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NETD Netdimensions

99.00
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Last Updated: 00:00:00
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Share Name Share Symbol Market Type Share ISIN Share Description
Netdimensions LSE:NETD London Ordinary Share KYG6427F1019 ORD USD0.001 (DI)
  Price Change % Change Share Price Bid Price Offer Price High Price Low Price Open Price Shares Traded Last Trade
  0.00 0.00% 99.00 0.00 00:00:00
Industry Sector Turnover Profit EPS - Basic PE Ratio Market Cap
0 0 N/A 0

NetDimensions (Holdings) Limited Half-year Report (1361K)

19/09/2016 7:01am

UK Regulatory


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TIDMNETD

RNS Number : 1361K

NetDimensions (Holdings) Limited

19 September 2016

NetDimensions (Holdings) Limited

("NetDimensions" or the "Company" or the "Group")

Half Yearly Report

NetDimensions (AIM: NETD; OTCQX: NETDY), a global provider of performance, knowledge and learning management systems, is pleased to announce its half year results for the period ending 30 June 2016.

Financial Highlights

   --     Total revenue of US$10.5M (2015 H1: US$10.6M) 

o 6% increase in revenue from our global hosted secure SaaS offering to US$5.4M (2015 H1: US$5.1M)

   --     Gross margin increased to 85% (2015 H1: 81%) 
   --     56% improvement in adjusted EBITDA loss to US$0.8M (2015 H1: loss of US$1.8M) 

o 8% reduction in cost of sales, selling & operating expenses to US$11.9M (2015 H1: US$12.9M)

   --     Cash as of 30 June 2016 US$11.2M (2015 FY: US$12.0M) 

Operations Highlights

   --     4.2M active users at the end of the period (2015 H1: 3.9M) 
   --     Recurring revenue was 70% of total revenue in the period (2015 H1: 68%) 
   --     12% increase in Research & Development investment to US$1.8M (2015 H1: US$1.6M) 

o All of which was expensed to the Income statement during the period

-- 17 new clients added in the period through direct and reseller channels with a combined contracted value of US$1.4M

Graham Higgins, Chairman of NetDimensions, commented: "The Company made good progress in the period in terms of better cost control and declaring a substantially smaller loss than the prior period. The Company did experience some delays in rolling out some larger client contracts in the first half, however the high consequence industries which we service continue to show demand for our product suite."

Enquiries:

 
 NetDimensions (Holdings)        Tel: +852 2122 4500 
  Limited 
 Jay Shaw 
  Matthew Chaloner 
 
 Panmure Gordon (UK) Limited     Tel: +44 20 7886 2500 
  (Nomad & Broker) 
 Fred Walsh 
 Peter Steel 
 
 Walbrook PR Ltd (Financial      Tel: +44 20 7933 8780 
  Public Relations) 
 Paul Cornelius                  netdimensions@walbrookpr.com 
 Sam Allen 
 Nick Rome 
 Helen Cresswell 
 

About NetDimensions

Established in 1999, NetDimensions (AIM: NETD; OTCQX: NETDY) is a global provider of performance, knowledge and learning management solutions to high consequence industries.

NetDimensions provides companies, government agencies and other organisations with talent management solutions to personalise learning, share knowledge, enhance performance, foster collaboration and manage compliance programmes for employees, customers, partners and suppliers.

Recognised as one of the talent management industry's top-rated technology suppliers, NetDimensions' award-winning solutions have been chosen by leading organisations worldwide including ING, Cathay Pacific, Chicago Police Department, Geely Automotive, Fugro Group and Fresenius Medical Care, tesa SE and DB Schenker.

NetDimensions is ISO 9001 certified and NetDimensions hosted services are ISO 27001 certified.

For more information, visit www.NetDimensions.com or follow @netdimensions on Twitter.

This announcement contains inside information for the purposes of Article 7 of Regulation (EU) No 596/2014.

Chairman's Statement for the six months Ended 30 June 2016

The revenue in the six months to 30 June 2016 was similar to the prior period at US$10.5M (2015 H1: US$10.6M). The sales in the first half were impacted by delays in the roll-out of some larger client engagements which impacted both growth in licence revenue and associated services.

Financial Highlights

   --     Total revenue of US$10.5M (2015 H1: US$10.6M) 

o 6% increase in revenue from our global hosted secure SaaS offering to US$5.4M (2015 H1: US$5.1M)

   --     Gross margin increased to 85% (2015 H1: 81%) 
   --     56% improvement in the adjusted EBITDA loss to US$0.8M (2015 H1: loss of US$1.8M) 

o 8% reduction in cost of sales, selling & operating expenses to US$11.9M (2015 H1: US$12.9M)

   --     Cash as of 30 June 2016 US$11.2M (2015 FY: US$12.0M) 

Financial Summary

The financial results for the period ending 30 June 2016 saw both revenue and invoiced sales coming in somewhat lower than expected. Revenue was largely unchanged when compared to the six months to June 2015, US$10.5M (2015 H1: US$10.6M) and invoiced sales were 3% lower, US$9.5M (2015 H1: US$9.8M).

