RNS Number:0841M
Cedar Group PLC
12 June 2000
The issuer has made the following amendment to the 'Final Results' announcement
released today at 07:00 am under RNS No 0566M.
The second Key Point should read:
* Group operating profit (before amortisation & NIC provision) increased by
97% to #6.3 million (1999: #3.2 million).
and not
* Group operating profit increased by 97% to #6.3 million (1999: #3.2
million)
as previously stated.
All other details remain unchanged.
The full corrected version is shown below.
CEDAR GROUP PLC
PRELIMINARY RESULTS
FOR THE YEAR ENDED 31ST MARCH 2000
(Cedar Group sells software and services which enable its customers to build
knowledge based enterprise business solutions)
Key Points
* Total turnover increased by 58% to #36.3 million (1999: #23.0 million)
* Licence revenues up 83%
* Recurring services up 120%
* Maintenance revenues up 28%
* Group operating profit (before amortisation & NIC provision) increased by
97% to #6.3 million (1999: #3.2 million).
* Profit before tax increased by 71% to #4.8 million (1999: #2.8 million)
* Earnings per share increased by 13% to 6.3p (before exceptional NIC
expense) (1999: 5.6p)
* Potential liability for National Insurance mitigated through directors'
undertakings
Growth Areas
* Major contracts won - Scottish Amicable & Sun Life of Canada
* Distribution partnership with Recognition Systems, a leading global
supplier of Marketing Campaign Management Software
* Significant acquisitions - PMPL, Firman Jack, Ansaback & Sword Business
Services - strengthen the group's enterprise computing portfolio
* Strengthened presence in the US through Cedar US acquisition and major
contract wins - Siemens Power Corporation, Ultea Leasing & ResourcePheonix
Inc.
Mike Harrison, Managing Director of Cedar Group, commented:
"I am delighted to report another successful trading period for the group. We
have maintained our commitment to growing the business organically and via
acquisitions while also improving our product offering, and our recent
expansion into the US looks set to bring even greater rewards. This has all
been achieved alongside record profits.
"We are now well positioned to exploit the Customer Relationship Management
(CRM) market. Our ability to deliver applications using the Application
Service Provider (ASP) business model will give us a significant advantage
over larger and less flexible competitors and allow us to maximise this global
opportunity."
Press enquiries:
Mike Harrison, Managing Director of Cedar Group Plc 01932 584 000
Mike Hosie, Finance Director of Cedar Group Plc 01932 584 000
Russell Cook, Teather & Greenwood 020 7426 9000
Zoe Biddick/Richard England, Biddick Associates 020 7464 4280
PRELIMINARY RESULTS FOR THE YEAR ENDED 31ST MARCH 2000
Chairman's Statement
Introduction
Cedar Group has achieved considerable success by selling and implementing
software that aims to satisfy business problems requiring a system solution
spanning the Enterprise. It is now well positioned to exploit the Enterprise
Computing Market where an increasing number of Companies have recognised a
need to build knowledge based business solutions.
This market has been poorly served historically. The Group believes that its
investments in product, people and infrastructure, have created the
opportunity to build an even more substantial business, initially in both the
UK and US, that will significantly increase the value and quality of the
Group.
The strong performance throughout the year was a result of increased sales of
licences and related services as well as solid contributions from businesses
acquired in the second half. The increased focus on the commercial sectors
means that as well as achieving higher overall contract values and better day
rates for the consultancy business, the Company as a whole is better balanced
in terms of its market focus. A solid and sustainable increase in services
and maintenance revenues also means that the Company is now generating higher
quality and recurring revenues to complement licence sales. Appropriate
control of expenditure has meant that the Group has generated an operating
profit of #6.3m from its sales of #36.3m. This is before taking into account
amortisation of goodwill and a provision of #0.5m relating to National
Insurance expense on the possible future exercise of share options granted
under the Group's unapproved scheme.
Financial Results
The Group's turnover of #36.3m (1999: #23.0m) was an increase of 58%. Licence
revenues increased by 83%, the recurring services and maintenance revenues
increased by 120% and 28% respectively. Licence revenues now account for
50% of revenues, services and maintenance 47% and other revenues 3%.
