RNS Number:1782D
RMR PLC
8 May 2001
RMR PLC
PRELIMINARY RESULTS ANNOUNCEMENT
For the year ended 28 February 2001
CHAIRMAN'S STATEMENT
Overview
The year to February 2001 may be characterised as an eventful one for RMR. The
Company floated on AIM in April 2000 raising approximately #12 million to fund
the growth of its self-commissioned online conference business. I reported in
the Interim Statement that the first six months to 31 August 2000 had seen an
expansion of RMR's library of conference topics and a number of events being
launched. During this period, the excellence of the Company's conference
product was also recognised by the winning of the Charteris and Institute of
Directors backed "Electronic Business Transformation Award". A US office was
also opened in Austin, Texas in July 2000.
However, the second half of the year has been challenging. The Company like
many others has been affected by the change in sentiment toward the internet
sector with trading performance adversely impacted by a decline in online
advertising in the UK. This evident departure from the original business plan
caused the Board to instigate a strategic review in November 2000. The
Business Review below describes the actions that have been taken.
Business Review - UK
RMR developed and sold on twelve self-commissioned conferences during the
year. These are listed in the following table.
Conference Date of Delegates URL
launch
For Business 2000 1 May 2000 12,700 www.forbusiness2000.com
Energy Resource 2000 15 May 2000 11,500 www.energyresource2000.com
Virtual Banking 2000 18 Sep 2000 11,000 www.virtualbanking2000.com
Communicate 2000 2 Oct 2000 4,000 www.communicate2000.com
Pharmaceuticals 2000 6 Nov 2000 7,500
www.pharmaceuticals2000.com
Global Investor 2000 20 Nov 2000 14,000 www.globalinvestor2000.com
Insurance and Financial 19 Feb 2001 10,000 www.rmr-ifs2001.com
Services 2001
Aviation 2001 5 Mar 2001 8,500 www.rmr-aviation2001.com
Energy Resource 2001 21 May 2001 -
www.rmr-energyresource2001.com
3G 2001 25 Jun 2001 - www.rmr-3g2001.com
Corporate Travel 2001 2 Jul 2001 -
www.rmr-corporatetravel.com
Exploration & Production 2001 1 Oct 2001 - www.rmr-eandp2001.com
While these events have continued to attract large numbers of delegates, sales
of exhibition stands and sponsorship space on the events have fallen below the
Company's target of #280,000 per event. A review of the sales performance
showed that whilst there was continuing strong interest in self-commissioned
conferences, there was a reluctance by organisations to commit to advertising
at these events. This was felt in part to be due to the relative newness of
the events themselves and also the format of sale which relied substantially
on telesales. As a result RMR has decided to work more closely with other
third parties who already have existing content and community as well as
changing the nature and quality of its contact with customers. We have moved
from using large numbers of telesales staff to smaller sales teams made up of
more experienced and skilled staff.
The expansion of RMR's business beyond self-commissioned conferences has been
helped by the substantial developments in the technology platform over the
last six months. Organisations can now use RMR's internally developed software
to disseminate their content through platforms such as conferences, portal and
e-learning sites. This has enabled RMR to become an Application Service
Provider (ASP) providing an online information solution to third parties such
as conference organisers, academic institutions and large companies. The Board
believes that the ASP model not only offers a broader revenue stream for the
Company but one which is less risky as revenues are now not solely derived
from selling advertising space on RMR's own self-commissioned conferences.
The success of the development in RMR's product range and move to a
consultative sales approach is being seen in the profitable business
relationships that are being established. RMR is now doing business with
conference organisers (e.g. Informa Group plc), corporates (e.g. Old Mutual
Securities) and academic institutions (e.g. Cranfield School of Management).
Unfortunately, the implementation of the changes described above resulted in a
reduction in employees from 160 to 80 employees, most but not all of the
redundancies were in telesales. The restructuring process was completed in
early February 2001. The financial implications of the restructuring are
highlighted in the Results section of my statement. The Board is continuing to
monitor the resources necessary to support the expected levels of business.
Business Review - US
RMR's conferences have always attracted considerable international interest,
particularly from the US. The Company's US office commenced producing and
selling its first event in October 2000. There are now 18 employees involved
in sales, research, editorial and support functions.
