RNS Number:1176N
Offshore Telecom PLC
03 July 2003
FOR IMMEDIATE RELEASE 3 July 2003
Offshore Telecom Plc
INTERIM RESULTS FOR THE SIX MONTHS ENDED 30 APRIL 2003,
REORGANISATION & BOARD CHANGES
Offshore Telecom Plc ("Offshore Telecom"), the AIM quoted provider of IT
networks and telecommunications services, today announces its unaudited results
for the six months to 30 April 2003, a reorganisation and changes to the Board.
Key points
* Following reappraisal of activities and prospects, Board has decided
to focus its resources on the recently acquired Matrix IT network solutions
business and to withdraw from satellite communications activities ("satcoms").
* Matrix has achieved an excellent start.
* Key financials for the half year are :
o Turnover : #316,000 (2002 : #166,000);
o Satcoms operating loss : #174,000 (2002 : #284,000);
o Matrix operating profit (post acquisition) : #76,000;
o One-off item : #174,000 write-down on investment in New Opportunities
Investment Trust ;
o Pre-tax loss : #275,000 (2002 : #283,000); and
o Cash at 30 April : #221,000 (2002 : #26,000).
* Following the reorganisation, Ian Smith becomes Chief Operating
Officer; David Bland, Phil Mehrtens, Mike Yarrow (non-executive) and Pat Roberts
(non-executive) will step down from the Board.
On outlook, Michael Frank, Chairman of Offshore Telecom, stated :
"Matrix's performance can be gauged by the fact that for the period from its
incorporation in January 2003 to the end of April 2003, it has achieved an
operating profit of approximately #160,000 and has generated cash.
"This encouraging progress by Matrix means that, going forward, the business is
now based on profitable operations with significant opportunities for growth."
For further information please contact:
Michael Frank, Chairman, Offshore Telecom Plc Tel: +44 (0) 7802-787624
Steve Liebmann Tel : +44 (0) 7802-888159
CHAIRMAN'S STATEMENT
Introduction
During the six months to 30 April 2003, trading within the original Offshore
Telecom satellite communications ("satcoms") business continued to be hampered
by a shortage of working capital for the reasons set out below, preventing it
from taking full advantage of a number of business opportunities. Nevertheless,
shortly before the end of the half-year we were able to complete the acquisition
of Matrix Network Solutions Limited ("Matrix"), a company which supplies high
performance IT network solutions to the public and private sectors in the UK. I
am pleased to report that Matrix has achieved an excellent start as part of the
group.
Offshore Telecom recently learnt that a major supplier proposed changes to the
distribution agreement with the company which may adversely affect the prospects
for its satcoms activities. This, together with the continuing cash outflow
from the original business, gave rise to a reappraisal of activities and
prospects. As a result the Board has decided to withdraw from satcoms and to
focus its resources on Matrix, which has been making excellent progress since
being acquired.
Results and Financial Review
Consolidated turnover for the six months to 30 April 2003 was #316,000. Of
this, #196,000 (2002 : #166,000) relates to the original satcoms business which
is being discontinued and #120,000 to Matrix which represents one month's
turnover in the period under review. Satcoms incurred an operating loss of
#174,000 (2002 : #284,000) and Matrix contributed an operating profit of
#76,000. After providing for the write-down in the value of investments (see
below), the loss before tax was #275,000 (2002 : #283,000). The loss per share
was 0.07p (2002 : 0.14p).
A further #345,000 was raised in the period through the issue of new equity to
provide working capital for Matrix. Including cash balances within Matrix,
total net cash at 30 April was #221,000 (2002 : #26,000).
We have reported previously on Offshore Telecom's participation in the New
Opportunities Investment Trust plc ("NOIT") scheme which had been expected to
contribute significant new funds to support the development of the original
satcoms business. Offshore Telecom sold its shares in NOIT in early May for
#62,000, an amount which was much less than originally hoped. The difference
between the carrying value and the amount realised is #174,000 and is reflected
in the results for the half-year.
An interim dividend will not be paid.
Acquisition of Matrix Network Solutions
Matrix was acquired on 29 April 2003 for a consideration of 432 million new
Ordinary Shares, equating to a value of approximately #1.2 million based on
Offshore Telecom's share price immediately prior to the initial announcement on
4 April 2003.
Reorganisation and board changes
For the reasons set out above, Offshore Telecom has decided to withdraw from the
original satcoms business. Every effort will be made to secure purchasers for
all or part of these activities with withdrawal expected to be completed by the
end of the current financial year.
