RNS Number:6414J
Offshore Telecom PLC
04 April 2003
FOR IMMEDIATE RELEASE 4 April 2003
OFFSHORE TELECOM PLC
ACQUISITION OF MATRIX NETWORK SOLUTIONS
PRELIMINARY RESULTS FOR THE YEAR ENDED 31 OCTOBER 2002
APPROVAL OF THE WAIVER OF THE OBLIGATIONS UNDER RULE 9 OF THE CITY CODE ON
TAKEOVERS AND MERGERS
Offshore Telecom Plc ("Offshore Telecom" or "the company"), the AIM listed
provider of integrated telecommunications services for the offshore and
off-the-beaten-track mobile satellite phone markets, today announces the
proposed acquisition of Matrix Network Solutions Limited ("Matrix") and its
audited preliminary results for the year ended 31 October 2002.
KEY POINTS
* Proposed acquisition of Matrix Network Solutions for # 1.2 m announced
today.
* Matrix will become a new division within Offshore Telecom, providing
high performance network solutions to corporate customers in the UK
and Ireland, complementing the existing integrated telecommunications
service offering.
* Ian Smith to join the Board on completion of the acquisition.
* Results for the year to 31 October 2002 were turnover : #260,000 (2001
: #43,000); loss before tax : #665,000 (2001 : #772,000); and loss per
share : 0.29p (2001 : 0.92p).
* Total new equity funds raised during 2001-2002 was #618,000.
* Further #345,000 equity funds have been raised since the year-end.
* Partner and supply agreements signed during the year include O2, part
of mmO2, and Cellhire, the world's largest renter of mobile phones.
On outlook, Michael Frank, Chairman of Offshore Telecom, stated :
"Looking to the future, the broadening of Offshore Telecom's product and service
portfolio, progress with trading partnerships and the proposed acquisition of
Matrix provides the Board with grounds for considerable optimism."
FOR FURTHER INFORMATION PLEASE CONTACT:
David Bland, Chief Executive, Offshore Telecom Plc Tel: +44 (23) 8045 8262
Steve Liebmann Tel : +44 (0) 7802-888159
ACQUISITION OF MATRIX NETWORK SOLUTIONS
and
APPROVAL OF THE WAIVER OF THE OBLIGATIONS UNDER RULE 9 OF THE CITY CODE ON
TAKEOVERS AND MERGERS
Introduction
The company has conditionally agreed to acquire Matrix which provides high
performance network solutions in the UK and Republic of Ireland. The proposed
consideration for this acquisition is 432,000,000 Ordinary Shares valuing Matrix
at # 1.2 million based on the closing mid market price as at 3 April 2003.
Matrix was incorporated in January 2003 as a joint venture between Paul Downton,
Anthony Weaver and Keith Berry. Ian Smith now holds 66.04 per cent. of the
shares in Matrix beneficially, Anthony Weaver and Keith Berry hold 16.67 per
cent. each beneficially and Paul Downton holds 0.62 per cent. beneficially. The
board of Matrix comprises Anthony Weaver as Chairman and Paul Downton as
Executive Director.
The vendors of Matrix, whose names are set out above (together referred to as
the "Concert Party"), are considered to be acting in concert in relation to
their combined holdings in the enlarged ordinary share capital of the company.
As the Ordinary Shares to be issued as consideration for the proposed
acquisition will represent 48.4 per cent. of the enlarged ordinary share capital
of the company, an obligation will arise, under Rule 9 of the Takeover Code, for
the Concert Party to make a general offer for the Ordinary Shares not owned by
them. The Takeover Panel (the "Panel") has agreed to a waiver of this obligation
subject to the approval of the independent shareholders at the EGM.
Notice of an EGM has been given in order to consider both a resolution to
approve such a waiver, or "whitewash", and also to increase the authorised share
capital of the company, authorise the directors to allot shares and seek
shareholder authority to allot these shares. In addition, the directors are
proposing a special resolution to disapply statutory pre-emption rights.
