Final Results
Harrier Group PLC
03 March 2004
HARRIER GROUP PLC
PRELIMINARY RESULTS ANNOUNCEMENT YEAR ENDED 31ST DECEMBER 2003
CHAIRMAN'S STATEMENT
FOR THE YEAR ENDED 31 DECEMBER 2003
I am delighted to report a welcome return to profitability for the Group for the
year ended 31 December 2003.
Turnover for the year amounted to £9.0m (2002: £9.5m). In the second half of
2003 turnover improved to £4.7m from £4.3m in the first half and this
improvement has continued into 2004.
EBITDA for the year improved significantly to £566,027 (2002: Loss £625,688).
The trading profit for the year amounted to £349,287 (2002: Loss £813,985) and
the net profit for the year was £200,381 (2002: Loss £19,005,408). Owing to
increased working capital requirements, cash balances decreased to £1.3m at the
year end (2002: £1.6m).
Owing to the large deficit on the company's profit and loss account, we are
unable to consider the payment of any dividends. To rectify this situation we
propose, subject to shareholders' approval, to apply to the Court for a
reduction of the share premium account of the company.
I would like to warmly thank all the management and staff for their hard work
and loyalty during the year and for the excellent turnaround in the Group's
trading performance.
With the overall improvement in our market sector we have increased our sales
force to take advantage of the upturn and we continue to enjoy a growing
pipeline of potential new business.
During 2003 we have successfully stabilised the group and returned it to
profitability. Our objective now is to further grow our revenues whilst
maintaining a tight control of our cost base. We are aware of a number of
opportunities in our market place and as and when appropriate will seek to
supplement our organic growth with complementary acquisitions.
CHIEF EXECUTIVE OFFICER'S STATEMENT
Important priorities for 2003 were to restore the confidence of our major
clients, and to strengthen existing vendor relationships, both of which have
been successfully accomplished. We have also been able to establish strong new
partnerships with vendors who we expect to play an important part in the future
growth of Harrier.
In the second half of 2003, we have strengthened and expanded our sales force
significantly. The full benefit of this recruitment is expected to occur during
2004 and we are encouraged that the results for the month of January 2004 were
clearly better than those for January 2003.
While we have continued to monitor and manage costs very carefully, modest
investments were made in 2003 on preparing for accreditation under BS 7799
(Information security processes) and ISO 9000 (Quality processes). With
sponsorship from strategic partners, we have also conducted a series of highly
effective promotional events in 2003 which we intend to continue in 2004.
We are rolling out marketing initiatives which target specific management
activities such as Messaging Compliance, E-mail Security, and E-mail Archiving.
Harrier has for some years been providing storage solutions as well as network
security solutions, and in 2004 we expect to grow this side of our business
further to take advantage of an improving market for storage projects.
In 2003, 53% of our revenue came from provision of services, comprising
consultancy, maintenance, training and managed services, and 47% from sales of
hardware and software products.
Although margins in all sectors of the IT marketplace had been further eroded
throughout 2003, by focusing on the delivery of quality services and products we
have been able to produce overall gross margins of 49% for the year.
Current trading and prospects
Harrier is well placed to grow organically within our traditional market sectors
of security and storage solutions.
We are also preparing to enter the UK outsourcing marketplace. This is the
fastest growing sector of the UK IT marketplace, and in the second half of 2004
a number of very large government and commercial outsourcing projects will be
going live. Having developed high level contacts with leading tier one
outsourcers, we believe that Harrier is in a strong position to become a
strategic partner and to win valuable subcontracts from the successful prime
contractors.
The board is aware that there will be a consolidation of the companies in our
market sectors over the next two years, and we intend to play a positive role in
that consolidation. Where we see opportunities to do so, we will build further
critical mass by acquisitions or mergers.
Since June 2002, we have consistently grown our turnover on a half yearly basis
and we look forward to the year ahead as one of continued growth.
I would like to thank the management and staff of the group for their
contribution to the improvements in our results, and on their behalf also to
thank our shareholders for their continued support during 2003.
