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Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
---|---|---|---|---|---|
EG Solutions | LSE:EGS | London | Ordinary Share | GB00B07XR777 | ORD 1P |
Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
---|---|---|---|---|---|---|---|---|---|---|
0.00 | 0.00% | 112.125 | 0.00 | 01:00:00 |
Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
---|---|---|---|---|---|
0 | 0 | N/A | 0 |
TIDMEGS
RNS Number : 2228R
EG Solutions plc
20 September 2017
20 September 2017
eg solutions plc
("eg" or the "Company" or the "Group")
Interim results for the six months ended 31 July 2017
eg solutions plc (AIM: EGS), the back office optimisation software company, announces its interim results for the six months ended 31 July 2017 ('H1 2018').
Financial highlights
-- Revenues for H1 2018 up 105% to GBP5.13m (H1 2017: GBP2.50m) -- Adjusted EBITDA* for H1 2018 of GBP0.92m (H1 2017: loss of GBP0.89m) -- Adjusted Profit* Before Tax for H1 2018 of GBP0.4m (H1 2017: loss of GBP1.33m) -- Cash generated from operations in H1 2018 of GBP0.86m (H1 2017: deficit of GBP0.78m) -- Cash as at 31 July 2017 of GBP2.35m (H1 2017: GBP1.66m) -- Earnings per share of 2 pence (H1 2017: loss of 5.2p) Unaudited Six months ended Figures in GBPm 31 July ----------------------------- H1 2018 H1 2017 ----------------------------- ------------- -------------- Revenues GBP5.13m GBP2.50m ----------------------------- ------------- -------------- Gross Profit GBP3.52m GBP1.34m ----------------------------- ------------- -------------- Gross margin % 68.7% 53.6% ----------------------------- ------------- -------------- Adjusted EBITDA* GBP0.92m (GBP0.89m) ----------------------------- ------------- -------------- Adjusted Profit / (loss) GBP0.40m (GBP1.33m) before tax * ----------------------------- ------------- -------------- Profit / (loss) before tax GBP0.30m (GBP1.51m) ----------------------------- ------------- -------------- Net Cash GBP2.35m GBP1.66m ----------------------------- ------------- -------------- Earnings / (loss) per share - diluted 2.0p (5.2p) ----------------------------- ------------- -------------- 4 Year order Book GBP21.4m GBP16.2m ----------------------------- ------------- --------------
*adjusted for Share Option Charges and non-recurring legal fees in current year and Share Option charges non-recurring legal fees and redundancy costs in prior year.
Operational highlights:
-- Strong trading in line with target sales growth strategy -- Significant contracts secured during the period include:
- Contract win through partnership with GCI to distribute eg operational intelligence(R) software within the public sector
- $2.7m contract with a leading global bank demonstrating ability to scale and service multi-national companies
-- Five year Master Service Agreement signed post period end with existing customer adding a minimum of GBP1.4m incremental revenue
-- Contract wins with new and existing customers supporting order book growth to GBP21.4m (H1 2017: GBP16.20m)
Post-period end
-- Recommended cash offer (the "Offer") made for the Company by Verint WS Holdings Limited ("Verint"), a indirectly owned subsidiary of Verint Systems Inc, a c.$2.3Bn US analytics company listed on NASDAQ
-- Under the terms of the Offer, each eg shareholder will be entitled to receive 112.5 pence in cash for each eg share held
-- The Offer values the entire issued and to be issued share capital of eg at approximately GBP26.30m
Chairman statement
I am pleased to report eg solutions' results for the first half of FY 2018.
During the period under review, we have delivered robust trading in line with our targeted growth strategy implementing direct sales and distribution via our in-house resources and global partners and thereby better positioning the Company for profitable growth. Revenues for the period increased 105% to GBP5.13m, which underpins the strong period we have had. We maintained the strong momentum gathered in the second half of the previous year, securing multiple major contracts with global firms for our best in class back office optimisation software. New contract wins and existing customer orders have seen our order book of recurring revenue grow to GBP21.4m.
