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Robotic Technology Systems PLC

Interim Results for the six months ended 30 June 2009

RTS is a high technology business supplying engineering solutions, products and integrated systems to automate scientific and industrial processes.  RTS today announces its interim results for the six months ended 30 June 2009.

	6 months ended 30 June 2009 £M			6 months ended 30 June 2008 £M	12 months ended 31 December 2008 £M
Revenue	5.5			4.6	10.5
Operating loss before 'exceptional' items	(0.2)			(1.1)	(0.7)
'Exceptional' items	(0.1)*			(1.1)	(5.6)
Net finance Income	0.2			0.3	1.5
Loss before taxation	(0.1)			(1.7)	(4.8)
Profit/(loss) after taxation	0.0			(1.8)	(4.5)
Profit/(loss) per share	0.02 p			(2.90)p	(7.20)p
Cash and cash equivalents	3.0			2.9	2.8

* The breakdown of 'exceptional' items can be found in note 3

KEY POINTS

• RTS Group improved operational performance continued in the first half of 2009, driven by a significant improvement in the RTS Life Science business.

• The balance sheet remains strong with a closing cash balance of £3.0m (2008 year end: £2.8m). We continued to receive loan note repayments of £0.2m in the period, in line with the latest agreement with Doerfer.

• The Group order book at £5.0m has increased by 14% from the balance at the half year in 2008.

• The Board declares a payment of a special interim dividend of 1 pence per share to those shareholders on the register at the close of business on 4 September 2009. This takes the total dividends paid over the last two years to 5 pence per share illustrating the Board's commitment to return excess funds to shareholders.

• The Board remains in talks, as previously announced, that may or may not lead to an offer for the Company.  There is no certainty that the talks will result in an offer for the Company.  The Board will notify shareholders on progress in due course.

Chris Brown, Chairman of RTS, said:

 'Despite difficult market conditions I am pleased to report that the Group's improved performance continued in the first half. With both businesses now operating with a lower cost base and with strategies clearly focused on lower risk work in higher growth areas, the Board is confident that this positive trend can be maintained.

 

'We are therefore declaring a special interim dividend of 1 pence per share. This takes the total dividends paid over the last two years to 5 pence per share illustrating the Board's commitment to return excess funds to shareholders.'

 25 August 2009

Enquiries:

Robotic Technology Systems PLC	Tel: 0161 777 2000
Chris Brown, Chairman
Jon Sharrock, Finance Director
College Hill	Tel: 020 7457 2020
Matthew Smallwood
Jamie Ramsay
Collins Stewart Europe Limited	Tel: 020 7523 8350
Stewart Wallace  Owen Price

 

Chairman's statement

Overview

With revenue growth in the Life Science business and cost reductions made at the end of 2008 the RTS Group continued its operational improvement in the first half of 2009.

RTS Life Science had a 70% increase in turnover compared to the same period in 2008, and combined with a reduced cost base it reversed the 2008 first half operating loss (before 'exceptional' items) of £0.6m to record an operating profit of £0.3m in the period. The business is benefiting from a closing half year order book 38% higher than at the same point last year and a strengthening prospect list. 

In RTS Flexible Systems the weak market conditions contributed to a 39% fall in revenues compared to the first half of the year 2008, although cost savings made in 2008 have mitigated some of this effect resulting in an operating loss (before 'exceptional' items) for the first half of £0.3m, marginally below the prior year.  However, the business expects to improve its order intake in the second half of the year.

The balance sheet remains strong with a closing cash balance of £3.0m (2008 year end: £2.8m). We continued to receive loan note re-payments of £0.2m in the period, in line with the latest agreed payment schedule.

 

In accordance with our policy of returning surplus cash to shareholders, the Directors declare the payment of a special interim dividend of 1 pence per share. 

The Board remains in talks, as previously announced, that may or may not lead to an offer for the Company.  There is no certainty that the talks will result in an offer for the Company.  As a result, the Company has adopted the Disclosure and Transparency Rules ('DTR') for these interim financial statements, in line with the requirements of the Takeover Panel.  The Board will notify shareholders on progress in due course.

