Source - RNS
RNS Number : 3856K
Elecosoft PLC
21 September 2016
 

 

 

 

21 September 2016

 

Elecosoft plc

("Elecosoft", the "Company" or the "Group")

 

Interim Results

for the six months ended 30 June 2016

 

Elecosoft plc (AIM: ELCO), the AIM-listed construction software specialist, today announces its unaudited results for the six months ended 30 June 2016.

 

Financial Highlights

 

·   

Revenue £8.8m, up 10% (2015 restated: £7.9m) of which 47% was from recurring maintenance and support revenue (2015: 46%)

·   

Operating profit before former directors termination payments up 25% to £710,000 (2015 restated: £568,000)

·   

Profit before tax up 14% to £557,000 (2015 restated: £490,000)

·   

EBITDA up 9% to £963,000 (2015 restated: £881,000)

·   

Cash generated in operations up 20% to £1,439,000 (2015: £1,201,000)

·   

Improved financial position; net cash at 30 June 2016 of £302,000; Net borrowings at 31 December 2015 £803,000; and Net borrowings at 30 June 2015; £1,533,000

·   

Earnings per share - basic and diluted 0.6p (2015 restated: 0.6p)

·   

Board declares an interim dividend of 0.15p per ordinary share covered four times by unaudited earnings of 0.6p (2015: nil)

 

At constant exchange rates

·   

Revenue £8.4m, up £0.4m, 6% (2015: £7.9m)

·   

Operating profit £561,000 (2015: £557,000)

·   

Profit before tax £517,000, up 6% (2015: £490,000)

 

Operational Highlights

 

·   

Swedish operations rebranded to Elecosoft.

·   

Inaugural Elecosoft user conference in the US.

·   

The performance in license sales accompanied by an increase in training and consultancy revenue across the group albeit at lower profit margins than license sales.

·   

We were pleased to welcome the State of Pennsylvania department of transport to present earlier this month at our second US software user conference, the merit of using Powerproject® to manage its state road building programme. 

·   

Powerproject® is currently being used on the new football stadium for Tottenham Hotspur in north London, the BBC Television Centre and the redevelopment of Chelsea Barracks as well as on other major construction projects.

·   

Received a significant order for Powerproject® from a Top 100 US main construction contractor our Swedish colleagues achieved the first sale in the UK of their leading Bidcon estimating software.

·   

Received orders for Interiormarket system from the largest home improvement retailer in Germany, the leading carpet/tile manufacturer in the US and the largest laminate flooring manufacturer in China and the world.

·   

The new augmented reality mobile application was approved by Apple and is now available on the iTunes store.

·   

Bidcon environmental module was released in Sweden this month preceding close collaboration with Tyréns, Sweden's largest construction and environmental consultancy.

·   

Significant improvement in group finances has enabled it to accelerate where necessary our software development activity.

 

 

Executive Chairman, John Ketteley said:

 

"I am pleased to announce an improved trading performance for the six months ended 30 June 2016 which leaves us in a strong position to meet market expectations. Elecosoft is now in a significantly strengthened financial position, evidenced by the declaration of an interim dividend, and I look forward to continuing to build on that position in the second half and beyond."

 

 

  For further information please contact:

 

 

 

 

Elecosoft plc

JHB Ketteley , Executive Chairman

 Tel: 0207 422 0044

Jason Ruddle, Chief Operating Officer

 

 

 

 

finnCap Ltd

 

Adrian Hargrave / Kate Bannatyne (Corporate Finance)

Camille Gochez (Corporate Broking)

Tel: 0207 220 0500

 

 

 

Redleaf Communications

 

Rebecca Sanders-Hewett / David Ison

/ Susie Hudson

Tel: 0207 382 4730

[email protected]

 

 

About Elecosoft plc

 

Elecosoft is listed on the Alternative Investment Market in London (AIM: ELCO). It is a specialist international provider of software and related services to the architectural, engineering, construction and digital marketing industries from centres of excellence in the UK, Sweden, Germany and the US. Elecosoft's market leading software solutions are developed by teams in the United Kingdom, Sweden and Germany; and its software programs cover project management, construction site management, estimating, timber engineering, 3D design and visualisation, and cloud based digital marketing solutions.

 

For more information, please visit www.elecosoft.com

 

The information communicated in this announcement is inside information for the purposes of Article 7 of Regulation 596/2014.

 

 

 

 

Chairman's Statement

 

I believe that we have never been better placed to realise the potential and ideas generated by the close collaboration of our development teams in Sweden, the UK and Germany for the benefit of our customers, employees and shareholders.

 

I am also pleased to report an improved trading performance and higher unaudited profits for the six months ended 30 June 2016, and a significantly strengthened financial position. As a consequence the Board has decided to resume its previous dividend policy by declaring dividends which are well covered by earnings.  Accordingly we have declared an interim dividend of 0.15p per ordinary share for the period.

  

Trading performance

 

Unaudited Revenue for the period under review increased to £8,769,000 (2015 H1: £7,948,000) of which £5,944,000 (2015 H1: £5,557,000) was generated from overseas operations at pre-Brexit foreign exchange rates, with the exception of sales made in the last week in June.  Recurring revenue for the period also increased to £4,102,000 (2015 H1: £3,642,000) and represented 47 per cent of total revenue for the period (2015 H1: 46 per cent).

