Final Results

Focus Solutions Group PLC 30 April 2002 30th April 2002 Focus Solutions Group plc Focus Solutions reports strong rise in revenues Preliminary unaudited results for the year ended March 31st 2002 Key Highlights • Revenue up by 123% • 1st mortgage customer signed • Acquisition of North American partner, MPO • Major Point of Sales (POS) system rollout for Norwich Union Life • Java version of goal:technology developed and deployed • Strong cash position at £4.6 million John Streets, Chief Executive, said: "This has been another highly successful year for Focus in extremely demanding markets. We have maintained our momentum in revenue growth while increasing our customer base, keeping a tight rein on costs and broadening our solutions into new sectors of the financial services market. The acquisition of MPO is a particularly significant step, representing an excellent opportunity for shareholders to participate in the growth opportunities of the US while giving Focus greater control over the pace and direction of expansion there. We anticipate significant progress in the coming year underpinned by our strong cash position, expanding blue chip customer base and growing revenue streams from new sectors of the financial services markets." Enquiries Focus Solutions Group plc 01926 468300 John Streets Claire Forrest Citigate Dewe Rogerson 020 7638 9571 Chris Barrie Sara Batchelor Chairman's Statement Financial performance I am pleased to report that for the third year running the Group's results have again shown significant revenue growth. We have increased our customer base, broadened our solutions into new sectors of the financial services market, signed our first international partnerships, and achieved a 123% growth in revenue. Today, we are also announcing our first acquisition, acquiring our North American partner, MPO Group Inc. Our results were achieved despite operating in some of the toughest market conditions faced by the IT sector to date. For the first time since the early 1990's, growth was less than 10% (2001 growth rate 4.6%. UK Market Review. Keynote February 2002). Breaking into new markets presents a challenge even in the best circumstances. The market slowdown particularly impacted the timing of our revenue in the UK mortgage market and the US life insurance market and as a result, we did not grow as fast as originally forecast. Turnover for the year ending 31st March 2002 was £5.1m compared with £2.3m in 2001. The loss before tax was £2.6m, (2001: £2.4m) which reflected planned on-going product development and sales and marketing costs. Of particular note is the cash balance and money market deposits at the year end of £4.6m compared with £7.7m at the end of last year, reflecting close control of working capital and costs. Loss per share increased to 10.3p in the year ended March 2002, compared with 9.7p in the year ended March 2001. In view of the current losses the Directors are not recommending the payment of a dividend. Business development In line with our original AIM flotation prospectus, investment has continued during the year. This investment has been not only in product and market development, but also in skills and infrastructure to ensure we build a sound base to support the business as it continues to grow. Over the past year Focus has expanded its life and pensions business, signing new customers, AMP, IFAengine and Scottish Widows as well as generating additional business from existing customers who are increasingly using our technology in more than one of their distribution channels. I was particularly pleased to note the successful roll-out of RIO, a major point of sales solution (POS) we have been developing for Norwich Union Life. This reflects an excellent performance from the team responsible, delivering a product that Norwich Union has described as 'world class'. Our recent acquisition of MPO cements a relationship which had started with the signing of a partnership agreement in May 2001. Like Focus, MPO specialises in delivering solutions that automate the sales process of capturing and underwriting insurance policies, using Focus's XML based toolkit, goal: technology. There are significant opportunities in the North American life insurance industry, where insurance transactions are still largely paper-based. By acquiring MPO at this early stage in its development, the Directors believe Focus shareholders will gain substantial value from MPO's growth. People Although our people are not to be found on our balance sheet, we recognise that they represent our biggest asset in driving shareholder value. With this in mind we have continued to develop our organisation's skills and structure. To deliver our vision for goal:technology and drive forward our ambitious growth plans, Frank Murray was appointed to the Board on 1st April 2002, taking a newly created position of Chief Technology Officer. Several key individuals with skills in major account sales and account management have joined the business to allow Mark Loosmore to concentrate on developing solutions and partnerships to accelerate our growth in new sectors of the financial services markets. We are making excellent progress towards building a culture of share ownership within the company. 