RNS Number:3412U
Offshore Telecom PLC
19 January 2004
FOR IMMEDIATE RELEASE 19 January 2004
Offshore Telecom Plc
to be renamed
Matrix Communications Group plc
RESULTS FOR THE YEAR ENDED 31 OCTOBER 2003
Offshore Telecom Plc, the supplier of high performance IT network solutions to
the public and private sectors in the UK, has announced its unaudited results
for the year ended 31 October 2003.
Key points:
* Business transformed into rapidly growing, profitable supplier of high
performance IT network solutions.
* Name of group to be changed to Matrix Communications Group plc,
subject to shareholders' consent.
* Ongoing Matrix business achieved an operating profit of #176,000 on
revenue of #1.3m since becoming part of the group on 29 April 2003.
* The original satcom business incurred an operating loss of #401,000 on
turnover of #328,000 and has been closed.
* Total group turnover was #1.7m (2002: #260,000). After one-off
charges, the loss before tax was #428,000 (2002: loss of #665,000) and the
loss per share was 0.06p (2002: loss of 0.29p).
* Net cash at 31 October 2003 was #161,000 (2002: #3,000).
* Since the year end, the business has been expanded by the acquisition
of a 50% interest in Norwood Adams Technical Services and the acquisition of
Intrinsic Networks.
On outlook, Michael Frank, Chairman, stated :
"The Matrix group is building a rapidly growing, profitable integrator of IT
networks. The recent acquisition of Intrinsic Networks takes us into IT
security systems - one of the fastest growing segments of the network market -
and our interest in Norwood Adam Technical Services secures our ability to
support our customers.
"Order intake in the current year has started strongly and we are in advanced
negotiations and trials on a number of substantial new business opportunities.
The group now has a clear sense of purpose and direction and expects to deliver
good results in the future."
For further information please contact:
Michael Frank, Chairman Tel: 07802-787624
Ian Smith, Chief Operating Officer Tel: 07811-327054
Steve Liebmann, Bankside Consultants Tel : 07802-888159 / 020-7444-4163
CHAIRMAN'S STATEMENT
Introduction
During the year to 31 October 2003 the group was transformed through acquisition
into a supplier of high performance IT network solutions. The original
satellite communications activities ("satcom") have been discontinued.
Matrix Network Solutions Ltd. ("Matrix") therefore became the principal
operating company within the group following its acquisition at the end of April
2003. This business has established an excellent client base and has been
profitable since acquisition. Its activities have since been augmented by two
subsequent acquisitions.
Proposed change of name
To reflect the new direction of the group, it is proposed to seek shareholders'
approval to change its name to Matrix Communications Group plc. Once the change
in name has come into effect after the forthcoming Extraordinary General Meeting
(the EGM will take place immediately after the Annual General Meeting), the new
stock exchange code will be 'MXC'.
Group development
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 the
share price immediately prior to the initial announcement in early April.
As a result of a review of activities and continuing losses within the original
satcom business, in July 2003 the board announced its decision to withdraw from
these activities. This process has been completed and the associated costs are
included in the results to 31 October 2003.
Since the end of the financial year, the ongoing core business of IT network
solutions has been augmented by two further acquisitions:
* On 10 November 2003, the group subscribed #100,000 cash from existing
resources for a 50% interest in Norwood Adam Technical Services Ltd.
("NATS"). NATS delivers a full range of technical support and managed
services. These services form an integral part of Matrix's ability to
provide ongoing support to its customers.
NATS will be consolidated as a subsidiary within the group accounts in the
current year.
* On 12 December 2003, Intrinsic Networks Ltd. ("Intrinsic") was
acquired for up to #2 million with an initial consideration of #600,000
split equally into cash and new ordinary shares. As a supplier of IT
security solutions and services, Intrinsic complements the existing Matrix
activities. The additional payments to the vendors of Intrinsic will depend
on the achievement of agreed performance targets. The cash element of each
payment is coming from existing resources.
Financial results
The results for the year to 31 October 2003 reflect the substantial changes
which have occurred during the year. The results for the first half year were
essentially those for the former satcom activities while the results for the
second half year reflect the contribution made by Matrix.
