RNS Number:0946K
Screen PLC
16 April 2003
For Immediate Release
16 April 2003
SCREEN PLC:
PRELIMINARY RESULTS ANNOUNCEMENT
Screen Plc ("Screen" or the "Group"), a leading provider of advanced security
and communication systems focused on homeland security, announces preliminary
results for the year ended 31 December 2002
In his Statement Ian Taylor, Screen Chairman, said:
"2002 was a terrible year for the Group and a real set-back. In my Interim
Statement of 17 December 2002 I set out in detail what went wrong and the
corrective measures taken by the Board. The new management team has made
significant progress since the Company's re-listing on 17 December 2002, as
Adrian Merryman sets out in his first Chief Executive's Report. Steps have been
taken to create a firm foundation from which a healthy growth trajectory can be
established.
"We are starting to unlock commercial potential from the strong technology base,
albeit at a slower pace than anticipated. Although in the first quarter 2003
there was an operating loss, reflecting the time needed to bed down the
reorganisation started in late 2002, in subsequent periods we expect to see an
increase in revenues and a move into profitability."
Financial Highlights
* Turnover of #18.7m (2001: #14.3m) - 2002 included a full year's
trading from 2001 acquisitions.
* Operating Loss (before exceptionals) of #3.7m (2001: #0.8m loss).
* Exceptional charge of #10.1m:
- Group product range reviewed: #2.3m provision against the value of
inventories.
- #1.5m provision against doubtful debts.
- Exceptional write down of goodwill of #5.3m.
- Reorganisation costs and other provisions of #0.9m.
* Pre-tax loss of #15.1m (2001: #0.9m loss).
* No dividend.
* #3.4m placing for Joyce-Loebl acquisition and working capital needs.
* Bank borrowings at 31 December 2002 were #4.3m (2001: #2.9m).
Other highlights
* New medium term loan facility being arranged with the Bank of
Scotland.
* Appointments: Ian Taylor, executive Chairman; Adrian Merryman, CEO;
Geoff Carswell, executive director; Tim Wightman non-executive director.
* No executive director in place in June 2002 remains on the Screen plc
Board.
* Group products and services focused on the homeland security market;
strong technology base.
* Customers include security services, emergency services, defence
forces, as well as commercial and governmental organisations.
* Expansion of selling effort into the US homeland security market.
Progress in Q1 2003
* Joyce-Loebl (transportation and defence) - record order book of #15.8m.
* Petards Vision (advanced security and surveillance) - record numbers of
Swift wireless camera systems; increasingly strong pipeline.
* PMI International (police services) - #1.8 m orders for new Provida ANPR
product, launched in 2003.
* Initial concentration during reorganisation period on rationalising corporate
overheads; increasing attention now on operating cost reduction.
* On-going annual cost savings of over #1m.
Adrian Merryman, who became Chief Executive of Screen last December, said:
"Although there is much work that remains to be done, we are pleased with the
progress being made throughout the Group as we position ourselves in the
homeland security market. In the first half 2003 we are concentrating on laying
a firm foundation and the second half results should demonstrate our
potential."
Contacts:
Screen Plc Tel: 01932 753 970
Adrian Merryman, Chief Executive
Andrew Lane, Chief Financial
Officer
info@screenplc.com
www.screenplc.com
Binns & Co PR Ltd Tel: 020 7786 9600
Paul McManus
Peter Binns
Editor's Notes:
The Screen companies serving each market and the products and services they
provide are outlined below.
Security & Surveillance
* Petards Vision
Delivers advanced security & surveillance solutions. Provides a highly
sophisticated line of security & surveillance command & control systems under
the Advantage and Argus brands. It also provides the Swift line of
rapid-deployment wireless camera systems.
* PDL
Integrator of advanced security & surveillance systems serving the needs of
sophisticated commercial and government customers.
* Joyce-Loebl Transportation Division
Delivers sophisticated on-board CCTV security & surveillance solutions to the
rail transportation industry. It also provides the rail industry with passenger
information and incident alert systems.
