RNS Number:2474H
Capcon Holdings PLC
12 January 2005
CAPCON HOLDINGS plc
________________________________________________________________________________
Capcon Holdings plc, the AIM listed investigations and risk management company,
announces its unaudited consolidated results for the year ended 30 September
2004.
Highlights
* Group sales increased by 4.9% to #7.45m (2003: #7.1m)
* Profit before interest and amortisation of goodwill increased by 11.8%
to #0.57m (2003: #0.51m)
* Net cash flow from operations increased by 13.0% to #0.52m
* Successful integration and development of acquisitions
* Re-branding under Capcon name to exploit benefits of Group activities
* Major new client wins in leisure sector for Capcon Audit & Stocktaking
* Improved margins in Capcon Argen - high value and sensitive
investigations and screening
Ken Dulieu, Chairman, commented:
"Trading from the divisions of the business that deliver our volume sales is
strong and our investigation divisions that are less predictable are currently
very active in new projects. The recent re-branding and changes in the
Commercial Investigations management structure have strengthened the Company and
facilitated a sharper focus of our specialised services. The Directors are
confident that the Company will benefit from these changes in the year ahead.
"In addition, the Company expects to take full advantage of the many
opportunities arising from the increasing awareness by corporate entities of the
damage caused by corporate fraud to their businesses."
Enquiries
Capcon Holdings plc 0845 067 5050
Cliff Cavender, Managing Director
Williams de Broe 020 7588 7511
Frank Moxon
Threadneedle Communications 020 7531 2620
Graham Herring 07793 839 024
CAPCON HOLDINGS plc
CHAIRMAN'S STATEMENT
________________________________________________________________________________
Operational review
We have completed another year of progress during which we significantly
developed and strengthened the Capcon group of companies. We have gained several
new blue chip clients in both of our main divisions, Audit & Stocktaking and
Commercial Investigations, and increased sales and profits during a period of
internal re-organisation and consolidation.
With the successful integration and development of both acquisitions, VSA and
Argen, the Board has decided that there are important future benefits in
marketing our services under a common brand. As a consequence, earlier in the
year we embarked on a re-branding initiative that highlights the Group brand
name, Capcon, whilst still retaining separate divisional identity and
familiarity for existing clients.
We continue to seek and implement new sales and marketing initiatives which the
Board is confident will have long term benefits for the business. Further, we
believe that the growth of the specialist areas of our business is restricted
only by the current shortage of specialist management resources within the
Group. Consequently, recruitment of additional experienced, specialist managers
is an on going priority for the Board and we are confident that successful
recruitment in this area will lead to stronger organic growth in the medium
term.
On 1 August 2004, the lease on the premises occupied by Argen terminated and the
business re-located. The Board has taken advantage of this move to establish
both Argen and the Group Head Office in a City location that is more
commercially suitable as a centre for the Group's operations whilst creating a
logical base for future expansion.
Throughout the year the Board has been active in the review and appraisal of
potential acquisitions that are compatible with our existing business. The Board
has decided to broaden the search to include potential acquisitions that include
additional areas of risk management to further improve the Group's offering.
Nevertheless, our acquisition criteria still determine that all potential
business acquisitions are generating high quality earnings from associated risk
management activities.
Financial overview
Sales for the year to 30 September 2004 were #7.45 million (2003: #7.10 million)
representing a 4.9% increase on last year.
The profit for the year, before interest and amortisation of goodwill, was #0.57
million (2003: #0.51 million), an increase of 11.8%. Profit before tax and
amortisation was #0.43 million, a 13.2% increase on the #0.38 million achieved
last year.
Basic earnings per share of 0.9p compares with 1.0p last year, and, excluding
amortisation of goodwill, earnings per share have decreased to 3.7p from 3.9p
last year. The lower level of earnings per share is the result of a new issue of
923,000 shares on 12 March 2004 and the effect of lower utilisation of acquired
tax losses compared with last year.
Net cash flow from operations increased by 13.0% to #0.52 million (2003: #0.46
million). Total bank borrowings in the year were reduced by #0.12 million to
#1.26 million from #1.38 million, representing 30% of net assets. Although the
Board does not consider this level of borrowings to be excessive in relation to
the cash generated by the operations, it is sufficiently high to limit internal
investment required to create new earnings enhancing services.
On 21 December 2004, the Company announced the sale of its 50 per cent interest
in Argen GmbH for a total cash consideration of #360,000. The investment was
acquired in February 2003 as a consequence of the acquisition of Argen Limited
and its disposal will generate cash for investment in our core UK business. The
strong working relationship with Argen GmbH is very much expected to continue in
the future.
