RNS No 9373v
NETWORK TECHNOLOGY PLC
26th May 1998
Network Technology : Unaudited Interim Results for period ended 31 March
1998
Salient Points :
* Turnover rose by 22% to UKpds 10.4m including acquisitions
* Operating profit up by 22% to UKpds 2.2m
* Pre-tax profits up by 25% to UKpds 2.3m
* Earnings per share increased by 7% to 4.33p
* Interim dividend up 10% to 0.55p per share
* Strong balance sheet with net cash of around UKpds 3.8m
* Core business remains H.Bollmann Manufacturers which, with its US
sales offices, generates 78% of group turnover, supplying printservers
to most of the world's leading printer manufacturers who account for
around 40% of the world's printer market
* Ringdale's Data Storage Systems, whose capitalised development costs
are UKpds 0.5m to date, will be launched at the Networks Telecom 98 show
in June
Commenting on prospects chairman Graham Woodhead said: "The structure
of the group is such that we have the right combination of knowledge,
expertise and commitment to deliver competitive new technology products
to the market. This gives us an excellent platform from which to enjoy
further sustained growth."
The main subsidiaries are: H.Bollmann Manufacturers, established in
1985, is a technology company which designs and manufactures a wide
range of leading-edge printservers and other networking products; JRL
Systems Inc, acquired in December 1996, has two key technologies -
firstly, it produces printer controllers and, secondly, it has ISDN
technology and products which Network Technology uses extensively;
International Technology Consultants is the non-trading intermediate
holding company for both Ringdale and N&R Circuits, and holds the rights
to the group's UK intellectual property; AB Semicon designs
semiconductor devices and has four main technologies comprising PCI,
Network, Memory and RISC processor chips; Ringdale is the brand name
under which products based on HBM and JRL's technology are distributed;
N&R Circuits manufactures and supplies single sided, double sided, PTH
and multi-layer printed circuit boards; Nextus Inc, the US electronic
cable and printed circuit board assembly company based in Georgetown,
Texas, was acquired in September 1997 and is now the group's main
manufacturing operation in the US; Bits Per Second, a software company
based in Brighton, East Sussex, was acquired by the group in November
1997.
Statement by Graham Woodhead, the Chairman
Results
In our trading statement for the first quarter we reported significantly
higher order levels had been achieved for the first two months of the
year. During the second quarter the continued strength of sterling has
reduced the impact of export sales. However, turnover for the half year
ended 31 March 1998 has risen by 22% to UKpds 10.4 million and pre-tax
profits have advanced by 25% to UKpds 2.3 million. Pre-tax profits
would have been UKpds 200,000 higher were it not for the increased
strength of sterling during the first half of the year.
Dividend
The Directors have declared an interim dividend of 0.55p per share, an
increase of 10% over last year (1997 - 0.5p), which will be paid on 6
July 1998 to shareholders on the register on 5 June 1998.
Review
The emphasis during the second quarter has been to change the focus of
our US businesses to improve their contribution to group profits and to
bring the Ringdale Data Storage System products to the attention of the
first potential customers. The capitalised development costs of the
storage devices are UKpds 0.5 million to date.
Our core business continues to be H.Bollmann Manufacturers (HBM), which
with its US sales offices, generates 78% of group turnover, supplying
printservers to most of the world's leading printer manufacturers who
account for around 40% of the world's printer market. HBM is strong on
R&D and producing leading edge solutions tailored to OEM requirements.
Our Ringdale subsidiary continues to grow in line with its reputation
for providing cost-effective solutions to any network connectivity
requirement. A number of new products have been launched recently,
including the Proxy Router and DHCP Server, the Megaswitch range of
Switching Hubs, and the IP Router. These products are all aimed at
organisations which are harnessing new technology, such as the Internet,
to provide themselves with a competitive advantage or, as in the case
of government and the educational sector, with low cost solutions to
communication needs.