Although the US business operates day-to-day on a stand-alone basis, the UK
developed conference software is being used for the self-commissioned
conferences currently under production. The first dedicated US event is US
Banking (www.rmr-usbanking.com) which is being launched in June 2001. This
event has the American Bankers Association as Primary Partner and speakers
include Roger Ferguson, Vice Chairman of the Federal Reserve System. I am
pleased to report that the sales on this event have been extremely encouraging
which is perhaps indicative of a more developed market for online advertising
here than in the UK. As with the UK, the Board will continue to monitor the
business against agreed performance targets.
Results
The turnover for the year to February 2001 was #2.052 million (2000: #1.116
million) of which 76 percent (#1.550 million) represented revenues generated
by online conferences, the balance being attributable to web development (#
502,000). The conference sales of #1.550 million include revenues of #160,000
from the US operation. The tougher market conditions in the second half of the
year affected sales considerably with group sales for this period of #938,000
compared to #1.114 million achieved in the first six months to 31 August 2000.
Principally, as a result of below target revenues, a pre-tax loss of #6.316
million was incurred for the year (2000: #967,000). This level of loss is
about twice that forecast at flotation. Of this loss, #4.038 million has
occurred in the second half due principally to below target sales revenue, the
US operation (#490,000) and the costs of the restructuring programme (#
330,000). It should be noted that the annual payroll cost has been reduced by
#1.6 million to #3.0 million as a result of the restructuring exercise.
The cash position at 28 February 2001 was #6.270 million (2000: #525,000). For
the year, there was a loss per share of 11.88p (2000: 2.27p).
Board Changes
The strategic and operational changes have coincided with changes in the Board
composition. Philip Marcella, who founded RMR and was Group CEO, has resigned.
I take this opportunity to thank Philip for the contribution that he has made.
Philip has been replaced by Robert Jackson who was appointed in November 2000
as UK CEO.
Prospects
Notwithstanding the more difficult market that has emerged over the last six
months, I believe that RMR has now developed a comprehensive product offering
and capability of resource to form the basis of a viable business. The
management have shown decisiveness and willingness to evolve the business in
response to changes in the marketplace. This has resulted in foundations being
put in place to enable the Company to transform itself into a provider of
technology solutions to organisations with complex information needs. I
believe that the quality of the relationships developed up to now provides an
encouraging base for the future development of the business. The success or
otherwise of our new direction should become evident over the next six months.
Dr Michael Peagram
Chairman
4 May 2001
RMR PLC
GROUP PROFIT AND LOSS ACCOUNT
FOR THE YEAR ENDED 28 FEBRUARY 2001
2001 2000
#'000 #'000
Turnover 2,052 1,116
Cost of sales (3,606) (1,088)
Gross result (1,554) 28
Restructuring costs (330) -
Professional costs prior to Company flotation (255) -
Other administrative expenses (4,623) (993)
Administrative expenses (5,208) (993)
Operating loss (6,762) (965)
Net interest 446 (2)
Loss for the year (6,316) (967)
Basic loss per share (pence) (11.88)p (2.27)p
There were no recognised gains or losses other than the profit for the
financial year.
BALANCE SHEETS AT 28 FEBRUARY 2001
Group Group Company
2001 2000 2001
#'000 #'000 #'000 #'000
#'000 #'000
Fixed assets
Tangible assets 1,235 620 -
Investments - - 4,264
1,235 620 4,264
Current assets
Stocks - 70 -
Debtors 603 969 11,847
Cash at bank and in hand 6,270 525 5
6,873 1,564 11,852
Creditors: amounts falling due within one (966) (973) -
year
Net current assets 5,907 591 11,852
Total assets less current liabilities 7,142 1,211 16,116
Creditors: amounts falling due after more (55) (46) -
than one year
Net assets 7,087 1,165 16,116
Capital and reserves
Called up share capital 5,510 4,264 5,510
Share premium account 10,650 - 10,650
Profit and loss account (9,073) (3,099) (44)
Shareholders' funds 7,087 1,165 16,116
CONSOLIDATED CASH FLOW STATEMENT
FOR THE YEAR ENDED 28 FEBRUARY 2001
2001 2000
#'000 #'000
Net cash outflow from operating activities (6,139) (825)
Returns on investments and servicing of finance
Interest paid (10) (3)
Interest received 456 1
446 (2)
Capital expenditure and financial investment
Purchase of tangible fixed assets (922) (518)
Sale of tangible fixed assets 59 -
(863) (518)
Cash outflow before management of liquid resources and (6,556) (1,345)
financing
Financing
Issue of share capital 12,823 1,894
Expenses paid in connection with shares issues (449) (2)
Capital element of finance lease and hire purchase contracts (73) (11)
Repayment of borrowings - (58)
Net cash inflow from financing 12,301 1,823
Increase in cash 5,745 478
NOTES TO THE PRELIMINARY ANNOUNCEMENT
For the year ended 28 February 2001
1. BASIS OF PREPARATION
The preliminary announcement has been prepared under the historical cost
convention and in accordance with applicable accounting standards.
