Source - RNS
RNS Number : 1361K
NetDimensions (Holdings) Limited
19 September 2016
 

 

 

NetDimensions (Holdings) Limited

("NetDimensions" or the "Company" or the "Group")

 

Half Yearly Report

 

NetDimensions (AIM: NETD; OTCQX: NETDY), a global provider of performance, knowledge and learning management systems, is pleased to announce its half year results for the period ending 30 June 2016.

 

Financial Highlights

·     Total revenue of US$10.5M (2015 H1: US$10.6M)

6% increase in revenue from our global hosted secure SaaS offering to US$5.4M (2015 H1: US$5.1M)

·     Gross margin increased to 85% (2015 H1: 81%)

·     56% improvement in adjusted EBITDA loss to US$0.8M (2015 H1: loss of US$1.8M)

8% reduction in cost of sales, selling & operating expenses to US$11.9M (2015 H1: US$12.9M)

·     Cash as of 30 June 2016 US$11.2M (2015 FY: US$12.0M)

 

Operations Highlights

·     4.2M active users at the end of the period (2015 H1: 3.9M)

·     Recurring revenue was 70% of total revenue in the period (2015 H1: 68%)

·     12% increase in Research & Development investment to US$1.8M (2015 H1: US$1.6M)

All of which was expensed to the Income statement during the period

·     17 new clients added in the period through direct and reseller channels with a combined contracted value of US$1.4M

 

Graham Higgins, Chairman of NetDimensions, commented: "The Company made good progress in the period in terms of better cost control and declaring a substantially smaller loss than the prior period. The Company did experience some delays in rolling out some larger client contracts in the first half, however the high consequence industries which we service continue to show demand for our product suite."

 

 

 

Enquiries:

NetDimensions (Holdings) Limited

 

Tel: +852 2122 4500

Jay Shaw

Matthew Chaloner

 

 

 

 

 

Panmure Gordon (UK) Limited (Nomad & Broker)

 

Tel: +44 20 7886 2500 

Fred Walsh

 

 

Peter Steel

 

 

 

 

 

Walbrook PR Ltd (Financial Public Relations)

 

Tel: +44 20 7933 8780

Paul Cornelius

 

[email protected]

Sam Allen

 

 

Nick Rome

 

 

Helen Cresswell

 

 

 

 

About NetDimensions

Established in 1999, NetDimensions (AIM: NETD; OTCQX: NETDY) is a global provider of performance, knowledge and learning management solutions to high consequence industries.

 

NetDimensions provides companies, government agencies and other organisations with talent management solutions to personalise learning, share knowledge, enhance performance, foster collaboration and manage compliance programmes for employees, customers, partners and suppliers.

 

Recognised as one of the talent management industry's top-rated technology suppliers, NetDimensions' award-winning solutions have been chosen by leading organisations worldwide including ING, Cathay Pacific, Chicago Police Department, Geely Automotive, Fugro Group and Fresenius Medical Care, tesa SE and DB Schenker.

 

 NetDimensions is ISO 9001 certified and NetDimensions hosted services are ISO 27001 certified.

 

For more information, visit www.NetDimensions.com or follow @netdimensions on Twitter.

 

This announcement contains inside information for the purposes of Article 7 of Regulation (EU) No 596/2014.

  

 

Chairman's Statement for the six months Ended 30 June 2016

 

The revenue in the six months to 30 June 2016 was similar to the prior period at US$10.5M (2015 H1: US$10.6M). The sales in the first half were impacted by delays in the roll-out of some larger client engagements which impacted both growth in licence revenue and associated services.

 

Financial Highlights

 

·     Total revenue of US$10.5M (2015 H1: US$10.6M)

6% increase in revenue from our global hosted secure SaaS offering to US$5.4M (2015 H1: US$5.1M)

 

·     Gross margin increased to 85% (2015 H1: 81%)

 

·     56% improvement in the adjusted EBITDA loss to US$0.8M (2015 H1: loss of US$1.8M)

8% reduction in cost of sales, selling & operating expenses to US$11.9M (2015 H1: US$12.9M)

 

·     Cash as of 30 June 2016 US$11.2M (2015 FY: US$12.0M)

 

 

Financial Summary

The financial results for the period ending 30 June 2016 saw both revenue and invoiced sales coming in somewhat lower than expected. Revenue was largely unchanged when compared to the six months to June 2015, US$10.5M (2015 H1: US$10.6M) and invoiced sales were 3% lower, US$9.5M (2015 H1: US$9.8M).

 

Revenue from higher margin SaaS licences and multi-year on premise licences increased by 8% to US$6.8M (2015 H1: US$6.3M). The increase in licence revenue was off-set by a reduction in support and maintenance revenue which declined by 33% to US$0.6M (2015 H1: US$0.9M) and software customisation & implementation revenue which declined by 9% to US$3.1M (2015 H1: US$3.4M). The reduction in support and maintenance revenue is a result of the Company's strategy of transitioning clients away from legacy perpetual licences to either SaaS or multi-year on premise licenses. Software customisation & implementation revenue was impacted by the delays in the roll out of some larger client engagements.

 

Invoiced sales to clients in high consequence industries represented 91% of total invoiced sales (2015 H1: 92%), which is in line with our strategy of becoming a leading provider of Talent Management Systems and related compliance solutions to high consequence industries.