 

Unaudited operating profit before charging a former director's termination payment of £109,000 (2015 H1: £11,000) was £720,000 (2015 H1: £546,000). Unaudited operating profit for the period under review was £601,000 (2015 H1: £557,000).  Software development expenses charged against operating profits in the period increased by £349,000 to £1,258,000 (2015 H1: £909,000).

 

Selling and administrative expenses were adversely impacted by currency movements during the period due to the gradual strengthening against Sterling of the Swedish Krona, Euro and US Dollar. These currencies represent the three most important overseas currencies in which the Group trades. However, the significant fall in the value of Sterling against those currencies which occurred after the Brexit vote on 23 June 2016 made little impact on the revenue or profit for the period ended 30 June 2016, although its impact on our financial position as at 30 June 2016 was beneficial and significant.

 

The operating profit margin in the period remained unchanged at 7.0 per cent. (2015 H1: 7.0 per cent).  Profit before tax for the period was £557,000 (2015 H1: £490,000 and basic and diluted earnings per share were 0.6p (H1 2015: 0.6p).

 

Financial performance

 

The Group generated cash from operations of £1,439,000 (2015 H1: £1,201,000) which enabled us to accelerate our software development spend in the period.  On 30 June 2016, partly reflecting a combination of the cash generated from operations and the positive currency impact of the Brexit vote on 23 June 2016 on our Group finances, Group net cash at 30 June was £302,000 which was a considerable improvement on our net borrowing position of £1,533,000 at 30 June 2015. Of the net cash position at 30 June 2016, borrowings totalled £2.2m and cash balances totalled the equivalent of £2.5m, which were held mainly in Swedish Krona and Euros.

 

During the time leading up to the Referendum on 23 June 2016, the Board decided that the pattern of cash generation across the Group was such that in the absence of unforeseen circumstances, the Group would be in a position to comfortably service and repay its medium term Sterling borrowings in accordance with their terms. We also decided that our overseas interests, which were also profitable and cash generative, should retain their cash balances in their own currencies. Accordingly, when the result of the Referendum was announced, all Elecosoft's borrowings were in Sterling and all its cash balances were in the Swedish Krona, the Euro and the US Dollar, all of which strengthened significantly against Sterling.

 

Software Development

 

Software development is the life blood of our business and as mentioned above software development expenditure increased to £1,433,000 in the period (2015 H1: £1,202,000) although the amount of development spend capitalised in the period was actually lower at £175,000 (2015 H1: £293,000). We were able to finance the increased development expenditure because of the continuing improvement in our cash flow from operations. The total development spend for the period represented 16 per cent of sales (2015 H1: 15 per cent) and is consistent with our commitment to customers to maintain and enhance our software programs so that they continue to be up to date and are leading software programs in their sectors.

  

Business Overview

 

We continue to strengthen our position as an international software Group and have made considerable progress in rebranding the Group "Elecosoft". This has been very well received by both our customers and the market generally. More importantly, the rebrand has had a particularly beneficial effect on our business and image in Scandinavia, so much so that I understand that Elecosoft is now acknowledged to be the leading construction software provider in the Swedish market.

 

Elecosoft UK has produced a strong performance in the period under review with Powerproject® software being used on landmark projects including the new football stadium for Tottenham Hotspur in north London, the BBC Television Centre and the redevelopment of Chelsea Barracks.

 

We continue to seek opportunities to expand our market penetration in new territories, and during the period under review we acquired a Powerproject® reseller in the Netherlands, thus further strengthening our position in Benelux.  We also appointed a new reseller to support sales of both Bidcon® and Powerproject® in Australia and New Zealand. 

 

In the US we hosted our inaugural US user conference in the period, which attracted 89 paying delegates. A second user conference was held in Philadelphia earlier this month. Such initiatives resulted in us receiving our first significant order for Powerproject® from a top 100 US main contractor. 

 

During the period, ESIGN, our interior visualisation and marketing operation, signed significant orders for its products and services from the largest US carpet tile manufacturer, the largest home improvement retailer in Germany and the largest laminate manufacturer in China and, I am given to understand, in the world. I also am very pleased to say that ESIGN has received approval from Apple of its new augmented reality mobile application, which has been very well received in the market.

 

Management Changes

 

During the period under review, we welcomed Jason Ruddle to the Board as Chief Operating Officer and Jonathan Hunter as Marketing and Business Development Director. Nick Caw has now left the Company to pursue other interests and we wish him well.

 

Dividend

 

Having regard to the financial performance in the period under review and the outlook for the remainder of the year, the Board decided to resume the payment of dividends by declaring an interim dividend of 0.15p per ordinary share (2015 H1: 0.0p), covered 4.0 times by unaudited earnings for the period of 0.60p per share. The interim dividend will be paid on 4 November 2016 to shareholders on the register at the close of business on 7 October 2016 and the ex-dividend date will be 6 October 2016.

