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| Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
|---|---|---|---|---|---|
| Vega Grp. | LSE:VEG | London | Ordinary Share | GB0009291500 | ORD 5P |
| Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
|---|---|---|---|---|---|---|---|---|---|---|
| 0.00 | 0.00% | 273.20 | 0.00 | 01:00:00 |
| Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
|---|---|---|---|---|---|
| 0 | 0 | N/A | 0 |
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RNS Number:0422N
Vega Group PLC
02 July 2003
FOR IMMEDIATE RELEASE 2 July 2003
VEGA Group PLC
RESULTS FOR THE YEAR ENDED 30 APRIL 2003
VEGA Group PLC ("VEGA") today announces its audited preliminary results for the
year ended 30 April 2003. VEGA is a consulting and technology company operating
in the space, defence and public sector markets.
KEY POINTS - FINANCIAL
* Results are in-line with market expectations
o pre-tax profit (before goodwill amortisation and exceptionals) up 51%
at #1.6m
o total turnover unchanged at #35.6m
o organic turnover growth 4% after adjusting for disposal and exchange
benefit
o operating margins (continuing operations) increased to 6.2% (2002:
4.6%)
* Forward order book #38.6m (2002: #37.8m from continuing operations)
* Strong cashflow reduces net debt to #4.3m (2002: #5.6m)
o interest cover* 5.3 times (2002: 2.7 times)
* Exceptional restructuring charge of #9.7m including disposal of Dutch
subsidiary
* before goodwill amortisation and exceptional items
KEY POINTS - OPERATIONAL
* Key events include:
o #2.5m extension to Eurofighter contract
o four-fold increase in public sector S-CAT orders
o recent launch of Mars Express space mission
* Strong public sector market demand plays to VEGA's strengths
* Significant growth and good profitability in markets of space, defence
and public sector
Chairman, Andy Roberts stated :
"The year to 30 April 2003 has been a successful one for VEGA. Trading
profitability has increased markedly and we have reduced our borrowings. Just
as importantly, given market conditions, we have generated organic turnover
growth and have increased the order backlog of our continuing businesses. In
our core markets of space, public sector and defence we have achieved
significant turnover growth and have continued to generate strong profits."
VEGA Group PLC : www.vega.co.uk Andy Roberts, Chairman; Phil Cartmell,
Chief Executive or Richard Amos, Finance
Director on 020-7466 5000 today and on
01707- 391 999 thereafter
Buchanan Communications: Tim Anderson/Nicky Cronk/Rebecca Skye
www.buchanan.uk.com Dietrich on 020-7466 5000
CHAIRMAN'S STATEMENT AND OPERATIONAL REVIEW
The year to 30 April 2003 has been a successful one for VEGA. Trading
profitability has increased markedly and we have reduced our borrowings. Just
as importantly, given market conditions, we have generated organic turnover
growth and have increased the order backlog of our continuing businesses. In
our core markets of space, public sector and defence we have achieved
significant turnover growth and have continued to generate strong profits.
Trading conditions in the commercial sector were very challenging and during the
year we restructured our business, divesting where prospects were poor to
concentrate in areas where we see potential.
Strategy
The market place for consulting and technology services in the last year has
been as difficult as I have experienced in 25 years in the industry. The
general economic slowdown has hit the IT sector particularly hard, as some of
the traditional big technology spenders, such as telecoms and financial services
companies, have been amongst the worst affected by the downturn. The one area
of promise, particularly in the UK, has been the public sector. Government
drives for efficiency improvements in public spending have led to a number of
initiatives that embrace new technologies.
This shift in spending is playing to VEGA's core strengths. The heritage of the
business is in the publicly funded markets of space and defence. Over the last
two years, under the leadership of Phil Cartmell, Chief Executive, we have
sought to refocus on those markets. We are actively marketing our offerings to
ensure we are recognised by clients for the full range of services that we can
offer. We are targeting specific actions in both markets that we believe can
deliver profitable top-line growth. In addition, we have successfully expanded
into adjacent public sector markets including central government, emergency
services and healthcare, providing services and technologies that we have
developed in space and defence.
