10th Aug 2005 07:01
Feedback PLC09 August 2005 Feedback Plc Preliminary Results for the year ended 31 March 2005 Chairman's Statement I am pleased to report that the operating profit, before reorganisation costsand SSAP 24 pension charge, for the year ended 31 March 2005 of £97,000 shows avery marked improvement when compared with a loss of £965,400 in the previousyear (of which £487,100 related to our continuing activities). The balance ofthe loss for the year after taxation of £668,300 was caused by re-organisationcosts of £139,300, provision for the contributions due to the now closed definedbenefits pension fund of £627,000, net interest payable of £38,200, but we didreceive a refund of corporation tax of £39,200 in the period. The past few years have been a very difficult period for the company as has beenexplained in previous statements. Many issues have been identified and decisivecorrective actions have been taken. We have endeavoured to keep you informed ofthese in last year's accounts and AGM and at the Extraordinary Meeting which washeld on 24 March 2005. Considerable savings have been made across the Group and there has been asignificant reduction in staff at all levels. This has not only resulted in moreefficient working practices but has allowed greater communication throughout thecompany and a more focused sense of purpose. In February of this year the Occupational Pensions Regulatory Authority (Opra)agreed to an extension of the period in which the company could address theserious shortfall in the funding of the now closed defined benefit pensionscheme. Although the deficit is great, it is under control and manageable solong as the company trades profitably going forward and generates sufficientcash. The sale has been agreed, subject to planning permission, of the company's mainbusiness premises in Crowborough. Other suitable facilities in the same areahave been identified and would allow all the company's UK operations to belocated on one site. Feedback Data Limited This company together with its German subsidiary produced a healthy profitprimarily due to the reduction in operating costs which were enjoyed during theyear. UK based business derived from the sale of Data Terminals, which remains thecore business, was maintained and there was a small increase in the turnovergenerated by the technical support team who not only provide technical aftersales service but also perform survey and installation work. Access Controlcontinues to be an interesting market with significant potential for growth. The new IP Data Terminal, which was launched during the previous financial year,is gaining acceptance in the market and new enhancements, primarily involvedwith the use and control of the collected data over the internet, willstrengthen its position. Strategic new developments will increase the company'spenetration in Access Control and it is anticipated that turnover can beimproved without any significant increase in costs. The German subsidiary, which addresses the European market, had a satisfactoryyear. Efforts are being made to improve its penetration of this marketplace andto increase the number of resellers promoting the products. Feedback Instruments Limited This was another very difficult year although improvements were forthcomingduring the last quarter. In recent years operating costs had increased while the underlying turnover wasdecreasing. Too much emphasis had been put on large contracts, with detriment tocore business. There was a lack of strategic direction and too few newdevelopments. The management structure was changed during the year and thecompany was restructured which has resulted in a more clearly defined sense ofpurpose. Performance in the UK was below expectations although there was a large amountof interest. Of particular note in the home market is the performance of thedistributed line of products from the USA which addresses the secondary schoolmarket and performed above expectations during the second half of the year. A conscious effort was made to redefine the company's strategy to the overseasagents which has begun to pay dividends. Significant business was won in Asiaand the Middle East and the underlying list of realistic prospects is moreencouraging than it has been for some time. The final shipments were made to fulfil the contract to provide equipment forthe College of the North Atlantic in Qatar, as mentioned last year, and afterprotracted negotiations full payment was received. This was a difficult contractwhich was not as profitable as had been hoped but the facility in Qatar isexcellent and will provide a superb reference point in this very importantregion. New products are being developed and a new management software package, whichenables assessment and tracking of students within a laboratory, has beensuccessfully launched. A new Sales and Marketing Director from within theindustry has recently joined the company and this, together with a distinctincrease in underlying business in recent months, instils more optimism for thefuture. Feedback Incorporated After the small loss last year it is very pleasing to report that this companyreturned to profitability. Despite the weak dollar, margins were maintained andthe new management structure, together with reduced operating costs, enabledthis excellent performance. A number of significant orders were won both directly and throughrepresentatives and prospects continue to be healthy. New products from FeedbackInstruments and other principals will assist the company and it is planned toincrease the number of direct sales personnel during the coming year. Current