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
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