RNS Number:4469E
Business Systems Group Hldgs PLC
29 November 2002
29 November 2002
Business Systems Group Holdings plc ("BSG" or the "Group")
Interim results for the six months ended 30 September 2002
Business Systems Group Holdings plc, which provides end-to-end technology
solutions for the business-to-business ("B2B") market, today announces its
interim results for the six months ended 30 September 2002.
Highlights
Turnover increased 7.5% over the corresponding period last year to #14.1m as a
result of new contracts and high retention rate among existing clients
Operating loss significantly reduced to #0.6m from #4.9m in the same period last
year
Gross margins improved to over 19% from only 1% a year ago
Cost base of the Group substantially lowered with annual payroll cost savings of
over #2.9m
Positive earnings before depreciation and amortisation for Webgenerics in the
period for first time since its launch in 1999
Continuation of strong Balance Sheet with #7.3m of cash and no debt
Contacts:
BSG Tel: 020 7880 8888
Nick Gerard, Group Chief Executive
James Wheaton, Group Finance Director
Buchanan Communications Tel: 020 7466 5000
Tim Thompson / Catherine Miles
CHAIRMAN'S STATEMENT
I am pleased to present the results for Business Systems Group Holdings plc for
the six months ended 30 September 2002, which show a considerable improvement
over the same period last year.
Financial review
In the first six months of the year, the Group incurred a significantly reduced
operating loss of #0.6m compared with an operating loss of #4.9m in the
corresponding period of the prior year. The loss before tax was reduced to
#0.4m from #4.5m.
The scale of the Group's progress can be seen in its trading cash performance
(being the loss before tax, adding back depreciation and amortisation), which
shows a profit of #33,000. Excluding exceptional redundancy costs this result
was a profit of #195,000.
The improvements have been achieved by:
Increasing revenues through new contracts and a high retention rate among
existing clients, resulting in Group revenues increasing 7.5% on the
corresponding period of the prior year to over #14m.
Improving the gross margin to over 19% from only 1% a year ago. This recovery
means that gross margins are now higher than they were in either of the two
previous years. A significant driver of better margins has been improved
utilisation in the consulting division.
Lowering the cost base of the Group. Last year the headcount of the Group was
reduced from 250 to approximately 180, with a further reduction of 14 positions
in April of this year. The result has been a saving in the Group's annual
payroll costs of over #2.9m. The exceptional redundancy costs incurred in the
first half of this financial year were #162,000.
Significant success in respect of Webgenerics' hosting offering. This has
resulted in revenues for the business quadrupling to over #1.1m for the six
months compared with a year earlier. Earnings before depreciation and
amortisation were positive in the period for the first time since Webgenerics
was launched in 1999.
The Group's balance sheet remains strong with #7.3m of cash and no debt. In the
six months the Group invested #400,000 in leasehold improvements on its property
to prepare two floors for sub-letting following the expiration of a previous
sub-lease. This space is now being marketed. Other than this one-off property
investment, capital expenditure for the six months was #130,000.
The Board does not recommend that an interim dividend be paid.
Operational review
The technology market as a whole has remained flat in the first half of this
year. Against these difficult conditions, BSG, having concentrated on cutting
costs last year, is now growing revenues again. This has meant a focus on
improving the quality of service and the degree of innovation used in helping
customers to draw real value from their technology investments, as well as
expanding our existing customer base as we seek new business opportunities.
One such example of the Group seeking new opportunities is the development of a
new service line involving the support and development of JD Edwards enterprise
software. With the completion of dotEncrypt, Webgenerics has ceased any new
speculative software development. This has freed up the development resource to
deliver new services, initially underpinned by demand from existing customers.
The first customer for the new JD Edwards practice has already been secured and
it will deliver a positive contribution in the second half of the year.
The objective of this service, and other initiatives, is to continue to increase
contracted revenues with both new and existing customers. As a result of these
initiatives, contracted revenues for the provision of services grew for the
whole Group by over a third compared to the corresponding six months last year
and it remains one of the Group's aims to increase the stream of annuity income,
whilst creating new growth areas in what remains a depressed market.