CAPCON HOLDINGS plc
CHAIRMAN'S STATEMENT (CONTINUED)
________________________________________________________________________________
Financial overview (continued)
Organic growth of the existing core business is expected to continue in the
coming year for all divisions. However, the Board believes it is necessary to
retain some of the cash generated by the business to support this growth. To
satisfy this cash requirement, the Directors have deferred until next year the
payment of their dividend entitlement from last year's final dividend and also
the current year's interim dividend declared in June. Also, to further
strengthen the Company's cash position, the Board is recommending that no final
dividend is declared or paid to shareholders in respect of the year ended 30
September 2004, making the interim dividend of 0.75p (2003: 0.73p) paid in
August 2004 the total dividend for the year (2003: 2.19p).
Audit & stocktaking
This has been a successful year for gaining new clients and work has been
undertaken for six new major leisure sector brands for the first time. Sales
reduced slightly to #3.40 million from #3.49 million in 2003, or 2.5%, but the
change in mix reported at the half year has continued into the second half of
the year enabling operating margins to be improved. Ongoing attention to cost
control and efficiency has combined with the favourable mix of work to produce
an improved profit for the division overall.
The lower sales level was largely attributable to a major client suspending our
services for three months pending resolution of their own internal IT problems.
Our services have since been re-instated at the beginning of the new financial
year at the same sales levels enjoyed prior to the interruption of our contract.
Our ongoing internal investment in IT infrastructure ensures a constantly
evolving range of flexible solutions for our clients whilst distinguishing our
services from those of our competitors. We believe that such investment is
paramount in demonstrating to existing and new clients the benefits of
outsourcing using our independent specialist services.
We continue to focus our services on the areas of our clients' business where we
believe we can make most impact and this can result in fewer audit visits and
lower sales, offset by higher margins reflecting the greater value of services
provided. We believe that this approach is important in the development of this
division's business and that our flexibility and understanding of the changing
needs of our clients in this highly competitive sector will secure our existing
relationships and lead to further new client gains in the coming year.
Commercial investigation services
Our three investigations divisions have been re-branded; Capcon Investigations,
Capcon Vincent Sherman and Capcon Argen. These divisions are still managed as
separate operations but, increasingly, instructions are being referred between
the divisions to ensure that our clients are served by the operation that has
greatest experience and specialist skill in the particular area of investigation
demanded by them.
It is now considered that reporting the financial performance of these
activities in one consolidated division is more appropriate.
Sales for the year for all investigation activities were #4.07 million compared
with #3.62 million last year, a 12.4% increase which includes the benefit of
Capcon Argen sales for a full year. Operating margins have continued to improve
and reflect an increasing proportion of projects undertaken by Capcon Argen
which specialises in high value business intelligence projects.
Fewer projects than expected were completed in the second half of the year by
the Capcon Investigations division that specialises in leisure sector work.
However, the Directors are satisfied that this does not indicate any fall in
demand for these services in the medium term.
CAPCON HOLDINGS plc
CHAIRMAN'S STATEMENT (CONTINUED)
________________________________________________________________________________
Commercial investigation services (continued)
Capcon Vincent Sherman, formerly Vincent Sherman Associates (VSA), the
specialist insurance investigator, increased sales by 4.8% which, together with
continuing attention to operational efficiencies, improved the operating profit
by approximately 20%. The division was re-structured during the second half of
the year and, as a result of this re-structuring; the year ahead should benefit
from further cost savings and improved resource management. The Directors are
confident that further new business will be gained this year with new and
existing blue chip insurance clients.
Capcon Argen has delivered another strong performance in the year to 30
September 2004, being the first full year after its acquisition by the Company.
Sales increased by 4.7% on a like for like basis and operating margins were
improved still further from a traditionally high base. The expectations of the
Board at the time this business was acquired have been fully satisfied. Having
successfully integrated Argen into the Group, our focus in the coming year will
be to enlarge our project resource capability. This will enable us to take full
advantage of the many opportunities arising from the increasing requirement by
corporate entities to gather specialist business intelligence and thereby
protect their investment and prevent exposure to unnecessary risk and fraud.
During the year the Company invested in establishing a separate risk management
business stream, trading under the Capcon Argen name, which specialises in
consultancy services that assist clients worldwide in reducing physical security
risk. This is regarded as an area of potential growth and is a complementary
service to Capcon Argen's developing business.