We have revised our geographic strategy, consolidating our operational hubs to
the UK, Germany and a new subsidiary in France, and from these bases are
targeting clients in neighbouring countries where we have the necessary market
knowledge.
We have focused on a restricted number of clients, recognising that our detailed
knowledge of their business often gives us opportunities to support them in a
wider range of services than we have previously offered. Thus we are now
selling training systems to maritime defence clients that previously knew us as
procurement consultants, and IT security advice to space clients to whom we have
previously offered operational support.
We have done much over the last two years to align our cost base to our business
scale. We have reorganised down to two business units, saving management
overhead, and have closed two UK facilities and relocated a third to smaller
premises.
Highlights of Trading Results
Against this backdrop, VEGA reported total turnover for the year to 30 April
2003 of #35.6m, unchanged on the previous year. Organic turnover growth from
continuing operations was 4%.
Profit before taxation, exceptional items and goodwill amortisation was #1.6m
(2002: #1.1m). The improvement in profitability comes predominantly from the
Government & Defence business where we have made significant progress in
restoring performance following the problems experienced in this business two
years ago.
Before the exceptional loss on disposal of the subsidiary and goodwill
amortisation and impairment, adjusted earnings per share were 2.61p, compared to
0.71p last year.
Orders received by continuing businesses in the period were #35.2m (2002:
#33.3m), slightly ahead of revenue for the year, resulting in a forward order
book at the year end of #38.6m (2002: order book of continuing businesses
#37.8m).
Government & Defence
With the exception of the disposed Dutch process automation business which is
reported as a discontinued business, results for the previously disclosed
Commercial Industries business unit are included within the Government & Defence
review as this is where that business is now managed.
The year under review has seen an increase in the profile of the defence
industry. Following the events of 11 September 2001, UK defence budgets have
been increased by #3.5 billion over the next five years, to develop capabilities
to target the new threats. Within the defence procurement agencies, key
initiatives are increasingly being focused on managing the risks associated with
large complex procurements. Much corporate activity has continued in the period
amongst the main defence prime contractors, who are revising their strategies in
light of overall defence market changes, offering opportunities for niche
players such as VEGA.
Opportunities have been significant in the UK public sector. The much heralded
public spending increases have started to flow down to specific programmes and
there are many initiatives underway that require the support of technology
providers. Competition amongst the suppliers has increased, as organisations
that are being impacted by the decline in the commercial market look to change
focus to the public sector. However, a lack of public sector domain knowledge
is proving a barrier to many of these potential new entrants.
Against this backdrop performance by the Government & Defence business has been
very strong during the period, with order intake and profit ahead of last year
and turnover maintained despite a reduction in commercial business.
Order intake was strong at #19.2m (2002: #18.3m) an increase of 4%. Significant
orders taken in the period included:
> #5m of orders from existing clients of defence training systems
including a #2.5m extension to the Eurofighter contract.
> Over #2m of new contract orders in Germany as we seek to expand our
European client base. These contracts included a #1m two year contract to
provide the Swiss armed forces with a training system for the Cougar
transport helicopter.
> Over #2m of orders from public sector clients, of which #1.2m was
contracted through the Government's S-CAT supplier catalogue reflecting a
four-fold increase on the previous year.
Overall turnover in the Government & Defence business unit has increased from
#18.7m to #18.9m. Within this the core public sector and defence areas
generated organic turnover growth of 17% including growth of over 50% in the
healthcare sector, whilst turnover to commercial clients fell by 57%.
Profitability in Government & Defence improved significantly from #0.5m to
#1.6m. Overall operating margins improved from 2.8% to 8.5%. The majority of
this increase came in training systems where cost efficiency has improved as a
result of managing resources as a single pool and from adopting consistent and
improved project management processes. In addition the product mix improved
with increased licence sales of previously developed intellectual property.
