23rd Apr 2007 07:00
Lo-Q PLC23 April 2007 Lo-Q PLC ("Lo-Q" or "the Company") FINAL RESULTS FOR THE YEAR ENDED 31 DECEMBER 2006 HIGHLIGHTS OF THE YEAR • Strong revenue growth with sales of £2.0m (15 months ended Dec 2005: £1.6m) • Year ended with operating profit £0.34m (2005: loss £0.1m) • Secured a 3 year contract with Dollywood and a three year agreement for the use of the Lo-Q Guest Services System in 7 Six Flags park • Secured Radio Frequency Identification ("RFID") agreement with Proximities, Inc. of Florida, USA, to accelerate the development of its cyber queuing product line. Proximities develops, markets and supports a suite of secure RFID business solutions for the leisure and entertainment Contacts: Jeff McManus, Lo-Q Plc - 01491 577 210Romil Patel / Jerry Keen, Corporate Synergy Plc - 0207 448 4400 CHAIRMAN'S STATEMENT Before 2006 started, we knew that we were facing the most important year of theCompany's operation. The prime objective that we set for the year was togenerate an operating profit for the twelve months of 2006 and to retainsufficient cash from our operations so that there would be adequate funding atthe end of the year to take us through the winter and into the spring with somedegree of financial comfort. The Board charged the operating team, led by SteveDrake, to more than meet these objectives and encouraged maximum performance byimplementing an aggressive bonus plan. I am pleased to report that an excellentteam performance led to a commendable level of sales with an outstandingperformance in the Six Flags Georgia Park in Atlanta. The year ended with anoperating profit of £341,729 (2005: £139,423 loss) with a £643,967 net cashbalance. The performance in the Six Flags parks was at such a high level that the chiefexecutive officer of Six Flags announced to the New York stock exchange in thelate autumn that he would be asking Lo-Q to sell Q-bots in two further parks andhe also wanted our operations team to manage and run the sales of Q-bots in allof the Six Flags park in which we were present. This was a great complement toSteve's team, and will require us to employ approximately 350 seasonal staff (24seasonal staff in 2005). Patent Settlement The operating profit was, however, offset by an exceptional item during theyear. On 14 December 2006, the Company announced that it has concludednegotiations with Palmtop Productions Inc. ('Palmtop'), the owners of a themepark line management patent based on hand-held personal organisers. Whilst itwas alleged that Lo-Q has been contravening their patent, the Company's lawyersand specialist patent attorneys believe this not to be the case. As a result,it had been the view of the Board that this claim could be successfullydefended. After weighing the balance of risk present in any USA patent lawcase, the Company made the decision to pursue an out of court agreement tosettle the case expediently. The Company recognises that this has the advantageof releasing a significant amount of management time and avoids the potentialcosts if any defence case were to become protracted. The cost involved in this legal settlement is taken as an extraordinary item inthe 2006 accounts and has led to an after tax loss of £269,208. The Board and Ican confirm that the Company has not been notified of any similar legal action. Theme Park Contracts The trial at the Dollywood Park in Tennessee progressed well with the newsoftware for booking the prime shows that are continuously run in the park,helping park guests throughout the last three months of the year. This park'smanagement were pleased with the system and saw the guests' reaction as positiveconfirmation that a full system, including reservations for coaster and otherattractions, would benefit the park. A three-year contract, with the provisionof a further three-year extension on expiration, was signed by both parties atthe end of February. Our Company is very pleased with this commitment and looksforward to discussing with other members of the Silver Dollar theme park chain,which owns Dollywood Park, how the system could give guests in those parks amore enjoyable day. Research and Development Our team started work on a new and improved version of our software at thebeginning of the year and in the late summer we were able to trial the newsystem, VQ 2020, and, following the success of this trial, we are now installingthis system in new parks. Users will find the system to be more flexible and thelarger Q-bot screen will enable much better communication with the centralsystem. We expect to develop extended systems to add to the ride/showreservation backbone. A major consideration for the new Six Flags seniormanagement, in committing to our system in their new contract, was that throughjoint communication in forecasting theme parks future methods of operation, andthrough our ability to harness new technology, we are charged by them in keepingour system as the world leader in the line management/guest communication field.We believe that this will lead to us installing our system and renting Q-bots inmore Six Flags parks in the future. The Company has also signed an agreement with Proximities, Inc. of Florida, USA('Proximities'), that will accelerate the Company's development of its virtualqueuing product line. Under this RFID Agreement, Lo-Q and Proximities will worktogether to add RFID functionality to Lo-Q's product offering, and Lo-Q'squeuing software will be integrated with Proximities product offering. The