Last checked at 21 Jan 2009 07:00
Manpower Software plc
("Manpower Software" or "the Company")
Interim Results for the six months to 30 November 2008
* Trading profit defined as profit before amortisation, share-based payments, interest and tax
Ian Bowles, Chief Executive Officer commented: "Manpower Software continues to make significant progress despite the economic downturn. We remain focussed on strong organic growth and are pleased to report that all sectors of the business have a strong pipeline of opportunities entering the second half of the year. As a result, the Directors are confident that the company's performance for the full year will be in line with their expectations."
Enquiries:
| Manpower Software Ian Bowles - Chief Executive Officer Simon Thorne - Chief Financial Officer
| Tel: +44 (0) 20 7389 9500 |
| Numis Securities Nominated adviser: Michael Meade / Brent Nabbs Corporate Broking: James Black
| Tel: +44 (0) 20 7260 1000 |
| Hansard Group Justine James John Bick | Tel: +44 (0) 20 7245 1100 +44 (0) 7525 324 431 +44 (0) 7872 061 007 |
CHAIRMAN'S STATEMENT
Introduction
I am pleased to report continuing success for the group in the first six months of the current financial year. Despite the economic downturn, Manpower Software has achieved strong growth as well as broadening its addressable markets within the UK and internationally.
Shortly before last year-end, the company made its first acquisition when it purchased Key Information Technology Systems Ltd ("KITS"). The acquisition of KITS established our position in the NHS temporary staffing solutions market, bringing with it 90 new sites and enabling us to offer a fully integrated e-rostering and bank staffing solution to both our own customers and those of KITS.
Shortly after the interim period-end, the company made its second acquisition when it purchased the business, goodwill and certain assets of Baum Hart & Partners ("BHP"). The acquisition of BHP has consolidated our position in the NHS temporary staffing solutions market, given that we have acquired the technology platform StaffBank. The company also gained a significant, recurring revenue stream in the form of support and maintenance, hosting and transaction-based services, and the opportunity to expand the MAPS Health Suite through the development of certain products of BHP. Further information relating to this acquisition is given below.
Overall, the company continues to deliver on its strategy to be the leading supplier of workforce optimisation solutions in its chosen markets.
Results
Revenue in the first half of the financial year was £6.5m (2007: £5.3m), an increase over the same period last year of 22%. Trading profit for the period, before adjustments for share-based payments and the amortisation of intangible assets, was £0.78m (2007: £0.62m), an increase over last year of 27%. The resulting trading profit margin was 12.1% (2007: 11.5%). Diluted adjusted EPS (excluding share-based payments and amortisation of intangibles) increased by 29% to 1.8p (2007: 1.4p).
Licence revenue grew by 23% to £3.1m in comparison to the first half of 2007 (£2.5m), while Services revenue grew by 21% to £3.4m (2007: £2.8m). By sector, Healthcare revenue in the period increased by 52% to £4.5m (2007: £2.9m), reflecting the company's continuing expansion within the NHS and its position as the supplier of choice for nurse rostering products. Defence revenues in the period increased by 6% to £1.4m (2007: £1.3m) as the company continued to deliver services to its existing customer base in this market sector. Maritime revenues were 41% less than the prior year's period at £0.6m (2007: £1.1m), reflecting a lack of new licence fees during the first half in this market sector.
Cost of sales in the period increased from £3.7m to £4.6m as the company developed its services business and we continued to add to our existing sales capability. Administrative costs in the period were held broadly in line with the same period last year at £1.0m, despite the acquisition of KITS.
Cash balances at the period-end were £2.8m (2007: £2.7m). This reflects an increase in debtors of £2m subsequent to increased sales activity prior to the period-end, an increase in trade and other payables (substantially new support contracts) of £1m, and having spent £0.4m to acquire KITS in the second half of the last financial year.
Organic growth
Excluding the acquisition of KITS made in April 2008:
Revenue in the first half of the financial year was £6.1m (2007: £5.3m), an increase over last year of 14%;
Licence revenue grew 18% in comparison to the first half of 2007;
Services revenue grew by 12%; and
Healthcare revenue increased 39%.
KITS is now an integral part of the company's business. As a result, the costs of KITS are not identified separately and it is not possible to state how much of the period's trading profit and margin are separately attributable to KITS.