Space
The European publicly funded ("institutional") space market, which is VEGA's
principal market, has continued to progress and the year has seen the launch of
a number of missions where VEGA has had significant involvement. These have
included the launch in August 2002 of the first of the new generation
geo-stationary weather satellites operated by EUMETSAT, the European
Organisation for the Exploitation of Meteorological Satellites, and the launch
of the European Space Agency's (ESA) Integral scientific satellite in October
2002 which is being used to capture gamma ray radiation as part of a study into
the origins of the universe.
There was considerable excitement during the year over the build-up towards the
June 2003 launch of the Mars Express space probe and although the launch of the
Rosetta comet chasing probe was delayed, this is now expected to launch in early
2004.
Progress has been made in the period on arranging European government funding
for the proposed Galileo European satellite navigation system and agreement to
proceed was finally given in May 2003.
Against this backdrop VEGA's Space business has maintained its large order book
and generated strong growth in turnover, although profitability is down on last
year.
Order intake of #16.0m is some 8% higher than last year and remains in line with
turnover. Significant orders taken in the period included:
> A Euro5m contract with ESA to integrate the European ground segment hardware
and software components for a Japanese earth observation satellite.
This project recognises VEGA as a significant player in the provision of
turn-key ground segment solutions for earth observation missions.
> Euro3m of contracts with EUMETSAT, to support operations preparation for
their proposed constellation of polar-orbiting satellites due for launch in
2005.
> #3m of consulting contracts for various parts of ESA to provide support
on a range of issues including assistance with the design simulation of the
Automated Transport Vehicle that will service the International Space
Station.
Turnover in the Space business unit has increased by 11% from #14.4m to #16.0m.
Adjusting for the impact of improving exchange rates, organic turnover growth
was 7%.
Profitability over the year has been slightly disappointing, falling from #1.3m
last year to #0.9m this year, with operating margins falling from 9.0% to 5.7%.
The major cause of this reduction was a #0.3m provision that was taken for
future anticipated costs on one fixed price contract. In addition, marketing
costs increased in Germany to support the increased business activity levels.
Cashflow
The Group profit performance was supported by good cash generation resulting in
net debt at 30 April 2003 of #4.3m compared to #5.6m twelve months earlier.
Strong cash generation has been a feature of VEGA's financial performance over
the last two years; indeed since net debt peaked at #9.1m in October 2000, it
has fallen by more than half to its current level.
Exceptional Items
The year just ended has been one of significant change for VEGA and this has
resulted in a number of exceptional charges to the profit and loss account. The
charges relate to the restructuring of the Commercial Industries business and
have resulted in a total exceptional cost of #9.7m. Of this, only #0.3m will
result in immediate additional cash cost to the Group. Full details of the
exceptional items are set out in the Financial Review below.
Dividend Policy
The Board is not proposing the payment of a dividend (2002: nil). The directors
intend to resume dividend declarations once sufficient progress has been made in
restoring profitability and strengthening the balance sheet. Progress towards
this has been made this year with the capital restructuring that was approved by
shareholders on 14 January 2003 and enables the Group to pay future dividends
out of future retained profits.
Outlook
We believe that the actions we have taken over the last two years will enable us
to take the maximum advantage from the opportunities that are available to us in
our core markets.
We have a strong backlog of orders that gives us good forward revenue
visibility. In addition, the work we have been undertaking on building our
market position and reputation will help us to compete for new contracts. We
believe that these factors will allow us to continue to focus on operating
margins and revenue growth which will in turn lead to enhanced returns for our
shareholders.
Andy Roberts
Chairman
FINANCIAL REVIEW
Profit and Loss Analysis
Trading Results
Turnover from continuing operations was #34.9m compared to #33.1m in the
corresponding period last year. Adjusting for the benefit of changes in
exchange rates, mainly the strengthening of the euro compared to sterling,
organic turnover growth was 4% with growth reported in each of our core space,
defence and public sector markets, offset by reductions in turnover to clients
in the commercial sector. Growth in the defence business in Germany and space
business in Holland increased the proportion of turnover generated by non-UK
operations to 38% in the year from 28% in the prior period.
