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RNS Number:6374S
Farsight PLC
28 November 2003
FARSIGHT PLC
PRELIMINARY RESULTS
FOR THE YEAR TO 31 MAY 2003
Results for the year reflect a difficult year but one in which Farsight has
undergone a radical transformation with its core business now repositioned on
technology led security solutions for corporate clients.
Highlights
Loss before tax reduced to #2,456,000 (2002: #3,353,000)
New monitoring connections being secured every month
Strong sales prospects
Second version of e-surveillance software to be released in 2004
New loan facility agreed, subject to shareholders' approval
Enquiries
Chris Thomas, Chief Executive 01733 352 435
Farsight plc
Chairman's Statement
Introduction
Earlier this year I indicated that the foundation had been laid for the
rebuilding of Farsight plc. In the last twelve months the company has undergone
a radical transformation with our core business successfully repositioned on
technology led security solutions for corporate clients.
A new management team has confronted the issues of change and cost reduction,
and put in place a business plan that is producing progress month by month in
terms of growth, improved operational performance, innovation and software
design and improved financial results. The operating loss on continued
operations after the exceptional goodwill charge was #621,000.
Tough decisions were taken during the year, culminating in a Board resolution to
put AIMS into liquidation at the end of February 2003. However, this enabled
the business to regroup around the core remote video monitoring activity, to
reduce costs and was the catalyst for the re-organisation of our technology
support services which are today channelled through the Farsight Technology
operating division.
This refocusing of resources is responsible for Farsight's ability to present
itself as one of the leading innovators within the security sector. The market
of the future will increasingly require skilled software and IT support in the
integration of our customers' networks to provide low cost, effective security
solutions using internet protocol ("IP") technology as the mechanism of
delivery.
Results and dividends for the year to 31 May 2003
Operating loss on all operations was #2,818,000; (2002; loss of #3,441,000) on
turnover of #1,027,000; (2002: turnover of #2,712,000).
The loss includes #289,000 of amortised goodwill (2002: #289,000) and #1,174,000
of provision against impairment in the value of goodwill.
The operating loss on continued operations was reduced to #1,795,000 (2002:
#1,838,000).
No dividend is recommended.
Trading review and current activity
The sales team led by Graham Johnson has successfully won new monitoring and
consultancy business every month since we implemented a new sales plan last
autumn. The effect has been to almost double the number of connections into the
Peterborough monitoring station and we have rationalised our activity away
from 'old' blue-collar activities towards white-collar security operations
typified by the facility management and property sectors.
In November 2003 we signed Heads of Terms for a substantial contract in
partnership with Johnson Workplace Management to deliver security costs savings
to one of the UK's largest IT companies in excess of #1 million per annum over
five years, the contract is scheduled to start on 1 December 2003.
These savings are possible by replacing increasingly expensive manned guards
with cctv installations across IP networks using Farsight's e-surveillance suite
of software.
All this amounts to a major opportunity to build the Group in the next two to
three years. The Board's clear strategy is to continue to invest in our
commercial presence in the security markets and take advantage of the clear cost
savings our technology allows us to exploit in partnerships with our channel
partners.
We have continued to build close relationships with new channel partners. In
the past seven months, two 'open days' have been held at the Observatory in
Peterborough co-jointly hosted by Panasonic. Farsight has successfully
developed and expanded its range of relationships with the larger, established
cctv installation companies.
Our e-surveillance business has finally matured to the point where our IP
know-how and software is in a position to generate increasing revenues in the
years ahead. The widespread use of company networks and the general acceptance
of the benefits of ADSL technologies today allow the exploitation of
e-surveillance. Most major new security installations will be IP based and
Farsight is well placed to exploit the opportunity. Further, we are planning to
release our own shrink-wrapped e-surveillance software to closed user
communities in the second half of this financial year.
The Farsight Technology operating division continues to provide IT support
services to customers like Cahoot Bank and SAIC. We aim to grow our support
services business during the next 18 months, and our sales prospects list is
lengthening.