 

Outlook

 

Elecosoft is now well financed and has been able to assemble a significant portfolio of market leading and award winning construction software applications for 5D BIM, project management, estimation, 3D architectural design and timber engineering construction, as well as a number of outstanding digital visualisation, internet and augmented reality software applications aimed at the interior marketing arena.  As we move forward we will continue to invest in new technologies, to grow our customer reach, and to strengthen our position as an international provider of innovative market leading software applications in our chosen fields.

 

The majority of our software solutions are based on Microsoft technology and are created by our software development teams in the UK, Sweden and Germany, whose development strategies evolve essentially from the regular detailed reports which they receive from our sales, training and support colleagues who are close to their customers in the markets we serve.

 

Despite the uncertainties caused by the UK Referendum in June, the second half of the year has started well. However we will continue to monitor markets for any untoward developments which could impact the progress of our businesses, while striving to provide innovative market leading software solutions, high quality maintenance and dedicated training to both our new and existing customers. 

 

 

 

John Ketteley

Executive Chairman

21 September 2016

 

 

Condensed Consolidated Income Statement

for the financial period ended 30 June 2016

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

six months to 30 June

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2015

 

Year Ended

 

 

 

 

 

 

2016

 

(unaudited-

 

31 December

 

 

 

 

 

 

(unaudited)

 

restated*)

 

2015

 

 

 

 

 

Notes

£'000

 

£'000

 

£'000

 

 

 

 

 

 

 

 

 

 

 

 

 

Revenue

 

 

3,4

8,769

 

7,948

 

15,260

 

 

Cost of sales

 

 

 

(1,179)

 

(925)

 

(1,688)

 

 

Gross profit

 

 

 

7,590

 

7,023

 

13,572

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating expenses before amortisation of intangible assets and former director's termination payments

 

(6,597)

 

(6,219)

 

(11,940)

 

 

Amortisation of intangible assets

 

(283)

 

(236)

 

(495)

 

 

 

 

 

 

 

 

 

 

 

 

 

Selling and administrative expenses before former director's termination payments

(6,880)

 

(6,455)

 

(12,435)

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating profit before former director's termination payments

710

 

568

 

1,137

 

 

Former director's termination payments

 

(109)

 

(11)

 

(11)

 

 

Selling and administrative expenses

 

(6,989)

 

(6,466)

 

(12,446)

 

 

Operating profit

4,5

601

 

557

 

1,126

 

 

 

 

 

 

 

 

 

 

 

 

 

Finance income

 

6

2

 

-

 

1

 

 

Finance cost

 

 

6

(46)

 

(67)

 

(121)

 

 

Profit before tax

 

 

557

 

490

 

1,006

 

 

Tax

 

 

 

(126)

 

(87)

 

(204)

 

 

Profit for the financial period

 

431

 

403

 

802

 

 

 

 

 

 

 

 

 

 

 

 

 

Profit for the financial period from discontinued operations

 

-

 

12

 

360

 

 

 

 

 

 

 

 

 

 

 

 

 

Profit for the financial period

 

431

 

415

 

1,162

 

 

 

 

 

 

 

 

 

 

 

 

 

Attributable to:

 

 

 

 

 

 

 

 

 

Equity holders of the parent

 

 

431

 

415

 

1,162

 

 

 

 

 

 

 

 

 

 

 

 

 

Earnings per share - basic

 

 

 

 

 

 

 

 

 

Continuing operations

 

7

0.6

p

0.6

p

1.1

p

 

Discontinued operations

 

7

0.0

p

0.0

p

0.5

p

 

Total operations

 

 

0.6

p

0.6

p

1.6

p

 

 

 

 

 

 

 

 

 

 

 

 

Earnings per share - diluted

 

 

 

 

 

 

 

 

 

Continuing operations

 

7

0.6

p

0.6

p

1.1

p

 

Discontinued operations

 

7

0.0

p

0.0

p

0.5

p

 

Total operations

 

 

0.6

p

0.6

p

1.6

p

 

 

 

 

 

 

 

 

 

 

 

 

* 2015 restated for the disposal of the Swedish architectural business sold in December 2015.

 

 

 

 

 

 

 

Condensed Consolidated Statement of Comprehensive Income

for the financial period ended 30 June 2016

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

six months to 30 June

 

 

 

 

 

 

 

 

 

 

 

2015

 

Year  Ended

 

 

 

 

 

 

 

2016

 

(unaudited -

 

31 December

 

 

 

 

 

 

 

(unaudited)

 

restated)

 

2015

 

 

 

 

 

 

 

£'000

 

£'000

 

£'000

 

 

Profit for the period

 

 

 

431

 

415

 

1,162

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other comprehensive income:

 

 

 

 

 

 

 

 

 

Items that will be reclassified subsequently to profit or loss:

 

 

 

 

 

 

 

    Translation differences on foreign operations

76

 

(118)

 

(11)

 

 

Other comprehensive income net of tax

 

 

76

 

(118)

 

(11)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total comprehensive income for the period

 

507

 

297

 

1,151

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Attributable to:

 

 

 

 

 

 

 

 

 

 

Equity holders of the parent

 

 

 

507

 

297

 

1,151

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Condensed Consolidated Statement of Changes in Equity

for the financial period ended 30 June 2016

 

 

 

 

 

 

