Interim Results

Harrier Group PLC 04 September 2003 HARRIER GROUP PLC INTERIM RESULTS FOR THE 6 MONTHS ENDED 30 JUNE 2003 CHAIRMAN'S STATEMENT I am pleased to announce an operating profit of £138,731 before exceptional severance costs, for the six months to 30 June 2003 (2002: £466,542 loss) on reduced revenue of £4.25m (2002: £5.72m). The return to profitability has been achieved through a combination of strong cost control and provision of a high quality service to clients. Compared to the corresponding period in 2002 we have reduced overheads by a total of £1.43m by eliminating wastage, increasing staff utilisation and disposing of excess premises. Our average staff numbers for the six months to 30 June 2003 were 51, down from an average of 88 for the same period to 30 June 2002. The salary reduction scheme introduced in June 2002 was removed in December 2002, with all staff, except the directors, being returned to full salary. Key Fundamentals 30 June 2003 30 June 2002 (£'000) (£'000) Turnover 4,255 5,721 Gross Margin 49% 51% Total overheads 1,939 3,371 EBITDA 270 (355) Operating profit/(loss) before goodwill 139 (467) amortisation & exceptional severance costs Profit/(loss) on Ordinary activities 13 (1,075) Cash 1,369 1,331 Following a disappointing performance in January, the company has traded profitably each month since February. This is testament to the dedication and determination of the Harrier team, and to the fact that the company has modified and improved the solutions and services provided to clients to keep pace with a rapidly changing marketplace. In the first half of this year we have succeeded in considerably strengthening our relationships with established clients and suppliers, and rebuilding confidence in the company. We have also identified strategies to enhance our business with existing clients, and to develop significant new name accounts. We have already begun to implement those strategies, and we are recruiting for a number of positions in both commercial and revenue earning areas in order to do so. The pipeline of new business is growing month on month and while our marketplace remains very challenging we are cautiously optimistic for the future. During the second half of 2003 we intend to lay the foundations within Harrier for strong growth in 2004. With the ongoing consolidation within the IT industry, we are also aware that there will be a number of interesting acquisition opportunities which we plan to pursue in order to enhance shareholder value. Mark Rowlinson (Non Exec Director) has today resigned from the board and I would like to take this opportunity to thank him for his support and commitment to Harrier since his appointment in 1999 and wish him every success for the future. ALR Morton 4 September 2003 INDEPENDENT REVIEW REPORT TO THE DIRECTORS OF HARRIER GROUP PLC SIX MONTHS ENDED 30 JUNE 2003 Introduction We have been instructed by the company to review the financial information set out on pages 3 to 8 and we have read the other information contained in the interim report and considered whether it contains any apparent mis-statements or material inconsistencies with the financial information. Directors' Responsibilities The interim report, including the financial information contained therein, is the responsibility of, and has been approved by, the Directors. The Directors are responsible for preparing the interim report in accordance with the Listing Rules of the UK Listing Authority which require that the accounting policies and presentation applied to the interim figures should be consistent with those applied in preparing the preceding annual accounts except where any changes, and the reasons for them, are disclosed. Review Work Performed We conducted our review in accordance with guidance contained in Bulletin 1999/4 issued by the Auditing Practices Board for use in the United Kingdom. A review consists primarily of making enquiries of group management and applying analytical procedures to the financial information and underlying financial data and, based thereon, assessing whether the accounting policies and presentation have been consistently applied unless otherwise disclosed. A review excludes audit procedures such as tests of controls and verification of assets, liabilities and transactions. It is substantially less in scope than an audit performed in accordance with United Kingdom Auditing Standards and therefore provides a lower level of assurance than an audit. Accordingly, we do not express an audit opinion on the financial information. Review Conclusion On the basis of our review, we are not aware of any material modifications that should be made to the financial information as presented for the six months ended 30 June 2003. Saffery Champness Chartered Accountants London 4 September 2003 CONSOLIDATED PROFIT AND LOSS ACCOUNT SIX MONTHS ENDED 30 JUNE 2003 Unaudited Unaudited Audited six months to six months to Year ended 30 June 30 June 31 December 2003 2002 2002 £ £ £ Turnover 4,254,722 5,721,206 9,544,298 Cost of sales (2,176,811) (2,816,568) (4,537,280) --------- --------- --------- Gross Profit 2,077,911 2,904,638 5,007,018 Administrative expenses (1,939,180) (3,371,180) (5,871,554) --------- --------- --------- Operating profit/(loss) before 138,731 (466,542) (864,536) goodwill amortisation & exceptional severance costs Exceptional severance costs (146,926) (134,761) (193,964) Amortisation of goodwill - (501,751) (17,997,459) --------- --------- --------- Operating loss (8,195) (1,103,054) (19,055,959) Interest receivable 165,512 282,948 541,123 Interest payable (144,505) (254,748) (490,574) --------- --------- --------- Profit/(loss) on ordinary 12,812 (1,074,854) (19,005,410) activities before taxation Taxation - - - --------- --------- --------- Profit/(loss) on ordinary 12,812 (1,074,854) (19,005,410) activities after taxation --------- --------- --------- Profit/(loss) for the financial 12,812 (1,074,854) (19,005,410) period ========= ========= ========= Basic profit/(loss) per share 0.05p (3.74p) (66.18p) ========= ========= ========= Diluted profit/(loss) per 0.04p (3.38p) (59.18p) share ========= ========= ========= IIMR 'headline' profit/(loss) 0.05p (0.20p) (3.51p) per share ========= ========= ========= CONSOLIDATED BALANCE SHEET AS AT 30 JUNE 2003 Unaudited Unaudited Audited 30 June 30 June 31 December 2003 2002 2002 £ £ £ Fixed assets Intangible assets - 17,495,709 - Tangible assets 484,178 732,948 616,285 --------- --------- --------- 484,178 18,228,657 616,285 --------- --------- --------- Current assets Stock 33,471 96,118 28,782 Debtors 2,080,895 2,705,390 1,797,308 Cash and bank balances 1,368,943 1,331,007 1,595,654 Term deposit - 12,000,000 12,000,000 --------- --------- --------- 3,483,309 16,132,515 15,421,744 --------- --------- --------- Creditors Amounts falling due within one year (2,858,808) (3,334,750) (2,942,163) --------- --------- --------- Net current assets 624,501 12,797,765 12,479,581 --------- --------- --------- Total assets less current 1,108,679 31,026,422 13,095,866 liabilities Creditors Amounts falling due after more than - (12,000,000) (12,000,000) one year --------- --------- --------- Net assets 1,108,679 19,026,422 1,095,866 ========= ========= ========= Capital and reserves Called up share capital 287,197 287,197 287,197 Share premium account 23,939,703 23,939,703 23,939,703 Capital redemption reserve 268,972 268,972 268,972 Profit and loss account (23,387,215) (5,469,472) (23,400,028) --------- --------- --------- Equity shareholders' funds 1,108,657 19,026,400 1,095,844 Minority interests 22 22 22 --------- --------- --------- Total shareholders' funds 1,108,679 19,026,422 1,095,866 ========= ========= ========= CONSOLIDATED CASH FLOW STATEMENT SIX MONTHS ENDED 30 JUNE 2003 Note Unaudited Unaudited Audited six months to six months to Year ended 30 June 30 June 31 December 2003 2002 2002 £ £ £ Net cash outflow from 4 (245,997) (806,796) (558,766) operating activities --------- --------- --------- Returns on investments and servicing of finance Interest received 165,512 282,948 541,123 Interest paid (144,505) (254,748) (490,574) --------- --------- --------- 21,007 28,200 50,549 --------- --------- --------- Taxation Corporation tax paid - - - --------- --------- --------- Capital expenditure and financial investment Purchases of tangible (1,721) (46,468) (71,239) fixed assets Sales of tangible fixed - - 19,040 assets --------- --------- --------- Net cash outflow from (1,721) (46,468) (52,199) investing activities --------- --------- --------- Acquisitions and disposals Purchase of subsidiary - (119,377) (119,378) undertakings --------- --------- --------- Net cash outflow before (226,711) (944,441) (679,794) financing Financing Loan notes repaid (12,000,000) (2,000,000) - --------- --------- --------- (12,000,000) (2,000,000) - --------- --------- --------- Decrease in cash (12,226,711) (2,944,441) (679,794) ========= ========= ========= Reconciliation of net cash flow to movement in net funds Decrease in cash in the (12,226,711) (2,944,441) (679,794) period Change in net debt from 12,000,000 2,000,000 - cashflows --------- --------- --------- Movement in net funds in (226,711) (944,441) (679,794) the period Net funds at start of 1,595,654 2,275,448 2,275,448 period --------- --------- --------- Net funds at end of 5 1,368,943 1,331,007 1,595,654 period ========= ========= ========= NOTES TO THE INTERIM RESULTS SIX MONTHS ENDED 30 JUNE 2003 1. The interim figures for the six month period to 30 June 2003 are unaudited and do not constitute statutory accounts. 2. The financial information set out in the interim statement has been prepared in accordance with applicable accounting standards. The accounting policies have been consistently applied both in 2002 and 2003 and are described in the 2002 financial statements. 3. The calculation of basic profit per ordinary share of 0.05p each is based on the profit on ordinary activities after taxation divided by the weighted average number of ordinary shares in issue during the period of 28,719,702. The diluted profit per share of 0.04p each is based on the profit on ordinary activities after taxation divided by the number of share options not exercised plus the weighted average number of ordinary shares in the period amounting in aggregate to 32,280,822. The IIMR 'headline' profit per share is the basic profit per share excluding amortisation of goodwill and is therefore based on a profit for the six months of £12,812 and a weighted average number of shares in issue of 28,719,702. 4. Reconciliation of loss to net cash outflow from operating activities: 6 months to 6 months to Year ended 30 June 30 June 31 December 2003 2002 2002 £ £ £ Operating loss (8,195) (1,103,054) (19,055,959) Amortisation of goodwill - 501,751 17,997,459 Depreciation 131,099 111,728 237,103 Loss/(profit) on disposal of fixed 2,730 - (2,979) assets Increase in stock (4,689) (74,978) (7,642) (Increase)/Decrease in debtors (283,587) 468,321 1,376,403 Decrease in creditors (83,355) (710,564) (1,103,151) --------- --------- --------- Net cash outflow from operating (245,997) (806,796) (558,766) activities --------- --------- --------- 5. Analysis of net funds: At beginning of Cashflow Other non cash At end of period changes period £ £ £ £ Cash at bank and in 13,595,654 (12,226,711) - 1,368,943 hand Debt due after one (12,000,000) 12,000,000 - - year --------- --------- --------- --------- 1,595,654 (226,711) - 1,368,943 ========= ========= ========= ========= 6. Minority interests represent non-participating shares in a subsidiary company Harrier Corporation Limited 7. The results for the year ended 31 December 2002 as shown in this report do not constitute statutory accounts but are an abridged version of the company's 2002 accounts which have been filed with the Registrar of Companies, which did not contain any statement under section 237 (2) or (3) of the Companies Act 1985 and upon which the auditors' report was unqualified. 8. The interim report was approved by the directors on 3 September 2003. A copy of the interim report will be posted to shareholders and will also be available from the company's registered office at Cromwell House, Bartley Wood Business Park, Hook RG27 9XA. This information is provided by RNS The company news service from the London Stock Exchange

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