TIDMTHF
RNS Number : 2379Q
Thirdforce PLC
07 April 2009
ThirdForce plc
Audited Final Results
Year Ended 31 December 2008
CHAIRMAN'S STATEMENT
Introduction
ThirdForce Plc ('ThirdForce') is a leading e-learning courseware, assessment and
services provider. The company's products have touched over 17 million users in
corporate business, education, government, care, hospitality and commercial
organisations across dispersed of populations. All our products encompass the
latest technologies in e-learning and e-assessment with unique wrap-around
services and infrastructure to provide a complete solution to our customers.
ThirdForce has offices in Ireland, the UK, USA and Canada. The company continues
to expand into new sectors and markets and continues to evolve its extensive
product portfolio.
I am pleased to report on another successful year of revenue growth and a
continuation of our unbroken track record of Operating Profits (profits before
charges for goodwill impairment, amortisation of acquisition intangibles, and
share options). Since the company was re-launched as ThirdForce in 2003, it has
become a strong business group. Our two main businesses are in the USA and the
UK. Each has an excellent management team and each generated over $2million in
Operating Profit in 2008.
Diversified
In 2003 the company had one e-learning revenue stream, IT skills, in one primary
market, UK & Ireland. We have strategically expanded the group through
acquisition and organic growth into a business that has a very wide geographical
spread and an extensive e-learning product portfolio with multiple revenue
streams.
We now have excellent franchises in
* Corporate Business
* IT skills (both end-user and professional)
* Adult Literacy & Numeracy
* Online Assessment
* Hospitality
* Health & Social Care
The company has an e-learning portfolio of more than 2,500 courses. We believe
this portfolio to be one of the top five in the world. The group continues to
invest in product maintenance and development to ensure that our portfolio
remains vibrant and current. New products can also become additional annuity
business streams.
In addition to our product diversification, the company is well spread across
key markets.
USA
Independent market research confirms that the USA remains the number one
e-learning market in the world. According to Bersin & Associates' last report
(May 2007), the total US learning market had estimated revenues of $55.8
billion. The e-learning market subset, which ThirdForce addresses, was estimated
at $8.7 billion. Furthermore many believe that e-learning's share of the $55.8
billion market is expanding. We clearly have ample room to grow in this exciting
market.
Under our MindLeaders brand, the group has a solid position in the US market.
The business is well diversified across almost 1,000 customers, with the largest
of those representing just 6% of group revenue. The excellent breadth and depth
of our e-learning portfolio means we have solutions for a wide range of
industries. This is reflected in the spread of customers that we have across
sectors including:
* Banking
* Insurance
* Government
* IT Service
* Health
* Education
In 2008 we focused on improving our sales effectiveness and introducing our
hospitality products to the market. Traction in hospitality has been slower than
expected, however we have overcome some initial hurdles and are optimistic about
the potential in the years ahead. In 2008 we recruited an experienced Vice
President of Sales. He has added new energy and additional sales people to the
team. He has also raised the "Sales Excellence" bar, which management believe
will show dividends in 2009 and beyond.
UK
2008 saw excellent growth in our Hospitality and Care sectors in the UK where
sales increased 65% year-on-year, on a like-currency basis. The company won
contracts with premier UK brands such as Spirit group in the Hospitality sector
(in excess of StgGBP800,000 over 3 years) and Anchor, a leading Care provider
(StgGBP450,000 over 3 years).
Our new Learning Services business, which we launched in 2007, grew sales by 25%
in 2008 on a like-currency basis. A core part of our offering is our adult
literacy and numeracy e-learning product, U-Skills. Our product diagnoses a
person's literacy or numeracy issues and then plans and provides the specific
individual training that they require. This is strategically in line with the UK
Government's "Skills Agenda" and ThirdForce is one of a small number of
companies with a true e-learning solution. Large UK companies such as Whitbread,
Care UK and DHL are deploying our Skills for Life program.
In 2008 ThirdForce also renewed its contract with the UK Government's
UfI/learndirect. For eight consecutive years the company has been the ECDL
supplier of choice to UfI/learndirect. Through this partnership, our e-learning
products are used by hundreds of thousands of UK citizens to acquire the skills
needed to confidently use a Personal Computer.
financial results
Revenue for the year ended 31 December 2008 was EUR26.9 million, an 18% increase
on the EUR22.8 million for 2007 (an increase of 31% on a like-currency basis).
