29th Nov 2006 07:00
Opsec Security Group PLC29 November 2006 29th November 2006 OPSEC SECURITY GROUP plc (formerly Applied Optical Technologies PLC) ("OpSec" or "the Group") Interim results for the six months ended 30th September 2006 OpSec Security Group plc, the supplier of anti-counterfeiting technologies andservices, announces interim results for the six months ended 30th September2006. Highlights 2006 2005 unaudited unaudited Group revenue £14.4m £13.0m Profit before tax £2.76 million £0.93 million Basic earnings per share 4.3p 1.2p • Record profit before tax, nearly tripled to £2.76m (2005: £0.93m) on turnover up 11% at £14.4m (2005: £13.0m) • European operations' profitability growing at significantly faster rate than original expectations • Excellent contribution from 3dcd joint venture due to a major new software programme launch by its principal customer • Trading in American operations improved markedly in second quarter and order book strong • GenuOne, acquired in June 2006, successfully integrated and the enhanced service offering helped the Group secure major new customers and contracts David Mahony, Chairman, said: "We view the prospects for the balance of the current year very positively.Current trading is at record levels and the Group is actively pursuing a numberof significant business opportunities. We are also in the early stages of anumber of discussions with possible acquisitions which we believe would furtherstrengthen the Group." - Ends - For further information, please contact:OpSec Security Group 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 29th November 2006 OPSEC SECURITY GROUP plc ("OpSec" or "the Group") Interim results for the six months ended 30th September 2006 Chairman's Statement In the half year to 30th September 2006 the Group achieved a major advance inprofitability. Turnover and profits grew markedly in our European operations andthere was a significant increase in the contribution received from our jointventure, 3dcd. The successful integration of GenuOne, which joined the Group inJune 2006, has provided a major impetus to the American operations as evidencedby new customers and several significant new contracts. Results Group turnover for the six months was £14.4 million (2005: £13.0 million) andthe Group operating profit was £2.82 million (2005: £0.87 million). Cash inflow from operating activities was £0.79 million (2005: £1.89 million). The Group's balance sheet remains strong, with net borrowings of only £0.1million (2005: net cash balances of £5.7 million) after funding the £7.5 millionacquisition of GenuOne and fixed asset additions of £1.5 million. Review of Operations European operations continued to progress at a faster rate than our originalexpectations. Turnover grew by 24% compared to the previous year andprofitability more than quadrupled. A number of capital investment projects arebeing undertaken to increase capacity and enable these operations to respond toa growing number of significant sales opportunities, particularly in the revenueand tax stamp markets. 3dcd contributed £2.23 million (2005: £0.29 million) largely due to the launchof a major new software programme by the joint venture's principal customer.This level of contribution will not be repeated in the second half. The cashflow arising from the 3dcd contribution has been utilised to assist in thefunding of the GenuOne acquisition and to undertake a significant investment inboth fixed assets and the Group's sales and marketing capabilities. The non recurrence of a significant government security contract which wascompleted in December 2005 impacted the American operations in the first quarter. Trading in the second quarter saw a marked improvement and the currentorder book is very strong. The integration of the GenuOne acquisition hasproceeded to plan. In addition to GenuOne securing new business with customerssuch as Boots, Oillily, River Island and Gant, the enhanced services we nowoffer customers have helped the Group secure significant contracts with severalnew customers including Phillips and the Collegiate Licensed PropertiesAssociation. Conclusion We view the prospects for the balance of the current year very positively.Current trading is at record levels and the Group is actively pursuing a numberof significant business opportunities. We are also in the early stages of anumber of discussions with possible acquisitions which we believe would furtherstrengthen the Group. DA MahonyChairman29th November 2006 OPSEC SECURITY GROUP plcConsolidated income statement Six months Six months ended ended Year ended 30-Sept-06 30-Sept-05 31-Mar-06 unaudited unaudited audited £'000 £'000 £'000 Revenue 14,442 13,022 25,390Cost of sales (8,190) (7,761) (15,759) ----------------------------------------Gross profit 6,252 5,261 9,631 Distribution and selling costs (1,922) (1,666) (3,051)Administrative expenses (3,740) (3,015) (5,688) ----------------------------------------Operating profit 590 580 892 Share of profit of joint ventures 2,230 292 690 ----------------------------------------Group operating profit 2,820 872 1,582 Financial income (8) 62 151Financial expenses (53) (1) (2) ----------------------------------------Profit before tax 2,759 933 1,731 Income tax (549) (343) 40 ----------------------------------------Profit for the period attributable to equity holders of the parent 2,210 590 1,771 ========================================Basic earnings per share (p) 4.3 1.2 3.5 ----------------------------------------Diluted earnings per share (p) 4.1 1.2 3.4 ======================================== OPSEC SECURITY GROUP plcConsolidated statement of recognised income and expense Six months Six months ended ended Year ended 30-Sept-06 30-Sept-05 31-Mar-06 unaudited unaudited audited £'000 £'000 £'000 Foreign exchange translation differences (1,340) 1,124 1,495 -----------------------------------------Net (expense)/income recognised directly in equity (1,340) 1,124 1,495 Profit for the period 2,210 590 1,771 -----------------------------------------Total recognised income for the period attributable to equity holders of the parent 870 1,714 3,266 ========================================= OPSEC SECURITY GROUP plcConsolidated balance sheet 30-Sept-06 30-Sep-05 31-Mar-06 unaudited unaudited audited £'000 £'000 £'000ASSETSNon-current assetsProperty, plant and equipment 5,812 4,938 4,966Intangible assets 12,166 6,371 6,498Investments in joint ventures 1,490 491 329Other investments 28 28 28Deferred tax assets 3,253 1,348 1,758 -----------------------------------------Total non-current assets 22,749 13,176 13,579 -----------------------------------------Current assetsInventory 2,109 2,095 1,839Trade and other receivables 5,179 4,780 3,616Cash and cash equivalents 2,715 5,695 7,568Assets classified as held for resale - 134 - -----------------------------------------Total current assets 10,003 12,704 13,023 ----------------------------------------- -----------------------------------------Total assets 32,752 25,880 26,602 -----------------------------------------LIABILITIESCurrent liabilitiesInterest-bearing loans and borrowings (2,819) - -Deferred government grants (10) (22) (21)Trade and other payables (7,093) (5,920) (4,876) -----------------------------------------Total current liabilities (9,922) (5,942) (4,897) ----------------------------------------- Non-current liabilitiesDeferred government grants - (12) - -----------------------------------------Total non-current liabilities - (12) - ----------------------------------------- Total liabilities (9,922) (5,954) (4,897) -----------------------------------------Net assets 22,830 19,926 21,705 =========================================EQUITYCapital and reservesIssued capital 2,669 2,669 2,669Share premium 29,309 53,160 29,309Translation reserve (291) 678 1,049Retained earnings (8,857) (36,581) (11,322) -----------------------------------------Total equity attributable to equity holders of the parent 22,830 19,926 21,705 ========================================= OPSEC SECURITY GROUP plcConsolidated statement of cash flows Six months Six months ended ended Year ended 30-Sept-06 30-Sept-05 31-Mar-06 unaudited unaudited Audited £'000 £'000 £'000Cash flows from operating activitiesProfit for the period 2,210 590 1,771Depreciation 581 659 1,332Profit on sale of property, plant and equipment - - (97)Release of government grants (11) (9) (22)Share based payment expense 300 180 329Share of joint venture income (2,230) (292) (690)Finance income 8 (62) (151)Finance expenses 53 1 2Income tax 549 343 (40)Movement in inventory (159) 101 415Movement in debtors (1,114) (529) 683Movement in creditors 662 903 (128) ------------------------------------Cash flows from operating activities 849 1,885 3,404Interest paid (53) (1) (2)Income tax paid - overseas (6) 3 (111) ------------------------------------Net cash inflow from operating activities 790 1,887 3,291 Cash flows from investing activitiesAcquisition of subsidiary undertaking (7,485) - -Acquisition of property, plant and equipment (1,543) (830) (1,397)Proceeds from sale of property, plant and equipment - 55 286Dividends received from joint venture 1,061 273 849Interest received (8) 62 130 ------------------------------------Net cash outflow from investing activities (7,975) (440) (132) ------------------------------------Cash flows from financing activitiesPayment of finance lease liabilities (10) (14) (14)Proceeds from sale of own shares 130 43 121Purchase of own shares (175) - - ------------------------------------Net cash (outflow)/inflow from financing activities (55) 29 107 ------------------------------------ Net (decrease)/increase in cash and cash equivalents (7,240) 1,476 3,266 Cash and cash equivalents at the start of the period 7,568 3,954 3,954Effect of exchange rate fluctuations on cash (432) 265 348 ------------------------------------Cash and cash equivalents at the end of the period (104) 5,695 7,568 ==================================== OpSec Security Group plcNotes to the Interim Statement 1. Basis of preparation This interim financial information has been prepared applying the accountingpolicies that were applied in the preparation of the Company's publishedconsolidated financial statements for the year ended 31st March 2006. 