Last checked at 2 Aug 2010 07:00
Publishing Technology plc
Interim results
Publishing Technology plc (LSE: PTO), ("Publishing Technology" or the "Group") the AIM quoted leading provider of online systems, management software and consulting services to trade and academic publishers of journals and books, today announces its unaudited interim results for the six months to 30 June, 2010.
Results
·; EBITDA up 30% to £0.471m (2009: £0.363m)
·; Revenues down 2.5% to £7.487m (2009:£7.676m)
·; Gross Profit up 5% to £3.174m (2009: £3.017m)
·; Net Profit £0.226m (2009: £0.045m loss)
·; Continuing high level of recurring revenues
·; Positive earnings per share
New customers
·; 15 sales of new advance, pub2web & ICS modules
·; Over $5m worth of new software sales in the USA, Brazil and Japan in the last 12 months
New markets
·; Brazil and Latin American revenue growing faster than expected
·; Launching the first site in Japan in September
Positive outlook
Despite the continuing economic uncertainty, the business is performing to expectations in the year with both profitability and margin slightly ahead of management expectations at the half year stage. New products and new markets are beginning to contribute positively to the profitability of the Group and are expected to make a significant difference in the coming 12 months as the volume of installed new product increases.
George Lossius, Chief Executive, commented:
"This has been another solid performance from Publishing Technology as we move into full scale marketing of the newly developed products in which we have been investing over the last 3 years. We have seen significant sales success already, and feel ever more confident that the Board's investment decisions will deliver the returns we expected."
Notes to Editors:
The Publishing Technology Group enables publishers to focus on their core competences by outsourcing technology requirements to a single, trusted partner. As a major provider of software and services for the publishing industry, the Group's proposition uniquely spans online and print solutions, providing the industry's only end-to-end suite of software specifically designed to support the entire publishing process.
Capabilities cover editorial & production, product information, distribution & fulfilment, content conversion & hosting, website development, sales representation, marketing programmes, information commerce, customer care, rights & royalties and business intelligence. Clients include leading book and journal publishers such as Hachette, Random House, Penguin and Reed Elsevier, and not for profit institutions, such as the World Bank, the IMF and OECD.
For further information please contact:
George Lossius/Alan Moug
Publishing Technology plc
Tel: 01865 397 800
Tom Griffiths
Arbuthnot Securities Limited
Tel: 020 7012 2000
Chief Executive's statement
The Group has continued to improve profitability in the first 6 months. Revenues have been held held up well despite the ongoing financial uncertainty in the wider economy and we have improved efficiency and reduced direct and indirect costs to further strengthen the Group and its future value.
Gross margin of £3.174m is slightly up on budget and £0.157m (5%) better than the previous year. Costs are in line with 2009 although sales and marketing costs have increased as we invest to sell the new advance product suite.
The success we have had in selling modules of our new advance product is particularly encouraging. To date, we have sold 15 modules to 7 customers with a value of over $5m in software and services.
Improving efficiency and holding revenues steady in the current climate underlines the soundness and stability of the Group and the skill and dedication of our staff.
Our confidence in the ground-breaking developments in our new product range is being rewarded this year so far and, looking forward, we believe this will improve in the second half of 2010 and into 2011.
Outlook
The second half should benefit from a natural cyclical increase in sales in certain areas of the business buoyed by additional revenues from expected new sales of advance, pub2web and the continued expansion in Latin America and Australia.
G M Lossius
Chief Executive Officer
Financial review
EBITDA (profit before finance costs, tax, depreciation, restructuring, amortisation, and foreign exchange gains and losses) increased by 30% to £0.471m in the first half of 2010 from £0.363m in the first half of 2009, with improved gross margin on slightly lower but more profitable revenue streams.
Profit from operations at £0.361m (2009: £0.005m) benefited from a £0.050m gain on foreign exchange (2009: £(0.206)m loss)
Revenue was £7.487m, which is £0.189m lower than the same period last year. The small reduction in revenue is caused by the planned reduction in some low margin business allowing greater efficiency savings in staffing and IT overhead costs.
All business units operated profitably and contributed between 22% and 26% of revenue to central group costs.
PCG continues to strengthen and in the first six months of 2010 generated more revenue with lower costs than in the same period in 2009.
Scholarly revenue was lower than in the same period last year, but cost efficiencies have held the contribution at the same level as the prior year.
PT Operations Gross margin has improved over last year, on revenues which are broadly similar (as revenues have moved towards higher margin sales).
Gross Profit has improved by £0.157m (5%) to £3.174m (2009: £3.017m) and Gross margin has improved from 39% to 42%.
Sales and marketing expenses have increased over last year as the sales team has been expanded to deliver increased revenue from our new range of products. Administrative expenses (excluding foreign exchange gains or losses) have remained broadly similar to the same period last year.
