Print   



Robotic Technology Systems PLC

Interim Results for the six months ended 30 June 2008

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 six months ended  30 June 2008.

Prepared under adopted IFRSs	6 months ended  30 June 2008 Continuing Operations £'000	6 months  ended  30 June 2007 Continuing Operations £'000	12 months  ended  31 December  2007 Continuing Operations £'000
Revenue	4,563	5,389	11,189
Operating loss before exceptional charges	(1,051)	(1,177)	(1,962)
Exceptional charges	(1,066)	(174)	(2,815)
Loss after taxation	(1,806)	(809)	(3,891)
Loss per share	(2.90)p	(1.30)p	(6.24)p

 

KEY POINTS

 

• 2008 first half loss after tax of £1.8m including £1.1m exceptional costs due to ongoing contract disputes in both businesses

• The balance sheet remains strong with a closing cash balance of £2.9m (2007 year end: £3.7m), after the payment of the special final dividend of £1.2m in June 2008

• A significant increase in order intake in the RTS Life Science business should lead to improved group performance in the second half of the year

• Continuing realisation of cash from our non-operating assets with the repayment of $1.5m against the Doerfer loan notes, and the sale of the final parcel of land for $0.7m in the period

• Cash and non-operating assets equate to 8.9 pence per share at the end of the period

  

Chris Brown, Chairman of RTS, said:

 'Operating performance in the first half of the year has been below expectations as indicated in our July trading statement.

RTS Life Science has recently secured orders in excess of £5m to supply several new compound stores for major pharmaceutical companies, and has successfully launched a new small blood fractionation system, which has won its first order and generated significant interest. We are therefore expecting improved performance in the second half of the year and entering 2009.

Trading in RTS Flexible Systems is expected to be weak for the second half of the year due to a reduced opening order book and difficult market conditions. The business is well placed to capitalise on further opportunities for low risk repeat business.  

We anticipate that the Group's strong net cash position will continue in the second half of 2008, through both the improving performance of the operating businesses and the further repayment of the Doerfer loan notes. 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.'

30 September 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

Overview

In the first half of 2008, as outlined in our pre-close statement of 25 July 2008, our revenues and operating performance were below expectations.

In RTS Life Science a weak first half performance had been anticipated given a low opening order book and a high level of planned development spend in the period. However, with a significantly increased order book and strengthening prospect list containing new products at the end of the period, we are now expecting an improved performance in the second half of the year and into 2009. 

In RTS Flexible Systems the shortfall was driven mainly by the failure to convert a strong prospect list into orders  and higher than anticipated costs to complete the first order for the automation of end-of-line bread packing.   The business still retains a strong prospect list including several significant repeat orders, but with the weakened trading conditions it is anticipated that this will only translate into increased revenue in 2009.

Our balance sheet remains strong with a closing cash balance of £2.9m (2007 year end: £3.7m) and the Doerfer loan notes valued at £2.7m.   

The Directors do not recommend the payment of a dividend at this stage, but intend to recommend dividends as appropriate in the light of further asset realisations.

Operating Review

In RTS Life Science the Sample Management business unit has made good progress in 2008 securing over £5m of orders for new automated compound storage systems, including the sale of our fourth SmaRTStore to a US biotechnology company.

We continue to see big pharmaceutical companies moving towards a more de-centralised model. As a result we anticipate an increasing demand from the small and medium sized storage market, and view this as a growth opportunity. We took positive steps in the period to enhance our offering by signing an exclusive worldwide distribution agreement with a European manufacturer to supply a small storage product that complements our current range, and we are continuing work to develop a new medium-sized store to fill the gap between SmaRTStore™

and our largest storage systems. We are confident that both of these initiatives will generate sales growth over the next twelve months.     

    

We have now completed the development of our new small blood fractionation unit, and will deliver our first unit to a US customer in the second half of the year as planned. With considerable interest generated at its launch at two major exhibitions we expect to be able to record further sales in the second half of 2008.

    

Our Drug Delivery business unit continues to expand its product offering with the completion of the first units in its new 'Walkaway' range. In addition, we made further progress on our solution for high throughput sample preparati    on, and the prototype was officially launched in the period.  We have generated considerable interest in this development with several major pharmaceutical companies, and are therefore expecting to see initial sales of the 'benchtop' product in the second half of the year.  

We continued to incur costs to complete one remaining legacy project. Despite significant progress in the year we are currently involved in contractual negotiations over the status of the project. We believe the accounting approach taken at the end of the period reflects a reasonable estimate of the costs to complete the contract, and at this point we believe it likely that this can be satisfactorily resolved in 2008.