Within the headline turnover of #1.7 million (2002: #0.3 million), continuing
activities contributed #1.3 million - virtually all of which was represented by
Matrix's revenue during the second half year. The turnover attributable to the
discontinued satcom activities was #0.3 million, most of which arose in the
first half year.
In terms of operating profit/loss, the contrast is even more marked. Matrix has
been profitable since it started trading and achieved an operating profit of
#261,000 in its first 9 months to 31 October 2003. In the period since Matrix
was acquired, it contributed an operating profit of #176,000 while discontinued
activities incurred an operating loss of #401,000 including one-off costs of
approximately #71,000 incurred in withdrawing from the original satcom
activities. Overall, the consolidated operating loss was #255,000 (2002: loss
of #586,000).
A charge of #174,000 (2002: #79,000) for diminution in the value of investment
represented the final withdrawal from the New Opportunities Investment Trust plc
scheme and is the difference between the carrying value and the eventual
realisation of #62,000. The consolidated loss before tax was #428,000 (2002:
loss of #665,000) and the loss per share was 0.06p (2002: loss of 0.29p).
The balance sheet has improved markedly during the course of the year with
year-end net cash of #161,000 (2002: #3,000) and shareholders' funds of #1.5
million (2002: #222,000). During the year, #501,000 was raised through the
issue of new equity.
The payment of a dividend for the year will not be proposed.
Strategy
Going forward, the strategy for the Matrix group will be clearly focussed on
building a rapidly growing, profitable IT network solutions business. The
initial elements already in place are the provision of high performance networks
(Matrix), the ability to offer IT security systems and services (Intrinsic) and
high level, round-the-clock customer support services (NATS). Two further areas
have been identified for future expansion through acquisition to develop the
group's market proposition :
* Data storage solutions go to the heart of securing and protecting an
organisation's vital information and dovetails neatly with existing group
products and services; and
* Voice over internet protocol ("VOIP") is regarded as the future for
mainstream telephony, essentially using IT networks and the Internet for
voice communications. Given the strengths of the group in networks and
security, this represents a natural direction for development.
An important aspect of the strategy is to acquire businesses which are
complementary in terms of both technology and customer base to increase the
opportunities for cross-selling between operating companies and to share common
overheads such as administration and training.
Board
The changes to the board have reflected the development of the group during the
year. Ian Smith was appointed a Director on the acquisition Matrix and was
appointed Chief Operating Officer in July 2003. More recently, we have welcomed
the appointment as Directors of Tony Weaver on the acquisition of 50% of NATS
and Peter Drinkwater on the acquisition of Intrinsic.
At the time of the decision to withdraw from the original satcoms activities in
July, David Bland, Philip Mehrtens, Mike Yarrow and Pat Roberts left the board.
We would like to thank them for their contributions.
Outlook
The Matrix group is building a rapidly growing, profitable integrator of IT
networks. The recent acquisition of Intrinsic Networks takes us into IT
security systems - one of the fastest growing segments of the network market -
and our interest in Norwood Adam Technical Services secures our ability to
support our customers.
Order intake in the current year has started strongly and we are in advanced
negotiations and trials on a number of substantial new business opportunities.
The group now has a clear sense of purpose and direction and expects to deliver
good results in the future.
Michael Frank 19 January 2004
Chairman
GROUP PROFIT AND LOSS ACCOUNT
YEAR ENDED 31 OCTOBER 2003
2003 2002
# # # #
Acquisitions
(Continuing Discontinued
activities) activities Total
Turnover 1,333,566 327,863 1,661,429 259,824
Cost of sales (874,557) (256,684) (1,131,241) (206,374)
-------------- -------------- -------------- --------------
Gross profit 459,009 71,179 530,188 53,450
Net operating expenses (312,579) (472,159) (784,738) (639,199)
-------------- -------------- -------------- --------------
Operating profit/(loss) 146,430 (400,980) (254,550) (585,749)
Interest receivable 1,367 -
Amounts written off investments (174,250) (78,750)
Interest payable (1,022) (843)
-------------- --------------
Loss on ordinary activities before (428,455) (665,342)
taxation
Tax on loss on ordinary activities (21,293) -
-------------- --------------
Loss for the financial year (449,748) (665,342)
========= =========
Loss per share (pence) (0.06p) (0.29p)
The group has no recognised gains or losses other than the results for the year
as set out above.