In the opinion of the directors, the proposed acquisition is an important
milestone in the growth and development of the company for the reasons set out
below.
Background to the Proposed Acquisition
Offshore Telecom is a network communications solutions company specialising in
the provision of networks, equipment and telecommunications services primarily
via satellite. It currently derives its revenues from three streams:
* the sale of satellite communications equipment and handsets
* the provision of airtime and bandwidth via satellite for both data and
voice
* the sale of additional and ancillary PC equipment, software, accessories
and support services
Increasingly, the company is addressing the market needs of medium to
large-scale enterprises, where integration between in-house network capabilities
and connectivity between sites, suppliers and customers worldwide is important.
Satellite services are increasingly being integrated into conventional local and
fixed-line wide area networks as well as providing wireless mobile services
beyond the range of conventional mobile phones.
Offshore Telecom is already responding to this changing customer environment in
a number of ways: by increasing its own direct sales channels, by adding
additional innovative mobile services, and by increasing the breadth of its
satellite service offerings to include networked broadband services across
Europe, the Middle East and Africa. However, an important key to success in
addressing the network solutions needs of the enterprise market is the
integration of such services with the supply of advanced in-house networking
equipment and services.
Many companies are already active in the network equipment and solutions markets
in the United Kingdom and the Republic of Ireland. The Board believes that
penetration of this market by Offshore Telecom solely by organic growth is
unlikely to prove viable. Thus, the company has searched for a compatible and
comparably sized existing network solutions business to acquire. The directors
believe that the proposed acquisition meets the requirements of the company and
its increasing customer base, and will allow rapid revenue growth. The directors
do not expect that the existing contractual and statutory rights of the
management and employees of the company will be affected by the proposed
acquisition.
Business of Matrix
Matrix provides high performance network solutions to public sector, enterprise
and internet service provider markets in the UK. The company sells and
integrates networking equipment, bandwidth and services to provide advanced
communication solutions. Matrix also delivers front-end consultancy and network
design, high quality systems integration coupled with cost effective and
efficient distribution. The primary revenue streams are generated by sales of
networking equipment, of bandwidth and from ongoing support and maintenance
contracts.
Matrix is already building a significant order book and enjoys close working
relationships with Norwood Adam, one of the country's leading distributors of
networking equipment. As a result of these relationships, Matrix benefits from
low-cost provision of a full range of manufacturer's hardware, from access at
cost to engineering specialists and from invoicing, office and administrative
support.
Information on the Concert Party
Ian Smith (aged 39) was, immediately prior to joining the company, regional
director of Foundry Networks Inc in the UK and Ireland. Ian has a 10 year track
record of sales management across a number of industries. His experience in the
communications market began with Cable and Wireless with a primary focus on the
public sector. A period spent at Cisco was followed by the move to Foundry
Networks Inc. where Ian has overseen significant business wins both in the
public sector and in the service provider market place.
Anthony Weaver (aged 35) trained as an electronics engineer and has 18 years
experience within the IT industry. In 1988 Tony Weaver formed Norwood Adam
Systems Ltd with Keith Berry. Four other companies now make up the Norwood Adam
group of companies. Norwood Adam provides data and telecommunications products
though a reseller base to UK and European clients. Tony is the Managing Director
of the Norwood Adam group.
Keith Berry (aged 52) is the Financial Director for the Norwood Adam Group of
Companies. Keith founded Norwood Adam Systems Ltd with Tony Weaver in 1988.
Keith had previously owned and run a highly successful graphic art studio in
London. Keith moved into IT when Norwood Adam was created.