Operating profit for the year was #6.3m (before NIC provision of #0.5m and
amortisation of goodwill of #1.0m) (1999: #3.2m), representing continued
strong organic growth and a six month contribution from the acquisition of
PMPL Limited and Firman Jack Limited. Profit before tax was #4.8m (after
taking account of NIC provision) (1999: #2.8m).
Earnings per share of 5.5p compares to last years 5.6p per share after taking
account of the National Insurance expense. Without this expense the Earnings
per share would have been 6.3p, an increase of 13%.
The reported results include an exceptional charge of #0.5m relating to the
National Insurance expense on options granted under the Group's unapproved
share option scheme. The Directors mindful of the potential effects of this
provision in the development of the business both in the UK and particularly
the US have agreed an undertaking whereby various senior managers will assume
liability for National Insurance should this arise on exercise of the options.
In order to remain competitive and to mitigate the effects of any future
National Insurance expense, the Group is currently evaluating various
alternatives that will help to protect the Group's earnings and importantly,
cashflow.
Debtors at the year-end were up 52% attributable to the increase in sales. To
support the increase in growth the Group used part of the #26.7m raised by way
of the Rights Issue on 15 November 1999, as working capital and had net
borrowings amounting to #4.3m (1999: #5.1m) at the year end.
The balance of the Rights Issue was used to settle deferred consideration
relating to earlier acquisitions; to acquire PMPL Limited and Firman Jack
Limited; and for investment within the Group.
A further fundraising was approved by the Shareholders after the year end at a
meeting held on 7 April 2000 following which an amount of #40.2m was raised.
These funds are intended for further strategic acquisitions in the UK and US;
for additional working capital support for the acquired businesses; and to
provide additional funding for the development of the Group's e-Content
business solutions into the United States Financial Services market.
At the time of the Interim Statement, the Directors decided that they would
not declare an interim dividend. Having reviewed the needs of the business the
Directors intend to recommend to the Shareholders that the dividend payments
be suspended during this important growth phase for the business.
Achievements
Sales -
The Group continued to build strongly upon the step change in revenue growth
initiated in the previous year. Sales were generated from new customers as
well as from cross-selling opportunities created by the acquisition of PMPL
Limited and Firman Jack Limited and the Financial Management Systems (FMS)
division of PPSL Limited.
New customers include Greater Glasgow Health Board where a contract valued at
over #1m has been won to supply Cedar Financials to a number of Health Trusts;
Scottish Amicable and Sun Life of Canada have each agreed contracts worth #2m
over a period to provide data migration services and the building of
enterprise level data repositories or warehouses; and Manchester City Council,
who as part of the Government's Local Government "best value" programme have
purchased Cedar's call centre products in order to improve the level of
service offered to customers and to do so cost effectively. As a consequence,
the Government has designated them a Beacon Site which will encourage other
Authorities to view their initiative as best practice.
Many long-standing customers represent additional opportunity and amongst
them, Scottish Power, BP Chemicals and the Forestry Commission have purchased
the new web-enabled version of Cedar Financials, E-series.
Distribution -
The Group continues to develop its channels to market. In addition to its
traditionally strong direct sales force the Group has started to develop
relationships with other organisations that can broaden its distribution and
provide complementary skills or products. Recent developments in this regard
are the partnerships with Anite Group Plc, where their Local Government
experience will be harnessed to deliver the advantages of e-business systems
on proven platforms and with Recognition Systems Plc, who are a leading global
supplier of Marketing Campaign Management Software.
Recognition System's Protagona product will be licensed alongside the Group's
own call centre and data warehousing products to provide a best of breed
solution for Customer Relationship Management (CRM). Given the opportunity
created in the United States by the recent de-regulation of the financial
services industry, Cedar Group can now provide a total customer knowledge
service for major US enterprises using a fast track process and full
implementation support.
The Group intends expanding its addressable market by applying greater
industry focus and segmentation. In addition the commercial launch of its
Application Service Provider (ASP), which delivers applications over a network
directly to the desktop of a user, will allow distribution into markets that
currently sit above and below its existing market.
