CBUY.L Regulatory News (CBUY)

28 Sep 2006 07:02

@UK PLC28 September 2006 Under embargo until 7:00am 28 September 2006 @UK PLC Unaudited Interim Statement for the six months ended 30 June 2006 @UK PLC (AIM:ATUK.L), a leading provider of software solutions that facilitate eCommerce and eProcurement in the local government and health sectors, today announces its unaudited interim statement for the six months ended 30 June 2006. Interim period highlights: •Turnover up 18% to £978,000 (2005: £828,000) •Gross profit up 5% to £582,000 (2005: £554,000) •Operating loss increased to £1,428,000 (2005: £124,000) reflecting an increased cost base •A number of strategically significant client gains since we last reported (Thames Valley Police, Lewisham, and coding project for NW London Health Trusts) •Significant progress achieved with suppliers since 31 July trading update Commenting on the interim results, Lyn Duncan, Chief Executive, said: "The public sector as a whole is taking longer to both initiate and implementthe government's stated eProcurement objectives than was anticipated by theBoard at the time of the IPO in December 2005. We recognised the need to accelerate the rate at which we sign up suppliers toour service and have implemented a new approach which is beginning to bearfruit. However, we are limited by the speed at which the public sector isprogressing the eProcurement initiative and we therefore expect our penetrationof the supplier community to grow more slowly than previously hoped. At the same time we have recognised that the public sector needs additional helpin progressing eProcurement and this provides @UK with the opportunity to selladditional services to its buyside clients, something that is being pursuedaggressively. We also hope to bring more of the public bodies which have chosenour solution onto the platform more quickly, but to achieve this we can onlyassist and cajole our clients to speed up their implementation. The Board believes that @UK remains well positioned to exploit what continues tobe a large opportunity and is therefore confident about the company's mediumterm outlook." For further information please contact: @UK PLC +44 (0) 118 963 7000Lyn Duncan Managing DirectorJohn Aiken Finance DirectorShore Capital +44 (0) 151 600 3700Mike SawbridgeMargaret StandishSmithfield +44 (0) 20 7360 4900Sara MusgraveTania Wild Notes to Editors: eCommerce can be defined as the buying and selling of products and services overthe internet and eProcurement as the process by which larger organisations carryout their purchasing using eCommerce. eProcurement is conducted via aneMarketplace, a secure internet platform that enables trade between one or morepurchasing organisations and a variety of suppliers. @UK is one of the UK's leading eMarketplace providers. Via the internet, @UK'ssoftware provides a secure eMarketplace enabling buyers such as localauthorities, schools and hospitals to buy online from commercial suppliers suchas small to medium enterprises (SMEs). The government has set up ambitious targets for public sector bodies to practisesuccessful eProcurement. The 2004 Gershon Review identified eProcurement as amajor cost-saving opportunity for the government and all public sector bodiesare now in the process of identifying, adopting and implementing eProcurementsolutions. Currently, there are over 1,000 public sector bodies spending over£100 billion annually on goods and services with around one million suppliers. @UK aims to become the market leader in its field and the partner of choice forpublic sector bodies requiring an eMarketplace. @UK joined AIM in December 2005, raising £8 million before expenses at an issueprice of 60p. It purchased Coding International Limited, its first acquisitionsince becoming a quoted company, in May 2006. @UK is included in the Softwareand Computer Services Sector (9530). For further information please visitwww.ukplc.net. OPERATING AND FINANCIAL REVIEW Company Description eCommerce can be defined as the buying and selling of products and services overthe internet and eProcurement as the process by which larger organisations carryout their purchasing using eCommerce. eProcurement is conducted via aneMarketplace, a secure internet platform that enables trade between one or morepurchasing organisations and a variety of suppliers. @UK is one of the UK's leading eMarketplace providers. @UK's software provides asecure eMarketplace enabling buyers such as local authorities, schools andhospitals to buy online from commercial suppliers such as small to mediumenterprises (SMEs). The government has set up ambitious targets for public sector bodies to practisesuccessful eProcurement. The 2004 Gershon Review identified eProcurement as amajor cost-saving opportunity for the government and all public sector bodiesare now in the process of identifying, adopting and implementing eProcurementsolutions. Currently, there are over 1,000 public sector bodies spending over£100 billion annually on goods and services with around one million suppliers -all of whom may be considered potential customers for @UK.