Paul Downton (aged 28) is Technical Director of Matrix Network Solutions. He is
a Member (MIEE) of the Institute of Electrical Engineers. In 1990 he joined
Motorola Codex in the United Kingdom and over the following 4 years held various
positions in Test & Configuration, Network Management and Customer Service. In
1994 he joined CompuServe, where he was responsible for the support,
installation and development of the European points of presence for access to
the CompuServe network and the Internet. In May 1997 he joined Telewest
Communications to manage the dial-up infrastructure and moved on to being
responsible for the specification, installation and support of the Foundry
Infrastructure and the points of presence where these were installed. Paul
joined Foundry Networks Inc in January 2001 and became their EMEA Post Sales
Support Manager supporting both resellers and customers in Europe Middle East
and Africa.
Terms of the Proposed Acquisition
Offshore Telecom will, subject to the passing of the resolutions at the EGM,
acquire Matrix for a consideration of 432,000,000 new Ordinary Shares. At the
mid market price at the close of business on 3 April 2003, of 0.275p per
Ordinary Share, this equates to a value of # 1.2 million. On completion of the
proposed acquisition the directors intend to invite Ian Smith to join the Board
of the company.
City Code on Take-overs and Mergers
The terms of the proposed acquisition give rise to certain considerations under
the City Code.
Ian Smith holds 57,000,000 Ordinary shares in aggregate in Offshore Telecom and
Ian Smith, Keith Berry, Anthony Weaver and Paul Downton own all the shares in
Matrix. Messrs Smith, Berry, Weaver and Downton are considered under the City
Code to be acting in concert in relation to the proposed acquisition. Following
the completion of the proposed acquisition the Concert Party will, in aggregate,
hold 489,000,000 Ordinary Shares representing approximately 54.8 per cent. of
the enlarged issued ordinary share capital of the company.
Under Rule 9 of the City Code, any person, together with any person or persons
acting in concert with him, who acquires, whether by a series of transactions
over a period of time or not, shares which (taken together with shares held or
acquired by persons acting in concert with him) carry 30 per cent. or more of
the voting rights of a public company, is normally required by the Panel to make
a general offer to the shareholders of the company to acquire the balance of the
equity share capital of the company at the highest price paid by such person or
persons within the preceding 12 months.
However, following discussions with the Panel, the Panel has agreed, subject to
the Whitewash Resolution set out in the Notice of EGM being passed on a poll of
the independent shareholders (who do not include Ian Smith, the only member of
the Concert Party holding Ordinary shares at the date of the EGM, who will not
be entitled to vote on the Whitewash Resolution), to waive the obligations which
might result from the proposed acquisition for the Concert Party to make such a
general offer.
Rule 9 of the City Code also provides, inter alia, that where any person,
together with persons acting in concert with him, holds shares carrying more
than 30 per cent. but no more than 50 per cent. of a public company's voting
rights and such person, or any person acting in concert with him, acquires any
additional shares carrying voting rights, such person is normally required to
make a general offer to the shareholders of that company to acquire the balance
of the equity share capital of the company at the highest price paid by such
person or persons within the preceding 12 months.
For such time as a concert party's shareholding remains more than 50 per cent.
of a public company's voting rights, it may further increase its shareholding
without incurring an obligation under Rule 9 of the City Code, so long as no
individual member of the concert party thereby becomes obliged to make a general
offer by increasing their individual shareholding through 30 per cent.
Therefore, Ian Smith will not, following completion of the proposed acquisition,
be able to acquire any further Ordinary Shares without incurring an obligation
to make a general offer to the company's shareholders pursuant to Rule 9 of the
City Code. However, Keith Berry, Anthony Weaver and Paul Downton will be able to
acquire further Ordinary Shares without incurring such an obligation as long as
their individual holdings do not amount to 30 per cent. or more of the issued
share capital of the company.
Recommendation
The directors, who have been so advised by Nabarro Wells, consider that the
terms of the proposed acquisition are fair and reasonable so far as the
shareholders are concerned and are in the best interests of the company and its
shareholders as a whole. In providing advice to the directors, Nabarro Wells has
taken account of the commercial assessment of the directors.
