OWEN WILLIAMS - SCREEN PLC (SEN.L)
CEO Interview - published 05/21/2001

DOCUMENT # MAE619

OWEN WILLIAMS is the Chairman of Screen Plc. He joined IBM (UK) Ltd. in
1960 and was later appointed a Director with responsibility for 
marketing in the UK and Europe. He served on Paris-based OECD standard
committees and earned the distinction of developing for IBM a message
switching system which was later adopted as a standard by IBM and
marketed worldwide. In 1987 Mr. Williams left IBM to chair MBS Plc, a
computer company which was listed on the London Stock Exchange. He left
MBS Plc to pursue other private business interests in January 1991. He
has been instrumental in founding a number of technology-led companies,
two of which formed the initial Screen Group. 

Sector: communications equipment

TWST: Let's start with a quick corporate profile of Screen Plc; what is
its core business?

Mr. Williams: For the last three years the core business has
increasingly been providing wireless-based technology products. We took
that decision as I say about three years ago and increasingly have been
focusing on that area, firstly, because we have very relevant and
attractive products, and secondly, because it was clear to us that this
was going to be an area that was going to enjoy very substantial above-
industry growth rates; and so it has proved.

TWST: Tell me about the wireless Web space and the opportunities that it
represents; how large is it in your estimate; how fast is it growing?

Mr. Williams: I find it almost impossible to calibrate the potential for
our products in the space, - I'll try and explain why. Today the
products that we have are directed primarily but not exclusively at the
emergency services, and they take the form, for example, of us putting
technology into a police car, which effectively is a high-powered
Pentium that sits in the trunk of the car and a touch-screen system
which is mounted within the dashboard; and that system can communicate
over a variety of different networks. The police application in the UK
uses something which is called a packet switch network, and that's so
because the network provider entered into a framework agreement with the
Home Office some few years ago. That network is about to be overtaken
and replaced by a more flexible and more appropriate system called
Tetra. Our technology in the police car allows an officer to perform a
variety of tasks which otherwise would be either impossible or difficult
for him. For example, there's an automatic vehicle location system, so
not only does he know where he is because he's provided with a complete
mapping system, but also the people back at base know where he is. He's
also able to make complex interrogations via the touch screen, for
example, entering in a registration number, and that allows him to make
an enquiry against a centrally-held police database and get the response
back in five or six seconds; this contrasts with the old system which
you see on television programs like The Bill, where over a crackly radio
you go into central control, and Daisy, if she's there, makes an entry
via the computer and if she remembers she'll call back the officer - by
which time the car being checked out has probably long since been dealt
with or gone. But the serious point here is that they're able to make
very many more checks. I think the last statistic on one of our police
forces was that they were making 33 times as many checks against the
police database as they were prior to our systems being deployed. I'm
not saying that's a measure of increased efficiency, but it's certainly
an indication of the extent to which they find this particularly feature
helpful. From that basic platform of the technology in the vehicle, we
have recently added a lot more functionality for the police. For
example, you may also have seen on television a program called Police-
Camera-Action, a type of program where they show video clips of drivers
who are behaving somewhat eccentrically; in the UK almost without
exception all of those video clips are taken from the technology that we
provide. These are effectively cameras mounted in the vehicle that make
a recording within the vehicle of whatever's being viewed at the time.
As you've got cameras via this technology, and because you've got
intelligence via the Pentium system that we install, you're able to do a
lot more. We've recently announced a capability which allows us to do
automatic number plate recognition from a mobile vehicle, and this is
causing a great deal of excitement. There are many other applications;
we can remove from the officer the chore of doing a lot of the paperwork
' we can do some of the paperwork automatically for him, for example. So
the basic premise is that we are providing in the vehicle almost a
complete command and control system designed to make life for the police
officer infinitely easier than it was hitherto. Now, that same principle
of course can be and is being used in other applications. It can be used
for fire brigades; it can also of course be used commercially for people
like service managers, and that's gradually where we are moving to. So
we're dealing with these market opportunities sector by sector, and
leading on from our success in the UK, where 22 of the 24 police forces
using mobile data are using our equipment, and all but one of the UK
police forces use our in-car video system. Having achieved a position of
some pre-eminence in the UK, what we have been doing now for some months
is to move via the channels provided by a recent acquisition, into the
international market. We now have a presence in 38 different countries,
through which we are beginning to flow the products of the company.

