RNS Number:6507D
M.M.T. Computing PLC
12 November 2002
12th November 2002
MMT COMPUTING PLC
PRELIMINARY RESULTS FOR THE YEAR ENDED 31st August 2002
SUMMARY
* Turnover #27.47m (2001: #31.11m)
* Profit before tax, exceptional items, minority interests and
amortisation of goodwill #0.51 million (2001: #2.77 million loss)
* Strong balance sheet position with #6.44m in cash and no borrowings
* Loss per share 6.4p (2001: 19.4p)
* Continued consolidation of the group's structure and improved
managerial and financial controls throughout the Group
* Staffing levels reduced across the entire Group
* Systems Solutions Division refocused back towards its core business
strengths
* Packaged Solution Division moving back towards profitability
* Successful launch of new energy trading product Power Quote Universal
* Hypnosis, the new media company, moved on site at M.M.T.'s head
office, and is diversifying into corporate web development
* Appointment of Tom Hall as Chairman. Mike Tilbrook to assume the role
of Deputy Chairman
Commenting on the results, Peter Onslow, Managing Director, said:
"MMT has made considerable progress this year towards its mission of returning
each part of the group to profitability. The focus has been on continuing to
consolidate the new group structure and reducing the cost base across the whole
Group. With this achieved, we believe that the Group is now better positioned
to tackle the challenging market that we now face and is well positioned to take
advantage of any positive business cycle upswing, when a sustained recovery
becomes apparent."
- ENDS -
Enquiries:
MMT Computing plc 020 7278 6211
Peter Onslow, Managing Director
Dee McFarlane, Financial Director
Merlin Financial 020 7606 1244
David Simonson / Nicola Davidson
Chairman's Statement
INTRODUCTION
A year ago, I had to report on MMT's first ever loss. Against this background,
I am pleased this year to report that the progress towards restoring MMT to
sustained profitability, as detailed at the Interim stage, has largely been
maintained despite trading conditions across the Group remaining very tough.
There is no doubt that the enduring quality and loyalty of our client base,
nurtured by an exceptionally strong group of proven sales people, has been the
main factor in what is, under the circumstances, a pleasing turn-round in
performance.
RESULTS, DIVIDENDS AND FINANCE
The results for the year were as follows. Turnover decreased to #27.47 million
(2001 : #31.11 million). Profit before tax, exceptional items, minority
interests and amortisation of goodwill was #0.51 million (2001 : loss before
tax, exceptional items, minority interests and amortisation of goodwill of #2.77
million). Basic earnings per share before exceptional items and amortisation of
goodwill were 1.8p (2001 : losses before exceptional items and amortisation of
goodwill 19.4p). Amortisation of goodwill was #0.61 million (2001 : #0.24
million).
After careful consideration of current trading conditions, prospects, cash
balances and projected cash flow, your Board recommends a final dividend of
1.0p, making a total of 1.5p for the year (2001 : 7.2p). Whilst the Board sees
significant opportunity for substantial recovery in the Group's business, it is
at present not really possible to put forward a clear dividend policy other than
to indicate that we would hope, in due course, to return to significantly higher
and well-covered payments.
MMT's balance sheet remains very strong with net cash of #6.44 million (2001 :
#5.9 million) at year-end. Ownership of all our head office buildings, and the
complete absence of any borrowings, are other significant pluses.
OVERVIEW
I am delighted by the recent promotion of five senior managers, within our
Systems Solutions Division, to divisional Business Development Directors. Those
concerned were major contributors in the late nineties when Group profitability
hovered around #10 million and when the Systems Solutions Division provided the
lion's share of those profits. The Division has undoubtedly underperformed
since but focusing once again on those truly able to generate business should
enable us to turn the corner here.
Peter Bevis, Managing Director of our Packaged Solutions Division, again
deserves a particular mention for the excellent progress he and his team have
made towards restoring, and in time hopefully exceeding, previous levels of
performance. Very substantial costs associated with the development of our new
Energy product range, Power Quote Universal, have been taken as incurred and it
is pleasing that production has kept to both time and budget. Management
believes that the prospects for both the new and existing products look good.
As indicated at the half year, our Management Consultancy Division indeed found
the second half much tougher and the urgent need to diversify, if decent growth
is to occur, could not be clearer.
PERSONNEL
I said in my Interim Statement that, in order to devote more time to various
other interests, I intend to step down from the Chairmanship of MMT. I am
delighted to confirm that, immediately following the AGM, Tom Hall will step up
from Deputy Chairman to Chairman and I will assume the role of Deputy.
