17th Nov 2005 07:01
Applied Optical Technologies PLC17 November 2005 17th November 2005 Applied optical Technologies plc ("Applied Optical Technologies" or "the Group") Interim results for the six months ended 30th September 2005 Applied Optical Technologies plc, the supplier of anti-counterfeitingtechnologies and services, announces interim results for the six months ended30th September 2005. Highlights 2005 2004 unaudited unaudited Group turnover £13.0m £12.2m Profit/(loss) before tax £933,000 £(1,190,000) Basic earnings/(loss) per share 1.2p (3.1)p • Marked turn around in performance • Profit before tax of £933,000 (2004: loss of £1,190,000) • All operating units are now profitable and cash generative • Net cash inflow from operating activities of £1,887,000 (2004: £400,000) • Strong balance sheet with net cash of £5.7 million (2004: £1.0 million) David Mahony, Chairman, said: "The first six months of the current year have seen major developments in anumber of areas of the business and have, we believe, laid a sound foundationfor progress in this and subsequent years." - Ends - For further information, please contact: Applied Optical Technologies plc 0191 417 5434Mark Turnage, Chief Executive ([email protected])Mike Angus, Finance Director ([email protected]) Weber Shandwick Square Mile 020 7067 0700Nick Oborne/Stephanie Badjonat 17th November 2005 Applied Optical Technologies plc ("Applied Optical Technologies" or "the Group") Interim results for the six months ended 30th September 2005 Chairman's Statement In the Chairman's statement contained within the Report and Accounts for theyear ending 31st March 2005 I said that an encouraging start to the year fromour restructured European operations, coupled with the continuing success of ourAmerican operations, led us to expect a marked improvement in the Group'sperformance for the current year and that the interim results would show thisimprovement. I am glad to be able to report that these interim results support our initialview of the likely outturn for the current year. Adoption of International Financial Reporting Standards ("IFRS") The profit and earnings previously reported for the half year ended 30thSeptember 2004, and for our financial year to 31st March 2005, have beenrestated following our adoption of IFRS in compliance with applicable EUregulations and in place of the UK Generally Accepted Accounting Practices ("UKGAAP") used previously. The principal effects on our historic accounts arisefrom differences in the treatment of the charge for goodwill amortisation andthe reclassification of certain fixed assets as assets held for resale. Theseare explained in more detail in the separate document referred to in note 1 onpage 8. The most significant areas of impact on our earnings for the current year, asprepared under IFRS compared to those we would have reported under UK GAAP,arise from the elimination of the goodwill amortisation charge and an increasedcharge for the cost of share based incentive schemes. Results Group turnover for the six months was £13.0 million (2004: £12.2 million) andthe group operating profit was £872,000 (2004: loss of £1,191,000). Cash inflow from operating activities was £1,887,000 (2004: £400,000). The Group's balance sheet remains strong, with net cash at bank and in hand of£5.7 million (2004: £1.0 million). This leaves the Company well placed to fundcapital investment in the current business and consider acquisitions asappropriate. American Operations Our American operations saw substantial growth in the market for bank note andhigh security documents. This more than offset a relatively weaker performancein the ID Technologies market and resulted in a 15% increase in overallturnover. The new government security contract announced at the end of theprevious financial year contributed strongly, as did strong turnover from the USsports leagues. On a dollar basis, profitability increased by 26% over the prioryear. European Operations The restructuring of our European operations was completed with core accountsretained and successfully serviced during a period of considerable upheaval. Newcontracts were obtained for the provision of excise stamps, and a contractextension secured for a major European passport programme. This new business wonexceeded budget and successfully replaced those sales previously arising fromthe markets we chose to exit. It is particularly gratifying to be able to report that our European operationswere both profitable and cash generative in the period to 30th September 2005.The Company will continue to make the necessary operating improvements to thisbusiness. Joint Ventures 3dcd was expected to have a subdued year due to the reduced level of its majorcustomer's business pending their intended 2006 launch of a new range ofproducts. However, the venture's success in selling into the DVD market enabled3dcd to exceed its budgeted contribution for the period. AIM / Capital Restructuring Subject to shareholders approval of the Resolution being tabled at the EGM to beheld on 17th November 2005 the Company expects to transfer from the main marketto AIM on 16th December 2005. It is further expected that prior to 31st January2006 the proposed share premium account reduction