Robotic Technology Systems PLC
26 March 2008
Robotic Technology Systems PLC
Preliminary Results for the year ended 31 December 2007
RTS is a high technology business supplying engineering solutions, products and
integrated systems to automate scientific and industrial processes. RTS today
announces its preliminary results for the year ended 31 December 2007.
Continuing Group
Prepared under adopted 2007 2006
IFRS's £M £M
Revenue 11.2 15.5
Operating loss before ' (2.0) (1.6)
exceptional' items
'Exceptional' costs (2.8) (1.6)
'Exceptional' income - 1.4
Loss after taxation before ' (1.1) (1.5)
exceptional' items
Loss after taxation (3.9) (1.7)
Loss per share (6.24)p (2.75)p
Net cash 3.7 3.6
Key Points
• The Group results are broadly in line with expectations, with a continuing
group loss before 'exceptionals' of £1.1m (2006: loss of £1.5m).
• Starting the year with £3.6m of cash, the group's cash position improved to
£3.7m after the payment of a special interim dividend of £1.2m. The second
half operational cash flow improved to an inflow of £0.9m, compared to an
outflow of £1.5m for the first half of the year.
• Group central costs reduced to £0.6m (2006: £1.2m). With the reductions in the
second half of the year the group has now achieved its annual target of £0.4m
per annum.
• Following an impairment review intangible assets have been written down by
£1.7m related to the Life Science business. This is part of the £2.8m of
'exceptional' administrative expenses, which also includes £0.3m of legal
costs related to the ongoing contract dispute in Flexible Systems, and
restructuring costs in Life Science and Group of £0.3m. This restructuring is
expected to generate annualised savings of £0.9m in 2008.
• Cash and non-operating assets equate to 11.6 pence per share at the end of the
period.
• The Board recommends the payment of a special final dividend of 2 pence per
share.
Chris Brown, Chairman of RTS, said:
'With a reduced cost base in Life Science, a more focused strategy, and new
products now available we expect to see an improving performance in 2008. Due to
the relatively low opening order book we expect this to be biased towards the
second half.
Flexible Systems enters 2008 with a higher order book and stronger prospect list
than 2007, including lower risk repeat orders. We therefore anticipate a return
to profitability driven by sales growth.
We anticipate the group's strong net cash position should continue in 2008,
through both the improving performance of the operating businesses and the
further realisation of non-operating assets into cash. The Board's intention is
to continue to return money to shareholders whilst maintaining sufficient funds
within the Group to develop growth opportunities in the businesses.
We therefore recommend the payment of a special final dividend of 2 pence per
share; this will take the total dividend paid since November 2005 to 10 pence
per share.'
26 March 2008
Enquiries:
Robotic Technology Systems PLC Tel: 0161 777 2000
Chris Brown, Chairman
Jon Sharrock, Finance Director
College Hill Tel: 020 7457 2020
Matthew Smallwood
Collins Stewart Europe Limited Tel: 020 7523 8350
Mark Connelly, Stewart Wallace
Chairman's Statement
Introduction
Following the detailed review in 2007 we have continued to make the necessary
changes to the group and have focused on cost reduction and developing our
capabilities to fit with the key skill sets inherent within the business.
Consistent with its stated strategy it remains the Boards' intention to continue
to return surplus cash to shareholders.
Business Results
The overall group turnover for 2007 reduced to £11.2m (2006 continuing
operations: £15.5m). Flexible Systems despite a stronger second half was below
expectations at £3.8m (2006: £5.4m). Life Science turnover fell to £7.4m (2006:
£10.1m), the reduction reflecting the continued difficult trading conditions as
previously reported.
Flexible Systems made an operating loss before 'exceptionals' of £0.6m (2006:
£nil profit), the loss attributable to timing of key orders and reduced margin
from the first-off of several high value repeatable projects. However, it
consequently enters 2008 in a stronger position than last year with an order
book of £1.5m (2006: £1.0m) and a prospect list containing some significant low
risk repeat orders.
