Foresightgr Regulatory News (FSG)

5 Dec 2006 07:48

Focus Solutions Group PLC05 December 2006 FOCUS SOLUTIONS GROUP PLC Interim results for the six months ended 30 September 2006 (unaudited) Focus Solutions Group Plc ("Focus" or "the Group"), a leading provider ofadaptive software solutions, today announces its interim results for the sixmonths ended 30 September 2006. Highlights • Trading for first half in line with expectations • £0.4 million improvement in Operating Profit before Reorganisation Costs compared to last year • Total revenues up 3% to £2.8 million (2005: £2.7 million) • Operating Loss before reorganisation costs £0.1 million (2005: £0.5 million) • Operating loss before tax and interest £0.3 million (2005: £0.6 million) • Cash balances £0.4 million (2005: £0.3 million) and debt free • Cash generated from operating activities in period £0.3 million (2005: £0.7 million) outflow • New contract wins in the period included: - Consultancy and development services for HSBC Bank Plc - Initial £60k software licence agreement with the UK subsidiary of a major US provider of life, pensions and investment products • Further new contract wins since the period end: - Our largest ever contract win with HSBC worth £6.0 million over the next 18 months - First contract with BT worth £120k for the development of an online registration solution in Central Government • Loss per share 0.71 pence (2005: loss 2.0 pence) Commenting on the results, Focus Chief Executive, Richard Stevenson said: "The results for the first half of FY2007 show that the Company is continuing tomove forward. Revenues were up 3%, however with careful management of the costbase we delivered a significantly improved performance. Over the past few monthswe have announced a series of major contract wins. The latest HSBC contract winis the most significant, awarded following eight months of consultancy work.Further contract wins for the UK subsidiary of a major US Insurance Company andfrom the established customer base have consolidated our position as the leadingPoint of Sale solution provider to the UK Financial Services market.Furthermore, the award of a contract from BT has provided further proof of theapplicability of our technology in other markets, particularly Government.I am extremely pleased with the recent progress of the Company since becomingCEO in March which gives me confidence that we will continue to build strengthin the business and enjoy further success in the short to medium term." For further informationFocus Solutions Group plc 01926 468300 Richard Stevenson - Chief ExecutiveMartin Clements - Finance Director Chairman's Statement Business Review It is with some pleasure that I report that the Group's results for the firsthalf of FY2007 continue to demonstrate strong progress in our business. Salesrevenues are up 3% on the same period last year. Our order backlog, as we enterthe second half of the year, stands at a record level and we remain confident wewill meet market expectations. Richard Stevenson joined the Group as Chief Executive as at the start of March2006. His impact has been immediate, with the reorganisation of the managementteam in line with our strategic objectives, refocusing of effort on thebusiness's key strengths, improved efficiencies within the organisation, anddeveloping the team and company ethos which he believes will ensure the futuresuccess of the business. The Board is exceptionally pleased with the impactRichard has made since joining us and is confidently expecting further positivedevelopments in the Group's future. Focus has continued to win business against major competition in the Point ofSale market, with a strong record in the Life and Pensions, Bancassurance andMortgage sectors. With highly successful solutions delivered to the likes ofNorwich Union, Openwork and Barclays Bank in recent years, leading UK financialservices business will naturally call on the expertise of Focus when new frontend systems are required. Our ability to rapidly generate and deploy software,delivering return on investment in exceptionally short timescales, remains themajor differentiator. Since the start of FY2007, we have seen further progress with the award of aseries of consultancy services contracts from HSBC Bank plc worth £1.28 millionin aggregate. Our ability to deliver consultancy services to HSBC's timetableled to the award of a contract in November worth approximately £6.0 million overthe next two years. This is the Company's largest ever contract win. The Group has also won business from two new customers in its core UK life andpensions market. In October, we won a one year licence, worth £60,000 for thesupply of our Focus technology software to the UK subsidiary of a major USprovider of life, pensions and investment products. This followed the award ofan initial consultancy contract in the first half and has been followed byfurther orders for consultancy services. It is expected that this will lead to afurther significant contract for the delivery of an extranet solution providingsupport for financial advisers selling and servicing retirement products. During the period we have continued to win further business from establishedcustomers including Openwork, Barclays, Home of