Ferro-alloy Re. Regulatory News (FAR)

28 Feb 2006 07:01

Farsight PLC28 February 2006 Farsight PLC Interim Results For the six months ended 30 November 2005 Introduction I am pleased to present my report for the six month period ended 30th November2005, a period in which the company continued to achieve sales growth throughincreased sales of monitoring services using the e-surveillance softwareplatform. Construction sites are finding the Build Secure product increasinglyattractive and a number of major developers are using this service to protecttheir property during the construction phase. Our objective continues to be the restoration of profitability and the reportedfigures indicate that we are close to achieving this. Results and Dividends Turnover on continuing activities increased by 37.04% over the comparativeperiod to £777,000 (2004 - £567,000). The operating loss was £40,000 (2004 - loss of £188,000). After recognising a profit on the disposal of the intellectual property rightsrelating to the e surveillance technology, sold in June 2005 and after deductinginterest payable, the profit for the period was £1,000 (2004 - loss of£189,000). No dividend is recommended. Trading Review Sales revenue from remote video monitoring operations continues to increase withannualised income from monitoring contracts now approaching £1,000,000. Customers are able to benefit from substantial cost savings using remotelymonitored cctv when compared with the cost of manned guarding. This makes theproduct extremely attractive in certain market sectors such as motor dealers andconstruction. We are also trying to increase our market share within theFacilities Management (FM) sector. The e surveillance product has been writtenwith FM companies in mind and it provides features and functionality which couldhelp reduce their costs significantly. The management information available to us internally is helping drive downcosts and improves service quality which will help us achieve our profitabilitytargets. Following the successful BS8418 accreditation last year we have now trained morethan 85% of our staff to the level necessary to achieve the Security IndustryAssociation license required to operate remote cctv services. We will completethe training of all staff during March in accordance with the legislation laiddown. We have also registered for the SIA Partnership programme which willfurther underpin our relationship with the 'industry watchdog'. We anticipate that the increasing regulation in our industry will ensureconsolidation occurs within the security industry sector. Some new business hasalready been achieved as a result. Customers are increasingly using our web portal to help manage their securityoperations and the management information available to them enables a closer tiebetween us and assists us to continually improve our overall performance. The sales pipeline is strong and our customer portfolio now includes a number ofcorporate customers who are anxious to have an effective security solution whichis sustainable over the long term. Conclusion We continue to seek to increase the scale of operations via acquisition ormerger whilst growing our customer base organically. The half year results are encouraging and demonstrate that we are now headingtowards profitability. We believe that the acquisition of monitoring contractsannounced in January will further strengthen the Company's position. C R C Thomas Chief Executive 28 February 2006 Consolidated profit and loss account for the six months ended 30 November 2005 6 months 6 months Year ended ended ended 30 November 30 November 31 May 2005 2004 2005 (unaudited) (unaudited) (audited) Notes £000 £000 £000 Turnover 777 567 1,172Cost of sales (577) (470) (968)Gross profit 200 97 204Operating expenses (240) (285) (578)Exceptional net operating expenses - - (265)Operating loss for the period (40) (188) (639)Disposal of intellectual property rights 4 50 - -Profit/(loss) before interest 10 (188) (639)Interest payable (9) (1) (16)Profit/(loss) before taxation 1 (189) (655)Taxation - - -Profit/(loss) after taxation 1 (189) (655) Basic earnings/(loss) per ordinary share 3 .00033p (0.062)p (0.214)pFully diluted earnings/(loss) per share 3 .00026p (0.052)p (0.179)p The results set out above relate to continuing operations. The group has no gains and losses for the period other than the results set outabove, consequently no statement of recognised gains or losses has beenpresented. Consolidated balance sheet at 30 November 2005 30 November 30 November 31 May 2005 2004 2005 (unaudited) (unaudited) (audited) Notes £000 £000 £000Fixed assetsTangible assets 5 289 - Current assetsDebtors 455 339 340Cash at bank and in hand - 73 - Creditors: due within one year:Secured convertible loans 5 - (750) -Other (1,074) (997) (913)Net current liabilities (619) (1,335) (573)Current liabilities less total assets (614) (1,046) (573)Creditors: due after more than one year:Secured convertible loans 5 (750) - (750)Other (147) - (189)Net liabilities (1,511) (1,046) (1,512) Called up share capital 6 7,484 7,484 7,484Share premium account 4,493 4,493 4,493Capital redemption reserve 20 20 20Profit and loss account (13,508) (13,043) (13,509)Equity shareholders' deficit 10 (1,511) (1,046) (1,512) Consolidated cash flow statementfor the six months ended 30 November 2005 6 months 6 months 6 months ended ended ended 30 November 30 November 31 May 2005 2004 2005 (unaudited) (unaudited) (audited) Notes £000 £000 £000Net cash (outflow) from operatingactivities 7 (299) (185) (304)Returns on investments and servicingof finance:Interest paid (9) (1) (11)Cash (outflow) from returns oninvestments and servicing of finance (9) (1) (11)Capital expenditure and financialinvestmentPurchase of tangible fixed assets (5) (2) (10)Proceeds from sale of tangible fixed assets - 13 13Proceeds from sale of intellectualproperty rights 50 - -Cash inflow from capital expenditureand financial investments 45 11 3Cash (outflow) before financing (263) (175) (312)FinancingIssue of convertible loans - 300 300Repayment of capital element offinance leases - (15) (15)Net cash inflow from financing - 285 285(Decrease)/increase in cash in theperiod 8 (263) 110 (27) Notes to the interim report for the six months ended 30 November 2005 1. Basis of preparation The interim report has been prepared using accounting policies that have beenconsistently applied and are those used in the preparation of the financialstatements for the year ended 31 May 2005 of Farsight plc. The group accounts comprise the consolidation of the accounts of the company andits subsidiary undertakings after eliminating inter company balances andtransactions. The comparative data in these interim financial statements are the auditedfinancial statements for the year ended 31 May 2005 and the unaudited managementaccounts for the six months ended 30 November 2004. The financial information contained in this interim announcement does notconstitute statutory accounts within the meaning S240 of the Companies Act 1985. The interim results, which have not been audited, have been prepared on thebasis of the accounting policies adopted by Farsight plc for the year ended 31May 2005 as set out in the Annual Report and Accounts. Those accounts (on whichthe auditors gave an unqualified report) have been delivered to the Registrar ofCompanies. 2. Dividends No dividend has been declared or proposed for the six months ended 30 November2005. 3. Earnings/(loss) per ordinary share 6 months 6 months Year ended ended ended 30 30 31 May November November 2005 2005 2004 (audited) (unaudited) (unaudited) £000 £000 £000Profit/(loss) attributable to ordinary shareholders 1 (189) (655) '000 '000 '000Weighted average number of ordinary shares(Basic EPS) 305,727 305,727 305,727Weighted average number of ordinary shares(Fully diluted EPS) 380,727 365,727 365,727 pence pence pence Basic earnings/(loss) per share .00033 (0.062) (0.214)Fully diluted earnings/(loss) per share .00026 (0.052) (0.179) Basic earnings per share (EPS) for the six months period ended 30 November 2005is calculated by dividing the profit attributable to ordinary shareholdersnamely a profit of £1,000 by the weighted average number of shares (305,727,072ordinary shares). Fully diluted earnings per share (EPS) for the six months period ended 30November 2005 is calculated by dividing the profit attributable to ordinaryshareholders by 380,727,072 potential ordinary shares. This includes a weightedaverage of 75 million potential ordinary shares which would be issued under theconvertible loan agreement. For the calculation of fully diluted loss per share for the comparative periodof the year ended 31 May 2005 the weighted average number of shares includes 60million potential ordinary shares which would be issued under the convertibleloan agreement (6 months ended 30 November 2004: 60 million). 4. Disposal of intellectual property rights On 8 June 2005 Farsight plc disposed of two dormant subsidiary undertakings,e-surveillance Limited and e-surveillance Software Limited. On 15 June 2005 thegroup's intellectual property rights relating to its e-surveillance technologywere disposed of to e-surveillance Limited, for a consideration of £50,000. The agreement reached with the buyer of the subsidiaries was that furtherconsideration may become payable to Farsight plc should the shares or thebusiness of the subsidiaries acquired be sold within a three year period from 8June 2005. This further consideration would be 20% of the considerationreceivable for any disposal, less costs expended in developing the business,including the software acquired, together with reasonable professional costs anddisbursements incurred by the buyer of the subsidiaries and or the subsidiariesin connection with any such disposal. 