In RTS Flexible Systems the first half of 2008 was dominated by the completion of an end-of-line bread packing system for a major UK baker. This flexible solution has significant repeat potential in the UK bakery industry, but due to a slowdown in capital investment in this sector this is now only likely to be realised in 2009.

We continue to expand the use of our innovative vision-based technology in the food industry, securing a major order for automating the packing of poppadums. In the industrial area we have substantially completed the second line to automate packaging of contact lenses, and are anticipating an order for a the third line in due course.

 

In the Advanced Robotics area work continued to provide advanced software for the MoD's next generation of Explosive Ordnance Device 'EOD' vehicle which is due to enter production in 2009, at which point we will earn royalty revenue for each unit sold.   

Despite these positive developments trading in our core markets has weakened in the period, and the failure to convert the strong prospect list into orders in the first half of the year led to a lower trading volume than initially forecast.     

Financial Review

Group turnover fell to £4.6m (2007: £5.4m). The lower sales level was primarily driven by a reduction in RTS Life Science to £2.5m (2007: £3.8m).

Gross margins reduced to 22.3% (2007: 27.2%), due primarily to an increase in development costs in the Life Science business to £0.4m (2007: £nil).

The overhead reductions made over the last twelve months more than offset the margin and volume deterioration, leading to a marginally reduced operating loss before exceptional items of £1.1m (2007: £1.2m loss).   

The exceptional expense of £1.1m (2007: £0.2m) related to two items. In the Life Science business we are in contractual negotiations over the completion of a legacy project, and we have therefore recorded exceptional costs of £0.4m in the period, which is expected to represent all costs to complete the project. 

In Flexible Systems, the business continues to pursue monies owed to it on an ongoing contract dispute and incurred legal costs of £0.7m in the period.  We are not expecting a resolution to this matter until 2009, but we remain satisfied with the accounting treatment adopted and are confident in a successful outcome to the claim.

    

Net Financial Income for the Group includes £0.3m interest relating to the Doerfer loan notes.  

The loss after taxation for the Group in the first half of 2008 was therefore £1.8m compared to a loss after taxation of £0.8m for the group in the first half of 2007.  

Further progress in the realisation of the Doerfer loan notes in the period led to cash inflow of $1.5m (£0.75m) from capital and interest payments. The remaining loan notes at the end of the period were valued at a book value of £2.7m.

The net cash balance reduced to £2.9m (2007: £3.7m), following the payment of the special final dividend of £1.2m and an operating outflow of £0.7m, including exceptional legal payments of £0.7m. These outflows were partially offset by the loan note repayments noted above and the proceeds from the sale of the final parcel of US land for £0.4m.

During the period there was an issue of share options under an Executive Share Option Plan.  The impact on the income statement is not material and therefore has not been disclosed in the financial statements.

Outlook

RTS Life Science has recently secured orders in excess of £5m to supply several new compound stores for major pharmaceutical companies, and has successfully launched a new small blood fractionation system, which has won its first order and generated significant interest. We are therefore expecting improved performance in the second half of the year and entering 2009.

Trading in RTS Flexible Systems is expected to be weak for the second half of the year due to a reduced opening order book and difficult market conditions. The business is well placed to capitalise on further opportunities for low risk repeat business.  

We anticipate that the Group's strong net cash position will continue in the second half of 2008, through both the improving performance of the operating businesses and the further repayment of the Doerfer loan notes. 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

30 September 2008

 

 

Consolidated income statement 

for the six months ended 30 June 2008 (unaudited)

		6 months ended  30 June 2008	6 months ended  30 June 2007	12 months ended  31 December 2007
	Notes	Total	Total	Total
		£'000	£'000	£'000
Revenue	2	4,563	5,389	11,189
Cost of sales		(3,546)	(3,923)	(8,414)
Gross profit		1,017	1,466	2,775
Distribution expenses		(634)	(734)	(1,404)
Administration expenses		(2,532)	(2,121)	(6,262)
Other operating income		32	38	114
Operating loss		(2,117)	(1,351)	(4,777)
Operating loss before exceptional items		(1,051)	(1,177)	(1,962)
Exceptional items included in administrative expenses above	3	(1,066)	(174)	(2,815)
Operating loss		(2,117)	(1,351)	(4,777)
Loss before interest and taxation		(2,117)	(1,351)	(4,777)
Financial income		381	466	965
Financial expenses		(50)	(142)	(250)
Net financing income		331	324	715
Loss before taxation		(1,786)	(1,027)	(4,062)
Taxation		(20)	218	171
Loss for the period, all attributable to equity shareholders of the parent		(1,806)	(809)	(3,891)
Basic loss per share	4	(2.90)p	(1.30)p	(6.24)p

 

     There were no recognised gains and losses in the period, or in the prior periods shown, other than the results shown above.