Current trading and prospects
Trading from the divisions of the business that deliver our volume sales is
strong and our investigation divisions that are less predictable are currently
very active in new projects. This level of activity has given us the confidence
to recruit additional specialists to accelerate organic growth. In addition, the
recent re-branding and changes in the Commercial Investigations management
structure have strengthened the Company and facilitated a sharper focus of our
specialised services. The Directors are confident that the Company will benefit
from these changes in the year ahead.
The Board continues to search for suitable acquisition opportunities in the
field of risk management and, with a broader perspective on the range of
services that would be compatible, we are confident that an earnings enhancing
transaction is achievable in 2005.
K P Dulieu
Chairman
12 January 2005
CAPCON HOLDINGS plc
CONSOLIDATED PROFIT AND LOSS ACCOUNT
FOR THE YEAR ENDED 30 SEPTEMBER 2004
________________________________________________________________________________________________________________________
Year ended Year ended
30 September 2004 30 September 2003
Before Before
Amortisation Amortisation Amortisation Amortisation
of of of of
goodwill goodwill Total goodwill goodwill Total
# # # # # #
Turnover 7,453,445 - 7,453,445 7,095,778 - 7,095,778
Cost of sales (4,100,957) (4,100,957) (4,009,213) (4,009,213)
------------ ------------ ------------ ------------ ------------ ------------
Gross profit 3,352,488 3,352,488 3,086,565 3,086,565
Administrative expenses (2,884,619) (274,429) (3,159,048) (2,656,043) (249,273) (2,905,316)
------------ ------------ ------------ ------------ ------------ ------------
Group operating profit 467,869 (274,429) 193,440 430,522 (249,273) 181,249
Share of operating profit in
associates 100,178 - 100,178 80,372 - 80,372
------------ ------------ ------------ ------------ ------------ ------------
Total operating profit 568,047 (274,429) 293,618 510,894 (249,273) 261,621
Interest receivable 58 58 1,111 1,111
Interest payable (137,875) (137,875) (130,071) (130,071)
------------ ------------ ------------ ------------ ------------ ------------
Profit on ordinary activities
before taxation 430,230 (274,429) 155,801 381,934 (249,273) 132,661
Taxation on profit on ordinary
activities (69,945) (51,430)
------------ ------------
Profit on ordinary activities
after taxation 85,856 81,231
Dividends (89,465) (201,624)
------------ ------------
Loss retained for the year (3,609) (120,393)
Retained profit brought forward 50,492 170,885
------------ ------------
Retained profit carried forward 46,883 50,492
============ ============
Earnings per share - Basic 0.9p 1.0p
- Diluted 0.8p 0.9p
All results derive from continuing operations.
Total Recognised Gains and Losses
There were no recognised gains or losses other than those stated above.
CAPCON HOLDINGS plc
CONSOLIDATED BALANCE SHEET
AS AT 30 SEPTEMBER 2004
________________________________________________________________________________
Group
2004 2003
# #
Fixed Assets
Intangible fixed assets 5,020,194 5,010,467
Tangible fixed assets 266,075 315,579
Investments 119,936 55,631
______________ ______________
5,406,205 5,381,677
Current Assets
Debtors 1,891,497 1,978,888
Cash at bank and in hand 37,207 42,986
______________ ______________
1,928,704 2,021,874
Creditors: amounts falling due within
one Year (2,999,392) (3,122,939)
______________ ______________
Net Current (Liabilities)/Assets (1,070,688) (1,101,065)
______________ ______________
Total Assets less Current Liabilities 4,335,517 4,280,612
Creditors: amounts falling due after
more than one year (100,000) (497,250)
Provisions for Liabilities and Charges (21,472) (31,823)
______________ ______________
Net Assets 4,214,045 3,751,539
============== ==============
Capital and Reserves
Called up share capital 101,568 92,338
Share premium account 2,774,094 2,317,209
Other reserves 950,000 950,000
Profit and loss account 46,883 50,492
Shares to be issued 341,500 341,500
______________ ______________
Equity Shareholders' Funds 4,214,045 3,751,539
============== ==============
CAPCON HOLDINGS plc
CONSOLIDATED CASH FLOW STATEMENT
FOR THE YEAR ENDED 30 SEPTEMBER 2004
________________________________________________________________________________
2004 2003
Note # # # #
Net cash inflow
from operating
activities 2 523,277 457,739
Dividend received
from associate - 109,470
Returns on
investments and
servicing of
finance
Interest received 58 1,111