As well as fully developing the Ringdale brand name for our network
connectivity products, it is also the brand under which our unique,
worldwide patented Data Storage Systems will be marketed. Ringdale's
Data Storage Systems will be launched at the Networks Telecom 98 show
in June and we anticipate a very exciting future for these products as
we believe now is the right time to enter this market. The acquisition
of this patent has allowed us to develop a totally scalable storage
system product which is more future proof than any of its peers. The
product has generated a significant amount of industry interest, which
we hope to capitalise on.
Bits Per Second (BPS), the Sussex based business acquired by Network
Technology in November 1997, has also performed well and has been
instrumental in designing the software that is used with the new Data
Storage System products. Their expertise in this area enables us to
offer customers the "complete package" when purchasing such a system.
BPS is also set to build on its well-established name as a specialist
in producing graphing and charting tools for software developers, with
the release of its Graphics Server DTC (Design Time Control) add-on.
This addition to BPS's award winning Graphics Server product will be
very popular with software developers as it speeds up the development
process of leading edge software applications.
Network Technology's other subsidiaries continue to contribute to the
group's strategy. JRL Systems Inc in the US provides essential
expertise that is incorporated in our plotter and ISDN products, and it
is this expertise, coupled with HBM's extensive network connectivity
knowledge, that enables JRL Systems Inc to offer such high performance
printer, plotter and scanner controllers. Our task now is to
substantially increase the sales penetration of and margins on these
products.
N&R Circuits continues to gain external customers for its printed
circuit boards, as well as providing components to fellow subsidiaries
HBM and Nextus Inc. The latter continues to be the group's main
manufacturing operation in the USA and is set to expand its customer
base, which already includes some household names.
AB Semicon remains at the forefront of semiconductor design, developing
a number of chips that are set to further reduce the cost and increase
the performance of existing hardware products available from HBM and JRL
Systems Inc. Its expertise in this specialist field has been recognised
by a number of Japanese OEMs, who now also use AB Semicon for reliable
chip technology.
Prospects
Our intention, at the beginning of the year, was to remain committed to
producing leading edge technology, an objective we have achieved and
will continue so to do. The structure of the group is such that we have
the right combination of knowledge, expertise and commitment to deliver
competitive new technology products to the market. This gives us an
excellent platform from which to enjoy further sustained growth.
See tables of results attached
Enquiries to:
Klaus Bollmann Network Technology Tel: 01444 870408
Paul Cottrell
Duncan Barkes
Leo Cavendish Bankside Consultants Tel: 0171 220 7477
Consolidated Profit and Loss Account
6 months to 6 months to 12 months to
31.03.98 31.03.97 30.09.97
Unaudited Unaudited Audited
UKpds000 UKpds000 UKpds000
TURNOVER 10,420 8,536 16,841
Operating costs (8,228) (6,747) 12,665)
_______ _______ _______
OPERATING PROFIT 2,192 1,789 4,176
Interest 80 18 (6)
_______ _______ _______
PROFIT BEFORE TAXATION 2,272 1,807 4,170
Taxation (719) (528) (1,406)
_______ _______ _______
PROFIT AFTER TAXATION 1,553 1,279 2,764
Dividends - equity (197) (161) (429)
_______ _______ _______
RETAINED PROFIT FOR THE PERIOD 1,356 1,118 2,335
_______ _______ _______
EARNINGS PER SHARE 4.33p 4.04p 8.59p
_______ _______ _______
Consolidated Balance Sheet
31.03.98 31.03.97 30.09.97
Unaudited Unaudited Audited