Significant activity in the period
The following significant activity occurred during the six month period to 30 November 2008:
Healthcare. We added 21 new NHS Trusts to our customer base, making a total at the period-end of 59. This is more than double the number of customers we had twelve months ago (30 November 2007: 27) and continues the sequential growth reported in prior periods. We have again broadened the addressable market and now supply MAPS Healthroster to both acute and primary care NHS Trusts for nurses, junior doctors and ancillary staff. Key to choosing MAPS Healthroster is its ability to provide a better understanding of demand versus supply of clinical staff, how this is balanced against efficient use of available budgets and how it helps reduce the administrative burden for HR, clinical and payroll staff, thereby improving patient care. MAPS Healthroster reduces costs significantly and maintains Clinical Governance. In addition to the new customers for MAPS Healthroster, we also added three new customers for our market leading Bank Staff Management Solution ("BSMS"), the temporary staffing solution. The award of these contracts brings the total number of NHS Trusts which have selected BSMS to 106. International sales. In October we announced the sale of MAPS Healthroster to our first customer in Malaysia, Sunway Medical Centre ("SMC"). This is a significant milestone in our efforts to extend our market reach for workforce optimisation and electronic rostering solutions into other markets. Since the period-end, we have further extended our reach overseas with a sale to Boston University Radiology Associates in the USA (refer below). The company has a strong pipeline of opportunities for the second half.
Defence. During the period we continued to enjoy success providing services to our British and overseas customers. HQ Land Forces ("HQLF") expanded their use of MAPS Defence Suite V6, introducing significant new functional and user interface enhancements to their extensive and growing user community managing the Collective Training Programme. Manpower Software has already trained over 3,000 MAPS users across the British Regular and Territorial Army, who between them now manage over 200,000 Collective Training Events. HQLF also selected MAPS Defence Suite to manage the capture of Recruitment Pipeline Management Information for Distributed Individual Training in the Army Reserves. These projects, coupled with the existing and highly significant MAPS Operational Commitments Planning application ("OCP"), offer significant potential for the company to expand MAPS' deployment into other, larger, pan-MoD contract opportunities going forward. Our footprint in NATO continues to expand with the recent introduction of a MAPS solution to support the newly established but critical NATO Special Forces Command Centre ("NSCC") at its strategic headquarters in Belgium. The Royal Fleet Auxiliary continued to work closely with us to exploit the utility of their existing products. The Royal Australian Navy is now in the process of rolling out its MAPS solution across the whole of its frigate fleet.
Service and Support. Revenues grew 21%, driven both by deliveries to new customers and by growth in the installed base.
Significant activity since the period-end
Strategy
The management team continues to focus on the four core structural elements of a successful software business.
Linearity of licence revenues through consecutive periods. Revenue growth is driven principally by the sale of new licences. Linear growth is therefore at the heart of management's objectives and the company's determination to drive shareholder value. First half licence revenues increased in comparison with the previous year's first half, while a strong forward pipeline exists for the second half of the financial year.
Appropriate margins in service and support. Management continues to focus on customer delivery, satisfaction and support, while achieving profitability at the best industry standards.
Investment. The company continues to target financial returns commensurate with the best software companies worldwide. We continue to invest in our people, the product, services and support, as well as new markets. This focus on improving productivity at all levels continues to underpin the long term development of the company. We use appropriate incentive structures, rigorous quarterly targets and demanding criteria for all investment, thereby driving revenue growth and optimising operating margins and free cash flow.
Strict financial management. We continue to measure and monitor carefully all financial ratios, maintaining a strict emphasis on achieving agreed operating plans.
Outlook
The Directors note that, in the first half of this financial year, there has been a particularly strong performance in the Healthcare sector. While we remain focused on strong organic growth, further acquisition opportunities are being considered against well defined criteria that support our strategic objectives. All sectors of the business, including Maritime, have a strong pipeline of opportunities entering the second half and, as a result, the Directors are confident that the company's performance for the full year will be in line with their expectations.
We are passionate about our customers and their success. By improving our customers' business processes and making a positive impact we aim to create a long-term mutually beneficial relationship that delivers sustainable value.