 

 

 

 

 

 

Share capital

Share premium

Merger reserve

Translation reserve

Other reserve

Retained earnings

Total

 

 

 

£'000

£'000

£'000

£'000

£'000

£'000

£'000

 

 

At 1 January 2016

749

-

-

(172)

(338)

7,654

7,893

 

 

 

 

 

 

 

 

 

 

 

 

Share-based payments

-

-

-

-

(9)

-

(9)

 

 

Transactions with owners

-

-

-

-

(9)

-

(9)

 

 

 

 

 

 

 

 

 

 

 

 

Profit for the period

-

-

-

-

-

431

431

 

 

Other comprehensive income:

 

 

 

 

 

 

 

 

 

Exchange differences on translation of net investments in foreign operations

-

-

-

76

-

-

76

 

 

Total comprehensive income for the period

-

-

-

76

-

431

507

 

 

 

 

 

 

 

 

 

 

 

 

At 30 June 2016 (unaudited)

749

-

-

(96)

(347)

8,085

8,391

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Share capital

Share premium

Merger reserve

Translation reserve

Other reserve

Retained earnings

Total

 

 

 

£'000

£'000

£'000

£'000

£'000

£'000

£'000

 

 

At 1 January 2015

7,487

7,923

4,086

(161)

(358)

(12,255)

6,722

 

 

 

 

 

 

 

 

 

 

 

 

Share-based payments

-

-

-

-

13

-

13

 

 

Transactions with owners

-

-

-

-

13

-

13

 

 

 

 

 

 

 

 

 

 

 

 

Profit for the period

-

-

-

-

-

415

415

 

 

Other comprehensive income:

 

 

 

 

 

 

 

 

 

Exchange differences on translation of net investments in foreign operations

-

-

-

(118)

-

-

(118)

 

 

Total comprehensive income for the period

-

-

-

(118)

-

415

297

 

 

 

 

 

 

 

 

 

 

 

 

At 30 June 2015 (unaudited)

7,487

7,923

4,086

(279)

(345)

(11,840)

7,032

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Share capital

Share premium

Merger reserve

Translation reserve

Other reserve

Retained earnings

Total

 

 

 

£'000

£'000

£'000

£'000

£'000

£'000

£'000

 

 

At 1 January 2015

7,487

7,923

4,086

(161)

(358)

(12,255)

6,722

 

 

Share-based payments

-

-

-

-

20

-

20

 

 

Capitalisation of merger reserve

4,086

-

(4,086)

-

-

-

-

 

 

Capital reduction

(10,824)

(7,923)

-

-

-

18,747

-

 

 

Transactions with owners

(6,738)

(7,923)

(4,086)

-

20

18,747

20

 

 

 

 

 

 

 

 

 

 

 

 

Profit for the period

-

-

-

-

-

1,162

1,162

 

 

Other comprehensive income:

 

 

 

 

 

 

 

 

 

Exchange differences on translation of net investments in foreign operations

-

-

-

(11)

-

-

(11)

 

 

Total comprehensive income for the period

-

-

-

(11)

-

1,162

1,151

 

 

 

 

 

 

 

 

 

 

 

 

At 31 December 2015

749

-

-

(172)

(338)

7,654

7,893

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Condensed Consolidated Balance Sheet

at 30 June 2016

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

30 June

 

 

 

 

 

 

 

 

 

2016

 

2015

 

31 December

 

 

 

 

 

 

 

(unaudited)

 

(unaudited)

 

2015

 

 

 

 

 

 

Notes

£'000

 

£'000

 

£'000

 

 

Non-current assets

 

 

 

 

 

 

 

 

 

 

Goodwill

 

 

 

9

10,237

 

10,514

 

10,152

 

 

Other intangible assets

 

 

10

1,899

 

1,771

 

1,910

 

 

Property, plant and equipment

 

 

596

 

571

 

503

 

 

Total non-current assets

 

 

12,732

 

12,856

 

12,565

 

 

Current assets

 

 

 

 

 

 

 

 

 

 

Inventories

 

 

 

 

5

 

10

 

9

 

 

Trade and other receivables

 

 

2,679

 

2,328

 

2,871

 

 

Current tax assets

 

 

 

213

 

189

 

173

 

 

Cash and cash equivalents

 

 

2,540

 

1,686

 

1,957

 

 

Total current assets

 

 

 

5,437

 

4,213

 

5,010

 

 

Total assets

 

 

 

18,169

 

17,069

 

17,575

 

 

Current liabilities

 

 

 

 

 

 

 

 

 

 

Bank overdraft

 

 

11

(541)

 

(355)

 

(674)

 

 

Borrowings

 

 

 

11

(750)

 

(750)

 

(750)

 

 

Obligations under finance leases

 

 

(158)

 

(164)

 

(139)

 

 

Trade and other payables

 

 

(1,068)

 

(1,193)

 

(1,255)

 

 

Provisions

 

 

 

 

(116)

 

(142)

 

(203)

 

 

Current tax liabilities

 

 

 

(73)

 

-

 

(2)

 

 

Accruals and deferred income

 

12

(5,898)

 

(5,025)

 

(5,068)

 

 

Total current liabilities

 

