Security Research Group plc ("Security Research Group" or the "Company") Interim Results for the six months ended 30 March 2013 Security Research Group comprises Specialist Electronics, consisting of Audiotel International Limited (`Audiotel') and its subsidiary Security Research Limited, Property Information Services Businesses ('PSG') and Moore & Buckle (Flexible Packaging) Limited (`M&B'). Following completion in December 2012 of the £50 million order for Improvised Explosive Device (`IED') detectors from the Ministry of Defence (`MoD'), Specialist Electronics is now focussed on improving its existing range of products and on developing a range of completely new innovative products aimed at the commercial market. PSG is a major provider of both commercial and residential property searches and Energy Performance Certificates to the conveyancing marketplace in England and Wales. PSG trades both through its expanded wholly owned operation based in Yorkshire and its national network of PSG Brand Franchisees across England and Wales. M&B provides specialist, bespoke, flexible packaging solutions. highlights * Group profit before taxation £219,000 (2012: £8,587,000). * Specialist Electronics operating profit £7,000 (2012: £8,609,000). * Property Information Services operating profit £368,000 (2012: £62,000). * M&B's operating profit £123,000 (2012: £146,000). For further information please visit www.srgroupplc.com Enquiries: Security Research Group plc Jonathan Mervis , Chairman 020 7881 0800 John Warwick, Finance Director W H Ireland Limited Chris Fielding/ James Bavister 020 7220 1650 chairman's statement for the six months ended 30 September 2013 Specialist Electronics The fall in Group Profit before taxation from £8,587,000 to £219,000 reflects the completion of the £50 million MoD contract and the sea change in global markets for IED Detection equipment, which was responsible for a large proportion of the profits last year. Withdrawal of the great majority of ISAF forces from operational theatre in Afghanistan, as well as a change in strategic tactics, has curtailed the prospects for further orders for the foreseeable future. Shareholders have, however, already benefitted through share buy backs totalling over £15 million as a result of the MoD contract. The Annual Report highlighted our goal of developing new products based on proprietary applications of our technology for the global market place and a commensurate upgrade of the Specialist Electronics profile. There has been positive work in progress on all fronts. Guard Products The high profile and risk of danger and damage to government agencies, corporations and a range of their advisers to the consequences flowing from eavesdropping, bugging and covert videoing has become of increasing concern. To reduce the risk of exposure to these threats and to raise the protective bar even further than previously achieved Audiotel has upgraded its Guard Products and is planning a major re-launch early in the new year. Operating in real time on a 24/7 basis Meeting Guard displays unequivocally on a screen, either as an alert or alarm, evidence of eavesdropping, bugging or the operation of covert video. The meeting participants are, therefore, made aware immediately of possible breaches of security. The Enhanced Superbroom The Enhanced Superbroom is the latest lightweight Non-Linear Junction Detector (NLJD). Its variable power enables it, in the first instance, to identify the general area of the threat and then to follow up by identifying the threat with pin point accuracy. Since its launch five months ago in July 2013 Enhanced Superbrooms have been sold to customers in Italy, Portugal, Finland, Saudi Arabia, South Africa, Singapore and Taiwan as well as to The Foreign and Commonwealth Office. The result of a £1 million MoD tender for this product is expected before the calendar year end. The Archway The Archway detects a wide range of information storing devices, including SIM cards, USB memory sticks, hidden cameras and listening and recording devices. It also detects mobile phones. There is interest from an important Chinese customer and from a major global manufacturer of electronic consumer products. PSG The outlook for PSG has improved substantially. The operating profit for the period was £368,000 (2012: £62,000). PSG is benefitting from, and will continue to benefit from, a variety of factors including:- * Rising house sale transactions. * All franchisees having signed up to a new agreement for five years with an option to renew. * Continued investment in IT, creating a national user friendly platform to process and deliver an expanding range of products resulting in increases in income with only minimal