Outlook
The Board believes that the information technology market will remain subdued
for at least another six months, and possibly for all of 2003, as customers
continue to delay projects and conserve cash. This is particularly true in
relation to hardware and software in BSG's traditional client base, in the City
and financial services. Hence, although the Group will continue to invest in
its relationships and expertise in these industries, it is developing new
markets in the property, publishing and voluntary/charity sectors, where demand
remains more robust. However, while the market remains depressed, the Board
recognises that the greatest challenge will be to gain new business, especially
in the consulting division.
Despite the difficulties of the market, BSG has demonstrated that, having
reduced the cost base, it can grow revenues, win new customers and develop new
services. It is the Board's aim to continue that growth and development in the
second half of the year.
Geoffrey Procter
Chairman
28 November 2002
CONSOLIDATED PROFIT AND LOSS ACCOUNT
Unaudited six Unaudited Audited
months to 30 six months to 30 year ended
September 2002 September 2001 31 March 2002
Note #'000 #'000 #'000
Turnover from
continuing operations 3 14,051 13,061 24,224
Cost of sales (11,342) (12,920) (22,691)
Gross profit 2,709 141 1,533
Net operating expenses (3,311) (5,015) (12,569)
Operating loss from
continuing operations 3, 4 (602) (4,874) (11,036)
Net interest receivable 156 335 526
Loss on ordinary
activities before taxation (446) (4,539) (10,510)
Taxation - - -
Loss on ordinary activities
after taxation (446) (4,539) (10,510)
Retained loss (446) (4,539) (10,510)
Loss per share (basic and fully
diluted) 6 (0.55)p (5.47)p (12.84)p
'000's '000's '000's
Weighted average shares in
issue 6 81,204 82,932 81,847
There are no recognised gains or losses other than the loss for the current and
preceding financial periods. Accordingly no statement of recognised gains and
losses is presented.
CONSOLIDATED BALANCE SHEET
Unaudited Unaudited Audited
at at at
30 September 30 September 31 March
2002 2001 2002
#'000 #'000 #'000
Fixed assets
Intangible assets 1,265 6,236 1,347
Tangible assets 1,793 1,783 1,669
Investments in own shares 595 595 595
3,653 8,614 3,611
Current assets
Stock 56 106 137
Debtors 3,768 5,667 4,780
Cash at bank and in hand 7,289 9,147 8,411
11,113 14,920 13,328
Creditors
Amounts falling due within one year (5,033) (7,384) (6,760)
Net current assets 6,080 7,536 6,568
Total assets less current liabilities 9,733 16,150 10,179
Capital and Reserves
Called up share capital 4,209 4,209 4,209
Share premium account 13,940 13,940 13,940
Profit and loss account (8,416) (1,999) (7,970)
Equity shareholders' funds 9,733 16,150 10,179
RECONCILIATION OF MOVEMENT
IN SHAREHOLDERS' FUNDS
Loss for the period (446) (4,539) (10,510)
Net additions to shareholders' funds (446) (4,539) (10,510)
Opening shareholders' funds 10,179 20,689 20,689
Closing shareholders' funds 9,733 16,150 10,179
CONSOLIDATED CASH FLOW STATEMENT
Unaudited Unaudited Audited
six months to six months to year ended
30 September 30 September 31 March
Note 2002 2001 2002
#'000 #'000 #'000
Net cash outflow from operating
activities 8 (657) (4,268) (4,810)
Returns on investments and servicing of
finance:
Net interest received 50 338 548
Net cash inflow from returns on
investments and servicing of finance 50 338 548
Taxation - (37) (153)
Capital expenditure and financial
investment:
Purchase of tangible fixed assets (530) (813) (1,107)
Sale of tangible fixed assets 15 24 30
Net cash outflow from capital expenditure
and financial investment (515) (789) (1,077)
Acquisitions
Capital costs of acquisition - (941) (941)
Net cash outflow for acquisitions - (941) (941)
Dividends
Equity dividends paid - (84) (84)
Net cash outflow before financing (1,122) (5,781) (6,517)
Decrease in cash in the period 10 (1,122) (5,781) (6,517)
NOTES
1. Basis of preparation
The interim results which are unaudited, have been prepared in accordance with
applicable United Kingdom Accounting Standards using accounting policies
consistent with those set out in the accounts for the year ended 31 March 2002.
