Interim Results

RNS Number:7256S
Focus Solutions Group PLC
02 December 2003


FOCUS SOLUTIONS GROUP PLC                                    2nd December 2003


Interim results for the six months ended

30 September 2003 (unaudited)





Highlights



* Revenue

       Turnover #2.6 million, down 8% (2002: #2.8 million)


       goal:technology licence and related services revenue increased by 62%
        to #1.4 million (2002: #0.9 million)


       Recurring revenue up 75%, now 27% of total turnover (14% in first half
        2002)


* Operating loss before tax and interest reduced to #0.7 million

(2002: #1.9 million)


* Leading contract wins included:

       Winterthur Life UK sign 3 year licence agreement worth #400,000

       The Exchange (the Marlborough Stirling portal for the life and pensions
       industry) sign a 10 year licence agreement for the supply of the 
       goal:technology online viewer for its Exweb service


* Continued investment in new product development of #0.4
million

* goal:technology licence agreement signed with Milliman USA
following their acquisition of FS Inc


Announcing today:

New product extension capitalising on W3C XForms standard



Commenting on the results, Focus Chief Executive, John Streets, said:


"We have continued to make good progress with our goal:technology licence and
related services sales delivering revenues up 62% in the year. New contracts
signed by Winterthur Life UK and The Exchange further enhance our position in
the UK Life and Pensions market. As the leading provider of technology
underpinning the roll-out of electronic trading in this industry sector, we
believe we are well placed to benefit from an improvement in market conditions
in 2004 even though trading conditions have continued to be very tough over the
past six months."

For further information

Focus Solutions Group plc


01926 468300


John Streets - Chief Executive

Martin Clements - Finance Director




Chairman's Statement


In common with the UK Life and Pensions market as a whole, Focus Solutions Group
plc ("Focus", "The Group") continued to experience difficult trading in the six
months ended 30 September 2003. However, the Group continued to make progress in
improving its financial performance. Tight management of costs ensured that the
loss in the period was significantly reduced and cash balances remained strong.
It is particularly pleasing, that in spite of lower turnover overall, sales of
goal:technology licences and associated services were up 62% compared with the
same period last year and at #1.42 million, now represent 55% of total sales in
the period.


In today's market, our ability to rapidly generate and deploy software that
delivers return on investment in exceptionally short timescales remains a major
differentiator.


Norwich Union's Point of Sale (POS) solution, RIO, developed by Focus, now has
900 users including Norwich Union's direct sales force and tied building
societies. RIO is currently being rolled out to support "bancassurance" sales
via Norwich Union's Joint Venture partner, The Royal Bank of Scotland Group.
Norwich Union and Focus won the 'Best use of IT in insurance' category at the
Financial Sector Technology Awards 2003 for this project.


Since the end of the period, Milliman USA Inc, a leading actuarial services
business has acquired the business and liabilities of Focus Solutions Inc, a
wholly-owned subsidiary of Focus Solutions Holdings Inc ("FSHI") in which Focus
had retained a 49% investment since the disposal of 51% of the issued share
capital of FSHI to management in April 2003. As part of the acquisition
agreement, Milliman has signed a new 3 year licence agreement with the Group. As
a result of this agreement, Focus will benefit from any future revenue based on
the use of goal:technology through royalty payments. However, given the lack of
trading history of this new business it is not currently possible to predict the
value of such royalties.


Financial Review


Turnover in the first half of the year was down 8% at #2.6 million (2002:#2.8
million), principally as a result of the Norwich Union RIO POS project moving
from the development phase into ongoing support and enhancement.


Operating loss before reorganisation costs and amortisation of goodwill (as
shown on the face of the Profit and Loss Account) was #0.6 million, a
significant reduction on the same period last year of #1.7 million, which
included an operating loss of #0.3 million attributable to the discontinued US
operations.


Administration costs of #3.2 million are #1.4 million down on last year, a
reduction of 30%. The reduction in costs was achieved by tight management
control over discretionary spending but also by some reduction in headcount
numbers during the period. Further cost savings have been made and
administration costs are now running at an annualised rate of #5.3 million per
annum.


Operating loss before tax and interest was down to #0.7 million (2002: #1.9
million). Loss after tax was #0.6 million (2002: #1.8 million), after a
corporation tax credit of #0.1 million against the costs of investment in
research and development for the year ending March 2003.


Cash, boosted by the raising of #0.6 million of additional share capital in the
period, remains strong and at the end of September was #1.3 million (2002: #2.2
million; 31 March 2003: #1.7 million).


The loss per share of 2.1 pence compares to 7.2 pence per share in the same
period last year.


Operational Review


Whilst life and pensions companies remain cautious about committing to new
investment, the strategic drive to cut costs and improve customer service
through the introduction of electronic trading remains. During the period,
important contracts were signed with Winterthur Life UK, part of the Credit
Suisse Group, and The Exchange, part of the Marlborough Stirling Group.


