Final Results
30 April 2003 - 2:29PM
UK Regulatory
RNS Number:5655K
Ultima Networks PLC
30 April 2003
ULTIMA NETWORKS PLC
Chairman's Statement
Trading Performance
The Group continues its progress towards profitability despite difficult
business conditions within the trading year. The gross margin for the current
year increased from 42% (2001) to 67%. Net operating expenses reduced by 41% to
#1.38 million (2001: # 2.33 million). This substantially completes the
restructure.
The Group continued to focus on areas of the business where profitable growth
can be achieved. Good progress has been made by our software division where
turnover increased by 20% to #1,133,000 (2001: #947,000). This resulted in an
operating profit of #211,000 (2001: #94,000). Cognito Software Limited
("Cognito"), our legal accounting and workflow management software company,
performed particularly well with an increase of over 12% in the number of users
since January 2002 and an increase in recurring revenues of over 22% compared to
31 December 2001.
In contrast, the networking division's results continued to be disappointing and
further steps have been taken to eliminate non-profitable elements of this
business. The networking division's turnover decreased by 74% to #893,000 (2001:
#3,444,000). This resulted in an operating loss of #42,000 (2001: loss
#269,000).
Financial highlights
*Group turnover down 41% to #2,026,000 (2001: #3,408,000).
*Group gross profit margin increased from 42% to 67%.
*Group net operating expenses reduced by 41% from #2.33 million to # 1.38
million.
*Software Division turnover up 20% to #1,133,000 (2001: # 947,000).
*Networking Division turnover down 74% to #893,000 (2001: #3,444,000).
Outlook
Investment in research and development continued across the Group. In the
software division approximately #68,000 was spent in the period on developing
new products and enhancing the existing product range. Developments included web
enabling the existing products and the introduction of new products such as
digital dictation and voice recognition software.
In our networking products company, SilCom Manufacturing Technology Inc.
("SilCom"), development continues on the wireless links product range. The
company is developing a gigabit bandwidth link, which is now in field trial
stages. Research and development costs incurred in the period on this product
were approximately #92,000.
At present the Group is researching into providing renewable energy and energy
efficient products and services. More information about the results of this new
venture will be given in the interim results.
The first quarter of 2003 was in line with management expectations with
continuing cost controls and focus on profit generation.
Operational Overview
NETWORKING DIVISION
Networking Services
Our Networking Services operations specialise in providing complete network
solutions to a range of clients in both the public and private sectors. Since
the relocation to Burnley from last year our Network Management Centre has
successfully maintained existing services and installations with reduced levels
of staff costs.
Networking Products
Our Networking Products operation, SilCom, based near Toronto, Canada, has
traditionally specialised in the design and manufacture of products, including
network management software, for the Local Area Network (LAN) marketplace.
SilCom is now concentrating on widening its wireless product offering where the
Directors' believe significant opportunities exist.
SOFTWARE DIVISION
Cognito software built upon last year's consolidation of the business and there
was record growth in 2002. Sales projections for 2002 rested largely upon a
steady stream of DOS to Windows conversions and the rollout of Case Management
Systems and concurrent with both, an increase in the numbers of users. In May
2002 there was 30% shortfall in projected revenues but immediate corrective
action was initiated to arrest the anticipated shortfall. These actions must be
set forth as the core element to improve revenue generation and sustainable
growth in the coming year and beyond. The product is witnessing increasing
operational stability, with a major version release incorporating several
product improvements.
Integrated Publishing Supplies Limited ("IPS") continued to consolidate its
client portfolio with the addition of a Liverpool based publishing house
incorporating several titles early in the year. In keeping with this
consolidation, the recurring revenue stream has registered growth. In addition,
IPS has undertaken to deliver a number of enhancements for existing customer
installations responding to their growing business needs as well as providing
for chargeable support and services outside the scope of the maintenance remit.
This has resulted in IPS now being poised for growth in terms of application
functionality and a product line for web integration has been invested in, which
will be launched at Newstec 2003 in May in Brighton. The management is confident
that this addition to the product portfolio will provide an attractive
proposition to existing and prospective clients offering business efficiency and
immediate return on investment.