The financial information for the six months ended 30 September 2002 and 30
September 2001 has been neither audited nor reviewed and does not constitute
statutory accounts as defined in section 240 of the Companies Act 1985.
The financial information for the year ended 31 March 2002 has been extracted
from the statutory accounts for that period which have been filed with the
Registrar of Companies. The auditors' report on those accounts was unqualified
and did not contain any statement under section 237(2) or (3) of the Companies
Act 1985.
The interim results for the six months ended 30 September 2002 were approved by
the Board of Directors on 28 November 2002.
2. Basis of consolidation
The Group accounts incorporate the results of the company and its subsidiaries
Business Systems Group Limited and Webgenerics Limited.
3. Analysis of turnover, operating loss and net assets
Analyses by class of business of: turnover, operating loss and net assets are
stated below:
Turnover Operating Loss Net Assets
Unaudited Audited Unaudited Audited Unaudited Audited
Six months Year ended Six months Year ended Six months Year ended
to 30 Sept 31 March to 30 Sept 31 March to 30 Sept 31 March
2002 2002 2002 2002 2002 2002
#'000 #'000 #'000 #'000 #'000 #'000
Class of business
Technology Services and
Solutions 12,905 23,573 (448) (8,541) 14,218 14,510
Technology Applications 1,146 651 (154) (2,495) (4,485) (4,331)
14,051 24,224 (602) (11,036) 9,733 10,179
The activities of the Group are wholly undertaken in the United Kingdom.
4. Operating Loss
The operating loss is stated after the following exceptional items:
Unaudited Unaudited Audited
six months to six months to year ended
30 September 30 September 31 March
2002 2001 2002
#'000 #'000 #'000
Costs associated with redundancies 162 357 1,037
Impairment of intangible assets - - 3,122
5. Dividend
No interim dividend will be paid in respect of the six month period ending 30
September 2002 (2001: nil).
6. Earnings per share
Earnings per share have been calculated by dividing the loss on ordinary
activities after taxation by the weighted average number of ordinary shares in
issue during the current period.
7. Copies of report
The interim report will be mailed to shareholders and copies will also be
available at the Company's registered office at 226 - 236 City Road, London,
EC1V 2TT.
8. Reconciliation of operating loss to cash outflow from operating activities
Unaudited Unaudited Audited
six months to six months to year ended
30 September 30 September 31 March
2002 2001 2002
#'000 #'000 #'000
Operating loss (602) (4,874) (11,036)
Depreciation of tangible assets 397 347 742
Amortisation of intangible assets 82 398 3,288
(Profit)/loss on disposal of fixed assets (6) 7 9
Decrease in stock 81 111 80
Decrease in debtors 1,118 1,570 2,441
Decrease in creditors (1,727) (1,827) (334)
Net cash outflow from operating activities (657) (4,268) (4,810)
9. Analysis of net funds
Audited at Unaudited Unaudited at
1 April 2002 cash flows 30 September
2002
#'000 #'000 #'000
Cash at Bank 8,411 (1,122) 7,289
Net funds 8,411 (1,122) 7,289
10. Reconciliation of net cash flow to movement in net funds
Unaudited Unaudited Audited
six months to six months to year ended
30 September 30 September 31 March
2002 2001 2002
#'000 #'000 #'000
Decrease in cash in the period (1,122) (5,781) (6,517)
Net funds at start of the period 8,411 14,928 14,928
Net funds at end of the period 7,289 9,147 8,411
This information is provided by RNS
The company news service from the London Stock Exchange
END
IR UWRWRUORAUAA
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