increases in costs. * Investment in marketing of new products and regular CPD seminars for solicitors. * Development of ways of using the unique national network to deliver services, other than property related services, to solicitor customers. PSG Energy continues to have high quality expertise and provides excellent service in this sector. M&B M&B's operating profit of £123,000 (2012: £146,000) was marginally down from the first half of the previous financial year. Outlook Specialist Electronics is progressing with its plans for gaining wide commercial acceptance for its latest products. These counter the theft of information through the eavesdropping of confidential discussions and inhibit the smuggling of memory devices loaded with classified information. PSG, for the first time since 2007, stands to benefit from an upward trend in residential housing sales leading to an increased income with only a minimal increase in costs. Jonathan Mervis Chairman 4 December 2013 consolidated income statement for the six months ended 30 September 2013 Six months Six months Year ended ended ended 30 September 30 September 31 March 2013 2012 2013 Unaudited Unaudited Audited £000 £000 £000 Revenue 4,799 25,781 29,364 Cost of sales (2,295) (10,342) (14,046) Gross profit 2,504 15,439 15,318 Administrative expenses (2,294) (6,900) (8,715) Operating profit before exceptional 210 8,539 6,603 items Exceptional administrative expenses - - (1,704) Operating profit 210 8,539 4,899 Finance costs - - (11) Finance income 9 48 90 Profit on ordinary activities before 219 8,587 4,978 taxation Income tax credit/(expense) 25 (2,010) (1,295) Profit on ordinary activities after 244 6,577 3,683 taxation Basic earnings per share 1.26p 27.06p 15.89p Diluted earnings per share 1.25p 26.56p 15.74p The consolidated income statement has been prepared on the basis that all operations are continuing operations. consolidated statement of comprehensive income for the six months ended 30 September 2013 The profit on ordinary activities after taxation represents the Group's total comprehensive income for the period. consolidated statement of changes in equity for the six months ended 30 September 2013 Share Share Capital Retained Total Capital Premium Redemption Earnings Reserve £000 £000 £000 £000 £000 At 1 April 2012 5,148 438 626 12,955 19,167 Purchase of ordinary share - - - (4,184) (4,184) capital for treasury (including costs of £47,000) Cancellation of own shares (368) - 368 - - Total comprehensive income for - - - 6,577 6,577 the period At 30 September 2012 4,780 438 994 15,348 21,560 Issue of new ordinary shares 76 114 - - 190 on exercise of options Purchase of ordinary share - - - (11,008) (11,008) capital for treasury (including costs of £80,000) Cancellation of own shares (971) - 971 - - Total comprehensive income for - - - (2,894) (2,894) the period At 31 March 2013 3,885 552 1,965 1,446 7,848 Total comprehensive income for - - - 244 244 the period At 30 September 2013 3,885 552 1,965 1,690 8,092 consolidated statement of financial position for the six months ended 30 September 2013 30 September 30 September 31 March 2013 2012 2013 Unaudited Unaudited Audited £000 £000 £000 Non-current assets Goodwill 3,273 4,977 3,273 Other intangible assets 597 668 628 Property, plant and equipment 365 743 411 Deferred tax asset 282 125 312 4,517 6,513 4,624 Current assets Inventories 1,262 1,655 1,189 Trade and other receivables 2,502 4,413 2,721 Current tax asset 289 - - Cash and cash equivalents 2,849 17,822 5,398 6,902 23,890 9,308 Current liabilities Trade and other payables (3,272) (6,681) (5,666) Current tax liability (55) (2,162) (418) (3,327) (8,843) (6,084) Net current assets 3,575 15,047 3,224 Net assets 8,092 21,560 7,848 Represented by: Capital and reserves attributable to equity holders Called up share capital 3,885 4,780 3,885 Share premium account 552 438 552 Capital redemption reserve 1,965 994 1,965 Retained earnings 1,690 15,348 1,446 Total equity 8,092 21,560 7,848 consolidated statement of cash flows for the six months ended 30 September 2013 Six months Six months Year ended ended ended 30 September 30 September 31 March 2013 2012 2013 Unaudited Unaudited Audited £000 £000 £000 Cash flows from operating activities Profit before taxation 219 8,587 4,978 Adjustments for: Depreciation of property, plant and 57 1,037 1,418 equipment Amortisation of goodwill - - 1,704 Amortisation of other intangible assets 256 278 533 Profit on disposal of tangible assets (16) (2) (7) Interest expense - - 11 Interest receivable (9) (49) (90) Decrease in receivables 219 2,810 4,501 (Increase)/decrease in inventories (73) (342) 124 Decrease in payables (2,394) (4,490) (5,505) Cash (used in)/generated from operations (1,741) 7,829 7,667 Interest paid - - (11) Income tax paid (597) (2,685) (3,902) Net cash (used in)/generated from (2,338) 5,144 3,754 operating activities Cash flows from investing activities Purchase of tangible assets (19) (203) (288) Purchase of other intangible assets (225) (258) (472) Proceeds from sale of tangible assets 24 6 47 Interest received 9 49 90 Net cash used in investing activities (211) (406) (623) Cash flows from financing activities Issue of share capital - - 190 Purchase of own shares - (4,184) (15,191) Net cash used in financing activities - (4,184) (15,001) Net (decrease)/increase in cash and cash (2,549) 554 (11,870) equivalents Cash and cash equivalents at beginning 5,398 17,268 17,268 of period Cash and cash equivalents at end of 2,849 17,822 5,398 period notes to the interim financial statements for the six months ended 30 September 2013 1. general information The interim financial statements for the six months ended 30 September 2013 were authorised for issue in accordance with a resolution of the Board of Directors on 3 December 2013. The Company is a public limited company incorporated in the United Kingdom. The address of its registered office is 133 Ebury Street, London SW1W 9QU. The Company's ordinary shares are admitted to trading on the AIM market of the London Stock Exchange. The financial information for the six months ended 30 September 2013 set out in this interim report is unaudited and does not constitute statutory accounts within the meaning of Section 434 of the Companies Act 2006. The comparative figures for the year ended 31 March 2013 are extracted from the statutory financial statements which have been filed with the Registrar of Companies. The auditors' report on those financial statements was unqualified and did not contain statements under section 498(2) or (3) of the Companies Act 2006. 2. basis of preparation The interim financial statements have been prepared under the historical cost convention and in accordance with applicable International Financial Reporting Standards (IFRSs), International Accounting Standards (IAS) and International Financial Reporting Interpretations Committee (IFRIC) interpretations adopted for use by the European Union and with those parts of the Companies Act 2006 applicable to companies reporting under IFRSs. The information within these interim financial statements has been prepared in accordance with IAS 34 "Interim Financial Reporting" as adopted by the European Union. 3. accounting policies The principal accounting policies used in preparing the interim financial statements and those the group expects to apply in its financial statements for the year ending 31 March 2014 are unchanged from those disclosed in the statutory financial statements for the year ended 31 March 2013. 4. segmental analysis Six months Six months Year ended ended ended 30 September 30 September 31 March 2013 2012 2013 Unaudited Unaudited Audited £000 £000 £000 Revenue - operating segment Specialist electronics 1,440 22,801 23,566 Property information services 2,606 2,190 4,234 Packaging solutions 753 790 1,564 4,799 25,781 29,364 Revenue - geographical area United Kingdom 4,608 25,579 28,833 Asia and Middle East 156 53 227 Europe 20 115 242 Other 15 34 62 4,799 25,781 29,364 4. segmental analysis (continued) Six months Six months Year ended ended ended 30 September 30 September 31 March 2013 2012 2013 Unaudited Unaudited Audited £000 £000 £000 Operating profit/(loss) Specialist electronics 7 8,609 6,765 Property information services 368 62 152 Packaging solutions 123 146 302 Head office (288) (278) (616) Exceptional items - - (1,704) 210 8,539 4,899 Net operating assets Specialist electronics 83 (2,773) (1,512) Property information services 3,316 4,420 2,935 Packaging solutions 1,934 2,236 1,964 Head office (89) (145) (937) 5,244 3,738 2,450 Interest bearing assets 2,849 17,822 5,398 8,093 21,560 7,848 5. earnings per share Basic earnings per share calculations have been arrived at by reference to the following profit and weighted average number of shares in issue during the period. The actual number of shares in issue at 30 September 2013 was 19,426,324. Six months Six months Year ended ended ended 30 September 30 September 31 March 2013 2012 2013 Profit after tax £244,000 £6,577,000 £3,683,000 Weighted average number of shares in 19,426,324 24,303,836 23,173,628 issue Basic earnings per share 1.26p 27.06p 15.89p Weighted average number of shares in 19,552,285 24,767,869 23,401,480 issue adjusted to take account of shares under option Diluted earnings per share 1.25p 26.56p 15.74p END -0- Dec/04/2013 07:00 GMT
SECURITY RESEARCH GROUP PLC: Interim Results
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