eg Solutions PLC Regulatory News (EGS)

12 Sep 2005 07:00

EG Solutions plc12 September 2005 12 September 2005 eg solutions plc ("eg" or the "company") Interim Results for the six months ended 31 July 2005 Maiden figures from eg solutions show good start to the year Strong sales pipeline eg solutions plc, the IT software and services company which joined AIM in Junethis year, announces interim results for the six months ended 31 July 2005. eguses its own software packages and production management methodology to deliversignificant improvements in the operational performance of its clients. Currentoperations are focused on the financial services sector with clients thatinclude Norwich Union, Portman Building Society and Co-operative Financial Services. Half year financial highlights: • Turnover up 58.2% to £2.51m (2004: £1.59m)• Operating profit of £0.10m (2004: loss £0.15m)• Adjusted operating profit* increased to £0.57m (2004: £0.05m)• Earnings per share of 0.7p (2004: loss 1.5p)• Adjusted earnings per share** of 5.2p (2004: 0.5p)• No interim dividend recommended Key Business Highlights: • New contracts finalised with Portman Building Society and Co-operative Financial Services• Staff numbers up from 30 at year end to 50• Structuring of sales function commenced• Investment in product development for roll out early next year• Development of partnership model Commenting on the results, Elizabeth Gooch, Managing Director, eg solutionssaid: "This is a good start to the year which fully supports our confidence in thebusiness when we came to market earlier in the year. We have also made goodprogress in the Company's strategic development, making the first steps into thepublic sector and to broadening our historically strong financial servicesbusiness into geographies outside the UK. We are investing in people and productdevelopment which will underpin the Company's long term growth. In the immediatefuture, the sales pipeline for new business remains strong." Further enquiries: Elizabeth Gooch (Managing Director) 01785 715772David Blain (Finance Director) 01785 715772Richard Evans (Brewin Dolphin Securities) 0161 214 5553Michael Henman (Cubitt Consulting) 020 7367 5100 * Adjusted operating profit is defined in Note 3.** Adjusted earnings per share is defined in Note 4. Chairman's statement Trading results Turnover in the six months ended 31 July increased by 58.2% to £2.51m (2004:£1.59m). Operating profit increased to £0.10m (2004: loss £0.15m), whileoperating profit, adjusted for changes in remuneration policy, has increased to£0.57m (2004: £0.05m). Dividend The Board is not recommending an interim dividend and has previously indicatedthat the first dividend is intended to be a final dividend in respect of theyear ending 31 January 2006. Sales I am delighted with the growth in sales achieved during the first six months ofthe year, which fully supports our confidence at the time of the AIM admissionin June. This high level of activity has made effective use of our existingresources and this, together with the outlook for new business conversion, hasbeen part of the reason for the level of staff recruitment. Highlights of the period include important new contracts with Portman BuildingSociety and Co-operative Financial Services. Despite this high level of activity we have continued to deliver ourtraditionally high levels of client delivery and performance. Resourcing With existing resources fully utilised, we have been working hard to put inplace the infrastructure needed for our growth plans in production managementand software installation while, at the same time, increasing the number ofpersonnel in sales and software support. Total staff numbers have increasedfrom 30 at 31 January 2005 to 50 at present. As a result, operating costs,excluding Directors' salaries, have increased compared to the prior year. Sales function and strategy Paul Maguire was appointed Sales and Marketing Director in June and has alreadymade important developments in structuring the sales function. These haveincluded the appointment of Client Engagement Managers with responsibility formanaging and co-ordinating eg's overall relationships with its customers. Paulhas developed an increasingly rigorous new business structure which has and willplay an important part in developing and monitoring our new business pipeline,substantially augmenting new business generation. In addition to our existing direct sales model, Paul has also developed a modelin which we can distribute our software and services through partnershiparrangements, so increasing the range of markets we can access. Product development As indicated at the time of the flotation, the development of our softwarecapabilities is important to us and we are making good progress in developing aroad map to guide our future product development in line with our customers'needs. This goes alongside further product investment and we expect to be in aposition to announce these developments early in the next financial year. Conclusion and Outlook This is a good start to the year which fully supports our confidence in thebusiness when we came to market earlier in the year. We have also made goodprogress in the Company's strategic development, making the first steps into thepublic sector and to broadening our historically strong financial servicesbusiness into geographies outside the UK. We are investing in people and productdevelopment which will underpin the Company's long term growth. In the immediatefuture, the sales pipeline for new business remains strong. Rodney Baker-BatesChairman12 September 2005 Profit and Loss Accountfor the six months ended 31 July 2005 Note 6 Months to 6 Months to Year to 31 July 2005 31 July 2004 31 January 2005 (Unaudited) (Unaudited) (Audited) £000 £'000 £000 Turnover 2,513 1,588 4,103Cost of sales (684) (570) (1,045)Gross profit 1,829 1,018 3,058Administrative expenses (1,730) (1,165) (2,957)Operating profit/(loss) 99 (147) 101Other interest receivable 7 - 1Interest payable