The increased turnover was achieved despite average staff numbers employed by
continuing operations decreasing from 481 in 2002 to 463 in the year ended April
2003. Revenue earned per head increased by 6%, due to improved effective day
rates. Utilisation rates were unchanged year on year. Additionally, revenue
generated from selling licences to use intellectual property previously
developed by the Group also increased, rising from #0.5m in the year to April
2002 to #1.1m in the year to April 2003.
Including the results of the disposed entity, which we owned for four months in
the year under review, total turnover was maintained at #35.6m.
Before exceptional items and goodwill amortisation, operating profit from
continuing operations increased 43% to #2.2m (2002: #1.5m) with a corresponding
improvement in net operating margin from 4.6% to 6.2%. This improvement came
partly from a better product mix, with higher licence revenue as detailed above,
and partly from the benefits of the cost efficiency programme that was initiated
in the previous financial year and continued throughout the year ended April
2003.
Including the results of the disposed entity, total operating profit before
exceptional items and goodwill amortisation was #2.0m (2002: #1.7m).
Exceptional items
In addition to the trading results analysed above, the Group has incurred three
significant exceptional items during the period under review as we focus the
activities of the business on the core space, public sector and defence markets:
> On 2 September 2002 we disposed of our non-core Dutch process automation
subsidiary ("Industry"). This resulted in a non-cash, book loss on
disposal of #4.7m, including #3.9m of reinstated goodwill that was written
off to reserves when the business was acquired in 1996. Proceeds for the
disposal of #0.4m are due on 2 September 2005 and, due to their long term
nature, will be recognised on receipt.
> Following the trading issues experienced by the Commercial Industries
business over the first half of the year, in October 2002 we conducted a
full review of goodwill capitalised on the balance sheet following
acquisitions. As a result, we have taken an exceptional goodwill
impairment charge of #4.1m in addition to the normal annual goodwill
amortisation of #0.7m. The #8.7m goodwill remaining on the balance sheet
at 30 April 2003 relates to our Government & Defence consulting business
which is performing ahead of expectations.
> In April, as part of our cost efficiency programme, we closed two small
UK offices and made 25 redundancies. The total cost of this exercise was
#0.9m including provisions for the lease costs of vacant office space for
the remainder of the relevant leases of #0.4m; write off of fixed assets
relating to the vacated offices of #0.2m; and redundancy costs of #0.3m.
Of the exceptional items detailed here, only the redundancy costs have an
immediate impact on the cash position of the Group. The provided lease costs
will be paid quarterly over the remaining lease period. The other items are
balance sheet reclassifications which do not impact cash generation.
Profit before Taxation, Taxation and Earnings per Share
After the exceptional items identified above of #9.7m, interest charges of #0.4m
(2002: #0.6m) and normal goodwill amortisation of #0.7m, the loss before
taxation was #8.7m (2002: loss before taxation of #0.8m).
The loss on disposal of the subsidiary and goodwill amortisation and impairment
are tax exempt transactions. A tax charge of #0.2m (2002: tax credit of #0.1m)
has been provided on the remaining profit, reflecting an underlying tax rate of
33%.
Taking account of this, the retained loss for the year is #9.0m (2002: #0.7m).
This represents a loss per share of 48.51p (2002: loss of 3.53p). Adjusted
earnings per share before goodwill amortisation and impairment and the loss on
disposal of the subsidiary increased to 2.61p from 0.71p in 2002.
Cashflow and Hedging
Strong cashflow has again been a feature of the Group's results with net debt
reducing by #1.3m over the period and interest cover (before goodwill and
exceptional items) increasing to 5.3 times, from 2.7 times last year. Proactive
working capital management has become a key part of the culture of the Group
that is driving the positive cashflow. Overall, working capital as a percentage
of sales improved to 15.1% from 16.2% in the comparable period.
Capital expenditure, mainly the purchase of computer equipment, was maintained
at #0.5m for the third consecutive year and, after this, operating cashflow was
#1.8m (2002: #1.1m).