Revenue from higher margin SaaS licences and multi-year on premise licences increased by 8% to US$6.8M (2015 H1: US$6.3M). The increase in licence revenue was off-set by a reduction in support and maintenance revenue which declined by 33% to US$0.6M (2015 H1: US$0.9M) and software customisation & implementation revenue which declined by 9% to US$3.1M (2015 H1: US$3.4M). The reduction in support and maintenance revenue is a result of the Company's strategy of transitioning clients away from legacy perpetual licences to either SaaS or multi-year on premise licenses. Software customisation & implementation revenue was impacted by the delays in the roll out of some larger client engagements.

Invoiced sales to clients in high consequence industries represented 91% of total invoiced sales (2015 H1: 92%), which is in line with our strategy of becoming a leading provider of Talent Management Systems and related compliance solutions to high consequence industries.

The North America region was the largest market for the Group during the period comprising 48% of Group revenues. Europe, Middle East & Africa ("EMEA") accounted for 40% of Group revenues and Asia Pacific including China 10%. The rest of the world made up 2%.

The Group continues to focus on supplying software via its global hosted secure SaaS offering and revenues from this product offering increased by 6% to US$5.4M (2015 H1: US$5.1M).

The Company continued to make improvements in expense management leading to a reduction of 8% in cost of sales, selling and operating expenses to US$11.9M (2015 H1: US$12.9M).

Gross Margins improved in the period to 85% (2015 H1: 81%) as a result of a reduction in the costs of sales related to services and a better product mix of higher-margin licence revenue which represented 64% of total revenue (2015 H1: 60%).

The improved margin and reduction in expenses resulted in the Group's adjusted EBITDA loss coming in 56% better than prior period. The Group's adjusted EBITDA loss excluding net foreign exchange gains US$0.2M, intangible asset amortisation (US$0.2M) and non-cash share-based payments (US$0.3M), was $0.8M (2015 H1: loss of US$1.8M). NetDimensions' loss before tax was US$1.2M (2015 H1: loss of US$2.5M).

Cash generated from operating activities was US$0.2M in the period (2015 H1: cash absorption of US$1.3M). The Group's cash balance at the end of the period was US$11.2M (2015 H1: US$3.5M) and the accounts receivable balance was US$4.6M (2015 H1: US$3.5M).

Operations Review

During the period we made the following progress in line with our business plan:

   --     4.2M active users at the end of the period (2015 H1: 3.9M) 
   --     Recurring revenue was 70% of total revenue in the period (2015 H1: 68%) 
   --     12% increase in Research & Development investment to US$1.8M (2015 H1: US$1.6M) 

o All of which was expensed to the Income statement during the period

-- NetDimensions Ranked as a Leader in the 2016 Aragon Research Globe(TM) for Corporate Learning. NetDimensions was ranked as a 'Leader' for excellence in:

o enterprise LMS functionality

o talent management

o compliance

o analytics

o language support

-- NetDimensions has been positioned again as a "Core Leader" in the unique European learning and talent market insight report, Fosway 9-Grid(TM) for Learning Management Systems (LMS)

-- 17 new clients added in the year through direct and reseller channels with a combined contracted value of US$1.4M. These new clients operate in a number of high consequence industries including healthcare, financial services, life sciences and precision manufacturing

Board

James Brooke, Non-Executive Director of the Company has decided to resign from the Company with immediate effect. We would like to thank James Brooke, for his contribution to the Board over the last three years, his financial expertise has been an asset to the Company and we are glad that he will continue to retain an interest in the Company as a valued shareholder, the Board would like to thank him and wish him well for the future.

Outlook

The Company made good progress in the period in terms of better cost control and declaring a substantially smaller loss than the prior period. The Company did experience some delays in rolling out some larger client contracts in the first half, however the high consequence industries which we service continue to show demand for our product suite.

CONDENSED CONSOLIDATED INCOME STATEMENT

FOR THE SIX MONTHSED 30 JUNE 2016

 
                                     Note                  Unaudited 
                                                         Six months ended 
                                                             30 June _ 
                                                          2016                 2015 
                                                           US$                  US$ 
 
 Revenue                                5           10,491,583           10,592,318 
 
 Cost of sales                          6          (1,576,233)          (2,021,335) 
                                            ------------------   ------------------ 
 Gross profit                                        8,915,350            8,570,983 
 
 
 Other gains/(losses), net                             194,525            (201,663) 
 
 Selling expenses                       6          (6,027,938)          (6,244,011) 
 Operating expenses                     6          (4,272,637)          (4,613,752) 
                                            ------------------   ------------------ 
 Operating loss                                    (1,190,700)          (2,488,443) 
 
 Finance income                                            367                  498 
 Finance costs                                           (549)                (834) 
                                            ------------------   ------------------ 
 Finance costs, net                    7                 (182)                (336) 
                                             -----------------   ------------------ 
 
 Loss before income tax                            (1,190,882)          (2,488,779) 
 
 Income tax expense                                          -              (3,540) 
                                            ------------------   ------------------ 
 Loss for the period                               (1,190,882)          (2,492,319) 
 
 
 Attributable to: 
 Equity holders of the Company                     (1,190,882)          (2,492,319) 
 