Post-the period end in September 2017, Verint, a indirectly owned subsidiary of Verint Systems Inc, a c.$2.3Bn US analytics company listed on NASDAQ, announced a recommended a cash offer to acquire all of the issued and to be issued share capital of the Company.
In the period since 11 August 2017, the Company's mid-market closing share price has been in excess of the price per share offered by Verint under the Offer. The Board believe however, that the increase in the share price prior to the announcement of the Offer of 5 September 2017 was entirely driven by small volumes of retail purchases, causing the share price to rise as a result of the limited liquidity of the Company's shares. In particular, we believe that the mid-market price prior to 5 September 2017 was not reflective of a price at which any significant volume of the Company shares could be bought or sold in the market. The Board consider that the Company has long suffered from an illiquid shareholder register which can give rise to volatility in its share price. Moreover, we understand that, so far as we are aware, prior to 5 September 2017 the last institutional price at which the Company's shares traded, was on 23 May 2017 at a price of 71.7 pence, some 40.8 pence (35%) below the Offer price. Between 23 May 2017 and 5 September 2017, the Board do not believe that there were any institutional trades and the median trade size was only 2,000 shares, with all purchases and sales since that date being driven by small volume trades. Other than in the period since late July 2017 and before 5 September 2017, so far as we are aware, there were no trades in the Company shares at a level at or above the Offer price in the last decade.
Importantly, the Board believe that the level of the Offer represents an attractive exit price when viewed against the fundamentals of the business, against the way comparable small technology companies are currently valued by the market and against the most recent higher-volume share trades. It also represents an attractive premium of 53% and 4.1% against the volume weighted average price of the Company's shares over the six and three month periods respectively prior to 5 September 2017.
If the acquisition is approved this will see the Company's market-leading back office optimisation solution marketed to a much wider global audience. With larger distribution and economies of scale that Verint can offer, this should see the Company's software global footprint extended to become a much larger dominant force within the back office optimisation industry across multiple new markets and sectors.
For full details of the proposed acquisition please see https://www.investegate.co.uk/verint-ws-holdings/rns/recommended-cash-offer-for-eg-solutions-plc/201709050700047948P/.
I would like to take this opportunity to thank my fellow Board members, employees and our shareholders for their continued support over the period and look forward to updating the market on the progress of our proposed acquisition by Verint at the appropriate time.
Nigel Payne
Chairman
Financial review
The Board is pleased with the strong performance in H1 2018. The Company continues to underpin revenue with a strong order book which has increased by 32.1% over the last 12 months. Gross margin has returned to previous levels with the six months ended 31 July 2017 delivering 68.7%, an increase of 15.1% on the same period last year.
The Company has generated GBP0.86m cash from operations which has supported the continued investment in product development with R&D capitalisation of (GBP0.84m) (H1 2017: (GBP0.73m). Cash remains at a strong level at GBP2.35m, an increase of GBP0.69m from H1 2017. This is supported by a positive working capital movement as a direct result of higher revenues. Trade and other receivables were GBP2.83m (H1 2017: GBP1.26m) predominantly driven by higher accrued revenue. Trade and other payables were GBP2.85m (H1 2017: GBP2.01m) driven by higher deferred income.
The Company has continued to benefit from the Research and Development tax relief with a recognised tax credit of (GBP0.13m) (H1 2017: (GBP0.13m)) and an effective tax rate of (43%) (H1 2017: (520%)) in the reporting period.
The non-recurring expenditure in the current year relates to legal costs relating to the proposed acquisition.
The Company continues to expect minimal impact on revenues as a result of Brexit and has the relevant polices in place to control any foreign exchange risk as it arises. However, the Company continues to believe that increased economic uncertainty will put pressure on businesses to reduce costs and the Company remains well positioned to optimise the opportunity this affords.