 

 

(8,604)

 

(7,629)

 

(8,091)

 

 

Non-current liabilities

 

 

 

 

 

 

 

 

 

 

Borrowings

 

 

 

11

(597)

 

(1,688)

 

(972)

 

 

Obligations under finance leases

 

 

(192)

 

(262)

 

(225)

 

 

Deferred tax liabilities

 

 

 

(218)

 

(203)

 

(242)

 

 

Non-current provisions

 

 

 

(167)

 

(220)

 

(139)

 

 

Other non-current liabilities

 

 

-

 

(35)

 

(13)

 

 

Total non-current liabilities

 

 

(1,174)

 

(2,408)

 

(1,591)

 

 

Total liabilities

 

 

 

(9,778)

 

(10,037)

 

(9,682)

 

 

Net assets

 

 

 

 

8,391

 

7,032

 

7,893

 

 

Equity

 

 

 

 

 

 

 

 

 

 

 

Share capital

 

 

 

749

 

7,487

 

749

 

 

Share premium account

 

 

 

-

 

7,923

 

-

 

 

Merger reserve

 

 

 

-

 

4,086

 

-

 

 

Translation reserve

 

 

 

(96)

 

(279)

 

(172)

 

 

Other reserve

 

 

 

(347)

 

(345)

 

(338)

 

 

Retained earnings

 

 

 

8,085

 

(11,840)

 

7,654

 

 

Equity attributable to shareholders of the parent

8,391

 

7,032

 

7,893

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Condensed Consolidated Statement of Cash Flows

for the financial period ended 30 June 2016

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

six months to 30 June

 

Year Ended

 

 

 

 

 

 

2016

 

2015

 

31 December

 

 

 

 

 

 

(unaudited)

 

(unaudited)

 

2015

 

 

 

 

 

Notes

£'000

 

£'000

 

£'000

 

 

Cash flows from operating activities

 

 

 

 

 

 

 

 

Profit before tax

 

 

 

557

 

502

 

881

 

 

Net finance costs

 

 

43

 

67

 

123

 

 

Depreciation charge

 

 

79

 

88

 

174

 

 

Amortisation charge

 

 

283

 

236

 

495

 

 

(Profit)/loss on sale of property, plant and equipment

(20)

 

(5)

 

(18)

 

 

Share-based payment charge

 

 

(9)

 

13

 

20

 

 

Decrease in provisions

 

 

(60)

 

-

 

(20)

 

 

Cash generated in operations before working capital movements

873

 

901

 

1,655

 

 

Decrease in trade and other receivables

 

958

 

406

 

349

 

 

Decrease/(increase) in inventories and work in progress

5

 

(4)

 

(1)

 

 

Decrease in trade and other payables

 

(397)

 

(102)

 

(363)

 

 

Cash generated in operations

 

 

1,439

 

1,201

 

1,640

 

 

Interest paid

 

 

 

(50)

 

(87)

 

(153)

 

 

Interest received

 

 

2

 

-

 

1

 

 

Net income tax paid

 

 

(101)

 

(95)

 

(127)

 

 

Net cash inflow from operating activities

 

1,290

 

1,019

 

1,361

 

 

 

 

 

 

 

 

 

 

 

 

 

Investing activities

 

 

 

 

 

 

 

 

 

Purchase of intangible assets

 

 

(218)

 

(343)

 

(754)

 

 

Purchase of property, plant and equipment

 

(128)

 

(33)

 

(58)

 

 

Acquisition of subsidiary undertakings net of cash acquired

13

(63)

 

-

 

(28)

 

 

Proceeds from sale of property, plant, equipment  and intangible assets

 

48

 

70

 

167

 

 

Sale of businesses net of expenses

 

-

 

-

 

754

 

 

Net cash (outflow)/inflow from investing activities

(361)

 

(306)

 

81

 

 

 

 

 

 

 

 

 

 

 

 

 

Financing activities

 

 

 

 

 

 

 

 

 

Repayment of bank loans

 

 

(375)

 

(375)

 

(1,091)

 

 

Repayments of obligations under finance leases

(73)

 

(108)

 

(251)

 

 

Net cash (outflow)/inflow from financing activities

(448)

 

(483)

 

(1,342)

 

 

 

 

 

 

 

 

 

 

 

 

 

Net increase in cash and cash equivalents

 

481

 

230

 

100

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash and cash equivalents at beginning of period

1,283

 

1,198

 

1,198

 

 

Effects of changes in foreign exchange rates

 

235

 

(97)

 

(15)

 

 

Cash and cash equivalents at end of period

 

1,999

 

1,331

 

1,283

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash and cash equivalents comprise:

 

 

 

 

 

 

 

 

Cash and short term deposits

 

 

2,540

 

1,686

 

1,957

 

 

Bank overdrafts

 

 

(541)

 

(355)

 

(674)

 

 

 

 

 

 

1,999

 

1,331

 

1,283

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Notes to the Condensed Consolidated Interim Financial Statements

 

1. General information

 

The company is a public limited company incorporated and domiciled in the UK. The address of its registered office is 66 Clifton Street, London, EC2A 4HB.