* PMI International
Serves the police services, providing the leading European mobile video evidence
system, the Provida 2000 and the new Provida 3000 system. Recently launched the
Provida ANPR and the Provida MPC, a ruggedised mobile computer.
Emergency Services
* Petards Emergency Services
Serves the fire and ambulance services as an acknowledged leader in providing
integrated mobile data and back office solutions.
Defence
* Joyce-Loebl Defence Division
An established supplier to the UK and European defence forces that specialises
in electronic warfare, fighting vehicle electronics, and rugged communications
and IT systems.
-0-
CHAIRMAN'S STATEMENT
INTRODUCTION
2002 was a terrible year for the Group and a real set back. In my Interim
Statement of 17 December 2002 I set out in detail what went wrong and the
corrective measures taken by the Board. The detail of the 2002 results is
reported elsewhere in this Annual Report. In this statement therefore, I wish to
present a balanced picture, which acknowledges past problems, reports on current
recovery and points the way to a commercially successful future. The new
management team has made significant progress since the Company's re-listing on
17 December 2002, as Adrian Merryman sets out in his first Chief Executive's
Report. Steps have been taken to create a firm foundation from which a healthy
growth trajectory can be established.
OVERVIEW OF FISCAL YEAR
As reported in December, accounting systems and reporting disciplines broke down
in parts of the business during the early part of the year. The quality of
information communicated to the Board deteriorated and substantive questions
were raised over the validity of certain figures. This led to departures from
the Board, the temporary de-listing of the Company from the Alternative
Investment Market of the London Stock Exchange and a breach of bank covenants.
Following my appointment as Chairman, I entered into discussions with the
Company's brokers and bankers. To stabilise the business, I directed an interim
management team to conduct a thorough review. The team determined that the
business was essentially sound, but that substantial restructuring was required.
This work was continued into the current financial year.
In cold figures, the results for the year present a depressing picture. There
was an operating loss of #3.7 million (2001, as restated: #0.8 million loss),
before exceptional costs of #10.1m (2001: #0.1m), on turnover of #18.7 million
(2001: #14.3 million). Although this indicates a growth in turnover of 31%, the
two periods are not directly comparable, as 2002 was the first period to include
a full year's trading from the 2001 acquisitions, most noticeably Joyce-Loebl. A
full commentary on the figures and the adjustments is given in the Financial
Review.
The loss for the financial year was #15.1m (2001, as restated: #0.9m loss),
after exceptional items of #10.1m, and the basic loss per share was 27.8p (2001,
as restated: 2p loss). The exceptional items are discussed further in the
Financial Review.
After the operating loss and exceptional items noted above are taken into
account the Group's Net Assets as at 31 December 2002 were #3.0m (2001, as
restated: #15.0m). The borrowings of the Group at the year end were #4.3m (2001:
#2.9m). The Group has continued to receive support from its bankers and a new
medium term loan facility is being finalised.
During the year the Group had a net cash outflow from operating activities of
#4.1 million (2001, as restated:#4.1 million). #3.4 million before expenses was
raised during the year by means of placings of new shares, which were used to
fund the acquisition of Joyce-Loebl and the Group's on-going working capital
requirements.
DIVIDENDS
The Board do not recommend a dividend payment.
THE BOARD
There have been a number of changes to the Board during the year: no executive
director in place in June 2002 remains on the Screen plc Board. Claes Bergstedt
resigned as the CEO in July 2002. In October 2002 the Finance Director, James
Shand, was dismissed from the Board; the Chairman and interim CEO, Owen
Williams, resigned; and I took over as Executive Chairman. The Business
Development Director, Richard Hill, resigned in November 2002 and Mike Williams,
having helped the Group re-establish itself, also resigned in January 2003.
