slower than expected. Sales growth has
continued to be strong - 23% over 2001 - and new customer wins have been close
to expectations. But sales growth achieved with both new and existing customers
is proving slower than anticipated. Development costs weighed heavily on the
operation during the last year. For the current year, the Board has implemented
overhead reductions in line with its current sales expectations.
The LTG Mailaender Division is now mainly active in the much stronger market for
high technology machinery. Imagelinx is continuing to win new blue chip clients
and now requires much lower levels of investment. As a result, the Board
believes that prospects for the coming year are now much more promising.
The Group raised #7.3 million (#6.7 million net of expenses; #2.5 million of the
total representing the capitalisation of a loan from a related party) via a
rights issue to continue to fund the development of Imagelinx.
The operations of Crabtree of Gateshead were sold on 18 March 2003 for a cash
consideration of #2.2 million. This resulted in a loss on disposal of #0.7
million. The operation itself contributed an operating loss of #5.7m (including
a goodwill write-down of #4.8 million goodwill arising on consolidation) to the
group's results. In accordance with FRS17, as a result of this disposal, we
recorded a provision against shareholder reserves for a liability of #5.2
million in respect of the Crabtree pension fund which in April 2000 we closed
for new entrants and additional contributions.
Financial Highlights
Imagelinx
* Sales of #7.4 million (23 per cent up on 2001)
* Operating loss before goodwill and exceptional items of #8.4 million
(2001: #3.5 million loss)
resulting from costs from the development of the core operation
* New client wins during 2002 and early 2003 include Procter & Gamble
Haircare, L'Oreal, Castrol Japan, US Can (outsourcing), Kimberly-Clark,
Duracell (Gillette), Sarah Lee, Uniq, DuPont, Akzo Nobel, Sherwin Williams,
JHP
* Sales coverage and pipeline significantly extended
* Investment in I-con maintained at reduced levels compared with 2001
LTG Mailaender (including Crabtree, now sold)
* Sales of #50.8 million (2001: #58.9 million)
* Operating loss of #0.3 million before goodwill amortisation and write-down
(2001: #3.3 million loss)
* Strong recovery in gross margin 25.2 per cent versus 16.3 per cent in 2001
* Demand for the Sprint printing press continues to grow and is a key driver
of the recovery of this division
* Total order book at 28 February 2003 #35.6 million (#30.6 million without
Crabtree), compared with #30.8 million (#26.4 million without Crabtree) a
year earlier and #35.7 million (#30.6 million without Crabtree) six months
ago
* Sprint comprises 48% (56% without Crabtree) compared with 43% (50% without
Crabtree) a year ago
* Impairment write-down of #4.8 million taken at 30 June 2002 relating to the
acquisition of Crabtree in 1998
* Disposal of Crabtree business in March 2003 for #2.2m - the group intends to
focus upon SprintSystem technology and the conventional Mailaender business
Operating highlights 2002 2001
#'000 #'000
Sales - continuing 48,209 53,059
Sales - discontinued 9,675 11,835
Total sales 57,884 64,894
Operating loss before goodwill (11,654) (8,259)
Goodwill amortisation (840) (1,052)
Goodwill write down (4,774) -
Operating loss after goodwill - continuing (11,583) (9,411)
Operating (loss)/profit after goodwill - discontinued (5,635) 130
Total operating loss after goodwill (17,268) (9,311)
Net interest and other income (651) 386
Exceptional items (658) (581)
Amounts written off investments (57) (428)
Loss before tax (18,634) (9,934)
Commenting on the results, Albert Klein, Chief Executive, said: "During 2001 and
2002 we were faced with the metal decorating market shifting to the Sprint
technology, requiring us to restructure this division. This is now done.
Crabtree is sold and LTG Mailaender in Germany is profitable again. Imagelinx
has gained and continues to gain significant blue chip clients. Even though this
does not translate into sales as fast as we would like to see, we are certain
that Imagelinx's innovative service is what these clients need and that sales
will continue to grow strongly. With major expansion steps approaching
completion, we are able to reduce investments in this division significantly."