Winterthur Life is Focus' first customer outside the membership of Origo, the
standards body for e-business within the UK life and pensions industry. In a
contract worth #400,000 over 3 years, Winterthur will use goal:technology to
provide an online solution for Independent Financial Advisers (IFAs) to access
product quotations and to transact new business electronically through its
extranet.


The Exchange, the UK's leading financial services portal for intermediaries,
will use goal:technology as part of its Exweb service to enable IFAs and other
intermediaries to complete transactions electronically, both off-line and
on-line.


In addition, The Skandia UK Group and Friends Provident signed major renewals.
Skandia will extend its use of goal:technology to all the major UK portals as
well as using it in its own extranet in the UK and across Europe. The POS
solution developed last year for the Zurich Advice Network (ZAN) has been
extended to include mortgage and general insurance products.


We continue to make progress in extending the uptake of our products and
services within our customer base. This established base continues to offer our
best prospects for growth.


Investment in development has continued, extending the breadth of the product 
range offered to our customers and in new technologies, such as XForms.  Today,
we have announced a new builder, available in Q1 2004, which will have the
capability to include the new W3C standard XForms. This will support the Group's
move into other market sectors and protect its user base. We are committed to 
keeping Focus at the forefront of technology offerings available to the UK Life 
and Pensions market.


Butler Group validated the benefits of our software in an ROI study stating that
goal:technology generates a 62% saving in development costs and a 50% total cost
of ownership saving compared to a traditional development methodology. The study
also confirmed the additional deployment savings of 84% available when
redeploying the technology in multiple distribution channels (goal:technology -
Reducing the cost of business process automation, Butler Group, September 2003).


Progress has been made to extend the use of goal:technology outside of the UK
Life and Pensions market, with the recent licence agreement with Milliman in the
US and an ongoing business relationship with Fidelity Information Services to
utilise goal:technology with its "Corebank" real time retail banking solution.
We would hope to accelerate this progress next year as a result of new
initiatives being planned.


Board Changes


To ensure that the Group continues to have the requisite resources and skills to
exploit the opportunities open to us, it is necessary to constantly review
senior appointments. I am pleased to welcome Martin Clements, who joined the
Board as Finance Director and Company Secretary during the period. I would also
like to thank Sue Hele and Robert Hull, who have stepped down from the Board for
their contribution to the business during its initial development stage.


Outlook


The fundamental drivers for the business remain unchanged. Our customers operate
in extremely competitive and heavily regulated markets and we believe that to
maintain competitive advantage, they must continue to invest in electronic
trading. Nevertheless, over the past two years, expenditure has been deferred,
which has had an impact on the growth of the Group's business. When economic
conditions improve, and we can perhaps see the first signs of a recovery, we are
well placed to benefit. We expect the remainder of this financial year to be
challenging but with measures taken already to reduce costs, we see good
prospects for the Group to continue to improve its financial performance.


We anticipate that the introduction of further regulations, particularly with
regard to the sale of mortgage and general insurance products, will provide
significant opportunities for the Group over the next two years.



Alastair Taylor

Chairman


Focus Solutions Group plc

Summarised Consolidated Profit and Loss Account

For the six months ended 30 September 2003

                                          6 months        6 months        Year
                                             ended           ended       ended
                                        30 September    30 September    31 March
                                              2003            2002        2003
                                              #000            #000        #000
Turnover

Continuing operations                         2581            2821        6583
Discontinued operations                          -               -           -
                                             _____           _____       _____
                                              2581            2821        6583
Operating loss before
re-organisation costs and
amortisation of goodwill
Continuing operations                         (589)          (1376)      (1358)
Discontinued operations                          -            (353)      (1119)
                                              _____          ______      ______    
                                              (589)          (1729)      (2477)
Re-organisation costs
Continuing operations                          (90)              -         (64)
Discontinued operations                          -               -        (129)
                                              _____           _____       _____ 
                                               (90)              -        (193)
Amortisation of goodwill
Continuing operations                            -               -           -
Discontinued operations                          -            (161)       (343)
                                               _____          _____       _____
                                                 -            (161)       (343)
Operating loss
Continuing operations                         (679)          (1376)      (1422)
Discontinued operations                          -            (514)      (1591)
                                              _____          ______      ______ 
                                              (679)          (1890)      (3013)
Loss on disposal of US operations
Continuing operations                            -               -           -
Discontinued operations                          -               -        (897)
                                              _____           _____       _____ 
                                                 -               -        (897)
Loss on ordinary activities
Before interest
Continuing operations                         (679)          (1376)      (1422)
Discontinued operations                          -            (514)      (2488)
                                              _____          ______      ______  
                                              (679)          (1890)      (3910)
Net interest receivable                         16              56          77
                                              _____          _____       ______

Loss on ordinary activities before
taxation                                      (663)          (1834)      (3833)
Taxation                                       100               -         401
                                              _____          ______       _____

Loss on ordinary activities after
taxation and retained loss for the
period                                        (563)          (1834)      (3432)
                                              =====          ======      ====== 

Basic and diluted loss per ordinary           (2.1p)          (7.2p)     (13.4p)
share (note 2)                                ======          ======     ======  





No separate statement of total recognised gains and losses has been presented as
all such gains and losses have been dealt with in the profit and loss account.