The company's technical and operational performance continues to be a major
priority. In the past six months Farsight has gained SSAIB (Security Systems
and Alarms Inspection Board) accreditations for our monitoring station in
Peterborough. In addition, we also gained formal status as a certified
Microsoft Partner. This reinforces our capability to deliver high quality
support to customer IT and IP networks.
Funding
At the EGM on 11 October 2002, all resolutions including those in relation to
the placing and open offer of up to 150,000,000 new ordinary shares and the
change of name to Farsight plc, were approved by shareholders. As a result of
this exercise, #1.5 million was raised. As at 31 May the Group indebtedness was
#186,000.
Since this fundraising the Company has had to utilise cash outflows. In order
to continue to fund the continued development of the monitoring and
e-surveillance business and to settle the last of the legacy debts the group
requires additional working capital. I am pleased to report that today the
Company has negotiated a Secured convertible Loan Facility of up to #750,000.
Details of this facility are set out in a circular being sent to shareholders
together with the report and accounts.
Board changes
There have been no changes to the Board since the interim results.
The Board intends to appoint a further non-executive director in the coming
months.
Conclusion
The company is well placed to take advantage of the market opportunity as
security networks increasingly utilise IP technology. Our consulting know-how
and e-surveillance software are increasingly sought after and with further small
cost reductions to come over the next six months, the Company is continuing to
re-establish its financial credibility.
The process of rebuilding the Farsight business continues and we can now also
look for appropriate growth opportunities to accelerate this process in order to
increase the scale the business needs.
A T G Wix
Chairman
Consolidated Profit and Loss Account
for the year ended 31 May 2003
2003 2002
#'000 #'000
Turnover
Continuing operations 669 637
Acquisitions - 2,075
Discontinued operations 358 -
1,027 2,712
Cost of sales (1,186) (1,123)
Gross (loss)/profit (159) 1,589
Net operating expenses (1,366) (3,052)
Exceptional net operating expenses (1,293) (1,978)
Total net operating expenses (2,659) (5,030)
Operating loss before goodwill (1,355) (1,174)
Goodwill (1,463) (2,267)
Operating loss after goodwill (2,818) (3,441)
Operating loss
Continuing operations (1,795) (1,838)
Acquisitions - (1,603)
Discontinued operations (1,023) -
Total operating loss (2,818) (3,441)
Profit on sale of discontinued operations 400 141
Interest payable and similar charges (41) (56)
Interest receivable 3 3
Loss on ordinary activities before taxation (2,456) (3,353)
Taxation - -
Loss on ordinary activities after taxation for the financial year (2,456) (3,353)
and withdrawn from reserves
Loss per ordinary share (0.997)p (2.94)p
Fully diluted loss per ordinary share (0.997)p (2.94)p
Reconciliation of Movements in Group Shareholders' Funds
at 31 May 2003
2003 2002
#'000 #'000
Loss for the financial year (2,456) (3,353)
Proceeds of share capital issues 1,408 1,723
Net decrease in shareholders' funds (1,048) (1,630)
Opening shareholders' funds 1,585 3,215
Closing shareholders' funds 537 1,585
The company has no gains or losses other than the results for the year as set
out above.
There is no difference between the loss on ordinary activities before taxation
and the retained loss for the year stated above and their historical cost
equivalents.
