Preliminary Results

4th Mar 2009 07:00



For Immediate Release

4 March 2009

Belgravium Technologies Plc

(BVM:AIM)

Preliminary Results for the year ended 31 December 2008

The Board of Belgravium Technologies plc ("Belgravium" or "The Group"), designers and manufacturers of real time mobile computing systems, is pleased to announce Preliminary results for the year ended 31 December 2008 in line with revised market expectations.

RESULTS

. Turnover	£8,330,000	(2007: £10,637,000)
. Profit before tax	£398,000	(2007: £2,053,000)
. Earnings per share	0.39p	(2007: 1.41p)

OPERATIONAL HIGHLIGHTS

. Full-year profit in line with revised market expectations.

. Second half performance stronger than first half.

. Net debt reduced from £1.962m to £1.668m

. Strategy intact for future growth.

Commenting on the results, John Kembery, Executive Chairman, said:

"2008 was a year in which unprecedented worldwide economic problems led to a general loss of buying confidence in all our markets. In these circumstances, I am pleased to report that Belgravium has delivered a profit in line with revised market expectations and continues to generate cash.

We are convinced that market conditions and customer confidence will return and confident that the Company has a structure and product range in place to enable it to capitalise on growth opportunities as and when they arise."

For further information please contact:

Belgravium Technologies plc 07770 731021

John Kembery, Chairman

www.belgravium-IR.com

  

Chairman's statement 

Results

2008 was a year in which unprecedented worldwide economic problems led to a general loss of buying confidence in all our markets. Given these circumstances, I am pleased to report that Belgravium has delivered a profit in line with revised market expectations and continues to generate cash.

The Group made a profit before tax of £398,000 in the twelve months ended 31 December 2008 on a turnover of £8,330,000. Whilst this does not compare favourably with a profit of £2,053,000 and turnover of £10,637,000 in the previous year, conditions were exceptional as outlined at the company's interim results announcement in September. Encouragingly, our second half performance indicated an improving trend with second half turnover of £4,388,000 (first half: £3,942,000) and profit before tax of £326,000 (first half: £72,000), a creditable improvement driven, in the main, by tenacious sales activity.

Basic earnings per ordinary share fell from 1.41p per share in 2007 to 0.39p per share in 2008. Cash flow continued to be positive with net debt reducing by £294,000 after paying 2007 dividends and taxation.

Operational Review

As we noted in our Interim Statement, the Company entered 2008 with several attractive projects in the pipeline, consistent with our overall growth strategy in selected markets. In the event, deterioration in the global economy and its impact on Belgravium's customer base has led to delays in securing these orders and the shortfall in sales has had a direct effect on profitability.

It is worth reiterating that these projects have not been lost to competitors or abandoned but simply that loss of financial confidence has led to postponements or delays, often for relatively minor reasons. Our strategy in such a market has been to apply all our resources, both sales and technical, to ensure we work with our customer base to overcome such problems. I am confident that this approach will pay off and, indeed, the improved sales picture in the second half indicates that some of the smaller projects we have been working on have now resulted in orders.

The strong recurring nature of the Group's service, licence and maintenance revenue, together with the increasing provision of software licences, has helped to mitigate the reduction in major contracts. Having reviewed the cost base in every area, which has resulted in a minor reduction in headcount, we are confident that the Company now has a structure capable of providing growth as market conditions improve.

The Market

Belgravium designs and installs real time data capture systems in the logistics, petrochemical and mobile retailing markets, the latter with particular application in aeroplanes and trains. All of these end users have cut back on capital expenditure and the signing of our new contracts has suffered from the well-documented lengthening of the sales cycle. Logistics has shown some small recovery, most likely because our products improve cost controls and operational efficiency, factors which should be important in such a market. Airlines have shown the most noticeable decline but, even here, we are confident of a recovery because on-board retailing is increasingly contributing to airline profitability.