UKpds000 UKpds000 UKpds000
FIXED ASSETS
Intangible Assets 1,850 668 1,249
Tangible Assets 3,384 2,659 3,138
Investments 383 - 230
_______ _______ _______
5,617 3,327 4,617
_______ _______ _______
CURRENT ASSETS
Stocks 4,089 3,161 3,899
Debtors 5,081 3,864 5,093
Cash at bank and in hand 3,829 1,121 3,312
_______ _______ _______
12,999 8,146 12,304
_______ _______ _______
CREDITORS: amounts falling
due within one year (5,030) (4,968) (4,473)
_______ _______ _______
NET CURRENT ASSETS 7,969 3,178 7,831
_______ _______ _______
TOTAL ASSETS LESS CURRENT
LIABILITIES 13,586 6,505 12,448
CREDITORS: amounts falling due
after more than one year (220) (190) (220)
PROVISIONS FOR LIABILITIES
AND CHARGES (364) - (359)
_______ _______ _______
NET ASSETS 13,002 6,315 11,869
======= ======= =======
CAPITAL AND RESERVES
Called up share capital 3,588 3,218 3,575
Share premium account 8,005 5,244 8,043
Capital redemption reserve 12 12 12
Goodwill reserve (4,378) (5,360) (4,209)
Profit and loss account 5,775 3,201 4,448
_______ _______ _______
EQUITY SHAREHOLDERS FUNDS 13,002 6,315 11,869
======= ======= =======
Consolidated Cash Flow
6 months to 6 months to 12 months to
31.03.98 31.03.97 30.09.97
Unaudited Unaudited Audited
UKpds000 UKpds000 UKpds000
Operating profit 2,192 1,789 4,176
Depreciation and amortisation 569 372 911
Working capital movements (441) (729) (2,657)
_______ _______ _______
NET CASH INFLOW FROM
OPERATING ACTIVITIES 2,320 1,432 2,430
RETURNS ON INVESTMENTS AND
SERVICING OF FINANCE
Interest received/(paid) 80 18 (6)
TAXATION PAID 5 (131) (1,145)
CAPITAL EXPENDITURE AND
FINANCIAL INVESTMENT (1,624) (962) (2,555)
ACQUISITIONS AND DISPOSALS (158) (474) (1,329)
EQUITY DIVIDENDS PAID - - (316)
_______ _______ _______
CASH INFLOW/OUTFLOW
BEFORE FINANCING 623 (117) (2,921)
FINANCING (106) (639) 4,466
_______ _______ _______
INCREASE/DECREASE IN CASH
AND CASH EQUIVALENTS 517 (756) 1,545
_______ _______ _______
Notes to the Interim Statement
1. Basis of preparation
The interim financial statements have been prepared in accordance with the
accounting policies as set out in the Group financial statements for the year
ended 30 September 1997. The statements do not comprise of full financial
statements within the meaning of section 240 of the Companies Act 1985. The
statements are unaudited but have been reviewed by KPMG Audit Plc and their
report is set out on page 9.
The figures for the year ended 30 September 1997 have been extracted from the
financial statements filed with the Registrar of Companies on which the
Auditors gave an unqualified report.
2. Taxation
The tax charge for the six months ended 31 March 1998 is an estimate based on
the anticipated effective rate of tax for the year to 30 September 1998.
3. Interim Dividend
The Directors have declared an interim dividend of 0.55p per share which will
be paid on 6 July 1998 to shareholders on the register on 5 June 1998.
4. Earnings per share
Earnings per share have been calculated on profits after taxation of UKpds
1,553,000 (1997: UKpds 1,279,000) and 35,854,752 Ordinary Shares (1997:
31,625,896 Ordinary Shares) being the weighted average number of shares during
the six months to 31 March 1998. The potential dilution arising from options
granted under the Company's Share Option Schemes is not material.
5. Acquisitions
On 5 November 1997 the Group acquired the entire share capital of Bits Per
Second Ltd. for a total consideration of around UKpds 270,000 of which UKpds
81,000 was paid in cash and the balance by the issue to the vendors of 128,000
Ordinary Shares in the Company.
6. Profit and Loss Account
6 months to 6 months to 12 months to
31.03.98 31.03.97 30.09.97
UKpds000 UKpds000 UKpds000
Opening Balance 4,448 2,084 2,084
Retained Profit
for the Period 1,356 1,117 2,335
Exchange Differences (29) - 29
_____ _____ _____
5,775 3,201 4,448
_____ _____ _____
END
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