Product -
The Group continues to invest in the development of new products and
enhancements to existing products. Products are enabled for use in e-Commerce
and over secure managed communication networks and the Internet. The Group
will continue to seek additional and complementary products with which to
enhance its portfolio.
Acquisitions -
The Group's strategy for acquisitions has been to seek opportunities to build
a strong portfolio of products capable of addressing the needs of the
Enterprise Computing Market. The acquisition of PMPL provided a key element
of the Group's proposition by providing capabilities and products in the areas
of data migration and data warehousing without which no enterprise level
system would be complete. Firman Jack provided a level of project management
and consultancy experience, which has provided immediate benefit to the Group
and will provide the opportunity for longer term and sustainable incremental
revenues from their involvement in complex customer projects.
The Government's "best value" programme is creating significant opportunity in
the Local Authority market and the acquisition of FMS makes the Group the
largest supplier, by number of authorities, of financial accounting systems to
the local authority market. This creates further cross selling opportunities
in conjunction with other product and distribution initiatives taken.
The more recent acquisitions of Ansaback Limited and Sword Business Services
Limited represent an evolution in the Group's acquisition strategy that
provides additional services revenues and distribution capability.
Cedar US -
The acquisition of our American distributor is consistent with our geographic
strategy to build a solid position in the UK, and through an established US
business create a significant presence throughout North America from which the
world's largest market for the Group's product can be exploited.
Cedar US now has a critical mass upon which to build. The recently appointed
CEO, Tom Rump has a strong team that is working from four locations to support
the distribution activities.
With an existing customer base of 150 organisations, Cedar US is currently
developing its market with a multi-product offering leveraging the Group's
software products and know-how. A number of new customers have been won,
including Siemens Power Corporation who purchased Cedar Businessflow, the
Group's integrated document management and business process product. Ultea
Leasing Inc. who provide vehicle and equipment leasing and have purchased
Cedar Financials integrated with a Cedar partners' leasing product; and
ResourcePhoenix Inc., who are a leading provider of outsourced accounting
operations and business information management.
ResourcePhoenix Inc. has signed a full service provider partnership agreement
to re-market Cedar Financials to their North America prospects.
The partnership established between Recognition Systems plc and Cedar Group
also represents an opportunity for accelerated growth into the Financial
Services sector of the US market.
Given the Group's ambition and geographic strategy the Directors believe it
will be necessary to raise its profile with US investors and customers.
Consequently one of the activities undertaken this year will be to evaluate
the benefits, and possible timing of a US Listing.
People -
The Group continues to recruit industry experienced professionals and managers
and is aware of the need to remain competitive in a world-wide market where it
constantly competes for good people. Staff attrition is currently running
below the industry average at 15% and the Group intends to ensure its staff
are well motivated and prepared for future challenges by investing in
technical, professional and management training as well as being organised to
maximise the valuable contribution that all staff members can make. The Group
aims to secure the long term commitment of its people and ensure that it is
positioned to recruit in a competitive market. It is therefore investigating
ways in which share ownership and equity participation can be extended
throughout the organisation. It is the Group's policy to ensure that its
remuneration strategy allows it to compete for good quality and experienced
people who can secure the Group's strategic goal.
Outlook
Having built a solid business in the UK, the Group intends to extend its
distribution capability in both the UK and increasingly the US in pursuit of
greater revenue and profit growth. To support this, it will continue to
source complementary products and access effective distribution channels. As
the market develops, the Group expects to sell and implement an increasing
number of integrated solutions, which combines a number of the Group's
products.
The market opportunity for the Information Technology industry to solve
enterprise wide business problems is global and significant over the next
decade. Cedar Group is now well positioned to take advantage of this
opportunity and in order to capitalise upon it a new division has been
created. Advanced Business Solutions will focus on the areas of data
warehousing, image, document management and business process and call centres,
often integrated with financial systems. The objective is to improve any
business's ability to manage its enterprise knowledge base to enhance Customer
Relationship Management (CRM), and other key business processes, through
traditional and e-Commerce channels.