RENEWABLE ENERGY DIVISION
This division has been set up as part of the holding company to explore business
opportunities in the renewable energy sector. This exercise will initially be
confined to the Group's existing customers base.
Consolidated profit and loss account
for the year ended 31 December 2002
2002 2001
#000 #000
Turnover
Continuing operations 2,026 3,408
Discontinued operations - 983
-------------- --------------
Turnover 2,026 4,391
Cost of sales (672) (2,533)
-------------- --------------
Gross profit 1,354 1,858
Net operating expenses (1,381) (2,327)
Exceptional credit on
approval of
voluntary arrangement 158 980
Exceptional credit on - 291
provision for onerous
leases
Exceptional operating - 274
costs
Analysis of operating
profit -----------------------------------------
Continuing operations 131 843
Discontinued operations - 233
-----------------------------------------
Operating profit 131 1,076
-------------- --------------
Profit/ (loss) on 253 (1,061)
termination of an
operation -------------- --------------
Profit on ordinary 384 15
activities before
interest
Exceptional gain on - 779
extinguishment of debt
Interest payable and (219) (281)
similar charges
-------------- --------------
Profit on ordinary 165 513
activities before
taxation
Tax on profit on ordinary 36 63
activities
-------------- --------------
Profit for the financial 201 576
year
============== ==============
Basic earnings per share 0.10p 0.30p
============== ==============
Diluted earnings per 0.10p 0.30p
share
============== ==============
Consolidated balance sheet
at 31 December 2002
2002 2001
#000 #000 #000 #000
Fixed
assets
Tangible 3,148 3,229
assets
Current
assets
Stocks 156 32
Debtors 514 705
Cash at bank 99 74
and in hand
-------------- --------------
769 811
Creditors: (1,402) (4,107)
amounts
falling due
within one
year
-------------- --------------
Net current (633) (3,296)
liabilities
-------------- --------------
Total assets 2,515 (67)
less current
liabilities
Creditors: (3,450) (1,101)
amounts
falling due
after one
year
-------------- --------------
Net (935) (1,168)
liabilities
============== ==============
Capital and
reserves
Called up 7,434 7,434
share
capital
Share premium 5,520 5,520
account
Revaluation 1,102 1,124
reserve
Other 1,334 1,334
reserves
Profit and (16,325) (16,580)
loss account
- deficit
-------------- --------------
Deficit of (935) (1,168)
shareholders'
funds ============== ==============
Analysis of
shareholders'
deficit
Equity (6,442) (6,675)
interests
Non-equity 5,507 5,507
interests
-------------- --------------
(935) (1,168)
============== ==============
Consolidated cash flow statement
for the year ended 31 December 2002
2002 2001
#000 #000
Cash flow statement
Cash (outflow)/ inflow from (521) 359
operating activities
Returns on investments and (219) (149)
servicing of finance
Taxation 1 -
Capital expenditure and (1) 15
financial investment
--- -------------- --- --------------
Cash (outflow)/ inflow 225
before management of liquid
resources and financing
(740)
Financing 765 (84)
--- -------------- --- --------------
Increase in cash in the 25 141
year
=== ============== === ==============
NOTES
1. GOING CONCERN
The Group has net liabilities of #0.9 million and net current liabilities of
#0.6 million at 31 December 2002. However, the Directors consider it appropriate
to prepare the accounts on the Going Concern basis based on continued financial
support of Akhter Group plc.
2. DIVIDEND
The board recommends that no dividend will be paid.
