Preliminary Results

RNS Number:1951N
Documedia Solutions PLC
04 July 2003

4 July 2003


DOCUMEDIA SOLUTIONS PLC


PRELIMINARY ANNOUNCEMENT OF RESULTS FOR THE YEAR ENDED 28 FEBRUARY 2003


Chairman's Statement


The board announces the results for the year ended 28 February 2003.


The results for the 12 months ended 28 February 2003 are very disappointing.
The operating loss on continuing operations before exceptional items increased
to #2.0 million (2002: #0.2 million).  The loss on ordinary activities before
taxation increased to #2.5 million (2002: #1.7 million). Obviously no dividend
can be recommended by the Directors.


The dire conditions being experienced by the printing industry, which we
highlighted at the interim stage, continued to worsen through the rest of our
financial year; however we do see some early signs that stabilisation may now be
taking place and we are pleased with the take up of our e-commerce offering.


The hoped-for turnaround of the London Colourflow business did not materialise
and as a result, we have significantly reduced our headcount and taken in excess
of #1.5 million out of our cost base. In addition, immediately prior to the year
end, the Board took the decision to make further substantial cuts in the cost
base and to discard those lines of business that do not fit in with the group's
strategy. The costs of this are included in exceptional items.


The Colourflow operation accounted for #917,826, and exceptional administrative
costs #820,925, of the #2,059,685 operating loss on continuing operations for
the year. A provision of #226,000 is included in these accounts for redundancy
costs paid after the year-end relating to Colourflow. The Board has included
this provision as we believe that it gives a truer reflection of the financial
impact of the decisions made by the Board during the year, whilst acknowledging
that it does not strictly meet the recognition criteria of Financial Reporting
Standard Number 12, and our auditors have qualified their Audit report in this
respect.


As these situations materialised, your Board spent much time reviewing options
for the company.  Whilst we have naturally considered de-listing from AIM, your
Board has concluded that it is in the best interests of our shareholders to
retain the company's listing and to proceed with our business plan.


I am aware that our shareholders, and particularly those who supported our
flotation, have suffered a considerable fall in the value of their investment.
With this in mind, I wish to spend some time giving our reasons why we consider
that we are worthy of your continued support and to outline the progress that we
have made to date.


Our current business is now positioned squarely in the market place as a service
company providing marketing collateral in all its forms.  Following the lengthy
process of transformation from our dot-com beginnings, the business now includes
digital and litho printing capabilities, supported by a compelling e-commerce
front end.


The digital print operations are based in London and Cheltenham. We have
consolidated the Fingerprint operation, acquired in October 2002, into London
and moved the colour work from Cheltenham. This has created a strong London
presence, focusing on the creation and provision of personalised marketing
literature, with a largely automated workflow using our e-procurement tools.


The e-publishing contract work for the Civil Aviation Authority, undertaken in
Cheltenham, has again been renewed for a further two years.


During 2002, the company began to offer our DocuMarketing system under licence.
Following the adoption by Greene King of this technology as their group wide
on-line marketing system, we are now proactively developing further
opportunities for building technology based licence revenue.


In addition to the licensing revenue we are also supplying personalised point of
sale literature to over 500 Greene King leisure outlets.


We provide property brochures, ordered on-line, to over 300 estate agents and
this business continues to thrive. We are introducing this marketing service to
other relevant sectors.

The litho printing operations, based in Bury St Edmunds and Solihull, primarily
service City-based customers. Nomura has agreed to maintain its contract with us
for the next two years. In addition, we have recently signed a three year
contract with Merrill Lynch to supply all its business stationery.


Documedia's value added solutions uniquely cover all parts of the end-to-end
supply chain sought by many corporates. Our strategy is to improve corporate
processes and costs by creating, publishing and controlling their personalised
marketing campaigns. We are specifically targeting good quality long-term
corporate business that is either contracted or defined within an ongoing supply
agreement.


