RNS Number:0280O
Orbis PLC
28 July 2003
Date: 28 July 2003
Contact: John Leach, Chairman
Michael Holmes, Chief Executive
Orbis PLC 01895 465 500
David Bick/Chris Steele
Holborn Public Relations 020 7929 5599
david.bick@holbornpr.co.uk
ORBIS PLC
UNAUDITED PRELIMINARY RESULTS
FOR THE YEAR ENDED 31 MARCH 2003
Highlights
* Turnover of #43.1 million (2002: #43.9 million)
* Operating profit before amortisation of goodwill and intangible
asset and operating exception items #4.0 million (2002: #6.0 million)
* Operating loss after amortisation of goodwill and intangible
asset and operating exception items #3.1 million (2002: #0.9 million)
* Interest payable and similar charges #4.2 million (2002: #7.4
million)
* Loss on ordinary activities before taxation #7.3 million (2002:
#8.4 million)
* Cash flow from operations #9.8 million (2002: #5.9 million)
* Basic loss per share 4.28 pence (2002: 5.47 pence)
* Earnings per share from continuing operations before
amortisation of goodwill and intangible asset and operating exception items 0.33
pence (2002: 0.14 pence)
CHAIRMAN'S STATEMENT
RESULTS AND DIVIDEND
The group achieved an operating profit on continuing operations (before the
amortisation of goodwill and intangible asset and operating exceptional items)
of #5.0 million (2002: #6.0 million) on turnover on continuing operations of
#41.9 million (2002: #42.8 million). The operating loss on continuing
operations, after the amortisation of goodwill and intangible asset and
operating exceptional items, was #1.3 million (2002: #0.9 million).
The pre-tax loss for the year was #7.3 million (2002: #8.4 million) after an
operating loss on discontinued operation of #1.7 million and interest charge of
#4.3 million.
Earnings per share from continuing operations (before the amortisation of
goodwill and intangible asset and operating exceptional items) were 0.33 pence
(2002: 0.14 pence). The basic loss per share was 4.28 pence (2002: 5.47 pence).
The board will not be declaring a dividend for the year ended 31 March 2003.
New management controls resulted in an improved cash inflow from operating
activities of #9.8 million for the year compared to #5.9 million in the year
ended 31 March 2002.
The operating exceptional items reported in continuing operations of #1.8
million include the professional costs relating to refinancing and
reorganisation and costs relating to the closure of business sites, redundancies
and interim management.
Following the year end, Ernst & Young LLP resigned as auditors and the board
appointed KPMG Audit Plc.
EGM
A circular to shareholders is being posted today in respect of the proposals for
the financial restructuring of the business, including a reduction in the
existing senior facilities, the issue of convertible preference shares, a share
re-organisation, transfer to AIM and notice of an Extraordinary General Meeting
to be held on 20 August 2003. Further details are contained in an additional
announcement made to the London Stock Exchange today.
REVIEW OF OPERATIONS
As stated in the Interim Report in November 2002, a significant amount of work
has been undertaken during the period to improve operational structures and
remove loss-making activities, which has impacted on the profitability of the
group for the year.
During 2002, the expansion of Fernlee's business led to a number of control
issues which were identified by the group. These had a negative effect on the
profits of the group for the period. Action was taken to reduce costs and
significantly reduce non-profitable contracts, and with effect from January
2003, the operation was closed and the remaining business was merged into OPP's
UK operations.
Following the strategic review of Orbis Monitoring Services during the year, a
decision was made to cease future development of the vehicle tracking business
at the end of December 2002. Current contracts have subsequently been
transferred to a third party. The retained business has been transferred to OPP
to operate principally as the alarm monitoring centre for the UK business. It
will also continue to promote sales of the Cybertrak lone worker protection
solution aided by its association with Vodafone and the OGC.
The major restructuring of the group's UK void property protection business has
continued during the year and the new senior management team is focused on
improving efficiencies and enhancing revenue streams. New monitoring and
reporting mechanisms are being implemented to improve control of the
decentralised branch structure and a new management training programme has been
introduced.
Whilst the business suffered a significant number of major contract losses in
the first half year due to price competition and also customer uncertainty
regarding the group's ongoing financial position, a number of contract
extensions were granted towards the end of the financial year. The business is
now focusing on establishing partnerships with major customers to provide a
range of services for void property and the new management team has been
appointed to implement this strategy.