Operating Review

RTS Life Science

With a strong performance from our service and support business unit, and consistent project delivery, RTS Life Science successfully converted the large opening order book into a positive operational performance in the period.  

 

Our market entry strategy into the growing biobanking market continues with additional sales of two units of our high end Automated Blood Fractionation instrument (ABF500). These units will be deployed at leading US and European institutions who are at the forefront of the biobanking market and will serve as excellent additional reference sites.

In addition, using the same technology platform we have secured a significant order with a major biobank to process saliva and stabilised blood. This demonstrates the versatility of the product, and potentially opens up a wider market for us. 

In the automated storage business we continue to develop innovative solutions to meet our customers' changing needs. In collaboration with four major pharmaceutical companies we commenced work on a new instrument that analyses and reports valuable Quality Control ('QC') data on the contents of stored samples as they are removed from a controlled storage environment. We are confident that this new product will be a successful addition to our growing list of storage-related solutions. 

Our Drug Delivery business unit continues to increase its share of the inhaler automation market with multiple new sales of the 'Walkaway' range. In addition, we are progressing with our tablet testing product range, and although market penetration has been slower than we anticipated, we are confident that the allocation of additional sales resource at the end of the period will accelerate the sales growth of this product line.

RTS Flexible Systems

In RTS Flexible Systems the current market conditions have depressed order intake and led to a disappointing operational performance in the first half of the year. However, against this background we successfully completed a major order for the packing of poppadums, and continued to expand the use of our innovative vision-based technology in the food industry, securing an order for case packing of pasta pots which we are confident will lead to repeat opportunities. The planned growth from our service and support division is on track with the launch of '24-7' telephone support in the period proving very popular. Opportunities for control systems are developing and we will give this area further emphasis in the second half of the year.

The unique set of skills of the Flexible System business continues to provide opportunities across a range of industries, and we are currently working on a number of prospects that we believe will convert into orders in the second half of the year.

Financial Review

Group turnover increased to £5.5m (2008: £4.6m). The higher sales level was primarily driven by an increase in RTS Life Science revenues to £4.2m (2008: £2.4m).

Gross margins increased to 35.1% (2008: 22.3%), due primarily to improved project performance.

This led to a reduced operating loss (before 'exceptional' items) of £0.2m (2008: £1.1m loss).  

The 'exceptional' expense of £0.1m (2008: £1.1m) predominantly related to the ongoing dispute with a former customer in the Flexible Systems business. We are not expecting a resolution to this matter until 2010, but the management of the business remains confident in a successful outcome to the claim.

    

Net Financial Income for the Group includes £0.2m interest repayments relating to the Doerfer loan notes. Although we are encouraged by these payments, which are in line with the current deferral agreement, we will continue to hold the loan notes at a zero book value against a contractual value of £4.3m.  

The taxation credit of £0.1m related to a research and development claim in the Life Science business for the 2008 financial year, this led to a break even position after tax for the group (six month ended 30 June 2008: loss after taxation of £1.8m).  

The net cash balance increased to £3.0m (31 December 2008: £2.8m). With neutral operational cash flow, the increase can be attributed to the loan note repayments. 

The Group reported in its Annual Report for the period ended 31 December 2008 that its activities expose it to a number of operational and financial risks. These principal risks, as set out in the Directors' Report, remain unchanged at the date of the interim report.  

The principal risks are: managing economic conditions, delivery of complex projects, cost management, working capital management, financial risks, the dispute with a former customer in RTS Flexible Systems and competitor activity.

Outlook

RTS Life Science enters the second half of 2009 with a reduced cost base and an order book that is 38% higher than at the corresponding period last year.

Despite a weak trading environment in RTS Flexible Systems, we anticipate that a stronger prospect list will convert into an improved order book at the end of the year. 

We expect the Group's strong net cash position to continue in the second half of 2009, through both the improving performance of the operating businesses, and further receipts from the Doerfer loan notes. It continues to be the Board's intention to return surplus cash to shareholders, whilst retaining sufficient money in the business to take advantage of opportunities to enhance shareholder value.