The Group's business cycle has historically resulted in 60% to 70% of profitability being earned in the second half of the year. The Board believes this cycle will be similar in 2010. The Board does not propose the payment of an interim dividend (2009: nil).
Finance costs are slightly higher in the first half than the comparable period in 2009 due to an increased interest rate on the overdraft facility and the convertible loans. The Board expects finance costs to remain at this level for the remainder of the year and then drop as the funding requirement drops from January 2011.
Earnings per share in the first 6 months of the year were 2.69p, a significant improvement from the first half of 2009 when the loss per share was (0.53)p.
Financial position
Net borrowing (cash and cash equivalents and overdraft) has remained similar to borrowing at 30 June 2009 as cash inflow has been used to reduce trade and other payables and tax and social security debts. Payables have been reduced by £0.634m in the first 6 months of 2010.
The Group's financial position is as expected at 30 June 2010 and the forecast for the full year remains unchanged. Group cash benefited from an R&D tax credit in the UK of £0.154m in the six months to 30 June 2010 which was accrued in the accounts to 31 December 2009.
A B Moug
Chief Financial Officer
Condensed Consolidated Interim Statement of Comprehensive Income
|
|
| Unaudited Six months ended | Unaudited Six months ended |
|
|
| 30 June 2010 | 30 June 2009 |
|
| Note | £'000 | £'000 |
|
|
|
|
|
|
|
|
|
|
| Revenue |
| 7,487 | 7,676 |
| Cost of sales |
| (4,313) | (4,659) |
| Gross profit |
| 3,174 | 3,017 |
|
|
|
|
|
| Sales and marketing expenses |
| (941) | (900) |
| Administrative expenses |
| (1,872) | (2,112) |
|
|
|
|
|
| Profit from operations |
| 361 | 5 |
|
|
|
|
|
|
|
|
|
|
| Analysis of profit from operations |
|
|
|
| Profit before net finance costs, tax, depreciation, amortisation and foreign exchange gains and losses (EBITDA) |
| 471 | 363 |
| Depreciation |
| (128) | (110) |
| Foreign exchange gain / (loss) |
| 50 | (206) |
| Restructuring costs |
| (32) | (42) |
| Profit from operations |
| 361 | 5 |
|
|
|
|
|
|
|
|
|
|
| Finance costs |
| (119) | (104) |
| Profit / (loss) before tax |
| 242 | (99) |
|
|
|
|
|
| Tax |
| (16) | 54 |
|
|
|
|
|
| Retained profit / (loss) for the period |
| 226 | (45) |
|
|
|
|
|
| Other comprehensive income: |
|
|
|
|
|
|
|
|
| Exchange differences on translating foreign operations |
| (55) | 835 |
|
|
|
|
|
| Total comprehensive income for the period |
| 171 | 790 |
|
|
|
|
|
|
|
|
|
|
| Profit / (loss) attributable to owners of the parent |
| 226 | (45) |
|
|
|
|
|
| Total comprehensive income attributable to owners of the parent |
| 171 | 790 |
|
|
|
|
|
| Basic and diluted profit / (loss) per share - pence | 3 | 2.69p | (0.53)p |
|
|
|
|
|
Condensed Consolidated Interim Statement of Financial Position
|
|
| Unaudited 30 June 2010 | Unaudited 30 June 2009 |
|
| Note | £'000 | £'000 |
| Non current assets |
|
|
|
| Goodwill |
| 3,737 | 3,737 |
| Property, plant & equipment |
| 337 | 330 |
|
|
| 4,074 | 4,067 |
| Current assets |
|
|
|
| Trade and other receivables | 4 | 2,823 | 2,698 |
| Cash and cash equivalents | 6 | 59 | 349 |
|
|
| 2,882 | 3,047 |
|
|
|
|
|
| Total assets |
| 6,956 | 7,114 |
|
|
|
|
|
| Equity |
|
|
|
| Share capital |
| 841 | 841 |
| Merger reserve |
| 11,055 | 11,055 |
| Reverse Acquisition reserve |
| (5,228) | (5,228) |
| Translation reserve |
| (717) | (142) |
| Investment in own shares |
| (4) | (4) |
| Retained earnings |
| (8,337) | (9,108) |
|
|
| (2,390) | (2,586) |
| Non current liabilities |
|
|
|
| Borrowings | 5 | - | 500 |
|
|
|
|
|
| Current liabilities |
|
|
|
| Trade and other payables | 7 | 6,172 | 6,231 |
| Borrowings | 5 | 3,136 | 2,669 |
| Provisions |
| 38 | 300 |
|
|
| 9,346 | 9,200 |
|
|
|
|
|
| Total liabilities |
| 9,346 | 9,700 |
|
|
|
|
|
| Total equity and liabilities |
| 6,956 | 7,114 |
|
|
|
|
|
