RNS Number:5476N
Glotel PLC
15 July 2003
Embargoed until 0700 15 July 2003
Glotel Plc
Preliminary Results for the year ended 31 March 2003
Highlights
- Overall trading conditions during the period remained stable.
The first half improvement in the USA was not sustained but UK and
Australia showed small improvements.
- The Group maintained its infrastructure and branch network in
anticipation of more favourable conditions in the future.
- Turnover for the year was #76 million (2002 #98 million).
Turnover for each of the last three half year periods has now
remained constant at approximately #38 million.
- The loss before tax and exceptional items was reduced to #1.0
million (2002: #1.5million loss). The loss before tax was #1.3m
(2002: #4.4m loss).
- The Group's cash position remains strong with cash balances of
#8.2million (2002: #7.6 million).
Les Clark, Chairman, commented:
"Despite adverse conditions in the telecommunications sector and
the market as a whole, our strategy is working, and we are well
positioned to enjoy the benefits of any upturn. Our infrastructure
is still intact and we have cash and borrowing facilities to
support growth.
"Furthermore, through these challenging market conditions, we have
successfully managed to reduce our level of operating losses since
31 March 2003."
- ends -
For further information, please contact:
Glotel Plc Weber Shandwick Square Mile
Les Clark, Chairman Nick Oborne
Andy Baker, Chief Executive Becky Haywood
Alan Saffer, Group Finance Director 020 7067 0700
020 7484 3000
www.glotel.com
Chairman's and Chief Executive's Statement
There have been no significant changes to trading conditions from
those reported at the time of the Interim Results. This has enabled
us to maintain our infrastructure and branch network in
anticipation of more favourable trading conditions in the future.
The improvement in the USA experienced in the six months to 30th
September 2002 was not sustained and sales returned to their
previous levels. A gentle increase in sales in the UK and an
improvement in Australia offset this decline.
Financial
Sales for the year were #76m (2002: #98m) with the second half of
#38m being in line with the first half. The loss before tax and
exceptional items for the year was #1.0m (2002: #1.5m loss), which
was also distributed evenly between the two halves. Exceptional
costs in respect of vacant properties and staff reductions amounted
to #0.4m (2002: #2.9m). The loss before tax was #1.3m (2002: #4.4m
loss)
Due to our improved cash position, interest received amounted to
#0.2m (2002: interest payable #0.3m)
The gross profit percentage declined from 21.2% to 19.5% due to
considerable competitive pressure reflecting the softness in the
technology sector and our market. Our defensive strategy of
accepting volume business at lower rates also contributed to this
decline.
The loss per share for the period is 2.3p (2002: loss 8.6p) and
consequently the Board is not recommending the payment of a final
dividend.
The progress and grip on our cash position has continued and our
net cash position at 31st March 2003 was #8.2m (2002: #7.6m). We
have not experienced any significant bad debts in the period.
Operational
Our geographical mix of sales has moved to 54% UK (2002: 58%) and
46% overseas (2002: 42%).
As a support services company we rely heavily on the capital and
development expenditure of our telecommunications and other
clients. Due to market factors, political instability and internal
financial pressures, these companies have deferred or cancelled
projects. However as a pro-active organisation we have identified
where there are budgets and opportunities for Glotel and we have
made good progress in those areas. Specifically, sales to some of
our telecommunication clients have shown a significant increase and
we have made major progress in the UK within the public sector.
We have continued to review our cost base. Staff costs, our largest
item of expenditure, have been further reduced. From the beginning
of the financial year our total cost run rate has been reduced by
#0.2m per month. We are pleased to have assigned our Wardour
Street, London premises for the remainder of the lease, which
removes any additional burden.
UK
The UK business produced an operating profit (before exceptional
charges and central costs) of #0.3m (2002: #0.7m restated). The UK
market remains competitive and we continue to experience pressure
on margins. We have managed three consecutive halves of
approximately #20m revenues, which shows stability. We have
developed a considerable amount of new business, particularly
within the public sector and continue to win repeat business from
loyal preferred vendor customers. We are focusing on three main
markets: telecommunications, professional services and the public
sector and have seen an increase in market share within all three.
