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31 March 2008
Amteus PLC
("Amteus" or the "Company"or the "Group")
Final Results for
the year ended 30 September 2007
Chairman's Statement
I am pleased to announce the results for Amteus PLC for the year ended 30
September 2007.
Amteus' product suite allows users to create a secure community to protect its
users from the dangers associated with the Internet such as cyber-bullying,
data theft, fraud and other abuses. The Directors believe that the Amteus
private community concept represents an outstanding offering in terms of
technology and value, since the Group's products address all these universal
problems. In particular, through the use of Amteus Secure Instant Messaging,
users are able to have a secure and private system of Instant Messaging ("IM")
under their own control within their own private network, combined with
presence control and a suite of secure and compliant functionality.
Results
Turnover in the year ended 30 September 2007 amounted to �131,668 (2006: �
37,417). The loss before and after taxation was �3,118,794 (2006: �2,624,783).
Under the Group's revenue recognition policy there was �186,449 (2006: �64,449)
of deferred revenue held in the balance sheet as at 30 September 2007.
The Product and Technology
The Amteus product is a secure, stand-alone communication software system made
accessible for schools and small businesses. It offers IM, file transfer, file
sharing, presence (the ability to see whether people are online, busy etc.) and
Voice over IP ("VoiP"), all of which provide communications over the internet.
It is offered in a simple-to-implement, private package consisting of a server
and user software based, currently, on a Microsoft platform and can be used to
increase productivity and improve efficiency.
Competition
The competition consists of products in three general categories:
do-it-yourself open-source systems which are technically difficult to
implement with very little direct support available; publicly hosted systems
with all the inevitable security concerns and, again, lack of direct support;
and complex, integrated implementations, supplied by major software suppliers,
which are relatively expensive when compared to the Amteus product and can
require major changes to an organisation's IT strategy and infrastructure in
order to encompass all the requirements. The Directors believe that the Amteus
products address these issues and provide the customer with an effective,
value-for-money proposition.
The Directors believe that there is no direct competitor supplying IM and the
associated products in either the education or business sectors.
Strategy
In the early part of the year the Company focused on developing sales through
resellers who demonstrated considerable enthusiasm for the Amteus product.
However, it became apparent that the product was too early in its sales cycle
for this method of distribution and it was necessary to achieve a footprint in
the market place through direct sales. During the year, therefore, the Company
has redefined its strategy to sell direct to schools and businesses. It
launched the most recent version of the product in January 2008 at the BETT
fair and since then has been receiving a very encouraging level of sales
orders, having now sold the product to over 100 schools, including Manchester
Grammar, Rugby School, Cheetham Community and Wycliffe College.
Whilst the focus of the sales effort in the past three months has been on
schools, the Company recognises that the business sector offers a significant
opportunity and it is now well advanced in recruiting a sales force to sell to
this sector.
People
In Autumn 2007, the Group recognised that it needed to reduce its cost base and
after a thorough review decided, having already developed its current product
range, to reduce its product development team and to focus employment into the
sales area. The Company therefore reduced its staff from 54 people a year ago
to 35 in March 2008. It is now recruiting in the sales area and by the end of
March will have taken on an additional 23 people.
Simon Duffy joined the Board as a Non-Executive Director in February 2007 but
due to taking on a full time position with a company operating in emerging
markets has resigned as a director of Amteus plc with immediate effect together
with all his other UK directorships. We thank him for his contribution and wish
him well in his new position.
In October and December 2007 Chris Holt and David Lynde were appointed to the
Board as Chief Executive and Finance Director, respectively.
In order to maximise the sales opportunities for the Company's products and to
build on the significant interest generated in the education sector in recent
months Chris Holt has been appointed Director of Education with immediate
effect. He will report directly to Jeffrey Morris, Executive Deputy Chairman.
On behalf of the Board I would like to thank all of our staff for their hard
work and their contribution to the Group's progress.
Post Balance Sheet Events
The Company has today raised �1.5 million net of expenses through a placing of
12,000,200 new shares at 15 pence per share, subject to shareholder approval at
a general meeting to be held on 23 April 2008. The placing shares are expected
to be admitted to trading on AIM on or around 24 April 2008.
The Company's founder and major shareholder, Jeffrey Morris, has been providing
financial support to the Company and will continue to do so as required.
Outlook
Since 1 January 2008 the Company has identified a strong demand for its product
in both the education and the business area. The proceeds of the placing will
enable the Company to gain sales more quickly as we seek to achieve cash
breakeven in 2008.