Unaudited condensed consolidated interim statement of changes in equity
|
| Share capital | Merger reserve | Reverse acquisition reserve | Translation reserve | Investment in own shares | Retained Earnings | Total |
|
| £'000 | £'000 | £'000 | £'000 | £'000 | £'000 | £'000 |
|
|
|
|
|
|
|
|
|
| Balance at 1 January 2010 | 841 | 11,055 | (5,228) | (662) | (4) | (8,563) | (2,561) |
|
|
|
|
|
|
|
|
|
| Profit for the period | - | - | - | - | - | 226 | 226 |
| Other comprehensive income: |
|
|
|
|
|
|
|
| Exchange differences on translation of foreign operations | - | - | - | (55) | - | - | (55) |
| Total comprehensive income for the period | - | - | - | (55) | - | 226 | 171 |
|
|
|
|
|
|
|
|
|
| Balance at 30 June 2010 | 841 | 11,055 | (5,228) | (717) | (4) | (8,337) | (2,390) |
|
| Share capital | Merger reserve | Reverse acquisition reserve | Translation reserve | Investment in own shares | Retained Earnings | Total |
|
| £'000 | £'000 | £'000 | £'000 | £'000 | £'000 | £'000 |
|
|
|
|
|
|
|
|
|
| Balance at 1 January 2009 | 841 | 11,055 | (5,228) | (977) | (4) | (9,063) | (3,376) |
|
|
|
|
|
|
|
|
|
| Loss for the period | - | - | - |
| - | (45) | (45) |
| Other comprehensive income: |
|
|
|
|
|
|
|
| Exchange differences on translation of foreign operations | - | - | - | 835 | - | - | 835 |
| Total comprehensive income / (expense) for the period | - | - | - | 835 | - | (45) | 790 |
|
|
|
|
|
|
|
|
|
| Balance at 30 June 2009 | 841 | 11,055 | (5,228) | (142) | (4) | (9,108) | (2,586) |
Condensed Consolidated Interim Statement of Cash Flows
|
|
| Unaudited Six months ended | Unaudited Six months ended |
|
|
| 30 June 2010 | 30 June 2009 |
|
| Note | £'000 | £'000 |
|
|
|
|
|
| Profit / (loss) before tax |
| 242 | (99) |
|
|
|
|
|
| Adjustments for: |
|
|
|
| Depreciation |
| 128 | 110 |
| Interest expense |
| 119 | 104 |
| Restructuring |
| 32 | 42 |
| Unrealised foreign exchange differences |
| (105) | 755 |
| Increase in trade and other receivables |
| 73 | 1,007 |
| Decrease in trade and other payables |
| (634) | (774) |
| Decrease in provisions |
| - | (58) |
| Cash (used in) / generated from operations |
| (145) | 1,087 |
|
|
|
|
|
| Interest paid |
| (90) | (40) |
| R&D tax credit received |
| 154 | 65 |
| Net cash (used in) / generated from operating activities |
| (81) | 1,112 |
|
|
|
|
|
| Cash flows from investing activities |
|
|
|
| Purchase of property, plant and equipment |
| (120) | (51) |
| Net cash used in investing activities |
| (120) | (51) |
|
|
|
|
|
| Net (decrease) / increase in cash and cash equivalents |
| (201) | 1,061 |
|
|
|
|
|
| Cash and cash equivalents at beginning of period | 6 | (1,376) | (2,381) |
|
|
|
|
|
| Cash & cash equivalents at end of period | 6 | (1,577) | (1,320) |
Notes to the Unaudited Interim Report for the six months ended 30 June 2010
1. Nature of operations and general information
Publishing Technology plc (the "Company") and its subsidiaries (together 'the Group') is a provider of technology and supporting services to publishers and information providers. The nature of the Group's operations and its principal activities are set out in the full annual financial statements.
The Company is incorporated in the United Kingdom under the Companies Act 2006. The Company's registration number is 837205 and its registered office is 8100 Alec Issigonis Way, Oxford Business Park North, Oxford OX4 2HU. The condensed consolidated interim financial statements were authorised for issue by the Board of Directors on 30 July, 2010.
The financial information set out in this interim report does not constitute statutory accounts as defined in section 404 of the Companies Act 2006. The Group's statutory financial statements for the year ended 31 December 2009, prepared under IFRS as adopted by the European Union, have been filed with the Registrar of Companies. The auditor's report on those financial statements was unqualified and did not contain a statement under section c 498 (2) or section 498 (3) of the Companies Act 2006.