SUMMARY AND OUTLOOK
Trading conditions continue to be difficult. However, we have handled such
conditions exceptionally well in the past and can certainly do so again.
Management is mandated to ensure we concentrate on the basics and move once
again to being a sales-led Company. Staff headcount is now well down on peak
levels and profitable trading is now perfectly feasible on much-reduced client
demand. Any recovery in client demand, and there are certainly some positive
signs here, should see MMT's fuller recovery well and truly underway.
M.J. Tilbrook
Chairman
12 November 2002
Managing Director's Statement
Introduction
Further to my appointment as Managing Director at the end of April 2002, I am
pleased to report that since then we have made good progress in moving MMT back
to profitability. Whilst only a small profit before tax, exceptional items,
goodwill amortisation and minority interests of #0.51million (2001: loss before
tax, exceptional items, goodwill amortisation and minority interests of #2.77
million) has been achieved, I believe it is, never the less, a significant
improvement. This is all the more pleasing given the current challenging market
conditions as well as some of the relatively negative news recently announced by
certain of our competitors within the IT sector.
Highlights
* Continuation of the consolidation of the new group structure and
improved managerial and financial controls throughout the Group.
* Taking substantial steps to balance better overall staffing levels
across the group, such that they are once again much more closely aligned to
prevailing market need in what is proving to be a prolonged downturn in the
market-place.
* Refocusing the Systems Solutions Division (SSD) back to its core
business strengths of providing a flexible range of services and technical
resource that fully meet the needs and aspirations of our client base whilst
remaining competitive enough to provide an appropriate level of profitability.
* Bringing on site at our Head Office our new media company, Hypnosis,
having rationalised its operation and overheads to reflect current market
demand, resulting in the closure of its office and the full provision in the
financial year for all property related overheads for the remainder of the
lease.
* Returning the Packaged Solutions Division towards profitability by
drastically reducing the cost base and further tightening financial controls.
* Delivering our new generation of energy trading product, Power Quote
Universal (PQU), on schedule and launching PQU at the Paris EMART conference.
* Taking prompt and effective action to protect the first half
profitability of the Management Consultancy Division (MCD), when faced with a
marked slowdown in the need for their services in the second half.
Systems Solutions Division
As previously reported at the Interim stage, the extremely challenging trading
conditions that were prevalent in the earlier part of the year have had a
considerable impact on this Division. Turnover has decreased to #18.3 million
(2001: #22.2 million) and, with margins remaining under continual pressure, this
has resulted in a profit before tax, exceptional items and amortisation of
goodwill of #0.3 million (2001: profit before tax, exceptional items and
amortisation of goodwill of #1.1 million). However, I am pleased to report that,
more recently, staff utilisation, which was particularly poor in the first three
months of the calendar year, has returned to a much more appropriate level.
In order to refocus SSD back to its core business strengths, namely providing a
flexible range of services and technical resource that fully meet the needs and
aspirations of our client base whilst remaining competitive enough to provide an
appropriate level of profitability, we have reorganised the senior management
team. As referred to in the Chairman's Statement, the creation of the Business
Development Directors brings together a small but hugely experienced team with
what I believe gives the right mix of skill, ability and knowledge to guide the
future business and technical direction of this Division.
Our new media company, Hypnosis, was brought under the control of SSD following
a very poor start to the year. Originally acquired in January 2000, this
business area suffered from a dramatic slump in demand for its services to the
music/media industry. As a consequence, it was necessary to rationalise its
operation and control, and transfer it from its own premises to our main Angel
Gate offices. This area is now diversifying into the much more lucrative and
buoyant corporate web development area. Whilst still early days, the SSD
management team is moving Hypnosis towards trading at a small profit.
A high level of repeat business has been achieved within this Division, which is
pleasing given the general economic downturn and the reluctance of many to
commit to new IT expenditure. This is directly attributable to both our high
quality sales force, who have developed and nurtured these clients over many
years, as well as to our first class technical resource who continue to provide
our underlying services. I am heartened that we continue to expand our already
highly impressive client list, though the full benefits from this will not
necessarily filter through immediately. One area of concern that we remain alert
to is the trend by companies with a major IT spend to relocate work offshore. To
counter this threat, we are looking to strengthen our sales force and are
already adjusting its focus to provide us with a wider spread of clientele.
I am most encouraged by the level of interest in the services provided by our
internal application management and project groups. We have recently won
significant development work within both the Rail and Financial Services sectors
that give us cause for future optimism.
