Final Results

Belgravium Technologies Plc

(BVM:AIM)

Belgravium Technologies plc

Preliminary results for the year ended 31 December 2010

The Board of Belgravium Technologies plc ('Belgravium' or 'the Group'), designers and suppliers of mobile data capture systems, is pleased to announce preliminary results for the twelve months ended 31 December 2010.

 Highlights:

·; Profit before tax increased by 7% to £432,000 (2009: £405,000)

·; Substantial reduction in net debt from £1,424,000 to £264,000

·; Earnings per share reduced to 0.38p (2009: 0.43p) due to tax credit position in 2009

·; Group finished year in strong position to take advantage of steadily improving conditions

 Commenting on the year end results, John Kembery, Chairman of Belgravium, said:

"I am pleased to report another year of increased profit before tax at Belgravium as well as a substantial reduction in our net debt position. We enter the new year with a better order book than for the past three years having made real progress against our key strategic objectives. There is undoubtedly increased financial confidence amongst our customers and the need for our products has been accentuated by three years of restraint in capital expenditure".

 For further information please contact:

KPMG Corporate Finance, a division of KPMG LLP which is authorised and regulated by the Financial Services Authority for investment business activities, is acting for the Company as nominated adviser in relation to the matters set out in this announcement and is not acting for any other person in relation to these matters. KPMG Corporate Finance will not be responsible to anyone other than Company for providing the protections afforded to its clients or for providing advice in relation to the contents of this announcement

CHAIRMAN'S STATEMENT 2010

Results

Despite difficult market conditions throughout most of 2010, I am pleased to report that Belgravium remained cash generative and improved its profitability before taxation. The Group finished the year in a strong position to take advantage of steadily improving conditions.

With a marginal fall in revenues from £8,286,000 in 2009 to £8,200,000 in 2010, the Group made a pre-tax profit of £432,000 in the twelve months ended 31 December 2010, an improvement of 7% on the £405,000 achieved in the previous year. Sales were stronger in the final quarter and whilst this seasonality is quite normal, increased activity levels have continued into 2011, giving rise to prospects of a year of further improvement.

In 2009 we benefited from a tax credit of £32,000 but in 2010 have suffered a tax charge of £50,000. So despite the improved profit before tax, basic earnings per ordinary share reduced from 0.43p per share in 2009 to 0.38p per share in 2010.

Cash flow continued to be positive. Between 31 December 2009 and 31 December 2010, the Group reduced net debt by £1,160,000 including continued repayment of the term loan.

The Market

The Group manufactures and installs complete systems incorporating both hardware and software for real-time data capture in the logistics, petrochemical and mobile retailing markets. We seldom have to convince operating management of the improved efficiency and cost benefits of such systems but financial constraints have led to a marked reluctance to commit to capital projects. This has caused frustrating delays and

re-appraisals and Belgravium's increasing international business has shown little difference between home and overseas markets. Over the past few years we have developed a five point strategy for dealing with such an unresponsive market and on every count we have achieved real progress in 2010.

The Strategy

1. Persistent and determined sales force.

The only secure route to improve Belgravium's profitability is to increase revenues and in such a hesitant market this needs sheer dogged persistence. For example, an existing customer operating in France had an excellent but aging system, which could not be supported after 2010, but this still led to protracted and time consuming negotiations with a wide range of issues raised, and eventually resolved. The new contract, worth

€4 million, will be concluded in 2012, and is the result of tenacious and determined efforts by the whole team.

Sales to the UK logistics market have been noticeably quiet. Here, service personnel have received additional sales-oriented product training and we are starting to see a small but significant flow of orders being generated by those people. We have successfully entered the specialised market of RF Tagging, labelling and line marking, which not only generates revenue but also opens opportunities for other sales.

In Belgravium everyone is a salesman; no more so than at Novo IVC where persistent hard work has eventually gained orders in the long-suffering airline retailing market. In December we won major contracts with both Thomas Cook and Monarch and there are several more significant orders pending.

2. Making sure that all products fit the customer's needs.

With a much greater general understanding of IT, customers now expect more flexibility and functionality in a system. Where practically and economically possible our policy is to make sure they receive it and that the resulting product is completely fit for purpose.

In 2009 we introduced a major new product, the "Boston" handheld terminal. Since then we have decided to improve and develop this and other products to better satisfy the customer's changing needs. End-user consultation sessions are now an established part of research and development project management. We go to considerable lengths to identify technology trends and keep ahead of requirements. 

3. Supply the complete solution with increasing elements of repeat revenue.

Historically, Belgravium has been thought of as a hardware supplier but increasingly the contracts we gain tend to centre around software and the other elements of a complete system. Licences, upgrades and maintenance are all essential in a system and all differentiate the overall product and provide repeat revenues. In addition the Group has been successful in offering web hosted services attracting healthy and recurring revenues. In particular, we have has added vehicle tracking and telematics capability to our core fuel distribution system. The company also seeks to gain repeat revenue from GPRS data contracts and software licencing. We have successfully added accredited "chip and pin", Wi-Fi on-board and GPRS data transfer technology to our portfolio providing wider recurring revenue, as well as being able to offer "virtual" on- board products to the airline passenger such as tickets to theme parks and other major city attractions.

