RNS Number:3415N
Centurion Electronics PLC
09 June 2005
Embargoed until 07.00, Thursday 9 June 2005
Centurion Electronics plc
Interim results for the six months ended 31 March 2005
Centurion Electronics plc ("Centurion" or the "Company"), the UK provider of
in-car audio-visual entertainment, is pleased to announce its interim results
for the six months ended 31 March 2005.
Highlights for the six months ended 31 March 2005
* Turnover up 76.3% to #7.8 million (2004: #4.4 million)
* Operating loss before exceptional items, interest and taxation
#0.08 million (2004: profit of #0.56 million)
* Basic loss per share excluding exceptional items 0.92p (2004: earnings
per share 1.59p)
* Two new in-car entertainment programme contracts won with the Toyota Group
* Post period end contract win with major European car manufacturer
Brian Hendon, Chairman of Centurion commented: "The Company anticipates that the
financial performance will improve in the second half as our restructuring,
which is progressing well, is expected to generate benefits by the end of 2005.
With continuing difficult retail market conditions, the Board is concentrating
on the successful development of its automotive business, and I expect to be
able to announce further progress during the second half of the year."
For further information please visit www.ceplc.net or contact:
Chris Rhodes Russell Cook Jeremy Carey / Claire Melly
Centurion Electronics Charles Stanley & Co. Ltd Tavistock Communications
Tel: 01707 330550 Tel: 020 7739 8200 Tel: 020 7920 3150
Chairman's Statement
Overview
Centurion announces its interim results for the six months ended 31 March 2005.
The last six months have proved to be a period of transition for the Company. As
outlined in our pre-close period trading statement on 31 March, the unexpected
severity of the downturn in retail markets, particularly in the UK, in which
part of the business operates, resulted in our finishing the period with an over
supplied stock position. The difficulties created by declining retail markets
were further exacerbated by significant component price deflation as a result of
cheap imports provided by an aggressive and expanding manufacturing base in the
Far East.
The difficult retail conditions facing the Company have been addressed and the
Board has implemented a stock liquidation programme to eliminate the over supply
of stock levels and introduced a restricted component purchasing plan.
I am pleased to say, as outlined in our statement issued on 25 May, that as a
result of the actions we have taken stocks have been reduced significantly and
are now approaching appropriate levels.
The Board remains focused on the successful development of its automotive
business, which continues to exceed management expectations and I am delighted
to report that the Company has secured a new contract with a major European car
manufacturer.
The Company anticipates that the financial performance will improve in the
second half as our restructuring, which is well underway, will generate annual
cost savings in excess of #0.8 million by the end of 2005.
Financial Performance
Although turnover for the six months ended 31 March 2005 increased to #7.8
million (2004: #4.4 million) the Company is reporting a pre-exceptional loss
before interest and tax of #0.08 million (2004: profit of #0.56 million),
producing a pre-exceptional loss per share of 0.92p compared to a
pre-exceptional earnings per share of 1.59p for the same period last year.
As stated previously, the Company announced in March that the Board anticipated
a write down in the value of its stock of up to #1.4 million with a further #1.0
million possible in the second half. However, due to the level at which the
products affected have been discounted in order to generate the required
revenue, a write down of #3.7 million has been incurred, all of which has been
taken in the first six months. In addition, restructuring costs of #0.2 million
have been incurred in the first half. This has led to a post-exceptional pre
interest and tax loss of #4 million and a pre-tax loss of #4.3 million. Full
year exceptional items are expected to be #4.9 million on completion. A prior
year adjustment has been incurred as a result of incorrect import duty
calculations on a specific product. The effect of this has been to reduce net
assets by #0.25 million and operating profit by #0.37 million. However, I am
pleased to report that stock levels will be broadly in line with current trading
conditions and the supply chain is now managed with very strict controls.
Centurion's bankers have been supportive of the Company during this process.