Chris Brown, Chairman

24 August 2009

Responsibility Statement:

The Directors accept responsibility for the information contained in this announcement. To the best of the knowledge and belief of the Directors  (who have taken all reasonable care to ensure that such is the case), the information contained in this announcement for which they are responsible is in accordance with the facts and does not omit anything likely to affect the import of such information.

The Directors confirm that, to the best of their knowledge:

• The interim set of financial statements has been prepared in accordance with IAS 34 'Interim Financial Reporting', as adopted by the EU; and

• The interim management report includes a fair view of the information required by:

• DTR 4.2.7R of the Disclosure and Transparency Rules, being an indication of important events that have occurred during the first six months of the financial year and their impact on the interim set of financial statements; and a description of the principal risks and uncertainties for the remaining six months of the year; and

• DTR 4.2.8R of the Disclosure and Transparency Rules, being related party transactions that have taken place in the first six months of the current financial year and that have materially affected the financial performance of the entity during that period; and any changes in the related party transactions described in the last annual report that could do so.

The Directors of Robotic Technology Systems plc are listed on page 11 of the Group's Annual Report for the year ended 31 December 2008.

By order of the Board

C Brown, Chairman                        

J S Sharrock, Group Finance Director

Condensed consolidated statement of comprehensive income 

for the six months ended 30 June 2009 

		6 months	6 months	12 months
		ended	ended	ended
		30 June	30 June	31 December
		2009	2008	2008
	Notes	£'000	£'000	£'000
Revenue	2	5,461	4,563	10,475
Cost of sales		(3,546)	(3,546)	(7,919)
Gross profit		1,915	1,017	2,556
Distribution expenses		(593)	(634)	(1,256)
Administration expenses		(1,682)	(2,532)	(7,725)
Other operating income		33	32	102
Operating loss		(327)	(2,117)	(6,323)
Operating loss before exceptional items		(184)	(1,051)	(743)
Exceptional items included in administrative expenses above	3	(143)	(1,066)	(5,580)
Loss before interest and taxation		(327)	(2,117)	(6,323)
Financial income		193	381	1,620
Financial expenses		-	(50)	(74)
Net financing income		193	331	1,546
Loss before taxation		(134)	(1,786)	(4,777)
Taxation		143	(20)	286
Profit/(loss) for the period, all attributable to equity shareholders of the parent		9	(1,806)	(4,491)
Other comprehensive income
Other comprehensive income for the period		-	-	-
Total comprehensive income/(loss) for the period, all attributable to equity shareholders of the parent		9	(1,806)	(4,491)
Basic and diluted earnings/(loss) per share	4	0.02p	(2.90)p	(7.20)p

 

Condensed consolidated statement of financial position

at 30 June 2009

	30 June	30 June	31 December
	2009	2008	2008
	£'000	£'000	£'000
Non-current assets
Property, plant and equipment	691	729	680
Intangible assets	1,244	1,319	1,284
Other receivables	-	357	-
Deferred tax asset	371	371	371
Total non-current assets	2,306	2,776	2,335
Current assets
Inventories	168	162	179
Current tax receivable	102	-	283
Trade and other receivables	3,422	6,008	5,718
Cash and cash equivalents	3,028	2,909	2,824
Total current assets	6,720	9,079	9,004
Total assets	9,026	11,855	11,339
Current liabilities
Trade and other payables	(4,211)	(4,358)	(6,291)
Current tax payable	-	(17)	-
Total current liabilities	(4,211)	(4,375)	(6,291)
Non-current liabilities
Other liabilities	(536)	(359)	(750)
Provisions	(411)	(640)	(472)
Total non-current liabilities	(947)	(999)	(1,222)
Total liabilities	(5,158)	(5,374)	(7,513)
Net assets	3,868	6,481	3,826
Equity
Share capital	623	623	623
Share premium	680	680	680
Currency translation reserve	(126)	(127)	(126)
Retained earnings	2,676	5,290	2,634
Total equity attributable to equity shareholders	3,853	6,466	3,811
Minority interest	15	15	15
Total equity	3,868	6,481	3,826