Geoff Carswell (Managing Director of Joyce-Loebl), was appointed as an executive
director on 17 July 2002. Adrian Merryman, appointed CEO on 4 December 2002, and
Tim Wightman, who joined the Board as a non-executive director on 31 March 2003,
were a part of the interim management team that I assembled during the
re-organisation period. Both have had an opportunity to gain a real insight into
the Group's operations and potential
THE CURRENT POSITION
The Group's products and services are aimed at helping identify and address
homeland security related threats. They are used by the security services,
emergency services and defence forces as well as a wide range of commercial and
governmental organisations. Given the current global terrorist concerns, the
markets we address are growing and critical to our collective future.
The Group has an enviable client base with many of the most respected customers
in the markets we serve. It has well recognised brands and high value-added
products and services.The Chief Executive gives more information in his report.
In 2003 we are building on the work done in late 2002 as we continue to:
* Implement appropriate accounting and cash management processes to
reflect more accurately our trading position and conserve our working capital
resources.
* Tackle in the operational divisions the culture change required to
inject commercial controls alongside commitment to strong technology
development.
* Focus on maximising the significant potential of our current product and
service offerings, and those emerging from our product development pipeline.
* Expand our selling effort in the United States where the homeland
security market is embryonic. Our experience selling into the UK market, where
our customers have wide experience in fighting terrorism over a prolonged
period, will provide us with a strong competitive advantage.
STAFF
I should like to express my thanks to all the Group's employees who have shown
great commitment during a difficult year. They have maintained an unbridled
enthusiasm for their products and services and the markets they serve. This
enthusiasm is reflected in the extraordinary lengths to which they regularly go
to serve their customers and the Group. We are now building team spirit across
the previously segmented divisions, which is already showing benefit in the
creative flow of ideas.
OUTLOOK FOR 2003
The new management team, under Adrian Merryman, is performing well and the Group
is on a recovery path. We are starting to unlock commercial potential from the
strong technology base, albeit at a slower pace than anticipated. Although in
the first quarter 2003 there was an operating loss, reflecting the time needed
to bed down the reorganisation started in late 2002, in subsequent periods we
expect to see an increase in revenues and a move into profitability.
We are serving the growing homeland security related markets with highly
competitive products, often providing innovative solutions. Through the efforts
of management and staff, we intend to rebuild shareholder value over the medium
to long term.
IAN TAYLOR
16 April 2003
-0-
CHIEF EXECUTIVE'S REPORT
INTRODUCTION
I should like to begin by thanking our employees, board, bankers, brokers and
advisors. Without their commitment and support we would not have emerged from
the difficulties which faced the Company in 2002.
We can now concentrate on building a successful group of companies.
During the past months the potential of the Screen Group has become apparent. We
have begun to establish an attractive growth trajectory on a strong foundation.
There is still an enormous amount of work ahead of us, however, if we are to
take full advantage of the market opportunities opening up for our products.
OUR PRODUCTS AND SERVICES
Screen uses its technology to address security and communications related issues
in a variety of ways. Our security & surveillance companies are leaders in the
development and implementation of threat identification technologies. We have
innovated in the application of sophisticated software, database technologies,
mobile information systems and rapidly deployable cameras to make threat
identification and response more efficient and effective. These systems are
purchased primarily by large corporate customers and governmental agencies of
all types, including defence. Our police mobile video evidence systems have
helped increase conviction rates, and our new Provida ANPR solution, a mobile
automatic number plate recognition system is providing police forces with an
important and effective new tool for crime and threat identification.
Our emergency services company supports the fire and ambulance services. We have
led in providing state-of-the-art mobile and back office solutions to fire
brigades.
Our defence company provides European defence forces with electronic warfare
systems, which provide aircraft counter measures against incoming missile
threats. It also manufactures sophisticated vehicle electronics and ruggedised
equipment that can operate in harsh operating environments, such as those
experienced in the Iraq campaign.
The Screen companies serving each market and the products and services they
provide are outlined below.
Security & Surveillance
* Petards Vision
Delivers advanced security & surveillance solutions. Provides a highly
sophisticated line of security & surveillance command & control systems under
the Advantage and Argus brands. It also provides the Swift line of
rapid-deployment wireless camera systems.
