RNS No 9499a
CEDARDATA PLC
16th June 1998
CEDARDATA plc
leading supplier of financial accounting and commercial computer software
Preliminary Announcement
for the year ended 31 March 1998
1998 1997
* Turnover #12.5m #10.4m up 20%
* Profit before tax #2.6m #1.6m up 62%
* Earnings per share 5.3p 3.6p
* Operating cash inflow #0.9m #2.7m
* Gearing Nil Nil
* Final Dividend proposed of 1.6p 0.7p (net)
" We have assembled a portfolio of product offerings that can provide
significant business benefits to medium and large scale enterprises. Our goal
in the next year is to integrate the Groups' Product Development and
Distribution activities in order to exploit these opportunities whilst we
continue to deliver satisfactory results for the year. "
Mike Harrison,
Managing Director
FULL STATEMENT ATTACHED
ENQUIRIES
Today: Tel: 0171-282 8000 (10.00 am - 12 noon)
Mike Harrison, Managing Director
Chris Ellis, Finance Director
Cedardata plc
Thereafter: Tel: 0181-949 7057
Alex Walters, Citigate Communications Ltd
Thereafter: Tel: 0121-631 2299
FINANCIAL
Turnover at #12.5 million (1997: #10.4 million) increased by 20%, and, by
exceeding the previous highest Group turnover in absolute terms, confirmed the
good overall progress made in the last year. Licence revenues increased by 53%
as the new cfacs 8 product gained commercial market acceptance and some public
sector markets resumed buying. Service revenues from consulting and training,
down 9%, reflected the lagged impact of the lost and delayed business reported
last year. Recurring maintenance billings continued to progress increasing by
25%, and representing some 34% of total revenue for the year. Pre-tax profits
for the year, which are up 62% to #2.6 million (1997: #1.6 million), benefited
particularly from the return of high margin licence revenues. Earnings per
share of 5.3 pence reflected a 47% increase over the prior year's 3.6 pence
per share.
A very busy final quarter gave rise to increased debtor balances, up 48% at
year end. This was driven by the substantial delivery of both software and
implementation services to clients in the final three months. Cash balances
were reduced to #2.6 million (1997: #4.0 million ). This reduction reflects
the development of the business by way of payments of acquisition
consideration and advances of loans to support businesses over which
acquisition options are now held. The balance of this requirement was funded
by the issue and placing of 1,584,100 new shares in March, 1998.
The Board has proposed a final dividend of 1.6p (net) per Ordinary Share
payable on 18th August 1998 to all holders of Ordinary Shares on the register
at 17th July, 1997. This brings the total dividend for the year to 2.4p (net)
(1996: 2.27p).
ACHIEVEMENTS
The Group took necessary actions to secure recovery from the poor second half
it experienced in 1997. The early cost reduction programme and the targeting
of private sector business, combined with increasing sales success of the
cfacs 8 product has contributed to an improving performance in Cedardata
Software. Tele-Connect released an enhanced product in March and its overall
performance triggered further acquisition consideration payments in December,
1997.
This improved Group performance has allowed additional expenditure on
acquisitions and early investments in the reorganisation of the business, with
the intention of building a stable growing enterprise. It has been, and
continues to be, our challenge to develop a sustainable strategy for achieving
growth based on the strengths of the Group's existing operations in addition
to identifying and securing suitable acquisition opportunities.
OUTLOOK
Many large enterprises after two decades of expenditure find themselves with a
patchwork of unintegrated legacy systems which have yet to be harnessed
effectively in the delivery of high standards of customer care and management.
The call centre has a very high potential for the delivery of effective
customer care but in order to realise its capability needs to be effectively
managed in terms of its quality and responsiveness, and closely integrated
into the organisation's information systems and business processes. Our
strategy is to be successful by providing solutions capable of such
integration, from a 'best of breed' portfolio, to enable our customers to
obtain significant benefits by solving these problems.
Within this framework we have secured options to acquire businesses, as well
as intellectual property rights and distribution over several products in the
last nine months. These products extend the capability of the Group to
deliver solutions to the problems experienced by many enterprises today.
Qualtech has, we believe, the best available solution to measure and manage
call centre effectiveness, which is both a necessary precursor to investment
in its improvement and essential to measurement of this outcome. Having
defined and understood 'best practice', Tele-connect scripting and agent
support software best enables its consistent implementation across call
centres. Pmpl's data warehousing products, by significantly improving the
effectiveness and quality of our customers' marketing and sales activities,
ensure the consistent flow of well qualified customers seeking to do business
that the call centre requires. The COI Businessflow product supports call
centre operations by providing comprehensive access to documentation via image
processing but is also important as the basis for integrating the call centre
with the rest of the business and its processes particularly with existing
underlying systems such as cfacs.