 

Condensed consolidated statement of changes in equity

for the six months ended 30 June 2009

	Share	Share	Currency translation	Retained	Minority
	capital	premium	reserve	earnings	interest	Total
For the 6 months ended 30 June 2009	£'000	£'000	£'000	£'000	£'000	£'000
Balance at 1 January 2009	623	680	(126)	2,634	15	3,826
Total comprehensive income for the period
Profit	-	-	-	9	-	9
Total comprehensive income for the period	-	-	-	9	-	9
Transactions recorded directly in equity
Share based payment transactions	-	-	-	33	-	33
Total transactions recorded directly in equity	-	-	-	33	-	33
Balance 30 June 2009	623	680	(126)	2,676	15	3,868

	Share	Share	Currency translation	Retained	Minority
	capital	premium	reserve	earnings	interest	Total
For the 6 months ended 30 June 2008	£'000	£'000	£'000	£'000	£'000	£'000
Balance at 1 January 2008	623	680	(126)	8,320	15	9,512
Total comprehensive income for the period
Loss	-	-	-	(1,806)	-	(1,806)
Total comprehensive income for the period	-	-	-	(1,806)	-	(1,806)
Transactions recorded directly in equity
Share based payment transactions	-	-	-	23	-	23
Dividends to equity holders	-	-	-	(1,247)	-	(1,247)
Exchange differences	-	-	(1)	-	-	(1)
Total transactions recorded directly in equity	-	-	(1)	(1,224)	-	(1,225)
Balance 30 June 2008	623	680	(127)	5,290	15	6,481

	Share	Share	Currency translation	Retained	Minority
	capital	premium	reserve	earnings	interest	Total
For the 12 months ended 31 December 2008	£'000	£'000	£'000	£'000	£'000	£'000
Balance at 1 January 2008	623	680	(126)	8,320	15	9,512
Total comprehensive income for the period
Loss	-	-	-	(4,491)	-	(4,491)
Total comprehensive income for the period	-	-	-	(4,491)	-	(4,491)
Transactions recorded directly in equity
Share based payment transactions	-	-	-	52	-	52
Dividends to equity holders	-	-	-	(1,247)	-	(1,247)
Total transactions recorded directly in equity	-	-	-	(1,195)	-	(1,195)
Balance 31 December 2008	623	680	(126)	2,634	15	3,826

Condensed consolidated statement of cash flows

for the six months ended 30 June 2009

	6 months	6 months	12 months
	ended	ended	Ended
	30 June	30 June	31 December
	2009	2008	2008
	£'000	£'000	£'000
Continuing operations
Profit/(loss) for the period	9	(1,806)	(4,491)
Adjusted for:
Taxation	(143)	20	(286)
Depreciation charge	92	83	158
Amortisation	42	39	78
Profit on sale of non-current asset	-	-	23
Loss on sale of assets held for sale	-	18	-
Provision against loan notes	-	-	3,418
Foreign exchange (gains)/losses	37	(51)	(601)
Equity-settled share-based payment charges	33	23	52
Finance expense	-	50	74
Finance income	(193)	(381)	(1,620)
	(123)	(2,005)	(3,195)
Changes in working capital
Decrease/(increase) in inventories	11	4	(13)
Decrease/(increase) in receivables	2,293	1,419	(1,022)
(Decrease)/increase in payables	(2,288)	(291)	2,453
(Decrease)/increase in provisions	(54)	141	69
Cash used in operating activities	(161)	(732)	(1,708)
Finance expense paid	-	(50)	(74)
Finance income received	186	641	982
Taxation received	324	28	24
Net cash generated from/(used in) operating activities	349	(113)	(776)
Cash flows from investing activities
Payments to acquire property, plant and equipment	(103)	(19)	(45)
Payments to acquire intangible non-current assets	(2)	-	(3)
Receipt in respect of loan notes	-	179	297
Receipt from sale of land	-	370	448
Net cash (used in)/from investing activities	(105)	530	697
Cash flows from financing activities
Dividend paid	-	(1,247)	(1,247)
Net cash used in financing activities	-	(1,247)	(1,247)
Net increase/(decrease) in cash and cash equivalents	244	(830)	(1,326)
Cash and cash equivalents at beginning of period	2,824	3,708	3,708
Exchange (losses)/gains on cash and cash equivalents	(40)	31	442
Cash and cash equivalents at end of period	3,028	2,909	2,824