There has been some pressure on operating margins, primarily as the market has become increasingly price driven. So far, we have managed to offset the most extreme effects by reducing our own costs and, in an increasingly international business, currency presents both problems - due to the increasing costs of certain supplies - and opportunities, as we become more cost competitive in overseas markets. Belgravium's main strength is the quality of its goods and service. Everything we do is directed towards protecting and improving this reputation.

Strategy

Last year we declared our intention to shift our emphasis from hardware to software systems and customer services and this policy has already been successful in producing more repeat business. Secondly, we have placed great emphasis on new product development and the extension of our sales effort both within the UK and overseas. In these market conditions, making a sale takes on ever greater importance and we must all be concerned with giving the customers exactly what they need.

All of our markets have experienced slowdowns and delays. We believe that most will gradually show recovery, as product advantages overcome financial caution. It is important to note that Belgravium's products currently in the field have a finite lifespan and, at some stage, the increasing cost of maintenance and repair will necessitate customers upgrading to the latest products and software.  Our experience has shown that this represents an opportunity to the Company, as customers typically upgrade with Belgravium.

Balance Sheet

Belgravium continues to be cash generative, even under such difficult conditions. In view of the lower level of profitability, we have re-negotiated the terms of our term loan with our bankers and this loan is now held on more flexible terms. At the year end, the outstanding amount of this loan was £1,208,000 (2007: £1,750,000).

Dividend

Whilst cash generation is still positive, it is necessary to be prudent given the current market conditions and we have therefore taken the decision not to pay a final dividend. It remains our policy to resume payment of a dividend as soon as financial conditions allow.

Employees

In what was a difficult year and with a small reduction in head count, staff at all levels have responded well to demanding conditions and their flexibility and dedication is greatly appreciated.

Outlook

Belgravium enters 2009 with its growth strategy still intact and with the new projects on which this depends still available. The second half of 2008 showed an improvement over the first half and we believe that this momentum will be maintained in 2009. It will be supplemented by major projects which will generate improved profitability but, at present, it is not possible to say that this will occur in the current financial year.

J P Kembery

Executive Chairman

3 March 2009

  

Audited consolidated income statement 

				2008 £'000	2007 £'000
Revenue				8,330	10,637
Cost of sales				(3,824)	(4,407)
Gross profit				4,506	6,230
Distribution costs				(89)	(98)
Administrative expenses				(3,892)	(3,931)
Operating profit				525	2,201
Finance income				5	28
Finance expense				(132)	(176)
Profit before income tax				398	2,053
Income tax expense				-	(634)
Profit for the year				398	1,419
Earnings per ordinary share (pence)
Basic				0.39p	1.41p
Diluted				0.39p	1.41p

Consolidated statement of changes in equity for the year ended 31 December 2008

	Called up share capital	Share premium	Capital redemption reserve	Profit and loss account	Total
	£'000	£'000	£'000	£'000	£'000
Balance at 1 January 2007	5,021	2,915	2,100	(1,807)	8,229
New shares issued	26	17	-	-	43
Profit for the year	-	-	-	1,419	1,419
Dividends	-	-	-	(504)	(504)
Balance at 31 December 2007	5,047	2,932	2,100	(892)	9,187
Profit for the year	-	-	-	398	398
Dividends	-	-	-	(384)	(384)
Balance at 31 December 2008	5,047	2,932	2,100	(878)	9,201

  Audited consolidated balance sheet as at 31 December 2008

		2008	2007
		£'000	£'000
Non-current assets
Intangible assets
Goodwill		9,124	9,124
Other intangible assets		285	267
Property, plant and equipment		354	251
Deferred income tax assets		-	7
		9,763	9,649
Current assets
Inventories		1,358	1,262
Trade and other receivables		2,647	3,901
Cash and cash equivalents		2	2
		4,007	5,165
Total assets		13,770	14,814
Current liabilities
Trade and other payables		2,818	3,145
Current income tax liabilities		34	472
Deferred income tax liabilities		21	-
Financial liabilities: Borrowings		962	1,214
Short term provisions		26	46
		3,861	4,877
Non-current liabilities
Financial liabilities:
Borrowings		708	750
Total liabilities		4,569	5,627
Capital and reserves attributable to equity holders of the Company
Ordinary shares		5,047	5,047
Share premium		2,932	2,932
Capital redemption reserve		2,100	2,100
Profit and loss account		(878)	(892)
Total equity		9,201	9,187
Total equity and liabilities		13,770	14,814

