CBUY.L Regulatory News (CBUY)

28 Sep 2007 07:02

@UK PLC28 September 2007 Under embargo until 7:00am 28 September 2007 @UK PLC Unaudited Interim Results for the six months ended 30 June 2007 @UK PLC (AIM:ATUK.L), a leading eMarketplace provider of eCommerce andeProcurement solutions, today announces its unaudited interim results for thesix months ended 30 June 2007. Interim period highlights: • Revenue up 19% to £1,165,000 (2006: £978,000) • Loss before tax of £1,431,000 (2006: £1,257,000) • Significant reduction in run rate of losses and cash outflow compared to the second half of last year • Cash balance of £2,882,000 (2006: £4,119,000) • Local Authority markets remain slow • Switch of sales effort to the NHS showing first results in important contract win with major supplier to the NHS for procurement services The interim results have been prepared under IFRS for the first time. Commenting on today's announcement, Grant Oliver, Chief Executive, said: "Although implementations of eProcurement projects in the Local Authorities havebeen disappointing, we are encouraged by the advent of the opportunitiespresented by the NHS of which we have been able to take advantage. We do not anticipate that NHS contracts will compensate for the loss of turnoverfrom the Local Authority market in the current year, but it is this new streamof revenue and its potential for future growth which underpins our confidence inthe long term prospects for @UK." For further information please contact: @UK PLC +44 (0) 118 963 7000Grant Oliver, CEOJohn Aiken, Finance DirectorShore Capital +44 (0) 20 7408 4090Dru DanfordSmithfield +44 (0) 20 7360 4900Tania Wild Notes to Editors: @UK is one of the UK's leading eMarketplace providers. @UK's software provides asecure internet eMarketplace enabling buyers such as local authorities, schoolsand hospitals to buy online from commercial suppliers ranging from largecorporations to small to medium enterprises (SMEs). This allows buying andselling to take place with no paperwork and transposition reduced chance oferrors, achieving major savings throughout the supply chain. @UK PLC also offers services to new businesses, including incorporation, companysecretarial services and filing annual returns. Over 140,000 companies have beenincorporated using @UK's online company formation service. @UK is included in the Software and Computer Services Sector (9530). For furtherinformation please visit www.ukplc.net. OPERATING AND FINANCIAL REVIEW Financial results This is the first set of results announced under IFRS, with comparisons againstrestated 2006 interim results. Revenue for the six months to 30 June 2007 increased 19% to £1,165,000 (2006:£978,000). The operating loss was £1,521,000 (2006: £1,425,000). After net interest incomeof £90,000 (2006: £168,000), the loss before tax was £1,431,000, compared to£1,257,000 in 2006. During the six months our cash reduced by £1,237,000 to£2,882,000 (2006: £1,925,000). The loss before tax and cash outflow in the firsthalf were both substantially reduced from the levels in the second half of 2006,by 36% and 52% respectively, as the benefits of cost reductions flowed through. Operating Review Since we reported last this has been a difficult period for the Company due tothe lack of impetus in our traditional markets. However, it has ended verypositively as we are pleased to announce that @UK has won a contract with amajor supplier to the NHS for the provision of a national procurement catalogueand exchange service. Local AuthoritiesOur traditional market has been within Local Authorities, and it was there thatwe saw a major opportunity for expansion following our IPO, as Local Authoritieshad been targeted by Government to adopt eProcurement by 2006 as an aid toachieving cost savings. Pre IPO we had focussed strongly on Local Authorities asthey typically have large supplier numbers to whom we had anticipated ourSupplyside service could be sold. However, in general, the market has not developed as we had expected due to: • Government deadlines set for eProcurement have now passed; • the slow extension of eProcurement across the broader base of suppliers once (the relatively easier area of) commodity purchases such as stationery has been addressed; and • the expectation by many Local Authorities that implementing eProcurement is a long term project. We believe this experience is typical of the market as a whole, but that in thelonger term there will still be opportunities in the Local Authority market. We will therefore continue to work in this area and have major