relationship established with Proximities will allow Lo-Q to expand itsproduct offerings into water parks and other markets where a less sophisticatedor lower cost queuing device is required. It also supports Lo-Q's vision ofhaving every guest in the park on the system and not waiting in line for theprime attractions. AGM The AGM of the Company will be held at its offices at The Smith Centre,Fairmile, Henley-On-Thames, Oxfordshire at 11:00 a.m. on 29 May 2007. To sum up the last year, I believe that Lo-Q has come of age that we have nowfinished the building of the structural foundations of our Company and this yearwill see the first floor of the new building arising through the commitment ofour staff. I wish to thank every one of them for the hard work and expertisethat has been contributed in this important year. Jeff McManus17 April 2007 LO-Q PLCCONSOLIDATED INCOME STATEMENTFOR THE YEAR ENDED 31 DECEMBER 2006 12 months 15 months ended 31 ended 31 December 2006 December 2005 (restated) £ £ Revenue 1,978,554 1,596,482 Cost of sales (432,336) (273,270) ----------- -----------GROSS PROFIT 1,546,218 1,323,212 Other operating income 4,264 2,139Administrative expenses (1,208,753) (1,464,774) ----------- -----------OPERATING PROFIT/(LOSS) 341,729 (139,423) Other non-operating income - 75,671Exceptional Items - Other non operatingexpenses (663,337) - ----------- -----------LOSS BEFORE TAX (321,608) (63,752) Tax 52,400 29,565 ----------- -----------LOSS FOR THE YEAR/PERIOD (269,208) (34,187) =========== =========== EARNINGS PER SHAREBasic for loss for the year/period (1.83) (0.24)Basic for profit before exceptional costs 2.68 (0.24)Diluted for loss for the year/period (1.73) (0.23) All of the activities of the group are classed as continuing. CONSOLIDATED BALANCE SHEETAS AT 31 DECEMBER 2006 (restated) 2006 2005 £ £ASSETS NON CURRENT ASSETS Property, plant and equipment 15,010 18,304 ----------- ----------- 15,010 18,304 ----------- ----------- CURRENT ASSETS Inventories 195,226 208,124 Trade and other receivables 145,150 54,006 Prepayments 20,375 22,310 Cash and cash equivalents 643,967 637,429 ----------- ----------- 1,004,718 921,869 ----------- ----------- TOTAL ASSETS 1,019,728 940,173 =========== =========== EQUITY ISSUED CAPITAL AND RESERVES Issued share capital 147,658 143,478 Share Premium account 4,982,067 4,971,617 Other Reserves 20,578 18,285 Retained profits (4,636,901) (4,324,778) ----------- ----------- TOTAL EQUITY 513,402 808,602 ----------- -----------CURRENT LIABILITIES Trade and other payables 473,832 116,405 Tax payables 32,494 15,166 ----------- ----------- 506,326 131,571 ----------- -----------TOTAL EQUITY AND LIABILITIES 1,019,728 940,173 =========== =========== CONSOLIDATED CASH FLOW STATEMENTFOR THE YEAR ENDED 31 DECEMBER 2006 2006 2005 £ £CASH FLOWS FROM OPERATING ACTIVITIES Total operating Loss (321,608) (63,752) ADJUSTMENTS TO RECONCILE TO LOSS FROM OPERATIONS Share based payment expense 2,293 3,587 ----------- ----------- (319,315) (60,165) NON-CASH ADJUSTMENTS Depreciation 17,427 38,545 Unrealised gains on foreign currency exchange (42,917) 7,273 ----------- ----------- NON-CASH ADJUSTMENTS (25,490) 45,818 ----------- ----------- CASH FLOWS BEFORE CHANGES IN WORKING CAPITAL (344,805) (14,347) INCREASE IN WORKING CAPITAL Decrease/(Increase) in inventories 12,898 (9,677) (Increase)/Decrease in trade and other (68,024) 334,499 receivables Decrease in prepayments 1,935 9,699 Increase in trade and other payables 357,427 20,735 Increase in tax payable 46,608 42,915 ----------- ----------- INCREASE IN WORKING CAPITAL 350,844 398,171 ----------- ----------- CASH FLOWS FROM OPERATING ACTIVITIES 6,039 383,824 CASH FLOWS FROM INVESTING ACTIVITIES Payments to acquire property, plant and (14,132) (5,692) equipment CASH FLOWS FROM FINANCING ACTIVITIES Gross proceeds from issue of equity share 14,630 - capital ----------- ----------- NET CASH FLOWS FROM FINANCING ACTIVITIES 498 (5,692) ----------- -----------NET INCREASE IN CASH AND CASH EQUIVALENTS 6,537 378,132 Cash and cash equivalents as at 1 January 2006 637,429 259,297 ----------- -----------CASH AND CASH EQUIVALENTS AS AT 31 DECEMBER 2006 643,967 637,429 =========== =========== NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS REVENUE 12 months 15 months (restated) 2006 2005 £ £ Q-Bot rental income 1,977,929 1,596,482Other income 625 - ----------- ----------- 1,978,554 1,596,482 =========== =========== The geographical analysis of turnover is such that all rental income arisesthrough sales generated in America. EXCEPTIONAL ITEMS 12 months 15 months (restated) 2006 2005 £ £ Litigation cost (459,512) -Professional fees on litigation (203,825) - ----------- ------------- (663,337) - =========== ============= It was alleged that Lo-Q had been contravening a patent owned by PalmtopProductions Inc. ('Palmtop'). The Company's lawyers and specialist patentattorneys believe this is not to be the case. As a result, it had been the viewof the Board that this claim could be successfully defended. After weighing thebalance of risk present in any USA patent law case, the Company made thedecision to pursue an out of court agreement to settle the case expediently.The Company recognises that this has the advantage of releasing a significantamount of management time and avoids the potential costs if any defence casewere to become protracted. This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
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