 

The North America region was the largest market for the Group during the period comprising 48% of Group revenues. Europe, Middle East & Africa ("EMEA") accounted for 40% of Group revenues and Asia Pacific including China 10%. The rest of the world made up 2%.

 

The Group continues to focus on supplying software via its global hosted secure SaaS offering and revenues from this product offering increased by 6% to US$5.4M (2015 H1: US$5.1M).

 

The Company continued to make improvements in expense management leading to a reduction of 8% in cost of sales, selling and operating expenses to US$11.9M (2015 H1: US$12.9M).

 

Gross Margins improved in the period to 85% (2015 H1: 81%) as a result of a reduction in the costs of sales related to services and a better product mix of higher-margin licence revenue which represented 64% of total revenue (2015 H1: 60%).

 

The improved margin and reduction in expenses resulted in the Group's adjusted EBITDA loss coming in 56% better than prior period. The Group's adjusted EBITDA loss excluding net foreign exchange gains US$0.2M, intangible asset amortisation (US$0.2M) and non-cash share-based payments (US$0.3M), was $0.8M (2015 H1: loss of US$1.8M). NetDimensions' loss before tax was US$1.2M (2015 H1: loss of US$2.5M).

 

Cash generated from operating activities was US$0.2M in the period (2015 H1: cash absorption of US$1.3M). The Group's cash balance at the end of the period was US$11.2M (2015 H1: US$3.5M) and the accounts receivable balance was US$4.6M (2015 H1: US$3.5M).

 

Operations Review

 

During the period we made the following progress in line with our business plan:

 

·     4.2M active users at the end of the period (2015 H1: 3.9M)

 

·     Recurring revenue was 70% of total revenue in the period (2015 H1: 68%)

 

·     12% increase in Research & Development investment to US$1.8M (2015 H1: US$1.6M)

All of which was expensed to the Income statement during the period

 

·     NetDimensions Ranked as a Leader in the 2016 Aragon Research Globe™ for Corporate Learning.  NetDimensions was ranked as a 'Leader' for excellence in:

enterprise LMS functionality

talent management

compliance

analytics

language support

 

·     NetDimensions has been positioned again as a "Core Leader" in the unique European learning and talent market insight report, Fosway 9-Grid™ for Learning Management Systems (LMS)

 

·     17 new clients added in the year through direct and reseller channels with a combined contracted value of US$1.4M. These new clients operate in a number of high consequence industries including healthcare, financial services, life sciences and precision manufacturing

 

Board

 

James Brooke, Non-Executive Director of the Company has decided to resign from the Company with immediate effect. We would like to thank James Brooke, for his contribution to the Board over the last three years, his financial expertise has been an asset to the Company and we are glad that he will continue to retain an interest in the Company as a valued shareholder, the Board would like to thank him and wish him well for the future.

 

 

Outlook

 

The Company made good progress in the period in terms of better cost control and declaring a substantially smaller loss than the prior period. The Company did experience some delays in rolling out some larger client contracts in the first half, however the high consequence industries which we service continue to show demand for our product suite.   

 

 

 

 

CONDENSED CONSOLIDATED INCOME STATEMENT

FOR THE SIX MONTHS ENDED 30 JUNE 2016

 

 

 

 

Note

Unaudited

 

 

    Six months ended 30 June   _

 

 

2016

2015

 

 

US$

US$

 

 

 

 

Revenue

       5

10,491,583

10,592,318 

 

 

 

 

Cost of sales

       6

(1,576,233)

(2,021,335)

 

 

─────────

─────────

Gross profit

 

8,915,350

8,570,983

 

 

 

 

 

 

 

 

Other gains/(losses), net

 

194,525

(201,663)

 

 

 

 

Selling expenses

       6

(6,027,938)

(6,244,011)

Operating expenses

       6

(4,272,637)

(4,613,752)

 

 

─────────

─────────

Operating loss

    

(1,190,700)

(2,488,443)

 

 

 

 

Finance income

 

367

498

Finance costs

 

(549)

(834)

 

 

─────────

─────────

Finance costs, net

     7

(182)

(336)

 

 

-----------------

------------------

 

 

 

 

Loss before income tax

 

(1,190,882)

(2,488,779)

 

 

 

 

Income tax expense

 

-

(3,540)

 

 

─────────

─────────

Loss for the period

 

(1,190,882)

(2,492,319)

 

 

═════════

═════════

 

 

 

 

Attributable to:

 

 

 

Equity holders of the Company

 

(1,190,882)

(2,492,319)

 

 

═════════

═════════

 

 

 

 

Loss per share attributable to owners

 

 

 

   of the Company during the period

 

 

 

   (expressed in US$ cents per share)

 

 

 

 

 

 

 

- Basic

     8

(2.3)

(6.4)

 

 

═════════

═════════

 

 

 

 

- Diluted

     8

(2.3)

(6.4)

 

 

═════════

═════════

 

 

 

 

 

 

 

CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

FOR THE SIX MONTHS ENDED 30 JUNE 2016

 

 

 

 

Unaudited

 

Six months ended 30 June 

 

2016

2016

 

US$

US$

 

 

 

Loss for the period

(1,190,882)

(2,492,319)

 

 

 

Other comprehensive (loss)/income:

 

 

Currency translation differences

(907,041)

48,137

 

────────

────────

Other comprehensive (loss)/income for the period

(907,041)

48,137

 

----------------

----------------

 