* PDL
Integrator of advanced security & surveillance systems serving the needs of
sophisticated commercial and government customers.
* Joyce-Loebl Transportation Division
Delivers sophisticated on-board CCTV security & surveillance solutions to the
rail transportation industry. It also provides the rail industry with passenger
information and incident alert systems.
* PMI International
Serves the police services, providing a leading European mobile video evidence
system, the Provida 2000 and the new Provida 3000 system. Recently launched the
Provida ANPR and the Provida MPC, a ruggedised mobile computer.
Emergency Services
* Petards Emergency Services
Serves the fire and ambulance services as an acknowledged leader in providing
integrated mobile data and back office solutions.
Defence
* Joyce-Loebl Defence Division
An established supplier to the UK and European defence forces that specialises
in electronic warfare, fighting vehicle electronics, and rugged communications
and IT systems.
FIRM FOUNDATION
In his statement the Chairman outlines the growing importance of the homeland
security sector, the strength of our client base, the value of our brands, and
the value-added nature of our products and services. We are also beginning to
benefit from an on-going overhaul of our business practices, that has included
the implementation of prudent accounting practices and cash management
processes.
Screen's greatest strength, however, is its people, their talents, and their
enthusiasm for our products and services, and the markets we serve. This
enthusiasm is reflected in the late nights and weekends spent serving our
customers needs, so that they can ensure public safety is maintained. It is
reflected in the details that make a Screen product easier to use, or more
efficient, or faster. They make Screen a special company, and our products just
that much more valuable to our customers.
INITIAL INDICATORS OF PROGRESS
During the first half of 2003 we will begin to benefit from what we believe will
be a sustainable improvement in our trading and growth prospects. Some early
positive developments are:
* Joyce-Loebl reached a new record order book of #15.8 million.
* Petards Vision is selling record numbers of its Swift wireless rapid
deployment camera systems and has an increasingly strong sales pipeline.
* PMI International received orders totalling #1.8 million for its new
Provida ANPR product, which was launched in 2003.
* The strengthening of the Group Balance Sheet,
* There was minimal focus on operating cost reduction until the fourth
quarter 2002 when the emphasis was predominantly on rationalising corporate
overheads. To date we have implemented on-going cost savings of more than #1
million per year.
GROUP STRATEGY
Our strategy to maximise shareholder return is to:
* Introduce operational improvements in all the businesses, which will
strengthen margins and enhance delivery performance.
* Pursue aggressively the opportunities offered by the increased demand for
homeland security related requirements through the organic development of
our businesses. We are particularly focused on:
* Converting our growing sales pipeline.
* Improving marketing and distribution in the United Kingdom, the
United States and elsewhere.
* Product improvements and new product development based on our detailed
knowledge of customer needs, with emphasis on software solutions.
SUMMARY
Although there is much work that remains to be done, we are pleased with the
progress being made throughout the Group as we position ourselves in the
homeland security market. In he first half 2003 we are concentrating on laying a
firm foundation and in the second half results should demonstrate our potential
ADRIAN MERRYMAN
16 April 2003
-0-
FINANCIAL REVIEW
FISCAL YEAR 2002 RESULTS
The Board considers that the business review undertaken in the second half of
2002 has now established a properly based trading record for the 2002 Fiscal
Year. As a result of the adjustments reported below, the Group now has a firm
basis on which to assess and report accurately on its future performance.
PROFIT & LOSS ACCOUNT
Group revenue for the year was #18.7m, compared with #14.3m in the previous
year. This increase, however, reflects a full year's trading of the companies
acquired during 2001, particularly Joyce-Loebl, which has been offset by a year
on year decline in the revenues of the rest of the Group. Joyce-Loebl, acquired
on 21 December 2001, has performed strongly in the year, contributing revenue of
#9.0m to the Group.
