Final Results

Lo-Q PLC
16 December 2003

Lo-Q plc


PRELIMINARY RESULTS FOR THE YEAR ENDED 30 SEPTEMBER 2003



Lo-Q plc ('Lo-Q' or the 'Company'), the virtual queuing design and operation
company, announces its preliminary audited results for the year ended 30
September 2003.



Key points:

            •           Revenue has increased 161% year on year

            •           Non-stop operation in all 6 parks without any down time

            •           Three parks Gross over $1m revenue

            •           Completed development of low cost entry solution



Jeff McManus, Chairman of Lo-Q, stated:



'Lo-Q believes that despite another difficult year for the Theme Park industry,
it has been able to successfully demonstrate the commercial benefits of
operating virtual queuing systems across multiple sites, with nearly 500,000
satisfied users in the year paying an average of $10 per head to use it.



Revenue has grown significantly over last year although park-by-park performance
was mixed:



  • Two of the newer parks generated income well over $1m each, meeting the
    Company's expectations and exceeding the longest operating park's,
    (Georgia) best ever performance.
  • The Texas park was 80% up on last year.
  • Customers continued reliance on the Lo-Q product was demonstrated by the
    Georgia park which, despite lower attendance and hence smaller queues, had
    an increase in revenue over the earlier years.
  • The final 2 parks, where there were no significant queues and little
    public awareness, generated little income.



Because of the two under performing parks overall revenue was below where we
hoped to end the year and we have already started to work with all the parks to
put in place actions to further improve revenue for next year.



The revenue shortfall has also resulted in a lower share of income for Lo-Q and
hence our cash position at the end of the season is lower than forecast. The
Directors identified the need to introduce further funds into the company at the
time of the interim report and with the income for the year being less than we
hoped the cash position may well become critical before the start of the next
season. The Directors do have a number of alternatives open to them that, if
successful, will provide sufficient working capital to meet the current level of
activity.'





Enquiries:


Jeff McManus (Chairman), Lo-Q plc              01491 577210



Chairman's Statement

Overview


Lo-Q plc supplies and sells its services and products to parks that are members
of the worldwide theme park industry.



The last year has been a very difficult year for these companies. The large
destination parks have seen attendances fall since the events of 9-11 and only
found partial recovery this last year. Regional parks have found attendances
reduced and our major customer, Six Flags, has managed to keep its attendances
at near last year's numbers with a 1.8% drop in visitor levels. I am pleased to
report that our systems worked every hour of every day that our customer
required us to be renting our queuing robots, the Q-bot.  We take some pride in
believing that our activities helped the corporation to increase the amount of
money that the visitors spent whilst at the parks, the overall effect being that
Six Flags managed to increase the total revenue spent by their guests so that
their overall revenue had increased by 1.3% at the end of the third quarter.
This represents a 2.9% increase in the average amount of money spent by a guest
('per cap income'). With nearly 500,000 satisfied users in the year paying an
average of $10 per head to use it, the Lo-Q product created over 1 million hours
of spare leisure time for these guests, providing them with many opportunities
to enjoy, (and spend money on), other park activities.



Revenue has grown significantly over last year although park-by-park performance
was mixed:



  • Two of the newer parks generated income well over $1m each, meeting the
    Company's expectations and exceeding the longest operating park's, (Georgia)
    best ever performance.
  • The Texas park was 80% up on last year.
  • Customers reliance on the Lo-Q product was demonstrated by the Georgia
    park which, although attendance was down, hence smaller queues, had an
    increase in revenue over the earlier years.
  • The final 2 parks, where there were no significant queues and little
    public awareness, generated little income.



Because of the two under performing parks overall revenue was below where we
hoped to end the year and we have already started to work with all the parks to
put in place actions to further improve revenue for next year.



The revenue shortfall has resulted in a lower share of income for Lo-Q and hence
our cash position at the end of the season is lower than forecast. The Directors
identified the need to introduce further funds into the company at the time of
the interim report and with the income for the year being less than we hoped,
the cash position may well become critical before the start of the next season.
There are a number of initiatives in progress that, if successful, will provide
sufficient working capital to meet the current level of activity.



Review of Year



The group grew its revenues by 161% in the year ended 30 September 2003 to
£2,315,143 (2002 - £886,485). This produced a loss before tax of £1,408,963
(2002 loss - £1,704,972).