The Life Science order book fell during the period to £3.5m (2006: £5.3m). With
a more positive prospect list and new products to be launched throughout the
year we expect to see an improving position in 2008. The business made an
operating loss before 'exceptional' items of £0.8m (2006: loss of £0.4m). The
loss includes £0.3m of development costs (2006: £nil costs) and does not reflect
the full year effect of the £0.7m of annualised savings made in the last quarter
of the year.
The group recorded 'exceptional' operating costs of £2.8m in 2007. In the Life
Science business, following a review of the carrying value of intangible assets,
we have decided to write down the capitalised development costs, previously in
the balance sheet at £1.7m.
In Flexible Systems the business continues to pursue monies due to it from a
system delivered in 2006, incurring £0.3m 'exceptional' legal costs in the
period. The conclusion of this process is now expected in the second half of
2008 and we remain confident in the successful outcome of our claim.
Other 'exceptional' operating costs totalling £0.8m related to the restructuring
in Life Science and Group and the impairment of non-operating assets and
goodwill.
Group central costs before 'exceptionals', at £0.6m, were reduced significantly
from the 2006 cost of £1.2m, but do not reflect the full year effect of cost
reductions made in the year. Group central costs are now operating at its annual
target level of £0.4m.
The group loss after taxation was £3.9m (2006: loss from continuing operations
of £1.7m). This resulted in a loss per share of 6.24 pence (2006: loss per
share from continuing operations of 2.75 pence). The continuing group loss
after taxation before 'exceptionals' was £1.1m (2006: loss from continuing
operations before 'exceptionals' of £1.5m), leading to a loss per share pre '
exceptionals' of 1.73 pence (2006: loss per share from continuing operations
before 'exceptionals' of 2.47 pence).
'Exceptional' items are defined in note 1 to the financial statements.
Cash management and the realisation of non-operating assets
Starting the year with £3.6m of cash, the group's cash position improved to
£3.7m after the payment of a special interim dividend of £1.2m.
Following a first half outflow from operations of £1.5m, there has been a
significant improvement in the second half of the year to record an inflow of
£0.9m.
There was continued cash inflow from the Doerfer loan notes with $3.2m (£1.6m)
repaid in the period consisting of interest of £0.7m and capital of £0.9m, this
left the loan notes with a remaining book value at the year end of £3.1m. With
the final U.S. land holding under offer at £0.4m, the closing year end balance
sheet contained cash and assets to be realised into cash valued at 11.6 pence
per share.
Dividends
In accordance with the Board's stated intention to return the proceeds of the US
assets to shareholders, a special interim dividend of 2 pence per share was paid
on 2 November 2007 to those shareholders on the register on 5 October 2007. In
consideration of the group's strong balance sheet position, and the continuing
collection of cash from non-operating assets, the Board recommends the payment
of a special final dividend of 2 pence per share. If approved the dividend will
be payable on 6 June 2008 to those shareholders on the register at the close of
business on 2 May 2008.
Outlook
With a reduced cost base in Life Science, a more focused strategy, and new
products now available we expect to see an improving performance in 2008. Due to
the relatively low opening order book we expect this to be biased towards the
second half.
Flexible Systems enters 2008 with a higher order book and stronger prospect list
than 2007, including lower risk repeat orders. We therefore anticipate a return
to profitability driven by sales growth.
We anticipate the group's strong net cash position should continue in 2008,
through both the improving performance of the operating businesses and the
further realisation of non-operating assets into cash. The Board's intention is
to continue to return money to shareholders, while maintaining sufficient funds
within the Group to develop growth opportunities in the businesses.
Chris Brown
Chairman
26 March 2008
Operating review
RTS is structured into two market-focused businesses which are based in the UK
and support their customers wherever they operate internationally.
RTS Life Science
Performance in 2007
Following a detailed review of our position in 2007 we have continued to make
the changes necessary to align the business with market sectors that we believe
have the highest growth opportunities at acceptable risk levels, and
importantly, fit within our core competencies.
2007 was a significant year for RTS Life Science. As anticipated, the difficult
trading conditions combined with the completion of several high profile
technically challenging projects continued to effect financial performance with
turnover reduced to £7.4m (2006: £10.1m), and an operating loss before
exceptional costs of £0.8m (2006: loss of £0.4m)
This loss includes development costs of £0.3m and does not reflect the full
annualised effect of cost savings of £0.7m made in the final quarter.