Board Changes
During the period we instigated significant senior management changes. The
Company has been strengthened by the appointment of Chris Rhodes as Chief
Executive, who joined in October 2004. Mike Harrison joined as Finance Director
in February and Keith Davis was appointed Supply Chain Director in March. With
their combined experience and understanding of the automotive market, I am
certain that they will be a valuable addition to the Company and contribute to
the successful developments being made in the OEM market. John Bell, Operations
Director, resigned in November 2004, Amanda Thorneycroft resigned as Finance
Director in January 2005 and subsequent to the period end, we reported the
resignation of Alistair Powell, Product Development Director.
Dividend
At this stage in the development of Centurion and, in the light of the results
for the half year, the Board feels that the Company should focus its resources
on continuing to invest in the business and the Directors will not, therefore,
be declaring an interim dividend (2004: nil). It is, however, our intention to
adopt a progressive dividend policy in due course.
Strategy
Centurion's strategy is to become more focused on the automotive and specialist
retail markets and less dependant upon the volatile high street retail sector.
The Board is undertaking a restructuring of the business accordingly. In light
of the difficulties currently being faced by the retail market, the Board is
also re-evaluating its European strategy. The Company, however, remains
committed to the strategy of product development and growth within the
automotive and specialist retail market.
We have placed significant emphasis on the development of our internal design
and engineering resource. To supplement our growth plans we have concluded an
agreement with Infosys Technologies Limited to provide Centurion with outsourced
off-shore engineering, technical and design services, while at the same time we
continue to develop our relationships with current and potential component
suppliers.
Our strategy is clear and, with the right personnel in place and key automotive
relationships being fostered, we are confident that we will begin to return to
profitability and deliver improved shareholder value from our current low base.
Contract Win
The Company has secured a contract with a major European car manufacturer for
the supply of an undisclosed product that will be available as an option across
its entire range of vehicles by September 2005. No further details can be
released at present, due to client confidentiality. In addition, two new in-car
entertainment programme contracts have been won with the Toyota Group and the
range of Centurion products available through Peugeot dealerships has been
extended. Negotiations are also underway with a number of other European car
manufacturers for the supply of a variety of infotainment systems. I look
forward to reporting further progress with respect to these negotiations in due
course.
Outlook
The Company anticipates that the financial performance will improve in the
second half as our restructuring, which is progressing well, is expected to
generate benefits by the end of 2005. With continuing difficult retail market
conditions, the Board is concentrating on the successful development of its
automotive business, and I expect to be able to announce further progress during
the second half of the year.
Brian Hendon
Chairman
8 June 2005
Profit and loss account for the
six months ended 31 March 2005
Note Unaudited Unaudited Unaudited Unaudited Unaudited Unaudited
6 months to 6 months to 6 months to 6 months to 6 months to 6 months to
31 March 31 March 31 March 31 March 31 March 31 March
2005 2005 2005 2004 2004 2004
As restated* As restated* As restated*
Pre- Pre-
Exceptional Exceptional* Total Exceptional Exceptional Total
# # # # # #
Turnover 7,800,954 - 7,800,954 4,425,971 - 4,425,971
Cost of Sales 5,096,272 3,724,448 8,820,720 2,640,029 - 2,640,029
-------------------------------------- -------------------------------------
Gross
(loss)/profit 2,704,682 3,724,448 (1,019,766) 1,785,942 - 1,785,942
Administrative
expenses (2,786,018) (210,274) (2,996,292) (1,219,924) - (1,219,924)
Other
Operating
Income - - - - 470,000 470,000
-------------------------------------- -------------------------------------
Operating
(loss)/profit 2 (81,336) (3,934,722) (4,016,058) 566,018 470,000 1,036,018
Interest
Payable and
similar
charges (264,632) - (264,632) (80,006) - (80,006)
-------------------------------------- -------------------------------------
(Loss)/profit
on ordinary
activities
before
taxation (345,968) (3,934,722) (4,280,690) 486,012 470,000 956,012
Taxation on
(loss)/profit
on ordinary
activities 4 (120,415) (876,434) (996,850) 116,000 141,000 257,000
-------------------------------------- -------------------------------------
(Loss)/profit
on ordinary
activities
after taxation (225,553) (3,058,288) (3,283,840) 370,012 329,000 699,012