 
 Loss per share attributable 
  to owners 
   of the Company during the 
    period 
   (expressed in US$ cents 
    per share) 
 
 - Basic                               8                 (2.3)                (6.4) 
 
 
 - Diluted                             8                 (2.3)                (6.4) 
 
 
 

CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

FOR THE SIX MONTHSED 30 JUNE 2016

 
                                                       Unaudited 
                                                   Six months ended 
                                                        30 June 
                                                      2016               2016 
                                                       US$                US$ 
 
 Loss for the period                           (1,190,882)        (2,492,319) 
 
 Other comprehensive (loss)/income: 
  Currency translation differences               (907,041)             48,137 
                                          ----------------   ---------------- 
 Other comprehensive (loss)/income 
  for the period                                 (907,041)             48,137 
                                          ----------------   ---------------- 
 
 Total comprehensive loss for the 
  period                                       (2,097,923)        (2,444,182) 
 
 
 Total comprehensive loss attributable 
  to 
 owners of the Company                         (2,097,923)        (2,444,182) 
 
 

CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION

AS AT 30 JUNE 2016

 
                                                 Unaudited              Unaudited                    Audited 
                                                   30 June                30 June                31 December 
                                 Note                 2016                   2015                       2015 
                                                       US$                    US$                        US$ 
 ASSETS 
 Non-current assets 
 Property, plant and 
  equipment                       9                328,697                302,581                    260,030 
 Intangible assets                10             2,431,930              2,820,022                  2,590,605 
 Deposits                                          171,572                 29,498                    168,037 
                                        ------------------     ------------------         ------------------ 
                                                 2,932,199              3,152,101                  3,018,672 
                                        ------------------     ------------------         ------------------ 
 Current assets 
 Accounts and other 
  receivables, prepayments 
  and deposits                                   5,184,052              4,118,584                  9,030,267 
 Tax recoverable                                         -                  1,460                          - 
 Cash and bank balances            11           11,190,765              3,536,248                 11,981,221 
                                        ------------------     ------------------         ------------------ 
                                                16,374,817              7,656,292                 21,011,488 
                                        ------------------     ------------------         ------------------ 
 
 Total assets                                   19,307,016             10,808,393                 24,030,160 
 
 
 EQUITY 
 Equity attributable 
  to owners of the Company 
 Share capital                     12               51,230                 39,089                     51,150 
 Other reserves                                 28,085,621             18,623,045                 29,147,076 
 Accumulated losses                           (18,251,711)           (17,493,183)               (17,078,149) 
                                        ------------------     ------------------         ------------------ 
 Total equity                                    9,885,140              1,168,951                 12,120,077 
                                        ------------------     ------------------         ------------------ 
 
 LIABILITIES 
 Non-current liabilities 
 Deferred income tax 
  liabilities                                            -                      -                      3,567 
 Obligations under 
  finance leases                                    12,344                  1,172                     14,412 
 Deferred revenue                                  112,607                209,260                     61,789 
                                        ------------------     ------------------         ------------------ 
                                                   124,951                210,432                     79,768 
                                        ------------------     ------------------         ------------------ 
 Current liabilities 
 Accounts and other 
  payables                                       1,337,910              1,483,216                  2,967,993 
 Deferred revenue                                7,487,172              7,487,637                  8,727,155 
 Dividend payable                                  467,729                373,518                          - 
 Obligations under 
  finance leases                                     4,114                  2,357                      4,118 
 Income tax payable                                      -                 82,282                    131,049 
                                        ------------------     ------------------         ------------------ 
                                                 9,296,925              9,429,010                 11,830,315 
                                        ------------------     ------------------         ------------------ 
 
 Total liabilities                               9,421,876              9,639,442                 11,910,083 
                                        ------------------     ------------------          ----------------- 
 Total equity and liabilities                   19,307,016             10,808,393                 24,030,160 
 
 

CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

FOR THE SIX MONTHSED 30 JUNE 2016

Attributable to owners of the Company

 
                                                                                                   Share-based 
                                                                 Capital                               payment 
                             Share              Share         redemption        Translation       compensation          Accumulated 
                           capital            premium            reserve            reserve            reserve               losses              Total 
                               US$                US$                US$                US$                US$                  US$                US$ 
 
 At 1 January 
  2015                      38,763         17,702,373                850            216,288            852,548         (15,006,278)          3,804,544 
 Comprehensive 
  loss: 
  Loss for the 
  period                         -                  -                  -                  -                  -          (2,492,319)        (2,492,319) 
 Other 
 comprehensive 
 income for the 
 period: 
 Currency 
  translation 
  differences                    -                  -                  -             48,137                  -                    -             48,137 
                  ----------------   ----------------   ----------------   ----------------   ----------------   ------------------   ---------------- 
 Total 
  comprehensive 
  income/(loss) 
  for 
  the period                     -                  -                  -             48,137                  -          (2,492,319)        (2,444,182) 
                  ----------------   ----------------   ----------------   ----------------   ----------------     ----------------   ---------------- 
 Transactions 
  with 
  owners in 
  their 
  capacity as 
  owners 
  Employee 
  share potion 
  benefits                       -                  -                  -                  -             21,124                    -             21,124 
 Issue of 
  shares 
  to 
  non-executive 
  directors                     52             65,596                  -                  -                  -                    -             65,648 
 Issue of 
  shares 
  upon exercise 
  of 
  share 
  options                      274            151,285                  -                  -           (56,224)                    -             95,335 
 Transfer to 
  accumulated 
  losses upon 
  forfeiture 
  of share 
  options                        -                  -                  -                  -            (5,414)                5,414                  - 
 Dividend 
  relating 
  to 2014                        -          (373,518)                  -                  -                  -                    -          (373,518) 
                  ----------------   ----------------   ----------------   ----------------   ----------------   ------------------   ---------------- 
 At 30 June 
  2015 
  (unaudited)               39,089         17,545,736                850            264,425            812,034      (17,493,183)             1,168,951 
 
