RNS Number:1485O
Mediasurface PLC
18 February 2008
Mediasurface plc
Final Results for the Year Ended 30th September 2007
Mediasurface plc, (AIM: MSR) (the "Group" or the "Company") the AIM listed
Content Management Software Author and Vendor announces results for the year
ended 30th September 2007.
Financial and Operating Highlights
* Turnover increased
o Overall by 17 per cent. to �11.28 million (2006 : �9.67 million)
o On a pre-acquisition basis Turnover increased 5 per cent.
* Annual value of contracted support revenues of �4.26 million including
the addition of �1.0 million in Immediacy (2006 : �2.50 million)
* Reported EBITDA loss before FRS20 Share Option charges of �1.30 million
(2006 : profit of �0.97 million)
* The loss reported includes Pepperio losses of �1.06 million
* Cash of �1.78 million as at 30th September 2007 (2006 : �1.08 million)
* Continued investment in software development of �1.15 million (2006 :
�1.37 million)
o Released new versions of Mediasurface Morello 5.5 in January 2007
and 5.6 in August 2007
o Further leveraged benefit of Indian R&D centre
Chairman's Statement
The Group achieved revenues of �11.28 million (2006: �9.67 million), up 17 per
cent. compared to last year including the acquisition of Immediacy Limited. The
Group reported an EBITDA loss excluding non-cash exceptional items of �1.30
million (2006: profit �0.97 million) for the full year.
During the year the Group lost �1.06 million on providing the Pepperio roll-out.
Excluding this investment and the investment in US expansion, the Group was
break-even at EBITDA level.
As at 30th September 2007 the Group had �1.78 million (2006 : �1.08 million) in
cash excluding a three year term loan due of �1.90 million (2006 : �nil)
In July 2007 the Group concluded the acquisition of Immediacy Limited which
added a new product to the Group's product portfolio addressing the medium sized
enterprise market. The business has enjoyed significant growth in this market
sector and this continued to be the case post acquisition, reporting results
slightly ahead of expectations during the last quarter.
Morello had a mixed year. Having enjoyed a profitable first half, reporting
significant wins at the Foreign and Commonwealth Office and Office of Fair
Trading, the second half proved to be more challenging. The Group had
anticipated that the launch of Microsoft Office Sharepoint Server (MOSS) 2007
would be a disruptive event in the Morello market and to counter this developed
an innovative MOSS Connector to allow customers to leverage MOSS content in
Morello. The Group experienced extended sales cycles whilst customers digested
the merits of MOSS 2007 who eventually concluded that the Microsoft product did
not meet the needs of Enterprise Content Management. In addition, sales
opportunities in the Group's financial vertical were also delayed by the turmoil
in the Financial Markets toward the end of our financial year. As a consequence,
Morello revenues grew by a modest 5 per cent. compared to last year.
In line with stated policy, earnings for the foreseeable future will be
reinvested to finance the growth of the Group and acquisition strategy.
Consequently the Directors do not recommend the payment of a dividend. (2006 :
�Nil)
The Board is now confident that the Group's prospects are much improved as a
result of the cost savings made. We now have every reason to believe that
further progress will be achieved based on an encouraging start to the new
financial year.
In conclusion I would like to express my appreciation to all the management,
staff and shareholders for their continued support during the year.
Michael Jackson
Chairman
18th February 2008
Chief Executive's Statement
The year ended 30th September 2007 was characterised by two very different
halves to the year. In the first half the Company delivered revenues of �6.06
million and an EBITDA of �0.47 million. This was based on continued strong sales
successes around the major Morello product line, coupled with exceptionally
strong demand for professional services and a growing pre-contracted maintenance
annuity stream. During the half, the business enjoyed a number of high profile,
high value new business sales wins including the Foreign and Commonwealth
Office, the Office of Fair Trading and VRT, a major Belgian broadcaster.
The second half of the year was much more challenging for the core Morello
business. The professional services and maintenance revenue streams remained
very strong with continued high demand for services and continued growth in the
pre-contracted revenues for maintenance. The company ended the year with an
annualised pre-contracted run rate of �3.26 million (2006: �2.50 million) for
the Morello maintenance stream. The situation in Morello licence sales was
however much more difficult. There were two principal contributing market
factors which had a much greater impact on the sales result than had been
anticipated by the management. Firstly the launch of MOSS 2007 in April resulted
in a much greater marketplace overhang than expected. As a direct result, sales
cycles were heavily delayed while customer's internal teams were distracted into
evaluating MOSS as a potential solution to their web content management needs.
In reality MOSS was deemed not a suitable product by the vast majority of
potential customers and no deals were lost to MOSS, however the delays and
associated sales efficiency impacts within the business did have a significant
negative impact on the expected top line revenue.
The second key impact was less predictable. The effect of the "credit crunch"
following on from the issues in the USA with respect to the sub-prime market
resulted in uncertainty in one of our key markets, financial services. The
effect of this so close to the year end on a market that typically represents
approximately 25 per cent. of our revenues was dramatic as prospects suspended,
postponed or delayed a significant number of sales cycles.
