RNS Number : 7089D
  Optimisa PLC
  18 September 2008
   

    Embargoed for release at 7.00 a.m.
    18 September 2008

    Optimisa plc
    ("Optimisa" or the "Company")

    Interim results for the six months ended 30 June 2008

    Chairman's statement

    Highlights

    *     As forewarned in our trading update on 22 May, trading conditions in the 2nd quarter were extremely difficult and we performed
well below budget in all three of our major operating units.
    *     The re-organisation and integration of the EQ business acquired at the end of 2007 was completed. However, EQ did not make a
positive contribution to earnings after interest costs.
    *     KAE Asia, with operations in Singapore and Shanghai, made a positive contribution in the first half.
    *     Revenue for the first 6 months was up to �9.1m from �4.7m, an increase of 94%.
    *     Gross profit increased to �6.2m up from �3.5m, an increase of 74%.
    *     Adjusted pre tax profit fell to �472,000 from �789,000.
    *     Adjusted EPS reduced to 3.93p per share from 12.41p per share.
    *     Net debt rose in H1 and peaked at �4.3m at the end of June.
    *     In order to increase the speed at which we reduce debt, we do not propose to pay an interim dividend.

The disappointing results for the six months to 30 June 2008 reflect the sudden deterioration in trading experienced across the major
businesses in the UK market during this period as outlined in my trading update in May. Unfortunately our worst fears for business
performance in the UK materialised. Even with an improvement in conversion rates since the 2nd quarter, it is clear that market conditions
will continue to be difficult for some time to come.
 
The re-organisation and integration of the EQ companies into the group took longer and were more difficult than planned in part because of
the speed and severity of the delays, reduction and cancellation of projects. As a consequence and even with a modest recovery of fortunes
in the 2nd half of the year, the businesses acquired at the end of 2007 are not expected to be earnings enhancing during 2008 as was
planned.
 
Similarly, KAE the major operating unit in Optimisa prior to the EQ acquisition has performed below the level of the exceptional first half
delivered in 2007.
 
We expect that the overall markets in the US and UK to continue to contract in the 2nd half of 2008 and pressure on prices and the slow
business pipeline conversion rate to continue, possibly well into 2009. However, in the face of these difficult market and operational
conditions we have had a number of significant contract wins throughout the year and have succeeded in maintaining our business
relationships with all of our major clients.
 
Against this challenging economic background we have acted quickly to reduce fixed costs in all areas of the business and have targeted
operational changes that increase speed of project execution and overall efficiency so that we can deliver the same level of quality to our
clients at lower cost. The benefits of the cost cutting programme we have undertaken, while having some impact in the 2nd half of 2008 will
not be fully reflected until 2009. With these cost savings and a strong performance from KAE Asia we expect overall group margins to recover
in the 2nd half.
 
In our last trading statement we announced that new Managing Directors were appointed at both Buckingham and Quaestor in February and March
respectively. Both have worked extremely hard to get to grips with their respective businesses and have played a significant part in the
considerable change programme that has been undertaken. A significant part of this has been the expansion of *cross-group* business
development and execution and we have made considerable progress in this area with a wide range of projects involving KAE, Quaestor and
Buckingham now being undertaken. In addition we have moved the offices of our specialist research team AIA, co-locating them in the KAE /
Quaestor London office. 
 
The consolidated group offer of combined research and consulting has been met with considerable positive reaction from our clients and we
believe this, combined with our continued group wide investment in business development, will help us increase our market share in the UK
during the rest of this year and facilitate more positive growth once the general market starts to recover.
 
Net debt for the group has increased to �4.3m at the half year. Working capital requirements have risen in line with the normal seasonality
of the business. This has been exaggerated by reduced cash generation and the short term cash costs of re-organisation, the cost of
strengthening the management teams and the investment made to develop KAE Asia.
 
We continue to prioritise reduction in our overall level of debt and as a consequence we have taken the decision not to recommend payment of
an interim dividend this year in order to conserve cash. Improved operating cash flow in the 2nd half and the normal seasonal reduction in
working capital requirements should ensure that net debt is on a downward trend throughout the 2nd half.
 
The reductions in staff costs we have already made, the decline in Sterling against the US$ and the continued success of our new business in
Asia give us some confidence for the rest of this year. Despite the expected continued difficult economic conditions in our mature markets
the actions we have taken should result in a better performance in the 2nd half in operating profits, PBT and EPS.