Enquiries
LTG Technologies PLC Tel: +44 7801 910920
Albert Klein, Chief Executive
Seymour Pierce Limited Tel: +44 20 7648 8700
Jonathan Wright / John Depasquale
Gavin Anderson & Company Tel: +44 20 7554 1400
Tom Siveyer
Chief Executives' and Chairman's Operating and Financial Review
In difficult economic conditions, turnover for the full year for the group was
#57.9 million, 11% down on the prior year. The main reason for this was a very
weak first half year at LTG Mailaender. However, we have seen gross margins
increase to 28% from 21%, reflecting the success of the added value services
being offered by Imagelinx and the demand for the new SprintSystem technology.
Operating costs have increased to #27.7 million from #21.7 million in 2001, this
increase being mainly at Imagelinx. This reflects the strategy of establishing a
global presence for Imagelinx with investments in globally available IT systems
and new operations in Japan, Korea, Italy and two new locations in the USA. We
continue to pursue this global growth strategy but we have recently taken steps
to cut costs in Germany, Chicago and the UK, where sales targets have not been
met.
Continuing its investment for growth - both in terms of capital expenditure and
in expansion costs - the group incurred an operating loss of #17.3 million for
the year to 31 December 2002, compared to #9.4 million for the year to 31
December 2001. In this statement we set out how our businesses have fared in the
face of the global downturn in 2002. Although the year was difficult, it
finished with solid foundations for improvement in 2003.
In the period to 30 June 2002 the group loss before goodwill amortisation and
impairment was #6.9 million but in the second half a reduced operating loss of
#4.8 million was sustained. In particular, the LTG Mailaender Division showed a
significant improvement in the second half, recording an operating profit before
goodwill amortisation of #1.8 million compared with a loss of #2.1 million in
the first half. Ignoring operating exceptional items, this division was
profitable for the first time since 1997.
As well as sustaining losses in the year at Imagelinx, the group continued to
invest in the expansion of that division, through continued work on the new IT
infrastructure and the development of overseas operations. This investment was
slowed down in the second half of the year, latterly being made dependent on the
pace of further new client wins in the division, but continued to consume cash
resources up to the end of the year. In order to enable the group to continue
this investment, a rights issue in August 2002 raised #7.3 million (#6.7 million
net of expenses), of which #2.5 million represented the capitalisation of a loan
received earlier in the year from LTG Holding GmbH & Co. KG, a related company
and 45% shareholder in LTG Technologies PLC. The total number of shares in issue
thus increased from 125 million to 231 million.
The LTG Mailaender Division achieved very strong sales in the fourth quarter,
improving the liquidity situation of the group. In terms of sales, this division
still comprises 88% of the group.
Net bank borrowings of #1,322,000 at the end of December 2002 compared with
#5,890,000 at 30 June 2002 (after the #2,500,000 LTG Holding GmbH & Co. KG loan
had been fully drawn down) and #2,006,000 at 31 December 2001. Net debt at 31
December 2002 was #1,710,000 (2001: #2,460,000).
Imagelinx
Imagelinx has continued to win new customers and develop a strong sales pipeline
in 2002. Due to client wins during the last twelve months Imagelinx now handles
packaging graphics for well known products such as Kleenex tissues
(Kimberly-Clark), L'Oreal cosmetics, Duracell batteries (Gillette), Clairol hair
coloration (Procter & Gamble), Mon Savant personal care products (Sarah Lee) and
Castrol motor oils (BP). Major packaging companies such as US Can (who have
outsourced the majority of their pre-press operations to Imagelinx) and JHP now
use Imagelinx for pre-press services. However, sales growth in the second half
of 2002 has been disappointing, with sales for the year of #7,368,000 comparing
with #6,004,000 in 2001. At 23% growth, this was below expectations. The volume
of sales achieved by some new and existing customers was not as high as
expected, such that, although the customer base was broadened significantly, the
increase in overall sales volumes this brought was lower.
Customer wins in 2002 and during the last few months have been significant, and
the pipeline of prospective business is also strong. Experience in the past two
years has indicated that when companies are considering the step change in
technology, efficiencies and savings which outsourcing to Imagelinx involves,
the lead-time before an irrevocable decision is taken is long, frequently over a
year. However, the final decision taken by the majority of the target companies
to date has been to invest in the enormous potential that moving their business
to Imagelinx entails.