In addition to securing quality products it is also necessary to invest in
facilities and staff to support the planned expansion. The Group will
therefore be moving from its present premises in New Malden to a new facility
at Cobham, Surrey, during the summer. Since the end of March we have recruited
and reorganised our sales force to pursue the new opportunities presented by
Businessflow, PMpL and Tele-Connect, in addition to cfacs. Their efforts will
be aided by the considerably enhanced customer facilities then provided in
which to demonstrate our capabilities and secure orders. The half year is,
however, likely to find us having completed our investments without yet having
greatly benefited from them. The resulting incremental revenues are thus
anticipated to add to the Group's existing second half weighting.
We have assembled a portfolio of product offerings that can provide
significant business benefits to medium and large scale enterprises. Our goal
in the next year is to integrate the Product Development and Distribution
activities in order to exploit these opportunities whilst we continue to
deliver satisfactory results for the year.
1998 1997
Notes #'000 #'000
Turnover - continuing operations 1 12,506 10,363
Cost of Sales (3,935) (3,750)
Gross profit 8,571 6,613
Other operating expenses 2 (6,113) (5,239)
Operating profit - continuing
operations 2,458 1,374
Investment income 274 297
Interest payable and similar charges (168) (82)
Profit on ordinary
activities before taxation 2,564 1,589
Tax on profit on ordinary activities (866) (464)
Profit on ordinary
activities after taxation 1,698 1,125
Dividends paid and proposed (786) (703)
Retained profit for the year 912 422
Earnings per ordinary share 4 5.3p 3.6p
Consolidated Statement of Total Recognised Gains and Losses
The Group has no recognised gains or losses other than the profit for the
financial year in either year.
Group and Company
Balance Sheets
at 31 March 1998 Group Company
1998 1997 1998 1997
Notes #'000 #'000 #'000 #'000
Fixed Assets
Intangible assets 5 2,073 - 2,073 -
Tangible assets 1,499 1,696 955 973
Investments - - 6,879 6,990
3,572 1,696 9,907 7,963
Current assets
Debtors 10,904 5,769 4,563 1,651
Cash at bank and in hand 2,556 4,023 1,562 3,144
13,460 9,792 6,125 4,795
Creditors: Amounts falling due
within one year (9,398) (5,679) (5,242) (1,480)
Net current assets 4,062 4,113 883 3,315
Total assets less
current liabilities 7,634 5,809 10,790 11,278
Provisions for liabilities
and charges (922) (2,526) (922) (2,526)
Net assets 6,712 3,283 9,868 8,752
Capital and reserves
Called up share capital 1,667 1,584 1,667 1,584
Share premium reserve 3,286 963 3,286 963
Merger reserve - - 1,947 1,947
Profit and loss account 6,209 5,297 2,968 4,258
Goodwill write off reserve (4,450) (4,561) - -
Equity shareholders' funds 6,712 3,283 9,868 8,752
Consolidated
Cash Flow Statement
for the year ended 31 March 1998
1998 1997
#'000 #'000
Net cash inflow from operating activities 923 2,669
Returns on investments and servicing of finance 188 277
Taxation (620) (1,618)
Capital expenditure and financial investment (2,306) (215)
Acquisitions - (759)
Equity dividends paid (475) (1,305)
Cash outflow before use of liquid resources
and financing (2,290) (951)
Management of liquid resources (1,583) (1,000)
Financing 2,406 (213)
Decrease in cash (1,467) (2,164)
RECONCILIATION OF MOVEMENTS
IN SHAREHOLDERS' FUNDS
for the year ended 31 March 1998
Group Company
1998 1997 1998 1997
#'000 #'000 #'000 #'000
Profit/(loss) attributable
to shareholders 1,698 1,125 (504) 83
Dividends paid and proposed (786) (703) (786) (703)
Retained profit/(loss) for the year 912 422 (1,290) (620)
New share capital issued 2,406 3 2,406 3
Merger reserve - - - 1,947
Goodwill 111 (4,564) - -
Net movements in
shareholders' funds 3,429 (4,139) 1,116 1,330
Opening shareholders' funds 3,283 7,422 8,752 7,422
Closing shareholders' funds 6,712 3,283 9,868 8,752
Notes to the
Preliminary Statement
for the year ended 31 March 1998
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:
1998 1997
Classes of business #'000 #'000
Software products and services:
Licences 4,518 2,955
Consultancy and training 2,537 2,800
Maintenance 4,226 3,374
Bureau services - 206
Other 1,225 1,028
Turnover 12,506 10,363
Cost of sales (3,935) (3,750)
Gross profit 8,571 6,613
1998 1997
#'000 #'000
Geographical segments
United Kingdom 11,816 10,113
Rest of World 690 250
Total 12,506 10,363
2. Other operating expenses
1998 1997
#'000 #'000
Selling costs 1,484 1,366
Administrative expenses 4,629 3,873
6,113 5,239
3. Staff costs
Staff costs including Directors' remuneration amounted to:
1998 1997
#'000 #'000
Wages and salaries 4,115 3,874
Social security costs 491 477
Pension costs 27 24
4,633 4,375
Pension costs relate to payments by the Group into personal pension plans of
certain employees.