 

 

Total comprehensive loss for the period

(2,097,923)

(2,444,182)

 

════════

════════

 

 

 

Total comprehensive loss attributable to

 

 

owners of the Company

(2,097,923)

(2,444,182)

 

════════

════════

 

 

 

 

 

CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION 

AS AT 30 JUNE 2016

 

 

Unaudited

           Unaudited

                  Audited

 

Note

30 June
 201
6

30 June
2015

31 December 2015

 

 

US$      

US$     

US$      

ASSETS

 

 

 

 

Non-current assets

 

 

 

 

Property, plant and equipment

9

328,697      

302,581     

260,030

Intangible assets

10

2,431,930      

2,820,022     

2,590,605

Deposits

 

171,572      

29,498     

168,037

 

 

─────────  

─────────  

─────────

 

 

2,932,199      

3,152,101    

3,018,672

 

 

------------------    

------------------    

------------------

Current assets

 

 

 

 

Accounts and other receivables, prepayments and deposits

 

5,184,052      

4,118,584    

9,030,267     

Tax recoverable

 

-      

1,460    

-     

Cash and bank balances                                

11

11,190,765      

3,536,248    

11,981,221     

 

 

─────────  

─────────  

─────────  

 

 

16,374,817      

7,656,292    

21,011,488     

 

 

------------------    

------------------    

------------------     

 

 

    

 

 

Total assets

 

19,307,016      

10,808,393    

24,030,160     

 

 

═════════  

═════════  

═════════  

 

 

 

 

 

EQUITY

 

 

 

 

Equity attributable to owners of the Company

 

 

 

 

Share capital

   12

51,230      

39,089    

51,150     

Other reserves

 

28,085,621      

18,623,045    

29,147,076     

Accumulated losses

 

(18,251,711)      

(17,493,183)    

(17,078,149)     

 

 

─────────  

─────────  

─────────  

Total equity

 

9,885,140      

1,168,951    

12,120,077     

 

 

------------------     

------------------    

------------------     

 

 

 

 

 

LIABILITIES

 

 

 

 

Non-current liabilities

 

 

 

 

Deferred income tax liabilities

 

-      

-    

3,567     

Obligations under finance leases

 

12,344      

1,172    

14,412     

Deferred revenue

 

112,607      

209,260    

61,789     

 

 

─────────  

─────────  

─────────  

 

 

124,951      

210,432    

79,768     

 

 

------------------     

------------------    

------------------     

Current liabilities

 

 

 

 

Accounts and other payables

 

1,337,910      

1,483,216    

2,967,993     

Deferred revenue

 

7,487,172      

7,487,637    

8,727,155         

Dividend payable

 

467,729      

373,518    

-

Obligations under finance leases

 

4,114      

2,357    

       4,118         

Income tax payable

 

-      

82,282    

    131,049         

 

 

─────────  

─────────  

─────────  

 

 

9,296,925      

9,429,010    

11,830,315     

 

 

------------------    

------------------    

------------------     

 

 

 

 

 

Total liabilities

 

9,421,876      

9,639,442    

11,910,083     

 

 

------------------    

------------------    

-----------------     

Total equity and liabilities

 

19,307,016      

10,808,393    

24,030,160     

 

 

═════════  

═════════ 

═════════  

 

CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

FOR THE SIX MONTHS ENDED 30 JUNE 2016

 

                                                                                                                                                 Attributable to owners of the Company

 

Share

capital

Share

premium

Capital redemption reserve

 

Translation reserve

Share-based

payment

compensation reserve

Accumulated
losses

Total

 

US$

US$

US$

US$

US$

US$

US$

 

 

 

 

 

 

 

 

At 1 January 2015

38,763

17,702,373

850

216,288

852,548

(15,006,278)

3,804,544

Comprehensive loss:

Loss for the period

-

-

-

-

-

(2,492,319)

(2,492,319)

Other comprehensive income for the period:

 

 

 

 

 

 

 

Currency translation differences

-

-

-

48,137

-

-

48,137

 

────────

────────

────────

────────

────────

─────────

────────

Total comprehensive income/(loss) for the period

-

-

-

48,137

-

(2,492,319)

(2,444,182)

 

----------------

----------------

----------------

----------------

----------------

----------------

----------------

Transactions with owners in their          

   capacity as owners

Employee share potion benefits

-

-

-

-

21,124

-

21,124

Issue of shares to non-executive

   directors

52

65,596

-

-

-

-

65,648

Issue of shares upon exercise of share

   options

274

151,285

-

-

(56,224)

-

95,335

Transfer to accumulated losses upon forfeiture of share options

-

-

-

-

(5,414)

5,414

-

Dividend relating to 2014

-

(373,518)

-

-

-

-

(373,518)

 

────────

────────

────────

────────

────────

─────────

────────

At 30 June 2015 (unaudited)

39,089

17,545,736

850

264,425

812,034

(17,493,183)

1,168,951

 

════════

════════

════════

════════

════════

═════════

════════

 

 

 

 

 

 

 

 

 

 

CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

FOR THE SIX MONTHS ENDED 30 JUNE 2016

                                                                                                                                                 Attributable to owners of the Company

 

Share

capital

Share

premium

Capital redemption reserve

 

Translation reserve

Share-based

payment

compensation reserve

Accumulated
losses

Total

 

