Interim Results

Eurolink Managed Services PLC 08 December 2003 For immediate Release 8th December, 2003 Eurolink Managed Services ('Eurolink' or 'the Company') Interim Results for the six months ended 30th September 2003 Chairman's Statement Introduction and results I am pleased to report the results for the six months ended 30th September, 2003. Turnover for the period was £3.83 million (2002: £4.51 million) resulting in a loss before tax of £96,000 (2002: profit £17,000), before the reorganisation costs of £69,000 referred to below. Loss per share for the period was 1.13p (2002: earnings per share 0.03p). Your Board is not proposing the payment of an interim dividend. The half year has seen a reorganisation of your company's Board of Directors which resulted in Keith Chapman and myself joining the Board on 11th September, 2003 and Jim Carr retiring at that time. There have been legal and severance costs incurred by the Group during these changes and these are disclosed as an exceptional item. Business review Trading conditions in the IT market place remain uncertain. The Group has not been immune to this and has experienced a reduction in turnover which in turn has produced a poorer trading performance compared to the same period last year. With all opportunities, both from existing and prospective clients being subject to significant competition resulting in keener margins, your Group has concentrated on maintaining good business relationships and its reputation for delivering projects to a high quality, on time and budget. A great deal of effort, with associated cost, has been incurred in following up new prospects but the time required to convert prospects into orders continues to be extended, particularly in the financial services sector where a significant proportion of our revenues have traditionally been derived and the public sector where new business has been achieved. At the same time a review of our main supplier arrangements is in progress with a view to reducing our direct costs of supply, although it is not expected that any resultant benefits will be reflected in this financial year. Whilst always seeking to balance the need to have a responsive and available professional team with a minimal level of costs, the directors have been able to redefine roles and responsibilities of the management team, as a result of which, further annualised cost savings in the order of £250,000 will be realised next year. Outlook Your new Board is committed to growing the Group both organically and through acquisition. To this end several interesting companies have been identified and your Directors will be investigating these and other opportunities. The outlook for business from existing clients continues to be positive with the usual fluctuations in overall business levels arising from the nature of project work. We are currently experiencing a high level of activity and interest largely as a result of our increased sales effort. Nevertheless the timing of the commencement of new business remains difficult to predict. Consequently, your Directors are confident that the business is well placed to take advantage of improving market conditions. The present infrastructure should enable a considerable level of growth without corresponding cost increases, but at present your Directors remain cautious for the current year. I should like to thank my Board colleagues, all staff and our advisors for their support and understanding during these changing times. George Kynoch Chairman 8th December 2003 Group profit and loss account for the six months ended 30th September 2003 Audited twelve months to 31st March Unaudited six months to 30th September 2003 2002 2003 £'000 £'000 £'000 Turnover 3,827 4,512 9,152 Cost of sales (3,013) (3,610) (7,106) --------- --------- --------- Gross Profit 814 902 2,046 Operating expenses Administrative (891) (869) (1,792) Exceptional (note 2) (69) - - --------- --------- --------- Operating (loss)/ (146) 33 254 profit Net interest payable (19) (16) (50) --------- --------- --------- (Loss)/profit on (165) 17 204 ordinary activities before taxation Taxation on profit from 47 (14) (77) ordinary activities --------- --------- --------- (Loss)/profit for the (118) 3 127 financial period ========= ========= ========= (Loss)/earnings per share (note 3) Basic (1.13)p 0.03p 1.22p ========= ========= ========= Diluted (1.13)p 0.03p 1.22p ========= ========= ========= All disclosures relate only to continuing operations. There