 
 

CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

FOR THE SIX MONTHSED 30 JUNE 2016

Attributable to owners of the Company

 
                                                                                                   Share-based 
                                                                 Capital                               payment 
                             Share              Share         redemption        Translation       compensation          Accumulated 
                           capital            premium            reserve            reserve            reserve               losses              Total 
                               US$                US$                US$                US$                US$                  US$                US$ 
 At 1 January 
  2016                      51,150         28,062,193                850             59,999          1,024,034         (17,078,149)         12,120,077 
 Comprehensive 
  loss: 
  Loss for the 
  period                         -                  -                  -                  -                  -          (1,190,882)        (1,190,882) 
 Other 
 comprehensive 
 loss for the 
 period: 
 Currency 
  translation 
  differences                    -                  -                  -          (907,041)                  -                    -          (907,041) 
                  ----------------   ----------------   ----------------   ----------------   ----------------   ------------------   ---------------- 
 Total 
  comprehensive 
  loss for the 
  period                         -                  -                  -          (907,041)                  -          (1,190,882)        (2,097,923) 
                    --------------     --------------     --------------     --------------    ---------------      ---------------     -------------- 
 Transactions 
  with 
  owners in 
  their 
  capacity as 
  owners 
  Employee 
  share potion 
  benefits                       -                  -                  -                  -            272,661                    -            272,661 
 Issue of 
  shares 
  to 
  non-executive 
  directors                     35             30,483                  -                  -                  -                    -             30,518 
 Allotment of 
  shares 
  to a 
  non-executive 
  director but 
  not 
  yet issued                     -                  -                  -                  -             13,876                    -             13,876 
 Issue of 
  shares 
  upon exercise 
  of 
  share 
  options                       45             21,094                  -                  -            (7,479)                    -             13,660 
 Transfer to 
  accumulated 
  losses upon 
  forfeiture 
  of share 
  options                        -                  -                  -                  -           (17,320)               17,320                  - 
 Dividend 
  relating 
  to 2015                        -          (467,729)                  -                  -                  -                    -          (467,729) 
                  ----------------   ----------------   ----------------   ----------------   ----------------   ------------------   ---------------- 
 At 30 June 
  2016 
  (unaudited)               51,230         27,646,041                850          (847,042)          1,285,772      (18,251,711)             9,885,140 
 
 
 

CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS

FOR THE SIX MONTHSED 30 JUNE 2016

 
                                     Note                Unaudited 
                                                     Six months ended 
                                                          30 June 
                                                        2016               2015 
                                                         US$                US$ 
 Cash flows from operating 
  activities 
  Cash generated from/(used 
   in) operations                   14(a)            330,339        (1,244,684) 
   Interest paid                                       (549)              (834) 
   Income tax paid                                 (122,237)           (13,984) 
                                            ----------------   ---------------- 
 Net cash generated from/(used 
  in) operating activities                           207,553        (1,259,502) 
                                            ----------------   ---------------- 
 
 Cash flows from investing 
  activities 
  Purchase of property, plant 
   and equipment                                   (157,698)          (142,041) 
  Purchase of intangible assets                      (7,120)           (12,121) 
  Interest received                                      367                498 
  Proceeds from disposal of 
   property, plant and equipment    14(b)              1,314                  - 
  Decrease in bank deposits 
   with original maturity of 
   over three months                                       -             40,047 
                                            ----------------   ---------------- 
 Net cash used in investing 
  activities                                       (163,137)          (113,617) 
                                            ----------------   ---------------- 
 Cash flows from financing 
  activities 
  Proceeds from issuance of 
   shares under share option 
   scheme                                             13,660             95,335 
  Repayments of capital element 
   of finance leases                                 (2,072)            (1,741) 
                                            ----------------   ---------------- 
 Net cash generated from 
  financing activities                                11,588             93,594 
                                            ----------------   ---------------- 
 
 Net increase /(decrease) 
  in cash and cash equivalents                        56,004        (1,279,525) 
 
 Cash and cash equivalents 
  at beginning of the period                      11,731,221          4,867,071 
 Effect of foreign exchange 
  rate changes                                     (846,460)           (51,298) 
                                            ----------------   ---------------- 
 Cash and cash equivalents 
  at end of the period                 11         10,940,765          3,536,248 
 
 

NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL INFORMATION

   1              GENERAL INFORMATION 

NetDimensions (Holdings) Limited (the "Company") was incorporated in the Cayman Islands as a limited liability company under the Companies Law (2000) Revision on 10 July 2000. The address of its registered office is P.O. Box 309, Ugland House, South Church Street, George Town, Grand Cayman, Cayman Islands, British West Indies. The address of its head office and principal place of business in Hong Kong is 17/F., Siu On Centre, 188 Lockhart Road, Wan Chai, Hong Kong.