will have received High Courtapproval and be implemented. These measures will increase the flexibility of the Group in a number of areasand reduce overall corporate costs. Conclusion The first six months of the current year have seen major developments in anumber of areas of the business and have, we believe, laid a sound foundationfor progress in this and subsequent years. DA MahonyChairman17th November 2005 APPLIED OPTICAL TECHNOLOGIES plcConsolidated income statement Six months Six months ended ended Year ended 30-Sept-05 30-Sept-04 31-Mar-05 unaudited unaudited audited £'000 £'000 £'000 Revenue 13,022 12,153 23,747Cost of sales (7,761) (8,680) (16,168) -------------------------------------------Gross profit 5,261 3,473 7,579 Distribution and selling costs (1,666) (1,765) (3,267)Administrative expenses (3,015) (2,739) (5,558)Exceptional administrative expenses - (528) (4,552)Total administrative expenses (3,015) (3,267) (10,110) -------------------------------------------Operating profit/(loss) 580 (1,559) (5,798) Share of profit of joint ventures 292 368 735Dividend income - - 7 Group operating profit/(loss) 872 (1,191) (5,056) -------------------------------------------Finance income 62 14 36Finance expenses (1) (13) (7) -------------------------------------------Profit/(loss) before tax 933 (1,190) (5,027) Income tax (343) (378) (808) -------------------------------------------Profit/(loss) for the period attributable to equity holders of the parent 590 (1,568) (5,835) -------------------------------------------Basic earnings/(loss) per share(p) 1.2 (3.1) (11.6) -------------------------------------------Diluted earnings(loss) per share(p) 1.2 (3.1) (11.6) ------------------------------------------- APPLIED OPTICAL TECHNOLOGIES plcConsolidated statement of recognised income and expense Six months Six months ended ended Year ended 30-Sept-05 30-Sept-04 31-Mar-05 unaudited unaudited audited £'000 £'000 £'000 Foreign exchange translation differences 1,124 241 (446) ------------------------------------------ Net income / (expense) recognised directly in equity 1,124 241 (446) Profit/ (loss) for the period 590 (1,568) (5,835) ------------------------------------------Total recognised income and expense for the period attributable to equity holders of the parent 1,714 (1,327) (6,281) ------------------------------------------ APPLIED OPTICAL TECHNOLOGIES plcConsolidated balance sheet 30-Sept-05 30-Sep-04 31-Mar-05 unaudited unaudited audited £'000 £'000 £'000ASSETSNon-current assetsProperty, plant and equipment 4,938 6,748 4,895Intangible assets 6,371 6,677 5,965Investments in joint venture 491 1,054 451Other investments 28 28 28Deferred tax assets 1,348 2,091 1,586 ------------------------------------------Total non-current assets 13,176 16,598 12,925 ------------------------------------------Current assetsInventory 2,095 2,699 2,101Trade and other receivables 4,780 4,127 4,090Cash and cash equivalents 5,695 1,370 3,954Assets classified as held for resale 134 3,337 134 ------------------------------------------Total current assets 12,704 11,533 10,279 ------------------------------------------ ------------------------------------------Total assets 25,880 28,131 23,204 ------------------------------------------LIABILITIESCurrent liabilitiesBank overdraft - 349 -Interest-bearing loans and borrowings - 30 14Deferred government grants 22 22 21Trade and other payables 5,920 4,868 5,158 ------------------------------------------Total current liabilities 5,942 5,269 5,193 ------------------------------------------Non-current liabilitiesDeferred government grants 12 32 22Total non-current liabilities 12 32 22 ------------------------------------------Total liabilities 5,954 5,301 5,215 ------------------------------------------ ------------------------------------------Net assets 19,926 22,830 17,989 ------------------------------------------EQUITYCapital and reservesIssued capital 2,669 2,669 2,669Share premium account 53,160 53,160 53,160Translation reserve 678 241 (446)Retained earnings (36,581) (33,240) (37,394) ------------------------------------------Total equity attributable to equity holders of the parent 19,926 22,830 17,989 ------------------------------------------ APPLIED OPTICAL TECHNOLOGIES plcConsolidated statement of cash flows Six months Six months ended ended Year ended 30-Sept-05 30-Sept-04 31-Mar-05 unaudited unaudited audited £'000 £'000 £'000Cash flows from operating activitiesProfit/(loss) for the period 590 (1,568) (5,835)Depreciation 659 1,035 1,912Impairment losses - 126 1,791Profit on sale of property, plant and equipment - - (97)Release of government grants (9) (10) (21)Share based payment expense 180 112 225Share of joint venture income (292) (368) (735)Dividend income - - (7)Finance income (62) (14) (36)Finance expenses 1 13 7Income tax expense 343 378 808Movement in inventory 101 (157) 383Movement in debtors (529) 1,997 1,932Movement in creditors 903 (1,048) (849) ----------------------------------Cash from operating activities 1,885 496 (522)Interest paid (1) (13) (11)Income tax paid 3 (83) (80) ----------------------------------Net cash inflow/(outflow) from 1,887 400 (613)operating activities Cash flows from investing activitiesAcquisition of