are no recognised gains or losses other than the profit for the period. Group balance sheet at 30th September 2003 Unaudited Audited 30th September 31st March 2003 2002 2003 £'000 £'000 £'000 Fixed assets Tangible assets 233 276 256 Current assets Debtors 1,851 1,685 2,368 Cash at bank and in hand 3 375 3 -------- --------- --------- 1,854 2,060 2,371 -------- --------- --------- Creditors: amounts falling due within one (1,170) (1,416) (1,585) year -------- --------- --------- Net current assets 684 644 786 -------- --------- --------- Total assets less current liabilities 917 920 1,042 Provisions for liabilities and charges Deferred tax (19) (28) (26) -------- --------- --------- 898 892 1,016 ======== ========= ========= Capital and reserves Called up share capital 208 208 208 Share premium account 103 103 103 Profit and loss account 587 581 705 -------- --------- --------- Equity shareholders' funds 898 892 1,016 ======== ========= ========= Group cash flow statement for the six months ended 30th September 2003 Audited twelve months to 31st March Unaudited six months to 30th September 2003 2002 2003 £'000 £'000 £'000 Net cash inflow/ 418 286 (213) (outflow) from operating activities Returns on investments and servicing of finance Interest paid (19) (16) (50) Net capital expenditure (24) (11) (23) and financial investment Taxation UK corporation tax (63) (43) (60) -------- -------- ---------- Net cash inflow/ 312 216 (346) (outflow) before -------- -------- ---------- financing Financing Capital element of finance leases and hire purchase contracts (12) (26) (43) Amount advanced against 9 (233) (362) trade debtors -------- -------- ---------- Net cash (outflow)/ (3) (259) (405) inflow from financing -------- -------- ---------- Increase/(decrease) in 309 (43) (751) cash in the period ======== ======== ========== Reconciliation of operating profit to net cash flow from operating activities Operating (loss)/ (146) 33 254 profit Depreciation charges 32 31 64 Loss on sale of 15 - - tangible fixed assets Decrease/(increase) in 553 245 (438) debtors (Decrease)/increase in (36) (23) (93) creditors -------- -------- ---------- Net cash inflow/ 418 286 (213) (outflow) from -------- -------- ---------- operating activities Reconciliation of net cash flow to movement in net debt Opening net (debt) (575) (229) (229) Increase/(decrease) in 309 (43) (751) cash in period Cash outflow from 3 259 405 changes in debt -------- -------- ---------- Closing net debt (263) (13) (575) -------- -------- ---------- Analysis of net debt At 30th September At 1st April Cash flow 2003 2003 £'000 £'000 £'000 Cash at bank and in hand 3 - 3 Overdrafts (336) 309 (27) -------- -------- --------- (333) 309 (24) Amounts advanced against trade (229) (9) (238) debtors Finance leases (13) 12 (1) -------- -------- --------- Total (575) 312 (263) ======== ======== ========= Notes to the interim results 1. Preparation of interim results The financial information for the six month period ended 30th September 2003 is unaudited and does not constitute statutory accounts within the meaning of the Companies Act 1985. The financial information for the period ended 31st March 2003 has been extracted from the statutory accounts of Eurolink Managed Services plc which contained an unqualified audit report and which did not contain a statement under section 237(2) or 237(3) of the Companies Act 1985 and which have been filed with the Registrar of Companies. 2. Exceptional expenses The exceptional expenses consist of legal fees and severance costs relating to the Group reorganisation. 3. Earnings per share The calculation of basic (loss)/earnings per share is based on the (loss)/profit on ordinary activities after taxation of (£118,000) (September 2002: £3,000: March 2003: £127,000). The weighted average number of shares in issue during the period and throughout the previous year was 10,400,000. There is no difference between the basic and fully diluted (loss)/earnings per share. 4. Copies of report The Interim Report will be sent to all shareholders shortly and will be available on request from the Company Secretary, Queen Square House, 15 Queen Square, Brighton, BN1 3FD. Enquiries: Eurolink Managed Services Plc Keith Molineux/David Wood Tel: 01273 200100 John East & Partners Limited Jeffrey Coburn/Simon Clements Tel: 020 7628 2200 This information is provided by RNS The company news service from the London Stock Exchange

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