TWST: Tell me about the acquisition strategy that you're following; what
are you seeking to acquire; is it core or complimentary technology?
What's the basic premise that drives your acquisition strategy? Then
perhaps can you illustrate it by talking through some of the
acquisitions ' two or three, I think ' that you've made very recently?

Mr. Williams: There have been two drives behind acquisition strategy
that we've been following for some time. Firstly, we wanted to bring
into our company technology and/or products  which were complementary to
those we already had and which were relevant to the markets we were
addressing, and which puts the salesman in the position where he has a
richer menu of offerings to make when he calls on a prospective
customer; and that has worked extremely well. The other thing that I'm
very keen to do, going back to what I was saying earlier, is that having
achieved a degree of pre-eminence in the UK, I am very anxious to
replicate that internationally and, therefore, the acquisition we made
in September was designed to give us an international reach, and that
remains our strategy. There are still other technologies that are of
interest to us, and other market sectors outside the emergency services
are also of interest to us ' that should provide a clue as to where some
of our next acquisition effort might go into.

TWST: Two acquisitions in particular caught my eye. There's the ProVida
acquisition, and then the acquisition of the CSD. Can you explain how
those acquisitions are going to advance your strategic aims?

Mr. Williams: The ProVida product I described earlier provides the in-
car video, which are the cameras and the recording device. One of the
imperatives as far as the police force and other users are concerned
where space in police cars is at a premium, is the size of the equipment
footprint. We had been talking to JAI A/S, who were the owners of the
ProVida product, with a view to integrating their system with ours; and
I've illustrated what benefits you get from that, for example, automatic
number plate recognition is the result of combining the two products.
The sort of benefits that we get and the customer gets is that first of
all he gets an integrated system, one with a smaller footprint, and one
where we add to our portfolio of products another relevant product which
is attractive to the customer base we're addressing; that's what we got
out of that particular acquisition. It was a splendid financial
acquisition in terms of the value for money, and it was very much
earnings-enhancing, as was the CSD. But the other most important thing
we got out of the ProVida acquisition was this international reach '
they operate in 38 countries. Therefore immediately ' and this has not
really yet been recognized by the market ' we've genuinely transformed
ourselves from being UK-centric to being a truly international
organization, and the channel provided by ProVida we're now using to
flow through the other products. As far as the Civil Systems Division of
British Aerospace is concerned, going back to what I was saying earlier,
we have been very successful indeed in the police market and we can use
much of the same technology, same applications, same skills, same
experience, in a related market such as the fire service. We chose to
execute that by acquiring the Civil Systems Division of British
Aerospace, which provides software services to a number of the fire
brigades up and down the country. They've got the application
experience, they've got the customer base, and they are now beginning to
take products from the rest of the group to flow directly into their
market. So the criteria that we applied ' does it fit? Yes. Is it
strategic? Yes. The other criterion, of course, was ' is it earnings
enhancing? And it was ' in spades.

TWST: Integrating the various acquisitions: how do you deal with that
issue?

Mr. Williams: Quite frankly, it is an issue which is actually being
dealt with rather more easily than one might have thought, because you
can bring in different businesses from different backgrounds, involving
different personalities, and I'm quite happy to have wild ducks so long
as they fly in formation. What we have done this year ' and I've been
very, very pleased with the rate at which it's been accepted ' is that
each of the businesses that I've described has a responsibility to sell
the entire portfolio of the group's products; so a great deal of cross-
selling is encouraged, and indeed the individual Managing Directors are
motivated to do that. Part of their incentive reflects not only their
selling their own developed products but those developed elsewhere in
the group. So each of the businesses is increasingly customer-focused
rather than product- or technology-focused.

TWST: The third acquisition that I wanted to learn a little more about
was Tranzline; this is in the customer relationship management software
space. Why does it fit with the product set that you've put together in
the other businesses?

Mr. Williams: Tranzline was one of the country's best-kept secrets
really. They have an excellent CRM offering, which has been developed
since 1987. It is technically an excellent product but had not been
adequately exploited from a marketing standpoint. The product can work
in a mobile environment. They had, and they still do, make use of other
hand held PDA-type devices toenable the mobile worker and outworker to
access corporate information made available through CRM. One of the
products that we have recently developed and announced is a hand-held
version of the product I described that fits in the police car. The user
can simply lift it out of its cradle from the dashboard and take it with
him, and we incorporate different communications technologies to allow
this to happen. That device is ideal for a mobile CRM environment. So at
a stroke, we've given the company that was called Tranzline ' we have
incidentally rebranded all our products, and I'll come on to that ' the
opportunity to sell a unique solution in the mobile environment. So
we've enhanced their prospects and advanced their value, but at the same
time they have given us the opportunity to enhance the hardware by
adding value to it. So not only are we selling the hand-held device but
also the relevant application software as well. So that was the theory
behind the acquisition, and it is beginning to work quite well.