 

Consolidated balance sheet

at 30 June 2008 (unaudited)

		30 June  2008	30 June  2007	31 December 2007
		£'000	£'000	£'000
Non current assets
Property, plant and equipment		729	725	793
Intangible assets		1,319	3,670	1,359
Other receivables		357	1,900	1,541
Deferred tax asset		371	371	371
		2,776	6,666	4,064
Current assets
Inventories		162	657	166
Current tax receivable		-	54	11
Trade and other receivables		6,008	7,605	6,275
Cash and cash equivalents		2,909	3,609	3,708
Assets classified as held for sale		-	799	428
		9,079	12,724	10,588
Total assets		11,855	19,390	14,652
Current liabilities
Trade and other payables		(4,358)	(4,305)	(4,264)
Current tax payable		(17)	-	-
		(4,375)	(4,305)	(4,264)
Non current liabilities
Other liabilities		(359)	(399)	(379)
Provisions		(640)	(832)	(497)
		(999)	(1,231)	(876)
Total liabilities		(5,374)	(5,536)	(5,140)
Net assets		6,481	13,854	9,512
Equity
Share capital		623	623	623
Share premium		680	680	680
Currency translation reserve		(127)	(131)	(126)
Retained earnings		5,290	12,667	8,320
Total equity attributable to equity shareholders		6,466	13,839	9,497
Equity minority interest		15	15	15
Total equity		6,481	13,854	9,512

 

Consolidated statement of changes in shareholders' equity (unaudited)

For the 6 months ended 30 June 2008	Share  capital	Share  premium	Currency translation reserve	Retained earnings	Minority interest	Total
	£'000	£'000	£'000	£'000	£'000	£'000
Share options	-	-	-	23	-	23
Dividend paid	-	-	-	(1,247)	-	(1,247)
Exchange differences	-	-	(1)	-	-	(1)
Net expense recognised directly in equity	-	-	(1)	(1,224)	-	(1,225)
Loss for the period	-	-	-	(1,806)	-	(1,806)
Total recognised expense	-	-	(1)	(3,030)	-	(3,031)
Opening shareholders' funds at 1 January 2008	623	680	(126)	8,320	15	9,512
Closing shareholders' funds at 30 June 2008	623	680	(127)	5,290	15	6,481

For the 6 months ended 30 June 2007	Share  capital	Share  premium	Currency translation reserve	Retained earnings	Minority interest	Total
	£'000	£'000	£'000	£'000	£'000	£'000
Share options	-	-	-	38	-	38
Exchange differences	-	-	(3)	-	-	(3)
Net (expense)/income recognised directly in equity	-	-	(3)	38	-	35
Loss for the period	-	-	-	(809)	-	(809)
Total recognised expense	-	-	(3)	(771)	-	(774)
Opening shareholders' funds at 1 January 2007	623	680	(128)	13,438	15	14,628
Closing shareholders' funds at 30 June 2007	623	680	(131)	12,667	15	13,854

For the 12 months ended 31 December 2007	Share  capital	Share  premium	Currency translation reserve	Retained earnings	Minority interest	Total
	£'000	£'000	£'000	£'000	£'000	£'000
Share options	-	-	-	20	-	20
Dividend paid	-	-	-	(1,247)	-	(1,247)
Exchange differences	-	-	2	-	-	2
Net income/(expense) recognised directly in equity	-	-	2	(1,227)	-	(1,225)
Loss for the year	-	-	-	(3,891)	-	(3,891)
Total recognised income/(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 31 December 2007	623	680	(126)	8,320	15	9,512

 

Consolidated cash flow statement 

for the six months ended 30 June 2008 (unaudited)

