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Asite PLC (ASE)

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Tuesday 08 June, 2004

Asite PLC

Final Results

Asite PLC
08 June 2004



                                   Asite plc


                        PRELIMINARY RESULTS ANNOUNCEMENT
                      FOR THE YEAR ENDED 31 DECEMBER 2003


Results Highlights:


-    Growth in gross revenue of 8% on continuing operations
-    Gross profit increased by 23% to £891,000
-    Operating costs before depreciation reduced by £0.5 million
     from £3.8 million to £3.3 million
-    Loss for the year reduced to £2.1 million from £4.6 million


Sir John Egan, Chairman of Asite plc, commented:



'During 2003 Asite continued to invest in its product inventory.  Our product
suite was brought to market in the latter part of 2003 and this has been well
received by existing and new clients.  We have strengthened the Board of Asite
plc and we have built a management team to deliver on our sales and business
development targets.  The growth in our sales since the start of 2004 has been
promising:



  • the gross value of contracted sales this year to the end of May 2004
    stands at £1.2 million
  • the value of our order book (the value of contracted sales less work done)
    has grown to £1.8 million
  • the value of our sales pipeline measured in terms of proposals where we
    are in active negotiation with our clients has risen to £1.4 million



We have continued to keep close control over costs; in particular we are now
building software development capacity in India which will allow us to increase
output significantly with marginal change to our cost base.  Overall we are
making sound progress to becoming a sustainable and profitable business'


Asite plc
Tom Dengenis, Chief Executive                        Tel:  020 7647 5159
Gordon Ashworth, Finance Director                    Tel:  020 7647 5158

Deloitte Corporate Finance
Robin Binks                                          Tel:  020 7936 3000
Richard Collins




The directors of Asite plc accept responsibility for the information contained
in this announcement. To the best of the knowledge and belief of the directors
of Asite plc (who have taken all reasonable care to ensure that such is the
case) the information contained in this announcement is in accordance with the
facts and does not omit anything likely to affect the import of such
information.






CHAIRMAN'S STATEMENT



Results and dividends



During 2003 the Group focused on its core activities of software development and
the provision of solution consulting, integration and support services to its
clients.  The Board has continued to reduce the cost base whilst maintaining
sufficient resource to deliver on the development of new products to satisfy
increased customer demand.  With new product offerings available and promising
signs of acceptance being demonstrated by our clients, the Board took the
opportunity of strengthening the management team, in particular in the Sales
Development and Finance Functions in the early part of 2004.



The Group recorded a loss for the year of £2.1 million, being a considerable
improvement on the £4.6 million loss of the previous year.  The 2003 loss
reflects the significant investment made in Asite's product inventory.  The loss
per share was    2.1 p in 2003 compared with a loss of 4.7 p in 2002.  The Board
is not recommending a dividend this year (2002 £Nil).



Development of the Group



Following the extensive re-structuring of the Group in previous years, 2003 was
a time for consolidation and focus on tailoring our products to add immediate
value to our clients.  During the year the Group launched a number of key
products which were well received in the market.  These included Asite Tender in
March 2003, Asite Package Acquisition in May 2003 and Asite Workspaces in
September 2003.  Following the year end we launched Asite Project Workflow in
February 2004.  Development work continues on enhancements to existing offerings
and further new products.  In particular our Product Library offering will be
coming to the market in the second half of 2004.  We have also managed to reduce
our dependency on reseller agreements, the cost of which declined from £0.5
million to £0.4 million over the year, a trend which has continued in the first
quarter of 2004.  This will have a significant positive impact on our gross
margins as we grow our revenues.  At the same time turnover from our ongoing
business has continued to grow to £1.7 million from £1.6 million in 2002.



Five Directors remained in post throughout the year, including myself, Mr Walter
Goldsmith (Deputy Chairman), and Non-Executives Mr Peter Rogers of Stanhope plc,
Mr Mathew Riley of BAA plc, and Mr Robert Tchenguiz of Rotch Property Group
Limited.  Mr Tom Dengenis was promoted to Group Chief Executive in January 2003.
  In early 2004 the Board was strengthened with appointments in a number of
executive positions:



  • Mr Gordon Ashworth was appointed as Finance Director and joined in March
    2004;
  • Mr Brian Austin was appointed Business Development Director in April 2004;
    and,
  • Mr Nathan Doughty, already on the Board of Asite Solutions Limited, joined
    the Board as Technology Director in April 2004.



