RNS Number:0776O
Inspectron Holdings PLC
15 February 2008
Inspectron Holdings plc
15 February 2008
Inspectron Holdings plc ("Inspectron" or the "Company")
Preliminary Results for the Year Ended 31 July 2007
Inspectron, the AIM listed software company specialising in secure printing,
reports its final results for the year ended 31 July 2007.
Key points
* Turnover down approximately 29 per cent. to �2,507,091 (2006: �3,528,631)
* Loss before tax and exceptional item of �1,236,589 (2006: loss of �268,978)
* Disposal of Documents Solutions International Limited for an aggregate cash
amount received by the Company of �325,000
* Significant orders won since 2007 year end including a single repeat order
from the US government valued at almost �800,000
Allan Harle, chairman of Inspectron, said:
"The year to 31 July 2007 was a difficult one for Inspectron with significant
delays to promised orders and certain projects taking longer than expected to
complete. Trading since the year end has, however, been encouraging with several
significant orders placed by customers."
Enquiries:
Allan Harle, Inspectron 01625 828407
Pascal Keane, Shore Capital 020 7408 4090
Chairman's Statement
The Company announces a sharp drop in turnover for the year ended 31 July 2007
to �2,507,091. Loss on operations was �1,188,956 compared with a loss of
�250,373 for the previous year on turnover of �3,528,631. Losses per share were
1.83p (2006: loss per share 2.12p).
Actual cash balances as at 31 July 2007 amounted to �30,170 (2006: �198,075)
and net liabilities were �263,205 (2006: net liabilities �9,900). The Board
does not propose the payment of a dividend.
Operational Review
The Company announced on 30 January 2008 that it would be unable to send its
audited accounts to shareholders within the time limit under the AIM Rules due
to circumstances outside the Company's control connected with audit of a
subsidiary, Document Solutions International Ltd ("DSIL"), which was disposed of
with effect from 31 July 2007. As a result, trading in the Company's shares was
suspended on 30 January 2008.
The Company now expects to send its audited accounts to shareholders on 21
February 2008 upon which we expect that the suspension of trading in the
Company's shares will be lifted and trading in the shares will resume.
Although the results for the year were disappointing, the delay also gives me
the opportunity to deliver more promising news for the current year. The year to
31 July 2007, in common with previous years, saw a frustrating mix of
opportunity and disappointment. Some existing jobs took longer than expected to
complete, and some promised orders were significantly delayed. Meanwhile, what
at first appeared to be a one-off sale in the e-passport space, has developed
into a significant business area, where the Company's skills and software assets
are ideally placed to offer solutions worldwide.
In April, we undertook a fundamental review of our business prospects, our
financial resources and the opportunities for the future. It became clear that
the two businesses, DSIL and Integrity, were becoming less synergistic, and were
making differing and conflicting demands upon our limited management time.
Analysis showed that an ongoing short term lack of orders could put the
stability of the Group at risk.
Soon thereafter, we received an approach for DSIL, and a sale of this business
was completed on 31 July 2007. This had the effect of reducing trade debt,
significantly reducing our bank borrowings, and reducing our ongoing monthly
expenses.
The Formscan name for use in Europe was sold with the disposal of DSIL, but for
the time being, we will continue to trade as Formscan outside Europe. Our new
public name, Inspectron Holdings plc, more closely reflects the ongoing document
tracking aspects of the Integrity business.
Since July, we have been concentrating on positioning the group for the next few
years, to take advantage of our skills, assets, experience and the growing
demands of tracking in the production of chip-based documents. The lessons
learned and the reference customers already in place, in the production of
electronic passports, put us in an exciting position to build upon and widen our
presence in this new industry.
We are already seeing the benefits of this new focus, which has coincided with
an upturn in business. The new fiscal year started with significant orders and a
renewed determination throughout the Company to succeed.
