restructure in the US
Focus Solutions Group PLC
03 April 2003
3 April 2003
Focus Solutions Group plc
Focus restructures in the US
Focus Solutions Group plc ("the Group"), the specialist provider of sales
automation solutions, is today announcing the sale of 51% of the issued share
capital of its US subsidiary, Focus Solutions Holdings Inc, (which owns 100% of
Focus Solutions Inc) on 31st March 2003, to the US management of Focus Solutions
Inc for a nominal consideration.
Focus Solutions Holdings Inc Group, ("FSHG") which comprises both Focus
Solutions Holdings Inc and its subsidiary, Focus Solutions Inc, has been
developing solutions for the US life assurance market based on the Group's XML
toolkit, goal:technology. FSHG had net liabilities of approximately £0.1 million
as at the 31st March 2003 after the capitalisation as share capital of an
intercompany loan of £1.5 million. Losses for the year ending 31st March 2003
are estimated to be £0.9 million.
The Group incurred costs in the order of £0.3 million in the year ended 31st
March 2003 as a result of the transaction, including the costs of the associated
closure of the Group's Boston office, which provided support services to Focus
Solutions Inc. Goodwill write off will be approximately £1.0 million, in
addition to £0.2 million amortised in the first half of the financial year.
The sale of 51% of the issued share capital of Focus Solutions Holdings Inc
follows a review of the US market by the Group's Board of directors ("the
Board"). Current trading conditions in the US continue to be extremely tough and
whilst opportunities have been identified, the Board believes that FSHG is
likely to continue to need significant cash investment.
The Board has concluded as a result, that it is in the best interests of the
shareholders of the Group, to reduce the Group's exposure to the costs of
developing its position in the US market. By retaining a 49% investment in Focus
Solutions Holdings Inc, the Board will ensure that shareholders stand to benefit
from any future success of FSHG, without the obligation for continuing
investment. The Group's 49% interest in Focus Solutions Holdings Inc will be
included in the Group accounts at a nominal value.
The arrangements under which Focus Solutions Inc previously used the Group's
goal:technology software, have been formalised by the grant of a non exclusive
licence, allowing it to continue to use goal:technology to build its solutions
for the North American life assurance market and other defined territories.
Certain of the continuing rights and obligations, under the terms of the
acquisition documentation governing the Group's purchase of Focus Solutions Inc
in 2002, have been terminated by completion of this disposal, including
employment contracts with Focus Solutions Inc and the obligation on the Group to
pay any deferred consideration. One of the members of the Focus Solutions Inc
management team, Thomas W. McCahill (who was a director of Focus Solutions Inc
prior to completion of this transaction) has acquired approximately 49% of the
issued share capital of Focus Solutions Inc as part of this transaction.
The Directors of the Group, having consulted with Evolution Beeson Gregory,
consider that the terms of the transaction are fair and reasonable insofar as
its shareholders are concerned.
Outlook
As anticipated in the interim statement, the Group has continued to grow its
core business within the UK life and pensions market. The measures announced
today, together with the cost savings announced at the half year underpin the
Board's confidence in the future.
The Group will be announcing its results for the year ended 31 March 2003 in
early June, which, excluding the exceptional losses on disposal, the Board
believes will be broadly in line with market expectations. Whilst trading
conditions have been challenging, and are likely to remain so in the short term,
the Board is committed to securing the Group's position as a leading supplier of
e-trading solutions and is confident about its prospects in its core market.
Enquiries
Focus Solutions Group plc 01926 468300
John Streets
Citigate Dewe Rogerson 020 7638 9571
Chris Barrie
Sara Batchelor
Notes to editors
1. About Focus Solutions Group
Focus Solutions Group is a specialist provider of sales automation solutions for
the financial services industry. Based on goal:technology, its XML toolkit,
Focus delivers straight through electronic processing to create a paperless
sales process across multiple channels to market including IFA portals,
websites, extranets, direct sales and call centres.
Focus has a portfolio of market facing propositions and services to help
customers to implement and use its technology effectively. The Group has
specific expertise in Point of Sale systems, having developed RIO, Norwich
Union's POS solution for their direct sales, tied agents and telemarketing
channels. RIO won the Financial Sector Technology award 2003 for 'Best Use of IT
in Insurance'
Focus's customer base includes: Misys Financial Services, The Exchange, Friends
Provident, IFAengine, Legal & General, Norwich Union, Prudential, Scottish
Equitable, Scottish Provident, Scottish Widows, Skandia, Standard Life and
Zurich.
For further information on Focus Solutions, please visit
www.focus-solutions.co.uk.
This information is provided by RNS
The company news service from the London Stock Exchange