I and our non-executive Directors have visited customers and potential customers
to validate that our offering is as good as, and we believe better than, that of
our competitors. Our technology is excellent, our people have the expertise
necessary and we are confident that our offering meets the demands of modern
business. The list of prospects and proposals grows week by week.


With our Annual Report we will enclose our corporate brochure, highlighting in
more detail our services and our target markets. We would like to see as many of
our shareholders at our AGM as can make the time so that we can update you and
be questioned on our progress.


My thanks to the management and staff who have embraced considerable change over
the last year. Their understanding, support and involvement have been
commendable.


While results will not be immediate, I am confident that management have the
focus, expertise and commitment to continue the development of Documedia.


J W TAYLER
Chairman
4 July 2003


GROUP PROFIT AND LOSS ACCOUNT 
for the year ended 28 February 2003     
                                                                                                 
                                                        2003          2002 
                                                           #             # 
Turnover                                                                  

Continuing operations                              8,517,149     1,740,274

Acquisitions                                         425,500             -

Discontinued activities                              139,508       796,484

                                                   9,082,157     2,536,758

Cost of sales                                    (6,387,684)   (1,505,483)

Gross profit                                       2,694,473     1,031,275

Administrative expenses - normal                 (4,364,859)   (2,633,117)

Administrative expenses - exceptional              (820,925)             -

Operating Loss                                                            

Continuing operations                            (2,001,595)     (237,968)

Acquisitions                                       (111,553)             -

Discontinued activities                            (378,163)   (1,363,874)

                                                  2,491,311)   (1,601,842)

Reorganisation and business integration costs      (185,592)     (261,284)

Profit/(loss) on disposal of trading division        133,830      (43,040)

Loss on ordinary activities before interest      (2,543,073)   (1,906,166)

Net interest receivable and similar income            13,443       210,478

Loss on ordinary activities before taxation      (2,529,630)   (1,695,688)

Taxation                                               7,479             -

Loss on ordinary activities after taxation       (2,522,151)   (1,695,688)

Minority interest - equity                                 -      (49,138)

Loss for the period attributable to                                       

Members of the parent company                    (2,522,151)   (1,744,826)

Loss per share                                                            

Basic                                                (7.28p)       (5.03p)

Diluted                                              (7.28p)       (5.03p)

The Group had no recognised gains and losses other than those included in the
profit and loss account above.

GROUP BALANCE SHEET 
for the year ended 28 February 2003

                                                                                              
                                                    2003          2002 
                                                       #             # 

Fixed Assets                                                          

Intangible assets                                165,642       384,056

Tangible assets                                1,667,924     2,152,101

Investments                                       11,533        15,283

                                               1,845,099     2,551,440

Current Assets                                                        

Stocks                                           315,373       231,401

Debtors                                        1,984,357     1,330,054

Cash at bank and in hand                          25,048     1,625,730

                                               2,324,778     3,187,185

Creditors:                                                            

Amounts falling due within one year          (2,151,185)   (1,351,272)

Net current assets                               173,593     1,835,913

Total assets less current liabilities          2,018,692     4,387,353

Creditors:                                                            

Amounts falling due in more than one year       (13,400)             -

Provisions for liabilities and charges         (459,090)     (319,000)

                                               1,546,202     4,068,353

Capital and Reserves                                                  

Called up share capital                          401,133       401,133

Share premium account                          7,859,888     7,859,888

Merger reserve                                 1,162,400     1,162,400

Profit and loss account                      (7,877,219)   (5,355,068)

Shareholders' funds                                                   

Equity interests                               1,546,202     4,068,353


GROUP CASH FLOW STATEMENT 
for the year ended 28 February 2003

                                                            2003          2002 
                                                               #             # 

Net cash outflow from operating activities           (1,856,015)   (1,941,130)

Returns on investments and servicing of finance                               

Net interest received                                     13,443       210,478

Capital expenditure                                                           

Payments to acquire tangible fixed assets              (120,459)     (366,761)