Choice, Prudential, ScottishEquitable and the Co-Operative Bank. A prudent approach to revenue recognitionwill also lead to a significant increase in software licence revenues in thesecond half of FY2007. For some time, we have recognised the value of our software and the value of itspotential application outside of the UK financial services market, and to thisend there has been significant new progress in terms of identifyingopportunities, securing long term contracts with partners and developing a salespipeline. For example, last month, we announced the award of a potentiallysignificant order from BT, worth £120,000 initially, for the delivery of anonline registration solution to enable businesses to electronically registercompany incorporations. The Focus software will form part of a frameworkavailable for other business to Government transactions. This agreement givesthe Group a real platform for growth outside of UK financial services. Financial Review Turnover in the first half of the year was up 3% at £2.8 million (2005:£2.7million). An Operating Loss before Reorganisation Costs of £0.1 million compared to a lossof £0.5 million in the same period last year. As in previous years, we expectrevenues to be substantially greater in the second half than in the first half. Total costs in the first half were £3.1 million, £0.2 million down on the sameperiod last year, a decrease of 7%. This reflected the continued tight controlover expenditure, despite the increasing activity levels. We expect someadditional costs in the second half as the business gears up to deliver theorder book. However, we would also expect to see the benefits of increasedeconomies of scale to be felt in the second half. There were a number of one-off or exceptional costs relating to thereorganisation of the Group which were incurred in the first half and whichtotalled £181k. Operating Loss after reorganisation costs and before tax was£0.3 million compared to £0.6 million last year. This was in line withexpectations. We are now generating cash on an improved basis and remain debt free. Cashbalances at the end of September were £0.4 million (2005: £0.3 million; 31 March2006: £0.1 million). Overdraft facilities totalling £500k are available to usfrom our bankers, HSBC plc. Cash inflow from operating activities in the firsthalf was £261k (2005: £724k outflow). With the expected improvement in tradingin the second half, we anticipate that the business will be cash generative inthe second half. The Directors continually review the funding requirements forthe Group and will ensure that the continued development of the business isproperly funded. The loss per share of 0.71 pence per share compares to 2.0 pence loss per sharein the same period last year. As in previous periods, the Directors are notrecommending the payment of an interim dividend. Operational Review Focus has built on the progress made last year. We have won important newcustomers as well as winning additional business from our established customerbase. The changes in regulations in the life and pensions market have certainly led tosome major financial institutions changing their sales processes, and theirsupporting technology, to sell products from a wide range of providers. Focus'e-trading solutions and extensive footprint in the life assurance market has putthe Company in a strong position to support the organisations who have chosen tobecome distributors, or multi-tied, and this has resulted in major strategicprojects. Changes in regulations affecting the sales of mortgages have also been drivingdemand from organisations across the mortgage sector and the customer base nowincreasingly reflects mortgage providers, distributors and portals. The development of the business outside UK financial services has been a centralplank of our strategy for some time. The highlight in this regard hasundoubtedly been the contract win with BT. Government targets for e-Governmentare driving the public sector to look at how, and where, it captures the datafor any services it makes available electronically. The characteristics andcapabilities of our XML toolkit, goal:technology, provides highly effectivesolutions to these problems. We have therefore focused attention on buildingrelationships with established suppliers to the public sector and the initialresults have been encouraging. Investment in development continues, extending the breadth of the product rangeoffered to our customers and in new technologies. Outlook It remains our strategy to create a sustainable and scalable business. Thefundamental drivers for the business remain unchanged. Our customers operate inextremely competitive and heavily regulated markets and we believe that tomaintain competitive advantage, they must continue to invest in electronictrading. With the strengthening of the Group's balance sheet, the management team have aclear strategy for both organic and non-organic growth and is looking to broadenthe Company's portfolio where and when appropriate. Our sales pipeline is at its highest level to date and we expect this tocontribute to a further improvement in financial performance in the second half. Alastair M. TaylorChairman Focus Solutions Group plcSummarised Consolidated Profit and Loss AccountFor