The European operations performed strongly throughout the year with particularly
improved performances in Germany and the Netherlands. The new business
established in Poland in 2001 is progressing well and further geographic
expansion is planned in France and in new markets in the future.
THE BOARD
There have been major changes to the board during the year ended 31 March 2003
which have been reported previously. Mike Warriner joined the board on 1 April
2002 and Lisa Stone replaced Jeremy Sharman as a director in May 2002. John
Brebner was appointed as interim finance director from the end of May until
mid-October 2002 and I would like to thank him for all his efforts during his
tenure. I would also like to thank Jonathan Horton, who resigned from the board
in January 2003, for his contribution as a non-executive director over the past
4 1/2 years, and particularly for his hard work in taking on the role of acting
group chief executive for the first half of the financial year.
I would also like to welcome Michael Holmes, group chief executive, John Jukes,
group finance director, and Robert Morgan, non-executive director, who are
already providing significant new strength and expertise to the board.
EMPLOYEES
Our employees have continued to support the business during a further year of
uncertainty and change, and I would like to thank them all, on behalf of the
directors and the shareholders, for their hard work. The success of the group
in the future depends on their professionalism, dedication and loyalty.
PROSPECTS
The results for the year were in line with the board's expectations in light of
the major changes which were necessary during the period. The board believes
that the proposed financial restructuring will provide long-term support and
enable the company to implement its business plan over the next few years.
Unaudited Consolidated Profit & Loss Account
For the year ended 31 March
2003 2003 2003 2002 2002 2002
Before Operating TOTAL Before Operating TOTAL
operating exceptional operating exceptional
exceptional items exceptional items
items items
#000 #000 #000 #000 #000 #000
Turnover
Continuing operations 41,943 - 41,943 42,837 - 42,837
Discontinued operation 1,141 - 1,141 1,107 - 1,107
43,084 - 43,084 43,944 - 43,944
Operating profit/(loss)
Before amortisation of
goodwill and
intangible asset
Continuing operations 4,977 (1,776) 3,201 5,981 (2,321) 3,660
Discontinued operation (941) (201) (1,142) (5) - (5)
4,036 (1,977) 2,059 5,976 (2,321) 3,655
Amortisation of
goodwill and
intangible asset
Continuing operations (4,547) - (4,547) (4,523) - (4,523)
Discontinued operation (571) - (571) (28) - (28)
Operating profit/(loss)
Continuing operations 430 (1,776) (1,346) 1,458 (2,321) (863)
Discontinued operation (1,512) (201) (1,713) (33) - (33)
(1,082) (1,977) (3,059) 1,425 (2,321) (896)
Amounts written off (20) - (20) (153) - (153)
investments
Interest payable and similar (4,247) - (4,247) (4,522) (2,860) (7,382)
charges
Loss on ordinary activities (5,349) (1,977) (7,326) (3,250) (5,181) (8,431)
before taxation
Taxation on loss on ordinary (134) (1,068)
activities
Retained loss for the (7,460) (9,499)
financial year
pence pence
Basic loss per share (4.28) (5.47)
Earnings per share from 0.33 0.14
continuing operations before
the amortisation of goodwill
and intangible asset and
before operating exceptional
items
Diluted loss per share (4.28) (5.47)
Unaudited Consolidated Balance Sheet
As at As at
31 March 2003 31 March 2002
#000 #000
Fixed assets
Goodwill 64,911 68,515
Intangible asset - 464
Tangible assets 10,658 14,440
Investments 9 29
75,578 83,448
Current assets
Stocks 288 327
Debtors 11,433 12,735
Cash at bank 519 -
12,240 13,062
Creditors - amounts falling due within one year (71,989) (73,849)
Net current liabilities (59,749) (60,787)
Total assets less current liabilities 15,829 22,661
Creditors - amounts falling due after more than (698) (8)
one year
Provisions for liabilities and charges (150) (251)
14,981 22,402
Capital and reserves
Called up share capital 17,482 17,482
Share premium 32,436 32,436
Merger reserve 12,144 12,144
Profit and loss account (47,081) (39,660)
Equity shareholders' funds 14,981 22,402
Unaudited Consolidated Cash Flow Statement
Year ended Year ended
31 March 2003 31 March 2002
Note
#000 #000
Net cash inflow from operating activities 6 9,840 5,885
Returns on investment and servicing of finance
Bank and loan interest paid and similar charges (5,127) (7,259)