These changes were driven by the fact that the Group has now addressed a
significant element of its core development programme and the challenge is now
to build on our sales development and finance activities going forward.



Operational review



Asite has built on the major client relationships established during the course
of 2002 through the provision of existing products and services and also through
the introduction of new products as outlined above.  Our client base remains
heavily biased towards major players in the UK construction industry including
BAA plc, Stanhope plc, Laing O'Rourke plc, Grosvenor Estates, Berkeley Group plc
and Birse Rail Group plc.  During the course of 2003 we have added to this
impressive client list with contracts with Galliford Try and T-Mobile.  The
strengthening of our client relationships and our improved product inventory has
led to a growing order book (the value of contracted sales less work done) of
contracted revenue, which, under the long term framework contracts that our
clients contract with us upon, stretches out to 2010.



In 2002 we eliminated a number of contractual liabilities thereby reducing our
long term operating costs.  During 2003 we have continued to reduce our
operating costs (before depreciation) which fell from £3.8 million to £3.3
million.  We have also taken steps to offshore some of our development capacity,
thereby further reducing operating costs.  The size of our improving order book
and the reduced forecast operating costs leads the Board to believe that Asite
will make good progress towards turning cash flow positive during 2004.



As described in note 1 of this announcement, the directors believe that the
Company has adequate funding in place to reach the point where it will become
self-funding.



Calling of an Extraordinary General Meeting



Asite continues to operate within its borrowing facilities and Mr Robert
Tchenguiz continues to support Asite as described in note 1 to this
announcement.  Supported by the demonstrable improvement in the Group's
contracted order book, market acceptance of our products and improved margins
through the reduced reliance on reseller agreements, the Board remains confident
that Asite plc's operating subsidiary, Asite Solutions Limited, will move ahead,
in due course, into a period of profitable and sustainable trading.
Notwithstanding the support afforded Asite by Mr Robert Tchenguiz, the Board
believes that the commercial prospects of Asite Solutions Limited would be
improved through the strengthening of its balance sheet and also that of Asite
plc.  Accordingly the Board has undertaken a review of the financial structure
of the group and has decided to undertake a number of actions which will enable
Asite plc to return to a positive net asset position.



The Board wishes to seek the approval of shareholders to implement these
actions. Accordingly, the directors have called an Extraordinary General Meeting
to take place after the Annual General Meeting on 21 July 2004.  The notice of
the Extraordinary General Meeting and a circular setting out these actions will
be sent out separately from the Annual Report and Financial Statements for 2003.



Prospects



The past year has been a period of investment and consolidation at Asite.  The
focus on software development will continue in 2004. However, we are now in a
position to start to leverage our product inventory, our excellent client base
and the growing appreciation by existing and potential clients of the value of
our products and services.  Over the past year the traffic across our main
website increased by 43% and user logins to our community section increased by
53%.  2004 will, therefore, be a year of investment in our business development
and client acquisition capacity, and continued progress towards building a
profitable and sustainable business.





Sir John Egan
Chairman


8 June 2004



CONSOLIDATED PROFIT AND LOSS ACCOUNT
For the year ended 31 December 2003


                                                                           2003          2002
                                                                          £'000         £'000

TURNOVER

Continuing operations                                                    1,697         1,575

Discontinued operations                                                      -            24

                                                                         1,697         1,599
Cost of Sales                                                            (806)         (873)

Gross Profit                                                               891           726

Sales & Distribution costs                                               (357)         (547)

Administration expenses                                                (2,988)       (5,530)

OPERATING LOSS
Continuing operations                                                  (2,454)       (5,283)
Discontinued operations                                                      -          (68)

                                                                       (2,454)       (5,351)
Loss on sale of discontinued operations                                      -          (11)
Interest payable less receivable                                           (3)          (29)

LOSS ON ORDINARY ACTIVITIES BEFORE TAXATION                            (2,457)       (5,391)
Tax credit on loss on ordinary activities                                    -            71

LOSS ON ORDINARY ACTIVITES AFTER TAXATION                              (2,457)       (5,320)
Minority interest                                                          335           761