Imagelinx has continued to invest - albeit at a reduced rate - in the IT
technology which will allow it to expand its operation beyond the next two
years, and to expand its technology advantage. Of total group capital
expenditure of #4.9m, #4.8m or 98% was invested in Imagelinx, of which #2.2m was
invested in I-con. This integrated system will offer our customers significant
advantages by allowing them to monitor and influence the progress of their
project - for instance a new product launch - online as it is being finalised,
without the need to maintain costly in-house brand management functions.
Internal job-management efficiencies will also arise. We estimate that 5the
investment in this system will be largely completed by the end of this year with
customer benefits arising during the current year. We intent to make further
investments into this system dependent on Imagelinx's sales performance and we
believe that largest steps in expansion of the operations have now been made. As
such, Imagelinx can now in our view be run with overheads appropriate to the
size of this operation.
As growth in this division has been slower than expected, some operations have
become unsustainable. Imagelinx's Stuttgart operation was therefore closed down
in July 2002, and cuts have been made in the facilities in Chicago, Nottingham
and Hamburg. This has not significantly reduced the potential for growth, but
has concentrated management attention on those areas where our strengths are
most evident.
LTG Mailaender
This division has recovered strongly from a very poor first half. A catalyst for
this turnaround was the most significant trade fair in this industry, the
triennial MetPack exhibition held in Essen in April 2002. Demand for almost all
products increased significantly in the second half in terms of sales, order
book and pipeline. Most importantly, the new Sprint printing press is now in
demand around the world, with recent orders coming from Mexico, Denmark, Greece,
South Korea, Malaysia and Philippines. Our facility in Stuttgart is consequently
working to capacity, confounding the downbeat economic environment currently
prevalent in Germany. Divisional sales in the second half of 2002 comprised
#32,253,000, compared with #18,524,000 in the first half and #37,835,000 in the
second half of 2001. The order book, too, has strengthened significantly in this
period, to #30.6 million at 28 February 2003, compared with #26.4 million at 28
February 2002 and #23.5 million at 30 September 2002, the lowest level of the
year. The Sprint printing press remains a significant as a part of the order
book, with #17.2 million at 28 February 2003 compared with #13.2 million a year
earlier. However, the market in other equipment, spares and service has also
remained strong, with the February 2003 order book of #13.4 million comparing
favourably with #13.2 million the previous year. All of these numbers exclude
Crabtree, now sold.
Margins have also improved strongly from the previous year. Restructuring
measures taken at the end of 2001 and in the first half of 2002 have restricted
costs both in Stuttgart and in Gateshead. The reductions in the workforce were
regrettable, but necessary for the survival of this division, and have been
justified by the strong recoveries seen in the second half of the year, with the
division becoming cash positive. Gross margins had already improved
significantly in the first half of the year. However, it was with the return of
better volumes in the second half of the year that these improvements impacted
the bottom line.
The Crabtree of Gateshead business was sold in March 2003 as we believe that the
market for this metal sheet decorating equipment will continue to shift to the
SprintSystem technology. Crabtree's position in this market remains a provider
of service and spare parts for the declining population of existing machines and
a very small supplier of inexpensive equipment competing with Chinese
manufacturers.
The results of the LTG Mailaender Division can be analysed as follows:
2002 LTG
Mailaender Crabtree of Other
GmbH Gateshead operations Eliminations TOTAL
#'000 #'000 #'000 #'000 #'000
Sales 39,645 9,675 2,851 (1,394) 50,777
Cost of sales (29,971) (7,220) (2,125) 1,334 (37,982)
Gross margin 9,674 2,455 726 (60) 12,795
Gross margin % 24.4% 25.4% 25.5% 25.2%
Other operating expenses (8,983) (2,300) (1,362) (43) (12,688)
Exceptional operating
income/ (expenses) 423 (846) - - (423)
Operating profit / (loss)
before goodwill 1,114 (691) (636) (103) (316)
Operating margin (before
goodwill) % 2.8% (7.1%) (22.3%) (0.6%)
Goodwill amortisation - (220) - - (220)
Write-down of goodwill - (4,774) - - (4,774)
Operating profit / (loss) 1,114 (5,685) (636) (103) (5,310)
Operating margin % 2.8% (58.8%) (22.3%) (10.5%)
Accounting policies
The disclosure requirements of FRS17 "Retirement Benefits" and FRS19 "Deferred
Taxation" have been adopted for the first time by the group in these accounts.