TWST: Divisionally speaking, the company's organized in various
subsidiaries: there's Petards International, and then there's Petards
Datax. How is the divisional organization changing to incorporate these
acquisitions?

Mr. Williams: We have recently rebranded all of our products, and so in
effect what we have is Screen, which is the group company, which if you
like is City-facing and investor-facing, and Petards, which is market-
facing. Each of the operations carries now a Petards name. So Petards
International has now been rebranded Petards Vision, which we felt was
more appropriate for what is after all a CCTV-type company as it better
describes what it's doing. Petards Datax, which was in the mobile and
data business, is now called Petards Mobile Intelligence, and Tranzline
is called Petards Corporate Knowledge, because that's exactly what it's
about ' it's about making the knowledge that's available in the IT
system of that company available to the end user who can make better use
of that data. The recent acquisition of the Civil Systems Division of
British Aerospace we have named Petards Civil Systems; and our
international operation out of Denmark is called Petards Mobile
Intelligence A/S. So what we're trying to do is to increase the brand
awareness by having a common brand across all of the operations, and
building on the excellent record and reputation of our initial company
Petards International, which has been developed over the last eight or
nine years, and frankly it's going well.

TWST: What would be the priorities for 2001; is it a year of
consolidation of the acquisitions, or is there more to come on the
acquisitions front; how would you characterize the next 12-24 months for
you?

Mr. Williams: The market forecast shows us trebling revenue for this
year over last, so we've already set a fair pace. However, there are
acquisition opportunities as well as organic growth opportunities for
us, and therefore I think it's unlikely that we're going to have the
comfort of a prolonged period of consolidation. That said, the
acquisitions that we have made have brought with them, almost without
exception, first-rate senior management talent, so the assimilation into
the group has been smoother than I dared hope.

TWST: That's a good moment at which perhaps to profile the senior
management appointments and the key people and maybe talk about what you
take to be the distinguishing management strengths of Screen?

Mr. Williams: I have a technology background ' I was with IBM for many
years. My interest, and where I get my kicks, as it were, is in applying
technology to the benefit of the user by taking fairly raw technology
and packaging that and putting it into applications that deliver benefit
to customer. It's very easy to say but difficult to do, and what's even
more difficult is, once you've done it, to explain to the world that
you've done it and that's where my skills lie ' in recognizing those
opportunities and addressing them in that way. Over the last 18 months
we've completely re-populated the company in terms of bringing in
entirely new talent. I've reconstructed the Board and brought in a lot
of new skill to manage the growth that we're now beginning to
experience. My view was that it's better to do that earlier than later.
I explained to shareholders that the expectation was we were laying a
foundation in terms of organization and people that were going to manage
the growth we were anticipating ' there was of course a short-term cost
disadvantage of doing it earlier rather than later, but I was determined
to do it. That, too, has given us significant benefit, because we're
looking at about 300% growth year-on-year, and at the same time we're
improving our internal processes and procedures and investing heavily in
internal systems. That means that the following year, when we expect to
see the same level of growth, the systems aren't going creak and fall
apart and lose control. I see my role very much as setting out the
organization and populating the organization consistent with the kind of
growth that we are planning for. And I've been very pleased; we've been
able to attract some excellent talent into the business.

TWST: Who heads up each of the new brands, as it were?