    R F Littleboy 
    Chairman


    Enquiries:

    Optimisa plc    +44 (0) 20 7960 3320
    Ron Littleboy, Non-Executive Chairman

    Noble & Company Limited    +44 (0) 20 7763 2200
    Nick Naylor/Brian Stockbridge


    Unaudited consolidated income statement

                                       Six months ended   Six months ended             Year 
                                 Note           30 June            30 June            ended 
                                                    2008               2007      31 December
                                                   �'000              �'000             2007
                                                                                       �'000
 Revenue                          3                9,114              4,724           11,415
 Cost of sales                                   (2,961)            (1,183)          (3,325)
 Gross profit                                      6,153              3,541            8,090
 Administrative expenses                         (5,337)            (2,724)          (6,570)
 excluding depreciation and
 amortisation
 Depreciation                     7                (152)               (24)             (94)
 Amortisation                     6                 (92)               (20)            (125)
 Total administrative expenses                   (5,581)            (2,768)          (6,789)
 Operating profit                                    572                773            1,301
 Finance income                                        4                 14               51
 Finance costs                                     (174)                (7)             (95)
 Profit before income tax                            402                780            1,257
 Income tax expense                                (109)              (132)            (253)
 Profit for the period                               293                648            1,004

 Attributable to:
 Minority interests                                   13                  -                -
 Equity holders of the parent                        280                648            1,004
 Profit for the period                               293                648            1,004

    Earnings per share (pence) for the earnings
    attributable to equity holders of the company
 Basic    5  3.14  12.24  16.65
 Diluted  5  3.14  12.15  16.56

    Unaudited consolidated balance sheet
                                       As at 30  As at 30      As at 31 December
                                 Note      June      June                   2007
                                           2008      2007                  �'000
                                          �'000      �'000
 Assets
 Non-current assets
 Property, plant and equipment    7         554        182                   651
 Intangible assets - goodwill     6      14,339      2,577                14,284
 Intangible assets - other        6         522        144                   599
 Deferred income tax assets                  82         70                   126
 Total non-current assets                15,497      2,973                15,660

 Current assets
 Inventories - work in progress              43          -                   198
 Current income tax recoverable               -          -                   114
 Trade and other receivables              5,171      2,903                 4,555
 Cash and cash equivalents                  201      1,386                 1,137
 Total current assets                     5,415      4,289                 6,004

 Total assets                            20,912      7,262                21,664

 Current liabilities
 Trade and other payables               (3,081)    (1,536)               (3,257)
 Current income tax liabilities           (285)      (106)                 (487)
 Borrowings                             (1,765)          -               (1,660)
 Deferred consideration                    (60)      (111)                 (101)
 Total current liabilities              (5,191)    (1,753)               (5,505)

 Non-current liabilities
 Borrowings                             (2,765)          -               (3,197)
 Deferred consideration                   (161)      (596)                 (155)
 Deferred income tax                      (134)       (16)                 (154)
 liabilities
 Total non-current liabilities          (3,060)      (612)               (3,506)

 Total liabilities                      (8,251)    (2,365)               (9,011)

 Net assets                              12,661      4,897                12,653

 Capital and reserves
 attributable to equity holders
 of the Company
 Ordinary shares                          2,227      1,323                 2,227
 Share premium                            7,882      1,334                 7,880
 Merger reserve                             914        914                   914
 Foreign currency translation             (118)      (144)                 (115)
 reserve
 Retained earnings                        1,754      1,470                 1,747
 Total equity                            12,659      4,897                12,653
 Minority interests                           2          -                     -
 Equity attributable to equity           12,661      4,897                12,653
 shareholders of the parent

    Unaudited consolidated cash flow statement

                                 Note   Six months ended 30   Six months ended 30         Year ended 31
                                                 June 2008              June 2007         December 2007
                                                      �'000                 �'000                 �'000
      Cash flows from operating
                    activities:
       Profit before income tax                         402                   780                 1,257
               Adjustments for:
                   Depreciation   7                     152                    24                    94
                   Amortisation   6                      92                    20                   125
          Profit on disposal of                         (3)                     -                     -
  property, plant and equipment
              Share option cost                           -                     -                    10
     Foreign exchange losses on                         (3)                     -                     -
           operating activities
                 Finance income                         (4)                  (14)                  (51)
                  Finance costs                         174                     7                    95
     Operating cash flow before                         810                   817                 1,530
 changes in working capital and
                     provisions
        Decrease in inventories                         155                     -                    99
    Increase in trade and other                       (571)               (1,072)                 (787)
                    receivables
   (Decrease)/increase in trade                       (253)                   343                    63
             and other payables
                                                        141                    88                   905
                 Interest paid                        (183)                   (1)                  (82)
              Interest received                           4                    14                    51
                Income tax paid                       (175)                  (32)                  (92)
   Net cash (used by)/generated                       (213)                    69                   782
      from operating activities