the six months ended 30 September 2006 (Unaudited) (Unaudited) (Audited) 6 months 6 months Year ended ended ended 30 September 30 September 31 March 2006 2005 2006 Total Total Total £000 £000 £000 Turnover 2,806 2,731 6,585Cost of sales (1,129) (1,040) (2,055)Gross profit 1,677 1,691 4,530 OverheadsDistribution costs (582) (678) (1,424)Administrative expenses (includingre-organisation costs of £181k,2005:£120k, FY2006 £257k) (1,391) (1,615) (2,996) (1,973) (2,293) (4,420)Operating (Loss)/ Profit (296) (602) 110 ----------- ------------ ------------Operating (Loss)/ Profit beforereorganisation Costs (115) (482) 367reorganisation costs (181) (120) (257)Operating (Loss)/ Profit afterreorganisation costs (296) (602) 110 ----------- ------------ ------------Net Interest receivable 11 17 18(Loss)/ Profit on ordinary activitiesbefore taxation (285) (585) 128Taxation 83 - -(Loss)/ Profit on ordinary activitiesafter taxation and retained loss forthe period (202) (585) 26 ========== ============== ==========Basic and diluted (Loss)/ Earningsper ordinary share (note 2) (0.71p) (2.0p) 0.1p ========== ============== ========== No separate statement of total recognised gains and losses has been presented asall such gains and losses have been dealt with in the profit and loss account. Focus Solutions Group plcSummarised Consolidated Balance SheetFor the six months ended 30 September 2006 Restated (Unaudited) (Unaudited) (Audited) 6 months 6 months Year ended ended ended 30 September 30 September 31 March 2006 2005 2006 £000 £000 £000 Fixed Assets 157 144 135Tangible Assets 157 144 135Current Assets 2,642 2,378 4,147Debtors 418 262 123Cash at bank and in hand 3,060 2,640 4,270Creditors: amounts fallingdue within one year (1,070) (1,149) (2,056) ------- ------- --------Net Current Assets 1,990 1,491 2,214 Total Assets less currentliabilities 2,147 1,635 2,349 Creditors: amounts falling due in - - -more than one year -------- ------- -------Net Assets 2,147 1,635 2,349 ======== ======= ======= Capital and Reserves Called up share capital 2,864 2,864 2,864Shares to be issued - - -Share premium 9,832 9,833 9,832Merger reserve 220 220 220Share option reserve 55 - 55Profit and Loss Account (10, 824) (11,282) (10,622) ------- ------ ------ Shareholders' funds 2,147 1,635 2,349Equity interest ======= ====== ====== Focus Solutions Group plcSummarised Consolidated Cash Flow StatementFor the six months ended 30 September 2006 (Unaudited) (Unaudited) (Audited) 6 months 6 months Year ended ended ended 30 Sept 30 Sept 31 March 2006 2005 2006 £000 £000 £000 Net cash inflow/ (outflow) from 261 (724) (833)operating activitiesReturns on investments and 11 17 18servicing of financeTaxation 83 - -Capital expenditure and (60) (48) (79)financial investment Cash inflow/ (outflow) beforemanagement of 295 (755) (894)liquid resources and financing Financing Increase / (Decrease) in cash - 10 10Change in net debt resulting from cashflows 295 (745) (884)Increase/ (Decrease) in cash in theperiod 295 (745) (884)Cash outflow from increase in liquid - - -resources Movement in net funds in the period 295 (745) (884) Net funds at start of year 123 1,007 1,007Net funds at end of period 418 262 123 Focus Solutions Group plcNotes to the interim financial statements 1. Basis of preparation The summarised half year financial information is unaudited and does notconstitute statutory accounts for the purposes of section 240 of the CompaniesAct 1985. The statutory accounts for the year ended 31 March 2006, whichreceived an unqualified audit report, have been delivered to the Registrar ofCompanies. The unaudited financial information has been prepared on a consistent basis withthe accounting policies set out in the Group's 31 March 2006 audited statutoryaccounts with the exception of FRS 20 (see below) and are consistent with thosewhich will be adopted in the accounts for the year ending 31st March 2007. 2. Loss per ordinary share 30 September 30 September 31 March 2006 2005 2006 £'000 £'000 £'000 Earnings attributable to ordinaryshareholders (Loss)/ Profit for the financialperiod (202) (585) 128 Weighted average number of ordinaryshares issued during the year (000's) 28,642 28,615 28,629 Dilutive effect of share options - - 223 Basic and Diluted earnings per share (0.71p) (2.0p) 0.45p 3. Reorganisation costs Reorganisation costs related to the restructuring of the business into twoseparate business streams and to management reorganisation. 4. Reconciliation to shareholders' funds organisation costs Share Share Merger Share Profit and Total Capital Premium Reserve Option Loss Reserve account £'000 £'000 £'000 £'000 £'000 £'000 As at 1April2006 aspreviously 2,864 9,832 220 - (10,567) 2,349reported TransferredtoShare Option - - - 55 (55) -Reserve Loss for theperiod - - - - (202) (202) _______ _______ _______ _______ _______ _______At 30September 2,864 9,832 220 55 (10,824) 2,1472006 _______ _______ _______ _______ _______ _______ Opening reserves have been restated as a result of the adoption of FRS20 - sharebased payments. This has created a share option reserve at 31 March 2006 of £55kand increased the retained loss brought forward to £10.622 million. This information is provided by RNS The company news service from the London Stock Exchange