The opportunity is being taken to reduce the size of the Board. David Bland
(Chief Executive), Phil Mehrtens (executive director), Mike Yarrow and Pat
Roberts (non-executives) will resign shortly.
Ian Smith, already an executive director and responsible for Matrix's
operations, becomes Chief Operating Officer with immediate effect.
For the time being, the Board will comprise Ian Smith, Keith Mills
(non-executive) and myself as Chairman.
I would like to take this opportunity to thank David Bland for his dedication
and hard work since Offshore Telecom was formed in 1999, through its flotation
on AIM in 2001 and its acquisition of Matrix earlier this year. I would also
like to thank Phil Mehrtens, Mike Yarrow and Pat Roberts for their contributions
and wish them all well for the future.
Operational review : ongoing activities
Matrix provides high performance network solutions to the public sector,
enterprise and internet service provider markets in the UK, based mainly on the
products of Foundry Networks, a leading US-based supplier of networking
equipment. 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.
Matrix has built a #1 million pipeline of business across all the sectors in
which it operates. It's many customers include major 'blue chip' technology
companies, businesses operating in Formula 1 motor racing, sports car
manufacturing and outsource service contracting as well as a number of public
sector entities including four educational institutions and two local
authorities.
It is planned to change the name of the group in due course, subject to
shareholder approval, to reflect the change in the balance of the business.
Outlook
Matrix's performance can be gauged by the fact that for the period from its
incorporation in January 2003 to the end of April 2003, it has achieved an
operating profit of approximately #160,000 and has generated cash.
This encouraging progress by Matrix means that, going forward, the business is
now based on profitable operations with significant opportunities for growth.
Michael Frank
Chairman
CONSOLIDATED PROFIT AND LOSS ACCOUNT
FOR THE SIX MONTHS ENDED 30 APRIL 2003
Six months Six months Year
to 30 April to 30 April to 31 October
2003 2002 2002
(consolidated) (company) (company)
(unaudited) (unaudited) (audited)
# # #
Turnover 316,218 166,303 259,824
Cost of sales 169,152 (128,611) (206,374)
------------------ ----------------- -----------------
Gross profit 147,066 37,692 53,450
Administrative expenses (244,960) (321,496) (639,199)
------------------ ----------------- -----------------
-
Operating loss (97,894) (283,804) (585,749)
Diminution in value of investment (174,250) - (78,750)
------------------ ----------------- -----------------
Loss before interest and taxation (272,144) (283,804) (664,499)
Interest receivable - 563 -
Interest payable (2,594) - (843)
------------------ ----------------- -----------------
Loss on ordinary activities before taxation (274,738) (283,241) (665,342)
Corporation tax (14,363) - -
------------------ ----------------- -----------------
Loss for the financial period (289,101) (283,241) (665,342)
============ ============ ============
Loss per share (pence) (0.07)p (0.14)p (0.29)p
The company has no recognised gains or losses other than the results for the six
months as set out above.
CONSOLIDATED BALANCE SHEET
AS AT 30 APRIL 2003
As at As at As at
30 April 30 April 31 October
2003 2002 2002
(consolidated) (company) (company)
(unaudited) (unaudited) (audited)
# # #
Fixed Assets
Tangible assets 19,471 34,667 22,822
Intangible assets 1,200,945 - -
------------------ ----------------- ----------------
1,220,416 34,667 22,822
------------------ ----------------- ----------------
Current Assets
Stocks 20,170 28,500 13,495
Debtors 425,054 222,206 92,542
Short-term investments 62,000 - 236,250
Cash at bank and in hand 267,704 25,517 2,952
------------------ ----------------- ----------------
774,928 276,223 345,239
Creditors: Amounts falling due within one year (529,244) (110,087) (145,859)
------------------ ----------------- ----------------
Net current assets 245,684 166,136 199,380
------------------ ----------------- ----------------
1,466,100 200,803 222,202
========== =========== ===========
Capital and reserves
Called-up equity share capital 2,229,512 614,870 903,085
Share premium account 1,313,965 992,108 1,107,393
Profit and Loss Account (2,077,377) (1,406,175) (1,788,276)
------------------ ----------------- ----------------
Shareholders' funds 1,466,100 200,803 222,202
============ ============ ============
CONSOLIDATED CASH FLOW STATEMENT
FOR THE SIX MONTHS ENDED 30 APRIL 2003
Six months Six months Year
to 30 April to 30 April to 31 October
2003 2002 2002
(consolidated) (company) (company)