  Audited consolidated cash flow statement for the year ended 31 December 2008

		2008 £'000	2007 £'000
Cash flows from operating activities
Operating profit		525	2,201
Depreciation		128	179
Amortisation		111	80
(Profit)/loss on sale of tangible fixed assets		(3)	2
Movement in:
Provisions		(20)	(5)
Inventories		(96)	(105)
Trade and other receivables		1,254	(603)
Trade and other payables		(336)	172
Cash generated from operations		1,563	1,921
Interest received		5	28
Interest paid		(123)	(178)
Corporation tax paid		(410)	(466)
Net cash generated from operating activities		1,035	1,305
Cash flows from investing activities
Proceeds from sale of property, plant and equipment		3	-
Expenditure on intangible fixed assets		(129)	(146)
Purchase of property, plant and equipment		(231)	(71)
Net cash used in investing activities		(357)	(217)
Cash flows from financing activities
Proceeds from issuance of ordinary shares		-	43
Repayment of bank borrowings		(542)	(1,000)
Dividends paid to company's ordinary shareholders		(384)	(504)
Repayment of capital on finance leases		-	(10)
Net cash used in financing activities		(926)	(1,471)
Net decrease in cash, cash equivalents and bank overdrafts		(248)	(383)
Cash, cash equivalents and bank overdrafts at start of the year		(212)	171
Cash, cash equivalents and bank overdrafts at end of the year		(460)	(212)

  1. Basis of Reporting

This preliminary announcement has been prepared in accordance with International Financial Reporting Standards ("IFRS") and IFRIC interpretations as adopted by the EU and with those parts of the Companies Act 1985 applicable to companies reporting under IFRS as adopted by the European Union. The preliminary announcement does not constitute statutory accounts within the meaning of Section 240 of the Companies Act 1985. 

2. 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 2 Campus Road, Listerhills Science Park, Bradford, West Yorkshire, BD7 1HR.

The consolidated financial statements were authorised for issue in accordance with a resolution of the Directors on 4 March 2009.

3. Basis of preparation

The consolidated financial statements and the accompanying notes do not constitute statutory accounts within the meaning of Section 240 of the Companies Act 1985.

The auditors have reported on the Group's statutory accounts for each of the years ended 31 December 2007 and 31 December 2008 under S235 of the Companies Act 1985. These reports do not contain statements under S237(2) or S237(3) of the Companies Act 1985 and are unqualified. The statutory accounts for the year ended 31 December 2007 have been delivered to the Registrar of Companies and the statutory accounts for the year ended 31 December 2008 will be filed with the Registrar in due course.

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 1985 applicable to companies reporting under IFRS.

4. 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 the accounting policy stated above. 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 to 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.

  

5. Audited reconciliation of net financial liabilities

		2008 £'000	2007 £'000
Reconciliation of net financial liabilities
Net decrease in cash, cash equivalents and bank overdrafts		(248)	(383)
Net change in bank loans and finance leases		542	1,010
Movement in net financial liabilities in the year		294	627
Net financial liabilities at beginning of year		(1,962)	(2,589)
Net financial liabilities at end of year		(1,668)	(1,962)

6. Audited earnings per ordinary share

	2008	2007
Basic earnings per ordinary share	0.39p	1.41p
Diluted earnings per ordinary share	0.39p	1.41p

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:

	2008		2007
	Earnings £'000	Weighted average number of shares (in thousands)	Earnings £'000	Weighted average number of shares (in thousands)
Basic EPS
Earnings attributable to ordinary shareholders	398	100,937	1,419	100,665
Effect of dilutive securities
Options	-	-	-	166
Diluted EPS
Adjusted earnings	398	100,937	1,419	100,831

ENDFR ILFSRVDIVIIA

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