2. Status of financial information The interim information for the six months ended 30th September 2006 has notbeen audited or reviewed by the auditors. The comparative figures for the year ended 31st March 2006 are not the Company'sstatutory financial statements for that financial year. Those accounts have beenreported on by the Company's auditors and delivered to the Registrar ofCompanies. The report of the auditors was unqualified, did not include referenceto any matters to which the auditors drew attention by way of emphasis withoutqualifying their report and did not contain a statement under section 237(2) or(3) of the Companies Act 1985. 3. Segment Information Six months Six months ended ended Year ended 30-Sep-06 30-Sep-05 31-Mar-06 unaudited unaudited Audited £'000 £'000 £'000a) Turnover by geographic segment American operations 8,063 8,225 15,369European operations 7,278 5,887 12,226Intersegment sales (899) (1,090) (2,205) ----------------------------------------- 14,442 13,022 25,390 =========================================b) Turnover by market sector Banknote and high security 4,847 5,146 9,647documentsBrand protection 6,092 4,989 9,868ID Technologies 3,302 2,742 5,598Other 201 145 277 ----------------------------------------- 14,442 13,022 25,390 ========================================= c) Operating profit by geographic segment American operations 793 1,528 2,189European operations 1,026 242 579Joint Ventures 2,230 292 690Corporate costs (1,229) (1,190) (1,876) -----------------------------------------Adjusted operating profit 2,820 872 1,582 ========================================= OpSec Security Group plcNotes to the Interim Statement 4. Operating Expenses Six months Six months ended ended Year ended 30-Sep-06 30-Sep-05 31-Mar-06 Unaudited unaudited audited £'000 £'000 £'000 Distribution and Selling CostsSelling and marketing costs 1,922 1,666 3,051 ----------------------------------------Administrative ExpensesTechnical support 454 235 463Research and development costs 630 472 1,082Administrative costs 2,656 2,308 4,143 ---------------------------------------- 3,740 3,015 5,688 ----------------------------------------Total Operating Expenses 5,662 4,681 8,739 ======================================== 5. 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 2006.The operating profit of 3dcd is subject to taxation in the accounts of itspartners. 6. Acquisitions On 9th June 2006 the Group purchased GenuOne, Inc., a provider ofanti-counterfeiting and anti-diversion software products. The acquisitioncontributed £1,147,000 to turnover and made a net loss of £34,000 for theperiod. OpSec Security Group plcNotes to the Interim Statement 7. Financing Six months Six months ended ended Year ended 30-Sep-06 30-Sep-05 31-Mar-06 unaudited unaudited Audited £'000 £'000 £'000Financial income Interest income 69 38 129Foreign exchange losses/(gains) on foreign currency deposits (77) 24 22 ---------------------------------------- (8) 62 151 ---------------------------------------- Financial expenses Interest expense 53 1 - Foreign exchange losses/(gains) on foreign currency borrowings - - 2 ---------------------------------------- 53 1 2 ---------------------------------------- 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 per Share The calculations of earnings per share are based upon the following earningsand numbers of shares. Six months Six months ended ended Year ended 30-Sep-06 30-Sep-05 31-Mar-06 unaudited unaudited audited Earnings £'000 £'000 £'000 Earnings for the financial period 2,210 590 1,771 =========================================Weighted average number of No. of No. of No. of shares shares shares shares For Basic earnings per share 50,911,445 50,592,180 50,725,745 =========================================For Diluted earnings per share 53,362,516 50,645,078 52,034,094 ========================================= 10. Share capital and reserves Reconciliation of movement in capital and reserves attributable to equityshareholders Attributable to equity shareholders Unaudited Share Share Translation Retained Total capital premium reserve earnings £'000 £'000 £'000 £'000 £'000 At 31st March 2006 2,669 29,309 1,049 (11,322) 21,705Total recognised income and expense - - (1,340) 2,210 870Share based payments - - - 300 300Own shares sold 130 130Own shares purchased (175) (175) ---------------------------------------------------At 30th September 2006 2,669 29,309 (291) (8,857) 22,830 =================================================== The interim report has been sent to all shareholders. Further copies areavailable to members of the public from the Company's registered office, 40Phoenix Road, Crowther, District 3, Washington, Tyne & Wear, NE38 0AD. Theinterim report is also available on the Company's website, www.opsecsecurity.com. 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