The company has taken advantage of Section 230 of the Companies Act 1985 not to
publish its own Profit and Loss Account.
GROUP BALANCE SHEET
AS AT 31 OCTOBER 2003
2003 2002
# #
Fixed Assets
Intangible assets 1,155,627 -
Tangible assets 6,809 22,822
-------------- --------------
1,162,436 22,822
Current Assets
Stocks 33,987 13,495
Debtors 1,016,334 92,542
Investments - 236,250
Cash at bank and in hand 161,065 2,952
-------------- --------------
1,211,386 345,239
Creditors: Amounts falling due within one (692,368) (145,859)
year
-------------- --------------
Net current assets/(liabilities) 519,018 199,380
-------------- --------------
Total assets less current liabilities 1,681,454 222,202
Creditors: Amounts falling due after more (219,750) -
than one year
-------------- --------------
1,461,704 222,202
========= =========
Capital and reserves
Called-up equity share capital 2,303,917 903,085
Share premium account 1,395,811 1,107,393
Profit and Loss Account (2,238,024) (1,788,276)
-------------- --------------
Shareholders' funds 1,461,704 222,202
========= =========
GROUP CASH FLOW STATEMENT
YEAR ENDED 31 OCTOBER 2003
2003 2002
# #
Net cash outflow from operating activities (474,163) (690,540)
Returns on investments and
servicing of finance
Interest received 1,367 -
Interest paid (1,022) (843)
-------------- --------------
Net cash inflow/(outflow) from returns on 345 (843)
investments and servicing of finance
Capital Expenditure & financial investment
Payments to acquire tangible fixed assets (5,069) (1,546)
Receipts from sale of fixed assets 73,750 -
-------------- --------------
Net cash outflow from capital expenditure 68,681 (1,546)
and financial investment
-------------- --------------
Cash outflow before financing (405,137) (692,929)
Financing
Loans received 62,000 -
Issue of equity share capital 320,832 416,548
Share premium on issue of equity share 180,418 201,952
capital
-------------- --------------
Net cash inflow from financing 563,250 618,500
-------------- --------------
Increase/(decrease) in cash 158,113 (74,429)
========= =========
RECONCILIATION OF OPERATING LOSS TO NET CASH OUTFLOW FROM OPERATING ACTIVITIES
2003 2002
# #
Operating loss (254,550) (585,749)
Depreciation & amortisation 40,005 15,396
(Profit)/loss on disposal of fixed assets (1,042) 4,327
Increase in stocks (20,492) (13,495)
Increase in debtors (712,013) (23,501)
Increase/(decrease) in creditors 472,087 (87,518)
Pre-acquisition profits 84,929 -
Capitalised expenses (83,087) -
-------------- --------------
Net cash outflow from operating activities (474,163) (690,540)
========= =========
RECONCILIATION OF NET CASH FLOW TO MOVEMENT IN NET FUNDS
2003 2002
# #
Increase/(decrease) in cash in the period 158,113 (74,429)
-------------- --------------
Movement in net funds 158,113 (74,429)
========== ==========
Net funds at 1 November 2002 2,952 77,381
-------------- --------------
Net funds at 31 October 2003 161,065 2,952
========= =========
ANALYSIS OF CHANGES IN NET FUNDS
At At
1 Nov 2002 Cash flows 31 Oct 2003
# # #
Net cash:
Cash in hand and at bank 2,952 158,113 161,065
-------------- -------------- --------------
Net funds 2,952 158,113 161,065
========= ========= =========
NOTES
Earnings Per Share
2003 2002
Loss per ordinary share (pence) (0.06) (0.29)
======= =======
Earnings per share have been calculated on the net basis on the loss on ordinary
activities after taxation of #449,748 (2002: loss of #665,342) using the
weighted average number of ordinary shares in issue of 651,979,335 (2002 :
228,409,617).
There is no dilutive effect of options on the loss for the year ended 31 October
2003.
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 2003 or the year ended 31 October 2002. Statutory financial
statements for the period ended 31 October 2002 have been reported on by the
company's auditor and delivered to the Registrar of Companies.
The report of the auditor for the year ended 31 October 2002 was unqualified and
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 2003 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.
This information is provided by RNS
The company news service from the London Stock Exchange
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