US$

US$

US$

US$

US$

US$

US$

At 1 January 2016

51,150

28,062,193

850

59,999

1,024,034

(17,078,149)

12,120,077

Comprehensive loss:

Loss for the period

-

-

-

-

-

(1,190,882)

(1,190,882)

Other comprehensive loss for the period:

 

 

 

 

 

 

 

Currency translation differences

-

-

-

(907,041)

-

-

(907,041)

 

────────

────────

────────

────────

────────

─────────

────────

Total comprehensive loss for the period

-

-

-

(907,041)

-

(1,190,882)

(2,097,923)

 

--------------

--------------

--------------

--------------

---------------

---------------

--------------

Transactions with owners in their          

   capacity as owners

Employee share potion benefits

-

-

-

-

272,661

-

272,661

Issue of shares to non-executive

   directors

35

30,483

-

-

-

-

30,518

Allotment of shares to a non-executive

   director but not yet issued

-

-

-

-

13,876

-

13,876

Issue of shares upon exercise of share

   options

45

21,094

-

-

(7,479)

-

13,660

Transfer to accumulated losses upon forfeiture of share options

-

-

-

-

(17,320)

17,320

-

Dividend relating to 2015

-

(467,729)

-

-

-

-

(467,729)

 

────────

────────

────────

────────

────────

─────────

────────

At 30 June 2016 (unaudited)

51,230

27,646,041

850

(847,042)

1,285,772

(18,251,711)

9,885,140

 

════════

════════

════════

════════

════════

═════════

════════

 

 

 

 

 

 

 

 

 

CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS

FOR THE SIX MONTHS ENDED 30 JUNE 2016

 

 

 

 

Note

Unaudited

 

 

Six months ended 30 June

 

 

2016

2015

 

 

US$

US$

Cash flows from operating activities

 

 

 

Cash generated from/(used in) operations

14(a)

330,339

(1,244,684)

   Interest paid

 

(549)

(834)

   Income tax paid

 

(122,237)

(13,984)

 

 

────────

────────

Net cash generated from/(used in) operating activities

 

207,553

(1,259,502)

 

 

----------------

----------------

 

 

 

 

Cash flows from investing activities

 

 

 

Purchase of property, plant and equipment

 

(157,698)

(142,041)

Purchase of intangible assets

 

(7,120)

(12,121)

Interest received

 

367

498

Proceeds from disposal of property, plant and equipment

14(b)

1,314

-

 Decrease in bank deposits with original maturity of over three months

 

-

40,047

 

 

────────

────────

Net cash used in investing activities

 

(163,137)

(113,617)

 

 

----------------

----------------

Cash flows from financing activities

 

 

 

Proceeds from issuance of shares under share option scheme

 

13,660

95,335

Repayments of capital element of finance leases

 

(2,072)

(1,741)

 

 

────────

────────

Net cash generated from financing activities

 

11,588

93,594

 

 

----------------

----------------

 

 

 

 

Net increase /(decrease) in cash and cash equivalents

 

56,004

(1,279,525)

 

 

 

 

Cash and cash equivalents at beginning of the period

 

11,731,221

4,867,071

Effect of foreign exchange rate changes

 

(846,460)

(51,298)

 

 

────────

────────

Cash and cash equivalents at end of the period

11

10,940,765

3,536,248

 

 

════════

════════

 

 

 

NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL INFORMATION

 

1              GENERAL INFORMATION

 

                NetDimensions (Holdings) Limited (the "Company") was incorporated in the Cayman Islands as a limited liability company under the Companies Law (2000) Revision on 10 July 2000. The address of its registered office is P.O. Box 309, Ugland House, South Church Street, George Town, Grand Cayman, Cayman Islands, British West Indies. The address of its head office and principal place of business in Hong Kong is 17/F., Siu On Centre, 188 Lockhart Road, Wan Chai, Hong Kong.

 

                The principal activities of the Company and its subsidiaries (together the "Group") are licensing of computer software and the provision of related services.

 

The Company's ordinary shares were admitted to trading on the Alternative Investment Market ("AIM") operated by the London Stock Exchange. On 7 August 2012, the Company's ordinary shares were also admitted to trading on the OTCQX platform operated by OTC Markets Group, Inc.

This condensed consolidated interim financial information is presented in United States Dollars ("US$"), unless otherwise stated.

 

This condensed consolidated interim financial information for the six months ended 30 June 2015 and 2016 have not been audited.

 

2              SUMMARY OF SIGIFICANT ACCOUNTING POLICIES

 

(a)          Basic of preparation

 

The Company has a financial year end date of 31 December. This condensed consolidated interim financial information for the six months ended 30 June 2016 has been prepared in accordance with International Accounting Standard ("IAS") 34, "Interim Financial Reporting". The condensed consolidated interim financial information should be read in conjunction with the annual financial statements for the year ended 31 December 2015, which have been prepared in accordance with International Financial Reporting Standards ("IFRS") issued by the International Accounting Standards Boards ("IASB").

 

(b)          Significant accounting policies

 

Except as described below, the accounting policies applied are consistent with those of the annual financial statements for the year ended 31 December 2015, as described in those annual financial statements.

 

Taxes on income in the interim periods are accrued using the tax rate that would be applicable to expected total annual earnings.