@UK aims to become the market leader in its field and the partner of choice forpublic sector bodies requiring an eMarketplace. Financial results Turnover for the six months to 30 June 2006 increased 18% to £978,000 (2005:£828,000). The operating loss rose to £1,428,000 (2005: £124,000), reflecting the plannedincrease in our cost base as we commence the necessary roll-out of our productsand services across the public sector. After net interest income of £168,000(2005: net interest charge of £4,000), the loss before tax was £1,260,000compared to £128,000 in 2005. During the six months our net cash reduced by£1,919,000 to £6,634,000. Strategy and Operating Review The public sector is taking longer to initiate and implement eProcurement thananticipated at the time of IPO in December 2005. To date there has been a lack of sanction for failure to meet the deadlines andtargets set by government. However, many of the bodies who have actively chosenan eProcurement solution have selected @UK, so despite the delays we continue tobelieve that we are positioned to be one of the key players as this very largemarket develops. A move to eProcurement requires a mix of technology, training and changemanagement processes. @UK had been providing the technology element and relyingon the public sector body to manage the change process. As this is not a coreskill in the majority of these organisations, implementations have proven to bepatchy, impacting on @UK's ability to identify, communicate with and adoptsuppliers. We have recognised that the overall process is critical to oursuccess and are putting in place changes within the business so we can betterhelp our buying organisations to drive change. In so doing, we should increasethe number of suppliers being presented for adoption onto the @UK platform. Thisapproach should also increase our revenues from the buyside, whilst giving usgreater control over the management of the implementation project. Supplyside customersDuring the earlier part of the year we went through a similar exercise lookingat the methodology for successful supplier adoption, as our implanted supplieradoption officers were being diverted by the buyers to assist with changemanagement and training, resulting in a low sign up of suppliers. We havechanged the process and recruited 20 supplier advisors to work from a callcentre environment, at our Aldermaston head office, with a structured mailingand sales process across all of our buying organisations. Although it is earlydays and the majority of the team has only been in post since the beginning ofSeptember, they have adopted 399 suppliers in the first three weeks of Septemberalone. Central Government - As part of our focus on deploying our resources where wewill maximize supplier revenues, we have withdrawn from the Zanzibar consortium.The demand for value added services from suppliers proved to be very low and theboard took the decision to redeploy resource where it will be more effective. National Health Service - This year has seen @UK move successfully into the NHS,gaining the Leeds Teaching Hospitals Trust. With this flagship Trust nowimplemented and running successfully we can extend our sales focus across theNHS, and have more recently gained the Royal Devon and Exeter Trust. Local Authorities - a total of 58 authorities have adopted the @UK eProcurementsolution as their chosen approach, an increase of 48 from the figure we reportedat our Preliminary Results in April 2006. During the period our geographicspread was further increased when East Renfrewshire in Scotland adopted oursolution. We were pleased to announce this week that the London Borough ofLewisham has also adopted our solution. Education - We continue to promote our initiative in this area and are nowworking with 12 authorities, including the nine Greater Manchester Boroughswhere we are providing an electronically based schools purchasing informationservice. Following the half year end, we were recently delighted to announce @UK'ssuccessful move into a new vertical market by being selected to provide aneMarketplace to Thames Valley Police (TVP). @UK has a strong pipeline forprospects and continues to investigate opportunities for expansion into othervertical markets, including in the private sector. Company FormationsOur company formation services business grew revenues by 12% to £655,000compared to the same period last year (2005: £585,000). We continue to look atenhancements to our services in this area. Acquisition of Coding International LimitedThe acquisition of Coding International Limited at the end of April 2006 was animportant enhancement to our business as we believe proper coding of products isessential to gain the full benefits from eProcurement. We are introducing thebenefits of using Coding International to our existing clients as well as to oursales pipeline. Work commenced around the period end on the NW London HealthTrusts contract which we announced in July. Transition to International Financial Reporting Standards As an AIM quoted company @UK will adopt IFRS for our financial statements forthe year ending 31 December 2007. Our IFRS evaluation is ongoing. Outlook and current trading The public sector as a whole is taking longer to both initiate and implement thegovernment's stated eProcurement objectives than was anticipated by the Board atthe time