RNS Number:1156L
Lloyds British Testing PLC
15 May 2003
LLOYDS BRITISH TESTING PLC (FORMERLY YPCS 123 PLC)
PRELIMINARY ANNOUNCEMENT
FOR THE PERIOD ENDED 31 December 2002
___________________________________________________________________________
HIGHLIGHTS
* Admission to AIM July 2002 raising #4.5m
* Completed strategic review of all operations
Pro-forma Results
* Turnover - #15.3m + 9%
* Pre-tax profits - #0.61m + 47%
* Profits after tax & interest but before exceptional items - #0.54m + 90%
* Gearing reduced to 74%
* Introduction of dividend one year early. 0.25 pence to be paid on 1
August
* One-off strategic review costs of #259,000
Outlook
"Market conditions continue to be fragile. However ... both Support Services and
Engineering Services have exceeded their targets for the first quarter of 2003."
Extracted from the joint Chairman's and Chief Executive's Statement
We are pleased to report our first set of results since our admission to AIM in
July 2002. The AIM admission was accompanied by a restructuring of the Group and
a fund raising of #4.5million which enabled Lloyds Development Capital to exit
whilst providing additional working capital for further expansion. During the
final six months of the year ended 31 December 2002 the Group carried out a
comprehensive strategic review of all of its operations with a view to reducing
its core operating costs. This process has now been completed and the Board
expects that the effects of this will be to increase profitability in the
future.
Results
Turnover at #16.7 million, increased 9% compared to #15.3 million, for the
comparable period last year (2001) on a pro-forma basis. On a statutory basis
the turnover for the period amounted to #7.3 million. Profits after tax and
interest but before exceptional items improved by 90%, at #541,000 compared to
#286,000 for the full year to 31st December 2001. On a statutory basis the
profit after interest and tax but before exceptional items amounted to #376,000.
The Group's gearing has reduced in accordance with forecasts and at the year end
was 74%.
Dividend
The board stated in its admission document that a maiden dividend would be paid
based on satisfactory 2003 results. However, as a result of the positive
performance for the year ended 2002 the board has decided to accelerate the
dividend and therefore proposes a dividend of 0.25p per share to be paid on 1st
August 2003 to shareholders on the register on 4th July 2003. The board is
committed to a progressive dividend policy for the future.
Accounts
The change in the structure of the Group prior to its admission to AIM has
resulted in the first accounts of the revised Group containing a pro-forma
profit and loss account, which takes into account the seven months trading of
Lloyds British Group Limited and the five months trading of Lloyds British
Testing plc. We have therefore re-calculated our adjusted earnings per share, as
disclosed in the statutory financial statements, on a twelve month pro-forma
basis, assuming all 31,769,620 shares were in issue as of 1st January 2002 and
adjusting the profit for the reduced interest charge, the earnings per share
would have been approximately 2.26p. On a statutory basis the adjusted earnings
per share is 1.41p.
Operational review
These results were achieved despite a very difficult operating market place
during the second half of the year. We have benefited from the strategic review
as outlined in the interim statement. This has reduced costs and improved
operating efficiencies, the benefit from which will be fully reflected in 2003.
This process has been completed in its entirety with one off costs of #259,000
being incurred in the period.
The results reflect a continuing growth trend in Engineering Services which has
further enhanced its underlying contract base with a number of additional
contracts being awarded, the largest of these being MOD vehicle inspectorate and
Corus industrial lift maintenance. The Support Services Division has benefited
significantly from the major reorganisation and has increased its contribution
to the overall profitability of the Group.
A symptom of the poor market was reflected in the unprecedented rise in the
number of company failures. This has not impacted on our bad debts substantially
due to our prudent approach to debtors, which has seen debtor days reduce by
some 20% during this year. Your board believes that current provisions will be
adequate to cover any bad debts arising.
Acquisitions
Our policy has been to grow both organically and through acquisitions. During
the course of the period we have looked at various companies and we completed
the purchase of an industrial tool business in Leeds and Pontefract in July
2002. This has enabled the Group to expand and rationalise our Leeds operation.
In February 2003 we purchased certain assets and goodwill of the material
handling business Hedley Handling Services. Hedley Handling Services has been
integrated into our existing operation in the North East. This strategic
acquisition consolidates and enhances our existing services within the light
industrial sector for material handling. The board continues to look for
opportunities to expand both the range of facilities and services and to
increase national coverage.
Outlook
Market conditions continue to be uncertain. However, we are pleased to report
that both the Support Services and Engineering Services Divisions have exceeded
their targets for the first quarter of 2003. The Support Services Division has
in it's budget for 2003 placed no reliance on the historical major shut downs
and is nevertheless anticipated to out perform it's forecasts for the year. The
Engineering Services division has continued to improve its underlying contract
base. We have successfully re-tendered for a number of existing contracts, which
have now been renewed on existing or improved terms. The contract base continues
to grow through a steady stream of smaller but important contracts. This
Division's income stream has grown by some 31% over the first quarter of 2003.