Packaged Solutions Division
I am delighted to report that the progress made over the last twelve months by
the senior management team within this Division has resulted in a marked
improvement in performance. Whilst still returning an overall trading loss
before tax, exceptional items and amortisation of goodwill of #0.1 million
(2001: loss before tax, exceptional items and amortisation of goodwill of #4.27
million) this is considerably better than expected. Turnover remained on a level
with last year at #7.0 million (2001: #7.0 million). This turn-round has been
achieved by strong, decisive management, a drastic reduction of the cost base
(particularly associated with the use of contract staff) and a general
tightening of financial control. I am optimistic this Division will return to
profitability in the near future.
The major investment in a new generation of energy trading product (Power Quote
Universal) is still proceeding on schedule. This leading-edge product provides a
complete customer pricing, quotation, negotiation, and fulfilment system for
selling multiple commodities within deregulated markets of retail energy. I have
been encouraged by the high level of interest being shown in PQU, especially
following its recent launch at the Energy Trading (EMART) conference in Paris.
What has also been pleasing has been the successful promotion, in parallel with
PQU, of our existing product range. Coupled with a high level of product
enhancement, this provides a healthy order book going forward. The recent sales
of our existing product range to Energia of Northern Ireland and Electrabel of
Belgium, reported at the Interim stage, have now been followed by two further
major sales. In July, British Energy committed to take our Meter Registering
System, whilst ZCE of the Czech. Republic have purchased our Powertrade product.
The latter sale is of particular interest in that it provides a strategic
foothold in the rapidly emerging deregulated energy market in this country.
Another welcome aspect within this Division has been the performance of our
Derivatives operation. I am happy to report that it has now returned to its
previous levels of turnover and profitability. Again, the level of demand for
product enhancement from our existing client base has held up remarkably well
given their primary market is the London Metal Exchange. With business now
largely based on annually renewable contracts for licensing and support, it is
expected that a relatively good performance is achievable in the next financial
year.
Management Consultancy Division
The view expressed at the Interim stage, that demand for the services provided
by this particular Division would significantly slowdown in the second half,
proved to be correct. However, due to prompt and effective action taken by the
senior management team, the first half profitability was largely protected
giving a final figure of #0.3 million profit before tax, exceptional items and
amortisation of goodwill (2001: profit before tax, exceptional items and
amortisation of goodwill of #0.4 million) on an annual revenue of #2.2 million
(2001: #1.9 million).
On a more encouraging note, MCD has started the new financial year strongly with
some early sales successes including work arising from two new clients. This,
coupled with a healthy prospect list, is hopefully a sign that their primary
London Insurance sector may well be improving.
This Division also continues to expand its' service lines, as illustrated by the
introduction of their Operational Risk product and, whilst continuing to focus
on the London Insurance sector, it is now looking to diversify into other
sectors.
Staffing and Premises
Following substantial staff reductions made in the earlier part of the year to
better match our available resource to client demand, staff numbers have largely
remained unchanged since the half year.
In addition to the previously reported closure of our Ware and Chicago offices,
we have since closed our Underwood Street office occupied by the Hypnosis
business. Planning for the consolidation of our energy operation in Ipswich into
a single building is now underway although this is not currently expected to
take place until October 2003.
Board Change
As detailed in the Chairman's Statement, Mike Tilbrook hands over the
Chairmanship to Tom Hall after the AGM and some 25 years after co-founding the
company. Taking the group public with a USM listing in 1983, and securing a full
listing in 1994, profit growth throughout Mike's time in day-to-day charge was
amongst the best in the sector and he made MMT a hugely successful company.
Commanding great loyalty from senior staff and major clients alike, Mike was
tenacious in his pursuit of client win opportunities. Many of his successes
still make a major contribution to MMT's revenue - most notable being Marks &
Spencer, MMT's first and still largest client. My colleagues and I wish him
well, and are delighted that Mike will remain on the Board where he will
continue to make a major and much-valued contribution.
Summary and Outlook
This year MMT has made considerable progress towards its mission to return each
part of the group to profitability. We have successfully come through a major
reorganisation which better positions the company to tackle not only the
challenging market we currently face, but also leaves it in a position to react
quickly to any positive business cycle upswing, when a sustained recovery is
apparent.
