7th Sep 2006 07:00
Belgravium Technologies PLC07 September 2006 07 September 2006 Belgravium Technologies Plc (BVM:AIM) Interim Results for the 6 months to 30 June 2006 The Board of Belgravium Technologies plc ("Belgravium" or "the Group"),designers and manufacturers of real-time data capture systems, is pleased toannounce the Interim Results for the 6 months to 30 June 2006. FINANICAL HIGHLIGHTS 6 months to 6 months 30 June 2006 30 June 2005 • Turnover UP £4,982,000 £2,359,000• Operating Profits* UP £780,000 £430,000• Cash in Bank £817,000 £2,484,000• Basic EPS* 0.51p 0.51p• Dividend Maintained 0.13p 0.13p *before goodwill amortisation Commenting today, Executive Chairman John Kembery said: "After a slow first quarter and the inevitable issues of incorporating two newbusinesses into the Group, this is a good interim result. Much has beenachieved in this period to build confidence that the Company will benefit fromthese acquisitions in the second half of 2006 and in future years. Following on from the acquisitions of both Touchstar and Novo IVC, the Group iswell on the way towards developing a unified technical resource where salesopportunities have already benefited from this approach. Prospects for the second half are good and we are confident that the full yearwill show a significant advance on 2005." For further information please contact: Buchanan Communications ltd Kelly-Ann French Mob: 07958 972164 Belgravium Technologies plc John Kembery Mob: 07770 731021 www.belgraviuminvestorrelations.com CHAIRMAN'S STATEMENT RESULTS Total sales in the six months to the end of June 2006 were £4,982,000, more thandouble the £2,359,000 sold in the same period in 2005. This increase inturnover was largely as a result of the acquisition of Touchstar Limited inOctober 2005 and Novo IVC in January 2006. Operating profit, before amortisationof goodwill, increased by 81% from £430,000 in 2005 to £780,000 in 2006. Withan anticipated tax charge of 30%, basic earnings before amortisation of goodwillon the expanded share capital of the Company were maintained at 0.51p perordinary share. After a slow first quarter and the inevitable issues of incorporating two newbusinesses into the Group, this is a good interim result. Much has beenachieved in this period to build confidence that the Company will benefit fromthese acquisitions in the second half of 2006 and in future years. Belgravium Ltd ("Belgravium") The first quarter was quiet for Belgravium, a market feature in recent years.Equally we have become used to logistics contracts becoming more transactional,with technical excellence and post sales support being less of a buying motive.To maintain our position in this market, we have adopted new sales strategieswhich have brought results in winning contracts; too late to improve the secondquarter but an indication of a better second half to come. Equally there hasbeen some success in our long term drive to develop new and related markets andto provide solutions to customer problems by new technical capability, some ofwhich came from Touchstar. Overall, Belgravium has benefited from theintegration process with Touchstar and looks to the future with confidence. Touchstar Ltd ("Touchstar") Touchstar manufactures and supplies data capture systems largely for the oil andpetrochemical industry and, through Novo IVC, for airlines and railways. Theseare generally comparatively large contracts taking many months in negotiationand operational trials by customers. Touchstar has an excellent reputation inits chosen markets but, as we were aware at the time of the acquisition, itsforecasts for 2006 were underwritten by no new contracts. During the lastquarter of 2005 and the first half of 2006 we have built an international salesand marketing team and re-developed relationships with customers and sellingpartners. We have also listened carefully to operators' views of present andfuture technical requirements to ensure that Touchstar products continue toanticipate market needs. As a result, we enter the second half of 2006 with firm orders from newcustomers and a wide range of opportunities for market development and growth.Additionally, this is on a truly international basis, which offers the longerterm possibility of being less vulnerable to market cycles at home. Novo IVC ("Novo") Novo IVC is a recognised leader in the supply of mobile retailing systemscurrently used in aeroplanes and trains and with a multitude of other possibleapplications. It uses Touchstar hardware but has vitally important in-housesoftware capability and has agreement with WM Data for back office software. Atthe end of 2006 it is the intention to integrate Novo as a selling andoperational division of Touchstar which will give the necessary sales focus toprovide for broad market development. In the meantime the necessaryorganisational changes