During the second half of 2007 we refined our strategy by applying increased
focus and resources to our primary area of core competence, sample management,
and at the same time reducing our participation in the custom designed robotic
platform solutions business. The technical risk associated with such projects is
increasingly disproportionate to the profit opportunity that this market offers.
We will continue however to support our key clients and their installed systems,
and to deliver repeatable solutions.
We remain confident in our Drug Delivery Automation and Customer Support unit
strategies and will continue to pursue these as previously outlined.
Our overall vision remains unchanged, which is to build a sustainable, growing
business supplying automation to the Life Sciences by developing business units
that are aligned with market segments and deliver effective, reliable products
and solutions based on an excellent understanding of our clients' needs.
Markets and technologies
Sample management is the process of storing and retrieving high value samples
for research activities. It is what RTS Life Science is best known for in the
pharmaceutical market.
We have a major asset in our impressive customer list, which includes many of
the top ten pharmaceutical companies who use RTS equipment to manage their
compound libraries on a daily basis. Such equipment is at the heart of our
customers' drug discovery programmes and represents a significant asset for
them. We continue to develop, expand, add new technology and provide additional
support services for our customers ensuring that their capital investments
continue to deliver value and also meet their changing business needs.
In the period, we successfully completed delivery of a major project to GSK, one
of our largest clients. This system offers a novel solution for compound
management using robotics, proprietary third party equipment and the latest
technology in non-contact liquid dispensing instrumentation, which generates
considerable advantages in terms of cost and quality. We anticipate that
technology spin outs from this project will lead to additional business as the
level of interest shown by the market is encouraging.
We successfully delivered two additional major storage systems to new US based
customers, and we continue to be competitive in larger scale projects. The
market dynamics indicate however that these large projects are limited, and
growth potential is higher in the small to medium storage capacity market.
In 2007, this lower capacity market has been price competitive, especially in
the US due to the weakness of the dollar and strong indigenous competition. We
plan to address this in 2008 through improvements to both our SmaRTStoreTM and
medium sized storage offering.
We continued to invest in the development of our new small Blood Fractionation
System ABF200/500 for the Biobanking market. Based on RTS's proprietary 'vision
system' technology this unique product, with patent pending status, is due to be
launched at two showcase events in Europe and the US during April and May
respectively. Interest from the market has been good with one US client already
placing an order during the development phase.
Biobanking is a rapidly expanding market and blood fractionation, specifically
separation of the buffy coat layer, is a bottleneck in terms of cost and time,
and is also potentially hazardous. This process is currently performed manually
and requires well trained staff to get high quality results. The ABF 200/500
products will reduce labour, and dramatically improve reliability and
reproducibility of fractionated blood samples.
The new Drug Delivery Automation business made good progress throughout 2007,
with over 30% growth in order input. A key driver was the introduction of a
stratified pharmaceutical testing offering, with new ranges of 'Benchtop' and
semi-automated 'Walkaway Specialist' systems to complement the proven fully
automated 'Process Master' range.
Demand for the 'Walkaway Specialist' range was particularly strong, allowing RTS
to penetrate new business outside the traditional client pool. Research and
development investment yielded a patent pending solution for high throughput
sample preparation, demonstrating over 90% time savings and 90% reduction in
waste compared to established solutions. The technology is being commercialised
in partnership with a major pharmaceutical company, with a staged product launch
and commercial introduction planned in 2008.
With these initiatives, and additional sales resource added to the unit in 2007,
we are confident of continued growth in this business unit in 2008.
In the Service and Support business unit we strengthened our US team in
California and the Mid West, to provide additional account management and
support services, a strategy that we have used cost effectively on the East
Coast of the United States. Overall, the unit has performed to plan and produces
a stable recurring revenue base to the company. Our attention is now on the
development of our European capability to support our growing installed base of
high value equipment.
Outlook
We will continue to develop our sample management, drug delivery automation and
support services business units, while assessing complementary opportunities and
strategic alliances, where synergies have the potential to be exploited. With
the reductions to our cost base, a strong focus on our core competencies and
continued investment in product development, we believe that the medium term
outlook is more encouraging.
