Final Results

Focus Solutions Group PLC 14 June 2005 FOR IMMEDIATE RELEASE 14 June 2005 Focus Solutions Group plc Preliminary Results for the year ended 31 March 2005 Focus Solutions Group plc, a leading provider of customer management solutions for the financial services industry, today announces its preliminary results for the year ended 31 March 2005. Key Highlights • Profit before tax £26,000 (2004: loss before tax £0.4 million) • First annual profit as a public company • Second half operating profit of £0.8 million (H2 2004: £0.1 million) • Turnover £5.43 million (2004: £5.39 million) • goal:technology licence and related services revenue up 40 % to £5.2 million (2004: £3.7 million) • Cash and money market deposits of £1.0 million (2004: £1.5 million); debt free • Basic and diluted earnings per share of 0.1 pence (2004: loss per share 1.0 pence) • Significant MCA (Multi Channel Advice) orders during the year include: • £1.7 million Multi-tie Point of Sale contract with Zurich Financial Services • First phase of Extranet service for Prudential Plc • Development of new multi-tie Point of Sale solution for major retail bank • Good progress in mortgage market • Strategic partnership signed with Trigold • Three new customers in the mortgage market, Mortgages plc, a new mortgage distributor and Capital Home Loans Limited Commenting on the results and prospects, John Streets, Chief Executive, said: "Focus has delivered a very positive set of results, with the Group achieving its first full year profit as a public company. Whilst overall turnover was only marginally ahead, revenues for goal:technology and related services were up 40% compared with 2004. We have won some significant orders in our core life and pensions market, made good progress in the mortgage market and successfully launched Focus Software. The business has a robust platform for future growth and is in good shape to continue improving its financial performance." For further information please contact: FOCUS John Streets 01926 468 300 Chief Executive Martin Clements 077696 54527 Financial Director Chairman's Statement Business review I am very pleased to be able to report a positive set of results for Focus Solutions Group for the year ended 31 March 2005. For the first time as a public company, we have generated a full year profit and good progress was made in all areas even though turnover was only marginally ahead of 2004 at £5.43 million. This represents an exceptional achievement given the major change in the structure of the business over the past three years, with significant growth in sales of goal:technology licences and related services replacing the revenue generated by the major Point of Sale (POS) solution - RIO - developed for Norwich Union. goal:technology licences and services revenue grew strongly during the year, up by 40% whilst revenues from Norwich Union for RIO fell to less than £250k, down from £1.7 million last year. We have now reached a point where the business has a robust platform for future growth. During the year, we continued to restructure the Group to meet the needs of the markets in which we operate and we have formally split the business into two operating units; Focus Business Solutions and Focus Software, supported by a central services function. Focus Business Solutions (FBS), the principal operating company in the Group, is responsible for the provision of business process solutions supporting customer management processes within the UK retail financial services industry. Focus Software (FS) has been established to exploit the value of the Group's XML development tool, "goal:technology". Initially developed to supply business process solutions to the financial services industry, FS's objective will be to extend the use of goal:technology in other vertical markets through strategic partnerships. The central services function provides management, accounting, IT and administrative support to the Group. Focus Business Solutions FBS delivered an excellent trading performance during the period, with sales of goal:technology based solutions up by 40% compared with 2004, new customers in the mortgage, retail banking and general insurance markets and good growth in business with existing customers. During the year, FBS signed a five year contract with Zurich Financial Services for the supply of a multi-tie POS for its Openwork network. This contract, which represents the first phase of the project, is worth £1.7 million and reinforces the relationship between Focus and Zurich, which has grown every year over the past four years. FBS also started on the development of a new multi-tie POS for a major UK retail bank, to support the sale of regulated life and pensions products for both corporate and personal business by over 800 field sales staff. We continued to build on our entry into the mortgage market, signing a contract with specialist mortgage lender, Mortgages plc, to provide it with the ability to respond efficiently to the requirements of the new mortgage regulations that came into force in October 2004 (known as "M-Day"). During the year, we also won a major contract with a newly formed distributor of mortgage products, and since the year end, we have secured a further customer in this market; Capital Home Loans Limited. A strategic partnership was formed with the leading mortgage sourcing provider, Trigold, to develop electronic links between mortgage intermediaries and lenders. Trigold has over 130 lenders on its platform and over 20,000 registered users of its portal. We continue to offer market leading innovative business process solutions, and FBS is now a leading provider of customer management solutions to regulated financial services institutions selling protection and investment products in the UK. The UK life and pensions market remains the most important part of the business: the majority of the top 10 life and pensions providers in the UK are customers and goal:technology has over 40,000 deployments in the UK. Focus Software Towards the end of the financial year, we set up FS as a separate division within