The principal activities of the Company and its subsidiaries (together the "Group") are licensing of computer software and the provision of related services.

The Company's ordinary shares were admitted to trading on the Alternative Investment Market ("AIM") operated by the London Stock Exchange. On 7 August 2012, the Company's ordinary shares were also admitted to trading on the OTCQX platform operated by OTC Markets Group, Inc.

This condensed consolidated interim financial information is presented in United States Dollars ("US$"), unless otherwise stated.

This condensed consolidated interim financial information for the six months ended 30 June 2015 and 2016 have not been audited.

   2              SUMMARY OF SIGIFICANT ACCOUNTING POLICIES 
   (a)          Basic of preparation 

The Company has a financial year end date of 31 December. This condensed consolidated interim financial information for the six months ended 30 June 2016 has been prepared in accordance with International Accounting Standard ("IAS") 34, "Interim Financial Reporting". The condensed consolidated interim financial information should be read in conjunction with the annual financial statements for the year ended 31 December 2015, which have been prepared in accordance with International Financial Reporting Standards ("IFRS") issued by the International Accounting Standards Boards ("IASB").

   (b)          Significant accounting policies 

Except as described below, the accounting policies applied are consistent with those of the annual financial statements for the year ended 31 December 2015, as described in those annual financial statements.

Taxes on income in the interim periods are accrued using the tax rate that would be applicable to expected total annual earnings.

   (i)           Effect of adopting new and amendments to standards and interpretations 

During the year, the Group has adopted all of the new standards, amendments to standards and interpretations issued by IASB that are relevant to the Group's operations and mandatory for annual periods beginning on or after 1 January 2016. The adoption of these new standards, amendments to standards and interpretations did not result in a significant impact on the results and financial position of the Group.

NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL INFORMATION

   2              BASIS OF PREPARATION AND ACCOUNTING POLICIES (CONTINUED) 

(ii) New standards, amendments to standards and interpretations that have been issued but are not yet effective:

 
                                                           Effective 
                                                             for the 
                                                          accounting 
                                                    period beginning 
                                                         on or after 
 
   IAS 7 (Amendments)     Statement of Cash                1 January 
                           Flows                                2017 
   IAS 12 (Amendments)    Income Taxes                     1 January 
                                                                2017 
   IFRS 9                 Financial Instruments            1 January 
                                                                2018 
   IFRS 15                Revenue from Contracts           1 January 
                           with customers                       2018 
   IFRS 16                Leases                           1 January 
                                                                2019 
   IFRS 10 and            Sale of Contribution      To be determined 
    IAS 28 (Amendments)    of Assets between 
                           and Investor and 
                           its Associate or 
                           Joint Venture 
 
 
 
 

The Group will adopt the above new standards, amendments to standards and interpretations to existing standards as and when they become effective. The Group has already commenced the assessment of the impact to the Group and is not yet in a position to state whether these would have a significant impact on its results of operations and financial position.

   3              ESTIMATES 

The preparation of interim financial information requires management to make judgements, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets and liabilities, income and expense. Actual results may differ from these estimates.

In preparing this condensed consolidated interim financial information, the significant judgments made by management in applying the Group's accounting policies and the key sources of estimation uncertainty were that same as those that applied to the consolidated financial statements for the year ended 31 December 2015, with the exception of changes in estimate that are required in determining the provision for income tax.

   4              FINANCIAL RISK MANAGEMENT 

The Group's activities expose it to a variety of financial risks: market risk (including foreign exchange risk and cash flow interest rate risk), credit risk and liquidity risk.

The condensed consolidated interim financial information does not include all financial risk management information and disclosures required in the annual financial statements, and should be read in conjunction with the Group's annual financial statements for the year ended 31 December 2015.

There have been no changes in the risk management department since year end or in any risk management policies since year end.

   5              REVENUE AND SEGMENT INFORMATION 

Revenue represents income from software licensing and the provision of hosting, support and maintenance, software customisation and implementation services recognised during the period and is analysed as follows:

 
                                             Unaudited 
                                         Six months ended 
                                              30 June 
                                            2016               2015 
                                             US$                US$ 
 
  Software licensing                   1,343,175          1,211,213 
  Hosting services                     5,444,844          5,126,514 
  Support and maintenance                551,448            890,118 
  Software customisation and 
   implementation                      3,152,116          3,364,473 
                                ----------------   ---------------- 
                                      10,491,583         10,592,318 
 
 

The chief operating decision-maker ("CODM") has been identified as the executive directors of the Company. Management has determined the operating segments based on the reports reviewed by the CODM that are used to assess performance and allocate resources. The CODM considers the business from the geographic perspective, including North America, Europe, Middle East and Africa ("EMEA"), Asia Pacific and Rest of the World, which are also the Group's reportable operating segments.

