RNS Number:0639T
Vega Group PLC
10 December 2003
For Immediate Release 10 December 2003
VEGA Group PLC
RESULTS FOR THE SIX MONTHS ENDED 31 OCTOBER 2003
VEGA Group PLC ("VEGA"), the consulting and technology company, today announces
its Interim results for the six months ended 31 October 2003.
KEY POINTS - FINANCIAL
* Turnover up 21% to #21.1m (2002: #17.4m)
* Profit before tax* up 47% to #1.03m (2002: #0.7m)
* Basic EPS of 2.40p (2002: 47.99p loss per share)
* Substantial increase in order intake. Forward order book: #41.7m up
10% (2002: #37.9m)
*(from continuing operations before tax, exceptional items and goodwill
amortisation and impairment)
GOVERNMENT & DEFENCE
* Turnover grown by 31% to #11.8m (2002: #9.0m)
* Strong order intake of #15.5m (2002: #8.1m). Significant new orders
include working with Alvis for the delivery of Titan and Trojan and with
the Dutch and Norwegian Airforces for work on the F-16 aircraft.
* Strong growth in the consulting business in the operational command and
control arena and around VEGA's national security and intelligence
offerings.
SPACE
* Turnover grown by 21% to #9.3m (2002: #7.7m)
* Signed new orders of #7.2m (2002: #7.0m). Orders this year, include
#2.0m projects in Holland including support for Europe's manned space
programme.
* We have signed a contract to build a new simulator for the Venus Express
programme, following on from the successful launch of Mars Express.
Chairman, Andy Roberts stated :
"We are pleased with this significant growth in both revenue and profitability
in these results. VEGA is on track to deliver improved performance this year,
the results of effective management and careful execution of a strategy that is
geared towards growing the business in its chosen markets."
VEGA is an established consulting and technology company that implements
strategy for international businesses and government organisations. VEGA
delivers sustainable performance improvements for its clients, through the
practical application of knowledge from highly experienced people. VEGA operates
predominantly in the Space, Defence and Public Sector markets; its core
competencies include control & operations, simulation, learning & knowledge,
security and procurement.
VEGA Group PLC : Andy Roberts, Chairman; Phil Cartmell, Chief Executive
www.vega.co.uk on 020-7466 5000 today and on 01707- 391 999 thereafter
Buchanan Communications: Tim Anderson/Nicola Cronk/Rebecca Skye Dietrich
www.buchanan.uk.com on 020-7466 5000
CHAIRMAN'S STATEMENT
INTRODUCTION
Significant growth in both revenue and profitability has been delivered,
demonstrating the continuing success of our strategy. VEGA ended the first half
of its financial year slightly ahead of market expectations.
In comparison with the same period last year, we have seen a substantial
increase in order intake and our order book is #3.7m higher. Net debt has
continued to improve with a further reduction compared to the position twelve
months ago.
FINANCIAL REVIEW
Turnover for the six months to 31 October 2003 was #21.1m, an increase of #3.7m
or 21% when compared to the same period last year. Growth in turnover from
continuing operations was 26%.
Early completion of legacy low margin projects, particularly within the
commercial sector (now reported in our Government & Defence business) combined
with better project management and resulting higher margins on some fixed price
contracts, has enabled us to report an increased Operating Profit 1 on a like
for like basis of #1.2m (2002: #0.8m).
Interest costs of #0.1m (2002: #0.2m) benefited from lower rates negotiated
during the period with our principal bankers, together with our improving debt
position. Profit before taxation was #0.8m (2002: loss #8.7m) and Operating
Profit was #0.9m (2002: loss #3.8m).
Earnings per share were 3.84p (2002: 1.69p) on an adjusted basis before goodwill
amortisation and, for 2002, before exceptional costs. Earnings per share were
2.40p (2002: 47.99p loss per share).
Net cash inflow from operating activities for the six months to 31 October 2003
was #0.3m (2002: #1.0m). Cash flow has been impacted by #0.4m (2002: #0.1m)
through utilisation of the provisions for staff termination and vacant property
costs. Increasing turnover has also brought an increase in working capital
requirement. During the period we received repayment of the remaining loan,
advanced on disposal of the Dutch subsidiary in the first half of last year.