Continued investments in new product development and an initial low order intake
in the first half of 2008 are anticipated to make way for performance
improvements in the second half of the year, as the impact of new product sales
are realised.
RTS Flexible Systems
Performance in 2007
In 2007 Flexible Systems secured some strategically important orders within the
UK bakery market, including a contract to develop flexible end-of-line bread
packing automation solutions. This concept has considerable repeat potential
throughout the bakery industry both in the UK and abroad. In addition to the
food industry we continued to advance our plans to develop new opportunities in
Industrial Automation sales. This resulted in a significant repeat contract to
automate the packaging of contact lenses.
Due to the delays in placement of key orders, as previously noted, Flexible
Systems sales fell in 2007 to £3.8m (2006: £5.4m). This lower activity and
reduced margin from first-off repeat orders led to an operating loss before '
exceptional' items of £0.6m (2006: nil). However, the business enters 2008 with
an improved order book of £1.5m (2006: £1.0m), and with a stronger prospect list
than the beginning of 2007.
Flexible Systems took further steps to improve engineering performance and
project management in 2007. The changes in structure of the engineering team
introduced during 2006 combined with additional training and staff development
are beginning to take effect.
In 2008 we intend to continue to develop our technical capability with the
implementation of engineering process improvements, and strengthen our risk
management by the introduction of a key recruit in our technical department.
Markets & applications
The Food Industry
Whilst there are increasing environmental pressures on all manufactures to
reduce product packaging. In particular, multiple opportunities exist in the
food and consumer goods industries, including bakery, dairy and convenience
foods. Where flexible, cost effective solutions for high speed end of line
picking and packing applications remain under exploited. Significant potential
for robotic automation exists and is an excellent match for Flexible Systems
capabilities.
Industrial Automation
The initiative to find additional markets to capitalise on our skills and
technology as part of our ongoing strategy for growth is continuing. The market
for industrial automation is a mature segment where engineering and production
process expertise are critical success factors.
Working with our colleagues in Life Science and capitalising on our unique
vision based technology we have identified new markets with existing
pharmaceutical clients. With further repeat contracts also expected we
anticipate continued growth in the consumer electronics and healthcare products
packaging markets in 2008.
Advanced Robotics
As recently announced in the press, the UK government has committed to the
continued use of nuclear power. Nuclear de-commissioning will therefore remain a
long term requirement. RTS continues to work with INS Innovations in this area
by providing specialist remote handling expertise and robotic systems. During
2007 we saw a growing level of simulation demonstrator work that we anticipate
in 2008 will lead to more significant orders for robotic waste clean up systems.
The technical strengths required to operate in this market are also transferable
to our defence work, where we have continued to provide RTS advanced software
for the MoD's latest bomb disposal robot fleet. This has also allowed the
development of exciting new spin out technologies that will further add to our
revenue from this area.
Our aim is to grow the business in both sectors by strengthening these existing
relationships and to promote our expertise in providing high quality and
innovative solutions.
Outlook
Although order intake reduced in 2007, we enter 2008 with a higher order book,
and a prospect list containing high quality repeat contracts in the food and
consumer packaging markets.
With the anticipation of further progress in Advanced Robotics and new areas in
consumer goods packaging, we are therefore confident of sales growth and a
return to profitability.