As part of the disposal of Industry, the Group provided a Euro0.4m interest-bearing
working capital facility to the disposed business. Euro0.25m of this was repaid in
February. After the net effect of this and interest and taxation payments of
#0.3m, #1.3m of net cashflow was generated over the period, reducing debt to
#4.3m (30 April 2002 : #5.6m).
The Group hedges its material transaction exposure to foreign currencies (mainly
euro:sterling) by the use of forward foreign exchange contracts purchased up to
12 months in advance. Hedged euro:sterling rates for the financial year ended
April 2003 were 1.61. For the year ended April 2004, the equivalent hedged rate
is 1.52. Translation exposure of profits from overseas subsidiaries is not
hedged as this is an accounting not a cashflow risk. Overseas net assets
(mainly euro denominated) are hedged by maintaining euro denominated overdrafts.
Capital Reorganisation
As a result of the exceptional provisions made at 31 October 2002, we reported
in the Interim Statement, published in December 2002, that there existed a
shortfall in distributable reserves in the parent Company, VEGA Group PLC, which
prevented it from paying a dividend. To address this, at an Extraordinary
General Meeting of the Company on 14 January 2003, the Company received approval
from shareholders to apply to the High Court to reclassify #9.3m of share
premium account to profit and loss reserves. The reclassification was approved
by the Court on 19 February 2003 and allows the Company to pay dividends in
future financial periods out of future retained profits.
CONSOLIDATED PROFIT AND LOSS ACCOUNT
FOR THE YEAR ENDED 30 APRIL
2003 2002
Before Before
goodwill Goodwill goodwill Goodwill
amort'n and amort'n Other amort'n and amort'n Other
exceptional and exceptional exceptional and exceptional
items impairment items Total items impairment items Total
#'000 #'000 #'000 #'000 #'000 #'000 #'000 #'000
Turnover (note 2)
Continuing
operations 34,934 - - 34,934 33,103 - - 33,103
Discontinued
operations 655 - - 655 2,469 - - 2,469
Total turnover 35,589 - - 35,589 35,572 - - 35,572
Operating
expenses (note 3) (33,586) (4,808) (676) (39,070) (33,887) (785) (1,050) (35,722)
Operating profit/
(loss)
Continuing
operations 2,174 (4,808) (676) (3,310) 1,517 (785) (1,050) (318)
Discontinued
operations (171) - - (171) 168 - - 168
Operating profit/ 2,003 (4,808) (676) (3,481) 1,685 (785) (1,050) (150)
(loss)
Loss on disposal
of tangible fixed
assets - - (224) (224) - - - -
Loss on disposal
of subsidiary
(note 5) - - (4,654) (4,654) - - - -
Net interest (380) - - (380) (613) - - (613)
Profit / (loss)
on ordinary
activities before
taxation
Continuing
operations 1,794 (4,808) (900) (3,914) 904 (785) (1,050) (931)
Discontinued
operations (171) - (4,654) (4,825) 168 - - 168
Profit / (loss)
on ordinary
activities before
taxation 1,623 (4,808) (5,554) (8,739) 1,072 (785) (1,050) (763)
Taxation (note 6) (240) 110
Retained loss for
the financial
year (note 13) (8,979) (653)
Earnings per share (note 7)
Loss per share (48.51)p (3.53)p
Adjusted earnings per share - basic and
diluted 2.61p 0.71p
Consolidated Statement of Total Recognised Gains and Losses
for the Year ended 30 April
2003 2002
#'000 #'000
Loss for the financial year (8,979) (653)
Currency translation differences on foreign currency net investments 118 4
Total recognised gains and losses relating to the financial year (8,861) (649)
CONSOLIDATED BALANCE SHEET
AT 30 APRIL
2003 2002
Notes #'000 #'000
Fixed assets
Intangible assets 8,657 13,465
Tangible assets 1,049 1,426
9,706 14,891
Current assets
Debtors due within one year 8 9,211 9,054
due after more than one year 9 1,834 1,900