1 Operating Profit before exceptional items and goodwill amortisation and
impairment
OPERATIONAL REVIEW
During the first six months we have seen order intake increase by #5.9m,
compared to the same period last year, to #22.7m. At the end of October our
forward order book stood at #41.7m (2002: #37.9m). Already we can see #39.1m of
orders either already delivered or committed for the remainder of this financial
year.
Space
At #9.3m (2002: #7.7m), turnover for Space has grown organically by 21% compared
to the same period last year.
New orders of #7.2m (2002: #7.0m) were signed in the six months to 31 October
2003. We continue to be a major supplier to the European Space Agency and have
signed orders this year worth more than #2.0m on projects in Holland, including
support for Europe's manned space programme. Following on from the successful
launch of Mars Express we have been awarded the contract to build a new
simulator for the Venus Express programme scheduled for completion in 2005. We
have also secured a support contract for military satellite operations worth
#0.8m.
Turnover growth has been boosted where we are the prime contractor managing a
number of sub-contractors. Progress on some fixed price contracts has been
slower than we would have liked and has reduced margins and profitability in
this area.
Government & Defence
Revenue in Government & Defence has grown by #2.8m to #11.8m, a 31% increase on
the corresponding period last year.
Order intake has been very strong. In the six months to 31 October 2003 we have
signed #15.5m (2002: #8.1m) in new business. Significant new orders for our
training solutions have been signed with Alvis for the delivery of Titan and
Trojan (#2.8m) and with the Dutch and Norwegian Airforces (#2.6m) for work on
the F-16 aircraft. Our consulting business has also seen strong growth in the
operational command and control arena and around our national security and
intelligence offerings.
We have made our first delivery of classroom equipment under the Eurofighter
contract, further increasing revenue from hardware delivered to clients. Sharp
focus on project management disciplines has enabled us to make good progress on
our fixed price development projects and consequently we have seen improved
margins. We have continued to invest in building our Public Sector business and
have recently signed a multi-year framework agreement with a major
infrastructure operator for security consulting.
We have appointed a Chief Operating Officer and brought all our delivery
operations under a common leadership. This allows us to implement best practice
throughout the organisation, continue to develop our competency base and build
on the successful start to the year.
OUTLOOK
VEGA is on track to deliver improved performance this year. This is the result
of effective management and careful execution of a strategy that is geared
towards growing the business in its chosen competencies and markets.
Andy Roberts 10 December 2003
Non-Executive Chairman
SUMMARISED GROUP PROFIT AND LOSS ACCOUNT
Six months Six months Year
ended ended ended
31 October 31 October 30 April
2003 2002 2003
#'000 #'000 #'000
Turnover (note 2)
Continuing operations 21,093 16,735 34,934
Discontinued operations - 655 655
Turnover 21,093 17,390 35,589
Operating profit/(loss)
Continuing operations 898 (3,614) (3,310)
Discontinued operations - (171) (171)
Operating profit before exceptional items and goodwill 1,166 755 2,003
amortisation and impairment
Goodwill amortisation (268) (393) (661)
Exceptional goodwill impairment (note 3) - (4,147) (4,147)
Other exceptional items charged before operating profit (note 3) - - (676)
Operating profit/(loss) 898 (3,785) (3,481)
Loss on disposal of tangible fixed assets - continuing operations - - (224)
Loss on disposal of subsidiary - discontinued operations (note 3) - (4,654) (4,654)
Net interest (135) (223) (380)
Profit before tax, exceptional items and goodwill amortisation - 1,031 703 1,794
continuing operations
Loss before tax and exceptional items - discontinued operations - (171) (171)
Goodwill amortisation (268) (393) (661)
Exceptional items (note 3) - (8,801) (9,701)
Profit/(loss) before taxation 763 (8,662) (8,739)
Taxation (320) (220) (240)
Retained profit/(loss) 443 (8,882) (8,979)
Earnings per share (note 4)