Notes to the financial information

for the six months ended 30 June 2009

1 Basis of preparation 

These interim financial statements have been prepared in accordance with International Financial Reporting Standard (IFRS) IAS 34 'Interim Financial Reporting' as adopted by the EU. 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 2008.

The comparative figures for the financial year ended 31 December 2008 are not the Company's statutory accounts for that financial year. These accounts, which were prepared under adopted IFRSs, 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 condensed consolidated interim financial statements are the responsibility of the Directors and were authorised and approved by the Board of Directors on 24 August 2009.

2 Segmental analysis

The Group has two main trading segments which are the Group's strategic business units. The strategic business units offer different products and services and are managed separately because they require different technology and strategies. For each of the strategic business units the Board review internal management reports on a monthly basis.  For the purposes of IFRS 8 it is these strategic business units that form the Group's reportable segments and is in line with the basis of segmentation adopted in the consolidated Group financial statements for the year ended 31 December 2008.  The following summary describes the operations in each of the Group's reportable segments:

• RTS Life Science

A supplier of automated systems and products for sample storage and testing within the laboratory environment.  The market encompasses drug discovery and drug delivery applications within pharmaceutical biobanking and biotechnology organisations along with sample preparation and storage for medical research, clinical trials and pharmaceutical manufacturing applications.

• RTS Flexible Systems

A robotic system integrator, supplying advanced robotic automation solutions to the food, medical and consumer goods industries. The business provides end-of-line packaging and handling systems with solutions based upon robotics and leading commercially available components integrated with our own vision technology to identify, track and analyse the products they are handling.

• Others 

Non-trading subsidiaries of the Group.

 Income Statement 

	Flexible Systems			Life Science			Other			Total
	6 months	6 months	12 months	6 months	6 months	12 months	6 months	6 months	12 months	6 months	6 months	12 months
	ended	ended	ended	ended	ended	ended	ended	ended	ended	ended	ended	ended
	30 June	30 June	31 December	30 June	30 June	31 December	30 June	30 June	31 December	30 June	30 June	31 December
	2009	2008	2008	2009	2008	2008	2009	2008	2008	2009	2008	2008
	£'000	£'000	£'000	£'000	£'000	£'000	£'000	£'000	£'000	£'000	£'000	£'000
Gross revenue	1,291	2,117	3,506	4,154	2,445	6,908	70	1	61	5,515	4,563	10,475
Inter-segment revenue	(54)	-	-	-	-	-	-	-	-	(54)	-	-
External revenue	1,237	2,117	3,506	4,154	2,445	6,908	70	1	61	5,461	4,563	10,475
Depreciation	(7)	(5)	(10)	(41)	(36)	(69)	(44)	(42)	(79)	(92)	(83)	(158)
Amortisation	(20)	(18)	(39)	(19)	(19)	(36)	(3)	(2)	(3)	(42)	(39)	(78)
Grant income	-	-	-	-	-	-	19	19	40	19	19	40
Inter-company transactions	(39)	(40)	(83)	8	25	40	31	15	43	-	-	-
Operating profit/(loss) before exceptional items and exchange (losses)/gains	(258)	(303)	(699)	349	(560)	(220)	(238)	(239)	(425)	(147)	(1,102)	(1,344)
Exchange (losses)/gains	(1)	-	(1)	3	4	439	(39)	47	163	(37)	51	601
Exceptional items included in administrative expenses	(95)	(688)	(1,207)	-	(378)	(1,155)	(48)	-	(3,218)	(143)	(1,066)	(5,580)
Profit/(loss) before interest and taxation	(354)	(991)	(1,907)	352	(934)	(936)	(325)	(192)	(3,480)	(327)	(2,117)	(6,323)
Net financing income										193	331	1,546
Loss before taxation										(134)	(1,786)	(4,777)
Taxation										143	(20)	286
Profit/(loss) after taxation										9	(1,806)	(4,491)