The Group's operating loss in 2002, before exceptional items, was #3.7m,
compared with a loss of #0.8m in 2001, as restated. This operating loss includes
the #771,000 loss associated with the Petards Corporate Knowledge operations
which were discontinued in the year, and the costs of the reorganisation of
activities within the Petards division.
The Group faced severe working capital pressures throughout the fourth quarter
of 2002, as a result of bank financing constraints and the reluctance of
suppliers to extend credit terms. Some potential customers, on becoming aware of
the Group's difficulties, deferred or did not place orders, whilst some existing
customers deferred payments, which intensified the working capital pressures.
The reported operating loss also reflects the implementation of the Group Audit
Committee's recommendation in August 2002 to cease the practice of capitalising
development expenditure. This represents a change in the Group's accounting
policy and is in line with the policy applied by Joyce-Loebl. Accordingly all
expenditure on research and development is now written off to the profit and
loss account as it is incurred. This had the effect of increasing the loss for
the year by #0.7m in 2002 (2001, as restated: #1.5m) following the accounting
policy change. The impact of this policy change is to write off #2.8m of
capitalised development costs relating to prior years and the comparatives have
been restated accordingly. A consequence of this accounting policy change is
that the group is at present assessing its entitlement to R&D tax credits under
the government scheme.
EXCEPTIONAL ITEMS
As a result of the business review there was an exceptional charge of #10.1m
(2001: #0.1m), the major items of which are set out below:
* The Group's product range has been critically reviewed and following
rationalisation additional provisions amounting to #2.3m have been made against
the value of inventories.
* Provisions amounting to #1.5m have been made against doubtful debts.
Three particular debts, totalling #1.9m, relate to separate contracted sales of
ProVida in-car video equipment by PMI International A/S. As set out in the
Interim Statement in December 2002, in all three cases the Board took the
decision to recover title and possession of the goods, and so the respective
provision is net of the inventory value recovered.
* During the year the Board carried out an impairment assessment of the
goodwill carried in the Group's Balance Sheet. This has resulted in a write
down of goodwill through reduced market valuations of net worth, and the
lack of resources available to invest in some technological enhancements to
the Group's product range. Therefore there has been an exceptional write
down of goodwill of #5.3m in addition to the goodwill amortisation for the
period of #248,000 (2001: #397,000), and in addition to the attributable
goodwill in Petards Corporate Knowledge Limited of #1,599,000, which is
included within the loss on disposal.
BALANCE SHEET
As a result of the operating losses in the period, the exceptional charges and
the change in the accounting policy on Research & Development Expenditure, the
Consolidated Net Assets at 31 December 2002 were #3.0m (31 December 2001, as
restated: #15.0m).
BORROWINGS
At 31 December 2002, the Group had total borrowings of #4.3m million, compared
to #2.9m in the prior year. The Group has subsequently renegotiated its
facilities with its main banker, the Bank of Scotland, and expects shortly to
finalise the documentation of a #2.8 million 5 year term loan facility, a
#750,000 invoice discounting facility and a #250,000 credit facility. These new
facilities would replace the existing #2.5 million credit facility and are in
addition to the #1.25 million term loan with the Bank of Scotland. The Lloyds
TSB loan note due 21 January 2003 was acquired by the directors and the
management on 28 March 2003. The Board is confident the Company will be able to
implement a planned reduction in borrowings by meeting the loan repayment
programme as it falls due.
CASH FLOW
During the period under review the Group had a net cash outflow from operating
activities of #4.1m (2001, as restated: #4.1m). In January and March of 2002 the
Group raised aggregate funds of #3.4m before expenses, by means of new share
placings, which were used to fund the acquisition of Joyce-Loebl and the Group's
on-going working capital requirements.