the Group. The development team responsible for the production of goal:technology software have been joined by an experienced business development team, tasked with the objective of exploiting our innovative technology in other vertical markets. FS's sales and marketing activities will be focused through partners primarily. The relationship with BEA Systems Inc. to sell goal:technology, where appropriate, as part of their WebLogic Platform 8.1TM is progressing well. BEA is a billion dollar enterprise software company quoted on NASDAQ and has over 15,000 customers worldwide, including the majority of the Fortune Global 500 Companies. The Board believe this will be an important partnership for the Group over the next few years as it gives us the opportunity to grow internationally in all market sectors. FS is putting particular emphasis on the Business Process Management (BPM) and Service Oriented Architecture (SOA) markets, leveraging goal:technology, to add value to existing suppliers in these markets. In addition, they are concentrating on the key vertical markets of government and multi-national enterprises where multi-channel internet based technologies such as goal: technology are strategic. FS continues to invest in innovative product development, and has entered into a distribution deal with Grey Matter, the UK's leading specialist distributor of software to the technical developer community, for its XFormation product, the world's first commercially available XForms editor. Review of results Focus' main priorities for the year were to grow new business to cover the expected decline in revenues from the RIO project, to maintain a tight control of costs and to continue the progress towards profitability. We achieved all three. Turnover for the year ending 31 March 2005 was £5.43 million compared with £5.39 million in the previous financial year. This small increase reflects the change in sales mix which continued in the year with the completion of the Norwich Union POS, RIO and continued strong growth in goal:technology licence and related services up by 40% from £3.7 million in FY2004 to £5.2 million in FY2005. Over the past three years, sales of goal:technology licence and related services have grown by over 400% from £1.0 million in FY2002. Despite the small improvement in top line revenues, a combination of the change in sales mix and the benefits of cost control measures implemented over the past two years, meant that the Group delivered its first profit as a public company. Operating profit for the year as a whole was £26,000. In the second half of the year, operating profit increased to £0.8 million compared with £0.1 million in the second half of 2004. Total costs for the year were reduced from £5.9 million to £5.4 million. Cash outflow from operating activities during the year totalled £0.5 million (FY2004: £0.9 million). In the second half of the period, the Group generated £0.7 million of cash from its trading activities and at the end of the year, cash balances exceeded £1 million. The balance sheet remains debt free. We do, however, have bank facilities totalling £350,000 with HSBC plc, should we require them. Basic and diluted earnings per share for the year ending 31 March 2005 were 0.1p, compared with a loss of 1.0p for the year ending 31 March 2004. The Board's primary objective is to provide the resources necessary for the business to grow and create a business of sustained profitability and cash generation. In the long term, this represents the best opportunity for return on investment. Accordingly, we currently have no plans to pay a dividend in the near future. Research and development The investment in research and development and in product development continues to be substantial and totalled £0.9 million in FY2005 (FY2004: £0.9 million). This investment is fully written off in the year in which it is incurred. The Group has applied for research and development tax credits. However, the approval process for claims has proved extremely drawn out. We remain confident that our claims are entirely appropriate and are hopeful of reaching an agreement with the Inland Revenue concerning our FY2003 claim shortly. We have also made a claim for FY2004 but have made no provision in the accounts for the credit due for FY2004, pending agreement of the FY2003 submission. People Lin Johnstone has announced that, due to increased work commitments, she plans to retire as a non-executive director at the annual general meeting, after three years involvement with the Group. We are extremely grateful to Lin for her contribution and I would like to wish her all the best in her future endeavours. The continued improved financial performance of the Group is a testament to the reputation of our staff for both their technical expertise and responsiveness to customer requirements. The stability in our workforce is a prime factor in our success. To achieve these results in the current environment is a reflection of this stability and has required both flexibility and commitment from our staff. These challenging times have created many pressures, in spite of which our team has continued to exceed our expectations time after time. I thank all of them for their continued commitment to Focus and for their achievements and enthusiasm. Outlook Focus is well positioned within the UK retail financial services markets where significant changes in regulation and distribution models continue to drive demand for our propositions and products. Our strong customer base and innovative XML technology solutions provide a strong basis for long term, sustained, growth. We believe that global strategic partnerships offer a significant opportunity to increase sales of our technology outside of the UK financial services market and will continue to commit resources to grow sales through these channels. We have enjoyed our most successful year yet, and are in good shape to continue to improve our financial performance and increase growth next year. Alastair M Taylor Chairman Chief Executive's Statement The primary aim for the management