The market opportunity has been enabled by the introduction of the Internet,
falling telecommunication prices and the general development of the
Information Technology sector itself. These conditions create the opportunity
for Cedar; within which its ability to deliver applications using the
Application Service Provider (ASP) business model will give competitive
advantage over larger and less flexible competitors.
As it strives to meet its objectives and longer term ambitions Cedar is
dependent upon the continued involvement and development of its people. It is
therefore committed to creating opportunities and providing the resources
necessary for a successful and rewarding environment.
Brian Wilson
Chairman.
CONSOLIDATED PROFIT AND LOSS ACCOUNT
for the year ended 31 March 2000
2000 1999
Amortisation
of
Results before goodwill & Consolidated
amortisation + intangibles profit & loss
#'000 #'000 #'000 #'000
Turnover
Existing operations 32,300 - 32,300 23,046
Acquisitions 4,014 - 4,014 -
------- ------- ------- -------
Continuing operations 36,314 - 36,314 23,046
Cost of sales (8,401) - (8,401) (6,216)
------- ------- ------- -------
Gross profit 27,913 - 27,913 16,830
Other operating expenses
before amortisation (20,791) - (20,791) (13,591)
NIC payable on
unapproved options (536) - (536) -
Amortisation of goodwill
& intangibles - (961) (961) (356)
------- ------- ------- -------
Total operating expenses (21,327) (961) (22,288) (13,947)
Operating profit
Existing operations 5,615 (614) 5,001 2,883
Acquisitions 971 (347) 624 -
------- ------- ------- -------
Continuing operations 6,586 (961) 5,625 2,883
Investment income 173 - 173 162
Interest payable and
similar charges (969) - (969) (238)
------- ------- ------- -------
Profit on ordinary 5,790 (961) 4,829 2,807
activities before
taxation
Tax on profit on (2,248) - (2,248) (932)
ordinary activities
------- ------- ------- -------
Profit on ordinary
activities after 3,542 (961) 2,581 1,875
taxation
Dividends paid and - - - (813)
proposed
------- ------- ------- -------
Retained profit for the 3,542 (961) 2,581 1,062
year
======= ======= ======= =======
Earnings per ordinary 7.5p (2.0)p 5.5p 5.6p
share
------- ------- ------- -------
Diluted earnings per 7.1p (1.9)p 5.2p 5.5p
share
======= ======= ======= =======
+ Results before amortisation include all depreciation and amortisation
charges on assets other than purchased intellectual property rights and
goodwill.
GROUP AND COMPANY BALANCE SHEETS
As at 31 March 2000
Group Company
2000 1999 2000 1999
#'000 #'000 #'000 #'000
Fixed assets
Intangible assets 47,746 11,102 - -
Tangible assets 3,571 1,135 - -
Investments 1,321 1,825 50,595 15,268
------- ------- ------- -------
52,638 14,062 50,595 15,268
Current assets
Debtors
Due within one year 30,162 19,808 10,048 6,623
Due after one year 2,642 67 2,642 67
Cash at bank and in hand 3,920 6 1,867 564
------- ------- ------- -------
36,724 19,881 14,557 7,254
Creditors: Amounts
falling due within one year (26,207) (18,937) (4,968) (7,706)
------- ------- ------- -------
Net current assets/(liabilities) 10,517 944 9,589 (452)
------- ------- ------- -------
Total assets less current liabilities 63,155 15,006 60,184 14,816
Creditors: Amounts
falling due after more than one year - (916) - (916)
Provisions for liabilities and charges (18,528) (4,843) (18,154) (4,500)
------- ------- ------- -------
Net assets 44,627 9,247 42,030 9,400
======= ======= ======= =======
Capital and reserves
Called-up share capital 3,115 1,694 3,115 1,694
Share premium account 32,806 3,884 32,806 3,884
Other reserves 8,537 3,669 6,109 3,822
------- ------- ------- -------
Equity shareholders' funds 44,458 9,247 42,030 9,400
Equity minority interest 169 - - -
------- ------- ------- -------
Total capital employed 44,627 9,247 42,030 9,400
======= ======= ======= =======
CONSOLIDATED CASH FLOW STATEMENT