Chris Brown
Chairman
26 March 2008
Group income statement for the year ended 31 December 2007
Year ended Year ended
31 December 31 December
2007 2006
£'000 £'000
Continuing Operations Notes
Revenue 2 11,189 15,476
Cost of sales (8,414) (11,134)
Gross profit 2,775 4,342
Distribution costs (1,404) (1,721)
Administrative expenses (6,262) (5,941)
Other operating income 114 124
Operating Loss (4,777) (3,196)
Operating loss before exceptional items (1,962) (1,637)
Exceptional items included in administrative
expenses above 3 (2,815) (1,559)
Loss before interest and taxation 2 (4,777) (3,196)
Finance income 4 965 419
Exceptional finance income 4 - 1,385
Total finance income 965 1,804
Finance expenses 5 (250) (710)
Net finance income 715 1,094
Loss before taxation (4,062) (2,102)
Taxation 171 397
Loss for the period, attributable to equity
shareholders of the parent (3,891) (1,705)
Discontinued Operations
Profit for the period, attributable to equity
shareholders of the parent - 588
Total loss for the year attributable to equity
shareholders of the parent (3,891) (1,117)
Earnings/(loss) per share
Basic and diluted loss per share from 6
continuing operations (6.24)p (2.75)p
Basic and diluted earnings per share from 6
discontinued operations - 0.95p
Total basic and diluted loss per share
attributable to equity shareholders of the
parent (6.24)p (1.80)p
Group statement of changes in equity for year ended 31 December 2007
Group Share Share Currency Retained Minority Total
capital premium translation earnings interest
reserve
£'000 £'000 £'000 £'000 £'000 £'000
Dividend in specie - - - (1,817) - (1,817)
Share options - - - (104) - (104)
Issue of new shares 10 646 - - - 656
Exchange differences - - (128) - - (128)
Net income/(expense) recognised
directly in equity 10 646 (128) (1,921) - (1,393)
Loss for the year - - - (1,117) - (1,117)
Total recognised income and 10 646 (128) (3,038) - (2,510)
(expense)
Opening shareholders' funds at
1 January 2006 613 34 - 16,476 15 17,138
Closing shareholders' funds at 623 680 (128) 13,438 15 14,628
31 December 2006
Group Share Share Currency Retained Minority Total
capital premium translation earnings interest
reserve
£'000 £'000 £'000 £'000 £'000 £'000
Share options - - - 20 - 20
Exchange differences - - 2 - - 2
Dividend paid - - - (1,247) - (1,247)
Net income/(expense) recognised
directly in equity - - 2 (1,227) - (1,225)
Loss for the year - - - (3,891) - (3,891)
Total recognised expense - - 2 (5,118) - (5,116)
Opening shareholders' funds at
1 January 2007 623 680 (128) 13,438 15 14,628
Closing shareholders' funds at 623 680 (126) 8,320 15 9,512
31 December 2007
Group balance sheet at 31 December 2007
31 December 31 December
2007 2006
Notes £'000 £'000
Non current assets
Property plant and equipment 793 781
Intangible assets 7 1,359 3,823
Other receivables 1,541 4,203
Deferred tax asset 371 371
Total non current assets 4,064 9,178
Current assets
Inventories 166 570
Current tax receivable 11 394
Trade and other receivables 8 6,275 6,741
Cash and cash equivalents 3,708 3,566
Assets classified as held for sale 428 514
Total current assets 10,588 11,785
Total assets 14,652 20,963
Current liabilities
Trade and other payables (4,264) (5,362)
Total current liabilities (4,264) (5,362)
Non current liabilities
Other liabilities (379) (419)
Provisions (497) (554)
Total non current liabilities (876) (973)
Total liabilities (5,140) (6,335)
Net assets 9,512 14,628
Equity
Share capital 623 623
Share premium 680 680
Currency translation reserve (126) (128)
Retained earnings 8,320 13,438
Total equity attributable to equity shareholders 9,497 14,613
Equity minority interest 15 15
Total equity attributable to equity shareholders of the
company 9,512 14,628
Group cash flow statement for the year ended 31 December 2007
Year ended Year ended
31 December 2007 31 December 2006
£'000 £'000
Continuing operations
Loss for the period (3,891) (1,705)
Adjusted for:
Taxation (171) (397)
Depreciation charge 132 411
Amortisation 335 269
Profit on sale of fixed asset (2) -
Impairment of intangible assets 2,109 1,720
Impairment of asset held for resale 80 -
Foreign exchange losses 63 259
Equity settled share based payment charges 20 132
Finance expense 250 710
Finance income (965) (1,804)
(2,040) (405)
Changes in working capital
Decrease/(increase) in inventories 404 (82)
Decrease in receivables 2,185 224
Decrease in payables (1,061) (2,612)
Decrease in provisions (55) (75)
Cash used in continuing operations (567) (2,950)