P.J. Onslow
Managing Director
12 November 2002
MMT COMPUTING PLC
CONSOLIDATED PROFIT AND LOSS ACCOUNT
FOR THE YEAR ENDED 31 AUGUST 2002
2002 2002 2002 2001 2001 2001
Total Exceptional Before Total Exceptional Before
items and exceptional items and exceptional
goodwill items and goodwill items and
amortisation goodwill amortisation goodwill
amortisation amortisation
Notes #000 #000 #000 #000 #000 #000
Turnover
Continuing operations 27,472 - 27,472 31,112 - 31,112
Discontinued operations - - - - - -
1 27,472 - 27,472 31,112 - 31,112
Cost of sales (22,139) - (22,139) (28,082) - (28,082)
Gross Profit 5,333 - 5,333 3,030 - 3,030
Administrative Expenses 2 (6,218) (1,189) (5,029) (7,434) (1,249) 6,185
Operating (loss)/profit
Continuing operations (885) (1,189) 304 (4,404) (1,249) (3,155)
Discontinued operations - - - - - -
(885) (1,189) 304 (4,404) (1,249) (3,155)
Profit on sale of investments 26 26 - 1,223 1,223 -
Investment income 201 - 201 389 - 389
Profit/(loss) on ordinary (658) (1,163) 505 (2,792) (26) (2,766)
activities before taxation
Tax on profit/(loss) on (77) 166 (243) 588 - 588
ordinary activities
Profit/(Loss)/ on ordinary (735) (997) 262 (2,204) (26) (2,178)
activities after taxation
Equity minority interests (42) - (42) (152) - (152)
(Loss)/profit for the (777) (997) 220 (2,356) (26) (2,330)
financial year
Dividends 3 (183) - (183) (877) - (877)
Transfer (from)/to reserves (960) (997) 37 (3,233) (26) (3,207)
Basic earnings per share 4 (6.4p) (8.2p) 1.8p (19.4p) (0.2p) (19.2p)
Diluted earnings per share 4 (6.4p) (8.2p) 1.8p (19.4p) (0.2p) (19.2p)
All of the activities of the
Group are classed as
continuing for the year ended
31 August 2002.
Balance Sheet at 31st August 2002
Group Company
2002 2001 2002 2001
#000 #000 #000 #000
Fixed Assets
Intangible Assets 2,687 3,297 - -
Tangible Assets 2,845 3,390 2,249 2,429
Investments 27 37 6,336 11,614
5,559 6,724 8,585 14,043
Current Assets
Stock - 6 - -
Debtors 7,839 8,799 8,376 7,266
Cash at bank and in 6,439 5,932 2,642 3,280
hand
14,278 14,737 11,018 10,546
Current liabilities
Creditors: amounts
falling due
within one year 3,862 4,598 2,711 2,185
Net Current Assets 10,416 10,139 8,307 8,361
Total assets less
current liabilities 15,975 16,863 16,892 22,404
Provisions for
liabilities and
charges 94 - - -
15,881 16,863 16,892 22,404
Capital and
reserves
Called up share
capital 609 609 609 609
Share premium
account 3,045 3,045 3,045 3,045
Other reserves 297 297 297 297
Profit and loss 11,762 12,722 12,941 18,453
account
Equity 15,713 16,673 16,892 22,404
shareholders' funds
Equity minority 168 190 - -
interests
15,881 16,863 16,892 22,404
The financial statements were approved by the board of directors on
11 November 2002 and were signed on its behalf by:
P.J. Onslow Dee McFarlane
Director Director
Consolidated Cash Flow Statement for the year ended 31st August 2002
Group
2002 2001
Notes #000 #000
Net cash flow from operating activities 5 18 2,257
Returns on investment and servicing of finance 201 391
Taxation 487 (1,917)
Capital Expenditure and financial investment (77) 1,708
Acquisitions and disposals - (282)
Equity dividends paid (122) (2,415)
Cash inflow/(outflow) before use of liquid resources 507 (258)
and financing
Management of liquid resources (494) (209)
Financing - 23
Increase/(decrease) in cash 13 (444)
Reconciliation of Net Cash Flow to Movement in Net Funds
Increase/(Decrease) in cash 13 (444)
Increase/(Decrease) in liquid resources 494 209
Change in net debt resulting from cashflows 507 (235)
Translation difference - -
Movement in net funds 507 (235)
Net Funds at 1st September 2001 5,932 6,167
Net Funds at 31st August 2002 6,439 5,932
Reconciliation of movements in Shareholders' Funds
for the year ended 31st August 2002
Group Company
2002 2001 2002 2001
#000 #000 #000 #000
(Loss)/profit for the financial year (777) (2,356) (5,391) 2,313
Dividends (183) (877) (183) (877)
(960) (3,233) (5,574) 1,436
Issue of ordinary share capital - 23 - 23
Net (decrease)/increase in shareholders' (960) (3,210) (5,574) 1,459
funds
Opening shareholders' funds 16,673 19,881 22,404 20,945
Exchange adjustment - 2 - -
Closing shareholders' funds 15,713 16,673 16,830 22,404
Statement of total recognised gains and losses
for the year ended 31st August 2002
2,002 2,001 2,002 2,001
#000 #000 #000 #000
(Loss)/profit for the financial year (777) (2,356) (5,391) 2,313
Exchange difference on retranslation of
net assets of subsidiary undertaking - 2 - -
Total recognised gains and loss for the (777) (2,354) (5,391) 2,313
year
NOTES
1. TURNOVER
Turnover represents the amounts chargeable to clients, whether invoiced or
accrued, excluding value added tax, in respect of services provided during the
year. Turnover is attributable to the principal activity of the Group and by
origin wholly in the United Kingdom. Geographical analysis of turnover by
destination is shown below:
2002 2001
#000 #000
United Kingdom 25,308 29,876
North America 107 635
Rest of World 2,057 601
27,472 31,112
2. EXCEPTIONAL ITEMS AND GOODWILL AMORTISATION
Non-Operating exceptional items
2002 2001
#000 #000
Profit on sale of listed investments 26 -
Profit on sale of current asset - 1,223
investments
26 1,223
The above items are considered to be of an exceptional nature. The tax charge attributable to these
items is included in the tax on profit on ordinary activities detailed in Note 6 and is #8,000 (2001 -
#367,000).