installationsgoing live shortly at Somerset County Council and the London Borough ofHillingdon, which will take the total number of live sites to over 30. National Health ServiceThis year we made the decision to focus additional sales effort on the NHSmarket. Although it has taken us longer for these efforts to start to show results thanwe had originally hoped, the contract win with this supplier is an importantstrategic step for us. The @UK system will provide a new catalogue/contentplatform as part of the e-enablement strategy within the NHS. This will allowall Trusts nationally to purchase a wider range of products online, increasingfrom a current level of 50,000 items to around 500,000. We have already had significant interest from NHS Trusts in using the full @UKmarketplace solution for their own purchasing. This service would not be part ofthe contract win and will incur set-up charges and annual licence fees. We willalso be marketing the benefits of an enhanced presence on the @UK Marketplace toNHS suppliers. Coding InternationalWe are experiencing renewed interest in our coding and classification serviceswithin the NHS, as they are accustomed to using coding to analyse procurementdecisions and benchmark prices. Company FormationsOur Company Formation services business grew revenues by 8% compared to the sameperiod last year, and we continue to explore opportunities for furtherenhancements in this area. Outlook and current trading The Local Authority market is likely to remain slow and we do not anticipatethat the development of our NHS business will be able to compensate for this inthe remainder of the current year. Consequently and as previously announced,turnover for the year is expected to be below market expectations, but continuedtight management of costs and cash means that the pre-tax losses and cashoutflows are expected to be in line. We do not anticipate that NHS contracts will compensate for the loss of turnoverfrom the Local Authority market in the current year, but it is this new streamof revenue and its potential for future growth which underpins our confidence inthe long term prospects for @UK. Grant OliverChief Executive 28 September 2007 CONSOLIDATED INCOME STATEMENT (UNAUDITED) Notes 6 months to 6 months to Year ended 30 June 30 June 31 Dec 2007 2006 2006 £'000 £'000 £'000 (restated) (restated) Revenue 3 1,165 978 2,163Cost of sales (414) (396) (891) -------- --------- -------- Gross profit 751 582 1,272Administrative expenses (2,254) (1,974) (4,780)Share based payments (18) (33) (51) -------- --------- -------- Operating loss beforeexceptional item (1,521) (1,425) (3,559)Exceptional reorganisationcosts - - (220) -------- --------- -------- Operating loss (1,521) (1,425) (3,779)Interest receivable andsimilar income 93 171 291Interest payable and similarcharges (3) (3) (6) -------- --------- -------- Loss on ordinary activitiesbefore taxation (1,431) (1,257) (3,494)Taxation - - - -------- --------- -------- Loss for the yearattributable to equityshareholders of the parent (1,431) (1,257) (3,494) ======== ========= ======== Loss per share - basic anddiluted 4 3.8p 3.3p 9.3p ======== ========= ======== Revenue and operating loss all derive from continuing operations. CONSOLIDATED BALANCE SHEET (UNAUDITED) 30 June 30 June 31 Dec 2007 2006 2006 £'000 £'000 £'000 (Restated) (Restated) AssetsNon-current assetsGoodwill 96 72 96Intangible assets 58 52 60Property, plant and equipment 589 250 693 -------- --------- -------- 743 374 849 -------- --------- -------- Current assetsTrade and other receivables 336 280 398Cash and cash equivalents 2,882 6,719 4,119 -------- --------- -------- 3,218 6,999 4,517 -------- --------- -------- Total assets 3,961 7,373 5,366 -------- --------- -------- LiabilitiesCurrent liabilitiesTrade and other payables (866) (658) (876)Current tax liabilities (3) (3) (3)Financial liabilities - borrowings (12) (12) (12) -------- --------- -------- (881) (673) (891) -------- --------- -------- Non-current liabilitiesFinancial liabilities - borrowings (60) (73) (67) -------- --------- -------- (60) (73) (67) -------- --------- -------- Total liabilities (941) (746) (958) -------- --------- -------- Net assets 3,020 6,627 4,408 ======== ========= ======== Shareholders' equityCalled up share capital 5 378 376 376Share premium 10,114 10,114 10,114Other reserve 630 607 607Share based payment reserve 69 33 51Accumulated losses (8,171) (4,503) (6,740) -------- --------- -------- Total equity attributable to equityshareholders of the parent 3,020 6,627 4,408 ======== ========= ======== CONSOLIDATED