RNS Number:7689M
Lo-Q PLC
25 June 2003
LO-Q PLC
Interim Results for the six months ended 31 March 2003
Chairman's Statement
The results for the 6 months ended 31st March 2003 are for the closed season and
hence little rental income is earned against the fixed cost base. We announced
on 4th February 2003 the successful sale of 5 installations to a leasing company
during the period under review and included in revenue for the 6 months ended
31st March 2003 is #1m in respect of this.
The 2003 season has now started and the system is fully operational in the 6
installed Six Flags parks in the United States. It is still too early in the
season to be able to reasonably forecast the end of year results and after a
number of weekends of very poor weather in the northern parks the season has
started slowly.
The Atlanta, Georgia park is now operating for its third season and demand for
Q-bots is somewhat higher than at this point last year, however revenue is
consistent year on year due to significant discounting. This discounting is part
of a major initiative to increase overall awareness of the system and is
expected to have a positive effect later in the season. The other parks also
have a number of marketing initiatives to increase user awareness and the
outcome for the year will significantly depend on the success of these
activities.
During the closed season period we have continued to invest significant effort
in product development activity. The work was required to address issues that
became apparent as we reached volume usage of Q-bots in multiple parks and has
resulted in a much more robust Q-bot, a more reliable and extendable software
base, and simpler support and upgrade technology. This development work is now
drawing to a close and we will be able to reduce our expenditure in this area.
Our new 'eLine' entry-level solution has just been announced. It is a limited
functionality version of the main product facilitating faster deployment at much
reduced cost and will substantially reduce the barriers to entry, especially
when combined with wireless networking. While prospective customers remain
cautious as they await solid information about this year's attendances and
continue their restrictions on capital spend, opportunities do exist and the
feedback for the eLine solution has been encouraging.
The award of the patent in the US earlier this year confirms the company's
assessment of the value of its intellectual property. We are exploring
relationships with a number of organisations based on leveraging this IP and our
market position.
The Directors have identified the need to introduce further funds into the
company to protect the company's intellectual property and to take advantage of
the opportunities offered both by eLine and the original Lo-Q solution, and are
investigating a number of alternatives.
Jeff McManus
Chairman
Consolidated profit and loss account
Restated
Six months to Six months to Year to
31 March 31 March 30 September 2002
2003 2002
# # #
Turnover 1,194,235 36,814 886,484
Cost of sales 922,093 51,718 704,706
________ ________ _______
Gross profit/(loss) 272,142 (14,904) 181,778
Administrative expenses 995,397 737,324 1,914,285
________ ________ _______
Operating loss (723,255) (752,228) (1,732,507)
Interest receivable 1,215 10,072 30,022
Interest payable and similar charges - (4) (2,487)
________ ________ _______
Loss on ordinary activities before taxation (722,040) (742,160) (1,704,972)
Taxation on loss on ordinary activities (64,000) (31,600) (110,000)
________ ________ _______
Loss on ordinary activities after taxation (658,040) (710,560) (1,594,972)
Earnings (loss) per share
Basic (and diluted) (0.05)p (0.07)p (0.13)p
All amounts relate to continuing activities
There are no recognised gains or losses other than those within the profit and
loss account
Consolidated balance sheet
Restated
31 March 31 March 30 September
2003 2002 2002
# # #
Fixed assets
Tangible assets 261,565 398,419 336,876
Current assets
Stocks 277,220 136,799 1,826,758
Debtors falling due within one year 583,775 151,470 657,684
Debtors falling due after one year
- accrued income 589,980 - -
- corporation tax 64,000 139,389 -
Cash at bank and in hand 171,804 10,461 160,060
________ ________ _______
1,686,779 438,119 2,644,502
Creditors: amounts falling due within one year 179,338 547,175 554,332
________ ________ _______
Net current assets/(liabilities) 1,507,441 (109,056) 2,090,170
________ ________ _______
Total assets less current liabilities 1,769,006 289,363 2,427,046
Called up share capital 143,478 106,818 143,478
Share premium account 4,971,617 1,952,394 4,971,617
Capital reserve 12,473 12,473 12,473
Profit and loss account (3,358,562) (1,782,322) (2,700,522)
________ ________ _______
Equity shareholders' funds 1,769,006 289,363 2,427,046