NOTES TO THE
PRELIMINARY STATEMENT
for the year ended 31 March 1998
The staff costs for persons whose duties are wholly within research and
development are as follows:
1998 1997
#'000 #'000
Research and development staff costs 861 1,024
The average monthly number of persons employed by the Group during the year
was as follows:
1998 1997
Number Number
Sales 22 21
Technical 96 92
Office and management 27 36
145 149
4. Earnings per share
1998 1997
Earnings per ordinary share 5.3p 3.6p
Earnings per ordinary share are based on profit after taxation of #1,698,000
and on 31,772,995 ordinary shares being the weighted average number of
ordinary shares in issue and ranking for dividend during the year (1997:
31,068,217).
The potential dilution of earnings per share from the exercise of share
options is not material.
5. Intangible fixed assets and investments
PMpL Limited
The Company announced on 7 January 1998 that an agreement had been exchanged
to purchase the world-wide Intellectual Property Rights ("IPR") in the
Customer and Management Information System ("CaMIS") and Data Factory Tool Kit
("DFTK") products of PMpL Limited for a cash consideration of #2 million. The
agreement was completed on 23 March 1998 and consequently the capitalised
amount of this investment, being the purchase cost plus associated expenses of
#73,000, has not been subject to amortisation in the current year.
A second agreement allows for a staged purchase of the entire issued share
capital of PMpL on a put and call option basis. The agreement provides for
the acquisition of 40% of the equity of PMpL by 30 September 1999, 76% by 30
September 2000 and 100% by 30 September 2001. Under the terms of the
agreement consideration will be determined by reference to the three
accounting periods ending 31 March 2001 on a first year multiple of ten times
(year 2, nine times; year 3, eight times) post tax profits achieved by PMpL.
The Company may settle this consideration by way of shares or cash, at its
discretion. The maximum consideration over the period is capped at #6
million. No options under the agreement were exercised during the year ended
31 March 1998.
Tele-Connect Systems Limited
The investment in Tele-Connect Systems Limited is stated at the initial
consideration plus the discounted value of future payments under the terms of
the earn out agreement entered into in the prior year. During the year
#1,583,000 of loan stock was issued under this agreement and the schedule of
future anticipated payments revised, resulting in an adjustment to the
carrying value of #111,000.
NOTES TO THE
PRELIMINARY STATEMENT
for the year ended 31 March 1998
Qualtech Limited
The Company announced on 13 November 1997 that it had signed an agreement for
the option to purchase the entire share capital of Qualtech Limited. The
agreement allows for a staged purchase of the entire issued share capital of
Qualtech on a put and call option basis. The agreement provides for the
acquisition of 13% of the equity of Qualtech by 31 March 1999, 57% by 31
March 2000 and 100% by 31 March 2001. Under the terms of the agreement
consideration will be paid based on the three accounting period ending 30
September 2000 on a multiple of no greater than 10 times post tax profits
achieved by Qualtech. The Company may settle this consideration by way of up
to 50% in shares with the balance in cash, at its discretion. The maximum
consideration over the period is capped at #7 million. No options under the
agreement were exercised during the year ended 31 March 1998. The Company
have granted Qualtech a #300,000 secured loan in consideration for the
exclusive option to acquire Qualtech Limited under the above agreement. This
loan is included within debtors falling due after more than one year.
At the same time the Company also announced that it had acquired an option to
purchase the assets of Leicester Systems Limited, a company which owns the
world-wide intellectual property rights outside the UK to Qualtech's software
product, and such licensing arrangements as may have been entered into by
Leicester Systems at the time of exercise. The consideration, which is
calculated at 10 times notional post tax profits has been capped at #3 million
and is capable of being satisfied by up to 50% in shares no earlier than one
year and one day from the completion of the acquisition of 100% of the entire
issued share capital of Qualtech Limited, or 1 October 2002. This option has
been granted for no consideration.
6. Annual Report and Accounts
Copies of this statement are available to members of the public from the
Company's registered office: Oriel House, 52 Coombe Road, New Malden, Surrey,
KT3 4QH. The Annual Report and Accounts will be posted to shareholders
shortly.
The financial information set out above does not constitute the Company's
statutory accounts for the years ended 31 March 1997 or 1998 but is derived
from those accounts. Statutory accounts for 1997 have been delivered to the
registrar of companies, whereas those for 1998 will be delivered following the
Company's annual general meeting. The auditors have reported on those
accounts; their reports were unqualified and did not contain a statement under
section 237(2) or (3) of the Companies Act 1985.
END
FR DGGBLLDBCCIU
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