For the year ended 31 March 2000
2000 1999
#'000 #'000
Net cash inflow/(outflow) from operating 856 (4,313)
activities
Returns on investments and servicing of (796) (139)
finance
Taxation (871) (253)
Capital expenditure and financial investment (2,307) (1,960)
Acquisitions (28,169) (212)
Equity dividends paid (542) (804)
------- -------
Cash outflow before use of liquid resources (31,829) (7,681)
and financing
Management of liquid resources 2,526 -
Financing 30,043 26
------- -------
Increase/(decrease) in cash 740 (7,655)
======= =======
RECONCILIATION OF MOVEMENTS IN SHAREHOLDERS' FUNDS
for the year ended 31 March 2000
Group Company
2000 1999 2000 1999
#'000 #'000 #'000 #'000
Profit/(loss)attributable 2,581 1,875 - (280)
to shareholders
Dividends paid and proposed - (813) - (813)
------- ------- ------- -------
Retained profit/(loss) 2,581 1,062 - (1,093)
for the year
Unissued share capital 2,587 - 2,587 -
arising on Acquisition
New share capital issued 30,043 625 30,043 625
Adjustment to goodwill - 848 - -
------- ------- ------- -------
Net movements in 35,211 2,535 32,630 (468)
shareholders' funds
Opening shareholders' funds 9,247 6,712 9,400 9,868
------- ------- ------- -------
Closing shareholders' funds 44,458 9,247 42,030 9,400
======= ======= ======= =======
NOTES TO THE PRELIMINARY STATEMENT
for the year ended 31 March 2000
1. Turnover
The Directors consider that the Company's business comprises a single
activity, the development and sale of business software and related services.
However, additional analysis is provided in respect of turnover as the
Directors believe it to be informative. Turnover from continuing activities
can be analysed as follows:
2000 2000 2000 1999
Existing Acquisitions Continuing Continuing
Classes of business #'000 #'000 #'000 #'000
Software products and services:
Licences 17,308 796 18,104 9,900
Consultancy and training 7,908 2,936 10,844 4,920
Maintenance 5,880 186 6,066 4,728
Other 1,204 96 1,300 3,498
------- ------- ------- -------
Turnover 32,300 4,014 36,314 23,046
Cost of sales (8,127) (274) (8,401) (6,216)
------- ------- ------- -------
Gross profit 24,173 3,740 27,913 16,830
======= ======= ======= =======
2. Staff costs
Staff costs including Directors' remuneration amounted to:
2000 1999
#'000 #'000
Wages and salaries 12,137 8,190
Social security costs 1,364 847
Pension costs 162 41
------- -------
13,663 9,078
======= =======
Pension costs relate to payments by the Group into the
personal pension plans of certain employees.
The average monthly number of persons employed by the Group
during the year was as follows:
2000 1999
Number Number
Sales 63 47
Technical 193 127
Office and management 66 40
------- -------
322 214
======= =======
3. Dividends paid and proposed
2000 1999
#'000 #'000
Interim paid 0.00p (1999: 0.80p) - 271
Final proposed 0.00p (1999: 1.6p) - 542
------- -------
- 813
======= =======
4. Earnings per share
The calculations of earnings per share are based on the
following profits and number of shares:
2000 1999
#'000 #'000
Profit on ordinary activities after taxation 3,542 2,231
before amortisation
Amortisation of intangible assets and goodwill (961) (356)
------- -------
Profit on ordinary activities after taxation 2,581 1,875
======= =======
Weighted average number of shares:
2000 1999
Number of Number of
Shares Shares
For basic earnings per share 47,198,161 33,506,373
Exercise of share options 2,730,948 585,352
---------- ----------
For diluted earnings per share 49,929,109 34,091,725
========== ==========
5. Notes to the cash flow statement
a Reconciliation of operating profit to net operating cash
flows:
2000 1999
#'000 #'000
Operating profit 5,625 2,883
Depreciation 584 671
Profit on disposal of fixed assets (7) (39)
Amortisation of goodwill and intangibles 961 356
Increase in debtors (10,606) (9,934)
Increase in creditors 3,763 1,750