      Cash flows from investing
                    activities:
   Acquisition of subsidiaries,                        (28)                  (60)               (7,945)
           net of cash acquired
 Acquisition of property, plant                        (78)                  (65)                 (103)
            and equipment (PPE)
      Proceeds from sale of PPE                          36                     -                    11
 Payments to acquire intangible                        (15)                   (8)                  (12)
                         assets
     Net cash used by investing                        (85)                 (133)               (8,049)
                     activities

      Cash flows from financing
                    activities:
     Proceeds from the issue of                           -                     -                 7,805
                  share capital
    Purchase of treasury shares                        (42)                     -                     -
            Cost of share issue                           -                     -                 (355)
       Proceeds from borrowings                           -                     -                 3,686
       Repayments of borrowings                       (253)                     -               (5,074)
    Dividends paid to Company's                       (267)                 (132)                 (221)
                   shareholders
   Net cash (used by)/generated                       (562)                 (132)                 5,841
     from financing activities 

  Net decrease in cash and cash                       (860)                 (196)               (1,426)
                    equivalents
          Opening cash and cash                         173                 1,596                 1,596
                    equivalents
   Exchange gain/(loss) on cash                          13                  (14)                     2
           and cash equivalents
          Closing cash and cash                       (674)                 1,386                   172
                   equivalents*

    * Cash and cash equivalents at 30 June 2008 comprises cash balances of �201,000 (31 December 2007: �1,137,000, 30 June 2007: �1,386,000)
and bank overdraft balances of �875,000 (31 December 2007: �965,000, 30 June 2007: �nil).

    Notes to the unaudited interim results

    1.    Basis of preparation

    The company is a public limited company domiciled in the UK and its shares are listed on the Alternative Investment Market.  

    The interim financial results for the six months ended 30 June 2008 has been prepared in accordance with IAS 34, 'Interim financial
reporting', as adopted by the European Union. The interim financial report is unaudited and has not been reviewed by the auditors. The
financial information does not constitute statutory accounts within the meaning of section 240 of the Companies Act 1985. The comparative
figures for the year ended 31 December 2007 have been extracted from the Group's financial statements, on which the auditors gave an
unqualified opinion and did not make a statement under section 237 of the Companies Act 1985, were which approved by the Board on 21 April
2008 and delivered to the Registrar of Companies.

    The interim financial report will be published on the Company's website, www.optimisaplc.com. The maintenance and integrity of the
Company's website is the responsibility of the directors. Legislation in the UK governing the preparation and dissemination of financial
statements may differ from legislation in other jurisdictions.

    2.    Accounting policies

    The interim financial results have been prepared in accordance with International Financial Reporting Standards ("IFRS") as adopted by
the European Union. The same accounting policies and methods of computation are followed in the interim financial statements as the latest
published accounts, which are available from the Company Secretary at 209-215 Blackfriars Road, London, SE1 8NL.

    Of the new standards, amendments and interpretations that are in issue and mandatory for the financial year to 31 December 2008, there
are no changes that are expected to have a material impact on the Group.

    3.    Ordinary dividends

                                 Six months ended 30   Six months ended 30   Year ended
                                            June 2008             June 2007          31
                                                �'000                 �'000    December
                                                                                   2007
                                                                                  �'000
 Equity - ordinary
 Final 2007: 3.0p per share                       267                   132         132
 (final 2006: 2.5p per share)
 Interim 2007: 1.67p per share                      -                     -          89
                                                  267                   132         221

    The dividend per share figures prior to the 6 for 1 share sub-division on 22 October 2007 have been restated to reflect the dividend per
share after the share sub-division enabling the dividend per share to be comparable over the three periods.

    The directors do not recommend the payment of an interim dividend in 2008.

