Touchstar Plc Regulatory News (TST)

3 Sep 2008 07:00



Belgravium Technologies plc

Interim Results for the Six Months ended 30 June 2008

The Board of Belgravium Technologies plc ('Belgravium' or 'the Group'), designers and manufacturers of real-time data capture systems, is pleased to announce Interim results for the six months ended 30 June 2008.

Key Financials: 

Operational Overview:

Strong recurring service, licence and maintenance revenue has offset reduction in new contracts secured during first half 

Commercial emphasis on software and support services in H2

Belgravium's technology still required to improve customers; efficiency, cost control and growth

Belgravium well positioned to capitalise in key sectors as markets recover

Commenting today, Executive Chairman John Kembery said:

"The economic downturn has impacted our growth strategy more heavily than originally anticipated. On account of this we have seen a weak first half.

However, Belgravium provides a key service to its customers and whilst it is prudent to initially cut back in such economic conditions, customers cannot negate quality of service to their customers indefinitely. We are confident that our offering remains valuable and we cautiously expect a recovery at the end of 2008 and into 2009 as market conditions improve and customers reassess the value of our services taking a longer term view."

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Chairman's Statement

Results

Following a successful year for Belgravium in 2007, we arrive at the first half year end in 2008, in a very different economic climate, experienced the world over.

We reported in an update on trading at the time of our AGM in May 2008, that given such a climate, we had experienced a slowdown in trading, specifically in the number of forward order contracts secured which we believed would result in a first half result below expectations.

In the half year ended 30 June 2008, sales totalled £3,942,000 compared with £5,222,000 in the first half of 2007. Accordingly, profit before tax fell from £1,024,000 at the half year in 2007 to £72,000 in 2008 resulting in basic earnings per ordinary share of 0.05p per share against 0.71p per share in 2007.

Operational Review

At the end of 2007 we reported that the Company had made good progress in its growth strategy and that there were attractive projects in the pipeline which would contribute to organic growth in 2008 and beyond. As a result of a deterioration in the global economy experienced across many sectors, new business generation has been difficult in the first half of 2008 and the shortfall in sales has had a direct effect on profitability. Expected projects have not been lost or abandoned, rather customers have decided to re-examine, modify or postpone their plans leading to a series of delays. Our installations are generally considered capital projects and the general lack of confidence has led to a reluctance to commit to capital spend. We view this situation as a deferment of orders rather than a cancellation and we have maintained our market share with no loss of orders to competitors.

The strong recurring nature of the Group's service, licence and maintenance revenue has helped to offset the reduction in new contracts secured during the first half.

The Market

Uncertain trading conditions have been experienced across the whole of our industry. Belgravium is, however, well positioned to respond to this challenge and it reinforces our view that commercial emphasis should fall on software and support services. This approach offers more repeat business and better operating margins.

There is ample evidence that our systems improve customer efficiency, cost control and margin growth. We believe our clients will need to retain their competitive edge and cannot defer these advantages indefinitely.

As the market begins to recover, Belgravium is extremely well positioned to capitalise on the market sectors it has successfully developed.

Strategy

A year ago we stated that we intended to change our emphasis from hardware to software systems and support services. Despite changes to economic conditions, this policy remains appropriate for the longer term success of the Group. We continue to place great emphasis on new product development and maximised sales both within and outside the UK. We shall, of course, restrain costs wherever possible but must maintain our excellent service by continuing our employment of high quality technical and sales staff. 

Balance Sheet

We are pleased to report that total borrowings have decreased from £1.96m as at 31 December 2007 to £1.75m at 30 June 2008 as we pay down the term loan used to finance the acquisition of Touchstar. We are currently retiring this facility at a rate of £500,000 per annum.

Inventories were higher than usual at the end of the first half reflecting the typically long lead times of electronic components for our systems.  Trade receivables were almost the same as a year ago and have not flexed with lower sales because June was a comparatively strong month.

Dividend

The reduction in profit in the first half means it is not prudent for Belgravium to pay an interim dividend in 2008. The Directors are committed to resuming a dividend payment as soon as possible once financial conditions permit.

Acquisitions

We continue to review possible acquisition opportunities. However these will only be pursued where they can demonstrate significant incremental shareholder value. The Board continues to explore every opportunity, whilst taking a realistic view on funding requirements and current market conditions.

Outlook

Belgravium Group occupies strong positions in its chosen market sectors and offers customers unique solutions to improve productivity and efficiencies in the supply chain. Whilst the first half of 2008 witnessed a lengthening of the normal sales cycle, Belgravium's strength, reputation, proven product range and dedicated team will allow progress to resume once market conditions improve.

Consolidated income statement 

for the six months ended 30 June 2008

Consolidated statement of changes in shareholders' equity 

for the six months ended 30 June 2008

   Consolidated balance Sheet

at 30 June 2008

   Consolidated cash flow statement

For 6 months to 30 June 2008