		6 months ended 30 June 2008 £’000	6 months ended 30 June 2007 £’000	12 months ended 31 December 2007 £’000
	Notes
Continuing operations
Loss for the period		(1,806)	(809)	(3,891)
Adjusted for:
Taxation		20	(218)	(171)
Depreciation charge		83	83	132
Amortisation		39	166	335
Profit on sale of non current asset		—	—	(2)
Loss on sale of assets held for sale		18	—	—
Impairment of intangible assets		—	—	2,109
Impairment of asset held for sale		—	—	80
Foreign exchange (gains)/losses		(51)	98	63
Equity settled share based payment charges		23	38	20
Finance expense		50	142	250
Finance income		(381)	(466)	(965)
		(2,005)	(966)	(2,040)
Changes in working capital
Decrease/(increase) in inventories		4	(87)	404
Decrease in receivables		1,419	689	2,185
(Decrease) in payables		(291)	(1,107)	(1,061)
Increase/(decrease) in provisions		141	(14)	(55)
Cash used in operating activities		(732)	(1,485)	(567)
Finance expense paid		(50)	(35)	(151)
Finance income received		641	257	965
Taxation received		28	558	553
Net cash (used in)/generated from operating activities		(113)	(705)	800
Cash flows from investing activities
Payments to acquire property, plant and equipment		(19)	(28)	(145)
Payments to acquire intangible fixed assets		—	(12)	(88)
Receipt from sale of tangible fixed assets		—	—	2
Receipt in respect of loan notes		179	886	872
Receipt in respect of land sale		370	—	—
Net cash from investing activities		530	846	641
Cash flows from financing activities
Dividend paid		(1,247)	—	(1,247)
Net cash used in financing activities		(1,247)	—	(1,247)
Net (decrease)/increase in cash and cash equivalents		(830)	141	194
Cash and cash equivalents at beginning of period		3,708	3,566	3,566
Exchange gains/(losses) on cash and cash equivalents		31	(98)	(52)
Cash and cash equivalents at end of period		2,909	3,609	3,708

 

 

 

Notes to the financial information

for the six months ended 30 June 2008

1.    Basis of preparation 

The consolidated interim financial statements of Robotic Technology Systems PLC (the 'Company') for the six months ended 30 June 2008 comprise the Company and its subsidiaries (together referred to as the 'Group').  

The consolidated interim financial statements are the responsibility of the Directors and were authorised and approved by the Board of Directors for issuance on 29 September 2008.

The interim financial statements of Robotic Technology Systems PLC for the period ended 30 June 2008 are unaudited and do not comprise statutory accounts within the meaning of Section 240 of the Companies Act 1985.

This interim financial information has been prepared on the basis of the recognition and measurement requirements of adopted IFRSs.

These interim financial statements have not been prepared in accordance with IAS 34 'Interim Financial Reporting'. They do not include all of the information required for full annual financial statements, and should be read in conjunction with the consolidated financial statements of the Group for the year ended 31 December 2007.

The comparative figures for the financial year ended 31 December 2007 are not the Company's statutory accounts for that financial year. These accounts, which were prepared under IFRS, have been reported on by the Company's auditors and delivered to the registrar of companies. The report of the auditors was (i) unqualified, (ii) did not include a reference to any matters to which the auditors drew attention by way of emphasis without qualifying their reports, and (iii) did not contain a statement under Section 237 (2) or (3) of the Companies Act 1985.

The accounting policies have been applied consistently throughout the Group for purposes of these consolidated interim financial statements.

 

2.  Segmental analysis                    

   

 Basis of segmentation is unchanged from the financial statements for the year ended 31 December 2007.

	Continuing Operations									Total
	Flexible Systems			Life Science			Other
	6 months ended  30/6/08  £'000	6 months ended  30/6/07 £'000	12 months ended  31/12/07  £'000	6 months ended  30/6/08  £'000	6 months ended  30/6/07 £'000	12 months ended  31/12/07  £'000	6 months ended  30/6/08  £'000	6 months  ended  30/6/07 £'000	12 months ended  31/12/07  £'000	6 months  ended   30/6/08  £'000	6 months  ended  30/6/07 £'000	12 months  ended 31/12/07  £'000
Income Statement
Revenue from  external customers	2,117	1,614	3,825	2,445	3,775	7,364	1	-	-	4,563	5,389	11,189
Depreciation	(5)	(6)	(9)	(36)	(43)	(69)	(42)	(34)	(54)	(83)	(83)	(132)
Amortisation	(18)	(17)	(35)	(19)	(148)	(298)	(2)	(1)	(2)	(39)	(166)	(335)
Grant income	-	-	-	-	-	-	19	19	40	19	19	40
Inter-company transactions	(40)	(39)	(53)	25	5	62	15	34	(9)	-	-	-
Operating loss before exceptional items	(303)	(285)	(557)	(556)	(490)	(786)	(192)	(402)	(619)	(1,051)	(1,177)	(1,962)
Exceptional items	(688)	(155)	(308)	(378)	-	(1,919)	-	(19)	(588)	(1,066)	(174)	(2,815)
Operating loss	(991)	(440)	(865)	(934)	(490)	(2,705)	(192)	(421)	(1,207)	(2,117)	(1,351)	(4,777)
Loss before interest and taxation	(991)	(440)	(865)	(934)	(490)	(2,705)	(192)	(421)	(1,207)	(2,117)	(1,351)	(4,777)
Net financing income										331	324	715
Loss before taxation										(1,786)	(1,027)	(4,062)
Taxation										(20)	218	171
Loss after taxation										(1,806)	(809)	(3,891)