Focus Solutions Group plc

Summarised Consolidated Balance Sheet

For the six months ended 30 September 2003

                                          6 months        6 months        Year
                                             ended           ended       ended
                                        30 September    30 September    31 March
                                              2003            2002        2003
                                              #000            #000        #000
Fixed assets
Tangible assets                                134             328         224
Intangible assets - goodwill                     -            3784           -
                                              ____            ____        ____  
                                               134            4112         224

Current assets
Debtors                                       1626            1293        1704
Short term investments - money
market deposits                                752            1459         656
Cash at bank and in hand                       568             704        1039
                                              ____            ____        ____
                                              2946            3456        3399
Creditors: amounts falling due
within one year                              (1239)          (1450)      (1848)
                                             ______          ______      ______

Net current assets                            1707            2006        1551
                                              ____            ____        ____ 

Total assets less current                     1841            6118        1775
liabilities                                   ____            ____        ____

Creditors: amounts falling due in                -               -           -
more than one year                            ____            _____       ____   

Net assets                                    1841            6118        1775
                                              ====            ====        ====  

Capital and reserves
Called up share capital                       2824            2567        2567
Shares to be issued                              -            2750           -
Share premium                                 9799            9427        9427
Merger reserve                                 220             220         220
Profit and loss account                     (11002)          (8846)     (10439)
                                            _______          ______     _______ 

Shareholders' funds
Equity interest                               1841            6118        1775
                                              ====            ====        ====







Focus Solutions Group plc

Summarised Consolidated Cash Flow Statement

For the six months ended 30 September 2003

                                          6 months        6 months        Year
                                             ended           ended       ended
                                        30 September    30 September    31 March
                                              2003            2002        2003
                                              #000            #000        #000
Net cash outflow from
operating activities                         (1037)          (1565)      (2375)

Returns on investments and
servicing of finance                            16              54          73

Taxation                                        56               -         345

Capital expenditure and
financial investment                           (38)           (131)       (159)

Acquisitions and disposals                       -            (802)       (802)
                                             ______           ______      _____

Cash outflow before management of            (1003)          (2444)      (2918)
liquid resources and financing

Management of liquid resources                 (96)           2371        3174

Financing                                      628              (3)          3
                                              _____           _____        ____ 

(Decrease)/increase in cash                   (471)            (76)        259
                                              =====           =====        ==== 

Change in net debt resulting from
cash flows

(Decrease)/increase in cash in the
period                                        (471)            (76)        259

Change in net funds resulting from
financing                                        -               3           3

Cash outflow from increase in liquid
resources                                       96           (2371)      (3174)
                                              _____          ______      ______   

Movement in net funds in the                  (375)          (2444)      (2912)
period

Net funds at start of year                    1695            4607        4607
                                              _____           ____        ____ 

Net funds at end of period                    1320            2163        1695
                                              ____            ____        ____ 





Focus Solutions Group plc

Notes to the interim financial statements


1.   Basis of preparation


The summarised half year financial information is unaudited and does not
constitute statutory accounts for the purposes of section 240 of the Companies
Act 1985. The statutory accounts for the year ended 31 March 2003, which
received an unqualified audit report, have been delivered to the Registrar of
Companies.


The unaudited financial information has been prepared on the basis of the
accounting policies set out in the Group's 31 March 2003 audited statutory
accounts.



2.   Loss per ordinary share

                                       30 September    30 September    31 March
                                              2003            2002        2003
                                              #000            #000        #000
Earnings attributable to ordinary
shareholders

Loss for the financial period                 (563)          (1834)      (3432)
                                              _____          ______      ______ 

Weighted average number of ordinary
shares issued during the year (000's)       26,621          25,581      25,628     

Dilutive effect of share options               -               -           -
                                            _______         _______     _______  

Basic earnings per share                      (2.1p)          (7.2p)     (13.4p)
                                              _____           _____      ______



FRS 14 requires presentation of diluted EPS when a company could be called upon
to issue shares that would decrease net profit or increase net loss per share.
For a loss making company with outstanding share options, net loss per share
would only be increased by the exercise of underwater share options. Since it
seems inappropriate to assume that option holders would exercise underwater
share options, and there are no other diluting future share issues, diluted EPS
has not been presented.










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