Discontinued operations
Profit for the period - 588
Adjusted for:
Depreciation charge - 55
Finance expense - 1
Finance income - (6)
Changes in working capital
Decrease in inventories - 13
Increase in receivables - (1,618)
Increase in payables - 3,962
Cash generated from discontinued operations - 2,995
Cash (used in)/generated from operations (567) 45
Group cash flow statement for the year ended 31 December 2007 (continued)
Year ended Year ended
31 December 2007 31 December 2006
£'000 £'000
Cash (used in)/generated from operations (567) 45
Finance expense paid (151) (38)
Finance income received 965 535
Taxation received/(paid) 553 (232)
Net cash generated from operating activities 800 310
Cash flows from investing activities
Payments to acquire property, plant and equipment (145) (228)
Payments to acquire intangible fixed assets (88) (821)
Receipt from sale of tangible fixed assets 2 20
Receipt of withholding tax due following disposal of - 660
properties
Receipt of cash held in escrow - 1,081
Receipt in respect of loan notes 872 1,487
Cash disposed on demerger of business - (1,345)
Net cash from investing activities 641 854
Cash flows from financing activities
Proceeds from issuance of ordinary shares - 419
Dividend paid (1,247) -
Net cash from financing activities (1,247) 419
Net increase in cash and cash equivalents 194 1,583
Cash and cash equivalents at beginning of period 3,566 2,242
Exchange losses on cash and cash equivalents (52) (259)
Cash and cash equivalents at end of period 3,708 3,566
Notes forming part of the financial statements for the year ended 31 December
2007
1. Basis of preparation
The Group financial statements are authorised for issue by the Board of
Directors on 26 March 2008. European Union law (EULAW) (IAS Regulation EC 1606/
2002) requires that the financial statements of the Group are prepared in
accordance with International Financial Reporting Standards as adopted by the EU
(EU-IFRS). The financial statements have been prepared on the basis of the
recognition and measurement requirements of EU-IFRS that are endorsed by the EU
and effective at 31 December 2007.
The financial information does not constitute the company's statutory accounts
for the years ended 31 December 2007 or 2006 (but is derived from those
accounts). Statutory accounts for 2006 have been delivered to the registrar of
companies, and those for 2007 will be delivered in due course. The auditors
have reported on those accounts; their reports were (i) unqualified, (ii) did
not include references to any matters to which the auditors drew attention by
way of emphasis without qualifying their reports and (iii) did not contain
statements under section 237 (2) or (3) of the Companies Act of 1985.
Exceptional items
Income or costs which are material and non-recurring, whose
significance is sufficient to warrant separate disclosure in the financial
statements, are referred to as exceptional items. These items are included and
separately identified within their relevant income statement category.
2. Segmental analysis
Primary reporting format - business segments
Income
Statement
Continuing Operations
Flexible Systems Life Science Other Total Discontinued Total
Operations
2007 2006 2007 2006 2007 2006 2007 2006 2007 2006 2007 2006
£'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000
Turnover 3,825 5,366 7,364 10,110 - - 11,189 15,476 - 9,758 11,189 25,234
Depreciation (9) (20) (69) (68) (54) (323) (132) (411) - (55) (132) (466)
Amortisation (35) (13) (298) (256) (2) - (335) (269) - - (335) (269)
Grant income - - - - 40 40 40 40 - - 40 40
Inter-co
transactions (53) (39) 62 47 (9) (8) - - - - - --
Operating
(loss)/profit
before
exceptional
charges (557) 14 (786) (444) (619) (1,207) (1,962) (1,637) - 703 (1,962) (934)
Exceptional
items included
in
administrative
expenses (308) - (1,919) (1,782) (588) 223 (2,815) (1,559) - (939) (2,815) (2,498)
Operating
(loss)/profit (865) 14 (2,705) (2,226) (1,207) (984) (4,777) (3,196) - (236) (4,777) (3,432)
Profit on
termination of
business
segments - - - - - - - - - 819 - 819
(Loss)/profit
before
interest and
taxation (865) 14 (2,705) (2,226) (1,207) (984) (4,777) (3,196) - 583 (4,777) (2,613)
Financing
income 715 1,094 - 5 715 1,099
Loss before
taxation (4,062) (2,102) - 588 (4,062) (1,514)
Taxation 171 397 - - 171 397
Loss for
period
attributable
to equity
shareholders
of the parent (3,891) (1,705) - 588 (3,891) (1,117)
2. Segmental analysis (continued)
Primary reporting format - business segments (continued)