Balance Sheet

	Flexible Systems			Life Science			Other			Total
	30 June	30 June	31 December	30 June	30 June	31 December	30 June	30 June	31 December	30 June	30 June	31 December
	2009	2008	2008	2009	2008	2008	2009	2008	2008	2009	2008	2008
	£'000	£'000	£'000	£'000	£'000	£'000	£'000	£'000	£'000	£'000	£'000	£'000
Segment assets excluding inter-company balances	1,685	1,998	2,025	2,762	2,613	4,910	1,551	4,335	1,580	5,998	8,946	8,515
Cash/(overdraft)	(3,637)	(1,453)	(2,480)	(416)	1,299	1,790	7,081	3,063	3,514	3,028	2,909	2,824
Segment liabilities excluding inter-company balances	(671)	(1,204)	(958)	(3,090)	(2,709)	(5,260)	(1,397)	(1,461)	(1,295)	(5,158)	(5,374)	(7,513)
Net segment assets/(liabilities)	(2,623)	(659)	(1,413)	(744)	1,203	1,440	7,235	5,937	3,799	3,868	6,481	3,826

3 Exceptional items 

 

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

						6 months	6 months	12 months
						ended	ended	ended
						30 June	30 June	31 December
						2009	2008	2008
						£'000	£'000	£'000
Legal costs						95	688	950
Restructuring costs						-	-	93
One-off project completion costs						-	378	1,119
Provision against loan notes						-	-	3,418
Other exceptional administration expenses						48	-	-
						143	1,066	5,580

The exceptional administrative expenses consist of the following:

• The exceptional legal expense of £95,000 (30 June 2008: £688,000, 31 December 2008: £950,000) relates to a dispute with a former 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 £48,000 other exceptional charge relates to professional advice regarding restructuring.

Prior period exceptional administrative expenses:

• Restructuring costs of £93,000 at 31 December 2008 consisted of £37,000 in the Life Science business and £56,000 in RTS Flexible Systems;
• The one-off project completion costs of £1,119,000 at 31 December 2008 (30 June 2008: £378,000) are costs associated with concluding a project in the Life Science business. The contract is now completed and the Company has no further liabilities;

• The provision against loan notes of £3,418,000 at 31 December 2008 (30 June 2008 £nil) was a provision against US loan notes receivable from the purchaser of the trade and certain assets and liabilities of RTS Wright Industries, LLC following its sale in 2004. Given the low level of loan note receipts from Doerfer Industries Inc in the second half of 2008, the Directors decided to fully provide against the debt. This treatment has continued in 2009 with the Group only recognising interest received from Doerfer on a paid basis. The unprovided amount at 30 June 2009 is £nil (30 June 2008: £2,665,000, 31 December 2008: £nil). Further details can be found in Note 10 of these financial statements

4 Earnings per ordinary share

Earnings/(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 earnings/(loss) per share for the six months ended 30 June 2009 are based upon a profit after tax of £9,000 (30 June 2008: £1,806,000 loss after tax; 31 December 2008: £4,491,000 loss after tax). The weighted average number of shares used in the basic and diluted calculation is 62,335,374 (30 June 2008: 62,335,374; 31 December 2008: 62,335,374).

The calculation for diluted earnings per ordinary share is identical to that used for the basic earnings per share. This is because there were no share options outstanding with an exercise price lower than the average share price for the period and the exercise of share options in prior periods where a loss was made, would have had 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	6 months	12 months
					ended	ended	ended
					30 June	30 June	31 December
					2009	2008	2008
					Pence	Pence	Pence
Basic and diluted earnings/(loss) per share					0.02	(2.90)	(7.20)

5 Dividends 

A special interim dividend of 1 pence per ordinary share (2008: 2 pence per ordinary share) will be paid to those shareholders on the register at the close of business on 4 September 2009. 

ENDIR USVNRKURWUAR