Brian Ralley
Chairman
Ian White
Chief Executive
14 May 2003
For Further Information, contact:
Ian White, Chief Executive Tel: 0121 325 2700
Issued by:
Richard Robinson, Marshall Robinson Roe Tel: 020 7489 2033
CONSOLIDATED SUMMARISED PROFIT AND LOSS ACCOUNT
Notes
Exceptional Period ended
items 31.12.02
Pre-exceptional (note 3)
# # #
Turnover 7,274,500 - 7,274,500
Cost of sales (3,443,098) - (3,443,098)
Gross profit 3,831,402 - 3,831,402
--------- --------- --------
Other operating income and (3,176,424) (259,523) (3,435,947)
charges
Amortisation of goodwill (71,798) - (71,798)
--------- --------- --------
Operating income and (3,248,222) (259,523) (3,507,745)
charges
--------- --------- --------
Operating profit pre 654,978 (259,523) 395,455
amortisation of goodwill
Amortisation of goodwill (71,798) - (71,798)
--------- --------- --------
Operating profit 583,180 (259,523) 323,657
Net interest (121,910) - (121,910)
Profit on ordinary activities 461,270 (259,523) 201,747
before taxation
Tax on profit on ordinary 4 (84,970) - (84,970)
activities
Profit on ordinary activities 376,300 (259,523) 116,777
after taxation
Dividends 5 (79,424) - (79,424)
Profit transferred to 296,876 (259,523) 37,353
reserves
Earnings per share 6 0.37p
Adjusted earnings per share 6 1.41p
CONSOLIDATED SUMMARISED PRO-FORMA PROFIT AND LOSS ACCOUNT
Exceptional
items
Pre-exceptional (note 3) Year ended
31.12.02
2002 2002 Year ended
31.12.01
# # # #
Turnover 16,706,935 - 16,706,935 15,269,797
Cost of sales (8,114,756) - (8,114,756) (7,391,249)
Gross profit 8,592,179 - 8,592,179 7,878,548
-------- -------- -------- --------
Other operating income (7,506,736) (259,523) (7,766,259) (6,957,786)
and charges
Amortisation of (99,637) - (99,637) (42,999)
goodwill -------- -------- -------- --------
Operating income and (7,606,373) (259,523) (7,865,896) (7,000,785)
charges
-------- -------- -------- --------
Operating profit pre 1,085,443 (259,523) 825,920 920,762
amortisation of
goodwill
Amortisation of (99,637) - (99,637) (42,999)
goodwill -------- -------- -------- --------
Operating profit 985,806 (259,523) 726,283 877,763
Net interest (376,393) - (376,393) (464,367)
Profit on ordinary 609,413 (259,523) 349,890 413,396
activities before
taxation
Tax on profit on (68,011) - (68,011) (127,700)
ordinary activities
Profit on ordinary 541,402 (259,523) 281,879 285,696
activities after
taxation
Dividends (79,424) - (79,424) -
Retained profit for the 461,978 (259,523) 202,455 285,696
year
CONSOLIDATED SUMMARISED BALANCE SHEET AT 31 DECEMBER 2002
2002
#
Fixed assets
Intangible assets 3,693,160
Tangible assets 5,093,714
8,786,874
Current assets
Stocks 568,748
Debtors 4,638,737
Cash at bank and in hand 596,732
5,804,217
Creditors: amounts falling due within one year (5,436,876)
Net current assets 367,341
Total assets less current liabilities 9,154,215
Creditors: amounts falling due after more than one year (2,818,447)
Provisions for liabilities and charges (172,963)
Net assets 6,162,805
Capital and reserves
Called up share capital 317,696
Share premium account 3,893,168
Other reserves 1,914,588
Profit and loss account 37,353
Equity shareholders' funds 6,162,805
CONSOLIDATED SUMMARISED CASHFLOW STATEMENT
Note Period ended
31.12.02
#
Net cash inflow from operating activities 7 62,848
Returns on investments and servicing of finance
Interest received 4,934
Interest paid (107,980)
Finance lease interest paid (18,864)
Net cash outflow from returns on investments and servicing (121,910)
of finance
Taxation 13,459
Capital expenditure and financial investment
Purchase of tangible fixed assets (416,211)
Sale of tangible fixed assets 89,579
Net cash outflow from capital expenditure and financial (326,632)
investment
Acquisitions and disposals
Purchase of subsidiary undertaking (3,025,933)
Net cash outflow from acquisitions and disposals (3,025,933)
Financing
Issue of ordinary share capital 4,500,000
Share issue costs (387,320)
Repayment of borrowings (1,860,000)
Capital element of finance lease rentals (120,995)
Net cash inflow from financing 2,131,685
Decrease in cash 8 (1,266,483)
NOTES TO THE PRELIMINARY ANNOUNCEMENT
1 Basis of preparation
The preliminary announcement has been prepared in accordance with applicable
accounting standards and under the historic cost convention.
The principal accounting policies of the Group have remained unchanged from
those set out in the Group's 2001 annual report and financial statements.