Accordingly the directors unanimously recommend shareholders to vote in favour
of resolutions 1, 2 and 4 and independent shareholders to vote in favour of
resolution 3, the Whitewash Resolution, to be proposed at the EGM as they have
irrevocably undertaken to do in respect of their own beneficial holdings, which
in aggregate amount to 129,329,023 Ordinary Shares representing 28.1 per cent.
of the existing ordinary share capital of the company. Ian Smith, who together
with Keith Berry, Anthony Weaver and Paul Downton forms the Concert Party, will
not be entitled to vote on the Whitewash Resolution.
An irrevocable undertaking to vote in favour of the Resolutions has been
received from New Opportunities Investment Trust plc in respect of 90,000,000
Ordinary Shares representing 19.6 per cent. of the existing ordinary share
capital of the company.
Extraordinary General Meeting
Notice is hereby given that an Extraordinary General Meeting of Offshore Telecom
will be held at Dashwood House, 69 Old Broad Street, EC2M 1NR at 10.00am on 28
April 2003 at which the Resolutions, including the Whitewash Resolution, will be
proposed.
Key Information
Ordinary Shares
Number of Ordinary Shares in issue prior to the proposed acquisition 459,805,049
To be issued under the terms of the proposed acquisition 432,000,000
Total number of Ordinary Shares in issue following the proposed
acquisition 891,805,049
Market capitalisation following the proposed acquisition (at the
mid-market price at the close of business on 3 April 2003) #2,452,464
Timetable
Latest time and date for receipt of form of proxy from shareholders 10.00 am on 26 April 2003
EGM 10.00 am on 28 April 2003
Completion of proposed acquisition 28 April 2003
Ordinary Shares issued by Offshore Telecom under proposed acquisition 5 May 2003
admitted to trading on AIM
PRELIMINARY RESULTS FOR THE YEAR ENDED 31 OCTOBER 2002
CHAIRMAN'S STATEMENT
Introduction
I am pleased to report on the results for the year to 31 October 2002 at a time
when we are also able to announce a major step forward with the proposed
acquisition of Matrix Network Solutions Limited ("Matrix").
At the time of Offshore Telecom's Initial Public Offering on AIM in January
2001, the initial focus of our then 'start-up' business was providing telecoms
services for the offshore leisure marine market. Since then, the company's core
activities of providing 'extreme' communications services to individual and
corporate customers via satellite to users who are offshore at sea or
off-the-beaten-track on land have been extended through a series of trading
relationships and agreements. The potential of this market is illustrated by the
fact that, despite the growth in conventional mobile phone networks, 95% of the
earth's surface is not covered by a cellular signal. Satellite technology and
services have advanced rapidly while call prices have fallen to economic levels.
Mobile satellite phone service access can now be provided across the globe
through portable handsets which are of a size similar to conventional mobile
phones of just a few years ago. The proposed acquisition of Matrix will develop
Offshore Telecom's presence within the corporate networks arena, complementing
existing activities.
Results And Financial Review
To a significant extent, the results for the year to 31 October 2002 reflect the
constraints on development caused by the limited working capital available to
the company during the period. Turnover for the year was #260,000 (2001 :
#43,000) and the loss before tax was #665,000 (2001 : #772,000). The loss per
share was 0.29p (2001 : 0.92p).
The payment of a dividend for the year will not be proposed.
During the year under review, #618,000 was raised for working capital purposes
through a placing of shares including #339,000 from the Board. Since the
year-end, a further #345,000 has been raised in new equity.
On 25 September 2002, Offshore Telecom announced its participation in the
innovative New Opportunities Investment Trust plc ("NOIT") scheme which was
expected to raise up to #315,000 of additional working capital to accelerate the
company's rate of development.
Under the terms of the agreement, Offshore Telecom issued 90 million new
Ordinary shares of 0.25p at 0.35p in Offshore Telecom to NOIT in exchange for
315,000 new redeemable 5p Ordinary shares in NOIT at 100p. NOIT was a new
investment trust established to invest in undervalued quoted smaller companies.