The effect of adopting FRS17 is to bring onto the balance sheet as at 31
December 2002 a net pension liability of #5,181,000. The Statement of Recognised
Gains and Losses was impacted by this adjustment, by #3,046,000 in the current
year and the balance in prior years. There is no material effect of the change
in accounting policy for deferred taxation under FRS19 on the results and net
assets of the current and prior financial periods.
Outlook
We are confident in the strategy of the group and are pleased with sales
prospects for both divisions. Our commitment to Imagelinx and its strategy
remains. We anticipate that this will provide us with a strong competitive
position to expand our business in the changing world of print technology.
Imagelinx now has a much larger client base and a sales network that will lead
to the accelerated acquisition of new clients. These clients will eventually
expand their business with Imagelinx. On that basis, we are confident that we
will see accelerated sales growth for Imagelinx. This and a continued
restriction of expansion costs should lead to a substantial improvement of
Imagelinx's operating result.
For LTG Mailaender we are seeing returns on our investment in the new Sprint
technology, despite the difficult external market. Demand for SprintSystem
equipment is strong with a very high number of inquiries being handled. We are
in a good position to maintain our market lead and are expecting an improved
result for the division in the current year.
Funding of the group
The expansion of Imagelinx in 2001 and in 2002 has led to a significant
reduction in our cash resources, as expected. In addition, as explained above,
the rate of sales growth in this division in the second half of the year was
lower than expected, which meant that cash generation in this division fell
short of expectations. The significant reduction in order intake in the
conventional markets of the LTG Mailaender Division in late 2001 and the first
half of 2002 has reduced cash flows in that division. However, order intake
picked up strongly in the second half and this division was cash-generative in
2002 as a whole, broadly in line with our expectations.
The overall consequence of all this has been that the funding of group has
become tighter, such that the continued expansion of Imagelinx and investment in
its new computer systems has been subjected to careful review, with future
investment only being made as sales generation is assured. Variable costs and
overheads will be monitored and restricted should growth not meet expectations.
As described above, the rights issue in August 2002 raised #7.3 million (#6.7
million net of expenses), of which #2.5 million represented the capitalisation
of a loan received earlier in the year from LTG Holding GmbH & Co. KG.
Effective 26 February 2003, the Company discounted a receivable due to it on 24
August 2003 from International Thermo Systems LLC with a nominal value of
$3,141,000 (#1,995,000 at that date) for the sum of $2,909,000 (#1,811,000), of
which $1,884,000 (#1,197,000) was used to repay bank debt.
Effective close of business 18 March 2003, the Company disposed of its interest
in the business activities of Crabtree of Gateshead Limited to Ever 1919
Limited, a company in which the managing director of Crabtree of Gateshead
Limited, Steve McDowell, is interested, for cash consideration of #2,200,000.
After expenses of approximately #150,000, this resulted in a loss of #658,000.
This loss is provided for in the result for the year ended 31 December 2002 and
the disposal represents a discontinuation of this business under FRS3. In 2002,
the operations of Crabtree of Gateshead contributed an operating loss of #5.7
million (including a write-down of #4.8 million goodwill arising on
consolidation) to the Group's results.
In the year ended 31 December 2002, Crabtree of Gateshead Limited produced a
loss before tax of #753,000 and as at 31 December 2002 had net liabilities of
#6,742,000. The consideration will be applied to the general working capital
requirements of the Group.
Other developments
Following the resignation of Nick Hunter, Michael Williamson was appointed
Finance Director on 22 January 2003. Michael brings extensive experience to this
role and we look forward to working with him. Nick Hunter will remain with the
Group to ensure a smooth transition. The whole of the Board is grateful to Nick
for his contribution in helping the Group through a difficult period.