Earnings/(loss) per share - basic and diluted 2.40p (47.99)p (48.51)p
Adjusted earnings per share - basic and diluted 3.84p 1.69p 2.61p
SUMMARISED GROUP BALANCE SHEET
As at As at As at
31 October 31 October 30 April
2003 2002 2003
#'000 #'000 #'000
Fixed assets
Intangible assets 8,390 8,925 8,657
Tangible assets 1,041 1,382 1,049
9,431 10,307 9,706
Current assets
Debtors 13,628 10,672 11,045
Cash at bank and in hand 226 146 368
13,854 10,818 11,413
Creditors: amounts falling due within one year (11,158) (7,944) (8,187)
Net current assets 2,696 2,874 3,226
Total assets less current liabilities 12,127 13,181 12,932
Creditors: amounts falling due after more than one year (1,789) (3,290) (2,584)
Provisions for liabilities and charges (704) (642) (1,141)
Net assets 9,634 9,249 9,207
Capital and reserves
Share capital 926 926 926
Share premium 6,226 15,529 6,226
Profit and loss account 2,482 (7,206) 2,055
Total shareholders' funds 9,634 9,249 9,207
STATEMENT OF TOTAL RECOGNISED GAINS AND LOSSES
Six months ended Six months ended Year ended
31 October 2003 31 October 2002 30 April 2003
#'000 #'000 #'000
Profit/(loss) for period 443 (8,882) (8,979)
Currency translation differences on foreign (16) 63 118
currency investments
Total recognised gains and losses for the period 427 (8,819) (8,861)
Reconciliation of Movement in Shareholders' Funds
As at As at As at
31 October 2003 31 October 2002 30 April 2003
#'000 #'000 #'000
Retained profit/(loss) for the period 443 (8,882) (8,979)
Other recognised gains and losses (16) 63 118
Goodwill reinstated on disposal of subsidiary - 3,906 3,906
Net increase/(reduction) in shareholders' funds 427 (4,913) (4,955)
Opening shareholders' funds 9,207 14,162 14,162
Closing shareholders' funds 9,634 9,249 9,207
SUMMARISED GROUP STATEMENT OF CASH FLOW
Reconciliation of operating profit/(loss) to cash flow
Six months ended Six months ended Year ended
31 October 2003 31 October 2002 30 April 2003
#'000 #'000 #'000
Operating profit/( loss) 898 (3,785) (3,481)
Depreciation 249 299 618
Loss/(profit) on sale of fixed assets 4 (6) (11)
Goodwill amortisation and impairment 268 4,540 4,808
Increase in debtors (2,644) (186) (525)
Increase in creditors 1,972 253 457
(Decrease)/increase in provisions for liabilities (437) (108) 391
and charges
Net cash inflow from operating activities 310 1,007 2,257
Summarised Group cash flow statement
Six months ended Six months ended Year ended
31 October 2003 31 October 2002 30 April 2003
#'000 #'000 #'000
Net cash inflow from operating activities 310 1,007 2,257
Returns on investments and servicing of finance (248) (213) (408)
Taxation 3 (5) 99
Capital expenditure and financial investment (248) (553) (608)
Cash (outflow)/inflow before financing (183) 236 1,340
Other financing movements: repayment of bank (706) (1,310) (1,928)
loans
Decrease in cash in the period (889) (1,074) (588)
Reconciliation of net cash flow to movement in net debt
Six months ended Six months ended Year ended
31 October 2003 31 October 2002 30 April 2003
#'000 #'000 #'000
Decrease in cash in the period (889) (1,074) (588)
Repayment of bank loans 706 1,310 1,928
Exchange movements (2) 11 (14)
Movement in net debt for the period (185) 247 1,326
Opening net debt (4,261) (5,587) (5,587)
Closing net debt (4,446) (5,340) (4,261)
NOTES
1. The financial information in this report does not constitute statutory
accounts within the meaning of section 240(3) of the Companies Act 1985.
The interim financial information for the six months ended 31 October 2003
is unaudited but has been reviewed by the Company's auditor as set out
below.
The comparative figures for the year ended 30 April 2003 are not the
Company's statutory accounts for that financial year. Those accounts, upon
which the auditor issued an unqualified opinion, have been delivered to the
Registrar of Companies.
The interim financial information has been prepared on the basis of the
accounting policies set out in the Group's statutory accounts for the year
ended 30 April 2003. The taxation charge is calculated by applying the
directors' best estimate of the annual tax rate to the profit for the
period. Other expenses are accrued in accordance with the same principles
used in the preparation of the annual accounts.
The interim financial information for the six months ended 31 October 2003
was approved by the Board on 9 December 2003.
2. Segmental analysis
Analysis by business sector
Six months ended Six months ended Year ended
31 October 2003 31 October 2002 30 April 2003
#'000 #'000 #'000
a) Turnover
Space 9,280 7,732 16,018
Government & Defence 11,813 9,003 18,916
Total continuing operations 21,093 16,735 34,934
Discontinued operations - 655 655
Total 21,093 17,390 35,589
Six months ended Six months ended Year ended
31 October 2003 31 October 2002 30 April 2003
#'000 #'000 #'000
b) Operating profit/(loss)
Space 213 597 920
Government & Defence 1,326 511 1,610
Central (373) (182) (356)
Total continuing operations 1,166 926 2,174
Discontinued operations - (171) (171)
Goodwill amortisation and impairment * (268) (4,540) (4,808)
Exceptional items * - - (676)
Total 898 (3,785) (3,481)
* All exceptional items and goodwill amortisation and impairment relate to
continuing UK operations within Government & Defence
3. Exceptional items
Six months ended Six months ended Year ended
31 October 2003 31 October 2002 30 April 2003
#'000 #'000 #'000
Goodwill impairment - 4,147 4,147
Vacant property provision - - 399
Staff termination costs - - 277
Exceptional items recognised before operating - 4,147 4,823
profit/(loss)
Loss on disposal of fixed assets - - 224
Loss on disposal of subsidiary - 4,654 4,654
Total exceptional items - 8,801 9,701
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.
4. 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 per share required by FRS14 and is based on earnings from
continuing operations excluding the effect of goodwill write down and
exceptional items. It has been calculated to allow shareholders to gain a
clearer understanding of the trading performance of the Group.
Six months ended Six months ended Year ended
31 October 2003 31 October 2002 30 April 2003
#'000 #'000 #'000
Earnings/(loss) attributable to shareholders 443 (8,882) (8,979)
Adjusted for:
Loss on disposal of subsidiary - (4,654) (4,654)
Goodwill amortisation and impairment (268) (4,540) (4,808)
Adjusted earnings 711 312 483
Six months ended Six months ended Year ended
31 October 2003 31 October 2002 30 April 2003
Ordinary shares Ordinary shares Ordinary shares
Weighted average number of shares 18,507,883 18,507,883 18,507,883
INDEPENDENT REVIEW REPORT
Introduction
We have been instructed by the Company to review the financial information for
the six months ended 31 October 2003 which comprises the Summarised Group Profit
and Loss Account, Summarised Group Balance Sheet, Statement of Total Recognised
Gains and Losses, Reconciliation of Movement in Shareholders' Funds, Summarised
Group Statement of Cash Flow and the related notes 1 to 4. We have read the
other information contained in the interim report and considered whether it
contains any apparent misstatements or material inconsistencies with the
financial information.
This report is made solely to the Company in accordance with guidance contained
in Bulletin 1999/4 'Review of interim financial information' issued by the
Auditing Practices Board. To the fullest extent permitted by law, we do not
accept or assume responsibility to anyone other than the company, for our work,
for this report, or for the conclusions we have formed.
Directors' responsibilities
The interim report, including the financial information contained therein, is
the responsibility of, and has been approved by, the directors. The directors
are responsible for preparing the interim report in accordance with the Listing
Rules of the Financial Services Authority which require that the accounting
policies and presentation applied to the interim figures should be consistent
with those applied in preparing the preceding annual accounts except where any
changes, and the reasons for them, are disclosed.
Review work performed
We conducted our review in accordance with guidance contained in Bulletin 1999/4
'Review of Interim Financial Information' issued by the Auditing Practices Board
for use in the United Kingdom. A review consists principally of making enquiries
of Group management and applying analytical procedures to the financial
information and underlying financial data and, based thereon, assessing whether
the accounting policies and presentation have been consistently applied unless
otherwise disclosed. A review excludes audit procedures such as tests of
controls and verification of assets, liabilities and transactions. It is
substantially less in scope than an audit performed in accordance with United
Kingdom Auditing Standards and, therefore provides a lower level of assurance
than an audit. Accordingly we do not express an audit opinion on the financial
information.
Review conclusion
On the basis of our review we are not aware of any material modifications that
should be made to the financial information as presented for the six months
ended 31 October 2003.
Ernst & Young LLP
Luton
10 December 2003
This information is provided by RNS
The company news service from the London Stock Exchange
END
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