This included MindLeaders' USA revenue in respect of the full year 2008 as
opposed to part of 2007. Revenues in the UK and internationally (excluding USA)
were marginally higher (+2%) in 2008 than 2007 on a like-currency basis. Strong
growth in our software revenues in the compliance and care sectors was mitigated
by a reduction in our ECDL revenues, as the market for entry-level IT adult
education matures.
Group Operating Profit (profit before charges for goodwill impairment,
amortisation of acquisition intangibles, and share options) was EUR3.1 million on
a like-currency basis, an increase of 21% on the corresponding prior year period
profit of EUR2.6 million.
In US Dollars our revenue was $39.5m with EBITDA of $3.5m.
The marked decline in the GBP:Euro exchange rate through the year 2008, as well
as a continuing weak USD:Euro exchange rate, had a significant impact on the
group's financial results for the year. While 78% of operating expenses are
matched to Sterling or Dollar revenue, the balance of unmatched costs are
incurred in Euro. The effect of the adverse exchange rates during the year was
to reduce Operating Profit on an actual-currency basis, to EUR2.0 million.
Below the Operating Profit line, the inclusion of a full year's charge for the
amortisation of MindLeaders' intangible assets (acquired in June 2007), and
increased goodwill impairment charges in the ICT segment, as well as the decline
in euro Operating Profit noted above means the loss absorbed for the year to 31
December 2008 was EUR2.3 million, compared to a profit retained of EUR0.2 million
for 2007. The increased goodwill impairment charges are primarily a consequence
of projecting cash-flows into the future based on the currently prevailing
unfavourable exchange rates.
Earnings per share, adjusted for charges for goodwill impairment, amortisation
of acquisition intangibles, and share options, were 0.9c for the year to 31
December 2008. This was 37% lower than the equivalent earnings per share of 1.3c
for the year ended 31 December 2007. The loss per share after all charges and
taxation was 0.91c, compared to earnings per share of 0.10c for the year ended
31 December 2007.
The group's cash-flow from operations was very strong during the year,
generating EUR3.0 million, compared to EUR0.7m for the year 2007. That was a result
of the EUR2.0 million Operating Profit as well as a significant year-on-year
reduction in trade receivables. Net cash inflows for the group, after all
interest and capital expenditure flows, amounted to EUR2.7 million. Cash balances
at 31 December 2008 stood at EUR6.9 million, compared to EUR4.2 million at 31
December 2007.
Products
The group now has 75 people in its product development teams in Ireland, USA and
Canada. In 2008 these three teams were unified under one head of worldwide
development. This has facilitated shared thinking, knowledge-transfer and the
use of common technologies. The company has also decided to consolidate all of
the Group's existing learning platforms onto the MindLeaders Learning Management
backbone - a further synergy realised since the MindLeaders acquisition in 2007.
The development teams brought new products to market in the UK in 2008 including
* General Security Awareness Training (GSAT)
* Knowledge Sets for Care
"GSAT" is an example of moving quickly into a new sector, Travel & Logistics,
from where we can scope out further product opportunities.
"Knowledge Sets" build on our leadership position in the provision of
technology-based learning and assessment for the Care sector in the UK. The UK
government mandates that at least 50% of staff on duty in a Care home have a
National Vocational Qualification (NVQ). The ThirdForce Care solution is a
proven success in the sector with some of the largest providers, including
Voyage, Barchester, Caring Homes, among our customers. In 2008 we further
enhanced our Care products by developing an additional set of modules called
Knowledge Sets for Care. These were launched in 2008 and have shown strong sales
already.
Outlook
It is clear that 2009 will be a challenging year for all businesses worldwide.
The on-going currency volatility and market conditions have meant that many
customers have rationalised their businesses and are cautious about expenditure
in 2009. ThirdForce customers will be no different. In the hardest hit sectors
such as banking, some large customers will not renew their training programs. We
have considered these business realities in our planning and the company expects
to show a solid year in 2009 and trading for the first quarter has been in line
with expectations.
Acquisitions remain a key driver of our strategic growth ambitions. We continue
to assess the market for suitable acquisition targets and the USA is the
geography of primary interest. We already have a quality business with
world-class e-learning products. Our goal is to identify and make strategic
investments or acquisitions that will help us to drive scale in the business.