Operating exceptional items and
amortisation of goodwill
2002 2001
#000 #000
Operating exceptional items :
Provision for impairment of goodwill - 905
Costs relating to restructure of 579 -
operations
Costs relating to aborted deals - 102
579 1,007
Amortisation of goodwill (not 610 242
exceptional)
1,189 1,249
The above items have been shown separately on the face of the Profit and Loss Account within
Administrative expenses.
3. DIVIDENDS
2002 2001
#000 #000
Ordinary dividends
Interim-paid 21st June 2002 of 0.5p 61 816
(2001 - 6.7p) per share
Final - proposed payable 10th January 122 61
2003 of 1.0p
(2001 - 0.5p) per share
183 877
If approved the final dividend will be paid on 10 January 2003 to shareholders
on the register at the close of business on 20 December 2002.
All dividends are paid on equity shares
4. EARNINGS PER SHARE
The calculation of earnings per share is based on the loss for the financial
year of #777,000 (2001 -loss of #2,356,000) and on 12,178,192 Ordinary shares
(2001 - 12,155,472 Ordinary shares), being the weighted average number of
Ordinary shares in issue during the year. There are no dilutive potential
ordinary shares in 2002 or 2001. The additional earnings per share figures shown
on the profit and loss account are calculated based on the earnings before
exceptional items and goodwill amortisation. They are included as they provide
a better understanding of the underlying trading performance of the group.
5. RECONCILIATION OF OPERATING LOSS TO NET CASH INFLOW
FROM OPERATING ACTIVITIES
2002 2001
#000 #000
Operating loss (885) (4,404)
Depreciation of tangible fixed assets 635 842
Amortisation of intangible fixed assets 610 242
Impairment of goodwill - 905
Loss / (Profit) on sale of tangible 23 (11)
fixed assets
Decrease in debtors 587 5,673
Decrease in creditors (1,052) (1,026)
Increase in provisions 94
Decrease in stocks 6 36
____ ____
Net cash inflow from operating 18 2,257
activities
Included within net cash inflow from operating activities are cash outflows of
#423,000 in relation to the restructuring of operations (2001 net cash outflows
of #102,000 in relation to aborted deal costs). This is an operating
exceptional item - see note 2 for further details.
6. ACCOUNTING POLICIES
The accounting policies used in preparing the statutory accounts for the year
ended 31 August 2002 from which the preliminary statement is extracted are
consistent with those applied in prior years.
The group adopted FRS19 (Deferred Tax) in full during the year ended 31 August
2002.The adoption of FRS19 has had no material impact.
7. The financial information contained in these preliminary statements is abridged
and does not constitute the group's statutory accounts under section 240 of the
Companies Act 1985. The results for the year ended 31 August 2001 are extracts
from the group accounts which carry an unqualified auditors report and have
been filed with the Registrar of Companies.
The results for the year ended 31 August 2002 are extracts from the group
accounts. The unqualified audit report on the full financial statements has been
signed and will be filed with the Registrar of Companies after the Annual under
section 237 (2) or (3) of the Companies Act 1985. Copies will be available from
the General Meeting. The audit report does not contain a statement under
section 237 (2) or (3) of the Companies Act 1985. Copies will be available from
the registered office of the company: 14 Angel Gate, City Road, London EC1V 2PT.
The registered number of M.M.T. Computing plc is 1366291.
The preliminary announcement was approved on 11 November 2002.
This information is provided by RNS
The company news service from the London Stock Exchange
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