 

(i)           Effect of adopting new and amendments to standards and interpretations

 

During the year, the Group has adopted all of the new standards, amendments to standards and interpretations issued by IASB that are relevant to the Group's operations and mandatory for annual periods beginning on or after 1 January 2016. The adoption of these new standards, amendments to standards and interpretations did not result in a significant impact on the results and financial position of the Group.

 

 

 

 

NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL INFORMATION

 

2              BASIS OF PREPARATION AND ACCOUNTING POLICIES (CONTINUED)

 

(ii)          New standards, amendments to standards and interpretations that have been issued but are not yet effective:

 

 

 

 

Effective for the accounting period beginning on or after

 

 

 

 

 

IAS 7 (Amendments)

Statement of Cash Flows

1 January  2017

 

IAS 12 (Amendments)

Income Taxes

1 January  2017

 

IFRS 9   

Financial Instruments   

 1 January  2018

 

IFRS 15

Revenue from Contracts with customers        

1 January 2018

 

IFRS 16

Leases

1 January 2019

 

IFRS 10 and IAS 28 (Amendments)

Sale of Contribution of Assets between and Investor and its Associate or Joint Venture

To be determined

     

 

 

 

 

The Group will adopt the above new standards, amendments to standards and interpretations to existing standards as and when they become effective. The Group has already commenced the assessment of the impact to the Group and is not yet in a position to state whether these would have a significant impact on its results of operations and financial position.

 

3              ESTIMATES

 

The preparation of interim financial information requires management to make judgements, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets and liabilities, income and expense. Actual results may differ from these estimates.

 

In preparing this condensed consolidated interim financial information, the significant judgments made by management in applying the Group's accounting policies and the key sources of estimation uncertainty were that same as those that applied to the consolidated financial statements for the year ended 31 December 2015, with the exception of changes in estimate that are required in determining the provision for income tax.

 

4              FINANCIAL RISK MANAGEMENT

 

The Group's activities expose it to a variety of financial risks: market risk (including foreign exchange risk and cash flow interest rate risk), credit risk and liquidity risk.

 

The condensed consolidated interim financial information does not include all financial risk management information and disclosures required in the annual financial statements, and should be read in conjunction with the Group's annual financial statements for the year ended 31 December 2015.

 

                There have been no changes in the risk management department since year end or in any risk management policies since year end.

 

 

5              REVENUE AND SEGMENT INFORMATION

 

Revenue represents income from software licensing and the provision of hosting, support and maintenance, software customisation and implementation services recognised during the period and is analysed as follows:

 

 

 

Unaudited

 

 

Six months ended 30 June

 

 

2016

2015

 

 

US$

US$

 

 

 

 

 

Software licensing

1,343,175

1,211,213

 

Hosting services

5,444,844

5,126,514

 

Support and maintenance

551,448

890,118

 

Software customisation and implementation

3,152,116

3,364,473

 

 

────────

────────

 

 

10,491,583

10,592,318

 

 

 ════════

════════

 

The chief operating decision-maker ("CODM") has been identified as the executive directors of the Company. Management has determined the operating segments based on the reports reviewed by the CODM that are used to assess performance and allocate resources. The CODM considers the business from the geographic perspective, including North America, Europe, Middle East and Africa ("EMEA"), Asia Pacific and Rest of the World, which are also the Group's reportable operating segments.

 

The Group's revenue is mainly derived from customers located in North America, EMEA, Asia Pacific and Rest of the World, the Group's facilities and other assets are located predominantly in North America, EMEA, Asia Pacific and Rest of the World.

 

Segment performance is evaluated based on segment results, which is a measure of adjusted loss before income tax. The adjusted loss before income tax is measured consistently with the Group's loss before income tax, except that amortisation of intangible assets - customer base, unallocated corporate expenses, finance income and finance costs are not allocated to individual segment.

 

Segment assets consist primarily of property, plant and equipment, intangible assets, accounts and other receivables, prepayments and deposits, and cash and bank balances excluding for corporate use.  Cash and bank balances for corporate use are excluded from segment assets.

 

 

 

5              REVENUE AND SEGMENT INFORMATION (CONTINUED)

 

Segmental information for the six months ended 30 June 2016 is as follows:

 

 

 

North

America

EMEA

Asia

Pacific

Rest of

the World

Total

 

 

US$

US$

US$

US$

US$

 

 

 

 

 

 

 

 

Revenue from external customers

5,051,672

4,157,290

1,032,363

250,258

10,491,583

 

 

═════════

════════

════════

════════

════════

 

 

 

 

 

 

 

 

Segment results

(762,734)

(43,767)

190,055

93,553

(522,893)

 

 

 

 

 

 

 

 

Amortisation of intangible assets - customer base

(152,235)

-

-

-

(152,235)

 

Unallocated corporate expenses

 

 

 

 

(515,572)

 

Finance income

 

 

 

 

367

 

Finance costs

 

 

 

 

(549)

 

 

 

 

 

 

  ────────

 

Loss before income tax

 

 

 

 

(1,190,882)

 

Income  tax expense

 

 

 

 

-

 

 

 

 

 

 

────────

 

Loss for  the period

 

 

 

 

(1,190,882)

 

 

 

 

 

 

════════

 

 

 

 

 

 

 

 

Segment assets

6,815,865

2,897,187

1,615,752

-

11,328,804

 

Unallocated assets

 

 

 

 

7,978,212

 

 

 

 

 

 

───────

 

 

 

 

 

 

19,307,016

 

 

 

 