Dividends - - - - - -
-------------------------------------- -------------------------------------
Retained
(loss)/profit
for the
Financial
Period (225,553) (3,058,288) (3,283,840) 370,012 329,000 699,012
====================================== =====================================
Earnings Per
Share 3
Basic (0.92p) (12.49p) (13.41p) 1.59p 1.42p 3.01p
Diluted (0.92p) (12.49p) (13.41p) 1.55p 1.37p 2.92p
*Further details of exceptional items and prior period restatements are disclosed in note 2
Profit and loss account for the
six months ended 31 March 2005
continued
Note Audited Audited Audited
Year to Year to Year to
30 September 30 September 30 September
2004 2004 2004
As restated* As restated* As restated*
Pre-Exceptional Exceptional Total
# # #
Turnover 15,744,431 - 15,744,431
Cost of Sales 10,727,377 - 10,727,377
-----------------------------------------------
Gross (loss)/profit 5,017,054 - 5,017,054
Administrative expenses (3,351,423) - (3,351,423)
Other Operating Income - 470,000 470,000
-----------------------------------------------
Operating (loss)/profit 2 1,665,631 470,000 2,135,631
Interest Payable and
similar charges (174,946) - (174,946)
-----------------------------------------------
(Loss)/profit on ordinary
activities before taxation 1,490,685 470,000 1,960,685
Taxation on (loss)/profit
on ordinary activities 4 417,758 141,000 558,758
-----------------------------------------------
(Loss)/profit on ordinary
activities after taxation 1,072,927 329,000 1,401,927
Dividends 266,359 - 266,359
-----------------------------------------------
Retained (loss)/profit for
the Financial Period 806,568 329,000 1,135,568
===============================================
Earnings Per Share 3
Basic 4.52p 1.39p 5.91p
Diluted 4.40p 1.35p 5.75p
Balance sheet as at 31 March 2005
Unaudited Unaudited Audited
6 months to 6 months to Year to
31 March 31 March 30 September
2005 2004 2004
As restated
# # #
Fixed assets
Tangible assets 934,571 774,516 833,369
Current assets
Stocks 6,952,177 2,892,643 4,706,099
Debtors:
Trade debtors subject to financing 2,877,742 2,787,956 6,076,017
Less: non-returnable proceeds - (848,311) -
------------ ----------- -----------
2,877,742 1,939,645 6,076,017
Other debtors 1,613,760 877,462 2,221,229
Cash at bank and in hand 2,170,251 2,432,136 2,863,896
------------ ----------- -----------
13,613,930 8,141,886 15,867,241
Creditors: amounts falling due
within one year (10,794,557) (2,434,983) (9,796,168)
------------ ----------- -----------
Net current assets 2,819,373 5,706,903 6,071,073
------------ ----------- -----------
Total assets less current liabilities 3,753,944 6,481,419 6,904,442
Creditors: amounts falling due
after more than one year (199,341) (199,617) (193,365)
Provisions for liabilities and charges - (59,915) (52,634)
------------ ----------- -----------
3,554,603 6,221,887 6,658,443
============ =========== ===========
Capital and reserves
Called up share capital 221,481 220,881 220,881
Share premium account 4,731,879 4,552,479 4,552,479
Capital redemption reserve 130,000 130,000 130,000
Profit and loss account (1,528,757) 1,318,527 1,755,083
------------ ----------- -----------
Shareholders' funds 3,554,603 6,221,887 6,658,443
============ =========== ===========
Cash flow statement for the
six months ended 31 March 2005
Note Unaudited Unaudited Audited
6 months to 6 months to Year to
31 March 31 March 30 September
2005 2004 2004
# # #
Net cash outflow from
operating activities 5 (4,702,005) (281,968) (1,202,590)
Returns on investments and
servicing of finance
Interest paid (264,632) (80,006) (174,946)
------------ ----------- -----------
Net cash outflow from returns
on investments and servicing
of finance (264,632) (80,006) (174,946)
Taxation
UK corporation tax (paid)/received (170) 18,897 (261,208)
Capital expenditure and
financial investment
Purchase of tangible
fixed assets (149,153) (185,336) (271,046)
------------ ----------- -----------
(149,153) (185,336) (271,046)
Equity dividends paid - (184,078) (184,078)
------------ ----------- -----------
Cash outflow before financing (5,115,960) (712,491) (2,093,868)
Financing
Short term import loans
(paid)/advanced (793,708) 202,880 2,076,060
Bank loans paid (22,667) - (25,000)
Bank loans received - 48,499 50,833
Capital element of finance
lease rental payments (33,365) (24,736) (62,114)
Share options exercised 180,000 31,500 31,500
Issue of share capital
(net of expenses) - 1,173,700 1,173,701
------------ ----------- -----------
(669,740) 1,431,843 3,244,980
------------ ----------- -----------
(Decrease)/Increase in cash
for the period 6 (5,785,700) 719,352 1,151,112
============ =========== ===========
Notes to the interim report
1 Accounting policies
The financial information contained in this interim statement has been prepared
on the basis of the accounting policies set out in the Company's audited
financial statements for the year ended 30 September 2004, which have been
applied consistently.