60% of staff have been granted share options within the schemes approved by shareholders last year. Focus staff continue to be the invaluable key to our success and on behalf of the Board, I thank all staff for their commitment, energy and contribution throughout the past year. Outlook Whilst the UK software and services market overall, is forecast to generate only modest growth in 2002, companies will continue to spend in key strategic areas. Creating corporate agility, through being able to respond to market opportunities and competitive threats quickly and cost effectively, will be a critical success factor. Our solutions match that requirement delivering fast return on investment and allowing organisations to get products to market quicker. Our blue chip customer base, healthy pipeline and strong cash position underpin the significant progress we anticipate for the coming year. Chief Executive's Statement Building the Business This was a year of considerable progress for Focus. goal:technology is now being widely deployed in the life and pensions industry and delivering benefits, and helping our customers to capture and process the sales of insurance policies electronically. Recurring revenue from licences and usage has increased by 70%, albeit from a small base and represented 11% of turnover. We more than doubled our turnover, and achieved our first sales in a new sector of the financial services market. New services were introduced that help customers to implement and use our technology even more effectively. Growing the Life and Pensions business Whilst we continued to add new blue chip customers such as Scottish Widows and AMP to our customer base, existing customers made great strides during the year in making their products available electronically to the IFA community. This enabled Towry Law, one of the UK's leading independent advisers to submit £45m of insurance bonds business electronically during a six month period, reducing their error rates from 40% to 9%. In addition IFAengine, the portal for Bankhall, implemented goal:technology, allowing its 4000 member firms to place new business electronically. The 4 largest IFA portals in the life and pensions industry have now implemented goal:technology. One of our biggest successes in the past year has been the delivery of RIO, Norwich Union's point of sale (POS) solution for tied and direct sales channels, which is in the process of being rolled out to over 2000 users across the UK. Already Norwich Union is seeing benefits through the reduction of error rates, the introduction of a paperless compliance process, improved productivity and the straight-through processing of new business. goal:technology's 'build once-deploy many times' capability has enabled our customers to exploit their investment across a number of distribution channels. Skandia is the first insurance company to use goal:technology in its Extranet service for IFAs and Norwich Union now uses goal:technology in four of its channels to market: tied agents, direct sales, telemarketing and the IFA portals. Developing new markets The first breakthrough into a new sector of the UK financial services markets was achieved this year with the signing of the first customer in the mortgage market. A leading insurance company will be using goal:technology within its point of sale solution to submit mortgage applications electronically to 10 major lenders. A solution for companies in the general insurance market, to allow them to automate the sales process for insuring small and medium sized businesses, is planned for launch early in the current financial year. Going global - international business MPO has completed and is now marketing its solution to the North American market. It has recently signed partnerships with Milliman USA, a leading actuarial consulting practice and e-Nable, the internet-based portal for MIB Group Inc, that provides fraud prevention information services to the insurance industry. By integrating the MPO solution with its software, Milliman can now offer its customers straight-through processing for insurance policy sales, from data capture and validation, to policy issue and administration. A branch office has been set up in Boston to support MPO and develop additional partnerships in other sectors of the financial services market. To extend the reach of goal:technology globally, Focus signed a partnership agreement with Spotlight Interactive in South Africa in May 2001, who along with MPO has shown good progress in the development of their sales pipelines. goal:technology - the product goal:technology is now a proven XML toolkit that is systems and platform independent. It can be deployed in multiple market sectors and has international capability. A new Java version of goal:technology which supports IBM MQSeries and Web Sphere was completed for the North American market. goal:technology was enhanced to provide French capability for the Canadian market and to support the extended character set used in Pacific Rim languages. Building the team Staff numbers over the past year have risen to 112, up from 78 at the end of last year. Recruitment has slowed in line with revenue growth and has been carefully targeted. Senior managers with specific market and technical expertise have been recruited to respond to customer demands for services to help implement our technology and for solutions to automate sales through their different distribution channels. To reflect this, Service Delivery, Product Development, Propositions and Partnerships teams have been strengthened. Strategy Our focus on delivering software and solutions to automate complex sales processes will continue. We believe there is significant opportunity to increase the average value of our sales by delivering solutions to our customers, rather than just licensed software, and we have put in place the necessary skills and structure to achieve this. Proposed legislation due to be introduced