CASH FLOW STATEMENT (UNAUDITED) 6 months to 6 months to Year ended 30 June 30 June 31 Dec 2007 2006 2006 £'000 £'000 £'000 (Restated) (Restated)Cash flows from operatingactivitiesLoss for the period (1,431) (1,257) (3,494)Adjustments for:Interest and similar charges (90) (168) (285)Depreciation 143 39 155Share based payments 18 33 51Changes in working capitalTrade and other receivables 61 (31) (149)Trade and other payables 15 (389) (195) -------- --------- -------- Net cash used by operations (1,284) (1,773) (3,917) Tax paid - (66) (66) -------- --------- -------- Net cash outflow from operatingactivities (1,284) (1,839) (3,983) Cash flows from investingactivitiesInterest received 93 171 291Interest paid (3) (3) (6)Acquisition of subsidiary (netof cash acquired) - (22) (22)Purchase of intangible assets (11) (57) (75)Purchase of property, plant andequipment (25) (168) (717) -------- --------- -------- Net cash inflow/(outflow) frominvesting activities 54 (79) (529) -------- --------- -------- Cash flows from financingactivitiesRepayments of borrowings (7) (7) (13) -------- --------- -------- Net cash outflow from financing (7) (7) (13) -------- --------- -------- Net decrease in cash and cashequivalents (1,237) (1,925) (4,525) Cash and cash equivalents atbeginning of period 4,119 8,644 8,644 -------- --------- -------- Cash and cash equivalents at endof period 2,882 6,719 4,119 ======== ========= ======== CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY (UNAUDITED) Share Share Other Share Accumul- Total capital premium reserve based ated payment losses reserve £'000 £'000 £'000 £'000 £'000 £'000 Balance as at1 January 2006(Restated) 376 10,114 582 - (3,246) 7,826 Loss for theperiod - - - - (1,257) (1,257) Share basedpayments - - - 33 - 33 Shares issuedin the period - - 25 - - 25 -------- -------- -------- -------- -------- -------- Balance as at30 June 2006(Restated) 376 10,114 607 33 (4,503) 6,627 Loss for theperiod - - - - (2,237) (2,237) Share basedpayments - - - 18 - 18 -------- -------- -------- -------- -------- -------- Balance as at31 December2006(Restated) 376 10,114 607 51 (6,740) 4,408 Loss for theperiod - - - - (1,431) (1,431) Share basedpayments - - - 18 - 18 Shares issuedin the period 2 - 23 - - 25 -------- -------- -------- -------- -------- -------- Balance as at30 June 2007 378 10,114 630 69 (8,171) 3,020 ======== ======== ======== ======== ======== ======== NOTES TO THE FINANCIAL STATEMENTS 1. Basis of preparationThese interim financial statements have been prepared in accordance with theaccounting policies the Group expects to be applicable at 31 December 2007 andthe interpretation of those accounting standards underlying the accountingpolicies. IAS 34, Interim Financial Reporting, has not been applied. It ispossible that new standards and new interpretations may be issued which couldaffect the Group. These figures may therefore require amendment, to change thebasis of accounting or presentation of certain financial information, before theadoption of the financial statements for the year ended 31 December 2007, whenthe Group prepares its first complete set of financial statements in accordancewith EU Endorsed International Financial Reporting Standards and IFRICinterpretations (collectively "IFRS"). The interim financial statements havebeen issued in accordance with the AIM Rules of the London Stock Exchange andare unaudited. 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 2006 have been converted toIFRS after extraction from the statutory accounts for that period, which havebeen filed with the Registrar of Companies. The auditors' report on thestatutory accounts for the year ended 31 December 2005 was unqualified and doesnot contain a statement under Companies Act 1985 sections 237(2) or (3). The Group's consolidated financial statements were prepared in accordance withthe United Kingdom Generally Accepted Accounting Principles ("UK GAAP") until 31December 2006. UK GAAP differs in some areas from IFRS. In preparing theseinterim financial statements, management has amended certain accounting,valuation and consolidation methods applied in the UK GAAP financial statementsto comply with IFRS. The comparative figures in respect of 2006 were restated toreflect these adjustments. Reconciliations and descriptions of the effect of the transition from UK GAAP toIFRS on theGroup's equity and its net income and cash flows are provided in Note 6. The preparation of financial statements requires the estimates and assumptionsthat affect thereported amounts of assets and liabilities