Pepperio
The Pepperio product line had a disappointing year after a very promising start.
The early encouraging signs persuaded management to continue to invest in
channel establishment and a high growth strategy. Unfortunately the channel
strategy proved successful from a channel partner recruitment perspective but,
with a few notable exceptions, the channel proved not so successful from a sales
execution standpoint. The resulting numbers of customers, whilst continuing to
grow, was disappointing in the second half of the year and consequently,
following the trading announcement in October 2007, significant cost reduction
initiatives were implemented. The core Pepperio proposition remains compelling
to both customers and partners alike and holds the long term prospect for the
group of a secure annuity style revenue from the Software as a Service (SaaS)
model. Expectations have accordingly been reset within the business and the
costs associated with the product line dramatically reduced.
Acquisition
Also in the second half and on a far more positive note, the Company acquired
Immediacy Limited, a UK based provider of Web Content Management Software to two
sectors; mid-sized companies where the solution is deployed as the strategic web
platform and within larger organisations where the solution is acquired
tactically to support departmental or project based initiatives. Immediacy sits
well within the overall product line up of Mediasurface and has enjoyed previous
years of growth and success. In the first quarter of ownership of Immediacy
within the group, the business slightly exceeded expectations and is now a major
contributor to the plc representing around 30 per cent. of the overall business.
The profile of the Immediacy revenue stream is the same as Morello (namely,
licence sales, professional services and maintenance) but the fact that it is a
lower price, higher volume model assists the group in reducing the risks
associated with the very high value but less frequent licence transactions in
Morello.
Fundraising
The Company is pleased to advise that it is today announcing alongside the
preliminary results a proposed placing of 15,000,000 new ordinary shares of 1p
each in the Company ("Placing Shares") at a placing price of 5p per share (the "
Placing Price") to raise approximately �750,000 (the "Placing"). The proceeds
from the Placing will be used to augment the Company's working capital and
provide customers and employees with confidence in Mediasurface's long-term
growth prospects.
Current Trading and Prospects
The Group's first quarter trading of the new financial year, the 3 months ended
31st December 2007, made a modest un-audited EBITDA profit excluding the
rationalisation and non-recurring costs for Pepperio of some �0.18 million. As
at 31st December 2007 the Group's cash position stood at �0.42 million excluding
the term loan of �1.75 million.
The Group continues to implement judicious cost reductions including leveraging
the full benefits of the Indian R&D centre which together represent cost savings
of �2.0 million compared to last financial year. The Directors are confident the
Group is now in a position to achieve full year results in line with management
expectations.
Lawrence Flynn
Chief Executive Officer
18th February 2008
Consolidated Profit and Loss Account
Year ended 30th September 2007
2007 As Restated
� 2006
�
TURNOVER
Existing operations 10,143,829 9,670,713
Acquisition 1,139,701 -
Continuing operations 11,283,530 9,670,713
Cost of sales
Existing Operations (998,110) (355,044)
Acquisition (111,163) -
Continuing operations (1,109,273) (355,044)
Gross profit
Existing Operations 9,145,719 9,315,669
Acquisition 1,028,538 -
Continuing operations 10,174,257 9,315,669
Operating expenses
Existing Operations (11,006,918) (8,549,062)
Acquisition (893,190) -
Continuing operations (11,900,108) (8,549,062)
OPERATING (LOSS)/PROFIT
- Existing Operations (1,861,199) 766,607
- Acquisition 135,348 -
Continuing operations (1,725,851) 766,607
Interest receivable 34,492 7,322
Interest payable and similar charges (59,904) (78)
(LOSS)/PROFIT ON ORDINARY ACTIVITIES
BEFORE TAXATION (1,751,263) 773,851
Tax charge on (loss)/profit/ on
ordinary activities - (54,314)
(LOSS)/PROFIT ON ORDINARY ACTIVITIES
AFTER (1,751,263) 719,537
TAXATION AND FOR THE FINANCIAL YEAR
(Loss)/Profit per share - basic (2.1)p 0.9p
(Loss)/Profit per share - diluted (2.1)p 0.8p
Consolidated Statement of Total Recognised Gains/Losses
2007 As restated
� 2006
�
(Loss)/Profit for the financial year (1,751,263) 719,537
Profit/(Loss) on foreign currency translation of
equity investments in overseas subsidiaries 80,197 (50,437)
Total recognised (losses)/gains relating to the year (1,671,066) 669,100
Prior Year Adjustment 195,896 -
Total gains and losses recognised since last annual
report (1,475,170) 669,100
Consolidated Balance Sheet
30th September 2007
Note 2007 As restated
� 2006
�
FIXED ASSETS
Intangible Assets 4 4,977,313 161,419