Management and staff
The downturn experienced in the metal sheet decorating industry in the first
half of the year had a significant impact on that division and impacted the
Group as a whole. It has therefore been enormously satisfying to report on the
progress made in that division in the second half of the year. In the meantime,
enormous efforts have been undertaken in the Imagelinx Division to consolidate a
platform for growth in 2003. We therefore thank everyone in the Group for their
efforts in the year.
David Straker-Smith, Chairman
Albert Klein, Chief Executive
18 March 2003
RESULTS
The group showed an operating loss of #17,268,000, compared with #9,311,000 in
2001. The divisional analysis of that result was as follows:
2002 LTG
Mailaender Imagelinx Group TOTAL
Division Division overhead Eliminations GROUP
#'000 #'000 #'000 #'000 #'000
Sales 50,777 7,368 1,467 (1,728) 57,884
Cost of sales (37,982) (4,250) - 437 (41,795)
Gross margin 12,795 3,118 1,467 (1,291) 16,089
Gross margin % 25.2% 42.3% 27.8%
Other operating expenses (12,688) (10,470) (3,650) 1,297 (25,511)
Exceptional operating
expenses (423) (1,030) (779) - (2,232)
Operating loss before
goodwill (316) (8,382) (2,962) 6 (11,654)
Operating margin (before
goodwill) % (0.6%) (113.8%) (20.1%)
Goodwill amortisation (220) (620) - - (840)
Write-down of goodwill (4,774) - - - (4,774)
Operating loss (5,310) (9,002) (2,962) 6 (17,268)
Operating margin % (10.5%) (122.2%) (29.8%)
2001 - as restated LTG
Mailaender Imagelinx Group overhead TOTAL GROUP
Division Division #'000 Eliminations #'000
#'000 #'000 #'000
Sales 58,924 6,004 1,961 (1,995) 64,894
Cost of sales (49,289) (2,916) 710 (51,495)
Gross margin 9,635 3,088 1,961 (1,285) 13,399
Gross margin % 16.4% 51.4% 20.6%
Other operating expenses (12,899) (6,631) (3,155) 1,272 (21,413)
Exceptional operating
expenses (245) (245)
Operating loss before
goodwill (3,264) (3,543) (1,439) (13) (8,259)
Operating margin (before
goodwill) % (5.5%) (59.0%) (12.7%)
Goodwill amortisation (440) (612) - - (1,052)
Operating loss (3,704) (4,155) (1,439) (13) (9,311)
Operating margin % (6.3%) (69.2%) (14.3%)
In 2001, the Imagelinx Division was called the Packaging Services Division, and
the LTG Mailaender Division was called the Metal Sheet Decorating Division.
GROUP PROFIT AND LOSS ACCOUNT
For the year ending 31 December 2002
Notes As restated
2002 2001
#'000 #'000
TURNOVER
- Ongoing 48,209 53,059
- Discontinued 9,675 11,835
GROUP TURNOVER 2 57,884 64,894
Cost of sales
- Ongoing (34,575) (41,747)
- Discontinued (7,220) (9,748)
(41,795) (51,495)
Gross profit
- Ongoing 13,634 11,312
- Discontinued 2,455 2,087
16,089 13,399
Other operating expenses (27,743) (21,658)
Goodwill amortisation - continuing (620) (612)
Goodwill amortisation - discontinued (220) (440)
Goodwill impairment - discontinued (4,774) -
OPERATING (LOSS)/PROFIT
- Ongoing (11,583) (9,441)
- Discontinued (5,685) 130
2 (17,268) (9,311)
Non-operating exceptional items:
Ongoing: restructuring of LTG Mailaender Division 3 - (581)
Loss on disposal of discontinued operation 3 (658) -
Loss on ordinary activities before investment income,
interest and taxation (17,926) (9,892)
Amounts written off investments (57) (428)
Interest receivable and similar income 152 476
Interest payable and similar charges (843) (210)
Other finance income 40 120
LOSS ON ORDINARY ACTIVITIES BEFORE TAXATION (18,634) (9,934)
Tax on loss on ordinary activities 4 80 531
RETAINED LOSS FOR THE YEAR (18,554) (9,403)
Loss per ordinary share - basic and diluted 5 (11.60p) (7.90p)
GROUP STATEMENT OF TOTAL RECOGNISED GAINS AND LOSSES