The Directors believe that the Company will continue to build on the progress
made in the first quarter of 2008.
Michael D Abrahams CBE DL
Chairman
31 March 2008
Consolidated Profit and Loss Account
for the year ended 30 September 2007
Note 2007 2006
Restated
� �
Turnover 131,668 37,417
Cost of sales (56,275) (9,575)
Gross profit 75,393 27,842
Operating expenses (3,209,526) (2,659,884)
OPERATING LOSS (3,134,133) (2,632,042)
Interest receivable and 48,708 57,197
similar income
Interest payable and similar (33,369) (49,938)
charges
LOSS ON ORDINARY ACTIVITIES (3,118,794) (2,624,783)
BEFORE TAXATION
Tax on loss on ordinary - -
activities
LOSS FOR THE FINANCIAL PERIOD (3,118,794) (2,624,783)
Loss per share
- basic and diluted (pence) 3 (8.3) (8.2)
Statement of Total Recognised Gains and Losses
for the year ended 30 September 2007
2007 2006
As restated
� �
Loss for the financial year (3,118,794) (2,624,783)
Prior year adjustment (165,496)
Total recognised loss relating
to the year (3,284,290)
Consolidated Balance Sheet
as at 30 September 2007
Note 2007 2006
Restated
� �
FIXED ASSETS
Tangible assets 202,204 178,715
CURRENT ASSETS
Stocks 480,096 85,125
Debtors 267,720 59,774
Cash at bank and in hand 626,360 919,958
1,374,176 1,064,857
CREDITORS: amounts falling due 5 (1,104,256) (1,194,897)
within one year
NET CURRENT ASSETS/ 269,920 (130,040)
(LIABILITIES)
TOTAL ASSETS LESS CURRENT 472,124 48,675
LIABILITIES
CREDITORS: amounts falling due after 6 (44,736) (593,086)
more than one year
NET ASSETS/(LIABILITIES) 427,388 (544,411)
CAPITAL AND RESERVES
Called up share capital 4,045,328 3,447,458
Share premium 5,937,455 2,579,460
Share options reserve 300,224 165,496
Profit and loss account (9,855,619) (6,736,825)
EQUITY SHAREHOLDERS' FUNDS/ 427,388 (544,411)
(DEFICIT)
Consolidated Cash Flow Statement
for the year ended 30 September 2007
2007 2006
� �
Net cash outflow from (3,301,754) (2,258,607)
operating activities
Returns on investments and (9,145) 31,743
servicing of finance
Capital expenditure (net) (32,231) (26,226)
Management of liquid 346,040 (750,000)
resources
Cash outflow before (2,997,090) (3,003,090)
financing
Financing 3,049,532 3,238,589
Increase in cash in the 52,442 235,499
period
(a) Reconciliation of operating loss to net cash outflow from operating
activities
2007 2006
Restated
� �
Operating loss (3,134,133) (2,632,042)
Depreciation charge 88,367 83,613
Loss on sale of tangible 6,649 4,861
fixed assets
Employee share based payment 134,728 173,933
Increase in stocks (394,971) (82,365)
Increase in debtors (199,447) (39,655)
Increase in creditors 197,053 233,048
Net cash outflow from operating (3,301,754) (2,258,607)
activities
(b) Analysis of cash flows
2007 2006
� �
Returns on investment and servicing of
finance
Interest paid (57,853) (25,454)
Interest received 48,708 57,197
Net cash (outflow)/inflow (9,145) 31,743
Capital expenditure
Purchase of tangible fixed (87,133) (101,059)
assets
Sale of tangible fixed assets 54,902 74,833
Net cash outflow (32,231) (26,226)
Financing
Issue of ordinary shares (net of issue 3,163,865 3,398,219
costs)
Capital element of finance (45,700) (94,959)
leases
Related party loans (68,633) (64,671)
Net cash inflow 3,049,532 3,238,589
(c) Analysis and reconciliation of net funds
At Cashflow Non-cashflow At
1 30
October September
2006 2007
� � � �
Cash on deposit 750,000 (346,040) - 403,960
Cash at bank and in hand 169,958 52,442 - 222,400
919,958 (293,598) - 626,360
Other loans (872,600) 68,633 792,000 (11,967)
Finance leases (41,291) 45,700 (86,274) (81,865)
Net funds 6,067 (179,265) 705,726 532,528
30 30
September September
2007 2006
� �
Increase in cash in the 52,442 235,499
period
(Receipt)/purchase of (346,040) 750,000
deposits
Cash inflow from lease 45,700 159,630
financing
Change in net debt resulting (247,898) 1,145,129
from cash flows
Cash inflow from debt 860,633 -
financing
New finance leases in the (86,274) (26,136)
period
Movement in net funds in the 526,461 1,118,993
year
Net funds/(debt) at 1 6,067 (1,112,926)
October 2006
Net funds at 30 September 532,528 6,067
2007
Notes to the financial statements
1. Publication of non-statutory accounts
The financial information set out above does not constitute the Company's
statutory accounts for the years ended 30 September 2007 or 2006, but is
derived from those accounts. Statutory accounts for 2006 have been delivered to
the Registrar of Companies and those for 2007 will be delivered after the
annual general meeting. The auditors have reported on those accounts; their
reports were unqualified and did not contain statements under s. 237(2) or (3)
Companies Act 1985.