Current Trading
We have now received orders and strong indications of more orders, which are
expected to keep us busy for the next six months at least, and which should
produce stable cash flow. We started the year with an order for another
electronic passport tracking system in Asia, and an existing customer has since
placed a repeat order. We announced on 4 February 2008 a significant repeat
order from the US government valued at approximately �800,000. These current
orders will take between six and nine months to complete, but are sometimes
delayed by the customer, as they are part of a larger project, and so only
portions of these orders may be recognised as income for the current year. Two
other similar deals are currently in negotiation. The camera and Sentinel
database business is also healthy. Our MagVision product has now been
successfully installed with our first UK customer and two partnership selling
arrangements are currently being finalised for sale of MagVision in USA.
We have recently accepted an invitation to join the Infineon partners program,
called Silicon Trust. Infineon is one of the leading chip suppliers to the
e-Passport and RFID industry. It was an honour to be part of their exhibition
stand at the recent CARTES show in Paris. Cartes is the largest annual showcase
event for the smart card and associated security industry.
Our cash flow is good and we expect to achieve zero net bank debt by the end of
March 2008. A significant bonus from the e-passport activities is that these
systems need to be supported for at least 10 years. This suggests that we can
look forward to receiving repeat support orders for some years to come.
All of this has produced a new sense of confidence and optimism in the team, and
we are sensing generally that more business is close at hand.
Future Prospects
The level of enquiries and partner activity lead us to believe that the recent
upturn in business will continue for the year and beyond. We are investing in a
marketing and trade show presence, which reinforces the new direction of the
company. We expect to hire more personnel, especially for sales and product
development. For a small company like ours in the new chip-based document world,
we need to be sure that the niches we identify best reflect our skills and
experience. The challenge is to avoid running with the crowd, yet to build and
maintain our position as the partner of choice with the larger equipment
suppliers. Electronic passports, ID cards and other intelligent documents are
here to stay. Their production is technically challenging, and our solutions
experience is very relevant.
Western nations must be e-passport compliant by around 2010. This means there is
more business in this area to be taken. Furthermore, once the initial rush to
upgrade passport production is over, we expect to see a new focus on product
improvement and price reduction, plus enhanced security requirements. This
environment offers us scope to offer solutions in this space, building upon our
relationships and track record with some of the largest and most influential
nations.
CONSOLIDATED PROFIT AND LOSS ACCOUNT
For the year ended 31 July 2007
Year Ended Year Ended
31 July 2007 31 July 2006
� �
Turnover
Continuing operations 1,303,984 2,335,527
Discontinued operations 1,203,107 1,193,104
2,507,091 3,528,631
Cost of sales 2,389,430 2,626,624
Gross profit 117,661 902,007
Distribution costs 56,756 119,049
Administrative expenses:
Other administrative expenses 1,249,861 1,033,331
Operating profit (loss)
Continuing operations (1,104,620) 4,754
Discontinued operations (84,336) (255,127)
(1,188,956) (250,373)
Interest receivable 3,529 5,483
Interest payable (51,162) (24,088)
Loss on ordinary activities before exceptional item (1,236,589) (268,978)
Exceptional item 1,004,104 -
(232,485) (268,978)
Tax on profit on ordinary activities 14,569 16,534
Loss on ordinary activities after taxation (217,916) (252,444)
Dividends - -
Retained loss for year (217,916) (252,444)
Basic earnings per share (1.83)p (2.12)p
Diluted earnings per share (1.83)p (2.12)p
Dividends per share - -
The discontinued operations relate to the document and data capture solutions
business that was conducted through Document Solutions International Limited.