Tangible assets 331,022 231,639
5,308,335 393,058
CURRENT ASSETS
Debtors 3,934,054 3,499,892
Cash at bank and in hand 1,775,895 1,080,487
5,709,949 4,580,379
CREDITORS: amounts falling due 5 (4,662,618) (2,968,698)
within one year
NET CURRENT ASSETS 1,047,331 1,611,681
TOTAL ASSETS LESS CURRENT LIABILITIES 6,355,666 2,004,739
CREDITORS: amounts falling due after more
than one year 6 (1,230,142) (3,994)
NET ASSETS 5,125,524 2,000,745
CAPITAL AND RESERVES
Called up equity share capital 996,736 772,448
Share premium account 14,160,171 9,638,377
Shares to be issued 644,653 701,222
Capital redemption reserve 13,083,244 13,083,244
Merger reserve 27,297,412 27,297,412
Profit and loss account (51,056,692) (49,491,958)
EQUITY SHAREHOLDERS' FUNDS 5,125,524 2,000,745
Consolidated Cashflow Statement
Year ended 30th September 2007
2007 As restated
� 2006
�
Net cash (outflow)/inflow from operating activities
Operating (loss)/Profit (1,725,851) 766,607
Exchange difference on fixed asset translation (2,515) 809
Depreciation charge 151,767 107,418
Amortisation of Goodwill 127,623 56,022
Impairment charge 93,056 -
Write back of provisional consideration 68,363 -
Decrease/(Increase) in debtors 416,941 (1,140,835)
Increase in Creditors 126,450 1,108,297
FRS20 Share Option charge 49,763 46,794
Sub total (694,403) 945,112
Returns on investment and servicing finance
- interest payable (59,904) (78)
- interest receivable 34,492 7,322
(25,412) 7,244
Capital expenditure - Purchase of Tangible Fixed (248,635) (168,976)
Assets
Taxation - 49,933
Acquisitions
Purchase of subsidiary undertaking (5,390,654) -
Net cash acquired with subsidiary 796,265 -
Sub total (4,594,389) -
Financing
Issue of Share Capital 4,280,915 -
Term loan 2,000,000 -
Repayment of term loan (98,871) -
Capital element of finance leases (3,994) (5,195)
Sub total 6,178,050 (5,195)
Increase in cash in year 615,211 828,118
Notes :
1. The financial information set out above does not constitute the Group's
statutory accounts as defined by section 240 of the Companies Act 1985 for the
years ended 30 September 2007 or 30 September 2006 but is derived from these
accounts. Statutory accounts for 2006 have been delivered to the Registrar of
Companies in England and Wales and those for 2007 will be delivered following
the Company's Annual General Meeting.
The auditors have reported on the 2006 and 2007 accounts. Their reports for both
years were unqualified and did not contain statements under section 237 (2) or
(3) of the Companies Act 1985.
2. The preliminary announcement of results has been prepared under the
historical cost convention in accordance with the Group's accounting policies
for the year ended 30th September 2007.
3. Earnings per Share
The loss per ordinary share is calculated by reference to the loss attributable
to ordinary shareholders divided by the weighted average number of shares in
issue during each period as follows:
2007 As restated
2006
� �
(Loss)/Profit for the year (1,751,263) 719,537
Basic - weighted average number of shares 81,972,743 77,244,842
Basic - (loss)/profit per Share (2.1)p 0.9p
Fully diluted - weighted average number of shares 81,972,743 84,714,632
Fully diluted - (loss)/profit per Share (2.1)p 0.8p
4. Goodwill arose during the year upon the acquisition of Immediacy Limited
5. Creditors due within one year analysed as follows :-
Group
2007 2006
� �
Obligations under finance leases 3,994 5,195
Trade creditors 489,712 333,363
Amounts owed to subsidiary undertaking - -
Taxation and social security 1,001,954 467,233
Accruals and deferred income 2,495,971 2,162,907
Term Loan 670,987 -
4,662,618 2,968,698
6. Creditors due after one year analysed as follows :-
Group
2007 2006
� �
Obligations under finance leases - 3,994
Loan 1,230,142 -
1,230,142 3,994
Borrowings due after one year are repayable as follows:
2007 2006
� �
Finance leases
Between one and two years - 3,994
Between two and five years - -
After five years - -
- 3,994
Loans
In one year or less or on demand 670,987 -
Between one and two year 670,987 -
Between two and five years 559,155 -
After five years - -
1,901,129 -
7. The Annual General Meeting is scheduled to be held at 10am 28th March 2008.
Notice will be issued in due course.
8. Copies of the Report and Accounts will be available from 4th March 2008 at
the Company's offices at Mediasurface House, Newbury Business Park, London Road,
Newbury RG14 2QA and at the Company's website www.mediasurface.com. A copy of
the Report and Accounts will be posted to all Shareholders.
For further information please contact:
Lawrence Flynn Chief Executive Officer
David Deacon Chief Financial Officer
Telephone : 01635 262000
Adam Reynolds Hansard Group, Financial PR
Telephone : 020 7245 1100
Oliver Scott/Richard Kauffer KBC Peel Hunt, Nominated Adviser and Broker
Telephone : 0207 418 8850
This information is provided by RNS
The company news service from the London Stock Exchange
END
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