have been agreed and real progress has been made inensuring that the Group has all the facilities needed to capture what could bemajor growth. Some very good contracts are in prospect for 2007. Technical Development One of the significant benefits offered by the acquisition of Touchstar was thesharing of technical resources. The first stage of this plan required atechnical strategy identifying current and future product and system needs,establishing priorities and allocating resources. This has been completed andsome early results achieved. The Group is well on the way towards developing aunified technical resource and sales opportunities have already benefited fromthis approach. Balance Sheet The balance sheet shows the strengthened Group position, following theacquisitions. Gearing has increased as a result of a bank term loan but thecash position remains strong. At an operational level, the Belgravium Group iscash generative. Loan repayments will commence as planned in October 2006. Dividend The Directors remain committed to a policy of paying as good a dividend astrading conditions and the cash position will allow. The second half showspromise, and with a strong cash position, we propose paying an interim dividendof 0.13p per share, a level proposed in 2004 and held in 2005, on 6 December2006 to shareholders on the Register on 10 November 2006. Employees There were some gaps in the organisational structure of Touchstar which have nowbeen filled but, on the whole, we have been delighted by the capabilities ofemployees at both Touchstar and Novo. The way in which they have co-operatedwith the integration plans has also been outstanding. The Group now has somevery high calibre people in all departments. Outlook It is always difficult to forecast performance immediately after acquisitions.Despite a slow start to 2006, performance in the second quarter has begun todemonstrate the benefits of the work we have put into building a Group widesales function and regenerating our sales pipeline. Prospects for the secondhalf are good and we are confident that the full year will show a significantadvance on 2005. Longer term opportunities have been greatly enhanced by theGroup's expansion and the outlook is generally good for the Belgravium Group. FULL RESULTS BELOW Unaudited Profit and Loss Accountfor 6 months to 30 June 2006 6 months to 6 months to 30 June 2006 30 June 2005 Continuing (as restated) operations Acquisitions Total Total (Unaudited) (Unaudited) (Unaudited) (Unaudited) £'000 £'000 £'000 £'000 Turnover 3,942 1,040 4,982 2,359 Operating profit before goodwill amortisation 748 32 780 430 Goodwill amortisation (205) (27) (232) - Operating profit 543 5 548 430 Net interest payable (49) - Net interest receivable - 54 Profit on ordinary activities before taxation 499 484 Tax charge on ordinary activities (218) (145) Profit on ordinary activities after taxation 281 339 Ordinary dividend paid (321) (214) (Sustained loss)/retained profit for the period (40) 125 Basic earnings per ordinary share (pence) 0.28 0.51 Diluted earnings per ordinary share (pence) 0.28 0.50 Group Balance Sheetat 30 June 2006 As at As at As at 30 June 2006 30 June 2005 31 December 2005 (as restated) (Unaudited) (Unaudited) (Audited) £'000 £'000 £'000 Fixed assetsIntangible assets 9,069 - 8,232Tangible assets 381 213 325 9,450 213 8,557Current assetsStocks 1,225 548 1,103Debtors 2,271 1,426 2,479Cash at bank and in hand 817 2,484 1,799 4,313 4,458 5,381Creditors:Amounts falling due within one year (4,064) (1,852) (6,189) Net current assets 249 2,606 (808) Total assets less current liabilities 9,699 2,819 7,749 Creditors amounts falling due after more than one year (2,250) - (170) Provision for liabilities and charges (83) (48) (173) Net assets 7,366 2,771 7,406 Capital and reservesCalled up share capital 5,021 3,341 5,021Share premium 2,915 120 2,915Capital redemption reserve 2,100 2,100 2,100Profit and loss account (2,670) (2,790) (2,630) Total equity shareholders' funds 7,366 2,771 7,406 Group cash flow statementfor 6 months to 30 June 2006 2006 2005 (Unaudited) (Unaudited) £'000 £'000 Net cash inflow from operating activities 1,112 511 Returns on investments and servicing of financesInterest received 26 54Interest paid (35) - (9) 54 TaxationCorporation tax paid (714) (55)Corporation tax received 150 - (564) (55) Capital expenditure and financial investmentPurchase of intangible fixed assets (56) -Purchase of tangible fixed assets (87) (31) (143) (31) AcquisitionsAcquisition of subsidiary company (1,316) -Acquisition expenses (357) -Cash at bank and in hand acquired with subsidiary 616 - (1,057) - Equity dividends paid to shareholders (321) (214) Net cash (outflow)/inflow before financing (982) 265 FinancingNew bank loan 2,580 -Payment of loan notes (2,580) - - - (Decrease)/increase in cash in the period (982) 265 