4. Controlling costs and managing cash.

The Group is tightly run and in an effort to improve earnings, we have continued to take costs out of the business. The fact that profits for 2010 were higher than 2009 on a slightly reduced turnover is largely due to a fall in administrative costs and demonstrates the success of our cost cutting programme. We will continue with this policy and as confidence in our market increases, we will recruit relevant skilled personnel where needed.

5. Where we do not have the expertise in a sector, seek a strategic relationship with a partner who does.

Perhaps the best example of this policy is with "chip and pin" technology which has long been perceived as essential by the airlines. The hardware for such uses is relatively straight-forward but specific expertise and authorisation is needed when dealing with Banks and financial authorities. We wanted to retain our lead in this market and therefore developed a "preferred supplier" relationship with Ingenico, Europe's leading "chip and pin" provider. This relationship was vital in our gaining the Thomas Cook and Monarch contracts.

Another example of strategic partnership is with Accutest (part of the Trimble Group), a UK organisation, specialising in engine management monitoring. By taking their system hardware, we have integrated individual driver performance reports into our live web hosted tracking system.

Balance Sheet

In times of financial restraint cash management is critical and Belgravium has also sought to improve its independence by repaying the term loan. At the end of 2009, net debt stood at £1,424,000 but strong cash generation has meant that Belgravium had a net debt position of £264,000 at the year end.

It is the Board's strategy to continue to repay the term loan as quickly as possible. In addition, it is likely that our working capital requirement will increase in the near term in order to finance the expected growth in sales. The Board, therefore, does not recommend a dividend for 2010, although it is our intention to restore dividend payments as soon as possible.

Employees

Cost controls and the policy of widening sales activity has meant that many employees have had to learn new skills and work more flexibly. This combined with the frustration of a very hesitant market has not made for an easy working environment. Overall the response has been tremendous and I am confident that the team is in great shape to meet the challenges of 2011. 

Outlook

Belgravium has entered the new year with a better order book than for the past three years and has made real progress against its key strategic objectives. There is undoubtedly increased financial confidence amongst our customers and the need for our products has been accentuated by three years of restraint in capital expenditure. Provided these conditions are maintained, we expect Belgravium to return to growth in 2011.

J P Kembery

Executive Chairman

1 March 2011

Audited consolidated income statement for the year ended 31 December 2010

Audited consolidated statement of changes in equity for the year ended 31 December 2010

Audited consolidated balance sheet as at 31 December 2010

Audited consolidated cash flow statement for the year ended 31 December 2010

1. General Information

Belgravium Technologies plc is a public limited company incorporated and domiciled in the UK and listed on the Alternative Investment Market. Its registered office is 151 St. Vincent Street, Glasgow, G2 5NJ.

The consolidated financial statements were authorised for issue in accordance with a resolution of the Directors on 1 March 2011.

2. Basis of preparation

The financial information set out in this document does not constitute the Group's financial statements for the year ended 31 December 2010 or 31 December 2009. The annual report and financial statements for the year ended 31 December 2010 were approved by the Board of Directors on 1 March 2011 along with this preliminary announcement, but have not yet been delivered to the Registrar of Companies.

The auditors' report on the financial statements for the year ended 31 December 2010 was unqualified and did not contain a statement under section 498 of the Companies Act 2006. Financial statements for the year ended 31 December 2009 have been delivered to the Registrar of Companies. The auditors' report on the financial statements for the year ended 31 December 2009 was unqualified and did not contain a statement under section 498 of the Companies Act 2006.

The audited consolidated financial statements from which these results are extracted have been prepared under the historical cost convention and in accordance with International Financial Reporting Standards (IFRS) as adopted by the European Union, IFRIC interpretations and those parts of the Companies Act 2006 applicable to companies reporting under IFRS.

The accounting policies set out below represent an extract of the policies set out in the consolidated financial statements. There have been no changes in accounting policies in the year.

3. Critical accounting estimates and assumptions

The Group makes estimates and assumptions concerning the future. The resulting accounting estimates will, by definition, seldom equal the related actual results. The estimates and assumptions that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year are discussed below.

(a) Estimated impairment of goodwill

The Group tests annually whether goodwill has suffered any impairment, in accordance with its accounting policy. The recoverable amounts of cash-generating units have been determined based on value-in-use calculations. These calculations require the use of estimates, both in arriving at the expected future cash flows and the application of a suitable discount rate in order to calculate the present value of these flows.

 (b) Development expenditure

The Group recognises costs incurred on development projects as an intangible asset which satisfy the requirements of IAS 38. The calculation of the costs incurred includes the percentage of time spent by certain employees on the development project. The decision whether to capitalise and how to determine the period of economic benefit of a development project requires an assessment of the commercial viability of the project and the prospect of selling the project to new or existing customers.  

4. Audited reconciliation of net financial liabilities

5. Audited earnings per ordinary share

Basic earnings per share is calculated by dividing the earnings attributable to ordinary shareholders by the weighted average number of ordinary shares in issue during the year.

For diluted earnings per share, the weighted average number of ordinary shares in issue is adjusted to assume conversion of all dilutive ordinary shares. The dilutive ordinary shares represent the share options and warrants granted to employees where the exercise price is less than the average market price of the Company's ordinary shares during the year.

Reconciliations of the earnings and weighted average number of shares used in the calculation are set out below: