RNS Number:4280I
Opsec Security Group PLC
26 November 2007
26th November 2007
OPSEC SECURITY GROUP plc
("OpSec" or "the Group")
Interim results for the six months ended 30th September 2007
OpSec Security Group plc, the supplier of anti-counterfeiting technologies and
services, announces interim results for the six months ended 30th September
2007.
Highlights
2007 2006
unaudited unaudited
Group revenue £16.3m £14.4m
Profit before tax £859,000 £2,759,000
Profit after tax* £4,126,000 £2,210,000
Basic earnings per share* 8.2p 4.3p
Adjusted earnings per share** 2.6p 4.9p
* Including £3,284,000 deferred tax credit on recognition of deferred tax assets
in the UK operations.
** Adjusted for the effects of the deferred tax credit, share based payments and
the charge for intangible amortisation.
• Strong trading performance across the Group
• Results in line with expectations, despite absorption of aborted
acquisition costs
• Group revenue up by 13% and up across all market sectors
• Third consecutive year of record results in the European operations
• American turnover up by 25%; significant investment in Marketing and
Research & Development
• 3dcd joint venture ahead of budget but, as expected, down on prior year
leading to an overall reduction in operating profit
• Order books strong and continued confidence for the full year
David Mahony, Chairman, said:
"The second half of the current year has started well and we have a solid order
book for the remainder of the year. The markets for the Group's services remain
strong and the Directors believe that the Group is in line to meet expectations
for the full year."
- Ends -
For further information, please contact:
OpSec Security Group plc 0191 417 5434
Mark Turnage, Chief Executive/Mike Angus, Finance Director
Weber Shandwick Financial 020 7067 0700
Nick Oborne/Stephanie Badjonat/Charlie Hooper
Oriel Securities Limited 020 7710 7600
Andrew Edwards/Neil Langford
26th November 2007
OPSEC SECURITY GROUP plc
("OpSec" or "the Group")
Interim results for the six months ended 30th September 2007
Chairman's Statement
I am pleased to report on a strong first half performance by the Group. All our
operations traded well and we were able to return financial results in line with
our expectations despite absorbing the costs of aborted acquisition activity.
Group turnover for the six months was up 13% to £16.3 million (2006: £14.4
million). All market sectors showed increased turnover.
Operating profit of £875,000 (2006: £2,820,000) was down due to the anticipated
reduction in the contribution from our joint venture, 3dcd. Profit after
taxation was up from £2,210,000 to £4,126,000 due largely to a taxation credit
arising from the recognition of a deferred tax asset in the Group's UK based
companies.
The weakness of the US dollar has continued to have an impact when the results
of the American operations and joint venture are translated into sterling.
Review of Operations
European operations achieved further growth in both revenue and profitability in
the period. These record results together with confidence regarding the future
prospects for this business have led to the recognition of a significant
deferred tax asset related to past trading losses. The installation of the
smaller of two new coaters in the Crowther plant has now been completed and the
commissioning of the larger coater is proceeding to programme.
The American operations also achieved strong growth in revenue compared to the
previous year. Much of this increase in revenue was invested in Marketing and
Research & Development projects which should yield incremental future earnings.
Within the banknote and high security documents market the emphasis being placed
on the revenue protection and tax stamps market has led to some success and
further new programmes are actively being pursued. Good revenue growth was seen
in both the brand protection market and the ID technologies market.
The forward order book for all of our markets is robust and it is therefore
expected that we will trade strongly in the second half of the year.
3dcd's contribution to profits in the first half was ahead of expectations but
showed a return to the levels we would normally anticipate in years not
containing a major software release by its largest customer.
Acquisitions
In the first half the Group incurred costs amounting to £235,000 as a result of
aborted acquisition negotiations. While regrettable, the risk of such write-offs
is a necessary consequence of our unwillingness to complete transactions on
anything other than totally acceptable terms.
A number of other interesting acquisition opportunities are being vigorously
pursued. By its nature this activity is difficult to predict as regards timing
but it is hoped that some of these discussions will be successfully concluded in
the second half of the current financial year.
Conclusion
The second half of the current year has started well and we have a solid order
book for the remainder of the year. The markets for the Group's services remain
strong and the Directors believe that the Group is in line to meet expectations
for the full year.
DA Mahony
Chairman
26th November 2007
OPSEC SECURITY GROUP plc
Consolidated Income Statement
Six months Six months
ended ended Year ended
30-Sept-07 30-Sept-06 31-Mar-07
unaudited unaudited audited
£'000 £'000 £'000
Revenue 16,319 14,442 33,134
Cost of sales (9,503) (8,190) (18,581)
-----------------------------------------
Gross profit 6,816 6,252 14,553
Distribution and selling
costs (1,994) (1,922) (4,169)
-------------------------------------------------------------------------
Administrative expenses (4,460) (3,740) (8,369)
Intangible amortisation (63) - (109)
-------------------------------------------------------------------------
Total administrative
expenses (4,523) (3,740) (8,478)
Other income - - 119
-----------------------------------------
299 590 2,025
Share of profit of
joint ventures 576 2,230 3,298
-----------------------------------------
Operating profit 875 2,820 5,323
Financial income 37 (8) (10)
Financial expenses (53) (53) (139)
-----------------------------------------
Profit before income tax 859 2,759 5,174
Income tax 3,267 (549) (1,253)
-----------------------------------------
Profit for the period
attributable to equity
holders of the parent 4,126 2,210 3,921
=========================================
Earnings per share (pence)
Basic eps 8.2 4.3 7.7
=========================================
Diluted eps 7.6 4.1 7.2
=========================================
Adjusted eps 2.6 4.9 8.8
=========================================
Adjusted diluted eps 2.4 4.7 8.2
=========================================
OPSEC SECURITY GROUP plc
Consolidated Statement of Recognised Income and Expense
Six months Six months
ended ended Year ended
30-Sept-07 30-Sept-06 31-Mar-07
unaudited unaudited audited
£'000 £'000 £'000
Foreign exchange translation
differences (731) (1,340) (2,300)
-----------------------------------------
Net expense recognised
directly in equity (731) (1,340) (2,300)
Profit for the period 4,126 2,210 3,921
-----------------------------------------
Total recognised
income for the period
attributable to equity
holders of the parent 3,395 870 1,621
=========================================
OPSEC SECURITY GROUP plc
Consolidated Balance Sheet
30-Sept-07 30-Sep-06 31-Mar-07
unaudited unaudited audited
£'000 £'000 £'000
ASSETS
Non-current assets
Property, plant and equipment 7,243 5,812 7,125
Intangible assets 10,375 12,166 10,846
Investments in joint ventures 670 1,490 920
Other investments 18 28 18
Deferred tax assets 6,359 3,253 3,194
-----------------------------------------
Total non-current assets 24,665 22,749 22,103
-----------------------------------------
Current assets
Inventory 2,596 2,109 2,729
Trade and other receivables 5,590 5,179 5,600
Cash and cash equivalents 1,265 2,715 3,077
-----------------------------------------
Total current assets 9,451 10,003 11,406
-----------------------------------------
-----------------------------------------
Total assets 34,116 32,752 33,509
-----------------------------------------
LIABILITIES
Current liabilities
Interest-bearing loans and
borrowings (34) (2,819) (81)
Deferred government grants - (10) -
Trade and other payables (6,753) (7,093) (8,834)
-----------------------------------------
Total current liabilities (6,787) (9,922) (8,915)
-----------------------------------------
Non-current liabilities
Interest-bearing loans and
borrowings (2,185) - (1,470)
-----------------------------------------
Total non-current liabilities (2,185) - (1,470)
-----------------------------------------
-----------------------------------------
Total liabilities (8,972) (9,922) (10,385)
-----------------------------------------
-----------------------------------------
Net assets 25,144 22,830 23,124
=========================================
EQUITY
Capital and reserves
Issued capital 2,669 2,669 2,669
Share premium 29,309 29,309 29,309
Translation reserve (1,982) (291) (1,251)
Retained earnings (4,852) (8,857) (7,603)
-----------------------------------------
Total equity attributable to
equity holders of the parent 25,144 22,830 23,124
=========================================
OPSEC SECURITY GROUP plc
Consolidated Statement of Cash Flows
Six months Six months
ended ended Year ended
30-Sept-07 30-Sept-06 31-Mar-07
unaudited unaudited audited
£'000 £'000 £'000
Cash flows from operating activities
Profit for the period 4,126 2,210 3,921
Depreciation 635 581 1,239
Amortisation of intangible assets 63 - 109
Profit on sale of investment - - (119)
Release of government grants - (11) (21)
Share based payment expense 394 300 413
Share of joint venture income (576) (2,230) (3,298)
Finance income (37) 8 10
Finance expenses 53 53 139
Income tax (3,267) 549 1,253
-----------------------------------------
Cash flows from operating
activities before working
capital movements 1,391 1,460 3,646
Movement in inventory 63 (159) (847)
Movement in debtors (56) (1,114) (1,626)
Movement in creditors (1,865) 662 2,711
-----------------------------------------
Cash flows
from operating
activities (467) 849 3,884
Interest paid (53) (53) (139)
Income tax
paid - overseas (17) (6) (86)
-----------------------------------------
Net cash (outflow)/inflow from
operating activities (537) 790 3,659
-----------------------------------------
Cash flows from investing activities
Acquisition of subsidiary
undertaking 5 (7,485) (7,297)
Acquisition of property,
plant and equipment (919) (1,543) (3,695)
Proceeds from sale of investment - - 130
Dividends received from joint venture 786 1,061 2,589
Interest received 37 (8) (10)
-----------------------------------------
Net cash outflow from
investing activities (91) (7,975) (8,283)
-----------------------------------------
Cash flows from financing activities
Payment of finance lease
liabilities - (10) (26)
Proceeds from borrowings 715 130 1,470
Proceeds from sale of own shares 3 - 133
Dividends paid (506) - -
Purchase of own shares (1,266) (175) (748)
-----------------------------------------
Net cash (outflow)/inflow from
financing activities (1,054) (55) 829
-----------------------------------------
Net decrease in cash and
cash equivalents (1,682) (7,240) (3,795)
Cash and cash equivalents at
the start of the period 3,073 7,568 7,568
Effect of exchange rate
fluctuations on cash (126) (432) (700)
-----------------------------------------
Cash and cash equivalents at
the end of the period 1,265 (104) 3,073
=========================================
OpSec Security Group plc
Notes to the Interim Statement
1. Basis of preparation
This interim financial information has been prepared applying the accounting
policies that were applied in the preparation of the Company's published
consolidated financial statements for the year ended 31st March 2007.
2. Status of financial information
The interim information for the six months ended 30th September 2007 has not
been audited or reviewed by the auditors.
The comparative figures for the year ended 31st March 2007 are not the Company's
statutory financial statements for that financial year. Those accounts have been
reported on by the Company's auditors and delivered to the Registrar of
Companies. The report of the auditors was unqualified, did not include reference
to any matters to which the auditors drew attention by way of emphasis without
qualifying their report and did not contain a statement under section 237(2) or
(3) of the Companies Act 1985.
3. Segment Information Six months Six months
ended ended Year ended
30-Sep-07 30-Sep-06 31-Mar-07
unaudited unaudited audited
£'000 £'000 £'000
a) Revenue by geographic segment
American operations 9,155 8,063 19,315
European operations 8,015 7,278 15,824
Intersegment sales (851) (899) (2,005)
--------- ---------- ---------
16,319 14,442 33,134
========= ========== =========
b) Revenue by market sector
Banknote and high
security documents 4,913 4,847 10,795
Brand protection 7,153 6,092 12,645
ID Technologies 3,859 3,302 9,081
Other 394 201 613
--------- ---------- ---------
16,319 14,442 33,134
========= ========== =========
c) Operating profit by geographic segment
American operations 733 793 2,696
European operations 1,163 1,026 2,057
Joint Ventures 576 2,230 3,298
Corporate costs (1,534) (1,229) (2,619)
Intangible
amortisation (63) - (109)
--------- ---------- ---------
Operating profit 875 2,820 5,323
========= ========== =========
4. Operating expenses
Six months Six months
ended ended Year ended
30-Sep-07 30-Sep-06 31-Mar-07
unaudited unaudited audited
£'000 £'000 £'000
Distribution and Selling Costs
Selling and marketing costs 1,994 1,922 4,169
--------- ---------- ---------
Administrative Expenses
Technical support 421 454 1,017
Research and
development costs 938 630 1,499
Administrative costs 3,101 2,656 5,853
Intangible
amortisation 63 - 109
--------- ---------- ---------
4,523 3,740 8,478
--------- ---------- ---------
Total Operating
Expenses 6,517 5,662 12,647
========= ========== =========
5. Share of operating profit of joint ventures
The share of operating profit of joint ventures represents the Group's
share of the results of 3dcd for the six months ended 30th September 2007.
The operating profit of 3dcd is subject to taxation in the accounts of its
partners.
6. Finance income and expense
Six months Six months
ended ended Year ended
30-Sep-07 30-Sep-06 31-Mar-07
unaudited unaudited Audited
£'000 £'000 £'000
Financial income
Interest income 33 69 96
Foreign exchangelosses/(gains)
on foreign currency deposits 4 (77) (106)
--------- ---------- --------
37 (8) (10)
--------- ---------- --------
Financial expenses
Interest expense (64) (53) (139)
Foreign exchange losses on
foreign currency borrowings 11 - -
--------- ---------- --------
(53) (53) (139)
--------- ---------- --------
7. Taxation
Charges for taxation relate to State taxes of £17,000 in America. These charges
have been offset by the recognition of a deferred tax asset of £3,284,000 in the
Group's UK based companies which are now in a position to utilise past trading
losses against future trading profits.
8. Earnings per share
The calculations of earnings per share are based upon the following earnings and
numbers of shares.
Six months Six months
ended ended Year ended
30-Sep-07 30-Sep-06 31-Mar-07
unaudited unaudited audited
Earnings £'000 £'000 £'000
Earnings for the financial period 4,126 2,210 3,921
Intangible amortisation 63 - 109
Share-based payments 394 300 413
Deferred tax credit (3,284) - -
---------- --------- ---------
Adjusted earnings for
the financial period 1,299 2,510 4,443
========== ========= =========
Weighted average number of shares No. of No. of No. of
shares shares shares
For Basic earnings per share 50,375,875 50,911,445 50,766,763
========== ========= =========
For Diluted earnings per share 54,180,401 53,362,516 54,406,383
========== ========= =========
9. Share capital and reserves
Reconciliation of movement in capital and reserves attributable to equity
shareholders
Attributable to equity shareholders
Share Share Translation Retained Total
capital premium reserve earnings
£'000 £'000 £'000 £'000 £'000
At 31st March 2,669 29,309 (1,251) (7,603) 23,124
Total recognised
income and expense - - (731) 4,126 3,395
Share based payments - - - 394 394
Own shares sold - - - 3 3
Own shares purchased - - - (1,266) (1,266)
Dividends paid - - - (506) (506)
---------------------------------------------------
At 30th September 2007 2,669 29,309 (1,982) (4,852) 25,144
===================================================
The interim report has been sent to all shareholders. Further copies are
available to members of the public from the Company's registered office, 40
Phoenix Road, Crowther, District 3, Washington, Tyne & Wear, NE38 0AD. The
interim report is also available on the Company's website, www.opsecsecurity.com.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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