Interest on loan stock and convertible loan notes (140) (159)
(5,267) (7,418)
Tax paid (1,932) (541)
Capital expenditure and financial investment
Purchase of tangible fixed assets (2,144) (3,916)
Sale of tangible fixed assets 524 274
(1,620) (3,642)
Acquisitions and disposals
Purchase of subsidiary undertakings (net of cash acquired) - (840)
Purchase of intangible asset (50) (827)
(50) (1,667)
Net cash inflow/(outflow) before financing 971 (7,383)
Financing
Issue of ordinary share capital - 2,585
Costs of issue - (116)
New loans due within one year 2,775 2,400
Capital element of finance lease payments (47) (157)
Repayment of long term loans - (1,900)
Repayment of loan stock (2,775) -
Net cash (outflow)/inflow from financing (47) 2,812
Increase/(decrease) in cash 924 (4,571)
Unaudited Consolidated Statement of Total Recognised Gains and Losses
Year ended Year ended
31 March 2003 31 March 2002
#000 #000
Loss for the financial year (7,460) (9,499)
Exchange difference on retranslation of subsidiary net 1,369 (229)
assets
Exchange difference on loan (1,330) 229
Tax on exchange difference on loan - 15
Total recognised losses relating to the financial year (7,421) (9,484)
Unaudited Reconciliation of Movements in Shareholders' Funds
Year ended Year ended
31 March 2003 31 March 2002
#000 #000
Total recognised losses for the year (7,421) (9,484)
- 2,594
Issue of share capital
Net reduction in shareholders' funds (7,421) (6,890)
Opening shareholders' funds 22,402 29,292
Closing shareholders' funds 14,981 22,402
NOTES
1. BASIS OF PREPARATION
The financial information set out in this preliminary announcement does not
constitute the company's statutory accounts for the years ended 31 March 2003 or
2002. The financial information for 2002 is derived from the statutory accounts
for 2002 which have been delivered to the registrar of companies. The previous
auditors, Ernst & Young LLP, have reported on the 2002 accounts; their report
was unqualified and did not contain a statement under section 237(2) or (3) of
the Companies Act 1985. If the Proposals outlined below are approved by the
shareholders, the directors expect to finalise the statutory accounts for 2003
on the basis of the financial information presented in this preliminary
announcement and will deliver the statutory accounts to the registrar of
companies following the company's annual general meeting.
Going concern
The 2003 financial information has been prepared on a going concern basis which
the directors believe to be appropriate for the following reasons:
* The company currently operates within its existing senior debt
facilities. These facilities are short term in nature and mature on 31 July
2003. The directors recognised that the company would not be in a position to
repay the facilities and accordingly it has agreed a financial restructuring
package with its existing syndicate of banks ('the Senior Lenders) which will be
presented to shareholders at an Extraordinary General Meeting to be held on 20
August 2003 ('the Proposals');
* The Proposals are that, inter alia, (a) #15 million of existing
senior debt will be exchanged for #15 million of new convertible preference
shares issued to the Senior Lenders and (b) a new five year senior debt facility
for #50.0 million will be put in place. The Senior Lenders have agreed a
temporary suspension of their rights under the existing senior facilities to
provide ordinary shareholders with the opportunity of voting in favour of the
Proposals.
The directors consider that the approval and implementation of the Proposals
will enable the company and group to continue to operate and meet its debts as
they fall due for the foreseeable future. However, the directors recognise the
inherent uncertainty regarding the approval of the Proposals. The financial
information does not include any adjustments that would result from a failure to
obtain shareholders' approval to the Proposals. If the basis of preparation was
inappropriate, substantial adjustments would be necessary to the amounts
included in this financial information.
2. SEGMENTAL ANALYSIS
Turnover Net assets/(liabilities)
2003 2002 2003 2002
#000 #000 #000 #000
Continuing operations
Void property protection 41,943 42,837 16,217 22,495
Discontinued operation
Void property protection 1,141 1,107 (1,236) (93)
43,084 43,944 14,981 22,402
Included within turnover of 'Void Property Protection' is #37.9 million
(2002: #38.8 million) rental income from operating leases.