The Group's revenue is mainly derived from customers located in North America, EMEA, Asia Pacific and Rest of the World, the Group's facilities and other assets are located predominantly in North America, EMEA, Asia Pacific and Rest of the World.

Segment performance is evaluated based on segment results, which is a measure of adjusted loss before income tax. The adjusted loss before income tax is measured consistently with the Group's loss before income tax, except that amortisation of intangible assets - customer base, unallocated corporate expenses, finance income and finance costs are not allocated to individual segment.

Segment assets consist primarily of property, plant and equipment, intangible assets, accounts and other receivables, prepayments and deposits, and cash and bank balances excluding for corporate use. Cash and bank balances for corporate use are excluded from segment assets.

   5              REVENUE AND SEGMENT INFORMATION (CONTINUED) 

Segmental information for the six months ended 30 June 2016 is as follows:

 
                                                                Rest 
                                                                  of 
                             North                    Asia       the 
                           America        EMEA     Pacific     World               Total 
                               US$         US$         US$       US$                 US$ 
 
  Revenue from 
   external customers    5,051,672   4,157,290   1,032,363   250,258          10,491,583 
 
 
  Segment results        (762,734)    (43,767)     190,055    93,553           (522,893) 
 
  Amortisation 
   of intangible 
   assets - customer 
   base                  (152,235)           -           -         -           (152,235) 
  Unallocated 
   corporate expenses                                                          (515,572) 
  Finance income                                                                     367 
  Finance costs                                                                    (549) 
                                                                        ---------------- 
  Loss before 
   income tax                                                                (1,190,882) 
  Income tax expense                                                                   - 
                                                                        ---------------- 
  Loss for the 
   period                                                                    (1,190,882) 
 
 
  Segment assets         6,815,865   2,897,187   1,615,752         -          11,328,804 
  Unallocated 
   assets                                                                      7,978,212 
                                                                          -------------- 
                                                                              19,307,016 
 
 
  Additions to 
   non-current 
   assets                        -       3,896     160,922         -             164,818 
 
  Depreciation 
   and amortisation        196,498       6,440      46,008         -             248,946 
 
 
   5              REVENUE AND SEGMENT INFORMATION (CONTINUED) 

Segmental information for the six months ended 30 June 2015 is as follows:

 
                                                                    Rest 
                                                                      of 
                               North                      Asia       the 
                             America          EMEA     Pacific     World               Total 
                                 US$           US$         US$       US$                 US$ 
 
  Revenue from 
   external customers      5,027,990     4,150,050     865,212   549,066          10,592,318 
 
 
  Segment results        (1,033,426)   (1,265,246)     126,369   260,780         (1,911,523) 
 
  Amortisation 
   of intangible 
   assets - customer 
   base                    (235,996)             -           -         -           (235,996) 
  Unallocated 
   corporate expenses                                                              (340,924) 
  Finance income                                                                         498 
  Finance costs                                                                        (834) 
                                                                            ---------------- 
  Loss before 
   income tax                                                                    (2,488,779) 
  Income tax expense                                                                 (3,540) 
                                                                            ---------------- 
  Loss for the 
   period                                                                        (2,492,319) 
 
 
  Segment assets           5,080,464     2,873,820   1,365,021    40,002           9,359,307 
  Unallocated 
   assets                                                                          1,449,086 
                                                                              -------------- 
                                                                                  10,808,393 
 
 
  Additions to 
   non-current 
   assets                     99,431         1,666      53,065         -             154,162 
 
  Depreciation 
   and amortisation          280,279         8,029      68,507         -             356,815 
 
 
   6              OPERATING LOSS 

Operating loss is stated after charging the following:

 
                                                    Unaudited 
                                                Six months ended 
                                                     30 June 
                                                   2016               2015 
                                                    US$                US$ 
 
  Auditor's remuneration                         71,549             76,775 
  Amortisation of intangible 
   assets                                       165,771            250,499 
  Depreciation on property, 
   plant and equipment                           83,175            106,316 
  Employee benefit expenses                   7,916,550          8,134,250 
  Legal and professional expenses               412,994            514,812 
  Marketing and promotion expenses              647,028            680,330 
  Operating lease rentals in 
   respect of leased premises                   378,908            355,937 
  Other operating lease rentals                 530,302            514,167 
  Outsourcing fee                               613,161          1,047,170 
  Resell software rights                         33,042             41,162 
  Travel and entertainment expenses             305,954            409,653 
  Other expenses                                718,374            748,027 
                                       ----------------   ---------------- 
  Total cost of sales and selling 
   and operating expenses                    11,876,808         12,879,098 
 
 
  Representing: 
  Cost of sales                               1,576,233          2,021,335 
  Selling expenses                            6,027,938          6,244,011 
  Operating expenses                          4,272,637          4,613,752 
                                       ----------------   ---------------- 
                                             11,876,808         12,879,098 
 
 
 
   7              FINANCE COSTS, NET 
 
                                                         Unaudited 
                                                     Six months ended 
                                                          30 June 
                                                        2016             2015 
                                                         US$              US$ 
 
  Finance income: 
 
    *    Interest income on bank deposits                367              498 
                                              --------------   -------------- 
  Finance costs: 
 
    *    Interest element of finance lease             (549)            (834) 
                                              --------------   -------------- 
 
  Finance costs, net                                   (182)            (336) 
 
 
   8              LOSS PER SHARE 

Basic

Basic loss per share is calculated by dividing the loss attributable to owners of the Company by the weighted average number of ordinary shares in issue during the period.