Mr. Williams: If I can just come one step back, because it is important
to recognize that early last year I brought in two Non-Executive
Directors to the Board; Ian Taylor, who was Minister of Technology in
the previous administration, so well versed in all of the technological
issues that we are wrestling with and the legislative issues that we're
dealing with; and shortly thereafter I brought in Charles Hughes, who
was a Director of Fujitsu ICL. So although we're still a relatively
small company, we've got talent on the Board, which at the moment is
disproportionate to our size, but it won't remain that way very long.
Doing a thumbnail sketch of who heads up each of the businesses. Petards
Vision is run by Mike Williams, who suffers from the burden of being my
younger son. He joined the business in 1993 from IBM, and has been
running Petards International ' now Petards Vision ' since then. That
business has performed profitably and consistently since 1993. You may
have seen a recent announcement saying that the order inflow into that
business in the first two months of this year has been exceptionally
high ' so that business is in extraordinarily good shape. But
importantly he has brought with him a lot of the discipline and
background knowledge that he benefited from at IBM. Heading up the
mobile intelligence business in the UK is Steve Walker. Steve joined us
in September 2000; prior to that he was Managing Director of a company
called APD. APD is pre-eminent in the mobile data software field, and
therefore he brought with him a lot of credibility and a lot of
knowledge about this particular area. With the two acquisitions, Orla
Bennett ran the international mobile intelligence business out of
Denmark, a business that he's been associated with for 14 years, and he
has been instrumental in setting up the 38-country international network
that I referenced earlier. Coming with the Civil Systems Division is
Richard Brewer, who again had been running that business within British
Aerospace for some eight years. Finally John Bryant, who was the
Managing Director of Tranzline, is now Managing Director of Petards
Corporate Knowledge. He had been with that business again for at least
10 years. So fairly senior guys came with the businesses, and what is
very pleasing is that they have relished the relative freedom of coming
out of organizations which were obviously much larger than ours, but my
job is to enable them to succeed, and they get the care and attention,
the support, the encouragement ' whatever you want to call it- and
they're responding to that extraordinarily well. The speed of decision,
the quantum of support and so on, is of a much higher order than they
were enjoying before; I think I can say that without upsetting the likes
of British Aerospace.

TWST: Turning very rapidly to the financials, I know that you can't
comment on specific numbers but what are the metrics that investors
should start now to apply to Screen in order to appreciate the progress
that it's making; what sorts of ratios should they be looking at?

Mr. Williams: The external forecasts are currently projecting GBP15.0
million turnover for the current year as against GBP5million last, with
an NBT of about 1.5 million; so that's a very considerable profit swing.
There's an interesting point here ' almost uniquely I think Screen
represents an opportunity for people to invest in technology that's
capable of very high growth, but it's also an interesting defensive
stock, because this year we plan to make real revenues and real profit.
If the economy deteriorates any further, sadly one of the things that
tends to go with it is a deterioration in the law and order type
situation, so spending on supporting police and other emergency services
tends to accelerate.

TWST: It's counter-cyclical, in other words?

Mr. Williams: Absolutely. So if the technology surge picks up again then
we benefit from that, but on the other hand if for whatever reason
there's a delay in 3G or whatever, then we're sufficiently well spread
across a number of markets, and those markets aren't so sensitive to
economics. We're a good technology punt, if I can use that expression
and a good defensive stock.

TWST: What sorts of contracts have you got with your major clients? They
include the Metropolitan Police, the various UK police forces, the
emergency services; how visible and how secure are your earnings?

Mr. Williams: It's difficult to generalize, because they tend to vary
business by business. But in the main, one of the things that I look at
is obviously our forward order book, and the committed revenues. And in
the case of British Aerospace, for example, they brought with it an
order book in excess of GBP 4 million that spreads out beyond this year.
We usually sell products on the basis of a one-year warranty, and after
that first year we offer a maintenance or repair to base service which
is normally around the 10% of the capital value; and so as we place more
product out in the marketplace, we increasingly begin to benefit. There
is a time lag from what I would call recurring revenue, and therefore
the quality of our earnings are constantly improving ' although they may
be barely visible at the moment, certainly in the next two to three
years, as the warranty periods expire, that proportion of our business
will continue to increase.

TWST: Is it a capital-intensive business? What do you need to invest in
manufacturing?

Mr. Williams: Two points. One, it's capital intensive in the sense that
we invest significantly in software development. It is not so capital-
intensive as far as manufacturing is concerned, because we have taken
steps to put in place a network of sub-contractors who increasingly
manufacture our products. Now, in some cases of course, if we have to
experience very high rates of growth then they may need some financial
support, but generally speaking we ought to be able to ramp up our
volumes without there being a corresponding increase in the working
capital requirements of our business. That's the theory; we're getting
quite close to that now.

TWST: What do you take to be the critical issues facing the company over
the next 12-24 months? It sounds a terrific story, a very interesting
counter-cyclical technology play, but are there any things that can go
wrong, are there any things that might slow the growth?