Balance Sheet Continuing Operations
Flexible Systems Life Science Other Continuing Total
Operations
2007 2006 2007 2006 2007 2006 2007 2006
£'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000
Segment assets excluding 1,955 2,828 3,882 7,504 8,815 10,631 14,652 20,963
inter company balances
Segment liabilities (1,403) (1,486) (1,990) (3,041) (1,747) (1,808) (5,140) (6,335)
excluding inter company
balances
Net segment assets 552 1,342 1,892 4,463 7,068 8,823 9,512 14,628
Continuing operations
Flexible Systems Life Science Other Continuing & Total
Discontinued Operations
Cash flow 2007 2006 2007 2006 2007 2006 2007 2006
£'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000
Cash (used in)/generated (574) 417 36 1,256 (29) (1,628) (567) 45
from operating
activities
Add back inter company
movements (68) (497) (10) (1,690) 78 2,187 - -
Finance income/(expense) (14) 1 32 16 796 480 814 497
Taxation received/(paid) - - - (2) 553 (230) 553 (232)
Net cash generated from
operating activities (656) (79) 58 (420) 1,398 809 800 310
Payments to acquire (10) (15) (27) (59) (108) (154) (145) (228)
property, plant &
equipment
Payments to acquire (12) (106) (68) (715) (8) - (88) (821)
intangible fixed assets
Receipt from sale of - - 20 2 - 2 20
tangible fixed assets
Transfer of fixed assets - - - (593) - 593 - -
Cash flows from other - - - - 872 1,883 872 1,883
investing activities
Cash flows from
financing activities - - - - (1,247) 419 (1,247) 419
Less inter company
movements 68 497 10 1,690 (78) (2,187) - -
Net cash inflow/ (610) 297 (27) (77) 831 1,363 194 1,583
(outflow)
3. Exceptional administrative expenses / (income)
Year ended Year ended Year ended Year ended
31 December 2007 31 December 2006 31 December 2006 31 December 2006
Continuing
Total Operations Discontinued Total
Operations
£'000 £'000 £'000 £'000
Impairment of intangible fixed 2,109 1,600 - 1,600
assets
Impairment of assets held for sale 80 - - -
Restructuring costs 318 208 939 1,147
Legal costs 308 200 - 200
Other exceptional income - (449) - (449)
2,815 1,559 939 2,498
The exceptional administrative expenses consist of the following:
• The impairment of intangible assets of £2,109 consists of two items.
£1,704k relates to a write down in the carrying value of capitalised research
and development costs of SmaRTStoreTM and the 384 picking head technology in the
Life Science business. The Company intends to continue to support and develop
these products. However, they are no longer considered key growth opportunities
in their current form.
The remaining impairment of £405k represents the partial write down of goodwill
related to the Life Science business.
• The impairment of assets held for sale represents an £80k write down
in the book value of the land at Elm Hill Road, Tennessee. The land is currently
under offer at $887k (£428k), and the reduction reflects technical issues found
through the due diligence process.
• Restructuring costs of £318k consist of £215k in the Life Science
business and £103k in Group. The restructuring was completed in the last quarter
and is expected to generate annualised savings of £900k in 2008.
• The exceptional legal provision of £308k relates to a dispute with a
customer in our Flexible Systems business. The Company has reserved its right to
not disclose further information required by International Accounting Standard
37 on the grounds that it may prejudice the outcome of the claim.
• The other exceptional income in 2006 relates to the release of a
provision against a debt receivable from the Advanced Robotics Foundation ('
ARF'). AFR provided a secondary guarantee against a loan with a Group company,
RTS Networks. On 17 April 2002 the Company exercised its rights to call on the
guarantee. This income was received in 2007
4. Finance and similar income
Year ended Year ended Year ended Year ended
31 December 2007 31 December 2006 31 December 2006 31 December 2006
Total Continuing Discontinued Total
Operations Operations
£'000 £'000 £'000 £'000
Bank interest 248 132 6 138
Loan note interest 717 287 - 287
965 419 6 425
Exceptional interest:
Loan notes - 1,275 - 1,275
Other - 110 - 110
- 1,385 - 1,385
Exceptional interest receivable in 2006 of £1,385k consisted of two items:
• Exceptional loan note interest receivable of £1,275k relates to the
release of provisions against accrued interest on Loan Note B. The improved
position on Doerfer meant that this was deemed collectable at the contractual
discounted value.