for the year ended 31 December 2002
Notes As restated
2002 2001
#'000 #'000
Retained loss for the year (18,554) (9,403)
Exchange difference on retranslation of net assets of
subsidiary undertakings 635 (79)
Actuarial loss (3,046) (2,263)
TOTAL RECOGNISED GAINS AND LOSSES RELATING TO THE YEAR (20,965) (11,745)
Prior year adjustment (2,529)
TOTAL RECOGNISED GAINS AND LOSSES SINCE LAST ANNUAL REPORT (23,494)
As restated
2002 2001
#'000 #'000
Total recognised gains and losses: (20,965) (11,745)
Other movements:
New shares issued 5,246 -
Premium on share issue 2,099 -
Share issue costs written off against share premium account (252) -
Total movement during the year (13,872) (11,745)
Opening shareholders' funds (originally #24,240k before deducting the
prior year adjustment of #2,529k) 21,711 33,456
Shareholders' funds at 31 December 7,839 21,711
GROUP BALANCE SHEET
at 31 December 2002
Notes As restated
2002 2001
#'000 #'000
FIXED ASSETS
Intangible assets 10,507 16,151
Tangible assets 11,793 10,429
Investments 86 143
22,386 26,723
CURRENT ASSETS
Stocks 11,926 15,184
Debtors 10,597 13,741
Cash at bank and in hand 6,170 1,213
28,693 30,138
CREDITORS: amounts falling due within one year (33,758) (28,596)
NET CURRENT (LIABILITIES)/ASSETS (5,065) 1,542
TOTAL ASSETS LESS CURRENT LIABILITIES 17,321 28,265
CREDITORS: amounts falling due after more than one year (666) (271)
PROVISIONS FOR LIABILITIES AND CHARGES (3,635) (3,896)
NET ASSETS EXCLUDING PENSION LIABILITIES 13,020 24,098
PENSION LIABILITY (5,181) (2,387)
7,839 21,711
CAPITAL AND RESERVES
Called up share capital 11,542 6,296
Share premium account 37,828 35,981
Merger reserve 3,524 3,524
Other reserves (1,920) (2,555)
Profit and loss account (43,135) (21,535)
7,839 21,711
GROUP CASH FLOW STATEMENT
for the year ended 31 December 2002
Notes 2002 2001
#'000 #'000
NET CASH OUTFLOW FROM OPERATING ACTIVITIES 6 (1,447) (9,409)
RETURNS ON INVESTMENT AND SERVICING OF FINANCE
Interest and similar charges paid (799) (156)
Interest and similar income received 192 476
Interest element of finance lease rental payments (44) (54)
(651) 266
TAXATION
Taxation (paid)/received (68) 141
CAPITAL EXPENDITURE AND FINANCIAL INVESTMENT
Payments to acquire tangible fixed assets (4,778) (6,758)
Payments to acquire intangible fixed assets (388) (1,706)
Receipts from sales of tangible fixed assets 571 42
(4,595) (8,422)
ACQUISITIONS
Purchase of business (192) -
FINANCING
Receipt of loan from related party 2,500 -
Issue of ordinary share capital 4,845 -
Share issue cost (252) -
Repayment of short term loans (30) -
Repayment of capital element of finance leases and hire purchase (36) (308)
contracts
New short term loans - 73
7,027 (235)
INCREASE /(DECREASE) IN CASH 6 74 (17,659)
RECONCILIATION OF NET CASH FLOW TO MOVEMENT IN NET DEBT
Notes 2002 2001
#'000 #'000
Increase/(decrease) in cash in the period 74 (17,659)
Repayment of debt and lease financing 66 235
Change in net debt arising from cash flows 140 (17,424)
Exchange movement 610 (206)
Movement in the year 750 (17,630)
Net (debt)/funds at beginning of year (2,460) 15,170
Net debt at end of year 6 (1,710) (2,460)
1. FINANCIAL INFORMATION
The financial information set out above does not constitute statutory accounts
within the meaning of section 240 of the Companies Act 1985. The results for the
year to 31 December 2002 and the balance sheet and cash-flow statements as at
that date have been extracted from draft accounts on which will be based the
statutory accounts to be circulated to shareholders. This preliminary
announcement was approved by the directors on 18 March 2003.