The auditors have included an emphasis of matter paragraph in their audit
report to draw attention to the material uncertainties associated with the
Company's reliance on the adequate financial support of its majority
shareholder and the shareholder approval of the placing that has been announced
today.
The existence of these material uncertainties may cast significant doubt about
the Company's ability to continue as a going concern.
The financial information contained within this Announcement was approved by
the Board on 31 March 2008.
2. Accounting Policies
Accounting policies applied to the financial information in this Announcement
are consistent with those used for the 2006 accounts, with the exception of FRS
20 `Share based payments' as set out below.
During the year ended 30 September 2007, the group adopted the provision of FRS
20 `Share-based Payments'. This resulted in a charge to the profit and loss
account of �134,728 in the year. The provision of FRS 20 has also been applied
retrospectively to the comparative period and has resulted in a charge to the
profit and loss account of �165,496 for the year ended 30 September 2006.
3. Loss per share
The calculations of loss per ordinary share are based on the loss for the
financial year and the weighted average number of ordinary shares in issue
during the year. Dilutive earnings per share is based on the weighted average
number of ordinary shares in issue, adjusted to reflect conversion of all
dilutive potential ordinary shares. Dilutive potential shares comprise share
options granted to employees. For the periods ended 30 September 2007 and 30
September 2006 the impact of share options is anti-dilutive and these have been
excluded from the calculation of diluted weighted average share capital.
30 September 30 September
2007 2006
� �
Loss for the year (3,118,794) (2,624,783)
Number Number
Weighted average number of shares 37,631,140 32,177,254
Pence Pence
Basic and diluted loss per ordinary share (8.3) (8.2)
4. Dividends
No dividends are proposed for the year ended 30 September 2007 (2006: Nil)
5. Creditors: Amounts falling due within one year
30 September 30 September
2007 2006
� �
Obligations under finance leases and 37,129 25,547
hire purchase contracts
Trade creditors 563,645 269,781
Amounts due to related 25,442 298,529
parties
Accruals and deferred 382,714 245,667
income
Other taxes and social 69,258 314,899
security
Other creditors 26,068 40,474
1,104,256 1,194,897
6. Creditors: Amounts falling due after more than one year
30 September 30 September
2007 2006
� �
Obligations under finance leases and hire 44,736 15,744
purchase contracts
Amounts due to related - 577,342
parties
44,736 593,086
7. Reconciliation of movements in equity shareholders' funds/(deficit)
30 September 30 September
2007 2006
As restated
� �
New shares issued (net of issue 3,955,865 3,398,218
costs)
Employee share based payment 134,728 173,933
Loss for the financial period (3,118,794) (2,624,783)
Opening equity shareholders' deficit (544,411) (1,491,779)
Closing equity shareholders' funds/ 427,388 (544,411)
(deficit)
8. Copies of the Report and Accounts will be sent to shareholders shortly and
will be available from the registered office of the Company, 57 Cardigan Lane,
Leeds, LS4 2LE and on the Company's website www.amteus.com.
Enquiries:
Amteus plc 01756 770376
Michael Abrahams (Chairman)
John East & Partners Limited 020 7628 2200
John East/Simon Clements/Johnny Townsend
Rawlings Financial PR Limited 07715 769078
Catriona Valentine
John East & Partners Limited, which is authorised and regulated by the
Financial Services Authority, is acting exclusively for the Company and no one
else in connection with the matters set out herein and will not be responsible
to anyone other than the Company for providing the protections afforded to
customers of John East & Partners Limited or for providing advice in relation
to the matters set out herein or any transaction.
END
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