of the IPO in December 2005. This has adversely affected our revenuegrowth on both the buyside and supplyside. We recognised the need to accelerate the rate at which we sign up suppliers toour service and have implemented a new approach which is beginning to bearfruit. However, we are limited by the speed at which the public sector isprogressing the eProcurement initiative and we therefore expect our penetrationof the supplier community to grow more slowly than previously hoped. At the same time we have recognised that the public sector needs additional helpin progressing eProcurement and this provides @UK with the opportunity to selladditional services to its buyside clients, something that is being pursuedaggressively. We also hope to bring more of the public bodies which have chosenour solution onto the platform more quickly, but to achieve this we can onlyassist and cajole our clients to speed up their implementation. We are taking steps to ensure that our resources and costs are better matched toour revised growth expectations. The Board believes that @UK remains well positioned to exploit what continues tobe a large opportunity and is therefore confident about the company's mediumterm outlook. Lyn DuncanChief Executive 28 September 2006 UNAUDITED CONSOLIDATED PROFIT AND LOSS ACCOUNT Notes 6 months to 6 months to Year ended 30 June 30 June 31 Dec 2006 2005 2005 £'000 £'000 £'000 (restated) (restated) Turnover 2 978 828 1,454Costs of sales (396) (274) (474) Gross profit 582 554 980Administrative expenses (1,977) (678) (1,883)Share based payments (33) - - Operating loss beforeexceptional item (1,428) (124) (903)Exceptional goodwillwrite-off - - (799) Operating loss (1,428) (124) (1,702)Interest receivable andsimilar income 171 1 28Interest payable and similarcharges (3) (5) (10) Loss on ordinary activitiesbefore taxation (1,260) (128) (1,684)Taxation - - - Loss on ordinary activitiesafter taxation (1,260) (128) (1,684)Dividends payable - - - Retained deficit (1,260) (128) (1,684) Loss per share - basic anddiluted 3 3.3p 0.7p 8.5p Turnover and operating loss all derive from continuing operations. No separate Statement of Total Recognised Gains and Losses has been presented asall such gains and losses have been dealt with in the Profit and Loss Account. The comparative figures are restated for the reclassification within the profitand loss account of certain expenses (see note 1) UNAUDITED CONSOLIDATED BALANCE SHEET Notes 30 June 30 June 31 Dec 2006 2005 2005 £'000 £'000 £'000 Fixed assetsIntangible assets 4 69 - -Tangible assets 302 31 114 371 31 114 Current assetsDebtors 280 420 227Cash at bank 5 6,719 184 8,644 6,999 604 8,871Creditors: amounts falling due within oneyear (673) (575) (1,080) Net current assets 6,326 29 7,791 Total assets less current liabilities 6,697 60 7,905 Creditors: amounts falling due after morethan one year (73) (85) (79) Net assets/(liabilities) 6,624 (25) 7,826 Capital and reservesCalled up share capital 376 192 376Share premium 10,114 2,465 10,114Other reserve - merger 607 - 582Other reserve - share based payments 33 - -Profit & Loss (4,506) (2,682) (3,246) Shareholders' equity funds 6 6,624 (25) 7,826 UNAUDITED CONSOLIDATED CASH FLOW STATEMENT Notes 6 months 6 months Year to to ended 30 June 30 June 31 Dec 2006 2005 2005 £'000 £'000 £'000 Net cash outflow from operatingactivitiesOperating loss (1,428) (124) (1,702)Depreciation 39 6 17Amortisation of goodwill 3 - -Write-off of goodwill - - 799Share based payments 33 - -Increase in debtors (31) (296) (376)Decrease in creditors (389) (199) (45) (1,773) (613) (1,307) Returns on investments and servicing offinanceInterest received 171 1 10Interest paid (3) (5) (16) 168 (4) (6) Taxation (66) - (25) Capital expenditure and financialinvestmentPurchase of tangible fixedassets (225) (26) (121) AcquisitionsConsideration (29) - -Cash/(overdraft) insubsidiary acquired 6 - (126) (23) - (126) Cash outflow before use ofliquid resources andfinancing (1,919) (643) (1,585) Management of liquidresources 1,112 - (7,568) FinancingLoan repayments (6) (7) (13)New Loans - - -Proceeds of share issue - 830 10,238 (6) 823 10,225 (Decrease)/increase in cash 7 (813) 180 1,072 NOTES TO THE UNAUDITED INTERIM STATEMENT 1. Basis of preparationThe unaudited interim statement has been prepared on a basis consistent with theaccounting policies set out in the annual report and accounts for the year ended31 December 2005 save for the reclassification within expenses referred tobelow. It was approved by the Board of Directors on 28 September 2006 and isunaudited. The financial information set out does not constitute statutoryaccounts for the purposes of section 240 of the Companies Act 1985. Thecomparative figures for the year end 31 December 2005 have been extracted fromthe statutory accounts for that period, which have been filed with the Registrarof Companies. The auditors' report on the statutory accounts for the year ended31 December 2005 was unqualified and does not contain a statement underCompanies Act 1985 sections 237(2) or (3). Certain expenses, principally relating to "pay per click" advertising are nowclassified within administrative expenses and not cost of sales as the directorsbelieve that this gives a fairer presentation. The amount reclassified in theprior period is £170,000 (Year ended 31 December 2005: £290,000). 