3. OPERATING EXCEPTIONAL ITEMS
The operating exceptional items comprise the following:
2003 2002
#000 #000
Cost of strategic review and termination of bid discussions - 1,096
Professional costs relating to refinancing and reorganisation 586 634
Impairment of operating assets - 917
Reversal of Orbis Group Bonus Plan - (326)
Costs relating to closure of business sites, redundancies and 1,391 -
interim management
1,977 2,321
Following the breach in banking covenants in September 2001 the company
has incurred professional costs connected with the refinancing and
reorganisation of the group.
The reorganisation involved the closure of business sites within the
group and the redundancy of employees. Changes in senior management within the
group required the use of interim management before the appointment of the
current Group Chief Executive and Group Finance Director.
4. TAXATION ON LOSS ON ORDINARY ACTIVITIES
Current tax 2003 2002
#000 #000
UK corporation tax
Current tax on income for the year - -
Adjustments in respect of prior periods (1,300) -
(1,300) -
Foreign tax
Current tax on income for the year 1,434 1,068
Adjustments in respect of prior periods - -
Total current tax 134 1,068
Deferred tax - -
Tax on loss on ordinary activities 134 1,068
4. TAXATION ON LOSS ON ORDINARY ACTIVITIES (continued)
Factors affecting tax charge for the year
The tax assessed for both years is higher than the standard rate of
corporation tax in the UK (30%). The differences are explained below:
2003 2002
#000 #000
Loss on ordinary activities before tax (7,326) (8,431)
Loss on ordinary activities multiplied by the standard rate of (2,198) (2,529)
corporation tax in the UK of 30%
Expenses not deductible for tax purposes (including goodwill 1,675 2,423
amortisation)
Depreciation in excess of capital allowances 1,389 1,044
Higher tax rates on overseas earnings 212 130
Loss carried forward 356 -
Adjustment to tax charge in respect of previous periods (1,300) -
Current tax charge for period (see above) 134 1,068
5. LOSS PER SHARE
Basic loss per share has been calculated on the loss after tax for the year and
the weighted average number of ordinary shares (excluding shares owned by the
company's share ownership trust) in issue during the year as follows:
Year ended 31 March 2003 Year ended 31 March 2002
Earnings #000 (7,460) (9,499)
Weighted average shares in issue (million) 174.4 173.6
Basic loss per share (pence) (4.28) (5.47)
Earnings per share from continuing operations before amortisation of goodwill
and intangible and before operating exceptional items have been presented in
addition to basic earnings per share as defined by FRS 14 since, in the opinion
of the directors, this provides shareholders with a more appropriate
representation of the earnings derived from the group's present businesses. It
can be reconciled to basic loss per share as follows:
Earnings/(loss) per share Earnings/(loss)
Year ended 31 Year ended 31 Year ended Year ended
March 2003 March 2002 31 March 31 March
2003 2002
(pence) (pence) #000 #000
Basic loss per share (4.28) (5.47) (7,460) (9,499)
Amortisation of goodwill and intangible asset 2.61 2.61 4,547 4,523
Loss per share from discontinued operation 0.98 0.01 1,713 33
Loss per share from continuing operations before the (0.69) (2.85) (1,200) (4,943)
amortisation of goodwill and intangible asset
Loss from operating exceptional items 1.02 2.99 1,776 5,181
Earnings per share from continuing operations before 0.33 0.14 576 238
the amortisation of goodwill and intangible asset
and before operating exceptional items
5. LOSS PER SHARE (continued)
The diluted loss per share, as defined in FRS 14, has been calculated on the
following basis:
Year ended 31 March 2003 Year ended 31 March 2002
Diluted loss #000 (7,460) (9,499)
Weighted average number of shares in (million) 174.4 173.6
issue
Share options (million) - -
Diluted weighted average number of shares in (million) 174.4 173.6
issue
Diluted loss per share (pence) (4.28) (5.47)
6. RECONCILIATION OF OPERATING LOSS TO NET CASH INFLOW FROM OPERATING
ACTIVITIES
Year ended 31 March Year ended 31 March
2003 2002
#000 #000
Operating loss (3,059) (896)
Depreciation 5,599 5,630
Loss on disposal of fixed assets 136 1
Amortisation of goodwill and intangible asset 5,118 4,551
Decrease in stocks 39 17
Decrease/(increase) in debtors 1,817 (488)
Increase/(decrease) in creditors 190 (2,231)
Net cash inflow from operating activities before disposal costs 9,840 6,584
Costs of disposal - (699)
Net cash inflow from operating activities 9,840 5,885
This information is provided by RNS
The company news service from the London Stock Exchange
END
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