and similar charges (4) (2) (11)Profit/(loss) on ordinary activities 102 (149) 91before taxationTaxation on profit on ordinary (19) - (21)activitiesProfit/(loss) for the periodattributable to equity shareholders 83 (149) 70Dividends paid and proposed on equity - - -sharesRetained profit/(loss) for the period 83 (149) 70 Basic earnings/(loss) per share 4 0.7p (1.5p) 0.7pAdjusted earnings per share 4 5.2p 0.5p 9.8pDiluted earnings/(loss) per share 4 0.7p (1.5p) 0.7p There are no unrecognised gains or losses for the period.All activities derive from continuingoperations. eg solutions plcBalance Sheetas at 31 July 2005 31 July 31 July 2004 31 January 2005 2005 (Unaudited) (Unaudited) (Audited) £'000 £'000 £'000 Fixed assetsTangible assets 117 75 75 117 75 75 Current assetsStocks 19 24 24Debtors 1,362 382 416Cash at bank and in hand 2,254 - 410 3,635 406 850CreditorsAmounts falling due within one year (1,681) (709) (913)Net current assets/(liabilities) 1,954 (303) (63)Total assets less current liabilities 2,071 (228) 12 Provisions for liabilities and charges (6) 16 (4)Net assets 2,065 (212) 8 Capital and reservesCalled up share capital 143 101 101Share premium account 2,910 6 6Capital reserve 28 - -Own shares held (1,000) - -Profit and loss account (16) (319) (99)Equity shareholders' funds 2,065 (212) 8 eg solutions plcCash Flow StatementFor the six months to 31 July 2005 Note 6 months 6 months Year to to to 31 July 31 July 31 January 2005 2004 2005 (Unaudited) (Unaudited) (Audited) £'000 £'000 £'000 Cash flow from operating activities 5 (852) (55) 576 Returns on investments and servicing of financeInterest received 7 - 1Interest paid (4) (2) (11)Net cash inflow/(outflow) for returns oninvestments and servicing of finance 3 (2) (10) Taxation - - 3 Investing activitiesPurchase of own shares (1,000) - -Purchase of tangible fixed assets (62) (14) (29) Net cash used in investing activities (1,062) (14) (29)Cash (outflow)/inflow before financing (1,911) (71) 540 Financing activitiesIssue of ordinary share capital 3,500 - -Share issue costs (554) - -Increase in loans from banks 1,000 - -Loan repayments (167) - -Net cash from financing activities 3,779 - - Increase/(decrease) in cash in the period 1,868 (71) 540 Notes to the financial information 1. Basis of preparation The interim financial information has been prepared on a consistent basis using the accounting policies set out in the report and financial statements for the year ended 31 January 2005. 2. Non statutory accounts In accordance with S240(3) of the Companies Act 1985, the unaudited results do not constitute statutory financial statements of the Company. The six months results for both years are unaudited. The results for the year ended 31 January 2005 are an abridged version of the financial statements for that year which were audited and reported upon without qualification by Baker Tilly and did not contain a statement under Section 237(2) or (3) of the Companies Act 1985. Abbreviated financial statements for that year were delivered to the Registrar of Companies as the Company was entitled to do before its flotation. 3. Adjusted operating profit Prior to its admission to trading on AIM on 6 June 2005, the Company operated in a private environment and substantially all its trading profits were distributed in the form of remuneration to the Managing Director, who was also its founder and principal shareholder. On admission the Managing Director's remuneration was reduced to £150,000 per annum, a level appropriate for a public company at the stage of development of eg solutions. The adjusted operating profit figure has been calculated for illustrative purposes only to give shareholders an indication of what the operating profits of the Company would have been if the Managing Director's present remuneration arrangements had been in place since 1 February 2004, as follows: 6 months to 6 months Year to to 31 July 31 July 31 January 2005 2004 2005 £'000 £'000 £'000 Operating profit 99 (149) 101Add actual salary paid 547 271 1,046Deduct new salary (75) (75) (150)Adjusted operating profit 571 47 997 4. Earnings per share Basic earnings per share is calculated by dividing earnings attributable to ordinary shareholders by the weighted average number of ordinary shares in issue during the period excluding those held by the employee trust which are treated as cancelled for earnings per share calculation purposes. Adjusted earnings per share is calculated based on the adjusted operating profit for the period as defined in note 3. For diluted earnings per share, the weighted average number of ordinary shares in issue is adjusted to assume conversion of all dilutive potential ordinary shares, which comprise employee share options. Weighted average number of shares: 6 months to 6 months to Year to 31 July 31 July 31 January 2005 2004 2005 Basic 11,069,928 10,176,200 10,176,200Diluted 11,250,374 10,176,200 10,176,200 5. Notes to the cash flow statement Reconciliation of operating profit to net cash flow from operating activities: 6 months 6 months Year to to to 31 July 31 July 31 January 2005 2004 2005 £'000 £'000 £'000 (Unaudited) (Unaudited) ) (Unaudited) ) Operating profit/(loss) 99 (147) 101Depreciation 20 15 30Share option charge 28 - -(Profit)/loss on disposal of fixed - - -assetsDecrease in stocks 5 16 16(Increase)/decrease in debtors (946) 112 75(Decrease)/increase in creditors (58) (51) 354 Cash (outflow)/inflow from operatingactivitie (852) (55) 576 Analysis of changes in net cash: At At 31 31 July January 2005 Cash flows 2005 £'000 £'000 £'000 (Audited) (Unaudited) (Unaudited) Cash at bank and in hand 410 1,844 2,254Bank overdraft (24) 24 - 386 1,868 2,254Bank loans - (833) (833)Net funds 386 1,035 1,421 6. Copies of this statement will be sent to all shareholders and are available from the Company's registered office: The Roller Mill, Teddesley Road, Penkridge, Staffordshire, ST19 5BD This information is provided by RNS The company news service from the London Stock Exchange