2. Segmental analysis 6 months 6 months Year to to ended 30 30 31 June June Dec 2006 2005 2005 £'000 £'000 £'000 Turnover - analysis by class of business:Company formation services 655 585 1,082Web and ecommerce services 323 243 372 978 828 1,454 Turnover for the 6 months to 30 June 2006 includes£15,000 from acquisitions. 3. Loss per shareThe calculations for loss per share are based on the weighted average number ofshares in issue during the period 37,580,250 (6 months to 30 June 2005:18,624,874; year ended 31 December 2005: 19,920,248) and the following losses: 6 months to 6 months to Year ended 30 June 30 June 31 Dec 2006 2005 2005 £'000 £'000 £'000 Unadjusted earnings:Loss on ordinary activities after tax (1,260) (128) (1,684)Add back:Exceptional write-off of goodwill - - 798Share based payments 33 - - Adjusted earnings: (1,227) (128) (886) The share options and warrants are not dilutive as they would not increase theloss per share in the year. The basic and diluted loss per share calculated on the adjusted earnings is 3.3p(6 months to 30 June 2005: 0.7p; year ended 31 December 2005: 4.4p). 4. Acquisition of Coding International LimitedOn 28 April 2006 the company acquired 100 per cent of the issued capital ofCoding International Limited for an initial consideration of £50,000, satisfiedas to £25,000 in cash and £25,000 by the issue of 42,015 ordinary shares in theCompany at 59.5p. Goodwill of £71,918 arose on the acquisition. This goodwill isbeing amortised over 5 years. 5. CashIncluded within cash at 30 June 2006 is £5.5 million invested in a sterlingliquidity fund from which investments can be converted into cash on 1 day'snotice. 6. Reconciliation of movement in shareholders funds 6 months to 6 months to Year ended 30 June 30 June 31 Dec 2006 2005 2005 £'000 £'000 £'000 Loss for the period (1,260) (128) (1,684)New shares issued 25 830 11,155Share based payments 33 - -Purchase of own shares - - (1,112)Gain on placing and purchase of ownshares - - 194Opening shareholders' funds/(deficit) 7,826 (727) (727) Closing shareholders' funds 6,624 (25) 7,826 7. Reconciliation of net cash flow to movement in net funds 6 months to 6 months to Year ended 30 June 30 June 31 Dec 2006 2005 2005 £'000 £'000 £'000 (Decrease)/increase in cash (813) 180 1,072Cash (inflow)/outflow from managementof liquid resources (1,112) - 7,568Decrease in debt 6 7 13 Movement in funds in year (1,919) 187 8,653Opening net funds/(debt) 8,553 (100) (100) Closing net funds 6,634 87 8,553 8. Circulation to shareholdersCopies of the interim statement will be sent to shareholders and the AIM teamwith further copies available from the Company Secretary, @UK plc, 5 JupiterHouse, Calleva Park, Aldermaston, Reading RG7 8NN or from the investors sectionof the @UK Website, www.ukplc.net. INDEPENDENT REVIEW REPORT TO @UK PLC IntroductionWe have been instructed by the company to review the financial information setout on pages 6 to 10 and we have read the other information in the interimstatement and considered whether it contains any apparent misstatements ormaterial inconsistencies with the financial information. This report, including the conclusion, has been prepared for and only for thecompany for the purpose of their interim statement and for no other purpose. Wedo not, therefore, in producing this report, accept or assume responsibility forany other purpose or to any other person to whom this report is shown or intowhose hands it may come save where expressly agreed by our prior consent inwriting. Directors' responsibilitiesThe interim statement, including the financial information contained therein, isthe responsibility of, and has been approved by the directors. The directors areresponsible for preparing the Interim Statement in accordance with the AIMMarket Rules which require that the accounting policies and presentation appliedto the interim figures must be consistent with those that will be adopted in thecompany's annual accounts. Review work performedWe conducted our review in accordance with guidance contained in Bulletin 1999/4issued by the Auditing Practices Board for use in the United Kingdom, as if thatBulletin applied. A review consists principally of making enquiries of groupmanagement and applying analytical procedures to the financial information andunderlying financial data and based thereon, assessing whether the disclosedaccounting policies have been consistently applied unless otherwise disclosed. Areview excludes audit procedures such as tests of controls and verification ofassets, liabilities and transactions. It is substantially less in scope than anaudit and therefore provides a lower level of assurance. Accordingly, we do notexpress an audit opinion on the financial information Review conclusionOn the basis of our review we are not aware of any material modifications thatshould be made to the financial information as presented for the six monthsended 30 June 2006. BAKER TILLY Chartered AccountantsThe Clock House140 London RoadGuildfordGU1 1UW 28 September 2006 This information is provided by RNS The company news service from the London Stock Exchange