2. Basis of preparation
These condensed consolidated interim financial statements are for the six months ended 30 June 2010. They have been prepared following the recognition and measurement principles of IFRS as adopted by the European Union. They do not include all of the information required for full annual financial statements, and should be read in conjunction with the consolidated financial statements of the Group for the year ended 31 December 2009.
These condensed consolidated interim financial statements have been prepared on the going concern basis under the historical cost convention.
These condensed consolidated interim financial statements have been prepared in accordance with the accounting policies adopted in the last annual financial statements for the year ended 31 December 2009.
The accounting policies have been applied consistently throughout the Group for the purposes of preparation of these consolidated interim financial statements.
A detailed set of accounting policies can be found in the annual accounts available on our website, www.publishingtechnology.com or by writing to the Company Secretary.
3. Earnings per share
Basic earnings / (loss) per share is calculated by dividing the earnings attributable to ordinary shareholders by the weighted average number of ordinary shares outstanding during the period.
For diluted profit per share, the weighted average number of ordinary shares in issue is adjusted to assume conversion of all dilutive potential ordinary shares. Since the interest net of tax and other changes in income or expense per ordinary share obtainable on conversion of the convertible loan is greater than basic earnings per share for continuing operations there is no dilutive impact. And, since all outstanding options have an exercise price in excess of the average market rate in the year there is no dilutive impact from options granted.
|
|
| Six months ended |
| Six months ended |
|
|
| 30 June 2010 |
| 30 June 2009 |
|
|
|
|
|
|
| Attributable profit / (loss) (£'000) |
| 226 |
| (45) |
|
|
|
|
|
|
| Weighted average number of ordinary shares |
|
8,413,610 |
| 8,413,610 |
|
|
|
|
|
|
| Profit / (Loss) per share (basic and dilutive) arising from both total and continuing operations |
| 2.69p |
| (0.53)p |
|
|
|
|
|
|
4. Trade and other receivables
Trade and other receivables comprise the following:
|
|
|
|
|
|
|
|
| 30 June 2010 |
| 30 June 2009 |
|
|
| £'000 |
| £'000 |
|
|
|
|
|
|
| Trade receivables - gross |
| 2,021 |
| 1,614 |
| Less: provision for impairment of trade receivables |
| (20) |
| (54) |
| Trade receivables - net |
| 2,001 |
| 1,560 |
| Other receivables |
| 184 |
| 262 |
| Prepayments and accrued income |
| 638 |
| 876 |
|
|
|
|
|
|
|
|
| 2,823 |
| 2,698 |
|
|
|
|
|
|
5. Borrowings
|
|
|
|
|
|
|
|
| 30 June 2010 |
| 30 June 2009 |
|
|
| £'000 |
| £'000 |
|
|
|
|
|
|
| Bank overdrafts |
| 1,636 |
| 1,669 |
| Convertible loan note |
| 1,500 |
| 1,500 |
|
|
|
|
|
|
|
|
| 3,136 |
| 3,169 |
|
|
|
|
|
|
| On demand or within one year |
| 3,136 |
| 2,669 |
| In second year |
| - |
| 500 |
| In third to fifth years inclusive |
| - |
| - |
|
|
| 3,136 |
| 3,169 |
|
|
|
|
|
|
| Amount due for settlement after 12 months |
| - |
| 500 |
|
|
|
|
|
|
6. Cash and cash equivalents
|
|
| 30 June 2010 |
| 30 June 2009 |
|
|
| £'000 |
| £'000 |
|
|
|
|
|
|
| Cash and cash equivalents |
| 59 |
| 349 |
| Bank overdraft |
| (1,636) |
| (1,669) |
| Cash and cash equivalents including overdraft |
| (1,577) |
| (1,320) |
|
|
|
|
|
|
7. Trade and other payables
Trade payables comprise the following:
|
|
| 30 June 2010 |
| 30 June 2009 |
|
|
| £'000 |
| £'000 |
|
|
|
|
|
|
| Trade payables |
| 834 |
| 1,266 |
| Social security and other taxes |
| 727 |
| 778 |
| Other payables |
| 1,317 |
| 1,032 |
| Accruals |
| 602 |
| 474 |
| Deferred income |
| 2,692 |
| 2,681 |
|
|
|
|
|
|
|
|
| 6,172 |
| 6,231 |
|
|
|
|
|
|
8. Contingencies and commitments
There were no contingencies and commitments at the end of this or the comparative period.
9. Post balance sheet events
There were no material events subsequent to the end of the interim reporting period that have not been reflected in the interim financial statements.
10. Copies of the Interim Financial Statements
A copy of the interim statement is available on the Company's website, www.publishingtechnology.com, and from the Company's registered office, 8100 Alec Issigonis Way, Oxford Business Park North, Oxford OX4 2HU.