property, plant and equipment (830) (545) (920)Proceeds from sale of property, plant and equipment 55 - 3,464Dividends received 273 - 939Interest received 62 14 41 ----------------------------------Net cash (outflow)/inflow from investing activities (440) (531) 3,524 ----------------------------------Cash flows from financing activitiesPayment of finance lease liabilities (14) (17) (33)Proceeds from sale of shares 43 - - ----------------------------------Net cash inflow/ (outflow) from financing activities 29 (17) (33) ----------------------------------Net increase /(decrease) in cash and cash equivalents 1,476 (148) 2,878 Cash and cash equivalents at the start of the period 3,954 1,149 1,149Effect of exchange rate fluctuations on cash 265 20 (73) ----------------------------------Cash and cash equivalents at the end of the period 5,695 1,021 3,954 ---------------------------------- APPLIED OPTICAL TECHNOLOGIES plcConsolidated statement of changes in equity Six months ended 30th September 2005 Attributable to equity shareholders Unaudited Share Share Translation Retained Total capital premium reserve earnings £'000 £'000 £'000 £'000 £'000 At 31st March 2005 2,669 53,160 (446) (37,394) 17,989Total recognised income and expense - - 1,124 590 1,714Share based payments - - - 180 180Own shares sold 43 43 ---------------------------------------------------- ----------------------------------------------------At 30th September 2005 2,669 53,160 678 (36,581) 19,926 ---------------------------------------------------- Six months ended 30th September 2004 Attributable to equity shareholders Unaudited Share Share Translation Retained Total capital premium reserve earnings £'000 £'000 £'000 £'000 £'000 At 1st April 2004 2,669 53,160 - (31,784) 24,045Total recognised income and expense - - 241 (1,568) (1,327)Share based payments - - - 112 112 ----------------------------------------------------At 30th September 2004 2,669 53,160 241 (33,240) 22,830 ---------------------------------------------------- Year ended 31st March 2005 Attributable to equity shareholders Audited Share Share Translation Retained Total capital premium reserve earnings £'000 £'000 £'000 £'000 £'000 At 1st April 2004 2,669 53,160 - (31,784) 24,045Total recognised income and expense - - (446) (5,835) (6,281)Share based payments - - - 225 225 ----------------------------------------------------At 31st March 2005 2,669 53,160 (446) (37,394) 17,989 ---------------------------------------------------- Applied Optical Technologies plcNotes to the Interim Statement 1. Basis of preparation EU law (IAS Regulation EC 1606/2002) requires that the next annual consolidatedfinancial statements of Applied Optical Technologies plc, for the year ended31st March 2006, be prepared in accordance with International FinancialReporting Standards adopted for use in the EU ('IFRSs'). This interim financial information has been prepared on the basis of therecognition and measurement requirements of adopted IFRSs as at 30th September2005 that are effective (or available for early adoption) at 31st March 2006,the Group's first annual reporting date at which it is required to use adoptedIFRSs. Based on these adopted IFRSs, the directors have applied accountingpolicies which they expect to apply when the first annual IFRS financialstatements are prepared for the year ending 31st March 2006. However, the adopted IFRSs that will be effective (or available for earlyadoption) in the annual financial statements for the year ending 31st March 2006are still subject to change and to additional interpretations and thereforecannot be determined with certainty. Accordingly, the accounting policies forthat annual period will be determined finally only when the annual financialstatements are prepared for the year ending 31st March 2006. The preparation of this financial information resulted in changes to theaccounting policies as compared to the most recent annual financial statementsprepared under previous Generally Accepted Accounting Practice ('GAAP'). Therevised accounting policies have been applied consistently to all periodspresented in this financial information. IFRS 1 mandates that most IFRSs are applied fully retrospectively, meaning thatthe opening balance sheet at 1st April 2004 is restated as if those accountingpolices had always been applied. There are certain limited exceptions to thisrequirement. A detailed review of the changes in our accounting policies and reconciliationsof our financial statements from UK GAAP to IFRS at key dates has been releasedto the London Stock Exchange and is available on our website at www.AOTgroup.com. 2. Accounting polices The accounting policies that the Group intends to apply for the year ended 31stMarch 2006 are set out in the document referred to in note 1. The adoption bythe Group of IAS 32 and IAS 39 prospectively from 1st April 2005 has had noimpact on the accounting policies due to the nature of any financial instrumentsused. 