We have managed to compensate for the pressure on margins with an
increased number of consultants on assignment during the year.
USA
The USA performance improved with a small operating loss (before
exceptional charges and central costs) of #0.2m (2002: #1.0m loss).
We experienced a year of two very different halves, with
significant growth in the first half followed by a drop to start-of-
the-year levels in the second half. We have retained the office
infrastructure, which puts us in a stronger position to win
national accounts. We continue to believe that the US market gives
Glotel the best opportunity to return to significant sales and
margin growth.
International
Our International business, which comprises Europe, Australia and
our global team in London, produced sales of #10.1m (2002: #13.8m)
and an operating profit (before exceptional charges and central
costs) of #0.1m (2002: #0.3m). While the opportunities in Europe
were limited, the Australian and global markets had a good year.
Nearly all our International business is in the telecommunications
sector and we have had particular success with some of the global
equipment providers. A number of telecom customers are receiving
round the clock support due to our global coverage from our network
of offices.
Glotel Accounting Systems
This subsidiary, based in Guildford, is focused on providing
software and consultancy for Microsoft Business Solutions and had
an excellent year with sales increasing 62% to #1.1m (2002: #0.7m).
We have been recognised by Microsoft as one of the fastest growing
partners and are currently 8th out of 100 resellers. The current
year for Glotel Accounting Systems has started well.
Current Trading and Outlook
Despite adverse conditions in the telecommunications sector and the
market as a whole, our strategy is working, and we are well
positioned to enjoy the benefits of any upturn. Our infrastructure
is still intact and we have cash and borrowing facilities to
support growth.
Furthermore, through these challenging market conditions, we have
successfully managed to reduce our level of operating losses since
31 March 2003.
The support of the board and staff has been crucial during this
difficult period and our thanks go out to our global team. We
continue to focus on our best opportunities in our core markets.
- ends -
For further information, please contact:
Glotel Plc Weber Shandwick Square Mile
Les Clark, Chairman Nick Oborne
Andy Baker, Chief Executive Becky Haywood
Alan Saffer, Group Finance Director 020 7067 0700
020 7484 3000
www.glotel.com
GLOTEL Plc
Consolidated profit and loss account (unaudited)
Preliminary results for the year ended 31 March 2003
Year ended Year ended
31 March 31 March
2003 2002
#'000 #'000
_____________________________________________________________________
Turnover 75,900 98,352
Cost of Sales (61,128) (77,461)
_____________________________________________________________________
Gross profit 14,772 20,891
Administrative expenses (16,292) (25,065)
Operating loss before operating exceptional
items (1,158) (1,230)
Operating exceptional items (362) (2,944)
_____________________________________________________________________
Operating loss (1,520) (4,174)
Net interest receivable/(payable) and similar
income/(charges) 173 (271)
Loss on ordinary activities before taxation and
operating exceptional items (985) (1,501)
Operating exceptional items (362) (2,944)
Loss on ordinary activities before taxation (1,347) (4,445)
Tax on loss on ordinary activities 494 1,313
_____________________________________________________________________
(853) (3,132)
Loss on ordinary activities after taxation and
retained loss for the year
_____________________________________________________________________
Basic loss per share (2.3p) (8.6p)
_____________________________________________________________________
Diluted loss per share (2.3p) (8.6p)
_____________________________________________________________________
The results for the year and the prior year derive from continuing
operations.
There is no difference between the loss as disclosed in the profit
and loss account and that on an unmodified historical cost basis.