Consolidated cash flow statement
Restated
31 March 31 March 30 September
2003 2002 2002
# # #
Net cash outflow from operating activities 67,916 (450,176) (3,363,186)
________ ________ _______
Returns on investments and servicing of finance
Interest received 1,215 10,072 30,022
Interest paid - (4) (2,487)
________ ________ _______
Net cash inflow from returns on investments and servicing of
finance
1,215 10,068 27,535
________ ________ _______
Taxation
US corporation tax paid - (3,444) (757)
________ ________ _______
Capital expenditure and financial investments
Purchase of tangible fixed assets (57,387) (132,133) (145,561)
________ ________ _______
Cash outflow before use of liquid resources and financing 11,744 (575,685) (3,481,969)
Financing
Net cash inflow from shares issue - - 3,055,883
________ ________ _______
Increase/(decrease) in cash 11,744 (575,685) (426,086)
Notes to the consolidated cash flow statement
Reconciliation of operating loss to net cash inflow from operating activities
Restated
31 March 31 March 30 September
2003 2002 2002
# # #
Operating loss (723,255) (752,228) (1,732,507)
Depreciation charges 132,698 64,068 139,039
Decrease/(increase) in stock 1,549,538 (82,631) (1,772,589)
Decrease/(increase) in debtors 73,909 (77,908) (402,781)
(Increase) in deferred income (589,980) - -
(Decrease)/increase in creditors (374,994) 398,523 405,652
________ ________ _______
Net cash movement from operating activities 67,916 (450,176) 3,363,186
Reconciliation of net cash outflow to movement in net debt
Restated
31 March 31 March 30 September
2003 2002 2002
# # #
Increase/(decrease) in cash for the period 11,744 (575,685) (426,086)
________ ________ _______
Movement in net funds 11,744 (575,685) (426,086)
Net funds at beginning of period 160,060 586,146 586,146
________ ________ _______
Net funds at end of period 171,804 10,461 160,060
Notes forming part of the financial statements
1 Accounting policies
The interim figures for the six months ended 31 March 2003 have been prepared on
the basis of the accounting policies set out in the annual report and accounts
for the year ended 30 September 2002. In the accounts for the year ended 30
September 2002 the company changed its accounting policy so that development
costs are charged to the profit and loss account in the year of expenditure.
The results for the period ended 31 March 2002 have been restated to reflect
this change in accounting policy and the effect of this change in accounting
policy is that the operating loss for the six months ended 31 March 2002 has
been increased by #131,668. Since the year end the company has entered into a
number of lease obligations and has adopted the accounting policy given below.
The results for the year ended 30 September 2002 are extracted from the
published accounts for that period on which the auditors gave an unqualified
opinion and which have been filed with the Registrar of Companies. The results
for the six months ended 31 March 2003 and 2002 are unaudited, but have been
reviewed in accordance with the guidance contained in Bulletin 1999/4 issued by
the Auditing Practices Board.
During the period the group sold five park installation infrastructures to a
leasing company and entered leases for the use of the assets, which were
immediately sub leased to the end-user theme parks. The substance of the
transaction is that the parks have purchased the installation via a finance
lease with leasing payments paid directly by the parks to the leasing company.
The turnover and stock released to cost of sales matches the proportion of the
total income as it is realised.
The remainder of the stock in relation to the installations has been transferred
to debtors, as it is contingent upon future cash flows arising from the parks.
No unrealised profit is included and the debtor has not been discounted.
2 Turnover
Turnover for the group arises solely within the United States and Europe.
3 Taxation
In the interim results for the 6 months ended 31 March 2002 the company
implemented FRS19 - Deferred Tax for the first time whereby deferred tax assets
are recognised if they are regarded as recoverable. In light of the losses
incurred in the year ended 30 September 2002 the company concluded that recovery
of the asset is sufficiently distant so as to no longer merit recognition.
The company has recognised tax assets in respect of Research and Development tax
claims.
4 Earnings (loss) per share
Basic loss per share is calculated by dividing the loss attributable to ordinary
shareholders (#658,040) by the weighted average number of shares (14,347,837).
5. Copies of the interim report can be obtained, free of charge, from the
registered office at New Close, Greenlands, Henley-On-Thames, Oxfordshire, RG9
3AL.
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END
IR SEAFLISDSEIM