Included in revenue is £1.28m realised on the sale of 5 installations and direct
costs include an associated cost of £1.57m. The installations were sold to a
finance company as part of a tripartite sale/leasing contract whereby the assets
were immediately leased back to Lo-Q with a back-to-back lease with the theme
parks. The substance of the transaction is that the theme parks have acquired
the installations under a lease. Under the terms of the agreement, £1m was
received immediately and there is a potential further $1.5m of income that can
be earned by Lo-Q, of which $0.28m has been recognised as accrued income in the
accounts. Realisation of the $1.5m is dependent upon the revenue stream from the
installations and although the revenue for 2003 will release a small amount it
has been considered prudent not to provide for the full potential future income.



With the completion of the e-Line solution and the cash constraints facing the
company overhead costs continue to be closely monitored. During the year the
overhead headcount was reduced by 5 from 24 to 19 and has been further reduced
since the year-end.



Outlook for next year



Last year we identified that with the downturn in Theme Park attendances allied
with nervousness over the general state of the global economy there was a
reluctance by theme park companies to commit expenditure on long term projects
involving significant capital. Along with the interim results, we announced our
new 'e-Line' product, which could be installed by parks at a lower cost. It is a
limited functionality version of the main product facilitating faster deployment
at much reduced cost and it will substantially reduce the barriers to entry of
electronic line handling operations, especially when combined with wireless
networking.  Initially prospective customers remained cautious as they waited to
see the out-turn for their current year but, with the season over, parks are now
planning for next season.  Undoubtedly market condition for our client base
continue to be very difficult and decision making remains slower than we might
wish, however we are in a position to prove to theme parks that our product will
give significant revenue earning potential combined with better customer
satisfaction.  We are in discussions with a number of US and European parks to
install this solution in time for next season and are hopeful about securing
firm orders from a couple of parks. However, dependent upon the order level we
will need to secure further working capital in order to take advantage of the
opportunities that the new product is presenting.



Lo-Q has made progress in creating name and brand awareness, and we have
consolidated and expanded existing and new client relationships.  Both the park
staff and ourselves have collected much anecdotal evidence that shows that
customers using the Lo-Q system are spending much more cash on paid-for
attractions whilst in the park and not waiting in the queue lines.



At the end of the current season we tested new software, which is more robust
and also allows better handling of the multitude of messages that are involved
with the system.  We were also able to test a more rugged location aware
messaging system, 'proximity marketing', which alerts guest to attractions that
are very close by.  The system caused significant increase in sales of the
product advertised and the Company is planning to introduce this marketing
technique to all its parks next season.  We are expecting to gain a significant
increase in revenue from this activity.



Summary



In light of the losses, the early stage nature of the company and the ongoing
need for investment to grow, the Board does not recommend the payment of a
dividend for the year.



During the next year we will be concentrating on increasing the financial
strength of the company, which will be founded on new orders from parks outside
the Six Flags organisation and through working with Six Flags to maximise the
revenue out of the existing installations.



Jeff McManus

Chairman



CONSOLIDATED PROFIT AND LOSS ACCOUNT

Year ended 30 September 2003


                                                                                  2003         2002

                                                                                   £           £

TURNOVER                                                                          2,315,143    886,484

Cost of sales                                                                     1,892,565    704,706

Gross profit                                                                      422,578      181,778

Administrative expenses                                                           1,832,564    1,914,285


OPERATING (LOSS)                                                                  (1,409,986)  (1,732,507)

Interest receivable and similar income                                            1,488        30,022
Interest payable and similar charges                                              (465)        (2,487)

LOSS ON ORDINARY ACTIVITIES BEFORE TAXATION                                       (1,409,963)  (1,704,972)
Tax on loss on ordinary activities                                                (97,881)     (110,000)

LOSS FOR THE FINANCIAL YEAR                                                       (1,311,082)  (1,594,972)


Loss per ordinary share (pence)                                                   (0.09)       (0.13)
 (basic and diluted)




All activities derive from continuing operations.