ANDREW LANE
16 April 2003
-0-
CONSOLIDATED PROFIT AND LOSS ACCOUNT
For the year ended 31 December 2002
Unaudited Audited
------------------------------------------- --------------
Before After
exceptional Exceptional exceptional Year ended
items Items (note 4) items 31 December
Year ended Year ended Year ended 2001
Note 31 December 31 December 31 December (restated, see
2002 2002 2002 note 3)
#'000 #'000 #'000 #'000
Turnover
Continuing
operations 18,292 - 18,292 13,135
Discontinued
operations 394 - 394 1,115
--------- --------- --------- ---------
18,686 - 18,686 14,250
Cost of sales (10,480) - (10,480) (7,816)
--------- --------- --------- ---------
Gross profit 8,206 - 8,206 6,434
--------- --------- --------- ---------
Exceptional 4
items - (4,781) (4,781) (74)
Goodwill
amortisation
and impairment (248) (5,283) (5,531) (397)
Other
administrative
expenses (11,609) - (11,609) (6,847)
--------- --------- --------- ---------
Total
administrative
expenses (11,857) (10,064) (21,921) (7,318)
--------- --------- --------- ---------
Operating
loss
Continuing
operations (2,880) (10,014) (12,894) (670)
Discontinued
operations (771) (50) (821) (214)
--------- --------- --------- ---------
Total
operating
loss (3,651) (10,064) (13,715) (884)
--------- ---------
Loss on 2
disposal of
discontinued
operations (1,206) -
--------- ---------
Loss on
ordinary
activities
before
interest (14,921) (884)
Net interest
(payable)/
receivable (228) 33
--------- ---------
Loss on
ordinary
activities
before
taxation (15,149) (851)
Taxation - -
--------- ---------
Loss on
ordinary
activities
after taxation
being loss for
the financial
year (15,149) (851)
========= =========
Loss per share
Basic and
diluted 6 (27.8p) (2.0p)
CONSOLIDATED BALANCE SHEET
As at 31 December 2002
Unaudited Audited
31 December 2002 31 December
2001
(restated, see
note 3)
#'000 #'000
Fixed assets
Intangible assets 894 8,051
Tangible assets 1,250 1,435
----------- ------------
2,144 9,486
----------- ------------
Current assets
Stocks 6,178 5,303
Debtors 3,615 9,332
Cash at bank and in hand 1 554
----------- ------------
9,794 15,189
Creditors: amounts falling due within one
year (8,539) (7,609)
----------- ------------
Net current assets 1,255 7,580
Total assets less current liabilities 3,399 17,066
Creditors: amounts falling due after more than
one year (175) (2,093)
Provisions for liabilities and charges (196) -
----------- ------------
Net assets 3,028 14,973
=========== ============
Capital and reserves
Called up share capital 563 472
Share premium account 22,703 19,225
Other reserves - 423
Profit and loss account deficit (20,238) (5,147)
----------- ------------
Equity shareholders' funds 3,028 14,973
=========== ============
CONSOLIDATED CASH FLOW STATEMENT
For the year ended 31 December 2002
Unaudited Audited
Year ended Year ended
31 December 2002 31 December 2001
(restated, see note 3)
Note #'000 #'000 #'000 #'000
Net cash outflow from 7
operating activities (4,080) (4,106)
Returns on investments
and servicing of
finance
Interest received 81 104
Interest paid (282) (53)
Finance lease interest
paid (27) (18)
------- ------
Net cash inflow from
returns on investments
and servicing of
finance (228) 33
Taxation
UK corporation tax - -
Capital expenditure
Purchase of intangible
fixed assets (51) -
Purchase of tangible
fixed assets (422) (396)
Sale of tangible fixed
assets 107 46
------- ------
Net cash outflow from
capital expenditure (366) (350)
Acquisitions and
disposals
Purchase of 2
businesses (419) (4,526)
Bank balance acquired
with subsidiary - (91)
------- ------
(419) (4,617)
-------- ---------
Net cash outflow before
financing (5,093) (9,040)
Financing
Issue of shares 3,163 6,503
Repayment of principal
under finance leases 9 (229) (166)
Bank loan - 1,202
------- ------
Net cash inflow from
financing 2,934 7,539
-------- ---------
Decrease in cash in the
year 8 (2,159) (1,501)
======== =========
CONSOLIDATED STATEMENT OF TOTAL RECOGNISED GAINS AND LOSSES
For the year ended 31 December 2002
Unaudited Audited
31
December 31 December