Total 11,045 10,954
Cash at bank and in hand 368 617
11,413 11,571
Creditors: amounts falling due within one year 10 (8,187) (7,553)
Net current assets 3,226 4,018
Total assets less current liabilities 12,932 18,909
Creditors: amounts falling due after more than one year 11 (2,584) (3,997)
Provisions for liabilities and charges 12 (1,141) (750)
Net assets 9,207 14,162
Capital and reserves
Called up share capital 926 926
Share premium account 13 6,226 15,529
Profit and loss account 13 2,055 (2,293)
Total equity shareholders' funds 14 9,207 14,162
CONSOLIDATED CASH FLOW STATEMENT
FOR THE YEAR ENDED 30 APRIL
2003 2002
#'000 #'000
Net cash inflow from operating activities (note 15) 2,257 1,649
Interest received 27 117
Interest paid (435) (602)
Interest element of finance lease rental payments - (4)
Net cash outflow from returns on investments and servicing of finance (408) (489)
Taxation 99 285
Purchase of tangible fixed assets (502) (503)
Financial investment (116) -
Sale of tangible fixed assets 10 77
Sale of fixed asset investments - 679
Net cash (outflow)/inflow from capital expenditure and financial investment (608) 253
Cash inflow before financing 1,340 1,698
Issue of share capital - 7
Repayment of bank loan (1,928) (1,111)
Capital element of finance lease rental payments - (33)
Net cash outflow from financing (1,928) (1,137)
(Decrease)/increase in cash in the period (note 16) (588) 561
Notes
1. The financial information set out above does not constitute the Company's
statutory accounts for the year ended 30 April 2003 or 2002, within the
meaning of section 240(1) of the Companies Act 1985, but is derived from
those accounts. Statutory accounts for 2002 have been delivered to the
Registrar of Companies, and those for 2003 will be delivered following the
Company's annual general meeting. The auditors have reported on those
accounts; their reports were unqualified and did not contain statements
under section 237(2) or (3) of the Companies Act 1985.
The summary information presented herein was approved by the board on 2
July 2003.
2. Segmental analysis
a) Analysis by business sector
Turnover Operating profit/(loss) Net assets/(liabilities)
2003 2002 2003 2002 2003 2002
#'000 #'000 #'000 #'000 #'000 #'000
Space 16,018 14,418 920 1,295 2,320 2,566
Government & Defence 18,916 18,685 1,610 522 12,303 16,538
Central - - (356) (300) (1,155) (1,031)
Total continuing operations 34,934 33,103 2,174 1,517 13,468 18,073
Discontinued operations 655 2,469 (171) 168 - 1,676
Goodwill amortisation and impairment - - (4,808) (785) - -
(1)
Exceptional items(1) - - (676) (1,050) - -
Net debt - - - - (4,261) (5,587)
Total 35,589 35,572 (3,481) (150) 9,207 14,162
b) Analysis by location of operation
Turnover Operating profit/(loss) Net assets/(liabilities)
2003 2002 2003 2002 2003 2002
#'000 #'000 #'000 #'000 #'000 #'000
United Kingdom 21,782 23,913 1,333 1,139 12,479 17,584
Rest of Europe 13,152 9,190 841 378 989 489
Total continuing operations 34,934 33,103 2,174 1,517 13,468 18,073
Discontinued operations 655 2,469 (171) 168 - 1,676
Goodwill amortisation and impairment - - (4,808) (785) - -
(1)
Exceptional items (1) - - (676) (1,050) - -
Net debt - - - - (4,261) (5,587)
Total 35,589 35,572 (3,481) (150) 9,207 14,162
(1) All goodwill amortisation and impaiment and exceptional items above relate
to continuing UK operations within Government & Defence.
c) Turnover by location of clients (continuing operations)
2003 2002
#'000 #'000
United Kingdom 17,830 17,307
Rest of Europe 16,806 14,545
Rest of World 298 1,251
Total continuing operations 34,934 33,103
All turnover from discontinued operations related to the Rest of Europe.