The principal accounting policies have remained unchanged from those set out
in the Company's 2001 Annual Report and Financial Statements.
2. BASIS OF CONSOLIDATION
The consolidated financial statements have been prepared using the merger
method of accounting using the principles set out in Financial Reporting
Standard 6, 'Acquisitions and mergers'. Under merger accounting, the results
and cash flows of RMR plc and its subsidiaries are combined from the beginning
of the financial period in which the merger occurred and their assets and
liabilities combined at the amounts at which they were previously recorded.
The consolidated profit and loss account, balance sheet and cash flow
comparatives are restated on the combined basis.
The merger became effective when the Company acquired RMR Design Associates
Limited by means of a share for share exchange. The difference between the
share capital and share premium as previously stated in the accounts of RMR
Design Associates Limited (after adjusting for the effect of the share for
share exchange) and that immediately following the share for share exchange
has been taken to the Profit and Loss Reserve.
3. LOSS PER ORDINARY SHARE
The loss per share is based on a loss of #6,316,000 (2000: #967,000), being
the loss attributable to ordinary shareholders, and a weighted average of
53,186,129 (2000: 42,640,944) ordinary shares.
The comparative figures have been calculated using merger accounting
principles, which require the use of the number of shares issued in the share
for share exchange transaction as the weighted average number of shares.
4. SHARE CAPITAL
2001 2000
#'000 #'000
Authorised
100,000,000 Ordinary shares of 10p each 10,000 10,000
Allotted, called up and fully paid
55,102,847 (2000: 42,640,944) Ordinary shares of 10p each 5,510 4,264
During the year the Company made the following share issues:
* 42,640,944 ordinary shares to shareholders of RMR Design Associates
Limited in a share for share exchange immediately prior to the flotation
of the Company on the Alternative Investment Market.
* 10,416,667 ordinary shares on the initial placing offer of the Company
on the Alternative Investment Market at #1.20 each. The difference between
the proceeds and the nominal value of the shares has been credited to
share premium,
* 2,045,236 ordinary shares were issued in respect of share options
exercised. The difference between the proceeds of #236,000 and the nominal
value of the shares has been credited to share premium.
5. RECONCILIATION OF MOVEMENTS IN SHAREHOLDERS' FUNDS
Group
2001 2000
#'000 #'000
Loss for the financial year (6,316) (967)
Issue of shares 12,736 -
Expenses of share issues (585) -
Adjustments for merger accounting 87 (2,058)
Net addition to shareholders' funds 5,922 (3,025)
Shareholders' funds at 1 March 2000 1,165 4,190
Shareholders' funds at 28 February 2001 7,087 1,165
6. PUBLICATION OF NON-STATUTORY ACCOUNTS
The financial information set out in this preliminary announcement does not
constitute statutory accounts as defined in Section 240 of the Companies Act
1985.
The Balance Sheets at 28 February 2001 and the Group Profit and Loss Account,
Consolidated Cash Flow Statement and associated notes for the year then ended
have been extracted from the Group's 2001 statutory financial statements upon
which the auditors' opinion is unqualified and does not include any statement
under Section 237 of the Companies Act 1985.
7. REPORT AND ACCOUNTS
Copies of the 2001 Report and Accounts will be sent to shareholders in due
course.
8. ANNOUNCEMENT
Copies of this announcement will be available from the Nominated Adviser:
Smith & Williamson, No 1 Riding House Street, London W1A 3AS for one month
from the date of this announcement.
8 May 2001
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