Interest paid (137,875) (117,071)
____________ ____________
Net cash outflow
from returns on (137,817) (115,960)
investments and
servicing of
finance
Taxation
Tax paid (37,228) (52,861)
Capital
expenditure and
financial
investment
Payments to
acquire tangible (84,097) (159,036)
fixed assets
Sale of tangible
fixed 33,530 53,445
assets
____________ ____________
Net cash outflow
from (50,567) (105,591)
investing
activities
Acquisitions and
disposals
Acquisition of
subsidiary (428,658) (1,405,451)
undertakings
Net cash acquired
with - 195,750
subsidiary
____________ ____________
Net cash outflow
for (428,658) (1,209,701)
acquisitions
Equity dividends (224,465) (170,960)
paid
____________ ____________
Net cash outflow
before (355,458) (1,087,864)
financing
Financing
Issue of new 466,115 667,000
ordinary shares
Costs of new - (56,045)
issue
Repayment of loan (216,630) (164,717)
stock
New loans - 600,000
Movement in
invoice (77,084) 246,447
discounting
facilities
Principal payment
under (63,117) (87,668)
finance leases
Other loans 71,484 -
Other loan (62,779) (71,041)
repayments
____________ ____________
Net cash inflow
from 117,989 1,133,976
financing
____________ ____________
(Decrease)/ (237,469) 46,112
increase in cash ============ ============
CAPCON HOLDINGS plc
NOTES TO THE PRELIMINARY ANNOUNCEMENT
FOR THE YEAR ENDED 30 SEPTEMBER 2004
________________________________________________________________________________
1 EARNINGS PER SHARE
Year Ended Year Ended
30 September 2004 30 September 2003
# #
Earnings attributable to ordinary
shareholders 85,856 81,231
=========== ===========
Weighted average number of shares
issued during the year 9,743,191 8,386,963
Dilutive effect of share options - 29,089
Dilutive effect of shares to be issued 864,556 573,949
Diluted weighted average number of ___________ ___________
shares in issue during the year
10,607,747 8,990,001
=========== ===========
Basic earnings per share 0.9p 1.0p
=========== ===========
Diluted earnings per share 0.8p 0.9p
=========== ===========
Adjusted earnings per share:
Earnings attributable to ordinary shareholders 85,856 81,231
Amortisation of goodwill 274,429 249,273
___________ ___________
Adjusted earnings attributable to ordinary
shareholders 360,285 330,504
=========== ===========
Adjusted basic earnings per share 3.7p 3.9p
=========== ===========
Diluted earnings per share 3.4p 3.7p
=========== ===========
The Directors have presented adjusted earnings per share on this basis, as they
believe it to be a better indicator of underlying business performance.
CAPCON HOLDINGS plc
NOTES TO THE PRELIMINARY ANNOUNCEMENT (CONTINUED)
FOR THE YEAR ENDED 30 SEPTEMBER 2004
________________________________________________________________________________
2 RECONCILIATION OF OPERATING PROFIT TO NET CASH INFLOW FROM OPERATING
ACTIVITIES
2004 2003
# #
Group operating profit 193,440 181,249
Depreciation 96,370 108,665
Profit on disposal of fixed assets (2,178) (607)
Amortisation 274,429 249,273
Decrease/(increase) in debtors 87,391 (277,297)
(Decrease)/increase in creditors (126,175) 196,456
____________ ____________
Net cash inflow from operating activities 523,277 457,739
============ ============
3 RECONCILIATION OF NET CASH FLOW TO MOVEMENT IN NET DEBT
2004 2003
# #
(Decrease)/increase in cash in year (237,469) 46,112
Outflow/(inflow) from change in debt financing 348,126 (523,021)
____________ ____________
Movements in net debt resulting from cash flows 110,657 (476,909)
Net debt at 1 October 2003 (1,443,569) (966,660)
____________ ____________
Net debt at 30 September 2004 (1,332,912) (1,443,569)
============ ============
4 The financial information set out in the announcement does not constitute
the company's statutory accounts for the year ended 30 September 2004 or
2003. The financial information for the year ended 30 September 2003 is
derived from the statutory accounts for that year which have been delivered
to the Registrar of Companies. The auditors reported on those accounts;
their report was unqualified and did not contain a statement under s237(2)
or (3) Companies Act 1985. The statutory accounts for the year ended 30
September 2004 will be finalised on the basis of the financial information
presented by the directors in this preliminary announcement and will be
delivered to the Registrar of Companies following the annual general
meeting.
This information is provided by RNS
The company news service from the London Stock Exchange
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