3. Operating expenses
2003 2002
#'000 #'000
Net operating expenses comprise:-
Cost of sales (of which discontinued #562,000 (2002: #1,570,000)) 23,701 24,072
Administrative costs (of which discontinued #264,000 (2002: #731,000)) 10,546 10,600
Total operating costs before exceptional items (of which discontinued #826,000 34,247 34,672
(2002: #2,301.000))
Exceptional goodwill impairment 4,147 -
Other exceptional items 676 1,050
39,070 35,722
Administrative costs include:
Auditors' remuneration (of which Company #54,000 (2002: #52,000) 84 60
Other fees paid to the auditors (all tax compliance and consulting advice) 43 42
Depreciation of tangible assets 618 794
Amortisation of goodwill 661 785
Exchange losses 34 61
Rentals payable under operating leases - land and buildings 839 1,128
- others 274 493
Profit on sale of tangible fixed assets (11) (27)
Profit on sale of fixed asset investment - (19)
4. Exceptional items
2003 2002
#'000 #'000
Goodwill impairment 4,147 -
Vacant property provision 399 750
Staff termination costs 277 300
Exceptional items recognised before operating losses 4,823 1,050
Loss on disposal of fixed assets (before UK corporation tax credit of #67,000) 224 -
Loss on disposal of subsidiary (note 5) 4,654 -
Total exceptional items 9,701 1,050
5. Loss on disposal of subsidiary
On 2 September 2002 VEGA disposed of its 100% shareholding in VEGA
Informatietechnologie (Holding) bv for a deferred consideration of #400,000.
This transaction resulted in a loss on disposal for the Group of #4,654,000 of
which #3,906,000 relates to goodwill previously written off to reserves. Net
assets at the date of disposal were #623,000. VEGA Informatietechnologie
(Holding) bv contributed a loss before tax of #171,000 in the four months up to
its disposal.
6. Taxation
a) Analysis of tax charge in the year
2003 2002
#'000 #'000
UK corporation tax: tax charge on profit in the year 228 -
adjustments in respect of prior year (12) (69)
Foreign tax: tax charge on profit in the year 151 229
adjustments in respect of prior year 52 -
Current tax charge 419 160
Deferred tax credit (179) (270)
Tax charge/(credit) on loss on ordinary activities 240 (110)
6. Taxation (continued)
b) Factors affecting tax charge for the year
2003 2002
#'000 #'000
Group loss on ordinary activities before tax (8,739) (763)
Current tax 30% (2002: 30%) (2,622) (229)
Effects of:
Expenses (including goodwill amortisation) not deductible for tax purposes 1,342 249
Non allowable loss on disposal of subsidiary 1,372 -
Excess foreign tax on overseas income 72 141
Adjustments relating to prior years corporation tax 40 (69)
Originating timing differences 111 72
Non utilisation of tax losses 70 -
Other 34 (4)
Current tax charge 419 160
Deferred tax credit (179) (270)
Tax charge/(credit) on loss on ordinary activities 240 (110)
7. Earnings/(loss) per Ordinary share
The calculation of earnings/(loss) per share is based on profits attributable to
shareholders and weighted average numbers of shares as set out below.
An adjusted earnings per share figure has been calculated in addition to the
earnings/(loss) per share required by FRS 14 and is based on earnings excluding
the effect of goodwill amortisation and impairment and before loss on disposal
of subsidiary. It has been calculated to allow shareholders to gain a clearer
understanding of the trading performance of the Group.