Consolidated Statement of Comprehensive Income For the Six Months Ended 31 July 2017 Unaudited Unaudited Audited six months six months Year ended ended 31 ended 31 July July 31 January 2017 2016 2017 Note GBP'000 GBP'000 GBP'000 --------------------------------------- ----- ----------- ----------- ----------- Revenue 5,130 2,498 8,209 Cost of sales (1,608) (1,158) (2,424) Gross Profit 3,522 1,340 5,785
Administrative expenses (2,598) (2,227) (4,559) ---------------------------------------- ----- ----------- ----------- ----------- Adjusted EBITDA 924 (887) 1,226 Amortisation (501) (436) (891) Depreciation (21) (13) (30) Non-recurring expenditure (62) (150) (263) Share Option Charge (39) (27) (22) Profit/(Loss) from operations 301 (1,513) 20 Finance Income - 4 5 Finance Charges - - - ----------- ----------- ----------- Profit/(Loss) before tax 301 (1,509) 25 Tax credit 3 130 350 130 ---------------------------------------- ----- ----------- ----------- ----------- Profit/(Loss) for the period 431 (1,159) 155 ---------------------------------------- ----- ----------- ----------- ----------- Other comprehensive income: Exchange differences on translation of foreign operation 1 (4) (4) ----------- ----------- ----------- Total comprehensive income/(expense) for the period 432 (1,163) 151 ---------------------------------------- ----- ----------- ----------- ----------- Profit/(Loss) and total comprehensive income/(expense) attributable to equity shareholders of the Parent Company 432 (1,163) 151 ---------------------------------------- ----- ----------- ----------- ----------- Earnings per share From continuing operations Basic 5 2.03p (5.5p) 0.7p Diluted 5 1.95p (5.2p) 0.7p Consolidated Statement of Financial Position as at 31 July 2017 Unaudited Unaudited Audited six months six months Year ended ended 31 ended 31 July July 31 January 2017 2016 2017 Note GBP'000 GBP'000 GBP'000 ------------------------------- ----- ----------- ----------- ----------- Assets Non-current assets Intangible assets 6 4,410 3,798 4,069 Property, plant and equipment 146 90 91 4,556 3,888 4,160 ----- ----------- ----------- ----------- Current assets Trade and other receivables 7 2,825 1,259 2,760 Current tax receivable 381 416 285 Cash and cash equivalents 2,348 1,663 2,410 5,554 3,338 5,455 ----- ----------- ----------- ----------- Total assets 10,110 7,226 9,615 -------------------------------- ----- ----------- ----------- ----------- Liabilities Current liabilities Trade and other payables 8 2,851 2,011 2,793 2,851 2,011 2,793 ----- ----------- ----------- ----------- Non-current liabilities Deferred tax liabilities 381 117 415 381 117 415 ----- ----------- ----------- ----------- Total Liabilities 3,232 2,128 3,208 -------------------------------- ----- Net Assets 6,878 5,098 6,407 -------------------------------- ----- ----------- ----------- ----------- Equity Share capital 227 227 227 Share premium 7,924 7,924 7,924 Share-based payment reserve 847 813 808 Own shares held (1,149) (1,149) (1,149) Retained earnings (867) (2,612) (1,298) Foreign exchange (104) (105) (105) Total equity 6,878 5,098 6,407 -------------------------------- ----- ----------- ----------- ----------- Consolidated Interim Statement of Cash Flows For the Six Months Ended 31 July 2017 Unaudited Unaudited Audited six months six months Year ended ended 31 ended 31 July July 31 January 2017 2016 2017 GBP'000 GBP'000 GBP'000 ------------------------------------ ----------- ----------- ----------- Operating activities Profit/(Loss) before tax 301 (1,509) 25 Adjustments for: Depreciation of property, plant & equipment 21 16 30 Amortisation of intangible assets 501 436 891 Finance income - (4) (5) Share option charge 39 27 22 Decrease/(Increase) in receivables (65) 433 (1,068) (Decrease)/Increase in payables 58 (248) 534 Cash generated/(used in) by operations 855 (849) 429 Income taxes received - 70 278 Net cash generated/(used in) by operating activities 855 (779) 707 ------------------------------------- ----------- ----------- ----------- Investing activities Purchases of intangible assets (842) (727) (1,453) Purchases of property, plant and equipment (76) (26) (42) Net cash used in investing activities (918) (753) (1,495) ------------------------------------- ----------- ----------- ----------- Financing activities Proceeds from exercise of warrants - - - Interest received - 4 5 Net cash generated by financing activities - 4 5 ------------------------------------- ----------- ----------- ----------- Net (decrease) in cash and cash equivalents (63) (1,528) (783) ------------------------------------- ----------- ----------- ----------- Cash and cash equivalents at beginning of period 2,410 3,195 3,195 Effect of foreign exchange rates 1 (4) (2) Cash and cash equivalents at end of period 2,348 1,663 2,410 ------------------------------------- ----------- ----------- ----------- Consolidated Statement of Changes in Equity For the Six Months Ended Total 31 July 2017 amounts attributable to Share equity - based Own holders of the Share Share payment shares Retained Foreign Other parent capital premium reserve held earnings exchange reserves company GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 --------------- -------- -------- -------- -------- --------- --------- --------- ------------- Balance at 31 January 2016 227 7,924 786 (1,149) (1,453) (101) - 6,234 Loss for the period - - - - (1,159) - - (1,159) Other comprehensive expense - - - - - (4) - (4) Total comprehensive expense - - - - (1,159) (4) - (1,163)
---------------- -------- -------- -------- -------- --------- --------- --------- ------------- Share-based payments - - 27 - - - - 27 Balance at 31 July 2016 227 7,924 813 (1,149) (2,612) (105) - 5,098 Profit for the period - - - - 1,314 - - 1,314 Other comprehensive expense - - - - - - - Total comprehensive expense - - - - 1,314 - - 1,314 Share-based payments - - (5) - - - (5) Balance at 31 January 2017 227 7,924 808 (1,149) (1,298) (105) - 6,407 Profit for the year - - - - 431 - - 431 -------- -------- -------- --------- --------- --------- ------------- Other comprehensive expense - - - - - 1 - 1 Total comprehensive expense - - - - 431 1 - 432 ---------------- -------- -------- -------- -------- --------- --------- --------- ------------- Share-based payments - - 39 - - - - 39 ---------------- -------- -------- -------- -------- --------- --------- --------- ------------- Balance at 31 July 2017 227 7,924 847 (1,149) (867) (104) - 6,878
1. Notes to the Group Condensed Consolidated Interim Financial Statements
for the six months ended 31 July 2017
ACCOUNTING POLICIES
The interim financial information consolidates the results of the Company and its subsidiary undertakings made up to 31 July 2017 are unaudited.
The Company is a limited liability company incorporated and domiciled in England and whose shares are listed on the Alternative Investment Market.
The financial information contained in this interim report does not constitute statutory accounts as defined in section 434 of the Companies Act 2006.
It does not therefore include all the information and disclosures required in the annual financial statements and should be read in conjunction with the Group's annual financial statements as at 31 January 2017.
The financial information for the six months ended 31 July 2017 is unaudited. The Group has not applied IAS 34, Interim Financial Reporting, which is not mandatory for UK Groups listed on the Alternative Investment Market (AIM), in the preparation of these financial statements.
Full accounts of eg solutions plc for the year ended 31 January 2017 have been delivered to the Registrar of Companies. The report of the auditors on these accounts was unqualified and did not contain a statement under Section 498 (2-3) of the Companies Act 2006.
Significant Accounting Policies
The Accounting policies used in the preparation of the financial information for the six months ended 31 July 2017 are in accordance with the recognition and measurement criteria of International Financial Reporting Standards ('IFRS') as adopted by the European Union and are consistent with those that are expected to be adopted in the annual statutory financial statements for the year ending 31 January 2018. These are not expected to differ significantly from those adopted in the financial statements for the year ended 31 January 2017.
The interim report for the six months ended 31 July 2017 was approved by the Board of Directors on 20 September 2017.
2. OPERATING SEGMENTS
In prior periods, eg solutions plc has disclosed Financial information on two operating segments.
Following a review, eg now report Financial information to the Chief Executive Officer in one segment.