The preliminary announcement has been prepared on the same basis as set out in
the previous year's annual accounts. The group has adopted the accounting
policies most appropriate to its circumstances for the purposes of giving a true
and fair view.
The directors continually monitor the financial position of the Group, taking
into account the latest forecasts of future cash flows and analyses of these
forecasts, sensitised in respect of the key uncertainties facing the Group's
ability to generate cash. The directors consider that the major such uncertainty
is the timing of actual versus targeted sales in the Imagelinx Division while it
is building up the client base for its pioneering services. Another key
uncertainty which the Board is monitoring closely is the strength of the
underlying recovery of the LTG Mailaender Division, particularly given the
current geopolitical risk and its possible effect on the business environment.
The Board has analysed overheads to identify cash savings which can be realised
in the short term in both divisions, if necessary, while minimising the
consequent impairment to the group's global operating capability.
Based on this assessment, the directors have a reasonable expectation that the
Group has adequate resources to continue in operational existence for the
foreseeable future. For this reason, they continue to adopt the going concern
basis in preparing the accounts.
Prior Year Adjustment
The disclosure requirements of FRS17 "Retirement Benefits" and FRS19 "Deferred
Taxation" have been adopted for the first time by the Group in these accounts.
The effect of adopting FRS17 is to bring onto the balance sheet as at 31
December 2002 a net pension liability of #5,181,000. The Statement of Recognised
Gains and Losses was impacted by this adjustment, by #3,046,000 in the current
year and the balance in prior years. There is no material effect of the change
in accounting policy for deferred taxation under FRS19 on the results and net
assets of the current and prior financial periods.
2. TURNOVER AND SEGMENTAL ANALYSIS
In the opinion of the directors, the Group operates in two divisions with all
significant operations being based either in Europe (in the United Kingdom and
Germany) or the United States. The segmental analysis of operations is as
follows:
Segmental analysis by activity
LTG As restated
Imagelinx Mailaender Total Total
2002 2001 2002 2001 2002 2001
#'000 #'000 #'000 #'000 #'000 #'000
Group sales
Continuing 7,368 6,004 41,102 47,089 48,470 53,093
Discontinued - - 9,675 11,835 9,675 11,835
Total 7,368 6,004 50,777 58,924 58,145 64,928
Group level sales (261) (34)
Total sales 57,884 64,894
Operating loss
Continuing (7,352) (3,543) 882 (3,394) (6,470) (6,937)
Discontinued - - (775) 130 (775) 130
Total (7,352) (3,543) 107 (3,264) (7,245) (6,807)
Common costs (2,177) (1,207)
Operating exceptional (2,232) (245)
items
Goodwill amortisation (840) (1,052)
Impairment write-down of
goodwill (4,774) -
Group operating loss (17,268) (9,311)
Non-operating exceptional (658) (581)
items
Net interest (691) 266
Other finance income of
group undertakings 40 120
Amounts written off (57) (428)
investments
Loss before tax (18,634) (9,934)
LTG As restated
Imagelinx Mailaender Total Total
2002 2001 2002 2001 2002 2001
#'000 #'000 #'000 #'000 #'000 #'000
Net assets/(liabilities)
Continuing activities (10,642) (2,647) (793) 311 (11,435) (2,336)
Discontinued activities - - (1,064) (725) (1,064) (725)
(10,642) (2,647) (1,857) (414) (12,499) (3,061)
Unallocated net assets 20,338 24,772
Total net assets 7,839 21,711
Segmental analysis by geographical area
Net assets
Sales by Sales by Operating as
origin destination loss restated
2002 2002 2002 2002
#'000 #'000 #'000 #'000
Europe 55,677 24,614 (13,696) 16,422
Asia 838 14,602 (1,121) (891)
Americas 4,428 13,286 (2,187) (1,565)
Rest of the world 69 8,510 (264) (58)
Intersegment (3,128) (3,128) - -
57,884 57,884 (17,268)
Non - interest bearing net assets 13,908
Interest bearing net liabilities (6,069)
Total net assets at 31 December 2002 7,839
Net assets
Sales by Sales by Operating as
origin destination loss restated
2001 2001 2001 2001
#'000 #'000 #'000 #'000
Europe 66,325 31,871 (8,868) 25,023
Asia 2,386 17,205 (18) 89
Americas 4,474 15,989 (425) (1,886)
Rest of the world - 8,120 - -
Intersegment (8,291) (8,291) - -
64,894 64,894 (9,311)
Non - interest bearing net assets 23,226
Interest bearing net liabilities (1,515)
Total net assets at 31 December 2002 21,711
3. EXCEPTIONAL ITEMS
2002 2001
#'000 #'000
Restructuring of LTG Mailaender Division - (581)
Loss on disposal - Crabtree of Gateshead (658) -
(658) (581)
The loss arising from the exceptional items should have no tax impact in the
current year.