team over the past twelve months has been to take Focus through to profitability. The Group has come a long way since we floated five years ago. To achieve this during a period when capital expenditure was under pressure in our core markets is particularly noteworthy. Focus delivered a very encouraging performance, growing sales of goal:technology and related services by 40%, adding new customers and successfully launching Focus Software. Underpinning our plans for the Group over the past two years has been the recognition that we must make the business sustainable and scalable. In terms of sustainability, our objective has been to extend the customer base by entering additional retail financial services market sectors. A key medium term objective is for our recurring revenues to substantially cover our fixed cost base. We remain someway from achieving this goal, however, good progress was made in the year. Focus Business Solutions is profitable, based on our current strategy to design, deliver and implement world class e-trading solutions for the financial services markets, built using goal:technology. In terms of scalability we see Focus Software as offering much greater long term opportunities. The exploitation of goal:technology in other markets through global partners is a major plank of our strategy. Focus Business Solutions Over the past seven years, FBS has built a reputation in the UK life and pensions market for delivering leading edge customer management solutions across multiple distribution channels, based on our goal:technology software. The challenge in this market has been to collect large amounts of information about customers and prospective customers and to record this information accurately and cost efficiently. The requirement for accuracy has been driven by regulation, with the life and pensions companies required to prove that they sold the right product to each customer. The need to collect this information efficiently has come from the life and pensions companies themselves, as they have sought to maximise returns on investment and to cope with the world of 1% commissions. A wave of new regulation from the Financial Services Authority has followed and in the last year we have seen: •Depolarisation of the distribution of UK life and pensions •Mandatory electronic reporting across all regulated firms •Regulation of mortgage sales •Regulation of general insurance sales Depolarisation is the key driver for IT spending in the UK life and pensions industry. This will have a significant impact on distribution channels and the processes that support them. The old tied agent/ independent advisor split will be supplemented by a new channel, multi-tied agents, who sell products from a limited number of providers. Although there are likely to be fewer players in the market through consolidation, new combinations of providers, distributors and advisors will emerge. Minimising the costs for these new distribution models is critical and represents a major opportunity for MCA, Multi Channel Advice business process solutions provided by FBS. FBS has continued its penetration of the UK mortgage market, capitalising on its ability to provide the business process solutions required to handle the new regulated sales processes. As a result of the work undertaken by Focus, intermediaries dealing with Mortgages plc have been provided with the facility to complete Key Facts Illustrations in line with the requirements of the Financial Services Authority's mortgage regulation, which came into force in October 2004. FBS's ability to develop, deliver and deploy front-office solutions in short timescales, sometimes in less than 90 days from start to finish, remains one of its principle differentiators in the market. FBS offers consultancy, business analysis, project management, systems integration, testing and support services to its clients in the UK retail financial services market based on customer management process solutions with the MCA process framework. Focus Software The establishment of Focus Software reflects the ambitions of the Group to achieve global scale. We have been convinced for some time that goal:technology is suitable for markets and applications outside of the UK financial services market, and the recent collaborative relationships with BEA and Milliman USA Inc. have been set up with this objective in mind. The goal:technology suite comprises four propositions. Three are targeted at global technology BPM vendors, such as BEA, to allow their customers to develop business applications, proof of concepts or user interfaces rapidly and cost effectively. The fourth, XFormation, is targeted at the R & D and academic community, supporting the emerging XForms standards, in preparation for commercial use as XForms become more widely adopted over the coming years. A new version of XFormation has been completed and a European distribution agreement signed with Grey Matter, one of the UK's leading suppliers of business, technical and development software, went live in May 2005. During the year, the FS business development team have been creating a great deal of interest in goal:technology in a wide variety of areas, with a number of partnerships in development and significant proof of concept collateral. Strategy It is our strategy to create a sustainable and scalable business. The provision of business process solutions, focused on customer management, to the UK retail financial services market by Focus Business Solutions can generate sustainable profits in the foreseeable future. FBS has an enviable client list in the UK life and pensions market and is well placed to exploit the opportunities generated by the introduction of further regulation into the mortgage and general insurance markets. These markets have the same need for extensive re-engineering including improved business sales processes, data collection, accurate recording and cost efficient straight through enterprise processing as the UK life and pensions markets have experienced over the past few years. To achieve further growth, the Board believes