Pat McDonagh
Chairman
6 April 2009
For more information, please contact:
Eimer McGovern
ThirdForce plc
Tel. + 353 1 289 1916
Clive Carver
Charles Cunningham
JM Finn Capital Markets
Tel. + 44 207 600 1658
Consolidated Income Statement
Year ended 31 December 2008
+---------------------+--------+----------+----------+
| | Note | 2008 | 2007 |
+---------------------+--------+----------+----------+
| | | EUR'000 | EUR'000 |
+---------------------+--------+----------+----------+
| Revenue | | 26,941 | 22,819 |
+---------------------+--------+----------+----------+
| Cost | | (4,669) | (4,165) |
| of | | | |
| sales | | | |
+---------------------+--------+----------+----------+
| Gross | | 22,272 | 18,654 |
| profit | | | |
+---------------------+--------+----------+----------+
| Distribution | | (8,707) | (6,898) |
| costs | | | |
+---------------------+--------+----------+----------+
| Administrative | | (16,233) | (11,573) |
| expenses | | | |
+---------------------+--------+----------+----------+
| Operating | | (2,668) | 183 |
| (loss)/profit | | | |
+---------------------+--------+----------+----------+
| | | | |
+---------------------+--------+----------+----------+
| Finance | | 76 | 128 |
| income | | | |
+---------------------+--------+----------+----------+
| Finance | | (84) | (231) |
| costs | | | |
+---------------------+--------+----------+----------+
| Finance | | (8) | (103) |
| costs - | | | |
| net | | | |
+---------------------+--------+----------+----------+
| (Loss)/profit | | (2,676) | 80 |
| before income | | | |
| tax | | | |
+---------------------+--------+----------+----------+
| | | | |
+---------------------+--------+----------+----------+
| Income | | 360 | 131 |
| tax | | | |
| credit | | | |
+---------------------+--------+----------+----------+
| (Loss)/profit | | (2,316) | 211 |
| for the year | | | |
| attributable | | | |
| to equity | | | |
| holders of | | | |
| the company | | | |
+---------------------+--------+----------+----------+
| | | | |
+---------------------+--------+----------+----------+
| (Loss)/earnings per | | | |
| share attributable | | | |
| to the equity | | | |
| holders of the | | | |
| company during the | | | |
| year (expressed in | | | |
| cent per share) | | | |
+---------------------+--------+----------+----------+
| - | 3 | (0.91c) | 0.10c |
| Basic | | | |
+---------------------+--------+----------+----------+
| - | 3 | (0.91c) | 0.09c |
| Diluted | | | |
+---------------------+--------+----------+----------+
| | | | |
+---------------------+--------+----------+----------+
Consolidated Balance Sheet
As at 31 December 2008
+-----------------------+--------+----------+-----------+
| | | 2008 | 2007 |
+-----------------------+--------+----------+-----------+
| ASSETS | | EUR'000 | EUR'000 |
+-----------------------+--------+----------+-----------+
| Non-current | | | |
| assets | | | |
+-----------------------+--------+----------+-----------+
| Property, | | 617 | 748 |
| plant and | | | |
| equipment | | | |
+-----------------------+--------+----------+-----------+
| Intangible | | 22,721 | 27,601 |
| assets | | | |
+-----------------------+--------+----------+-----------+
| | | 23,338 | 28,349 |
+-----------------------+--------+----------+-----------+
| Current | | | |
| assets | | | |
+-----------------------+--------+----------+-----------+
| Inventories | | 1 | 41 |
+-----------------------+--------+----------+-----------+
| Trade | | 5,338 | 6,938 |
| and | | | |
| other | | | |
| receivables | | | |
+-----------------------+--------+----------+-----------+
| Cash | | 6,901 | 4,167 |
| and | | | |
| cash | | | |
| equivalents | | | |
+-----------------------+--------+----------+-----------+
| | | 12,240 | 11,146 |
+-----------------------+--------+----------+-----------+
| | | | |
+-----------------------+--------+----------+-----------+
| Total | | 35,578 | 39,495 |
| assets | | | |
+-----------------------+--------+----------+-----------+
| | | | |
+-----------------------+--------+----------+-----------+
| EQUITY | | | |
+-----------------------+--------+----------+-----------+
| Capital | | | |
| and | | | |
| reserves | | | |
| attributable | | | |
| to equity | | | |
| holders of | | | |
| the company | | | |
+-----------------------+--------+----------+-----------+
| Ordinary | | 31,764 | 31,764 |
| shares | | | |
+-----------------------+--------+----------+-----------+
| Share | | 15,725 | 15,725 |
| premium | | | |
+-----------------------+--------+----------+-----------+
| Currency | | (2,806) | (1,742) |
| translation | | | |
| adjustment | | | |