GLOTEL Plc
Consolidated statement of total recognised gains and losses
(unaudited)
Preliminary results for the year ended 31 March 2003
Year ended Year ended
31 March 31 March
2003 2002
#'000 #'000
____________________________________________________________________
Loss for the financial year (853) (3,132)
Currency translation difference on foreign
currency investments (556) (25)
____________________________________________________________________
Total recognised gains and losses relating to
the financial year (1,409) (3,157)
____________________________________________________________________
GLOTEL Plc
Consolidated balance sheet (unaudited)
Preliminary results for the year ended 31 March 2003
As at 31 March 2003
As at As at
31 March 31 March
2003 2002
#'000 #'000
____________________________________________________________
Fixed assets
Tangible assets 1,145 2,285
Investments 641 641
____________________________________________________________
1,786 2,926
Current assets
Debtors 15,366 15,010
Cash at bank and in hand 8,214 7,573
____________________________________________________________
23,580 22,583
Creditors - amounts falling due within
one year (7,794) (5,901)
____________________________________________________________
Net current assets 15,786 16,682
____________________________________________________________
Total assets less current liabilities 17,572 19,608
Provisions for liabilities and charges (674) (1,302)
____________________________________________________________
16,898 18,306
Net assets
____________________________________________________________
Capital and reserves
Called up share capital 1,895 1,895
Share premium account 15,880 15,879
Other reserves 100 100
Profit and loss account (977) 432
____________________________________________________________
Equity shareholders' funds 16,898 18,306
____________________________________________________________
GLOTEL Plc
Consolidated cash flow statement (unaudited)
Preliminary results for the year ended 31 March 2003
Year ended Year ended
31 March 31 March
2003 2002
#'000 #'000
_______________________________________________________________________
Net cash (outflow)/inflow from operating activities (240) 14,183
Returns on investment and servicing of finance
Interest received 186 88
Interest paid (13) (408)
Interest element of hire purchase payments - (1)
_______________________________________________________________________
Net cash inflow/(outflow) from returns on
investment and servicing of finance 173 (321)
Taxation
Corporate taxes paid - (150)
Corporate taxes refunded 900 688
_______________________________________________________________________
Net cash inflow from taxation 900 538
Capital expenditure
Purchase of tangible fixed assets (157) (628)
Sale of tangible fixed assets 165 582
_______________________________________________________________________
Net cash inflow/(outflow) from capital expenditure 8 (46)
_______________________________________________________________________
Net cash inflow before financing 841 14,354
Financing
Capital element of hire purchase payments - (28)
Net repayment of invoice discounting advances - (5,360)
Issue of ordinary share capital 1 -
_______________________________________________________________________
Net cash inflow/(outflow) from financing 1 (5,388)
_______________________________________________________________________
Increase in cash in the year 842 8,966
Translation (loss)/gain (201) 4
Net funds at 1 April 7,573 (6,785)
_______________________________________________________________________
Net funds at 31 March 8,214 7,573
_______________________________________________________________________
GLOTEL Plc
Reconciliation of operating loss to net cash flow from
operating activities (unaudited)
Preliminary results for the year ended 31 March 2003
Year ended Year ended
31 March 31 March
2003 2002
#'000 #'000
______________________________________________________________________
Operating loss (1,520) (4,174)
Depreciation charges 1,065 1,654
Profit on sale of fixed assets (5) (94)
(Increase)/decrease in debtors (1,101) 26,869
Increase/(decrease) in creditors 1,904 (11,374)
(Decrease)/increase in provisions for
liabilities and charges (583) 1,302
______________________________________________________________________
Net cash (outflow)/inflow from operating
activities (240) 14,183
______________________________________________________________________
GLOTEL Plc
Reconciliation of net cash flow to movement in net funds
(unaudited)
Year ended Year ended
31 March 31 March
2003 2002
#'000 #'000
______________________________________________________________________
Increase in cash in the year 842 8,966
Net cash outflow from decrease in debt - 5,388
______________________________________________________________________
Change in net funds resulting from cash flows 842 14,354
Translation difference (201) 4
______________________________________________________________________
Movement in net funds in the year 641 14,358
Net funds at 1 April 7,573 (6,785)
______________________________________________________________________
Net funds at 31 March 8,214 7,573
______________________________________________________________________
GLOTEL Plc
Preliminary results for the year ended 31 March 2003
Turnover and segmental information (unaudited)
Turnover represents the invoiced amount of services provided net of
value added taxation. The Group operates in one principal area of
activity, that being the provision of consultants (predominantly
in telecommunications and networking) on a contract basis.