2002 2001
(restated, see
note 3)
#'000 #'000
Loss for the financial year (15,149) (851)
Currency translation difference on foreign
current net investments 58 (82)
--------- ------------
Total recognised gains and losses relating to the
year (15,091) (933)
============
Prior year adjustment (note 3) (2,796)
---------
Total recognised gains and losses since last
annual report (17,887)
=========
The profit and loss account and the statement of total recognised gains and
losses have been restated for the change in accounting policy in relation to
research and development expenditure (note 3)
RECONCILIATION OF MOVEMENTS IN EQUITY SHAREHOLDERS' FUNDS
For the year ended 31 December 2002
Unaudited Audited
2002 2001
(restated, see note 3)
#'000 #'000
Loss for the financial year (15,149) (851)
Other recognised gains and losses 58 (82)
New share issues 3,822 7,475
Expenses of share issue (253) (900)
Deferred equity consideration (423) 423
Opening equity shareholders' funds 14,973 8,908
--------- -----------
Closing equity shareholders' funds 3,028 14,973
========= ===========
1. Basis of preparation
These financial statements do not constitute financial statements within the
meaning of Section 240 of the Companies Act 1985.
The financial information set out in the announcement does not constitute the
company's statutory accounts for the years ended 31 December 2002 or 2001. The
financial information for the year ended 31 December 2001 (as restated, see note
3) is derived from the statutory accounts for that year, which have been
delivered to the Registrar of Companies. The auditors reported on those
accounts; their report was unqualified and did not contain a statement under
s237(2) or (3) Companies Act 1985. The statutory accounts for the year ended 31
December 2002 will be finalised on the basis of the financial information
presented by the directors in this preliminary announcement and will be
delivered to the Registrar of Companies following the company's annual general
meeting.
This announcement is prepared on the same basis of the accounting policies as
stated in the previous year's financial statements with the exception of the
change in accounting policy for development expenditure, (see note 3).
2. Acquisitions and Disposals
Acquisitions
There have been no acquisitions in the year, however #419,000 relating to the
consideration for the purchase of Joyce-Loebl in 2001 was paid during 2003, and
the deferred consideration brought forward of #750,000 has been reduced to
#450,000 following the agreement of the Joyce-Loebl completion accounts.
Disposals
Petards Corporate Knowledge Limited was put into creditors voluntary liquidation
in October 2002. The loss on disposal, which was determined including
attributable goodwill, was #1,206,000. The results of the company have been
shown under discontinued operations. There were no cash effects of the disposal.
3. Change in accounting policy
Following the advice of the Audit Committee the directors have changed the
group's accounting policy in relation to research and development expenditure,
so that all expenditure on research and development is written off to the profit
and loss account as soon as it is incurred. The Audit Committee considered the
new policy to be a more prudent basis for accounting for research and
development in the current market conditions, and brought the group's policies
in line with that applied by Joyce-Loebl.
The financial statements have therefore been restated for this change in
accounting policy as summarised below:
Unaudited Audited
2002 2001
#'000 #'000
Profit and loss account
Previously capitalisable development expenditure
incurred in the period 1,527 1,893
Amortisation charge under previous policy (808) (386)
------- -------
Decrease in profit for the financial year 719 1,507
======= =======
Balance sheet
The comparative balance sheet at 31 December 2001 has been restated to show
development expenditure carried forward as nil. Previously, the total
development expenditure carried forward at 31 December 2001 was #2,796,000.