2 Operating (Loss)/profit and restatements
Unaudited Unaudited Audited
6 months to 6 months to Year to
31 March 31 March 30 September
2005 2004 2004
# # #
This is arrived at after
charging/(crediting):
Exceptional items (see below) 3,934,722 (470,000) (470,000)
Exceptional Items
Included in cost of sales for the six months ended 31 March 2005 is an
exceptional charge of #3,724,448 (2004 #nil). This relates to a stock write down
for obsolescence and valuation considerations resulting from issues in the
supply chain management and stock purchase, categorisation and net realisable
value procedures. A further #210,274 (2004 #nil) is included in administrative
expenses and relates to compensation costs paid to two outgoing directors as
well as consultants' costs.
The exceptional credit of #470,000 in the six months ended 31 March 2004 and for
the year ended 30 September 2004 relates to insurance proceeds from the keyman
policies held on Steven Cunningham which were paid out on his death.
Restatements
The profit and loss account for the six months ended 31 March 2004 has been
restated in so far as to reclassify carriage inwards costs as a cost of sale
whereas such costs were previously included within administrative expenses.
There has been no overall effect on operating profit or net assets as a result
of this restatement.
The profit and loss account for 30 September 2004 has been restated as a result
of the supply chain review highlighting a fundamental error in a duty
calculation for a specific product. The effect of this error on the comparatives
is that net assets have been reduced by #256,681 and operating profit has been
reduced by #366,687. Had this error not occurred, current year net assets would
have been higher by #256,681. The operating loss in the current year is
unaffected.
3 Earnings per share
Earnings per ordinary share have been calculated using the weighted average
number of shares in issue during the relevant financial periods. These take into
account the issue of 350,000 ordinary shares on 21 December 2004 and the issue
of 250,000 ordinary shares on 2 February 2005.
The weighted average number of equity shares in issue for the basic earnings per
share calculation is 24,488,328 (2004 23,726,817) and the earnings, being
(losses)/profits after tax and preference dividends, are (#3,283,840) (2004
#1,401,927). For the pre-exceptional items earnings per share ratios the
earnings have been increased/(reduced) by #3,058,288 (2004 (#329,000)).
The numerator for the diluted earnings per share disclosure is the same as the
basic earnings per share numerator.
The denominator for the diluted earnings per share disclosure is as follows:
Unaudited Unaudited Audited
6 months to 6 months to Year to
31 March 31 March 30 September
2005 2004 2004
# # #
Basic earnings per
share denominator
ordinary shares of 0.1pence 24,488,328 23,239,207 23,726,817
Dilutive effect of company
share option schemes - 714,468 665,565
------------ ----------- -----------
24,488,328 23,953,675 24,392,382
============ =========== ===========
4 Taxation on loss on ordinary activities
Corporation Tax
The tax rate used is based on the effective rate for the year, taking into
account the exceptional charges for the six months to 31 March 2005.