• The other exceptional interest receivable of £110k related to the
interest due from the ARF debt. Further details regarding this debt are
explained in Note 29 Related Party Transactions.
5. Finance and similar expenses
Year ended Year ended Year ended Year ended
31 December 2007 31 December 2006 31 December 2006 31 December 2006
Total Continuing Discontinued Total
Operations Operations
£'000 £'000 £'000 £'000
Bank loans and overdrafts 151 36 1 37
Other interest - 1 - 1
Net currency movements on foreign
currency denominated assets and
liabilities 99 673 - 673
250 710 1 711
6. (Loss) / earnings per share
(Loss)/earnings per ordinary share has been calculated using the weighted
average number of shares in issue during the relevant financial years. The
calculations of both basic and diluted loss per share for the year are based
upon a loss after tax and minority interests of £3,891,000, (2006: loss of
£1,705,000 from continuing operations; £588,000 profit from discontinued
operations). The weighted average number of equity shares used in the basic
calculation is 62,335,374 (2006: 61,975,785).
The calculation for diluted loss per ordinary share is identical to that used
for the basic loss per share. This was because the exercise of share options
would have the effect of reducing the loss per ordinary share from continuing
operations and is therefore not dilutive under the terms of International
Accounting Standard 33 Earnings Per Share.
Year ended Year ended
31 December 2007 31 December 2006
Continuing operations
Loss for the year (£'000) (3,891) (1,705)
Exceptional costs (£'000) 2,815 1,559
Exceptional income (£'000) - (1,385)
Loss after tax before 'exceptional items' (£,000) (1,076) (1,531)
Discontinued operations
Profit for the year (£'000) - 588
Weighted average ordinary shares in issue 62,335,374 61,975,785
Year ended Year ended
31 December 2007 31 December 2006
Pence Pence
Continuing operations
Basic/diluted loss per share (6.24) (2.75)
Loss per share before 'exceptional items' (1.73) (2.47)
Discontinued operations
Basic/diluted earnings per share - 0.95
7. Intangible assets
Acquisition Software and Total
goodwill development costs
Group £'000 £'000 £'000
Cost
At 1 January 2006 3,762 3,402 7,164
Additions - 821 821
Transferred on demerger (1,027) - (1,027)
At 31 December 2006 and 1 January 2007 2,735 4,223 6,958
Additions - 88 88
Disposal - (108) (108)
At 31 December 2007 2,735 4,203 6,938
Amortisation and impairment losses
At 1 January 2006 1,481 50 1,531
Charge for the year - 269 269
Transferred on demerger (385) - (385)
Impairment 120 1,600 1,720
At 31 December 2006 and 1 January 2007 1,216 1,919 3,135
Charge for the year - 335 335
Disposal - - -
Impairment 405 1,704 2,109
At 31 December 2007 1,621 3,958 5,579
Net book value
At 1 January 2006 2,281 3,352 5,633
At 31 December 2006 1,519 2,304 3,823
At 31 December 2007 1,114 245 1,359
8. Trade and other receivables
31 December 2007 31 December 2006
Group Group
£'000 £'000
Trade receivables 2,942 3,508
Amounts receivable on long-term contracts 1,416 2,149
Other receivables 79 515
Loan notes receivable 1,585 127
Amounts falling due from group undertakings - -
Prepayments and accrued income 253 442
6,275 6,741
The amount receivable on the loan notes represents the discounted value of two
loan notes receivable from the purchaser of the trade and certain assets and
liabilities of RTS Wright Industries, LLC. The loan notes are
interest bearing and are payable on or before 30 April 2009. From May 2007, both
loan notes are repayable on a monthly repayment schedule, the amount falling due
within one year relates to the payments due in 2008.
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