NOIT joined the Official List of the London Stock Exchange and thereby became
part of the #60 billion investment trust sector. NOIT was set up principally
through 'in specie' subscriptions by exchanging its own shares at its issue
price of 100p for shares of an equivalent value in a number of quoted companies
at their market value, thereby acquiring a ready-made portfolio. After the
expiry of a three-month lock-in period ending 25 December 2002, shares in NOIT
held by the investee companies were to have been the subject of a placing
organised by NOIT with investment institutions, enabling participating investee
companies to realise part or all of their NOIT shares for cash.
To date, no such placing has taken place and it has not been practicable for
Offshore Telecom to sell any of its NOIT shares. On 26 February 2003 Jubilee
Investment Trust, another recently launched specialist investment trust,
announced an unsolicited offer for NOIT by way of a further exchange of shares;
the formal offer document was posted on 25 March 2003. Urgent discussions are
taking place in an attempt to find a viable way forward which will enable
Offshore Telecom and other investee companies to realise their NOIT shares for
cash.
Proposed Acquisition Of Matrix Network Solutions
Matrix provides high performance network solutions to the public sector,
enterprise and internet service provider markets in the UK. The company sells
and integrates networking equipment, bandwidth and services to provide advanced
communication solutions. Matrix delivers front-end consultancy and network
design, high quality systems integration coupled with cost effective and
efficient distribution. The primary revenue streams are generated by sales of
networking equipment, of bandwidth and from ongoing support and maintenance
contracts.
Offshore Telecom will, subject to the passing of the resolutions at the
forthcoming EGM, acquire Matrix for a consideration of 432 million new Ordinary
Shares, equating to a value of approximately #1.2 million.
Matrix was incorporated in January 2003 and, to date this year, it has achieved
invoiced sales in excess of #225,000 and is building a significant order book.
Business Development
During the year under review, initial emphasis was placed on establishing key
supplier relationships with the primary communications satellite operators
worldwide. Through our service provider and distribution arrangements with
Thuraya, Inmarsat and Iridium we are able to provide a full range of mobile
satellite telecommunications services anywhere in the world where the customer
needs them. Market expansion has occurred in both the sea and land markets, such
that revenues are currently split approximately 50/50 between offshore and
on-land usage.
The second key objective was to build sales and distribution channels. Owing to
the need to conserve cash, the Board decided to concentrate on the development
of third party indirect channels. Management has been successful in securing key
distribution arrangements in several areas, primarily:
- in the leisure marine business, with key boat manufacturers such as
Oyster Marine
- in the mainstream GSM market, with key operators such as MMO2 in the
United Kingdom and Vodafone in Ireland
- in the worldwide phone rental market, through a key relationship with
the world's largest phone rental company, Cellhire Ltd, and others
The company's business plan for the current year involves further strengthening
of the indirect channels together with building a direct sales team to market
directly to the larger enterprise customer. Though the company has been
operating in difficult financial conditions, the Board believes a direct sales
team is important to the long-term growth of the company.
The product range of the company has expanded considerably since the last Annual
Report, principally as a result of marketing co-operation agreements with the
GeoLink s.a. ("Geolink"), based in Paris. Two very significant products which
Offshore Telecom is able to offer to the market through these co-operation
agreements - amongst several - allow the company to further develop its
innovative product range.
The first of these is the extension of GSM mobile services via satellite to
ocean liners, cruise ships and ferries. This exciting new service allows
existing mobile phone users with their normal handsets to make and receive
voice, data and SMS calls via satellite while at sea. The service works by using
the ship's on-board satellite equipment to provide a relay to a GSM 'base
station' on board ship, with repeaters placed throughout both the cabins and the
public areas of the vessel. The ship then behaves as another 'roaming network'
while at sea, allowing the customer to make or receive calls in exactly the same
way - and with his existing mobile number - as if he were roaming in an overseas
territory. No additional actions are required by the user, with billing through
the subscriber's existing mobile service provider. Geolink is already operating
the service on certain UK to France and UK to Spain ferries, while Offshore
Telecom has commenced discussions with major cruise line operators.