Deferred tax
The recognition of deferred tax assets is limited to the extent that the company
anticipates to make sufficient taxable profits in the future to absorb the
reversal of the underlying timing differences
5 Reconciliation of operating (loss)/profit to net cash outflow from operating
activities
Unaudited Unaudited Audited
6 months to 6 months to Year to
31 March 31 March 30 September
2005 2004 2004
As restated
# # #
Operating (loss)/profit (4,016,058) 1,036,018 2,135,631
Depreciation 116,752 76,877 179,914
Increase in stocks (2,246,078) (630,483) (2,443,939)
Decrease/(Increase) in debtors 4,183,667 (1,061,295) (6,541,435)
(Decrease)/Increase in creditors (2,740,288) 296,915 5,467,239
------------ ----------- -----------
Net cash outflow from operating
activities (4,702,005) (281,968) (1,202,590)
============ =========== ===========
6 Reconciliation of net cash inflow to movement in net funds/(debt)
Unaudited Unaudited Audited
6 months to 6 months to Year to
31 March 31 March 30 September
2005 2004 2004
# # #
(Decrease)/Increase in cash
in the year (5,785,700) 719,352 1,151,112
Cash outflow/(inflow)
from changes in debt
and lease financing 849,739 (226,643) (2,039,779)
------------ ----------- -----------
Change in net debt resulting from
cash flows (4,935,961) 492,709 (888,667)
New finance leases (68,801) (70,710) (146,890)
------------ ----------- -----------
Movement in net debt in the period (5,004,762) 421,999 (1,035,557)
Net (debt)/funds at start of period (267,606) 767,951 767,951
------------ ----------- -----------
Net (debt)/funds at end
of year (note 7) (5,272,368) 1,189,950 (267,606)
============ =========== ===========
7 Analysis of net funds At Other At
1 October Cash non-cash 31 March
2004 flow changes 2005
# # # #
Cash in hand and at bank 2,863,896 (693,645) - 2,170,251
Bank Overdrafts - (5,092,055) - (5,092,055)
----------
(5,785,700)
Debt due after 1 year (86,750) 22,667 - (64,083)
Debt due within 1 year (2,869,154) 793,707 - (2,075,447)
Obligations under
finance leases (175,598) 33,365 (68,801) (211,034)
---------- ---------- --------- -----------
Total (267,606) (4,935,961) (68,801) (5,272,368)
========== ========== ========= ===========
8 Non-statutory Accounts
The financial information contained in this report does not constitute full
statutory accounts as defined by section 240 of the Companies Act of 1985.
Except for the effect of prior period restatements, the financial information in
respect of the year ended 30 September 2004 has been extracted from the
statutory accounts for that year which have been filed with the Registrar of
Companies. The auditors report on those accounts was unqualified.
Copies of this report are being sent to all shareholders and are available from
the Company's offices at Satellite House, City Park, Swiftfields, Welwyn Garden
City, Hertfordshire AL7 1LY.
Independent review report to Centurion Electronics Plc
Introduction
We have been instructed by the company to review the financial information for
the six months ended 31 March 2005. We have read the other information contained
in the interim report and considered whether it contains any apparent
misstatements or material inconsistencies with the financial information.
Our report has been prepared in accordance with the terms of our engagement to
assist the company in meeting the requirements of the rules of the London Stock
Exchange for companies trading securities on the Alternative Investment Market
and for no other purpose. No person is entitled to rely on this report unless
such a person is a person entitled to rely upon this report by virtue of and for
the purpose of our terms of engagement or has been expressly authorised to do so
by our prior written consent. Save as above, we do not accept responsibility for
this report to any other person or for any other purpose and we hereby expressly
disclaim any and all such liability.
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 rules of the
London Stock Exchange for companies trading securities on the Alternative
Investment Market which require that the half-yearly report be presented and
prepared in a form consistent with that which will be adopted in the company's
annual accounts having regard to the accounting standards applicable to such
annual accounts.
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 by auditors
of fully listed companies. A review consists principally of making enquiries of
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 31 March 2005.
BDO STOY HAYWARD LLP
Chartered Accountants
London
8 June 2005
This information is provided by RNS
The company news service from the London Stock Exchange
END
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