Finally, I would like to thank and recognise all Manpower Software's people for their total commitment to the Company's continuing success.
Terry Osborne
CHAIRMAN
20 January 2009
INDEPENDENT REVIEW REPORT TO MANPOWER SOFTWARE PLC
INTRODUCTION
We have been engaged by the company to review the condensed set of financial statements in the half-yearly financial report for the six months ended 30 November 2008, which comprises the condensed, consolidated balance sheet, income statement, statement of changes in equity and cash flow statement, and related notes. We have read the other information contained in the half yearly financial report, which comprises only the chairman's statement, and considered whether it contains any apparent misstatements or material inconsistencies with the information in the condensed set of financial statements.
This report is made solely to the company in accordance with guidance contained in ISRE (UK and Ireland) 2410, 'Review of Interim Financial Information performed by the Independent Auditor of the Entity'. Our review work has been undertaken so that we might state to the company those matters we are required to state to them in a review report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the company, for our review work, for this report, or for the conclusion we have formed.
DIRECTORS' RESPONSIBILITIES
The half-yearly financial report is the responsibility of, and has been approved by, the directors. As disclosed in Note 2, the annual financial statements of the group are prepared in accordance with IFRS's as adopted by the European Union.
OUR RESPONSIBILITY
Our responsibility is to express to the company a conclusion on the condensed set of financial statements in the half-yearly financial report based on our review.
SCOPE OF REVIEW
We conducted our review in accordance with International Standard on Review Engagements (UK and Ireland) 2410, 'Review of Interim Financial Information Performed by the Independent Auditor of the Entity' issued by the Auditing Practices Board for use in the United Kingdom. A review of interim financial information consists of making enquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with International Standards on Auditing (UK and Ireland) and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.
CONCLUSION
Based on our review, nothing has come to our attention that causes us to believe that the condensed set of financial statements in the half-yearly financial report for the six months ended 30 November 2008 is not prepared, in all material respects, in accordance with in accordance with the basis of accounting described in Note 2.
GRANT THORNTON UK LLP
AUDITOR
LONDON
20 January 2009
CONDENSED CONSOLIDATED INCOME STATEMENT
| 6 months to | 6 months to | Year to | ||
| 30 November | 30 November | 31 May | ||
| (Unaudited) 2008 | (Unaudited) 2007 | (Audited) 2008 | ||
| £'000 | £'000 | £'000 | ||
| Note | ||||
| Revenue | 6,481 | 5,325 | 11,578 | |
| Selling and operational expenses | (4,648) | (3,743) | (7,700) | |
| Gross profit | 1,833 | 1,582 | 3,878 | |
| Administrative expenses | (1,049) | (967) | (2,028) | |
| Profit before amortisation, share-based payments, interest and tax | 784 | 615 | 1,850 | |
| Amortisation of intangible assets | (145) | - | (50) | |
| Share-based payments | (52) | (56) | (104) | |
| Total administrative expenses including share-based payments | (1,246) | (1,023) | (2,182) | |
| Operating profit | 587 | 559 | 1,696 | |
| Finance income | 71 | 53 | 132 | |
| Profit for the period before taxation | 658 | 612 | 1,828 | |
| Tax on profit for the period | (23) | 3 | (44) | |
| Profit for the period | 635 | 615 | 1,784 | |
| Earnings per share | 4 | |||
| Basic (pence per share) | 1.4p | 1.4p | 4.0p | |
| Diluted (pence per share) | 1.3p | 1.3p | 3.8p | |
CONDENSED CONSOLIDATED BALANCE SHEET
| 30 November | 30 November | 31 May | ||
| 2008 | 2007 | 2008 | ||
| (Unaudited) £'000 | (Unaudited) £'000 | (Audited) £'000 | ||
| Non-current assets | ||||
| Intangible assets | 650 | - | 795 | |
| Property, plant and equipment | 566 | 176 | 521 | |
| Trade and other receivables | 102 | - | 102 | |
| Total non-current assets | 1,318 | 176 | 1,418 | |
| Current assets | ||||
| Trade and other receivables | 4,288 | 2,290 | 2,566 | |
| Cash and cash equivalents | 2,842 | 2,661 | 4,317 | |
| Total current assets | 7,130 | 4,951 | 6,883 | |
| Total assets | 8,448 | 5,127 | 8,301 | |
| Equity and liabilities | ||||
| Equity | ||||
| Share capital | 2,235 | 2,234 | 2,235 | |
| Share premium account | 6,493 | 6,492 | 6,493 | |
| Shares to be issued | 159 | - | 159 | |
| Share-based payments reserve | 365 | 266 | 314 | |
| Foreign exchange reserve | 77 | - | 63 | |
| Retained earnings | (4,464) | (6,188) | (5,099) | |
| Total equity | 4,865 | 2,804 | 4,165 | |
| Non-current liabilities | ||||
| Borrowings | 185 | - | 196 | |
| Total non-current liabilities | 185 | - | 196 | |
| Current liabilities | ||||
| Trade and other payables | 3,351 | 2,323 | 3,893 | |
| Corporation tax | 47 | - | 47 | |
| Total current liabilities | 3,398 | 2,323 | 3,940 | |
| Total liabilities | 3,583 | 2,323 | 4,136 | |
| Total equity and liabilities | 8,448 | 5,127 | 8,301 | |
The interim financial statements were approved by the Board of Directors on 20 January 2009.