 
                                           Unaudited 
                                       Six months ended 
                                            30 June 
                                          2016          2015 
 
  Loss attributable to equity 
   holders of the Company (US$)    (1,190,882)   (2,492,319) 
 
 
  Weighted average number of 
   ordinary shares in issue         51,221,190    38,917,530 
 
 
  Basic loss per share (US$ 
   cents per share)                      (2.3)         (6.4) 
 
 
  Diluted 
 

Diluted loss per share is the same as basic loss per share since the exercise of the outstanding share options would have an anti-dilutive effect for the six months ended 30 June 2015 and 2016.

   9              PROPERTY, PLANT AND EQUIPMENT 
 
 
                                                    As at 30 June 
                                               2016                 2015 
                                                US$                  US$ 
 
  Net book value at 1 January               260,030              270,171 
  Additions                                 157,698              142,041 
  Disposals                                 (4,504)              (2,193) 
  Depreciation for the period              (83,175)            (106,316) 
  Exchange differences                      (1,352)              (1,122) 
                                 ------------------   ------------------ 
  Net book value at 30 June 
   (unaudited)                              328,697              302,581 
 
 
 
   10           INTANGIBLE ASSETS 
 
 
                                                     Customer         Computer 
                                  Goodwill               base         software              Total 
                                       US$                US$              US$                US$ 
 
  Net book value 
   at 1 January 
   2016                          1,147,553          1,420,864           22,188       2,590,605 
  Additions                              -                  -            7,120            7,120 
  Disposals                              -                  -                -                - 
  Amortisation 
   for the period                        -          (152,235)         (13,536)        (165,771) 
  Exchange differences                   -                  -             (24)               (24) 
                          ----------------   ----------------   --------------    ---------------- 
  Net book value 
   at 30 June 2016 
   (unaudited)                   1,147,553          1,268,629           15,748       2,431,930 
 
 
 
 
  Net book value 
   at 1 January 
   2015                          1,147,553          1,878,918           32,125       3,058,596 
  Additions                              -                  -           12,121          12,121 
  Disposals                              -                  -            (202)            (202) 
  Amortisation 
   for the period                        -          (235,996)         (14,503)       (250,499) 
  Exchange differences                   -                  7              (1)                6 
                          ----------------   ----------------   --------------    ---------------- 
  Net book value 
   at 30 June 2015 
   (unaudited)                   1,147,553          1,642,929           29,540        2,820,022 
 
 
   11           CASH AND BANK BALANCES 
 
                                                    Unaudited 
                                                    As at 30 June 
                                               2016               2015 
                                                US$                US$ 
 
  Cash on hand                                5,503              5,476 
  Cash at bank                           10,895,212          3,490,718 
  Short-term bank deposits                   40,050             40,054 
                                   ----------------   ---------------- 
  Cash and cash equivalents              10,940,765          3,536,248 
                                   ----------------   ---------------- 
 
  Restricted bank deposits with 
   original maturity of over 
   three months                             250,000                  - 
                                    ---------------    --------------- 
 
  Total cash and bank balances           11,190,765          3,536,248 
 
 
   12           SHARE CAPITAL 

Ordinary shares, issued and fully paid:

 
                                                         Unaudited 
                                                       As at 30 June 
                                       2016                                    2015 
                                     No. of                                  No. of 
                                     shares              US$                 shares              US$ 
  Movements in 
   ordinary shares 
  At 1 January                   51,150,226           51,150             38,762,826           38,763 
  Issue of shares 
   to non-executive 
   directors (note 
   13(b))                            34,639               35                 52,500               52 
  Issue of shares 
   upon exercise 
   of share options 
   (note a)                          45,000               45                273,500              274 
                       --------------------   --------------   --------------------   -------------- 
  At 30 June                     51,229,865           51,230             39,088,826           39,089 
 
 

Note:

(a) During the period ended 30 June 2016, an aggregate of 45,000 share options (30 June 2015: 273,500) were exercised with proceeds of US$13,660 (30 June 2015: US$95,335). The weighted average market value per share at the date of exercise for these share options exercised was GBP 60 pence (30 June 2015: GBP 80.4 pence).

   13           EQUITY SETTLED SHARE-BASED PAYMENTS 

(a) Share option scheme

Pursuant to the share option scheme (the "Plan") approved and adopted on 18 September 2000, the Board of Directors of the Company may offer eligible employees, directors and sales agents rights to subscribe for shares of the Company. The Plan shall be valid and effective for a period of ten years. Pursuant to an ordinary resolution passed at the annual general meeting of the Company on 10 June 2011, the Plan expired on 17 September 2010 is renewed for a further period of ten years, and is to expire on 16 September 2020 (the "Renewed Plan"). The maximum aggregate number of ordinary shares of US$0.001 each which may be issued pursuant to the Renewed Plan is 10,000,000 ordinary shares according to an ordinary resolution passed at the annual general meeting of the Company on 9 June 2014. Options are granted at a price equal to the average market price of the Company's shares on the date of grant. The vesting period is ranged from one year to five years from the date of grant. If the options remain unexercised ten years after the date of grant, the options will expire. Options are forfeited if the relevant option holder leaves the Group before the options vest.