The second key new service is the provision of broadband data services via
satellite terminals on the customer's premises. With the Geolink Access Service,
bandwidth and broadband internet connectivity services are being offered at data
speeds of up to 2 megabits per second via a small (sub one metre) fixed
satellite antenna. These services are available throughout the UK and Europe,
across the Middle East and all of Africa. Offshore Telecom is in discussion with
major corporate customers to provide network solutions based on this technology,
making broadband internet service a reality in remote areas on land and fixed
locations - such as oil rigs - at sea. This fixed antenna service complements
the mobile satellite broadband service known as Inmarsat R-BGAN which the
company sells, via its relationship with MVS USA Inc., to corporate customers
requiring broadband data services while travelling with their laptops.
Board
The company has been fortunate to secure the services of Phil Mehrtens, a highly
experienced telecommunications professional with recent senior management roles
in both Cable & Wireless and Tiscali. Phil joined the company as of the
beginning of 2003 as Chief Operating Officer, with key focus on developing
direct and indirect sales particularly in corporate markets.
We also look forward to welcoming Ian Smith to the Board as an executive
director on the completion of the acquisition of Matrix. A highly experienced IT
and communications industry developer of new business, Ian worked directly for
Foundry Networks as Regional Director in the UK from 2000 until participating in
Matrix. Before that, he held senior sales positions with Dataworkforce, Cisco
Systems, Olympic Worldlink and Cable and Wireless.
I would like to pay tribute to the skill and dedication of our management and
staff as well as the continuing support of the individual members of the Board.
Outlook
Looking to the future, the broadening of Offshore Telecom's product and service
portfolio, progress with trading partnerships and the proposed acquisition of
Matrix provides the Board with grounds for considerable optimism.
Michael Frank
Chairman
PROFIT AND LOSS ACCOUNT
YEAR ENDED 31 OCTOBER 2002
2002 2001
# #
Turnover 259,824 42,660
Cost of sales 206,374 28,522
-------- --------
Gross Profit 53,450 14,138
Administrative expenses 639,199 741,360
-------- --------
Operating Loss (585,749) (727,222)
Cost of reorganisation or restructuring - (50,000)
-------- --------
(585,749) (777,222)
Interest receivable - 5,530
Amounts written off investments (78,750) -
Interest payable (843) -
-------- --------
Loss On Ordinary Activities Before (665,342) (771,692)
Taxation
Tax on loss on ordinary activities - -
-------- --------
Loss for the financial year (665,342) (771,692)
========== =========
Loss per share (pence) (0.29p) (0.92p)
The company has no recognised gains or losses other than the results for the
Year as set out above.
All of the activities of the company are classed as continuing.