Trading and Future Prospects The first three months of this Financial Year have started reasonably well,carrying on from the upturn in business, at Feedback Instruments in particular,towards the end of the previous year. The reduction in costs referred topreviously has begun to produce benefits and a new pricing policy has helped thecompany to improve margins. This upturn in business has been achieved without winning any exceptionallylarge orders, although there are a number under negotiation. The recent effortsto enhance the background business are beginning to provide results and theorder book is improving. Funding the pension deficit continues to be a significant drain on resourceseven with the assistance of the Opra determination. It is imperative that thecompany returns to consistent and high profitability so that the situation canbe managed. There is a real determination within the management to ensure the Group'ssuccess and in many ways the business is now better focused to address thechallenges that lie ahead. I am most grateful to the management teamand staff for all their efforts. D. H. Harding 10 August 2005Chairman Enquiries: David Sawyer 01892 653322Feedback plc Philip Davies 020 7953 2000Charles Stanley & Co. Limited Consolidated Profit and Loss AccountYear ended 31 March 2005 Total 2004 2004 Total 2005 Continuing Discontinued 2004 operations operations (restated) (restated) £000 £000 £000 £000 TURNOVER 9,179.2 9,219.1 543.8 9,762.9 Cost of Sales (6,238.4) (6,193.2) (8.0) (6,201.2) Gross profit 2,940.8 3,025.9 535.8 3,561.7 Other Operating Expenses (3,610.1) (4,395.0) (1,014.1) (5,409.1) Operating profit/(loss) before reorganisationcosts and SSAP 24 pension charge 97.0 (487.1) (478.3) (965.4) Reorganisation costs (139.3) - - - Additional SSAP 24 pension charge (627.0) (882.0) - (882.0) Operating loss (669.3) (1,369.1) (478.3) (1,847.4) Loss on sale of trade - - (365.5) Interest payable (38.2) (24.3) LOSS ON ORDINARY (707.5) (2,237.2)ACTIVITIES BEFORE TAXATION Tax on loss on ordinary activities 39.2 28.7 LOSS ON ORDINARY (668.3) (2,208.5)ACTIVITIES AFTER TAXATION Dividends (non-equity) (104.9) (100.2) RETAINED LOSS FOR THE YEAR (773.2) (2,308.7) LOSS PER SHARE (pence)Basic (6.41) (19.27)Diluted (6.41) (19.27) The results for 2005 relate to continuingoperations. Consolidated Balance Sheetat 31 March 2005 2005 2004 £000 £000 £000 £000Fixed assets Tangible assets 526.3 598.9 Current assets Stocks 1,210.7 1,692.4Debtors 1,753.6 4,019.2Cash at bank and in hand 760.4 - 3,724.7 5,711.6 Creditors: amounts falling duewithin one year Borrowings (64.4) (206.7)Other creditors (1,669.6) (2,916.9) (1,734.0) (3,123.6) Net current assets 1,990.7 2,588.0 Total assets less current liabilities 2,517.0 3,186.9 Creditors: amounts falling dueafter more than one yearBorrowings (561.5) (657.0) Provisions for liabilities and charges (1,031.0) (882.0) Net assets 924.5 1,647.9 CAPITAL AND RESERVESCalled up share capital 2,038.8 2,042.7Share premium account 383.7 379.8Revaluation reserve 379.7 369.4Capital reserve 299.9 299.9Dividend reserve 125.3 41.9Profit and loss account (2,302.9) (1,485.8) Total reserves (1,114.3) (394.8) Shareholders' funds 924.5 1,647.9 Included within shareholders' funds is an amount of £955,700 ( 2004 - £880,000 ) in respect of non-equity interests. Approved by the Board of Directors on 9 D. J. SawyerAugust 2005 Director Consolidated Cash Flow StatementYear ended 31 March 2005 2005 2004 £000 £000 £000 £000 Net cash inflow/(outflow) from operating activities 964.7 (1,010.4)Returns on investments and servicing of finance Other interest paid (38.2) (24.3)Non-equity dividends paid - (42.3) Net cash outflow from returns on investmentsand servicing of finance (38.2) (66.6) Corporation tax recovered 28.7 - Capital expenditure and financial investment Purchase of tangible fixed assets (23.2) (61.0) Sale of tangible fixed assets 0.7 3.4 Net cash outflow from capital expenditureand financial investment (22.5) (57.6) Acquisitions and disposals Net consideration from sale of trade - 334.0 Financing New loan advanced by director - 572.7 Repayments of bank and other loans (30.0) (243.0) Capital elemnet of finance leasesand rental payments (29.6) (5.7) Net cash (outflow)/inflow from financing - (59.6) 324.0 Increase / (decrease) in cash in the year 873.1 (476.6) Earnings per share 1. Basic earnings per share for the year ended 31 March 2005 is based on theGroup loss on ordinary activities after taxation and preference dividends of773,200 (2004 - loss of £2,308,700) attributed to 2005 - 12,057,060 OrdinaryShares, being the weighted average number of shares in issue throughout the year(2003 - 11,981,854). The diluted earnings per share is calculated allowing for the full conversion ofthe Preference Shares. However, in accordance with Financial Reporting Standard14, as these conversions would not have a dilutive effect, the earnings pershare figure remains the same. 2. The financial information for the year ended 31 March 2004 is extracted fromthe Group's financial statements to that date which received an unqualifiedauditors' report and have been filed with the registrar of companies. Thefinancial information for the year ended 31 March 2005 is extracted from theGroup's financial statements to that date which received an unqualifiedauditors' report and will be filed with the registrar of companies. 3. The Report and Accounts will be posted to shareholders in due course and theAnnual General Meeting will be held at 11.00am on Monday 26 September 2005. This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
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