I J Bowles - Director
S C Thorne - Director
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
| | Share capital | Share premium | Shares to be issued | Share based payment reserve | Foreign exchange reserve | Retained earnings | Total equity |
| | £’000 | £’000 | £’000 | £’000 | £’000 | £’000 | £’000 |
| | | | | | | | |
| At 31 May 2007 | 2,227 | 6,465 | - | 210 | 75 | (6,883) | 2,094 |
| | | | | | | | |
| Exchange differences on opening reserves | - | - | - | - | 5 | - | 5 |
| Net income recognised directly in equity | - | - | - | - | 5 | - | 5 |
| Result for the period | - | - | - | - | - | 615 | 615 |
| | | | | | | | |
| Total recognised income and expense | - | - | - | - | 5 | 615 | 620 |
| | | | | | | | |
| Issue of shares | 7 | 27 | - | - | - | - | 34 |
| Equity settled share options | - | - | - | 56 | - | - | 56 |
| | | | | | | | |
| At 30 November 2007 | 2,234 | 6,492 | - | 266 | 80 | (6,268) | 2,804 |
| | | | | | | | |
| Exchange differences on opening reserves | - | - | - | - | (17) | - | (17) |
| Net income recognised directly in equity | - | - | - | - | (17) | - | (17) |
| Result for the period | - | - | - | - | - | 1,169 | 1,169 |
| Total recognised income and expense | - | - | - | - | (17) | 1,169 | 1,152 |
| | | | | | | | |
| Issue of shares | 1 | 1 | 159 | - | - | - | 161 |
| Equity settled share options | - | - | - | 48 | - | - | 48 |
| | | | | | | | |
| At 31 May 2008 | 2,235 | 6,493 | 159 | 314 | 63 | (5,099) | 4,165 |
| | | | | | | | |
| Exchange differences on opening reserves | - | - | - | - | 14 | - | 14 |
| Net income recognised directly in equity | - | - | - | - | 14 | - | 14 |
| Result for the period | - | - | - | - | - | 635 | 635 |
| Total recognised income and expense | - | - | - | - | 14 | 635 | 649 |
| | | | | | | | |
| | | | | | | | |
| | | | | | | | |
| Equity settled share options | - | - | - | 51 | - | - | 51 |
| | | | | | | | |
| At 30 November 2008 | 2,235 | 6,493 | 159 | 365 | 77 | (4,464) | 4,865 |
| | | | | | | | |
CONDENSED CONSOLIDATED CASH FLOW STATEMENT
| 6 months to | 6 months to | Year to | ||
| 30 November | 30 November | 31 May | ||
| 2008 | 2007 | 2008 | ||
| (Unaudited) £'000 | (Unaudited) £'000 | (Audited) £'000 | ||
| Cash flow from operating activities | ||||
| Profit for the period | 635 | 615 | 1,784 | |
| Adjustments for: | ||||
| Finance income | (71) | (53) | (132) | |
| Income tax charge / (credit) | 23 | (3) | 44 | |
| Depreciation | 71 | 47 | 99 | |
| Amortisation | 145 | - | 50 | |
| Share-based payments | 52 | 56 | 104 | |
| Increase in trade and other receivables | (1,723) | (549) | (614) | |
| (Decrease) / increase in trade and other payables | (541) | 130 | 957 | |
| Net cash (used in) / generated from operations | (1,409) | 243 | 2,292 | |
| Income tax (paid) / refunded | (23) | - | 3 | |
| Net cash (used in) / generated by operating activities | (1,432) | 243 | 2,295 | |