 

The company is listed on the Alternative Investment Market ("AIM")

 

The condensed consolidated interim financial information does not constitute statutory accounts as defined in section 434 of the Companies Act 2006. The Group's consolidated financial statements for the year ended 31 December 2015 have been filed at Companies House and the audit report was not qualified and did not contain a statement under section 498(2) or section 498(3) of the Companies Act 2006.

 

 

2. Basis of preparation

 

The condensed consolidated interim financial statements for the six months to 30 June 2016 have been prepared in accordance with the accounting policies which will be applied in the twelve months financial statements to 31 December 2016. These accounting policies are drawn up in accordance with International Accounting Standards (IAS) and International Financial Reporting Standards (IFRS) as issued by the International Accounting Standards Board and as adopted for use in the European Union that are effective at 30 June 2016.

 

The condensed consolidated interim financial statements are unaudited and have not been subject to review. They do not include all the information and disclosures required in the annual financial statements, and therefore should be read in conjunction with the Group's published financial statements as at 31 December 2015.

 

In accordance with IFRS 5, the prior year comparative figures for the six months to 30 June 2015 have been restated for the disposal of the Swedish architectural business sold in December 2015 and the reclassification of capital reduction expenses. Capital reduction expenses of £30,000 were reported in exceptional items in the Group's condensed consolidated financial statements for the six months to 30 June 2015. These costs were subsequently reclassified to operating expenses in the financial statements for the year to 31 December 2015.

 

The comparative figures for the year ended 31 December 2015 are not the Company's statutory accounts for that period but have been extracted from these accounts.

 

The Directors, having considered the Group's current financial resources, have concluded that they are adequate for the Group's present requirements. Thus the condensed consolidated interim financial information has been prepared on the going concern basis. 

 

New accounting standards and interpretations are effective for the first time in the current period but have had no impact on the results or financial position of the Group. Furthermore, new standards, new interpretations and amendments to standards and interpretations that have been issued but are not effective for the current period have not been adopted early.

 

Estimates

Application of the Group's accounting policies in preparing condensed consolidated interim financial statements requires management to make judgements and estimates that affect the reported amount of assets and liabilities, revenues and expenses.  Actual results may ultimately differ from these estimates.

 

In preparing these condensed consolidated interim financial statements, the significant judgements made by management in applying the Group's accounting policies and the key sources of estimation uncertainty were the same as those that applied to the consolidated financial statements for the year ended 31 December 2015.

 

Risks and uncertainties

A summary of the Group's principal risks and uncertainties was set out on page 15 of the 2015 annual report and accounts. The Board considers these risks and uncertainties are still relevant to the current financial year and the impact of changes in the UK economy is reviewed in the Chairman's statement contained in this report.

 

 

3. Revenue

Revenue disclosed in the income statement is analysed as follows:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

six months to 30 June

 

 Year ended

 

 

 

 

 

 

 

(restated)

 

31 December

 

 

 

 

 

2016

 

2015

 

2015

 

 

 

 

 

£'000

 

£'000

 

£'000

 

 

 

 

 

 

 

 

 

 

 

 

Licence sales

 

 

2,738

 

2,636

 

4,536

 

 

Recurring maintenance and support revenue

 

4,102

 

3,642

 

7,278

 

 

Services income

 

 

1,929

 

1,670

 

3,446

 

 

 

 

 

8,769

 

7,948

 

15,260

 

 

 

 

 

 

 

 

 

 

 

 

 

 

4. Segmental information

 

Operating segments

The Group comprises of software business activity only and as such the information is presented in line with management information, as one segment.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

six months to 30 June

 

 Year ended

 

 

 

 

 

 

(restated)

 

31 December

 

 

 

 

2016

 

2015

 

2015

 

 

 

 

£'000

 

£'000

 

£'000

 

 

Revenue

 

8,769

 

7,948

 

15,260

 

 

 

 

 

 

 

 

 

 

 

Adjusted operating profit

 

2,330

 

1,801

 

3,446

 

 

Depreciation charge

 

(79)

 

(88)

 

(174)

 

 

Product development costs

 

(1,258)

 

(909)

 

(1,640)

 

 

Operating profit before amortisation of intangible assets and former directors termination payments

993

 

804

 

1,632

 

 

Amortisation of intangible assets

 

(283)

 

(236)

 

(495)

 

 

Former director's termination payments

(109)

 

(11)

 

(11)

 

 

Operating profit

 

601

 

557

 

1,126

 

 

Net finance cost

 

(44)

 

(67)

 

(120)

 

 

Segment profit before tax

 

557

 

490

 

1,006

 

 

Tax

 

(126)

 

(87)

 

(204)

 

 

Segment profit after tax

 

431

 

403

 

802

 

 

 

 

 

 

 

 

 

 

 

Development costs capitalised

 

(175)

 

(293)

 

(665)

 

 

Total development costs

 

(1,433)

 

(1,202)

 

(2,305)

 

 

 

 

 

 

 

 

 

 

 

Operating profit

 

601

 

557

 

1,126

 

 

Amortisation of intangible assets

 

283

 

236

 

495

 

 

Depreciation charge

 

79

 

88

 

174

 

 

EBITDA

 

963

 

881

 

1,795

 

 

 

 

 

 

 

 

 

 

 

Adjusted operating profit represents operating profit before expensed product development costs and intangible asset amortisation. Development project costs are expensed as incurred unless they meet the accounting policy requirements for capitalisation. The projects capitalised in the six months to 30 June 2016 are explained in the Chairman's Statement and the accounting policy requirements are set out on page 41 of the 2015 annual report and accounts.