3. TAXATION Unaudited Unaudited Audited six months six months Year ended ended 31 ended 31 July July 31 January 2017 2016 2017 GBP'000 GBP'000 GBP'000 ------------------------------- ----------- ----------- ----------- Current tax: United Kingdom (96) (162) (285) Tax in respect of prior years (1) 44 -------------------------------- ----------- ----------- ----------- (96) (163) (241) Deferred tax: Origination and reversal of temporary differences (34) (187) 129 Rate change on deferred tax brought forward (18% - 17%) 0 0 (18) Tax receivable by the Group and its subsidiaries (130) (350) (130) -------------------------------- ----------- ----------- -----------
Domestic income tax is calculated at 19.17% (2017: 20.00%) of the estimated assessable loss for the year.
The change in applicable tax rate is due to the reduction in UK Corporation tax rates.
Taxation for other jurisdictions is calculated at the rates prevailing in the respective jurisdictions.
Unaudited Unaudited Audited six months six months Year ended ended 31 ended 31 July July 31 January 2017 2016 2017 GBP'000 GBP'000 GBP'000 -------------------------------- ----------- ----------- ----------- The credit for the period can be reconciled to the loss per the Statement of Comprehensive Income as follows: Profit/Loss before tax 301 (1,509) 25 --------------------------------- ----------- ----------- ----------- Tax at the applicable domestic income tax rate 19.17% (2017: 20.00%) 58 (302) 5 Tax effects of expenses that are not deductible in determining taxable profit 13 31 39 Share-based payments (58) 5 34 Research and development enhanced relief (165) (165) (316) Losses surrendered for R&D tax credit 19 61 108 Prior year items - (1) 44 Other movements 3 21 (44) Tax credit (130) (350) (130) --------------------------------- ----------- ----------- ----------- Effective tax rate for the period -43% -57% -520%
4. DIVIDS
The Board is not proposing the payment of an interim dividend.
5. EARNINGS PER ORDINARY SHARE From Continuing Operations Unaudited Unaudited six six Audited months to months to Year ended 31 July 31 July 31 January 2017 2016 2017 Weighted average number of shares in issue 22,682,937 22,682,937 22,682,937 Weighted average number of shares held by the Employee Benefit Trust (1,514,285) (1,514,285) (1,514,285) ------------------------------- ------------ ------------ ------------ Weighted average number of shares for the purposes of basic earnings per share 21,168,652 21,168,652 21,168,652 Effect of dilutive potential ordinary shares - Share options 900,458 950,464 617,033 Weighted average number of shares for the purposes of diluted earnings per share 22,069,110 22,119,117 21,785,686 ------------------------------- ------------ ------------ ------------ Unaudited Unaudited six six Audited months to months to Year ended 31 July 31 July 31 January 2017 2016 2017 GBP'000 GBP'000 GBP'000 ------------------------------ ------------ ------------ ------------ Basic earnings attributable to equity shareholders 431 (1,159) 155 Earnings for the purposes of diluted earnings per share 431 (1,159) 155 ------------------------------- ------------ ------------ ------------ Unaudited Unaudited six six Audited months to months to Year ended 31 July 31 July 31 January 2017 2016 2017 ------------------------------ ------------ ------------ ------------ Basic earnings per share 2.03p (5.5p) 0.8p
Diluted earnings per share 1.95p (5.2p) 0.7p ------------------------------- ------------ ------------ ------------
EPS has been calculated using the following methodology:
Basic earning per share are calculated by dividing the earnings attributable to ordinary shareholders by the number of weighted average ordinary shares during the period. The number of shares excludes shares held by an Employee Benefit Trust.
For Diluted earnings per share, the number of ordinary shares in issue is adjusted to assume conversion of all dilutive potential ordinary shares. These represent share options granted to employees.
At 31 July 2017 there were 1,307,827 (2017: 1,397,821) share options outstanding that could potentially dilute basic EPS in the future, but are not included in the calculation of diluted EPS because they are anti-dilutive for the periods presented.