there is significant opportunity in exploiting goal:technology more widely by Focus Software developing partnership agreements with organisations operating in different geographical and vertical markets. Prospects In the forthcoming year, our target markets will continue to look for solutions that cut the costs of distributing their products and help them meet the challenge of the significant new regulations. Our blue chip customer base and track record of improvement in business process management based on innovative technology puts us in a strong position to exploit the opportunities this will generate. Our first partnership agreements for goal:technology offer significant opportunities for future growth and we will continue to focus resources on supporting them. Tight control on costs, coupled with a closely targeted approach to sales and partnership development will ensure that the Group continues to make good progress in achieving a sustainable and scalable business. John Streets Chief Executive Consolidated Profit and Loss Account 31 March 2005 Year ended Year ended 31 March 31 March 2005 2004 (as restated see note 1) Notes £'000 £'000 Turnover 2 5,431 5,388 Cost of sales (1,361) (1,773) ________ ________ Gross profit 4,070 3,615 Overheads Distribution costs (1,221) (1,491) Administrative expenses (2,847) (2,594) ________ ________ (4,068) (4,085) ________ ________ Operating profit/ (loss) before re-organisation costs 2 (470) Re-organisation costs - (119) ________ ________ Operating profit/ (loss) 2 (589) Disposal of US operations - 167 ________ ________ Profit/ (Loss) on ordinary activities before 2 (422) interest Net interest receivable 24 40 ________ ________ Profit/ (Loss) on ordinary activities before 26 (382) taxation Taxation - 100 ________ ________ Profit/ (Loss) on ordinary activities after taxation 26 (282) and retained profit/ (loss) for the year ======= ======= Earnings/ (Loss) per ordinary share Basic 3 0.1p (1.0p) Diluted 3 0.1p (1.0p) The operating profit for the year and loss for the prior year arises from the company'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 2005 Year Ended Year Ended 31 March 31 March 2005 2004 £'000 £'000 Fixed assets Tangible assets 137 171 _____ _____ Current assets Debtors 2,665 1,845 Investments - money market deposits - 250 Cash at bank and in hand 1,007 1,234 _______ ______ 3,672 3,329 _______ ______ Creditors: Amounts falling due within one year 1,598 1,331 _______ ______ Net current assets 2,074 1,998 _______ ______ Total assets less current liabilities 2,211 2,169 _______ ______ Net assets 2,211 2,169 ======= ====== Capital and reserves Called up share capital 2,859 2,851 Share premium 9,827 9,819 Merger reserve 220 220 Profit and loss account (10,695) (10,721) ________ _______ Shareholders' funds - equity interests 2,211 2,169 ======== ====== Approved by the Board on 13 June 2005 J B Streets M J Clements Director Director Consolidated Cash Flow Statement Year ended Year ended 31 March 31 March 2005 2004 £'000 £'000 Net cash outflow from operating activities (454) (927) Returns on investments and servicing of finance 24 40 Taxation - 56 Capital expenditure and financial investment (63) (56) _______ _______ Cash outflow before management of liquid resources and financing (493) (887) Management of liquid resources 250 406 Financing 16 676 ________ _______ Increase in cash in the year (227) 195 ======== ======= Reconciliation of net cashflow to movement in net funds Year ended Year ended 31 March 31 March 2005 2004 £'000 £'000 (Decrease)/ increase in cash in the period (227) 195 Cash outflow from decrease in liquid resources (250) (406) _______ _______ Movement in net funds in the year (477) (211) Net funds at start of year 1,484 1,695 ________ _______ Net funds at end of year 1,007 1,484 ======== ======= Notes to the Accounts for the year ended 31 March 2005 1. The financial information set out above does not constitute statutory accounts for the years ended 31 March 2005 and 2004, but is derived from those accounts. Statutory accounts for the year ended 31 March 2004 have been delivered to the Registrar of Companies and those for the year ended 31 March 2005 will be delivered following the Company's annual general meeting. The auditors have reported on those accounts; their reports were unqualified and did not contain statements under s237(2) or (3) Companies Act 1985. In order to be consistent with standard industry practice, the format of the Consolidated Profit and Loss account has been changed. The prior year numbers have been restated in accordance with the revised format. 2. Turnover The geographical analysis of turnover by destination is: 2005 2004 £000 £000 United Kingdom 5,381 5,367 North America 50 21 __ __ 5,431 5,388 ===== ===== 3. Earnings/(loss) per share The basic earnings per share is based on attributable profit /(loss) for the year of £26,000 (FY2004: Loss £282,000) and on 28,588,000 ordinary shares (FY2004: 27,504,000) being the weighted average number of ordinary shares in issue during the year. The diluted earnings per share is based on attributable profit /(loss) for the year of £26,000 (FY2004: Loss £282,000) and on 29,150,000 shares (27,504,000) calculated as follows: Year Year ended ended 31 March 31 March 2005 2004 £'000 £'000 Basic weighted average number of ordinary shares (000's) 28,588 27,504 Dilutive potential ordinary shares: Share Options 562 - _______ _______ 29,150 27,504 ====== ====== 4. Report and Accounts Copies of the Report and Accounts will be circulated to shareholders shortly and may be obtained after the posting date from the Company Secretary, Focus Solutions Group Plc, Cranford House, Kenilworth Road, Leamington Spa, CV32 6RQ. 5. The AGM will be held at 4.30 pm on 21 July 2005 at the registered office of the Company (Cranford House, Kenilworth Road, Leamington Spa, CV32 6RQ) This information is provided by RNS The company news service from the London Stock Exchange

Companies

Foresight Group Holdings Limited NPV (FSG)
UK 100
FTSE quotes by TradingView

Latest directors dealings

All directors dealings today