Balance Sheet
at 31 May 2003
2003 2002
#'000 #'000
Fixed assets
Intangible assets 885 2,348
Tangible assets 408 612
Investments - -
1,293 2,960
Current assets
Debtors amounts falling due outside one year - -
Debtors amounts falling due within one year 248 475
Cash at bank and in hand 14 2
262 477
Creditors: Amounts falling due within one year (1,003) (1,716)
Net current (liabilities)/assets (741) (1,239)
Total assets less current liabilities 552 1,721
Creditors: Amounts falling due after more than one year (13) (134)
Provision for liabilities and charges
Deferred Tax (2) (2)
Net assets 537 1,585
Capital and reserves
Share capital 7,452 5,902
Share premium account 4,493 4,635
Capital redemption reserve 20 20
Profit and loss account (12,502) (8,972)
Equity Shareholders' funds 537 1,585
Consolidated Cash Flow Statement
for the year ended 31 May 2003
2003 2002
#'000 #'000
Net cash outflow from operating activities (1,061) (329)
Returns on investments and servicing of finance
Interest received 3 3
Interest element of finance lease payments (40) (52)
Interest paid (1) (4)
(38) (53)
Taxation
United Kingdom corporation tax paid (85) -
Capital expenditure and financial investment
Purchase of tangible fixed assets (12) (26)
(12) (26)
Acquisitions and disposals
Purchase of subsidiaries - (1,600)
Net cash acquired with subsidiary - 43
Net (cash)/overdraft disposed with subsidiary (28) 6
(28) (1,581)
Net cash outflow before management of liquid resources and financing (1,224) (1,989)
Financing
Issue of new share capital 1,408 988
Capital element of finance lease payments (149) (79)
Net cash inflow from financing 1,259 909
Increase/(decrease) in cash in the year 35 (1,080)
Reconciliation of Operating Loss to Net Cash Flow from Operating Activities
2003 2002
#'000 #'000
Operating loss
Operating loss before goodwill (1,355) (1,174)
Goodwill (1,463) (2,267)
Total operating loss (2,818) (3,441)
Amortisation of intangible fixed assets 289 289
Provision against impairment in value of intangible fixed assets 1,174 1,978
Depreciation of tangible fixed assets 211 205
Decrease in stocks - 18
Decrease in debtors 271 576
(Decrease)/increase in creditors (188) 46
Net cash flow from operating activities (1,061) (329)
Notes to the Preliminary Results for the year ended 31 May 2003
1. Loss per ordinary share
Basic loss per share (LPS) is calculated by dividing the loss attributable to
ordinary shareholders, namely a loss of #2,456,000 (2002: loss #3,353,000) by
246,422,277 ordinary shares (2002: 114,218,694 ordinary shares), being the
weighted average number of ordinary shares in issue and ranking for dividend
during the year.
2003 Weighted 2002 Weighted
average number average number
of shares of shares
'000 '000
Earnings / Per share Earnings / Per share
(loss) amount (Pence) (loss) amount (Pence)
#'000 #'000
Basic LPS (2,456) 246,422 (0.997) (3,353) 114,219 (2,94)
2. Reconciliation of net cash flow to movement in net debt
2003 2002
#'000 #'000
Movement in cash in year 35 (1,080)
Cash inflow from change in debt 149 79
Change in net debt resulting from cash flows 184 (1,001)
Net debt movement on disposal of subsidiary - 8
Movement in net debt in the year 184 (993)
Net (debt)/funds at 1 June, 2002 (370) 623
Net debt at 31 May, 2003 (186) (370)
3. Analysis of net debt
At 1 June, At 31 May,
2002 Cash Flow 2003
#'000 #'000 #'000
Cash at bank and in hand 2 12 14
Overdrafts (89) 23 (66)
(87) 35 (52)
Finance leases (283) 149 (134)
(370) 184 (186)
4. Statutory Accounts
The financial information contained in this announcement does not constitute
statutory accounts within the meaning of Section 240 of the Companies Act 1985.
The figures for the year ended 31 May 2002 have been extracted from the
statutory accounts which have been filed with the Register of Companies and
which are available on request from the Company Secretary. The auditor's report
on those accounts was unqualified and did not contain any statement under
section 237(2) or section 237(3) of the Companies Act 1985. The statutory
accounts for the financial year ended 31 May 2003 have been approved by the
Directors and are available for collection at the offices of AGN Shipleys, 10
Orange Street, Haymarket, London WC2 7DQ or in electronic form on the company's
website, www.farsight.co.uk. The auditors' report on these accounts was
unqualified and did not contain any statement under section 237(2) or section
237(3) of the Companies Act 1985.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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