2003 2002
#'000 #'000
Loss attributable to shareholders (8,979) (653)
Adjusted for:
Loss on disposal of subsidiary 4,654 -
Goodwill amortisation and impairment 4,808 785
Adjusted earnings 483 132
2003 2002
Ordinary shares Ordinary shares
Basic weighted average number of shares 18,507,883 18,507,211
Dilutive potential shares (employee share options) - 68,959
Diluted weighted average number of shares 18,507,883 18,576,170
8. Debtors: due within one year
2003 2002
#'000 #'000
Trade debtors 4,662 4,966
Corporation tax 10 185
Other debtors 33 17
Prepayments 372 451
Amounts recoverable on contracts 3,955 3,435
Deferred tax 179 -
9,211 9,054
9. Debtors: due after more than one year
2003 2002
#'000 #'000
Amounts recoverable on contracts 1,718 1,900
Financial investment 116 -
1,834 1,900
10. Creditors: amount falling due within one year
2003 2002
#'000 #'000
Current instalments due on bank loan 1,413 1,928
Bank overdraft 632 279
Payments received on account 2,102 2,020
Trade creditors 1,004 673
Corporation tax 673 327
Other taxes 825 656
Accruals 1,538 1,670
8,187 7,553
11. Creditors: amounts falling due after one year
2003 2002
#'000 #'000
Bank loan 2,584 3,997
2,584 3,997
12. Provisions for liabilities and charges
Vacant property Staff termination Total
#'000 #'000 #'000
At 1 May 2002 750 - 750
Charge for the year 399 277 676
Utilised (244) (41) (285)
At 30 April 2003 905 236 1,141
The vacant property provision represents rent and rates over the remaining
periods of the leases on our offices at Hounslow and Stevenage and on vacant
space at our Welwyn Garden City office.
13. Share premium and reserves
Share Profit &
premium account loss account
#'000 #'000
At 1 May 2002 15,529 (2,293)
Currency translation differences - 118
Transfer arising from capital reduction (9,303) 9,303
Goodwill written back on disposal of subsidiary - 3,906
Retained loss for the financial year - (8,979)
At 30 April 2003 6,226 2,055
During the year the Company reduced its share premium account by #9,303,000 in
order to eliminate a deficit in distributable reserves. This reduction was
approved by shareholders at an EGM on 14 January 2003 and subsequently
sanctioned by the High Court on 19 February 2003.
14. Reconciliation of movements in shareholders' funds
2003 2002
#'000 #'000
Retained loss for the financial year (8,979) (653)
Other recognised gains 118 4
Goodwill written back on disposal of subsidiary 3,906 -
New share capital issued - 7
Net reduction in shareholders' funds (4,955) (642)
Opening shareholders' funds 14,162 14,804
Closing shareholders' funds 9,207 14,162
15. Reconciliation of operating loss to operating cash flow
2003 2002
#'000 #'000
Operating loss (3,481) (150)
Depreciation 618 794
Profit on sale of fixed assets (11) (46)
Amortisation and impairment of goodwill 4,808 785
(Increase)/decrease in debtors (525) 990
Increase/(decrease) in trade creditors 281 (902)
Increase/(decrease) in other creditors 176 (572)
Increase in provisions for liabilities and charges 391 750
Net cash inflow from operating activities 2,257 1,649
16. Reconciliation of net cash flow to movement in net debt
2003 2002
#'000 #'000
(Decrease)/increase in cash in the period (588) 561
Cash outflow from loan repayments 1,928 1,111
Capital element of finance lease repayments - 33
Exchange movements (14) (5)
Reduction in net debt for the year 1,326 1,700
Opening net debt (5,587) (7,287)
Closing net debt (4,261) (5,587)
17. Analysis of net debt
At Cash Exchange At
1 May 2002 flow movements 30 April 2003
#'000 #'000 #'000 #'000
Cash at bank and in hand 617 (261) 12 368
Overdrafts (279) (327) (26) (632)
338 (588) (14) (264)
Debt due after one year (1,928) 515 - (1,413)
Debt due within one year (3,997) 1,413 - (2,584)
(5,587) 1,340 (14) (4,261)
18. Exchange rates
The applicable foreign exchange rates used are as follows:
2003 2002
Average for year - EUR 1.54 1.63
USD 1.56 1.44
Period end - EUR 1.44 1.62
USD 1.59 1.46
This information is provided by RNS
The company news service from the London Stock Exchange
END
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