	Flexible Systems			Life Science			Other Continuing			Total
Balance Sheet	30/6/08 £'000	30/6/07 £'000	31/12/07 £'000	30/6/08 £'000	30/6/07 £'000	31/12/07 £'000	30/6/08 £'000	30/6/07 £'000	31/12/07 £'000	30/6/08 £'000	30/6/07 £'000	31/12/07 £'000
Segment assets	545	1,735	1,955	3,912	6,803	3,882	7,398	10,852	8,815	11,855	19,390	14,652
Segment liabilities	(1,204)	(768)	(1,403)	(2,709)	(2,715)	(1,990)	(1,461)	(2,053)	(1,747)	(5,374)	(5,536)	(5,140)
Net segment assets/(liabilities)	(659)	967	552	1,203	4,088	1,892	5,937	8,799	7,068	6,481	13,854	9,512

3.    Exceptional items 

Loss on ordinary activities before taxation is stated after charging the following exceptional items:

	6 months  ended 30 June  2008 £'000	6 months  ended 30 June 2007 £'000	12 months  ended 31 December 2007 £'000
Impairment of intangible non current  assets	-	-	2,109
Impairment of assets held for sale	-	-	80
Legal costs	688	155	308
Restructuring costs	-	19	318
One-off project completion costs	378	-	-
	1,066	174	2,815

The exceptional administrative expenses consist of the following:

• The exceptional legal expense of £688,000 (30 June 2007: £155,000, 31 December 2007: £308,000) relates to a dispute with a customer in our Flexible Systems business. The Company has reserved its right not to disclose further information required by IAS 37 on the grounds that it may prejudice the outcome of the claim.

• The one-off project completion costs of £378,000 are costs associated with concluding a project in the Life Science business.  The Company has reserved its right not to disclose further information required by IAS 37 on the grounds that it may prejudice ongoing contract negotiations.

Prior period exceptional administrative expense:

• The impairment of intangible non current assets of £2,109,000 consisted of two items. £1,704,000 related to a write down in the carrying value of capitalised research and development costs in the Life Science business. The remaining £405,000 impairment represented the partial write down of goodwill related to the Life Science business.

• The impairment of assets held for sale represented an £80,000 write down in the book value of land in Nashville, Tennessee. This land has now been sold for a consideration of £373,000, resulting in a loss on sale of £20,000.

• Restructuring costs of £318,000 consisted of £215,000 in the Life Science business and £103,000 in Group.  

4.    Loss per ordinary share 

Loss per ordinary share has been calculated using the weighted average number of shares in issue during the relevant period. The calculations of both basic and diluted loss per share for the six months ended 30 June 2008 are based upon a loss after tax of £1,806,000 (30 June 2007: £809,000 loss after tax; 31 December 2007: £3,891,000 loss after tax). The weighted average number of shares used in the basic calculation is 62,335,374 (30 June 2007: 62,335,374; 31 December 2007: 62,335,374).

The calculation for diluted loss per ordinary share in 2008 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 and is therefore not dilutive under the terms of IAS 33 Earnings Per Share. 

	6 months  ended 30 June 2008 Pence	6 months  ended 30 June  2007 Pence	12 months  ended 31 December 2007 Pence
Basic loss per share	(2.90)	(1.30)	(6.24)

5.    Contingent liabilities

RTS Flexible Systems is engaged in a dispute with a customer pursuant to a contract entered into during May 2005. The information usually required by IAS 37 is not disclosed on the grounds that it can be expected to seriously prejudice the outcome of the dispute. The Directors are of the opinion that the claim can be successfully resisted by the Company.

 

ENDIR UKOBRWRRKUAR