 

Geographical, product and sales channel information

Revenue by geographical segment represents revenue from external customers based upon the geographical location of the customer.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

six months to 30 June

 

 Year ended

 

 

 

 

 

 

 

(restated)

 

31 December

 

 

 

 

 

2016

 

2015

 

2015

 

 

 

 

 

£'000

 

£'000

 

£'000

 

 

 

 

 

 

 

 

 

 

 

 

UK

 

 

2,825

 

2,391

 

4,857

 

 

Scandinavia

 

 

3,451

 

3,175

 

5,950

 

 

Germany

 

 

1,425

 

1,201

 

2,308

 

 

Rest of Europe

 

 

717

 

604

 

1,359

 

 

Rest of World

 

 

351

 

577

 

786

 

 

 

 

 

8,769

 

7,948

 

15,260

 

 

 

 

 

 

 

 

 

 

 

 

Revenue by product group represents revenue from external customers.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

six months to 30 June

 

 Year ended

 

 

 

 

 

 

 

(restated)

 

31 December

 

 

 

 

 

2016

 

2015

 

2015

 

 

 

 

 

£'000

 

£'000

 

£'000

 

 

 

 

 

 

 

 

 

 

 

 

Project management

 

 

4,272

 

3,988

 

7,493

 

 

Site management

 

 

229

 

199

 

396

 

 

Estimating

 

 

1,507

 

1,315

 

2,557

 

 

Engineering

 

 

1,389

 

1,161

 

2,373

 

 

CAD/Design

 

 

573

 

563

 

1,001

 

 

Visualisation

 

 

799

 

722

 

1,440

 

 

 

 

 

8,769

 

7,948

 

15,260

 

 

 

 

 

 

 

 

 

 

 

 

The Group utilises resellers to access certain markets. Revenue by sales channel represents revenue from external customers.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

six months to 30 June

 

 Year ended

 

 

 

 

 

 

 

(restated)

 

31 December

 

 

 

 

 

2016

 

2015

 

2015

 

 

 

 

 

£'000

 

£'000

 

£'000

 

 

 

 

 

 

 

 

 

 

 

 

Direct

 

 

8,273

 

7,249

 

14,236

 

 

Reseller

 

 

496

 

699

 

1,024

 

 

 

 

 

8,769

 

7,948

 

15,260

 

 

 

 

 

 

 

 

 

 

 

 

 

5. Operating profit

Operating profit for the period is after charging the following items:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 Year ended

 

 

 

 

 

six months to 30 June

 

31 December

 

 

 

 

 

2016

 

2015

 

2015

 

 

 

 

 

£'000

 

£'000

 

£'000

 

 

 

 

 

 

 

 

 

 

 

 

Software product development

 

1,258

 

909

 

1,640

 

 

Directors termination payment

 

109

 

11

 

11

 

 

Foreign exchange (gains)/losses

 

(10)

 

31

 

85

 

 

 

 

 

1,357

 

951

 

1,736

 

 

 

 

 

 

 

 

 

 

 

 

 

6. Net finance (cost)/income

Finance income and costs disclosed in the income statement is set out below:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Year ended

 

 

 

 

six months to 30 June

 

31 December

 

 

 

 

2016

 

2015

 

2015

 

 

 

 

£'000

 

£'000

 

£'000

 

 

Finance income:

 

 

 

 

 

 

 

 

  Bank and other interest receivable

2

 

-

 

1

 

 

Finance costs:

 

 

 

 

 

 

 

 

  Bank overdraft and loan interest

(41)

 

(60)

 

(107)

 

 

  Finance leases and hire purchase contracts

(5)

 

(7)

 

(14)

 

 

Total net finance cost

 

(44)

 

(67)

 

(120)

 

 

 

 

 

 

 

 

 

 

 

 

7. Earnings per share

The calculations of the earnings per share are based on profit after tax attributable to the ordinary equity shareholders of the Company and the weighted average number of shares in issue for the reporting period.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Year ended

 

 

 

 

six months to 30 June

 

31 December

 

 

 

 

2016

 

2015

 

2015

 

 

 

 

 

 

 

 

 

 

 

Continuing operations

 

£431,000

 

£403,000

 

£802,000

 

 

 

 

 

 

 

 

 

 

 

Discontinued operations

 

£0

 

£12,000

 

£360,000

 

 

Total profit after taxation

 

£431,000

 

£415,000

 

£1,162,000

 

 

 

 

 

 

 

 

 

 

 

Basic weighted average number of shares

73,970,534

 

73,970,534

 

73,970,534

 

 

Dilutive effect of share options

 

294,000

 

675,000

 

882,000

 

 

Diluted weighted average number of shares

74,264,534

 

74,645,534

 

74,852,534

 

 

 

 

 

 

 

 

 

 

 