this year, will change the role of the IFA, with a new channel emerging where intermediaries (Authorised Financial Advisers or AFAs) will be able to represent a number of insurers. Technology will be key to the success of these new channels and we are well positioned to deliver solutions for the new multi-tie groupings. To capitalise on the generic capability of goal:technology to handle complex processes, opportunities in non-financial services markets will be explored via partners, who have broader market expertise and international reach. We can look forward to an equally exciting year ahead, building on our strong position in our core life and pensions markets, addressing significant new revenue opportunities from the mortgage and general insurance markets, and developing internationally, through our new subsidiary in the US and our other partners. The Annual General Meeting will be held on 25 July at 4.30pm at the offices of Focus Solutions Group plc in Leamington Spa. Consolidated Profit and Loss Account for the year ended 31 March 2002 Year ended Year ended 31 March 31 March 2002 2001 (Unaudited) (Audited) £'000 £'000 Turnover 5,073 2,273 ------------ ----------- Operating loss before national insurance on share options granted (2,906) (2,857) National insurance on share options granted 47 (86) ------------ ----------- Operating loss before interest and taxation (2,859) (2,943) Net interest receivable 269 506 ------------ ----------- Loss on ordinary activities before taxation (2,590) (2,437) Taxation - - ------------ ----------- Loss on ordinary activities after taxation and loss for the year (2,590) (2,437) ======== ======== Loss per ordinary share (10.3p) (9.7p) ======== ======== Turnover and operating loss are derived from the Group's continuing operations. 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. Group Balance Sheet 31 March 2002 2002 2001 (Unaudited) (Audited) £'000 £'000 Fixed assets Tangible assets 383 519 ---------- ---------- Current assets Debtors 1,439 534 Money Market Deposits 3,830 7,082 Cash at bank and in hand 780 588 ---------- ---------- 6,049 8,204 ---------- ---------- Creditors: Amounts falling due within one year 1,505 1,120 ---------- ---------- Net current assets 4,544 7,084 ---------- ---------- Total assets less current liabilities 4,927 7,603 Creditors: Amounts falling due in more than one year - 86 ---------- ---------- Net assets 4,927 7,517 ====== ====== Capital and reserves Called up share capital 2,508 2,508 Share premium 9,426 9,426 Profit and loss account (7,007) (4,417) ---------- ---------- Shareholders' funds - equity interests 4,927 7,517 ====== ====== Consolidated Cash Flow Statement for the year ended 31 March 2002 Year ended Year ended 31 March 31 March 2002 2001 (Unaudited) (Audited) £'000 £'000 Net cash outflow from operating activities (3,121) (2,072) Returns on investments and servicing of finance 282 491 Capital expenditure and financial investment (197) (575) ---------- ---------- Cash outflow before financing (3,036) (2,156) Management of liquid resources 3,252 2,596 Financing (24) (91) ---------- ---------- Increase in cash in the year 192 349 ====== ====== Reconciliation of net cashflow to movement in net funds Year ended Year ended 31 March 31 March 2002 2001 (Unaudited) (Audited) £'000 £'000 Increase in cash in the year 192 349 Change in net funds resulting from cash flows 24 25 Cash outflow from increase in liquid resources (3,252) (2,596) ---------- ---------- Movement in net funds in the year (3,036) (2,222) Net funds at start of year 7,643 9,865 ---------- ---------- Net funds at end of year 4,607 7,643 ====== ====== 1 The comparative figures are extracts from the non-statutory audited financial statements of Focus Solutions Group plc for the year ended 31 March 2001, which have been filed with the Registrar of Companies. The report of the auditors for the periods ended 31 March 2001 contains no qualification or statement under sections 237(2) or (3) of the Companies Act 1985. The financial information contained in this announcement does not constitute statutory accounts within the meaning of section 240 of the Companies Act 1985. The 2002 annual report and financial statements will be filed with the Registrar of Companies after the Annual General Meeting. The accounts have been prepared on the basis of the accounting policies set out in the group's 31 March 2001 accounts, with the exception of adopting the recommendations set out in FRS 18, Accounting Policies and FRS 19, Deferred Tax. There is no profit effect on the current or prior periods from such an adoption. Cash in the Balance Sheet for last year has been re-analysed to show the split between cash and money market deposits. 2 Loss per ordinary share Year Year ended ended 31 March 31 March 2002 2001 (Unaudited) (Audited) £'000 £'000 Earnings attributable to ordinary shareholders Loss for the financial year (2,590) (2,437) ====== ====== Weighted average number of ordinary shares issued during the year (000's) 25,084 25,084 ---------- ---------- Loss per share (10.3p) (9.7p) ====== ====== 3 Reconciliation of operating loss to net cash outflow from operating activities Year Year ended ended 31 March 31 March 2002 2001 (Unaudited) (Audited) £'000 £'000 Operating loss (2,859) (2,943) Depreciation 333 221 Increase in debtors (914) (207) Increase in creditors 319 857 ---------- --------- Net cash outflow from operating activities (3,121) (2,072) ====== ====== This information is provided by RNS The company news service from the London Stock Exchange

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