| Cash flows from investing activities | ||||
| Interest received | 71 | 53 | 132 | |
| Investment to acquire subsidiary (net) | - | - | (386) | |
| Payments for property, plant and equipment | (114) | (69) | (154) | |
| Net cash used in investing activities | (43) | (16) | (408) | |
| Cash flows from financing activities | ||||
| Repayment of borrowings | (11) | - | (4) | |
| Proceeds from the issue of equity shares | - | 34 | 36 | |
| Net cash (used in) / generated by financing activities | (11) | 34 | 32 | |
| Net (decrease)/increase in cash and cash equivalents | (1,475) | 261 | 1,919 | |
| Foreign exchange differences | 11 | (9) | (11) | |
| Cash and cash equivalents at the start of the period | 4,317 | 2,409 | 2,409 | |
| Cash and cash equivalents at the end of the period | 2,842 | 2,661 | 4,317 | |
| | | Revenue | |
| | 30 November | 30 November | 31 May |
| | 2008 | 2007 | 2008 |
| | (Unaudited) | (Unaudited) | (Audited) |
| | £’000 | £’000 | £’000 |
| | | | |
| Licences | 3,043 | 2,476 | 5,756 |
| Services | 3,438 | 2,849 | 5,822 |
| | | | |
| | 6,481 | 5,325 | 11,578 |
| | | Revenue | |
| | 30 November | 30 November | 31 May |
| | 2008 | 2007 | 2008 |
| | (Unaudited) | (Unaudited) | (Audited) |
| | £’000 | £’000 | £’000 |
| | | | |
| Defence | 1,371 | 1,296 | 3,082 |
| Healthcare | 4,467 | 2,934 | 6,551 |
| Maritime | 643 | 1,095 | 1,945 |
| | | | |
| | 6,481 | 5,325 | 11,578 |
| | 30 November | 30 November | 31 May |
| | 2008 | 2007 | 2008 |
| | (Unaudited) £’000 | (Unaudited) £’000 | (Audited) £’000 |
| | | | |
| Profit for the year | 635 | 615 | 1,784 |
| | | | |
| Earnings per share | | | |
| Basic (pence per share) | 1.4p | 1.4p | 4.0p |
| Diluted (pence per share) | 1.3p | 1.3p | 3.8p |
| | | | |
| Weighted average number of shares | Number of shares | Number of shares | Number of shares |
| | | | |
| Shares in issue at opening | 44,702,625 | 44,539,813 | 44,539,813 |
| Shares issued during the period | - | 144,812 | 162,812 |
| | | | |
| Shares at closing | 44,702,625 | 44,684,625 | 44,702,625 |
| | | | |
| Weighted average shares for basic earnings per share | 44,702,625 | 44,547,831 | 44,621,541 |
| Effect of dilutive potential ordinary shares | 2,579,091 | 2,963,195 | 2,859,416 |
| | | | |
| Weighted average shares for diluted earnings per share | 47,281,716 | 47,511,026 | 47,480,957 |
| | | | |
| | 30 November | 30 November | 31 May |
| | 2008 | 2007 | 2008 |
| | (Unaudited) £’000 | (Unaudited) £’000 | (Audited) £’000 |
| | | | |
| Profit for the year attributable to shareholders | 635 | 615 | 1,784 |
| Share-based payments | 52 | 56 | 104 |
| Amortisation of intangibles | 145 | - | 50 |
| | - | - | - |
| Adjusted profit for the year attributable to shareholders | 832 | 671 | 1,938 |
| | | | |
| Basic adjusted earnings per share | 1.9p | 1.5p | 4.3p |
| Diluted adjusted earnings per share | 1.8p | 1.4p | 4.1p |