Mr. Williams: Yes. I'm very focused now on improving the lot of the
shareholder, frankly. We suffered in the latest downgrading of the
technology stocks, and if I'm not successful in getting a fairer
appreciation across to the investing community of the benefits and
attributes of our company then our share price may not develop, and we
may therefore have to pass up on opportunities that otherwise we would
be able to go after. So that's a risk, but that's a risk of slower
growth rather than no growth. I don't want to sound complacent, but we
are now operating across a number of applications, a number of
businesses a number of marketplaces and a number of countries, such that
we ought to avoid it all going badly wrong, and I think we will. We're
not making a single technology play, and we're not dependent on the
economy of one particular country any longer, although we still do a
vast amount of our business from the UK. What I should point out is that
as well as operating in 38 countries, we are investing significantly in
opening up new channels in North America, and that's a key plank of our
strategy for this current year.

TWST: How will you be developing your North American strategy; can you
give me some glimmer?

Mr. Williams: We have sought out business partners who are operating in
the marketplaces in which we're interested, particularly the emergency
services at the moment, who have a technical competence and a market
reach that we can use to put our products through, and those interviews
and discussions and negotiations continue as we speak.

TWST: What are financial analysts making of the story; have they had any
comments; what questions are they putting to you about the strategy
today?

Mr. Williams: Until about six months ago we had private shareholders
rather than institutional shareholders. When we made the placing in
September 2000 I was successful in bringing in some institutional
shareholders, and indeed in the placing that we did six weeks ago we
brought in more, but nevertheless institutions still only represent less
than 20% of our shareholder base; and as a result of that we haven't had
a great deal of analytical cover. We appointed SocGen Securities to be
our co-broker with effect from 1 February 2001, and they were stalled in
putting out any analyst's note until we announced our results, which we
did on the 3rd May. Shortly after producing the results a note went out
which I hope will do a lot to lift our profile.

TWST: Summarizing your three to five year vision for the company, what
do you think are the key dimensions?

Mr. Williams: I don't know how to answer that. We have, by a bit of good
luck and some good management and judgment, positioned this company
where it has fantastic ' almost incapable of calibration ' opportunities
open to us, and if there is anything that keeps me awake at night it is
that we don't exploit those fully. And I would prefer to sleep at night!
I can see us being a very, very substantial business very quickly. We've
certainly got the management talent, we've got the relevant technology
and technical capability; we now have a much more solid balance sheet
and we've got net cash of about GBP3million. Most of the things that one
would need in order to drive business forward we now have.

TWST: If you were making a closing statement to a potential investor,
possibly a US small-cap specialist or a private investor, what reasons
would you give him beyond what you've said to buy the stock today?

Mr. Williams: Forget the fact that we're a technology stock ' just on
our fundamentals. There are in my view very, very few technology
businesses that have got the kind of profile that I've described to you
that are sitting on substantial net cash relative to our size and are
therefore well able to exploit other acquisition-type opportunities that
are undoubtedly coming along out of other people's distress. I think we
have this unique characteristic of being a fantastic technology punt on
the one hand, but where the fundamentals are such that we're a good
defensive stock as well. This is a business that's poised really to do
spectacularly well, and somehow we've got to get that message across,
otherwise I'm not doing my job properly.

TWST: Thank you. (OK)

OWEN WILLIAMS
Chairman
Screen Plc
Stubbings Barn
Burchetts Green Lane, Burchetts Green
Maidenhead, Berks SL6 3QP
United Kingdom
+44 (0)1628 820 011
+44 (0)1628 820 015-FAX
www.screenPlc.com

Each Executive who is the featured subject of a TWST Interview is
offered the opportunity to include an Investors Brief or other highlight
material to be provided and sponsored by and for the company. This
interview with Owen Williams, Chairman of Screen Plc, is accompanied by
an Investors Brief containing corporate information.

Copyright 2001 The Wall Street Transcript Corporation
All Rights Reserved


The Wall Street Transcript (TWST) interviews are published verbatim, and TWST does not in any way endorse or guarantee the accuracy of any information or opinions expressed herein and all opinions are subject to change without notice. Nothing herein constitutes a solicitation to buy or sell any securities. TWST interviews with CEOs may include include "forward-looking statements", which are based on factors that involve risks and uncertainties. Actual results may differ materially from those expressed or implied. TWST shall have no liability whatsoever for any trading losses arising out of use of this information. Copyright 1999 Wall Street Transcript Corporation. All Rights Reserved.