 

 

═══════

 

 

 

 

 

 

 

 

Additions to non-current  assets

-

3,896

160,922

-

164,818

 

 

════════

═══════

═══════

═══════

═══════

 

Depreciation and amortisation

196,498

6,440

46,008

-

248,946

 

 

════════

═══════

═══════

═══════

═══════

               

 

 

 

5              REVENUE AND SEGMENT INFORMATION (CONTINUED)

 

Segmental information for the six months ended 30 June 2015 is as follows:

 

 

 

North

America

EMEA

Asia

Pacific

Rest of

the World

Total

 

 

US$

US$

US$

US$

US$

 

 

 

 

 

 

 

 

Revenue from external customers

5,027,990

4,150,050

865,212

549,066

10,592,318

 

 

════════

════════

════════

════════

════════

 

 

 

 

 

 

 

 

Segment results

(1,033,426)

(1,265,246)

126,369

260,780

(1,911,523)

 

 

 

 

 

 

 

 

Amortisation of intangible assets - customer base

(235,996)

-

-

-

(235,996)

 

Unallocated corporate expenses

 

 

 

 

(340,924)

 

Finance income

 

 

 

 

498

 

Finance costs

 

 

 

 

(834)

 

 

 

 

 

 

  ────────

 

Loss before income tax

 

 

 

 

(2,488,779)

 

Income  tax expense

 

 

 

 

(3,540)

 

 

 

 

 

 

────────

 

Loss for the period

 

 

 

 

(2,492,319)

 

 

 

 

 

 

════════

 

 

 

 

 

 

 

 

Segment assets

5,080,464

2,873,820

1,365,021

40,002

9,359,307

 

Unallocated assets

 

 

 

 

1,449,086

 

 

 

 

 

 

───────

 

 

 

 

 

 

10,808,393

 

 

 

 

 

 

═══════

 

 

 

 

 

 

 

 

Additions to non-current  assets

99,431

1,666

53,065

-

154,162

 

 

════════

═══════

═══════

═══════

═══════

 

Depreciation and amortisation

280,279

8,029

68,507

-

356,815

 

 

════════

═══════

═══════

═══════

═══════

 

 

 

6              OPERATING LOSS

 

                Operating loss is stated after charging the following:

 

 

 

Unaudited

 

 

Six months ended 30 June

 

 

2016

2015

 

 

US$

US$

 

 

 

 

 

Auditor's remuneration

71,549

76,775

 

Amortisation of intangible assets

165,771

250,499

 

Depreciation on property, plant and equipment

83,175

106,316

 

Employee benefit expenses

7,916,550

8,134,250

 

Legal and professional expenses

412,994

514,812

 

Marketing and promotion expenses

647,028

680,330

 

Operating lease rentals in respect of leased premises

378,908

355,937

 

Other operating lease rentals

530,302

514,167

 

Outsourcing fee

613,161

1,047,170

 

Resell software rights

33,042

41,162

 

Travel and entertainment expenses

305,954

409,653

 

Other expenses

718,374

748,027

 

 

────────

────────

 

Total cost of sales and selling and operating expenses

11,876,808

12,879,098

 

 

════════

════════

 

 

 

 

 

Representing:

 

 

 

Cost of sales

1,576,233

2,021,335

 

Selling expenses

6,027,938

6,244,011

 

Operating expenses

4,272,637

4,613,752

 

 

────────

────────

 

 

11,876,808

12,879,098

 

 

════════

════════

 

 

 

 

 

7              FINANCE COSTS, NET

 

               

 

Unaudited

 

 

Six months ended 30 June

 

 

2016

2015

 

 

US$

US$

 

 

 

 

 

Finance income:

 

 

 

-     Interest income on bank deposits

367

498

 

 

--------------

--------------

 

Finance costs:

 

 

 

-     Interest element of finance lease

(549)

(834)

 

 

--------------

--------------

 

 

 

 

 

Finance costs, net

(182)

(336)

 

 

═══════

═══════

 

 

 

8              LOSS PER SHARE

 

Basic

 

Basic loss per share is calculated by dividing the loss attributable to owners of the Company by the weighted average number of ordinary shares in issue during the period.

 

 

 

Unaudited

 

 

Six months ended 30 June

 

 

2016

2015

 

 

 

 

 

Loss attributable to equity holders of the Company (US$)

(1,190,882)

(2,492,319)

 

 

═════════

═════════

 

 

 

 

 

Weighted average number of ordinary shares in issue

51,221,190

38,917,530

 

 

═════════

═════════

 

 

 

 

 

Basic loss per share (US$ cents per share)

(2.3)

(6.4)

 

 

═════════

═════════

 

 

 

 

 

Diluted

 

 

 

Diluted loss per share is the same as basic loss per share since the exercise of the outstanding share options would have an anti-dilutive effect for the six months ended 30 June 2015 and 2016. 