CONSOLIDATED STATEMENT OF TOTAL RECOGNISED GAINS AND LOSSES

Year ended 30 September 2003


                                                                                   2003         2002

                                                                                   £            £

LOSS FOR THE FINANCIAL YEAR                                                        (1,311,082)  (1,594,972)
 Exchange translations arising on consolidation                                     12,156      -

TOTAL GAINS AND LOSSES RECOGNISED SINCE LAST FINANCIAL STATEMENTS                  (1,298,926)  (1,594,972)




CONSOLIDATED BALANCE SHEET

30 September 2003


                                                                                   2003         2002

                                                                                   £            £


FIXED ASSETS
Tangible assets                                                                     175,237     336,876

                                                                                   175,237      336,876
CURRENT ASSETS
Stocks                                                                             219,790      1,826,758
Debtors                                                                            577,180      657,684
Cash at bank and in hand                                                           287,033      160,060

                                                                                   1,084,003    2,644,502
CREDITORS: amounts falling due within one year                                     131,120      554,332

NET CURRENT ASSETS                                                                 952,883      2,090,170

TOTAL ASSETS LESS CURRENT LIABILITIES                                              1,128,120    2,427,046


CAPITAL AND RESERVES
Called up share capital                                                            143,478      143,478
Share premium account                                                              4,971,617    4,971,617
Capital redemption reserve                                                         12,473       12,473
Profit and loss account                                                            (3,999,448)  (2,700,522)

EQUITY SHAREHOLDERS' FUNDS                                                         1,128,120    2,427,046










CONSOLIDATED CASH FLOW STATEMENT

Year ended 30 September 2003


                                                                                   2003        2002

                                                                                    £          £


Net cash inflow/(outflow) from operating activities                                32,500      (3,363,186)

Returns on investments and servicing of finance                                    1,023       27,535

Taxation                                                                           150,117     (757)

Capital expenditure and financial investment                                       (57,319)    (145,561)

Net cash inflow/(outflow) before financing                                         126,321     (3,481,969)

Financing                                                                          -           3,055,883

Increase/(decrease) in cash in the year                                            126,321     (426,086)



NOTES TO THE ACCOUNTS

Year ended 30 September 2003





1.         BASIS OF PREPARING THE FINANCIAL STATEMENTS



The Company meets its day to day working capital requirements from the internal
generation of revenues and has no agreed bank overdraft facilities. The nature
of the Company's business is such that receipts from theme park revenues are of
a seasonal nature, and future income will not be generated from this source
until April 2004 onwards, and although the Company has taken steps to reduce its
expenditure, the cash flow projections indicate that further finance will be
required before April. The directors believe that it is in the mutual interest
of its major client that the Company continues to trade and the client will
provide the financial support to enable this. On this basis, the directors
consider it is appropriate to prepare the financial statements on a going
concern basis. Should the company not receive such financial support it would
need to find alternative sources of funding. The financial statements do not
include any adjustments that would result from a failure to obtain the necessary
finance.



2.         SEGMENTAL ANALYSIS



Turnover by destination is as follows:
                                                                                   2003         2002

                                                                                   £            £


United State of America                                                            2,315,143    886,484


All turnover is from the group's principal activity.



3.          LOSS PER ORDINARY SHARE



The calculation of basic and diluted loss per ordinary share are based on a loss
of £(1,311,082) (2002 - £1,594,972) and on 14,281,837 (2002 - 12,245,799)
ordinary shares being the weighted average number of ordinary shares in issue
during the year.



Potentially dilutive issuable shares are only included in the calculation of
diluted earnings per share if their issue would increase net loss per share.



4.          FINANCIAL INFORMATION



The financial information contained in this preliminary announcement of audited
results does not constitute the group's statutory accounts for the years ended
30 September 2003 or 30 September 2002.  The financial information has been
prepared using consistent financial policies.  The accounts for the year ended
30 September 2002 have been delivered to the Registrar of Companies and those
for 2003 will be delivered following the company's annual general meeting.



The statutory accounts for the years ended 30 September 2003 and 30 September
2002 have been reported on by the company's auditors; the reports on these
accounts were unqualified and they did not contain a statement under section 237
(2) or (3) of the Companies Act 1985.



Copies of the full statutory accounts will be despatched to shareholders in due
course.  Copies of this announcement and the full statutory accounts will be
available, free of charge, from the registered office of the company at New
Close, Greenlands, Henley-On-Thames, Oxfordshire, RG9 3AL., and from 12 Nicholas
Lane, London EC4N 7BN.






                      This information is provided by RNS
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