Print   

COE Group plc

("COE", the "Company" or the "Group")

Announcement of preliminary unaudited results for the twelve months ended 30 June 2009

COE, the AIM-quoted developer and supplier of advanced video surveillance systems, announces preliminary unaudited results for the 12 months ended 30 June 2009.

Financial Highlights

• Order book increased by 35%. 

• Revenue down 9% to £3,828k (2008: £4,185k) due to timing of orders. Order book increase expected to flow through to revenue during the second half of FY10.

• Gross margins up to 58% (2008: 54%).

• Operating expenses reduced by 38% to £2,138k (2008: £3,436k) following the successful restructuring of the Company cost base. 

• Operating profit, before exceptional items, of £71k compared to a loss of £1,195k for the prior year. 

• Profit after taxation of £13k compared to a loss of £1,053k for the prior year.

• Funds of £1,290k raised in November 2008 via an equity share issue to strengthen the balance sheet and provide working capital to take on the larger contracts for which the Company is now competing. 

Operational Highlights

• Significant contract wins include:

  • Seoul Metro, a CCTV system with a capacity of over 8000 cameras transmitted over a network utilising our Course Wave Division Multiplexing (CWDM) technologies. 

  • Upgrade of transmission equipment on east/west and north/south rail lines for Singapore MRT to add around 4,000 cameras to the existing network.

  • Gunsan Port, our second major port win in Asia following our success at the Port of Singapore ("PSA"), based on our IP digital video technology.

• Product launches:

  • Ethernet data and video transmission product for hybrid video/IP network solutions.

  • H.264 video codec for real time digital video transmission and storage over IP networks.

  • CCTV control keyboard for IP networks that allows video system control over digital networks.

  • I-Vue Cameras, a range of IP/Analogue cameras providing a choice of compression options, high performance quality and built in motion detection.

  • I-Command Lite, a management and control interface for small to medium size networks.

Ian Jefferson, Chief Executive, commented:

"There are two key achievements which stand out for me this year. The first one is the Group turnaround. Achieving a profit in a very difficult economic climate is a tremendous result and a testament to the talented group of people we have at COE.  The second is the Seoul Metro contract win. This contract, which is worth in excess of £1m, was through a new partner in a new territory and demonstrates the competitiveness of our solution and the quality of partners we are attracting.  In the current year we will be stepping up our business development activity as we look to replicate this success around the world".

About COE: 

COE Ltd develops and supplies integrated analogue and IP video surveillance (CCTV) systems for some of the most complex high profile sites worldwide. COE products and systems allow users to achieve faultless and cost-effective video surveillance in safety critical operations and rugged environments year after year, by delivering very high quality video, high reliability and extensive third party integration. COE provides both IP and hybrid IP/analogue solutions so that customers have the option of leveraging existing installations.

The Company has over 10,000 installations worldwide across three main sectors - traffic & transport, heavy industrial and urban surveillance. References include the London Congestion Charge network, underground and high-speed rail systems worldwide, including the UK, Singapore, France, Spain, Germany, Hong Kong and Delhi; airports across Germany, Hong Kong and SE Asia, and road systems worldwide. City-centre systems include over 35 UK towns and cities, while industrial complexes include the South Parrs gas field in the Middle East.

COE works closely with selected systems integrators, helping them to deliver the most competitive overall solutions for end-users. The Company provides support through the entire lifecycle including design, supply, on-site testing, commissioning and long-term support.

Please visit www.coe.co.uk

CHAIRMAN'S STATEMENT

Operational report

I am pleased to report that the Company delivered a profit for the year and is successfully executing its strategy for turnaround and growth. The order book increased by 35% over the prior year and this increase is expected to flow through to revenue during the second half of FY10. The order book increase was bolstered by a contract win for Seoul Metro worth in excess of £1m. This contract was through a new partner in a new region and demonstrates the potential of our partner expansion programme. Business development activity to find more new partners in other new territories is progressing well as we seek to replicate this early success.

The security market is undergoing a shift in technology from analogue to digital. COE is uniquely positioned to take advantage of this change being able to provide analogue, digital and hybrid solutions. This enables the Company to be truly agnostic when advising customers of the most appropriate technology and provides customers with the ability to transition from analogue to digital over time and in a more cost effective manner than replacing the entire system in one go.  For green field sites our ability to provide tailored IP solutions is also proving to be effective against our competitors.