 

 

9              PROPERTY, PLANT AND EQUIPMENT

 

 

 

 

 

 

              As at 30 June

 

 

2016

2015

 

 

US$

US$

 

 

 

 

 

Net book value at 1 January

260,030

270,171

 

Additions

157,698

142,041

 

Disposals

(4,504)

(2,193)

 

Depreciation for the period

(83,175)

(106,316)

 

Exchange differences

(1,352)

(1,122)

 

 

─────────

─────────

 

Net book value at 30 June (unaudited)

328,697

302,581

 

 

═════════

═════════

 

 

 

 

 

 

 

 

10           INTANGIBLE ASSETS

 

 

 

 

 

 

 

 

Goodwill

Customer

base

Computer

 software

Total

 

 

 

US$

US$

US$

US$

 

 

 

 

 

 

 

 

Net book value at 1 January 2016

1,147,553

1,420,864

22,188

2,590,605

 

Additions

-

-

7,120

      7,120

 

Disposals

-

-

-

           -

 

Amortisation for the period

-

(152,235)

(13,536)

   (165,771)

 

Exchange differences

-

-

(24)

           (24)

 

 

────────

────────

───────

────────

 

Net book value at 30 June 2016 (unaudited)

1,147,553

1,268,629

15,748

2,431,930

 

 

════════

════════

═══════

════════

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net book value at 1 January 2015

1,147,553

1,878,918

32,125

3,058,596

 

Additions

-

-

12,121

    12,121

 

Disposals

-

-

(202)

      (202)

 

Amortisation for the period

-

(235,996)

(14,503)

(250,499)

 

Exchange differences

-

7

(1)

          6

 

 

────────

────────

───────

────────

 

Net book value at 30 June 2015 (unaudited)

1,147,553

1,642,929

29,540

 2,820,022

 

 

════════

════════

═══════

════════

 

 

11           CASH AND BANK BALANCES

 

 

 

 Unaudited

 

 

              As at 30 June

 

 

2016

2015

 

 

US$

US$

 

 

 

 

 

Cash on hand

5,503

5,476

 

Cash at bank

10,895,212

3,490,718

 

Short-term bank deposits

40,050

40,054

 

 

────────

────────

 

Cash and cash equivalents

10,940,765

3,536,248

 

 

----------------

----------------

 

 

 

 

 

Restricted bank deposits with original maturity of over three months

250,000

-

 

 

---------------

---------------

 

 

 

 

 

Total cash and bank balances

11,190,765

3,536,248

 

 

════════

════════

 

 

12           SHARE CAPITAL

 

                Ordinary shares, issued and fully paid:

 

 

Unaudited

As at 30 June

 

 

2016

2015

 

 

No. of

 

No. of

 

 

 

shares

US$

shares

US$

 

Movements in ordinary shares

 

 

 

 

 

At 1 January

51,150,226

51,150

38,762,826

38,763

 

Issue of shares to non-executive directors (note 13(b))

34,639

35

52,500

52

 

Issue of shares upon exercise of share options (note a)

45,000

45

273,500

274

 

 

──────────

───────

──────────

───────

 

At 30 June

51,229,865

51,230

39,088,826

39,089

 

 

══════════

═══════

══════════

═══════

 

Note:

 

 

(a)   During the period ended 30 June 2016, an aggregate of 45,000 share options (30 June 2015: 273,500) were exercised with proceeds of US$13,660 (30 June 2015: US$95,335). The weighted average market value per share at the date of exercise for these share options exercised was GBP 60 pence (30 June 2015: GBP 80.4 pence).

 

 

13           EQUITY SETTLED SHARE-BASED PAYMENTS

 

(a)  Share option scheme

 

Pursuant to the share option scheme (the "Plan") approved and adopted on 18 September 2000, the Board of Directors of the Company may offer eligible employees, directors and sales agents rights to subscribe for shares of the Company. The Plan shall be valid and effective for a period of ten years. Pursuant to an ordinary resolution passed at the annual general meeting of the Company on 10 June 2011, the Plan expired on 17 September 2010 is renewed for a further period of ten years, and is to expire on 16 September 2020 (the "Renewed Plan"). The maximum aggregate number of ordinary shares of US$0.001 each which may be issued pursuant to the Renewed Plan is 10,000,000 ordinary shares according to an ordinary resolution passed at the annual general meeting of the Company on 9 June 2014. Options are granted at a price equal to the average market price of the Company's shares on the date of grant. The vesting period is ranged from one year to five years from the date of grant. If the options remain unexercised ten years after the date of grant, the options will expire. Options are forfeited if the relevant option holder leaves the Group before the options vest.

 

 

 

13           EQUITY SETTLED SHARE-BASED PAYMENTS (CONTINUED)

 

(a)  Share option scheme (Continued)

 

                The following table discloses the movements of the Company's share options:

 

 

 

 

 

 

 

                      2016                         

                     2015                          

 

 

Number of

share

options

Weighted

average

exercise

price

Number of

share

options

Weighted

average

exercise

price

 

 

 

US$

 

US$

 

 

 

 

 

 

 

As at 1 January

2,989,000

0.840

4,276,000

0.876

 

Granted

2,480,000

0.802

550,000

1.126

 

Forfeited

(134,000)

1.017

(1,467,000)

0.990

 

Exercised

(45,000)

0.303

(273,500)

0.365

 

 

────────

 

────────

 

 

As at 30 June

5,290,000

0.789

3,085,500

0.840

 

 

════════

 

════════

 

 

 

 

 

 

 

 

Exercisable as at 30 June

1,780,416

0.653

1,066,250

0.558

 

(unaudited)

════════

 

════════

 

 

Share options outstanding during the periods ended 30 June 2016 and 30 June 2015 are as follows:

 

Expiry date

Exercise price

per share

30 June 2016

Number of

shares under

option

30 June 2015

Number of

shares under

option

 