Reconciliation of net cash flow to movement in net debtfor 6 months to 30 June 2006 2006 2005 (Unaudited) (Unaudited) £'000 £'000 (Decrease)/increase in cash (982) 265 Movement in net funds during year (982) 265 Net (debt)/funds at 1 January (1,201) 2,219 Net (debt)/funds at 30 June (2,183) 2,484 Group cash flow statement (a) Reconciliation of operating profit to net cash inflow from operating activities 2006 2005 (Unaudited) (Unaudited) £'000 £'000 Operating profit 548 430 Depreciation 97 55 Amortisation 257 - Movement in provisions (90) (6) Funds generated by operations 812 479 Decrease/(increase) in stocks 23 (105) Decrease in debtors 457 32 (Decrease)/increase in creditors (180) 105 Decrease in working capital 300 32 Net cash inflow from operating activities 1,112 511 (b) Analysis of net funds At 1 January At 30 June 2006 Cash flow 2006 (Audited) (Unaudited) (Unaudited) £'000 £'000 £'000 Cash at bank and in hand 1,799 (982) 817 Debt due within one year (2,830) 2,080 (750) Debt due after one year (170) (2,080) (2,250) (1,201) (982) (2,183) Notes to the Interim ReportFor the 6 months to 30 June 2006 1. The interim report has not been audited and the information contained inthis interim statement does not constitute statutory accounts as defined insection 240 of the Companies Act 1985. The audited accounts for the year ended31 December 2005 upon which the auditors issued a qualified opinion, have beendelivered to the Registrar of Companies. 2. During the year ended 31 December 2005 the Group adopted FRS 17 'Retirementbenefits', FRS 21'Events after the balance sheet date', and FRS 28'Corresponding amounts'. The adoption of each of these standards represents achange in accounting policy and the comparative figures have been restatedaccordingly, except where the exemption to restate comparatives had been taken.The prior year adjustment relates to the implementation of FRS 21. The adoptionof FRS 21 has resulted in an increase in shareholders funds of £87,000 at 1 July2005 due to the write back of the interim proposed dividend at 30 June 2005. 3. Earnings per ordinary share 2006 2005 (Unaudited) (Unaudited) £'000 £'000 Basic earnings per ordinary share 0.28p 0.51pDiluted earnings per ordinary share 0.28p 0.50pBasic earnings per ordinary share before goodwill amortisation 0.51p 0.51pDiluted earnings per ordinary share before goodwill amortisation 0.51p 0.50p Basic earnings per share is calculated by dividing the earnings attributable toordinary shareholders by the weighted average number of ordinary sharesoutstanding during the year. For diluted earnings per share the weighted average number of ordinary shares inthe issue is adjusted to assume conversation of all diluted ordinary shares.The dilutive ordinary shares represent the share options and warrants granted toemployees where the exercise price is less than the average market price of theCompany's ordinary shares during the period. Basic earnings per ordinary share before goodwill amortisation and dilutedearnings per ordinary share before goodwill amortisation is based on profit onordinary activities after taxation but before goodwill amortisation of £232,000,being £513,000. 2006 2005 (Unaudited) (Unaudited) Weighted Weighted average average number number Earnings of shares Earnings of shares £'000 (in £'000 (in thousands) thousands)Basic EPSEarnings attributable to ordinary shareholders 281 100,426 339 66,826Effect of dilutive securitiesOptions - 679 - 449 Diluted EPSAdjusted earnings 281 101,105 339 67,275 Earnings per share before goodwill amortisationBasic EPS 281 100,426 339 66,826Goodwill amortisation 232 - - - Basic EPS before goodwill amortisation 513 100,426 339 66,826 Diluted EPS 281 101,105 339 67,275Goodwill amortisation 232 - - - Diluted EPS before goodwill amortisation 513 101,105 339 67,275 4. Acquisitions On 13 January 2006 the Company acquired the entire share capital of Novo IVCLimited for a total consideration of £1,315,000 plus costs of £357,000 being thefair value of the consideration. The book and provisional fair value of the assets acquired are as follows:- £'000 Intangible assets Goodwill 21 Other 57Fixed assets 66Stock 145Debtors 424Cash 616Creditors (616)Net assets acquired 713Goodwill 960 1,673Satisfied by Cash 1,316Costs 357 1,673 The book value of the assets and liabilities have been taken from the accountingrecords of Novo IVC Limited at 13 January 2006. No fair value adjustments havebeen made to date. 5. The record date for the interim dividend for Belgravium Technologiesplc is 10 November 2006 (Ex-Dividend date 8 November 2006) 6. Copies of this statement will be posted to shareholders and furthercopies will be made available to the public at the Company's office:- CampusRoad, Listerhills Science Park, Bradford, West Yorkshire, BD7 1HR. 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Touchstar Plc