CONSOLIDATED BALANCE SHEET
As at As at
31 July 2007 31 July 2006
� � � �
Fixed Assets
Tangible assets 326,521 358,049
Intangible assets 44,451 53,571
370,972 411,620
Current Assets
Stocks 27,009 158,826
Debtors 457,468 871,991
Cash at bank and in hand 30,170 198,075
514,647 1,228,892
Creditors - amounts falling due within one year
(1,148,824) (1,650,412)
Net Current Liabilities (634,177) (421,520)
Total Assets less Net Current Liabilities (263,205) (9,900)
Capital and Reserves
Equity interests
Called up share capital 118,909 118,909
Share premium 1,247,665 1,247,665
Merger reserve 712,147 712,147
Revaluation reserve 366,474 366,474
Capital redemption reserve 5,289 5,289
Profit and loss account (2,713,689) (2,460,384)
Total shareholders' funds (263,205) (9,900)
CONSOLIDATED CASH FLOW STATEMENT
Year Ended Year Ended
31 July 2007 31 July 2006
� � � �
Cash flow from operating (144,543) (227,750)
activities
Returns on investments and (47,633) (18,605)
servicing of finance
Taxation 41,663 (21,568)
Capital expenditure and (13,631) (40,390)
financial investment
Cash outflow before use of (164,144) (308,313)
liquid resources and financing
Reconciliation of net cash flow
to movement in net funds
Decrease in cash in the period (164,144) (308,313)
Cash outflow from decrease in - -
lease financing
Changes in net funds resulting (164,144) (308,313)
from cash flows
Non cash movements - -
Translation difference (10,226) (8,065)
Movement in net funds for the (174,370) (316,378)
period
Net funds at 1 August 2006 (148,943) 167,435
Net funds at 31 July 2007 (323,313) (148,943)
STATEMENT OF TOTAL RECOGNISED GAINS AND LOSSES
Year Ended Year Ended
31 July 31 July
2007 2006
� �
Loss attributable to shareholders (217,916) (252,444)
Foreign exchange translation loss (35,389) (39,491)
(253,305) (291,935)
RECONCILIATION OF MOVEMENTS IN SHAREHOLDERS' FUNDS
2007 2006
� �
Loss attributable to shareholders (217,916) (252,444)
Foreign exchange translation loss (35,389) (39,491)
Total recognised losses (253,305) (291,935)
Dividends - -
(253,305) (291,935)
Own shares deduction - -
Net reduction to shareholders' funds (253,305) (291,935)
Shareholders' funds at 1 August 2006 (9.900) 282,035
Shareholders' funds at 31 July 2007 (263,205) (9,900)
Represented by:
Equity interests (263,205) (9,900)
NOTE OF HISTORICAL PROFITS AND LOSSES
2007 2006
� �
Reported loss on ordinary activities before taxation (232,485) (268,978)
Realisation of property revaluation gains of previous years - -
Difference between historical cost depreciation and the actual
depreciation charge for the year calculated on the revalued
amount 5,263 5,263
Historical cost loss on ordinary activities before taxation (227,222) (263,715)
Historical cost loss in the year retained after taxation and
dividends (212,653) (247,181)
Notes
1. Financial Information
The financial information set out above does not constitute statutory accounts
within the meaning of section 240 of the Companies Act 1985. Such information
has been extracted from the Group's accounts for the relevant financial years
2007 and 2006. The accounts were prepared using the historic cost convention
and on a going concern basis. The accounts for the year ended 31 July 2006 have
been delivered to the Registrar of Companies and the accounts for the year ended
31 July 2007 will be so delivered in due course.
2. Losses per share
Basic losses per share have been calculated on the loss attributable to
shareholders for the year of 1.83p (2006: loss of 2.12p) and 11,890,904 shares
(2006: 11,890,904), being the weighted average number of shares in issue during
the year. Diluted earnings per share have been calculated using the same
weighted average shares of 11,890,904.
The two calculations are the same this year since outstanding share options
(17,109 shares) currently have an exercise price above the market share price
and are therefore, in accordance with FRS 14, not included in the diluted shares
calculation.
3. Availability of documents
Copies of this announcement are available from the Company at Apex House, West
End, Frome, Somerset BA11 3AS. The Company's annual report and accounts for the
year ended 31 July 2007 will be posted to shareholders shortly.
This information is provided by RNS
The company news service from the London Stock Exchange
END
FR FKPKPCBKKQBD
Inspectron (LSE:ISPT)
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