For illustrative purposes only, a pro-forma profit and loss account has been
presented to reflect a full years trading of the company and its subsidiary.
This incorporates the pre-acquisition results of Lloyds British Group Limited
from 1 January 2002 to 31 July 2002 together with the post acquisition results
of the group for the period 1 August 2002 to 31 December 2002. The effects of
fair value adjustments on the acquisition of Lloyds British Group Limited have
been excluded from the pro-forma profit and loss account, as shown in note 2.
P2 ro-forma profit and loss account reconciliation
A reconciliation of the pro-forma profit to the profits/(losses) reported in the
statutory financial statements of the Company and its acquired subsidiary is
shown below:
#
Lloyds British Testing PLC (LBT) - reported profit 116,777
for the period from incorporation to 31 December
2002
Lloyds British Group Limited (LBG)
- Profit before fair value adjustments and 165,102
the write off of goodwill
and investments
- Fair value adjustments and write off of (1,942,634)
goodwill and investments
- Consolidation adjustments 792,262
(985,270)
(868,493)
Fair value adjustments reflected through LBG 1,150,372
Pro-forma profit on ordinary activities after 281,879
taxation
E3 xceptional operating items
Exceptional items relate to redundancy costs incurred in the course of a
reorganisation of the structure and management of the business, following the
Company's admission to the Alternative Investment Market and subsequent
acquisition of Lloyds British Group Limited.
4 Tax on profit on ordinary activities
The tax charge is based on the profit for the period and represents:
Period ended
31.12.02
#
Deferred tax 84,970
Unrelieved tax losses of approximately #1,357,267 remain available to offset
against future taxable trading profits.
The tax assessed for the period differs from the standard rate of corporation
tax in the UK as follows:
Period ended
31.12.02
#
Profit on ordinary activities before taxation 201,747
Profit on ordinary activities multiplied by the standard rate of 40,394
corporation tax in the UK of 20%
Effect of:
Expenses not deductible for tax purposes 12,747
Depreciation less than capital allowances (2,778)
Amortisation of goodwill 14,360
Offset of losses (64,723)
Current tax charge for the period -
5 Dividends
Period ended
31.12.02
#
Proposed final dividend of 0.25p per share 79,424
6 Earnings per share
The calculation of the basic earnings per share is based on the profit on
ordinary activities after tax and on the weighted average number of ordinary
shares in issue during the period. The adjusted earnings per share is calculated
excluding the impact of the exceptional operating costs and amortisation of
goodwill.
The share options are not considered to have a dilutive effect due to the
exercise price being higher than the fair value of the shares.
The profits and weighted average number of shares used in the calculations are
set out below:
Profit Weighted Earnings per
average number share
of shares
# # pence
Basic earnings per share
Earnings attributable to ordinary 116,777 31,769,620 0.37
shareholders
Amortisation of goodwill 71,798 31,769,620 0.22
Exceptional operating items 259,523 31,769,620 0.82
Adjusted earnings per share 448,098 31,769,620 1.41
7 Net cash inflow from operating activities
Period ended
31.12.02
#
Operating profit 323,657
Depreciation 297,940
Amortisation 71,798
Profit on sale of tangible fixed assets (764)
Increase in stocks (63,267)
Increase in debtors (361,777)
Decrease in creditors (204,739)
Net cash inflow from operating activities 62,848
reconciliation of net cash flow to movement in net debt
Period ended
31.12.02
#
Decrease in cash in the period (1,266,483)
Cash outflow from repayment of bank loans 1,360,000
Capital element of finance leases 120,995
Net debt resulting from cashflows 214,512
Inception of finance leases (16,252)
198,260
Net debt acquired (4,766,578)
Net debt at 31 December 2002 (4,568,318)
Analysis of changes in net debt
Acquisitions Inception of At 31 December
finance leases 2002
Cash flow
# # # #
Cash at bank and 596,732 - - 596,732
in hand
Bank overdraft (1,863,215) - - (1,863,215)
(1,266,483) - - (1,266,483)
Bank loans 1,360,000 (4,200,000) - (2,840,000)
Finance leases 120,995 (566,578) (16,252) (461,835)
214,512 (4,766,578) (16,252) (4,568,318)
PUBLICATION OF NON-STATUTORY ACCOUNTS
The financial information set out in this preliminary announcement does not
constitute statutory accounts as defined in Section 240 of the Companies Act
1985.
The summarised balance sheet at 31 December 2002 and the summarised statutory
and pro-forma profit and loss accounts, summarised cash flow statement and
associated notes for the period then ended have been extracted from the Group's
2002 statutory financial statements upon which the auditor's opinion is
unqualified and does not include any statement under Section 237 of the
Companies Act 1985.
The Accounts for the year to 31 December 2002 will be sent to shareholders on
6th June 2003 after which copies will be available from the Company Secretary,
Lloyds British Testing Plc, 319 Shady Lane, Great Barr, Birmingham B44 9XA.
ENDS
This information is provided by RNS
The company news service from the London Stock Exchange
END
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