LOSS FOR THE FINANCIAL YEAR                                            (2,122)       (4,559)

Loss per share - basic & diluted                                        (2.1p)       (4.7p)





CONSOLIDATED BALANCE SHEET
As at 31 December 2003




                                                                           2003          2002
                                                                          £'000         £'000

FIXED ASSETS
Tangible assets                                                             77             -

CURRENT ASSETS
Debtors                                                                    368           564
Cash at bank                                                                 7            89

                                                                           375           653
CREDITORS: amounts falling due within one year                           (794)       (1,936)

NET CURRENT LIABILITIES                                                  (419)       (1,283)

TOTAL ASSETS LESS CURRENT LIABILITIES                                    (342)       (1,283)

CREDITORS: amounts falling due after more than one year                (5,972)       (2,632)

EQUITY MINORITY INTERESTS                                                2,038         1,761

                                                                       (4,276)       (2,154)

CAPITAL AND RESERVES
Called up share capital                                                 10,291        10,291
Share premium account                                                    2,442         2,442
Profit and loss account                                               (17,009)      (14,887)

EQUITY SHAREHOLDERS' DEFICIT                                           (4,276)       (2,154)



NOTES



1.                  BASIS OF PREPARATION



The early stage of development of the Group's business is such that there can be
considerable unpredictable variation in the amount of revenue and timing and
amounts of cash flows.  The directors have projected cash flow information for
the period to 30 June 2005.  On the basis of this cash flow information, the
directors are of the opinion that additional funding may be required.  The
directors are working towards bringing the Company to a level of profitable
trading.  In doing so, they are assessing, on a regular basis, cost levels,
sales activities and research and development expenditure.



Over the past twelve months, Mr Robert Tchenguiz has provided the Group with the
financial support it has required in the form of loans from two companies, Rotch
Property Group Limited and R20 Limited, of which Mr Robert Tchenguiz is a
director.  The directors believe that Mr Robert Tchenguiz will continue to
provide the funding required and have received written confirmation from him
that he intends to provide this funding in the form of a new loan, which, when
added to existing facilities, amount to £1.35million and that he will not call
for the repayment of this new loan or existing loans before 9 June 2005.



There is inherent uncertainty as to the realisation of the forecasts.  The
directors consider that in preparing the financial statements they have taken
into account the uncertainty and all information that could reasonably be
expected to be available.  On this basis, the directors have formed a judgement
at the time of approving the financial statements that they consider it
appropriate to prepare these financial statements on the going concern basis.
The financial statements do not include any adjustments that would result should
the going concern basis of accounting no longer be appropriate.





2.                  TURNOVER




                                                                   Turnover             Operating Loss
                                                                    2003        2002        2003         2002
                                                                   £'000       £'000       £'000        £'000
Class of business:
e-commerce portal and services - continuing                        1,697       1,575      (2,454)    (5,283)
Lighting distribution - discontinued                                   -          24            -       (68)

                                                                   1,697       1,599      (2,454)    (5,351)

The analysis of net liabilities employed by class of
business is:
Class of business:
e-commerce portal and services - continuing                                               (4,276)    (2,154)



3.                  RECONCILIATION OF MOVEMENTS IN SHAREHOLDERS' DEFICIT


                                                                              2003         2002
                                                                             £'000        £'000

Loss for the period                                                        (2,457)      (5,320)
Net proceeds of issues of new share capital                                      -          947
Minority interest                                                              335          761

                                                                           (2,122)      (3,612)
Opening shareholders' (deficit) / funds                                    (2,154)        1,458

Closing shareholders' deficit                                              (4,276)      (2,154)




4.         STATUS OF FINANCIAL INFORMATION IN THIS ANNOUNCEMENT



The financial information set out above does not constitute the Company's
statutory accounts for the years ended 31 December 2003 or 2002, but is derived
from those accounts. Statutory accounts for 2002 have been delivered to the
Registrar of Companies and those for 2003 will be delivered following the
Company's Annual General Meeting.  The auditors have reported on those accounts;
their reports were unqualified but drew attention as to the uncertainty as to
the realisation of the forecasts and the uncertainty as to the continuing
availability of financial support from Mr Robert Tchenguiz.





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