6. INTANGIBLE ASSETS Development Intellectual Total costs property intangibles GBP'000 GBP'000 GBP'000 ----------------------------- ------------ ------------- ------------ Cost At 1 February 2016 7,496 498 7,994 Acquisitions - internally developed 727 - 727 ------------------------------ ------------ ------------- ------------ At 1 August 2016 8,223 498 8,721 Acquisitions - internally developed 726 - 726 ------------------------------ ------------ ------------- ------------ At 1 February 2017 8,949 498 9,447 Acquisitions - internally developed 842 - 842 ------------------------------ ------------ ------------- ------------ At 31 July 2017 9,791 498 10,289 ------------------------------ ------------ ------------- ------------ Amortisation and Impairment At 1 February 2016 3,989 498 4,487 Amortisation for the period 436 436 ------------------------------ ------------ ------------- ------------ At 1 August 2016 4,425 498 4,923 Amortisation for the period 455 455 At 1 February 2017 4,880 498 5,378 Amortisation for the period 501 - 501 At 31 July 2017 5,381 498 5,879 Carrying amount At 31 July 2017 4,410 - 4,410 At 1 February 2017 4,069 - 4,069 ------------------------------ ------------ ------------- ------------ At 1 August 2016 3,798 - 3,798 ------------------------------ ------------ ------------- ------------ At 1 February 2016 3,507 - 3,507 ------------------------------ ------------ ------------- ------------ 7. TRADE AND OTHER RECEIVABLES --------------------------------------------- ---------- ----------- Unaudited Unaudited six six Audited -------------------------------- ---------- ---------- ----------- months to months to Year ended -------------------------------- ---------- ---------- ----------- 31 July 31 July 31 January -------------------------------- ---------- ---------- ----------- 2017 2016 2017 -------------------------------- ---------- ---------- ----------- GBP'000 GBP'000 GBP'000 -------------------------------- ---------- ---------- ----------- Trade receivables 808 794 812 --------------------------------- ---------- ---------- ----------- Less provision for impairment - - - -------------------------------- ---------- ---------- ----------- Net trade receivables 808 794 812 --------------------------------- ---------- ---------- ----------- Prepayments and accrued income 2,017 465 1,948 --------------------------------- ---------- ---------- ----------- 2,825 1,259 2,760 ---------- ---------- -----------
Ageing analysis of trade receivables past due but not impaired:
Unaudited Unaudited six six Audited months to months to Year ended 31 July 31 July 31 January 2017 2016 2017 ----------------------- ---------- ---------- ----------- Up to 30 days overdue 540 55 71 31 - 90 days overdue 99 591 52 Over 91 days overdue 169 - 1 808 646 124 ---------- ---------- -----------
No provision has been made for impairment losses.
8.TRADE AND OTHER PAYABLES Trade and other payables are as follows: Unaudited Unaudited six six Audited months to months to Year ended 31 July 31 July 31 January 2017 2016 2017 GBP'000 GBP'000 GBP'000 ------------------------------- ---------- ---------- ----------- Trade payables 717 469 619 Other tax and social security 137 71 534 Grants received 199 196 199 Accruals and deferred income 1,798 1,275 1,441 2,851 2,011 2,793 ---------- ---------- -----------
ENDS
CONTACTS
+44 (0) 1785 eg Solutions plc 715772 Elizabeth Gooch Michael Woolley +44 (0)20 7496 N+1 Singer 3000 Shaun Dobson Alex Price Yellow Jersey PR Limited +44 (0) 7748 843871 Felicity Winkles +44 (0) 7769 Joe Burgess 325254
About eg solutions plc
eg solutions is a back office workforce optimisation software Group. eg pioneered this new market space and developed the most complete, purpose built workforce optimisation software for back offices - the only solution that manages work, people and end-to-end processes wherever they are undertaken, anywhere in the world.
eg solutions' software is now used by leading UK, international and global companies in multiple industry sectors including financial services, healthcare and utilities. Using its forecasting, scheduling, real-time work management and operational analytics capabilities, eg delivers measureable improvements in service, quality, productivity and regulatory compliance. When supported by eg's implementation and training services eg guarantee a return on investment in short timescales.
The Group is listed on AIM, the London Stock Exchange's international market for smaller growing companies (EGS).
This information is provided by RNS
The company news service from the London Stock Exchange
END
IR UKORRBWAKAUR
(END) Dow Jones Newswires
September 20, 2017 02:00 ET (06:00 GMT)
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