    4.    Earnings per share

                                 Six months ended 30   Six months ended 30          Year ended 31
                                            June 2008             June 2007         December 2007
 Basic earnings per ordinary                     3.14                 12.24                 16.65
 share (pence)
 Diluted earnings per ordinary                   3.14                 12.15                 16.56
 share (pence)
 Adjusted earnings per share                     3.93                 12.41                 18.37
 (pence)

    All earnings per share (EPS) information presented above has been calculated based on the number of shares following the 6 for 1 share
sub-division.

    Basic EPS is calculated by dividing the earnings attributable to ordinary shareholders by the weighted average number of ordinary shares
in issue during the year.

    For diluted EPS, the weighted average number of ordinary shares in issue is adjusted to reflect the assumption of conversion of all
dilutive ordinary shares. The dilutive ordinary shares represent the share options granted to employees where the exercise price is less
than the average market price of the Company's ordinary shares during the year.

    For adjusted EPS, the reported profit after tax is adjusted for the amortisation charge on customer contracts and customer
relationships.

    Reconciliations of basic EPS to diluted EPS and adjusted EPS are set out below:

                                                   30 June 2008                    30 June 2007                31 December 2007
                                 Earnings      Weighted average  Earnings      Weighted average  Earnings      Weighted average
                                    �'000      number of shares     �'000      number of shares     �'000      number of shares
 Basic EPS
 Profit and weighted average          280             8,910,090       648             5,292,906     1,004             6,031,243
 number of ordinary shares for
 basic earnings per share

 Diluted EPS
 Adjustment for share options           -                16,010         -                42,348         -                32,168
 Profit and weighted average          280             8,926,100       648             5,335,254     1,004             6,063,411
 number of shares for diluted
 earnings per share

 Basic EPS
 Profit and weighted average     280  8,910,090  648  5,292,906  1,004  6,031,243
 number of ordinary shares for
 basic earnings per share

 Adjusted EPS
 Adjustment for customer          70          -    9          -    104          -
 contracts and relationships
 amortisation
 Profit and weighted average     350  8,910,090  657  5,292,906  1,108  6,031,243
 number of shares for adjusted
 earnings per share

    5.    Business combinations

    The following acquisition was made during the period:

    KAE: Asia Pacific PTE Ltd

    On 1 May 2008, the Group exercised its option, as contained in an agreement entered into on 18 January 2008, to acquire 80% of the
issued share capital of KAE Asia Pacific Pte. Ltd (KAE Asia), a company based and incorporated in Singapore. The consideration payable was
the face value of the shares of SGD4,000 which translates to �1,492 at the exchange rate prevailing on 1 May 2008 of SGD2.681:�1.00. 

    KAE Asia provides marketing intelligence to a number of blue chip clients in Asia and has grown rapidly since its incorporation on 29
November 2007. KAE Asia has one 100% owned subsidiary, KAE Greater China Ltd, which to date has not operated.

    KAE Asia contributed revenues of �155,000 and a profit before tax of �77,000 for the period from 1 May 2008 to 30 June 2008. The impact
on the Group's revenue and profit would have been �315,000 and �62,000 if the acquisition had occurred on 1 January 2008.

    The book value of each class of the acquiree's assets and liabilities at the acquisition date are set out below. No fair value
adjustments have been made to these values and they and the resulting goodwill value are therefore provisional. A full assessment of the
fair value of the assets and liabilities acquired will be carried out for inclusion in the Group's financial statements, with any
adjustments resulting in a corresponding adjustment to the goodwill value.

                                �'000
 Non-current assets
 Property, plant and equipment     10
 Total non-current assets          10
 Current assets
 Trade and other receivables       44
 Cash and cash equivalents         26
 Total current assets              70
 Total assets                      80

 Current liabilities
 Trade and other payables       (135)
 Total liabilities              (135)

 Net Liabilities                 (55)
 Minority interests (20%)        (11)
 Net Liabilities acquired        (44)
 Fair value of consideration        1
 Goodwill                          45

    The goodwill that has arisen on the combination can be partly attributed to the value in the workforce of KAE Asia, which at acquisition
comprised 9 people, which cannot be recognised as an intangible asset under IAS 38, 'Intangible Assets'. Additionally there is expected to
be an increase in activity resulting from membership in Optimisa Group for KAE Asia as its geographical location will enable it to win new
and additional work from existing customers of the Optimisa Group.




This information is provided by RNS
The company news service from the London Stock Exchange
 
  END 
 
IR GGGMLLNVGRZM

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