4. TAX ON LOSS ON ORDINARY ACTIVITIES
Tax on loss on ordinary activities
2002 2001
#'000 #'000
UK Current tax:
Adjustments in respect of previous years (43) (448)
Overseas Tax:
Adjustments in respect of previous years (37) (83)
(80) (531)
Deferred Tax:
Originating and reversal of timing differences - -
(80) (531)
Factors affecting the tax credit for the year
As restated
2002 2001
#'000 #'000
Loss on ordinary activities before tax (18,634) (9,934)
Loss on ordinary activities before tax multiplied by
the standard rate of corporate tax in the UK at 30% (2001: 30%) (5,590) (2,980)
Effect of:
Disallowed expenses and non-taxable income 2,670 1,107
Capital allowances in excess of depreciation 153 (244)
Other timing differences 736 (66)
Adjustments in respect of previous periods (80) (531)
Tax losses 2,497 1,305
Effect of German tax pooling agreement (466) 878
Current tax credit for the period (80) (531)
5. LOSS PER ORDINARY SHARE
The calculation of earnings per ordinary share (and fully diluted) is based on
losses of #18,554,000 and on 159,998,949 ordinary shares, being the weighted
average number of ordinary shares in issue during the year. 4,425,002 shares
held by ESOTs are excluded from the total number of shares.
The calculation of earnings per ordinary share (and fully diluted) for the prior
year is based on losses of #9,403,000 and on 119,057,241 ordinary shares, being
the weighted average number of ordinary shares in issue during the year.
4,425,002 shares held by ESOTs are excluded from the total number of shares.
6. NOTES TO THE STATEMENT OF CASH FLOWS
(a) Reconciliation of operating loss to net cash outflow from operating
activities
As restated
2002 2002 2001 2001
#'000 #'000 #'000 #'000
Operating loss (17,268) (9,311)
Cost of fundamental restructuring - (581)
Depreciation of tangible fixed assets 2,290 1,786
Amortisation of intangible fixed assets 6,470 2,368
Loss on sale of tangible fixed assets 128 26
Decrease/(increase) in stocks 3,553 (871)
Decrease/(increase) in operating debtors and
prepayments 3,142 (2,166)
Increase/(decrease) in operating creditors and 1,116 (1,453)
accruals
(Decrease)/increase in other provisions (959) 1,019
Write-down of property held for resale 293 -
Employers' contribution (212) (226)
15,821 (98)
Net cash outflow from operating activities (1,447) (9,409)
(b) Analysis of net debt
At Other At
1 January Cash Exchange non-cash 31 December
2002 Flow movement movement 2002
#'000 #'000 #'000 #'000 #'000
Cash 1,213 4,512 445 - 6,170
Overdraft (3,219) (4,438) 165 - (7,492)
(2,006) 74 610 - (1,322)
Short-term loans (73) 30 - - (43)
Other loans - 2,500 - (2,500) -
Finance lease obligations (381) 36 - - (345)
Total (2,460) 2,640 610 (2,500) (1,710)
(c) In the year, #2,500,000 was received as a loan from a related party. This
was subsequently converted into equity as part of the rights issue.
This information is provided by RNS
The company news service from the London Stock Exchange
END
FR SFAEDASDSESD