 

 

 

 

 

24/05/2016

US$0.300

-

20,000

 

28/12/2016

US$0.300

44,000

49,000

 

12/02/2020

GBP0.18

80,000

80,000

 

06/12/2020

GBP0.215

250,000

250,000

 

24/01/2021

GBP0.1925

50,000

50,000

 

02/01/2022

GBP0.215

275,000

300,000

 

01/01/2023

GBP0.51

250,000

250,000

 

05/03/2023

GBP0.44

100,000

100,000

 

05/05/2023

GBP0.425

250,000

250,000

 

01/09/2023

GBP0.555

50,000

50,000

 

14/04/2024

GBP0.73

1,176,000

1,334,000

 

08/06/2024

GBP0.71

-

7,500

 

01/09/2024

GBP0.655

10,000

10,000

 

10/11/2024

GBP0.725

25,000

25,000

 

13/11/2024

GBP0.715

10,000

10,000

 

22/04/2025

GBP0.815

250,000

300,000

 

12/01/2026

GBP0.61

750,000

-

 

02/02/2026

GBP0.545

1,720,000

-

 

 

 

────────

────────

 

 

 

5,290,000

3,085,500

 

 

 

════════

════════

13           EQUITY SETTLED SHARE-BASED PAYMENTS (CONTINUED)

 

(a)  Share option scheme (Continued)

 

 

The fair values of share options granted during the period ended 30 June 2016 were calculated using the Binomial Option Pricing Model. The inputs into the model were as follows:

 

 

Batch

   i

                ii

iii

 

Date of grant

13 January 2016

3 February 2016

3 February 2016

 

Closing price at date of grant (GBP)

0.61

0.545

0.545

 

Exercise price (GBP)

0.61

0.545

0.545

 

Expected volatility

51.68%

51.60%

51.60%

 

Expected multiple

3

3

1.5

 

Risk-free interest rate

1.75%

1.52%

1.52%

 

Expected annual dividend yield

1.02%

1.15%

1.15%

 

Fair value per share option(GBP)

0.299

0.252

0.22

 

 

 

 

             

The expected volatility is based on the average of industry annualised historical stock price volatility as at the date of grant. The expected life is the expected lives of the options which have been taken into account of early exercise behaviour of the option holders.

 

(b)   Pursuant to the terms and conditions of the letter of appointment with the non-executive directors of the Company, an aggregate of 34,639 (30 June 2015: 52,500) ordinary shares of the Company were allotted to them as part of their remuneration package during the period ended 30 June 2016. The fair values of these shares amounting to US$30,518 and US$65,648 respectively.

 

(c)   The Company recognised total expenses of US$317,056 and US$86,772 relating to equity settled share-based payments in the periods ended 30 June 2016 and 30 June 2015 respectively.

 

(d)   Pursuant to the terms and conditions of the letter of appointment with a non-executive director of the Company, an aggregate of 15,750 (30 June 2015: Nil) ordinary shares of the Company were allotted to him as part of his remuneration package for his service during the period ended 30 Jun 2016. The fair value of these 15,750 (30 June 2015: Nil) shares amounted to US$13,876 (30 June 2015: Nil). As at 30 Jun 2016, the shares had not been issued to the director yet.

 

 

14           NOTES TO THE CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS

 

(a)  Reconciliation of loss before income tax to net cash generated from/(used in) operations:

 

 

Unaudited

 

 

Six months ended 30 June

 

 

2016

2015

 

 

US$

US$

 

 

 

 

 

Loss before income tax

(1,190,882)

(2,488,779)

 

Adjustments for:

 

 

 

  Amortisation of intangible assets

165,771

250,499

 

  Depreciation of property, plant and equipment

83,175

106,316

 

  Equity settled share-based payments

317,056

86,772

 

  Exchange (gain)/loss

(168,922)

154,625

 

  Finance income

(367)

(498)

 

  Finance costs

549

834

 

  Loss on disposal of property, plant and equipment

3,190

2,193

 

  Loss on disposal of intangible assets

-

202

 

 

────────

────────

 

Changes in working capital

(790,430)

(1,887,836)

 

- Accounts and other receivables, prepayments and deposits

3,799,042

3,946,838

 

- Accounts and other payables

(1,589,692)

(2,452,223)

 

- Deferred revenue

(1,088,581)

(851,463)

 

 

────────

────────

 

Net cash generated from/(used in) operations

330,339

(1,244,684)

 

 

════════

════════

(b)  In the condensed consolidated statement of cash flows, proceeds from disposal of property, plant and equipment comprise:

 

 

Unaudited

 

 

Six months ended 30 June

 

 

2016

2015

 

 

US$

US$

 

 

 

 

 

Net book amount (Note 9)

4,504

2,193

 

Loss on disposal of property, plant and equipment

(3,190)

(2,193)

 

 

────────

────────

 

Proceeds from disposal of property, plant and equipment

1,314

-

 

 

════════

════════

(c)   In the condensed consolidated statement of cash flows, proceeds from disposal of intangible assets comprise:

 

 

Unaudited

 

 

Six months ended 30 June

 

 

2016

2015

 

 

US$

US$

 

 

 

 

 

Net book amount (Note 10)

-

202

 

Loss on disposal of intangible assets

-

(202)

 

 

────────

────────

 

Proceeds from intangible assets

-

-

 

 

════════

════════

 


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