The geographical split of the results of the Group is as follows:
Turnover Operating profit/(loss) Profit/(loss) before tax
Year Year Year Year Year Year
ended ended ended ended ended ended
31 March 31 March 31 March 31 March 31 March 31 March
2003 2002 2003 2002 2003 2002
Re-stated Re-stated
(note 4) (note 4)
#'000 #'000 #'000 #'000 #'000 #'000
_________________________________________________________________________________________
United Kingdom
Glotel UK 39,982 56,126 346 (173) 353 (413)
Glotel
International * 4,114 4,451 366 244 366 244
Other 1,089 674 (56) (15) (56) (15)
_________________________________________________________________________________________
Total United
Kingdom 45,185 61,251 656 56 663 (184)
Glotel North
America 24,776 27,757 (537) (2,476) (936) (2,876)
Glotel
Continental
Europe* 2,577 6,100 (244) 231 (293) 83
Glotel Australia * 3,362 3,244 (2) (84) (21) (114)
_________________________________________________________________________________________
75,900 98,352 (127) (2,273) (587) (3,091)
Central Activities - - (1,393) (1,901) (760) (1,354)
_________________________________________________________________________________________
Glotel Group 75,900 98,352 (1,520) (4,174) (1,347) (4,445)
_________________________________________________________________________________________
* Total Glotel
International 10,053 13,795 120 391 52 213
_________________________________________________________________________________________
The turnover figures above represent sales to third parties by
geographical origin.
GLOTEL Plc
Preliminary results for the year ended 31 March 2003
Notes to the accounts (unaudited)
1. BASIS OF PREPARATION
These financial statements are prepared under the historical cost
convention in accordance with applicable accounting standards.
The preliminary statement has been prepared on the basis of the
accounting policies and presentation set out in the Group's
statutory accounts for the year ended 31 March 2002, which is
the most recently published set of annual financial statements,
and which have been filed with the Registrar of Companies.
The preliminary statement was approved by the Board on 15 July 2003
and the financial information contained in this preliminary
statement does not constitute full statutory accounts as defined
in Section 240 of the Companies Act 1985. The statutory accounts
for the year ended 31 March 2003 have not yet been reported on
by the Company's auditors and have not yet been filed with the
Registrar of Companies.
2. EXCEPTIONAL ITEMS
Operating exceptional items relate to the redundancy and office
closure costs associated with the Group's cost reduction
programme. An analysis is given below:
Year ended Year ended
31 March 2003 31 March2002
#'000 #'000
Lease provisions 265 1,741
Redundancy costs and other related costs 97 1,203
______________________
Total 362 2,944
______________________
3. LOSS PER SHARE
The calculation of loss per Ordinary Share is based on a loss
attributable to members of the holding Company of #853,000
(2002: loss #3,132,000) and on 36,558,500 Ordinary Shares (2002:
36,555,806), being the weighted average number of Ordinary
Shares in issue during the year, after excluding the shares
owned by the Group's Employee Share Trust.
The diluted loss per Ordinary Share is based on the same loss of
#853,000 (2001: loss #3,132,000) and on 36,558,500 Ordinary
Shares (2002: 36,555,806).
4. SEGMENTAL INFORMATION
Certain staff costs, computer depreciation, communication and property
costs have been re-allocated between Glotel UK and central
activities in order to more appropriately reflect the nature of
the costs. The comparatives in the segmental information have
been re-stated to bring them onto the same allocation basis as
the current period.
5. GENERAL
Copies of the 2003 Report and Accounts will be sent to shareholders in
due course. Copies will be available from The Company Secretary,
Glotel Plc, 7th Floor, The Communications Building, 48 Leicester
Square, London, WC2H 7LT.
This information is provided by RNS
The company news service from the London Stock Exchange
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