BALANCE SHEET
AS AT 31 OCTOBER 2002
2002 2001
# #
Fixed Assets
Tangible assets 22,822 40,999
Current
Assets
Stocks 13,495 -
Debtors 92,542 69,041
Investments 236,250 -
Cash at bank 2,952 77,381
and in hand
-------- ------
345,239 146,422
Creditors: 145,859 233,377
Amounts
falling due
within one
year
-------- -------
Net current 199,380 (86,955)
assets/
(liabilities)
-------- ---------
222,202 (45,956)
======== =========
Capital And
Reserves
Called-up 903,085 261,537
equity share
capital
Share premium 1,107,393 815,441
account
Profit and (1,788,276) (1,122,934)
Loss Account
----------- -----------
Shareholders' 222,202 (45,956)
Funds/
(Deficiency)
=========== ==========
CASH FLOW STATEMENT
YEAR ENDED 31 OCTOBER 2002
2002 2001
# #
Net cash outflow from operating activities (690,540) (617,479)
Returns on investments
and servicing of finance
Interest received - 5,530
Interest paid (843) (1,100)
------- -------
Net cash (outflow)/inflow from
returns on investments and
servicing of finance (843) 4,430
Capital Expenditure
Payments to acquire
tangible fixed assets (1,546) (44,929)
------- -------
Net cash outflow from capital expenditure (1,546) (44,929)
------- --------
Cash outflow before financing (692,929) (657,978)
Financing
Issue of equity share capital 416,548 188,405
Share premium on issue of
equity share capital 201,952 773,573
Net outflow from other
long-term creditors - (307,060)
------- ---------
Net cash inflow from financing 618,500 654,918
------- -------
Decrease in cash (74,429) (3,060)
======== =======
RECONCILIATION OF OPERATING LOSS TO NET CASH OUTFLOW FROM OPERATING ACTIVITIES
2002 2001
# #
Operating loss (585,749) (727,222)
Depreciation 15,396 16,662
Loss on disposal of fixed assets 4,327 -
Increase in stocks (13,495) -
(Increase)/Decrease in debtors (23,501) 91,990
(Decrease)/Increase in creditors (87,518) 51,091
Re-organisation costs - (50,000)
--------- ---------
Net cash outflow from operating activities (690,540) (617,479)
========= =========
RECONCILIATION OF NET CASH FLOW TO MOVEMENT IN NET FUNDS
2002 2001
# # # #
Decrease in (74,429) (3,060)
cash in the
period
Net cash - 307,060
outflow from
other
long-term
creditors -------- --------
(74,429) 304,000
-------- -------
Change in net (74,429) 304,000
funds
Net funds at 1 77,381 (226,619)
November 2001 -------- ---------
Net funds at 2,952 77,381
31 October ======== =========
2002
ANALYSIS OF CHANGES IN NET FUNDS
At 1 Nov 2001 Cash flows At 31 Oct 2002
# # #
Net cash:
Cash in hand and at bank 77,381 (74,429) 2,952
-------- -------- -------
Net funds 77,381 (74,429) 2,952
======== ======== =======
NOTES
Earnings Per Share 2002 2001
Earnings per ordinary share (pence) (0.29) (0.92)
======= =======
Earnings per share have been calculated on the net basis on the loss on ordinary
activities after taxation of #(665,342) (2001 - #(771,692)) using the weighted
average number of ordinary shares in issue of 228,409,617 (2001 - 83,599,728).
There is no dilutive effect of options on the loss for the year ended 31 October
2002.
Basis of derivation
The financial information contained in these preliminary results is abridged and
does not constitute the company's statutory financial statements for the year
ended 31 October 2002 or the year ended 31 October 2001. Statutory financial
statements for the period ended 31 October 2001 have been reported on by the
company's auditor and delivered to the Registrar of Companies.
The reports of the auditor for the year ended 31 October 2002 and the year ended
31 October 2001 were unqualified and they did not contain a statement under
section 237(2) or (3) of the Companies Act 1995.
The statutory financial statements for the year ended 31 October 2002 will be
posted to shareholders shortly and will be delivered to the Registrar of
Companies after they have been laid before the company in General Meeting on 28
April 2003.
SECTION 142 OF THE COMPANIES ACT 1985
Section 142 of the Companies Act 1985 provides that, where the net assets of a
public company are half or less of its called-up share capital, the directors
must convene an Extraordinary General Meeting of the Company for the purpose of
considering whether any, and if so what, steps should be taken to deal with the
situation. As a result of losses incurred to date in the development of the
Company's products and markets the Board believes that the Company's net assets
are now less than half of its called-up share capital. Accordingly, resolutions
have been included in the notice of Annual General Meeting for the above
purpose. The Board has included this resolution in the notice of Annual General
Meeting, as opposed to convening a separate Extraordinary General Meeting.
The directors have considered the steps available to the Company to deal with
this situation. The acquisition of the entire issued share capital of Matrix
Network Solutions Limited together with recent share subscriptions totalling
#345,000 will, the directors believe, redress the position.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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