Basic earnings/(loss) per share

 

 

 

 

 

 

 

 

Continuing operations

 

0.6

p

0.6

p

1.1

p

 

 

 

 

 

 

 

 

 

 

Discontinued operations

 

-

p

-

p

0.5

p

 

Total operations

 

0.6

p

0.6

p

1.6

p

 

 

 

 

 

 

 

 

 

 

Diluted earnings/(loss) per share

 

 

 

 

 

 

 

Continuing operations

 

0.6

p

0.6

p

1.1

p

 

 

 

 

 

 

 

 

 

 

Discontinued operations

 

-

p

-

p

0.5

p

 

Total operations

 

0.6

p

0.6

p

1.6

p

 

 

 

 

 

 

 

 

 

 

Shares held by the Employee Share Ownership Trust are excluded from the weighted average number of shares in the period.

 

8. Dividends

The Board have recommended the payment of an interim dividend of 0.15p per ordinary share (2015 H1: 0.0p)

 

9. Goodwill

The increase in goodwill since 31 December 2015 includes £18,000 of goodwill acquired on the acquisition of Elecosoft BV in the Netherlands and £67,000 of exchange gains on the revaluation of goodwill denominated in foreign currencies.

 

10. Other intangible assets

Other intangible assets comprise capitalised development costs, acquired customer relationships and purchased intangible assets. Additions in the six months to 30 June 2016 represent purchased intangible assets of £43,000 (2015: £50,000), internal development costs capitalised of £175,000 (2015: £293,000) and intangible assets acquired on the acquisition of Elecosoft BV in the Netherlands of £44,000. Internal development relates to software development projects that meet the accounting policy criteria for capitalisation. 

 

11. Borrowings

The bank loans and overdrafts are repayable as follows:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

at 30 June

at 30 June

at 31 December

 

 

 

 

 

 

 

2016

2015

2015

 

 

 

 

 

 

 

£'000

£'000

£'000

 

 

In one year or less

 

 

 

1,291

1,105

1,424

 

 

Between one and two years

 

 

597

750

750

 

 

Between two and five years

 

 

-

938

222

 

 

 

 

 

 

 

1,888

2,793

2,396

 

 

 

 

 

 

 

 

 

 

 

 

 

12. Accruals and deferred income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

at 30 June

at 30 June

at 31 December

 

 

 

 

 

 

 

2016

2015

2015

 

 

 

 

 

 

 

£'000

£'000

£'000

 

 

Accruals

 

 

 

 

1,696

1,497

1,360

 

 

Deferred income

 

 

 

4,202

3,528

3,708

 

 

 

 

 

 

 

5,898

5,025

5,068

 

 

 

 

 

 

 

 

 

 

 

 

Deferred income represents income from software maintenance and support contracts and is taken to revenue in the income statement on a straight line basis in line with the service and obligations over the term of the contract.

 

13. Acquisitions

On 4 January 2016 the Group acquired the business and certain assets of Asta BV, of The Netherlands, enhancing its control of the Dutch market for a total consideration of £63,000. The consideration comprised the payment of £48,000 in cash from the Group's existing resources and deferred consideration of £15,000 payable on the successful collection of the annual maintenance renewals invoiced in December 2015.

 

An analysis of the fair value of the Asta BV net assets acquired and the fair value of the consideration paid is set out below: 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Book value

Fair value adjustments

Provisional fair value

 

 

 

 

 

 

 

£'000

£'000

£'000

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Customer relationships

 

 

31

-

31

 

 

Intellectual property

 

 

12

-

12

 

 

Property, plant and equipment

 

2

-

2

 

 

Net assets

 

 

 

45

-

45

 

 

 

 

 

 

 

 

 

 

 

 

Goodwill

 

 

 

 

 

 

18

 

 

 

 

 

 

 

 

 

 

 

 

Total consideration

 

 

 

 

 

63

 

 

 

 

 

 

 

 

 

 

 

 

Satisfied by:

 

 

 

 

 

 

 

 

Cash

 

 

 

 

 

 

48

 

 

Deferred purchase consideration

 

 

 

15

 

 

 

 

 

 

 

 

 

63

 

 

 

 

 

 

 

 

 

 

 

 

Goodwill contains certain intangible assets that cannot be individually, separately and reliably measured by the acquirer. These items include the value of the management and workforce together with synergies that are expected to be gained from being part of the Group.

 

 

14. Related Party Disclosures

Transactions between Group undertakings, which are related parties, have been eliminated on consolidation and are not disclosed in this note.

 

The Directors of the Company had no material transactions with the Company during the six months to 30 June 2016, other than a result of service agreements. An amount of £18,000 (2015: £18,000) was paid to JHB Ketteley & Co Limited under a lease for occupation by the Group of 66 Clifton Street, London, EC2A 4HB and £3,000 (2015: £3,000) for a contribution to the office costs at Burnham-on-Crouch.

 

An amount of £40,000 was paid to JHB Ketteley relating to deferred salary unpaid at 31 December 2015. JHB Ketteley deferred £38,000 (2015: £nil) of his salary in the six months to June 2016. The deferred salary unpaid at 30 June 2016 is £38,000. (2015: £nil)

 

 

 


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