+-----------------------+--------+----------+-----------+
| Other | | 3,807 | 3,482 |
| reserves | | | |
+-----------------------+--------+----------+-----------+
| Retained | | (27,091) | (24,775) |
| losses | | | |
+-----------------------+--------+----------+-----------+
| Total | | 21,399 | 24,454 |
| equity | | | |
+-----------------------+--------+----------+-----------+
| | | | |
+-----------------------+--------+----------+-----------+
| LIABILITIES | | | |
| | | | |
+-----------------------+--------+----------+-----------+
| Non-current | | | |
| liabilities | | | |
+-----------------------+--------+----------+-----------+
| Deferred | | 390 | 938 |
| revenue | | | |
+-----------------------+--------+----------+-----------+
| Deferred | | 2,267 | 2,676 |
| income | | | |
| tax | | | |
| liabilities | | | |
+-----------------------+--------+----------+-----------+
| Borrowings | | 234 | 234 |
+-----------------------+--------+----------+-----------+
| | | 2,891 | 3,848 |
+-----------------------+--------+----------+-----------+
| Current | | | |
| liabilities | | | |
+-----------------------+--------+----------+-----------+
| Deferred | | 7,568 | 7,314 |
| revenue | | | |
+-----------------------+--------+----------+-----------+
| Trade | | 3,513 | 3,731 |
| and | | | |
| other | | | |
| payables | | | |
+-----------------------+--------+----------+-----------+
| Current | | 206 | 105 |
| income | | | |
| tax | | | |
| liabilities | | | |
+-----------------------+--------+----------+-----------+
| Borrowings | | 1 | 43 |
+-----------------------+--------+----------+-----------+
| | | 11,288 | 11,193 |
+-----------------------+--------+----------+-----------+
| | | | |
+-----------------------+--------+----------+-----------+
| Total | | 14,179 | 15,041 |
| liabilities | | | |
+-----------------------+--------+----------+-----------+
| | | | |
+-----------------------+--------+----------+-----------+
| Total | | 35,578 | 39,495 |
| equity | | | |
| and | | | |
| liabilities | | | |
+-----------------------+--------+----------+-----------+
| | | | |
+-----------------------+--------+----------+-----------+
Consolidated Cash Flow Statement
Year ended 31 December 2008
+-----------------+--------+--------+---------+
| | | 2008 | 2007 |
+-----------------+--------+--------+---------+
| | | EUR'000 | EUR'000 |
+-----------------+--------+--------+---------+
| Cash | | 48 | |
| flows | | | |
| from | | | |
| operating | | | |
| activities | | | |
| | | | |
+-----------------+--------+--------+---------+
| Cash | | 2,963 | 723 |
| generated | | | |
| from | | | |
| operations | | | |
+-----------------+--------+--------+---------+
| Interest | | 73 | (182) |
| received/(paid) | | | |
+-----------------+--------+--------+---------+
| Income | | (32) | (125) |
| tax | | | |
| paid | | | |
+-----------------+--------+--------+---------+
| Net | | 3,004 | 416 |
| cash | | | |
| generated | | | |
| from | | | |
| operating | | | |
| activities | | | |
+-----------------+--------+--------+---------+
| | | | |
+-----------------+--------+--------+---------+
| Cash | | | |
| flows | | | |
| from | | | |
| investing | | | |
| activities | | | |
+-----------------+--------+--------+---------+
| Acquisition | | - | (5,088) |
| of | | | |
| subsidiary, | | | |
| net of cash | | | |
| acquired | | | |
+-----------------+--------+--------+---------+
| Purchases | | (150) | (157) |
| of | | | |
| property, | | | |
| plant and | | | |
| equipment | | | |
+-----------------+--------+--------+---------+
| Proceeds | | 11 | 38 |
| on | | | |
| disposal | | | |
| of | | | |
| property, | | | |
| plant and | | | |
| equipment | | | |
+-----------------+--------+--------+---------+
| Purchases | | (89) | (30) |
| of | | | |
| intangible | | | |
| assets | | | |
+-----------------+--------+--------+---------+
| Net | | (228) | (5,237) |
| cash | | | |
| used | | | |
| in | | | |
| investing | | | |
| activities | | | |
+-----------------+--------+--------+---------+
| | | | |
+-----------------+--------+--------+---------+
| Cash | | | |
| flows | | | |
| from | | | |
| financing | | | |
| activities | | | |
+-----------------+--------+--------+---------+
| Proceeds | | - | 14,255 |
| from | | | |
| issuance | | | |
| of | | | |
| ordinary | | | |
| shares | | | |
+-----------------+--------+--------+---------+
| Repayments | | (42) | (98) |
| of lease | | | |
| obligations | | | |
+-----------------+--------+--------+---------+
| Net | | (42) | 14,157 |
| cash | | | |
| (used | | | |
| by)/generated | | | |
| from | | | |
| financing | | | |