COE has a reputation for providing highly scalable dual redundant systems providing unparalleled levels of reliability in extreme environments with no single point of failure. Our products have proved to be particularly suited to harsh environments such as railways and ports and have secured us contract wins with PSA, the largest port in the world and Seoul Metro, the world's third busiest metro system.

We fully expect to build on these wins as we extend our reach around the world and, as the shift from analogue to digital is estimated to be only 10% complete, the market opportunities are significant.

Financial report 

Revenue of £3,828k was down 9% (2008: £4,185k) due simply to the longer delivery schedules of larger contracts which consequently resulted in an increase in the order book of 35%.  The increase in the order book is expected to flow through to revenue in the second half of FY10.

Gross margins increased from 54% to 58%. This continued growth in the gross margin percentage is attributed to better material sourcing and the value that customers place on our unique tailored solutions.

Overheads, excluding exceptional costs, decreased significantly during the year to £2,138k (2008: £3,436k) due to the successful restructuring of the Company cost base, resulting in a pre-exceptional operating profit of £71k (2008: loss of £1,195k).

Exceptional costs of £206k (2008: £nil) were incurred in the year relating to the re-organisation of the Group.

Tax income of £170k (2008: £62k) was recorded in the year as a result of a research and development tax credit of £100k (2008: £62k) and recognition of a deferred tax asset of £70k (2008: £nil). 

A profit after tax of £13k was recorded for the year compared to a loss of £1,053k in the prior year.

Balance sheet and financing

In July 2008 IPG Plc ("IPG") provided a £350k loan to the Group in order to enable it to implement its restructuring plans.

In November 2008 the Group announced that it had raised approximately £940k by way of a share issue. These funds were to provide the working capital headroom required by the Group as it continued to implement its growth plans. The Group also took the opportunity during the share issue to convert the £350k loan from IPG to ordinary shares to further improve the financial position.

Board and staff changes

In July 2008 the Board announced a restructuring plan designed to deliver growth more efficiently. As a result of the restructuring Andrew Wallace left the business.  Ian Jefferson, formerly Finance Director took over as CEO.

Conclusion and outlook

Despite very difficult market conditions the Company successfully delivered a profitable result for the year and its business development strategy achieved early success with a contract win, worth over £1m, from a new partner in a new territory.  Our focus in the current year is to accelerate the partner recruitment process. 

The security market is moving from analogue to digital. COE is uniquely placed to capitalise on this move as its product range enables it to cost effectively transition customers from one technology to the other. This therefore provides good, medium to long term, opportunities for the Company. 

However, the ongoing economic downturn continues to affect short term business performance. In the UK and Europe, in particular, we have seen a significant slow down in demand. To date this slowdown has been offset by new business wins, primarily in Asia, and whilst the results for FY10 will be heavily weighted towards the second half, the board remains confident that the overall result for the current year will show a continued improvement over FY09.

Dr Alison Fielding 

Chairman

9 November 2009

 

COE Group Plc    

Ian Jefferson, Chief Executive Officer    0113 230 8800    

 

Zeus Capital Ltd    

Nick Cowles    0161 831 1512

Consolidated income statement (unaudited)

For the year ended 30 June 2009

		Year ended 30 June 2009 £'000	Year ended 30 June 2008 £'000
Revenue		3,828	4,185
Cost of sales		(1,619)	(1,944)
Gross profit		2,209	2,241
Total net operating expenses		(2,344)	(3,436)
Profit/(loss) from operations:
Operating profit/(loss) excluding exceptional costs		71	(1,195)
Exceptional re-organisational costs		(206)	-
Operating loss		(135)	(1,195)
Financial income		7	558
Financial expense		(29)	(478)
Loss before tax		(157)	(1,115)
Income tax credit		170	62
Profit/(loss) for the period		13	(1,053)
Basic loss per share		0.0p	(4.7)p
Diluted loss per share		0.0p	(4.7)p

Consolidated statement of changes in equity (unaudited)