3. SEGMENTAL ANALYSIS
2002 2001
#000 #000
=== ===
TURNOVER
Networking Division 893 3,444
Software Division 1,133 947
------------ ------------
Total 2,026 4,391
============ ============
2002 2001
#000 #000
PROFIT ON ORDINARY ACTIVITIES BEFORE
INTEREST
Networking Division (42) (269)
Software Division 211 94
Group overheads (38) (294)
Exceptional non-operating items (excluding
gain on extinguishment of debt)
253 484
------------ ------------
Total 384 15
============ ============
4. EXCEPTIONAL OPERATING ITEMS
2002 2001
#000 #000
Gain on approval of Company
Voluntary Arrangement ("CVA")
Ultima Networks PLC - 271
SilCom Manufacturing Technology 19 389
Inc
UTN Solutions (North) Limited 139 221
Integrated Publishing Systems - 41
Limited
Cognito Software Limited - 58
---------------- ----------------
158 980
================ ================
Other
Release of onerous lease provision - 291
(Ultima Networks PLC)
================ ================
Microvitec plc pension plan - 274
provision (Ultima Networks PLC)
================ ================
The exceptional profits in the current year represent the difference between
actual payments made or to be made in settlement of the voluntary arrangements
and the estimate liability to the creditors within the scope of voluntary
arrangements at the date of approval.
In accordance with FRS12 'Provisions for liabilities and contingent assets',
provision has been made in earlier years' accounts in respect of obligations
under onerous leases and an actuarial deficit on the Microvitec plc New Pension
and Life Assurance Plan. These liabilities fell within the scope of the Company
Voluntary Arrangement entered into on 9 November 2001 and accordingly the
provisions have been released to the profit and loss account as part of the
exceptional gain on approval of the voluntary arrangement in 2001
EXCEPTIONAL NON-OPERATING ITEMS
2002 2001
#000 #000
Ultima Networks PLC
Gain on extinguishment of debt (see note
28)
- 779
============== ==============
Loss on closure of business - (1,061)
============== ==============
Gain on liquidation of subsidiary 253 -
============== ==============
The loss on closure of a business above is the transfer of goodwill previously
written-off directly to reserves to the profit and loss account in respect of
UTN Solutions (South) plc.
On 18 April 2002 a subsidiary of the Group, UTN Solutions (South) plc was placed
in creditors voluntary liquidation. Consequently the company is no longer under
the control of the Group. The gain arising reflects the net liabilities of the
company (excluding any inter-group balances) at the date of liquidation no
longer due from the Group. UTN Solutions (South) Limited ceased trading during
2001.
5. TAXATION
2002 2001
#000 #000
Corporation Tax
Current tax on income for the year - (63)
Adjustments in respect of prior 68 -
years
---------------- ----------------
Current taxation 68 (63)
Deferred taxation
Net origination (reversal) of timing (104) -
differences
---------------- ----------------
Tax on profit on ordinary (36) (63)
activities
================ ================
There is no UK corporation tax charge for the year due to the availability of
trading losses brought forward and tax losses incurred during the year. The
Group has significant trading losses carried forward which will impact on future
taxation charges.
6. PROFIT/(LOSS) PER SHARE
The basic and diluted earnings per Ordinary Share has been calculated taking
into account the same weighted average number of Ordinary Shares and profit
attributable to shareholders.
7. ANALYSIS OF NET DEBT
At beginning At end
of year Cash flow of year
#000 #000 #000
Cash at bank and in 74 25 99
hand
Bank loans and - (1,708) (1,708)
overdrafts
Other loans (1,800) 943 (857)
-------------- -------------- --------------
(1,726) (740) (2,466)
Loan notes (1,101) - (1,101)
-------------- -------------- --------------
(1,101) - (1,101)
-------------- -------------- --------------
Total (2,827) (740) (3,567)
============== ============== ==============
8. OTHER INFORMATION
This preliminary statement, which has been agreed with the auditors, does not
constitute the Company's statutory financial statement for the year 31st
December 2002. Statutory financial statements for 2001 have been delivered to
the Registrar of companies, whereas those for 2002 have been approved, audited
but not filed. The auditors have reported on the financial statements for the
year ended 31December 2002; their report was unqualified and did not contain a
statement under section 237(2) or (3) of the Companies Act 1985.
The Annual Report for 2002 will be posted to shareholders by 30 May 2003 and
will be available to the public from the Company's registered office at Ultima
Networks PLC, Akhter House, Perry Road, Harlow CM18 7PN.
This information is provided by RNS
The company news service from the London Stock Exchange
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