Receipts from sale of tangible assets                      6,949             -

Net cash outflow on capital expenditure                (113,510)     (366,761)

Acquisitions and disposals                                                    

Purchase of subsidiary undertakings                     (98,641)             -

Purchase of investment                                         -       (3,750)

Net overdraft acquired with subsidiary                  (26,669)             -

Purchase of trade and assets                                   -   (1,817,284)

Sale of trade and assets                                  71,925        33,000

Net cash outflow from acquisitions and disposals        (53,385)   (1,788,034)

Net cash outflow before financing                    (2,009,467)   (3,885,447)

Financing                                                                     

Repayment of bank loan                                   (2,886)             -

Capital element of hire purchase contracts              (28,401)             -

Net cash outflow from financing                         (31,287)           -  

Decrease in cash                                     (2,040,754)   (3,885,447)


RECONCILIATION OF OPERATING LOSS TO NET CASH OUTFLOW FROM OPERATING ACTIVITIES 

                                                                                                     
                                                                 2003          2002 
                                                                    #             # 
Operating loss                                            (2,491,311)   (1,601,842)

Exceptional reorganisation and business                                            

integration costs                                           (185,592)             -

Provision for impairment in value of goodwill                 326,835             -

Provision for impairment in investments                         3,750             -

Profit on disposal of fixed assets                            (5,449)             -

Depreciation of tangible fixed assets                         524,083       186,024

Provision for impairment in value of freehold property        210,000             -

Increase in stock                                            (39,884)      (38,668)

Increase in debtors                                         (208,226)     (775,074)

Increase in creditors and provisions                            9,779       288,430

Net cash outflow from operating activities                (1,856,015)   (1,941,130)


RECONCILIATION OF NET CASH FLOW TO MOVEMENT IN NET FUNDS

                                                                                                   
                                                             2003          2002 
                                                                #             # 

Decrease in cash                                      (2,040,754)   (3,885,447)

Cash outflow from decrease in debt                         31,287             -

Change in net debt resulting from cash flows          (2,009,467)   (3,885,447)

Bank loan acquired with subsidiary                       (24,945)             -

Hire purchase obligations acquired with subsidiary       (28,673)             -

Movement in net (debt)/funds in the year              (2,063,085)   (3,885,447)

Opening net funds                                       1,625,730     5,511,177

Closing net (debt)/funds                                (437,355)     1,625,730


NOTES TO THE PRELIMINARY ANNOUNCEMENT OF RESULTS
FOR THE YEAR ENDED 28th FEBRUARY 2003

1.    ACCOUNTING POLICY

The above Profit and Loss Account, Balance Sheet and Cash Flow Statement
is an abridged statement of the full Group accounts for the year ended 28
February 2003.


The financial statements have been prepared under the historical cost
convention and are in accordance with applicable accounting standards and
on a going concern basis.


The report of the Auditors, Hazlewoods, which did not include a statement
under Section 237 (2) or 237 (3) of the Companies Act 1985 includes the
following statement:

"Qualified opinion arising from disagreement about accounting treatment

Included in provisions for liabilities and charges of the Group is an
amount of #226,000 in respect of redundancy payments made to employees in
March 2003. The directors have included the provision on the basis that the
board passed a resolution on 27 February 2003 approving these costs. In our
opinion no provision should have been made against these costs as the Group
did not have an actual or constructive obligation to make these payments at 28
February 2003. The loss before tax should be reduced by the same amount."


2.    REPORT AND ACCOUNTS


Copies of the Group's full Report & Accounts are being posted today to
shareholders.  Additional copies will be available from the Company's
registered office, Truscott House, 32-42 East Road, London N1 6AD. The
Statutory Accounts will be filed with the Registrar of Companies in due course.


Contact:

Warren Tayler Chairman   07850 085781

Herbert Maxwell Finance Director  07970 696746

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