For the year ended 30 June 2009

		Year ended 30 June 2009 £'000	Year ended    30 June 2008 £'000
Profit/(loss) for period		13	(1,053)
Total recognised income and expense		13	(1,053)
Shares issued		1,167	-
Share based payments		(18)	64
Net increase/(decrease) in total equity		1,162	(989)
Total equity at start of period		-	989
Total equity at end of period		1,162	-

Consolidated balance sheet (unaudited)

As at 30 June 2009

		Year ended 30 June 2009 £'000	Year ended    30 June 2008 £'000
Non-current assets
Property, plant and equipment		41	72
Intangible assets		416	340
		457	412
Current assets
Inventories		225	236
Trade and other receivables		1,547	1,104
Cash and cash equivalents		358	384
		2,130	1,724
Total assets		2,587	2,136
Current liabilities
Trade and other payables		(1,398)	(2,020)
		(1,398)	(2,020)
Non Current Liabilities
Provisions for liabilities and charges		(27)	(116)
		(27)	(116)
Total liabilities		(1,425)	(2,136)
Net assets		1,162	-
Shareholders' equity
Called-up share capital		1,455	1,312
Share premium account		4,653	3,629
Retained earnings		(4,946)	(4,941)
Total shareholders' equity		1,162	-

Consolidated cash flow statement (unaudited)

For the year ended 30 June 2009

		Year ended 30 June 2009 £'000	Year ended    30 June 2008 £'000
Cash flow from operating activities
Operating loss		(135)	(1,195)
Depreciation		38	54
Amortisation of intangible assets		340	245
Capitalisation of research & development costs to intangible assets		(416)	(340)
Decrease/(increase) in inventories		11	(69)
Increase in trade and other receivables		(335)	(2)
(Decrease)/increase in trade and other payables		(703)	343
Decrease in provisions		(89)	(6)
Share based payment (income)/charge		(18)	64
Interest paid		(29)	(478)
Taxation received		62	42
Net cash outflow from operating activities		(1,274)	(1,342)
Cash flows from investing activities
Purchase of plant and equipment		(7)	(49)
Interest received		7	558
Net cash flow from investing activities		-	509
Cash flows from financing activities
Proceeds from the issue of ordinary shares		1,167	-
Repayment of loan notes		-	18,342
Decrease in money market investments and deposits		-	(18,342)
Net cash flows from financing activities		1,167	-
Net decrease in cash and cash equivalents		(107)	(833)
Cash and cash equivalents at the beginning of the period		21	854
Cash and cash equivalent at the end of the period		(86)	21

Notes to the preliminary results announcement for the year ended 30 June 2009 (unaudited)

1. Annual accounts

The financial information set out in this announcement, which is unaudited, does not constitute the Group's Statutory Accounts for the year ended 30 June 2009 or 2008 but, in relation to 2008, is derived from those accounts. Statutory Accounts for COE Group Plc for 2008 have been delivered to the Registrar of Companies and those for 2009 will be delivered to the Registrar of Companies in November 2009.  

2. Basis of preparation

The preliminary financial information has been prepared on the historical cost basis in accordance with International Financial Reporting Standards (IFRS). The accounting policies used in preparing the preliminary financial information are set out in the "Accounting Policies" section of the COE Group Plc annual accounts 2009, which will be delivered to the Registrar of Companies in November 2009.

3. Earnings per share

Basic earnings per share is calculated as the profit/(loss) for the period divided by the weighted average number of shares outstanding. For diluted earnings per share, the weighted average number of ordinary shares in issue is adjusted to assume conversion of all potentially dilutive ordinary shares. Under IAS 33 'Earnings per share' any potentially dilutive ordinary shares are deemed anti-dilutive in the event that a loss has been incurred. Consequently the basic and adjusted loss per ordinary share for the 12-month period ended 30 June 2008 are unaffected by dilution.  

		Year ended 30 June 2009	Year ended    30 June 2008
Profit/(loss) attributable to shareholders		13,000	(£1,053,000)
Weighted average number of shares		30,626,805	22,394,397
Basic/diluted profit/(loss) per share		0.0p	(4.7)

4. Copies of Preliminary Results

 

Copies of these preliminary results announcement are available to view from the Company's website

at www.coe.co.uk and the Annual Report and Accounts will be posted to shareholders in due course.

ENDFR BRBDBBGGGGCL