Increase in provisions 536 -
------- -------
Net cash inflow/(outflow) from operating 856 (4,313)
activities
======= =======
b Analysis of cash flows for headings netted in the cash
flow statement:
2000 1999
#'000 #'000
Returns on investments and servicing of finance
Interest received 173 162
Interest paid (969) (301)
------- -------
Net cash outflow for returns on investments and (796) (139)
servicing of finance
======= =======
Capital expenditure and financial investment
Purchase of tangible fixed assets (1,854) (1,192)
Proceeds from sale of fixed assets 220 979
Purchase of trade investments (673) (1,747)
------- -------
Net cash outflow for capital expenditure and (2,307) (1,960)
financial investment
======= =======
2000 1999
#'000 #'000
Acquisitions
Current year purchase of subsidiary undertakings (20,539) -
Current year purchase of business undertaking (1,375) -
Prior year purchases (6,006) (312)
(Overdrafts)/cash acquired (249) 100
------- -------
Net cash outflow for acquisitions (28,169) (212)
======= =======
Financing
Receipt of short term loans 2,500 -
Repayment of short term loans (2,500) -
Proceeds from the issue of ordinary share capital 30,043 26
------- -------
Net cash inflow from financing 30,043 26
======= =======
c Reconciliation of net cash flow to movement in net debt
2000 1999
#'000 #'000
Increase/(decrease) in cash in the year 740 (7,655)
Net (debt)/cash at the start of the year (5,099) 2,556
------- -------
Net debt at the end of the year (4,359) (5,099)
======= =======
d Analysis of net funds
At 1 April Cash At 31 March
1999 Flow 2000
#'000 #'000 #'000
Cash at bank and in hand 6 3,914 3,920
Overdrafts (5,105) (3,174) (8,279)
------- ------- -------
Net debt (5,099) 740 (4,359)
======= ======= =======
6. Acquisitions
Acquisition of subsidiary undertakings
Sword
Firman Business
PMPL Jack Systems
Limited Limited Limited
#'000 #'000 #'000
Net assets/(liabilities) acquired
Tangible fixed assets 127 69 1,001
Debtors 948 471 272
Cash at bank and in hand (86) 84 21
Creditors (672) (347) (249)
Tax payable - (109) -
------- ------- -------
317 168 1,045
Minority interest - - (169)
Goodwill arising on acquisition 5,316 2,461 4,113
Total consideration (including expenses) 5,633 2,629 4,989
======= ======= =======
Satisfied by:
Capitalised loans
Deferred shares 2,587
Deferred cash
Cash 5,633 42 4,989
======= ======= =======
5,633 2,629 4,989
Acquisition of subsidiary undertakings
Cedar
SBA Group US
Limited Inc Total
#'000 #'000 #'000
Net assets/(liabilities) acquired
Tangible fixed assets 81 101 1,379
Debtors 168 635 2,494
Cash at bank and in hand (103) (165) (249)
Creditors (493) (1,469) (3,230)
Tax payable - - (109)
------- ------- -------
(347) (898) 285
Minority interest - - (169)
Goodwill arising on acquisition 16,157 7,666 35,713
Total consideration (including expenses) 15,810 6,768 35,829
======= ======= =======
Satisfied by:
Capitalised loans 1,177 1,177
Deferred shares 2,587
Deferred cash 10,020 1,506 11,526
Cash 5,790 4,085 20,539
------- ------- -------
15,810 6,768 35,829
======= ======= =======
7. Annual Report and Accounts
Copies of this statement are available to members of the public from the
Company's registered office: Cedar House, 78 Portsmouth Road, Cobham,
Surrey, KT11 1HY. The Annual Report and Accounts will be posted to
shareholders shortly.
The financial information set out above does not constitute the Group's
statutory accounts within the meaning of Section 240 of the Companies Act
1985. The condensed information for the year ended 31 March 1999 represents
extracts from the latest statutory accounts which have been delivered to the
Registrar of Companies: the report of the auditors was unqualified and did not
contain a statement under section 237 (2) or (3) of the Companies Act 1985.
END
FR KKBKBDBKDBAD
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