at the date of the financialstatements and the reported amounts of revenues and expenses during thereporting period. Although the estimates are based on management's bestknowledge of the amounts, events or actions, actual results may differ fromthose estimates. A full disclosure of accounting policies of the company as were applicable underUK GAAP are available in the annual report for the year ended 31 December 2006.The major differences in accounting policies under IFRS are described in note 6,and the revised accounting policies following the adoption of IFRS are set outin note 2. Copies of the interim statements for the six months ended 30 June 2007 are beingsent to all shareholders and to the AIM Team. Details can also be found on thecompany's website at www.ukplc.net. Further copies of the interim statements andcopies of the accounts for the year ended 31 December 2006 can be obtained bywriting to the Company Secretary, @UK PLC, 5 Jupiter House, Calleva Park,Aldermaston, Berkshire RG7 8NN. This announcement was approved by the board of @UK PLC on 28 September 2007. 2. Revised accounting policies The following are the revised accounting policies which have been adoptedfollowing the adoption of IFRS. GoodwillGoodwill arising on consolidation represents the excess of the cost ofacquisition over the Group's interest in the fair value of the identifiableassets and liabilities at the date of acquisition. Goodwill is recognised as anasset and reviewed for impairment at least annually. Any impairment isrecognised immediately in the income statement and is not subsequently reversed.Goodwill is allocated to cash generating units for the purpose of impairmenttesting. Intangible assets Computer softwareAcquired computer software is capitalised as an intangible asset unless it is anintegral part of the related hardware (such as the operating system) where itremains as an item of property, plant and equipment.Amortisation is calculated using the straight-line method to allocate the costof the software over its estimated useful economic life. Research and developmentResearch expenditure is written off as incurred. Development expenditure is also written off, except where the Directors aresatisfied that a new or significantly improved product or process results andother relevant IAS 38 criteria are met such as to the technical, commercial andfinancial viability of individual projects that would allow such costs to becapitalised. In such cases, the identifiable expenditure is capitalised andamortised over the period during which benefits are expected. Income taxesFull provision is made for deferred tax on all temporary timing differencesresulting from the carrying value of an asset or liability and its tax base.Deferred tax is determined using tax rates (and laws) that have been enacted orsubstantially enacted by the Balance Sheet date and are expected to apply whenthe related deferred tax liability is settled or deferred tax asset realised. Deferred tax assets are only recognised to the extent to which they are expectedto be recovered in the near future. IAS 12 Income Taxes require the separatedisclosure of deferred tax assets and liabilities on the Group's Balance Sheet. 3. Revenue (unaudited) Set out below is an analysis of revenue recognised between principal productcategories, which the Directors use to assess future revenue flows fromcustomers. Revenue 6 months to 6 months to Year ended 30 June 30 June 31 Dec 2007 2006 2006 £'000 £'000 £'000 Company formation services 709 655 1,223Web and ecommerce services 456 323 940 ---------- ---------- -------- 1,165 978 2,163 ========== ========== ======== 4. Loss per share (unaudited)The calculations for loss per share are based on the weighted average number ofshares in issue during the period 37,665,515 (6 months to 30 June 2006:37,580,250; year ended 31 December 2006: 37,593,941) and the following losses: 6 months to 6 months to Year ended 30 June 30 June 31 Dec 2007 2006 2006 £'000 £'000 £'000 Unadjusted earnings:Loss on ordinary activities after tax (1,431) (1,257) (3,494)Add back:Exceptional reorganisation costs - - 220Share based payments 18 33 51 --------- --------- --------- Adjusted earnings: (1,413) (1,224) (3,223) ========= ========= ========= 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 3.8p(6 months to 30 June 2006: 3.3p; year ended 31 December 2006: 8.6p). 5. Share CapitalDuring the period 172,413 1p Ordinary Shares were issued in settlement of£25,000 owed as deferred consideration for the acquisition of CodingInternational Limited in respect of Coding International's performance for theyear ended 31 December 2006. 