3 Status of financial information The comparative figures for the financial year ended 31st March 2005 are not theCompany's statutory accounts for that financial year. Those accounts, which wereprepared under UK GAAP, have been reported on by the Company's auditors anddelivered to the Registrar of Companies. The report of the auditors wasunqualified and did not contain a statement under Section 237 (2) or (3) of theCompanies Act 1985. The interim information for the six months ended 30th September 2005 has notbeen audited or reviewed by the auditors. In relation to the financialstatements for the year ended 31st March 2005, this has been extracted from arestatement of financial information taken from the company's statutory accountsfor the financial year and the auditors have issued a special purpose auditreport on that financial information. The audit report can be found along withthe detailed review referred to in note 1. Applied Optical Technologies plcNotes to the Interim Statement 4. Segment Information Six months Six months ended ended Year ended 30-Sep-05 30-Sep-04 31-Mar-05 unaudited unaudited audited £'000 £'000 £'000a) Turnover by geographic segment American operations 8,225 7,148 14,398European operations 5,887 6,021 11,168Intersegment sales (1,090) (1,016) (1,819) ---------- ---------- ---------- 13,022 12,153 23,747 ---------- ---------- ---------- b) Turnover by market sector Banknote and high security documents 5,146 2,994 6,519Brand protection 4,989 4,942 9,386ID Technologies 2,742 3,248 6,562Other 145 969 1,280 ---------- ---------- ---------- 13,022 12,153 23,747 ---------- ---------- ---------- c) Operating profit/(loss) by geographic segment American operations 1,528 1,201 2,600European operations 242 (1,785) (5,517)Joint Ventures 292 368 735Trade investments - - 7Corporate costs (1,190) (975) (2,881) ---------- ---------- ----------Operating profit /(loss) 872 (1,191) (5,056)Exclude goodwill impairment - - 450Exclude exceptional items - 528 4,102 ---------- ---------- ----------Adjusted operating profit/(loss) 872 (663) (504) ---------- ---------- ---------- d) Adjusted operating profit/(loss) by geographic segment American operations 1,528 1,201 2,600European operations 242 (1,598) (2,482)Fixed asset investments - - 7Joint Ventures 292 368 735Corporate costs (1,190) (634) (1,364) ---------- ---------- ---------- 872 (663) (504) ---------- ---------- ---------- Applied Optical Technologies plcNotes to the Interim Statement 5. Operating Expenses Six months Six months ended ended Year ended 30-Sep-05 30-Sep-04 31-Mar-05 unaudited unaudited audited £'000 £'000 £'000 Distribution CostsSelling and marketing costs 1,666 1,765 3,267 ---------- ---------- ----------Administrative ExpensesTechnical support 235 228 450Research and development costs 472 519 1,036Administrative costs 2,308 1,992 4,072Exceptional costs - 528 4,552 ---------- ---------- ---------- 3,015 3,267 10,110 ---------- ---------- ----------Total Operating Expenses 4,681 5,032 13,377 ---------- ---------- ----------Exceptional items included within administrative expenses Goodwill impairment - - 450Reorganisation costs - 402 1,765Tangible fixed asset impairment - 126 1,341Lease surrender costs - - 1,093Profit on disposal of fixed assets - - (97) ---------- ---------- ---------- - 528 4,552 ---------- ---------- ---------- 6. Share of Operating Profit of Joint Ventures The share of operating profit of joint ventures represents the Group'sshare of the results of 3dcd for the six months ended 30th September 2005.The operating profit of 3dcd is subject to taxation in the accounts of itspartner. Applied Optical Technologies plcNotes to the Interim Statement 7. Financing Six months Six months ended ended Year ended 30-Sep-05 30-Sep-04 31-Mar-05 unaudited unaudited audited £'000 £'000 £'000Finance income Bank interest receivable 38 4 42Foreign exchange gains/(losses) on foreign currency deposits 24 10 (6) ---------- ---------- ---------- 62 14 36 ---------- ---------- ----------Finance expenses Interest on finance leases and hire purchase agreements 1 1 3Interest on short term bank loans and overdrafts - 12 22Foreign exchange losses/(gains) on foreign currency borrowings - - (18) ---------- ---------- ---------- 1 13 7 ---------- ---------- ---------- 8. Taxation No taxation is payable in the current or comparative periods by any of theGroup's UK based companies. Charges for taxation relate to State taxes inAmerica and the utilisation of the Group's deferred tax asset in respect ofprofits arising in the American operations. 9. Earnings/(loss) per Share The calculations of earnings/(loss) per share are based upon the followingearnings and numbers of shares. Six months Six months ended ended Year ended 30-Sep-05 30-Sep-04 31-Mar-05 unaudited unaudited audited Earnings £'000 £'000 £'000 Earnings/(loss) for the 590 (1,568) (5,835) financial period ----------- ----------- ----------- Weighted average number of shares No. of No. of No. of shares shares shares For Basic earnings per share 50,592,180 50,516,234 50,516,234 ----------- ----------- -----------For Diluted earnings per share 50,645,078 50,516,234 50,516,234 ----------- ----------- ----------- A copy of this announcement has been sent to all shareholders. Further copiesare available to members of the public from the Company's registered office, 40Phoenix Road, Crowther, District 3, Washington, Tyne & Wear, NE38 0AD. This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
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