| activities | | | |
+-----------------+--------+--------+---------+
| | | | |
+-----------------+--------+--------+---------+
| Net | | 2,734 | 9,336 |
| increase | | | |
| in cash, | | | |
| cash | | | |
| equivalents | | | |
| and bank | | | |
| overdrafts | | | |
+-----------------+--------+--------+---------+
| Cash, | | 4,167 | (5,169) |
| cash | | | |
| equivalents | | | |
| and bank | | | |
| overdrafts | | | |
| at | | | |
| beginning | | | |
| of year | | | |
+-----------------+--------+--------+---------+
| Cash, | | 6,901 | 4,167 |
| cash | | | |
| equivalents | | | |
| and bank | | | |
| overdrafts | | | |
| at end of | | | |
| year | | | |
+-----------------+--------+--------+---------+
| | | | |
+-----------------+--------+--------+---------+
1. General information
The company is a public limited liability company incorporated and domiciled in
Ireland, and is listed on IEX in Ireland and AIM in the United Kingdom. The
group has offices in the US, the UK, Ireland, Australia and Canada, and it
provides e-learning and assessment products and services to hundreds of
organisations worldwide. The group offers a wide portfolio of solutions in the
areas of ICT literacy skills, IT Professional, Skills for Life, Compliance, Job
Skills, Project Management and Implementation Support. Further information
relating to the group's business is set out in the Chairman's Statement.
2. Basis of preparation
These financial statements, which are presented in euro, rounded to the nearest
thousand, have been prepared under the historical cost convention, as modified
by the measurement at fair value of share options, and in accordance with the
group's accounting policies under IFRS.
IFRS applied by the company and group in the preparation of these financial
statements is that which was effective at 31 December 2008.
The financial information set out in this document does not constitute full
statutory financial statements but has been derived from the group financial
statements for the year ended 31 December 2008. The 2008 financial statements
have been audited and have received an unqualified audit report.
3. (Loss)/Earnings per share
(a) Basic
Basic (loss)/earnings per share is calculated by dividing the (loss)/profit
attributable to equity holders of the company by the weighted average number of
ordinary shares in issue during the year.
+---------------------+--------------+-------------+
| | 2008 | 2007 |
+---------------------+--------------+-------------+
| | | |
+---------------------+--------------+-------------+
| (Loss)/profit | (EUR2,316,000) | EUR211,000 |
| attributable | | |
| to equity | | |
| holders of | | |
| the company | | |
+---------------------+--------------+-------------+
| Weighted | 254,110,922 | 202,809,831 |
| average | | |
| number | | |
| of | | |
| ordinary | | |
| shares | | |
| in issue | | |
+---------------------+--------------+-------------+
| Basic | (0.91c) | 0.10c |
| (loss)/earnings per | | |
| share (cent per | | |
| share) | | |
+---------------------+--------------+-------------+
(b) Diluted
Diluted earnings per share is calculated by adjusting the weighted average
number of ordinary shares outstanding to assume conversion of all dilutive
potential ordinary shares.
+----------------------------------------------+--------------------------+
| | Year ended 31 December |
| | 2007 |
+----------------------------------------------+--------------------------+
| Profit attributable to equity holders of the | EUR211,000 |
| company | |
+----------------------------------------------+--------------------------+
| Weighted average number of ordinary shares | 223,304,624 |
| in issue including weighted average number | |
| of options outstanding | |
+----------------------------------------------+--------------------------+
| Diluted earnings per share (cent per share) | 0.09c |
+----------------------------------------------+--------------------------+
At 31 December 2008 and 2007 the company had two categories of dilutive
potential ordinary shares and they are deferred share consideration and share
options. A calculation of diluted earnings per share is not presented for the
year 2008 because options granted and the deferred share consideration are both
anti-dilutive.
4. Annual Report and Accounts
Copies of the Company's annual report and accounts for the year ended 31
December 2008 will shortly be despatched to shareholders and will be available
to download from the Company's website at www.thirdforce.com.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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