6. Reconciliation of Loss and Net Assets under UK GAAP to IFRS (unaudited)In implementing the transition to IFRS, the Group has followed the requirementsof IFRS 1 "First Time Adoption of International Financial Reporting Standards",which in general requires IFRS accounting policies to be applied fullyretrospectively in deriving the opening balance sheet at the date of transition.In the Group's case this is 1 January 2006 being the start of the previousperiod that has been presented as comparative information. IFRS 1 containscertain mandatory exceptions and some optional exemptions to this principle ofretrospective application. Where the Group has taken advantage of the exemptionsthey are noted below. The adoption of IFRS represents an accounting change onlyand does not affect the operations or cash flows of the Group. The principalareas of impact are described below. 6 months to 6 months to Year ended 30 June 30 June 31 Dec 2007 2006 2006 £'000 £'000 £'000 Operating loss under UK GAAP (1,531) (1,428) (3,792) Change in amortisation period ofgoodwill (note (a) below) 10 3 13 --------- --------- --------- Operating loss under IFRS (1,521) (1,425) (3,779) ========= ========= ========= Retained loss under UK GAAP (1,441) (1,260) (3,507) Change in amortisation period ofgoodwill (note (a) below) 10 3 13 --------- --------- --------- Retained loss under IFRS (1,431) (1,257) (3,494) ========= ========= ========= 30 June 2006 31December 2006 UK GAAP Effect of IFRS UK GAAP Effect of IFRS change change £'000 £'000 £'000 £'000 £'000 £'000 Assets Non-current assets Goodwill (note(a) below 69 3 72 83 13 96Intangibleassets (note(b) below) - 52 52 - 60 60Property,plant andequipment(note (b)below) 302 (52) 250 753 (60) 693 -------- -------- -------- -------- -------- -------- 371 3 374 836 13 849 -------- -------- -------- -------- -------- -------- Current assets Trade andotherreceivables 280 - 280 398 - 398Cash and cashequivalents 6,719 - 6,719 4,119 - 4,119 -------- -------- -------- -------- -------- -------- 6,999 - 6,999 4,517 - 4,517 -------- -------- -------- -------- -------- -------- Total assets 7,370 3 7,373 5,353 13 5,366 -------- -------- -------- -------- -------- -------- Liabilities Current liabilities Trade andother payables (658) - (658) (876) - (876)Current taxliabilities (3) - (3) (3) - (3)Financialliabilities -borrowings (12) - (12) (12) - (12) -------- -------- -------- -------- -------- -------- (673) - (673) (891) - (891) -------- -------- -------- -------- -------- -------- Non-current liabilities Financialliabilities -borrowings (73) - (73) (67) - (67) -------- -------- -------- -------- -------- -------- (73) - (73) (67) - (67) -------- -------- -------- -------- -------- -------- Totalliabilities (746) - (746) (958) - (958) -------- -------- -------- -------- -------- -------- Net assets 6,624 3 6,627 4,395 13 4,408 ======== ======== ======== ======== ======== ======== Shareholders' equityCalled upshare capital 376 - 376 376 - 376Share premium 10,114 - 10,114 10,114 - 10,114Other reserve 607 - 607 607 - 607Share basedpaymentsreserve 33 - 33 51 - 51Accumulatedlosses (4,506) 3 (4,503) (6,753) 13 (6,740) -------- -------- -------- -------- -------- -------- Totalshareholders'equity 6,624 3 6,627 4,395 13 4,408 ======== ======== ======== ======== ======== ======== There is no difference between UK GAAP and IFRS for the balance sheet as at 1January 2006. Explanation of reconciling differences between UK GAAP and IFRS (a) The goodwill arising from the acquisition of Coding InternationalLimited was previously amortised under UK GAAP on a straight-line basis over itsestimated useful life of 5 years. This goodwill is no longer amortised, but issubject to reviews for impairment. The Group has taken advantage of theexemption not to apply IFRS 3 retrospectively to business combinations occurringprior to the date of transition to IFRS. (b) Purchased computer software costs were previously recorded as property,plant and equipment as permitted by UK GAAP. In accordance with IAS 38, allpurchased computer software is recorded as an intangible asset. INDEPENDENT REVIEW REPORT TO @UK PLC IntroductionWe have been instructed by the Company to review the financial information setout on pages 5 to 13 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 2007. Baker Tilly UK Audit LLP Chartered AccountantsThe Clock House140 London RoadGuildfordGU1 1UW 28 September 2007 This information is provided by RNS The company news service from the London Stock Exchange