(unaudited) (unaudited) (audited)
# # #
Net cash outflow from operating activities (308,793) (582,427) (690,540)
Returns on investments and
servicing of finance
Interest received - 563 -
Interest paid (2,594) - (843)
------------------ ----------------- ----------------
Net cash inflow/(outflow) from returns on (2,594) 563 (843)
investments and servicing of finance
Capital Expenditure
Payments to acquire tangible fixed assets (1,131) - (1,546)
------------------ ----------------- ----------------
Net cash outflow from capital expenditure (1,131) - (1,546)
Acquisitions
Costs of acquisition (81,837) - -
Cash in subsidiary at acquisition 267,704 - -
------------------ ----------------- ----------------
Net cash inflow from acquisition 185,867 - -
------------------ ----------------- ----------------
Cash outflow before financing (126,651) (581,864) (692,929)
Financing
Issue of equity share capital 246,428 353,333 416,548
Share premium on issue of equity share capital 98,572 176,667 201,952
Net outflow from other long-term creditors - - -
------------------ ----------------- ----------------
Net cash inflow from financing 345,000 530,000 618,500
------------------ ----------------- ----------------
Increase/(decrease) in cash 218,349 (51,864) (74,429)
========== =========== ===========
RECONCILIATION OF OPERATING LOSS TO NET CASH OUTFLOW
FROM OPERATING ACTIVITIES
Six months Six months Year
to 30 April to 30 April to 31 October
2003 2002 2002
(consolidated) (company) (company)
(unaudited) (unaudited) (audited)
# # #
Results before interest and taxation (272,144) (283,804) (585,749)
Depreciation 7,620 7,698 15,396
Loss on disposal of fixed assets / impairment 174,250 - 4,327
Increase in stocks (6,675) (28,500) (13,495)
(Increase)/decrease in debtors (212,395) (153,165) (23,501)
(Decrease)/increase in creditors 551 (124,656) (87,518)
------------------ ----------------- ----------------
Net cash outflow from operating activities (308,793) (582,427) (690,540)
=========== =========== ===========
RECONCILIATION OF NET CASH FLOW TO MOVEMENT IN NET FUNDS
Six months Six months Year
to 30 April to 30 April to 31 October
2003 2002 2002
(consolidated) (company) (company)
(unaudited) (unaudited) (audited)
# # #
Increase/(decrease) in cash in the period 218,349 (51,864) (74,429)
------------------ ----------------- ----------------
Net funds at the start of the period 2,952 77,381 77,381
------------------ ----------------- ----------------
Net funds at the end of the period 221,301 25,515 2,952
============ ============ ============
ANALYSIS OF CHANGES IN NET FUNDS
At 31 October Cash flows At 30 April 2003
2002
# # #
Net cash:
Cash in hand and at bank 2,952 264,752 267,704
Overdraft - (46,403) (46,403)
------------------ ----------------- ----------------
Net funds 2,952 218,349 221,301
=========== =========== ==========
NOTES
1. Earnings per share have been calculated on the net basis on the loss
on ordinary activities after taxation of #(289,101) (2002 : #(665,342)) using
the weighted average number of ordinary shares in issue of 426,215,847 (2002 :
228,409,617).
There is no dilutive effect of options on the loss for the year ended 31 October
2002.
2. The interim accounts were approved by the Board of Directors on the 2
July 2003.
3. The interim report has been prepared using accounting policies
consistent with those set out in the statutory accounts of the company for the
year ended 31 October 2001.
Additional policies are :
Basis of Consolidation
The consolidated Profit & Loss Account and Balance Sheet include
the financial statements of the Company and it's subsidiary made up to 30/4/03.
The results of subsidiaries are included in the Profit & Loss Account from the
date of acquisition.
On acquisition the subsidiaries figures are recorded at fair value.
Goodwill
Goodwill arising on consolidation represents the excess of fair
value of consideration given over the fair value of identifiable net assets
acquired. Goodwill is capitalised and amortised over its useful economic life.
4. The interim financial information for the two half year periods is
unaudited and does not constitute statutory accounts within the meaning of
Section 240 of the Companies Act 1985. The results for the year ended 31
October 2002 have been extracted from the statutory accounts of the company on
which an unqualified auditors' report has been received and which have been
delivered to the Registrar of Companies.
5. Copies of this interim report are being sent to all shareholders and
will be available to the public from the company's registered office, Hamble
Point Marina, Hamble, Southampton, SO31 4NB.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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