5 Secured convertible loans On 28 November 2003 the company negotiated a conditional secured convertibleloan facility of up to £750,000 with a "concert party" of investors in thecompany (John Dalton, Robert Davies and Michael James). Prior to 31 May 2005the full balance of the facility had been drawn down by the company. When the facility was negotiated the "concert party" investors were given anoption to convert the outstanding balance of the secured loans into ordinaryshares at a conversion price of 1p per share at any time prior to the secondanniversary of the date of the agreement (ie prior to 28 November 2005). Anyordinary shares of 1p each issued pursuant to a conversion of the loans wouldrank pari passu with the existing issued ordinary share capital of the company.If that option was not exercised then the secured loans fell due to be repaid onthe second anniversary of the date of the agreement (ie on 28 November 2005). Prior to 28 November 2005 the "concert party" investors notified the companythat they were prepared to extend the period for which the facility is grantedfor an additional two year period (ie up to 28 November 2007). On 28 November2005 the lenders and the borrower agreed to vary the principal deed of the loanagreement entered into on 28 November 2003. The lenders and borrower agreed adeed of variation to extend the final repayment date of the loan agreement to 28November 2007. The deed of variation also inserts a new clause into theprincipal deed stating that the lenders conversion rights shall be exercisedsubject to the lenders complying with the rule of the City Code on Takeovers andMergers. The loans outstanding at 30 November 2005 are secured by debentures giving fixedand floating charges over the assets of Farsight plc, and its subsidiaryundertaking Farsight Security Limited and by cross company guarantees in respectof those companies. 6. Called up share capital 30 November 30 November 31 May 2005 2004 2005 (unaudited) (unaudited) (audited) £000 £000 £000Allotted, called up and fully paid305,727,072 ordinary shares of 1p each 3,057 3,057 3,057Deferred shares of 1p each 4,427 4,427 4,427 7,484 7,484 7,484 The deferred shares carry no voting rights, no rights to dividends or otherdistributions and on a winding up holders of deferred shares will only be paidout once the holders of ordinary shares have been paid all the capital on theirshares together with an aggregate premium of £100,000,000. 7. Reconciliation of operating loss to net cash flow from operatingactivities 6 months 6 months Year ended ended ended 30 November 30 November 31 May 2005 2004 2005 (unaudited) (unaudited) (audited) £000 £000 £000Operating loss (40) (188) (639)Depreciation charge in respect oftangible fixed assets - 38 70Impairment of tangible fixed assets - - 265Profit on disposal of tangible fixed assets - (13) (13)(Increase) in debtors (115) (108) (109)(Decease)/increase in creditors (144) 86 122Net cash (outflow) from operating activities (299) (185) (304) 8. Analysis of net debt At Cash flow for At 31 the 6 months 30 May ended November 2005 30 November 2005 (audited) 2005 (unaudited) (unaudited) £000 £000 £000Bank overdrafts (64) (263) (327)Secured convertible loans (750) - (750)Net debt (814) (263) (1,077) 9. Reconciliation of net cash flow to movement in net debt 6 months 6 months Year ended ended ended 30 November 30 November 31 May 2005 2004 2005 (unaudited) (unaudited) (audited) £000 £000 £000 Movement in cash in the period (263) 110 (27)Cash inflow from change in debt - (285) (285)Change in net debt resulting fromcash flows (263) (175) (312)Net debt at beginning of period (814) (502) (502)Net debt at end of period (1,077) (677) (814) 10. Movement in equity shareholders' (deficit)/funds 6 months 6 months Year ended ended ended 30 November 30 November 31 May 2005 2004 2005 (unaudited) (unaudited) (audited) £000 £000 £000At the beginning of the period (1,512) (857) (857)Profit/(loss) for the period 1 (189) (655)At the end of the period (deficit) (1,511) (1,046) (1,512) 11. Circulation A copy of this announcement is available from the Company Secretary, TheObservatory, Leofric Square, Vicarage Farm Road, Peterborough, Cambridgeshire,PE1 5TP. A copy of the announcement is also posted on the company's websitewww.farsight.co.uk This information is provided by RNS The company news service from the London Stock Exchange