CONSOLIDATED PROFIT AND LOSS ACCOUNT
FOR THE YEAR ENDED 31 DECEMBER 2003
2003 2002
£ £
Turnover 9,029,851 9,544,299
Cost of sales (4,613,122) (4,537,281)
----------- -----------
Gross profit 4,416,729 5,007,018
Administration expenses (4,107,933) (5,871,554)
----------- -----------
Operating profit/(loss) before goodwill
impairment 308,796 (864,536)
provision and exceptional severance
costs
Exceptional severance costs (148,905) (193,964)
Goodwill impairment provision - (17,997,459)
----------- -----------
Operating profit/(loss) 159,891 (19,055,959)
Interest receivable 186,591 541,123
Interest payable (146,101) (490,574)
----------- -----------
Profit/(loss) on ordinary activities
before 200,381 (19,005,410)
taxation
Taxation - -
----------- -----------
Profit/(loss) for the financial year 200,381 (19,005,410)
=========== ===========
Basic profit/(loss) per share 0.69p (66.18p)
============ ============
Diluted profit/(loss) per share 0.55p (59.19p)
============= =============
IIMR 'headline' profit/(loss) per share 0.69p ( 3.51p)
============== ==============
CONSOLIDATED BALANCE SHEET
AS AT 31 DECEMBER 2003
2003 2002
£ £ £ £
Fixed assets
Intangible assets - -
Tangible assets 376,059 616,285
---------- ----------
376,059 616,285
Current assets
Stocks 103,841 28,782
Debtors 2,143,900 1,797,308
Cash and bank balances 1,284,124 1,595,654
Term deposit - 12,000,000
--------- ---------
3,531,865 15,421,744
--------- ----------
Creditors: Amounts (2,583,672) (2,942,163)
falling
due within one year
---------- ----------
Net current assets 948,193 12,479,581
Total assets less current 1,324,252 13,095,866
liabilities
---------- ----------
Creditors: Amounts - (12,000,000)
falling due
after more than one
year ---------- ----------
Net assets 1,324,252 1,095,866
========== ==========
Capital and reserves
Called up share capital 292,420 287,197
Share premium account 23,962,485 23,939,703
Capital redemption 268,972 268,972
reserve
Profit and loss account (23,199,647) (23,400,028)
----------- -----------
Equity shareholders' 1,324,230 1,095,844
funds
Minority interests 22 22
----------- -----------
Total shareholders' funds 1,324,252 1,095,866
=========== ===========
CONSOLIDATED CASH FLOW STATEMENT
FOR THE YEAR ENDED 31 DECEMBER 2003
2003 2002
£ £ £ £
Net cash outflow from (363,021) (558,766)
operating activities
Returns on investments and
servicing
of finance
Interest received 186,591 541,123
Interest paid (146,101) (490,574)
--------- ----------
40,490 50,549
Taxation
Corporation tax paid - -
Capital expenditure and
financial
investment
Purchases of tangible fixed (19,003) (71,239)
assets
Sales of tangible fixed assets 2,000 19,040
--------- ----------
Net cash outflow from (17,003) (52,199)
investing
activities
Acquisitions and disposals
Purchase of subsidiary - (119,378)
undertaking ---------- --------
Net cash outflow before (339,534) (679,794)
financing
Financing
Issue of ordinary share 28,004 -
capital
Redemption of loan notes (12,000,000) (2,000,000)
----------
---------
(11,971,996) (2,000,000)
---------- --------
Decrease in cash (12,311,530) (2,679,794)
========== ========
2003 2002
£ £
Reconciliation of net cash flow
to movement in net funds
Decrease in cash in the year (12,311,530) (2,679,794)
Redemption of loan notes 12,000,000 2,000,000
---------- ----------
Movement in net funds in the year (311,530) (679,794)
Net funds at start of year 1,595,654 2,275,448
---------- ----------
Net funds at end of year 1,284,124 1,595,654
========== ==========
NOTES TO THE FINANCIAL INFORMATION
FOR THE YEAR ENDED 31 DECEMBER 2003
1. The preliminary announcement of results has been prepared under the
historical cost convention in accordance with the Group's accounting policies
for the year ended 31 December 2003.
2. The above financial information does not constitute statutory accounts
as defined in Section 240 of the Companies Act 1985. The summarised balance
sheet at 31 December 2003 and the summarised profit and loss account and cash
flow statement for the year then ended have been extracted from the Group's
financial statements. These financial statements have not yet been delivered to
the Registrar of Companies.
3. The calculation of basic and diluted loss per ordinary share of 1p each
is based on the profit on ordinary activities after taxation and minority
interests of £200,381 divided by the weighted average number of ordinary shares
of 1p each 28,829,201 (basic) and 36,669,626 (diluted). The IIMR 'headline'
profit per share is the basic figure excluding the goodwill amortisation and is
therefore based on a profit of £200,381 and a weighted average number of shares
of 28,829,201.
4. Reconciliation of profit/(loss) to net cash outflow from continuing
operating activities
2003 2002
£ £
Operating profit/(loss) 159,892 (19,055,959)
Goodwill amortisation and impairment - 17,997,459
provision
Depreciation 249,748 237,103
Loss/(profit) on sale of fixed assets 7,481 (2,979)
Increase in stock (75,059) (7,642)
(Increase)/Decrease in debtors (346,592) 1,376,403
Decrease in creditors (358,491) (1,103,151)
----------- -----------
Net cash outflow from operating activities (363,021) (558,766)
=========== ===========
5. All of the Group's activities are classed as continuing and there are no
gains and losses other than disclosed above.
6. No dividends are proposed or were paid during the period.
7. The Annual General Meeting will be held at 1.00pm on 21st April 2004 at
Cromwell House, Hook.
8. The Report and Accounts will be sent to shareholders on, or before 24th
March 2004. Further copies may be obtained on application to the Company's
Registered Office, (Cromwell House, Cromwell Way, Bartley Wood, Hook, Hampshire,
RG27 9XA) or will be available for collection at the same address for a period
of 1 month from the date of publication.
This information is provided by RNS
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