4. Exceptional costs
Unaudited Audited
2002 2001
#'000 #'000
Goodwill impairment 5,283 -
Inventory provisions 2,333 -
Debtor provisions 1,526 -
Reorganisation costs 783 74
Other provisions 139 -
-------- --------
10,064 74
======== ========
The exceptional charge was incurred following the review of the business in 2002
as described in the Chairman's Statement. The directors have carried out an
impairment assessment of the goodwill carried in the Group's Balance Sheet. This
has resulted in an exceptional write down of goodwill because of reduced market
valuations of net worth and the limited resources available to invest in some
technological enhancements of the Group's product range. The Group's product
range has also been critically reviewed and following rationalisation additional
provisions have been made against the value of inventories. Exceptional
provisions against doubtful debts have been made, and where inventory has been
recovered the provision has been reduced by that amount. Exceptional costs have
also been incurred in the review and reorganisation of the Group's activities.
The exceptional charge in the prior year relates to the reorganisation of the
existing business units into the Petards Emergency Services and Petards Vision
Divisions. There was a nil tax impact and #25,000 of these costs were paid after
the year end.
5. Dividend
The Board of Directors does not recommend the declaration of a dividend for the
year ended 31 December 2002.
6. Loss per share
The basic loss per share for the year ended 31 December 2002 is based on the
loss for the year on ordinary activities after taxation of #15,149,000 (2001
(restated): loss #851,000) and on the weighted average number of ordinary 1p
shares of 54,511,705 (2001 - 42,269,753).
FRS 14 requires presentation of diluted EPS when a company could be called upon
to issue shares that would decrease net profit or increase net loss per share.
For a loss making company with outstanding share options, net loss per share
would only be increased by the exercise of out-of-the-money options. As it seems
inappropriate to assume that option holders would act irrationally, and there
are no other diluting future share issues, diluted EPS is equivalent to basic
EPS.
7. Net cash outflow from operating activities
Unaudited Unaudited
2002 2001
(restated)
#'000 #'000
Operating loss (13,715) (884)
Goodwill amortisation and provision for impairment 5,531 397
Depreciation of tangible fixed assets 610 325
Loss on sale of tangible fixed assets 21 6
Increase in stocks and work in progress (875) (770)
Decrease/(increase) in debtors 5,619 (4,731)
(Decrease)/increase in creditors (1,271) 1,551
-------- --------
Net cash outflow from operating activities (4,080) (4,106)
======== ========
8. Reconciliation of net cash flow to movement in net debt
Unaudited Audited
2002 2001
#'000 #'000 #'000 #'000
Decrease in cash in the year (2,159) (1,501)
Cash outflow/(inflow) from debt 229 (1,036)
-------- --------
Change in net debt resulting from cash
flows (1,930) (2,537)
Loans and finance leases acquired with
subsidiary - (109)
Other movements/non cash items:
- new finance leases (183) (182)
- other loans 300 (750)
- other - (7)
Translation difference (169) (24)
-------- --------
Movement in net cash in the year (1,982) (3,609)
Net (debt)/cash at 1 January (2,340) 1,269
-------- --------
Net debt at 31 December (4,322) (2,340)
======== ========
9. Analysis of net cash
At 1 Cash flow Other non cash Exchange At 31 December
January changes movement 2002
2002
#'000 #'000 # '000 #'000 #'000
--------
Cash at bank
and in hand 554 (553) - 1
Overdrafts (646) (1,606) - (169) (2,421)
--------- -------- --------- -------- -----------
(92) (2,159) - (169) (2,420)
--------
Debt due within
1 year - - (1,659) - (1,659)
Debt due after
1 year (1,959) - 1,959 - -
Finance
leases (289) 229 (183) - (243)
--------
229
--------
--------- -------- --------- -------- -----------
Total (2,340) (1,930) 117 (169) (4,322)
========= ======== ========= ======== ===========
10. Report and accounts
Copies of the Report and Accounts will be sent to shareholders in due course.
11. Announcement
Copies of this announcement will be available from the Nominated Adviser:
Collins Stewart, 9th Floor, Wood Street, London, EC2V 7QR for 14 days from the
date of this announcement.
This information is provided by RNS
The company news service from the London Stock Exchange
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