   13           EQUITY SETTLED SHARE-BASED PAYMENTS (CONTINUED) 

(a) Share option scheme (Continued)

The following table discloses the movements of the Company's share options:

 
 
                      2016                           2015 
                               Number    Weighted             Number    Weighted 
                                   of     average                 of     average 
                                share    exercise              share    exercise 
                              options       price            options       price 
                                              US$                            US$ 
 
  As at 1 January           2,989,000       0.840          4,276,000       0.876 
  Granted                   2,480,000       0.802            550,000       1.126 
  Forfeited                 (134,000)       1.017        (1,467,000)       0.990 
  Exercised                  (45,000)       0.303          (273,500)       0.365 
                     ----------------               ---------------- 
  As at 30 June             5,290,000       0.789          3,085,500       0.840 
 
 
  Exercisable as 
   at 30 June               1,780,416       0.653          1,066,250       0.558 
  (unaudited) 
 

Share options outstanding during the periods ended 30 June 2016 and 30 June 2015 are as follows:

 
                                            30 June            30 June 
                                               2016               2015 
                                             Number             Number 
                                                 of                 of 
                                             shares             shares 
                 Exercise price               under              under 
  Expiry date     per share                  option             option 
 
  24/05/2016     US$0.300                         -             20,000 
  28/12/2016     US$0.300                    44,000             49,000 
  12/02/2020     GBP0.18                     80,000             80,000 
  06/12/2020     GBP0.215                   250,000            250,000 
  24/01/2021     GBP0.1925                   50,000             50,000 
  02/01/2022     GBP0.215                   275,000            300,000 
  01/01/2023     GBP0.51                    250,000            250,000 
  05/03/2023     GBP0.44                    100,000            100,000 
  05/05/2023     GBP0.425                   250,000            250,000 
  01/09/2023     GBP0.555                    50,000             50,000 
  14/04/2024     GBP0.73                  1,176,000          1,334,000 
  08/06/2024     GBP0.71                          -              7,500 
  01/09/2024     GBP0.655                    10,000             10,000 
  10/11/2024     GBP0.725                    25,000             25,000 
  13/11/2024     GBP0.715                    10,000             10,000 
  22/04/2025     GBP0.815                   250,000            300,000 
  12/01/2026     GBP0.61                    750,000                  - 
  02/02/2026     GBP0.545                 1,720,000                  - 
                                   ----------------   ---------------- 
                                          5,290,000          3,085,500 
 
 
   13           EQUITY SETTLED SHARE-BASED PAYMENTS (CONTINUED) 

(a) Share option scheme (Continued)

The fair values of share options granted during the period ended 30 June 2016 were calculated using the Binomial Option Pricing Model. The inputs into the model were as follows:

 
  Batch                        i                  ii          iii 
 ------------------  -----------  ------------------  ----------- 
  Date of             13 January          3 February   3 February 
   grant                    2016                2016         2016 
  Closing 
   price at 
   date of 
   grant (GBP)              0.61               0.545        0.545 
  Exercise 
   price (GBP)              0.61               0.545        0.545 
  Expected 
   volatility             51.68%              51.60%       51.60% 
  Expected 
   multiple                    3                   3          1.5 
  Risk-free 
   interest 
   rate                    1.75%               1.52%        1.52% 
  Expected 
   annual dividend 
   yield                   1.02%               1.15%        1.15% 
  Fair value 
   per share 
   option(GBP)             0.299               0.252         0.22 
 
 
 

The expected volatility is based on the average of industry annualised historical stock price volatility as at the date of grant. The expected life is the expected lives of the options which have been taken into account of early exercise behaviour of the option holders.

(b) Pursuant to the terms and conditions of the letter of appointment with the non-executive directors of the Company, an aggregate of 34,639 (30 June 2015: 52,500) ordinary shares of the Company were allotted to them as part of their remuneration package during the period ended 30 June 2016. The fair values of these shares amounting to US$30,518 and US$65,648 respectively.

(c) The Company recognised total expenses of US$317,056 and US$86,772 relating to equity settled share-based payments in the periods ended 30 June 2016 and 30 June 2015 respectively.

(d) Pursuant to the terms and conditions of the letter of appointment with a non-executive director of the Company, an aggregate of 15,750 (30 June 2015: Nil) ordinary shares of the Company were allotted to him as part of his remuneration package for his service during the period ended 30 Jun 2016. The fair value of these 15,750 (30 June 2015: Nil) shares amounted to US$13,876 (30 June 2015: Nil). As at 30 Jun 2016, the shares had not been issued to the director yet.

   14           NOTES TO THE CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS 

(a) Reconciliation of loss before income tax to net cash generated from/(used in) operations:

 
                                                                              Unaudited 
                                                                          Six months ended 
                                                                               30 June 
                                                                             2016               2015 
                                                                              US$                US$ 
 
       Loss before income tax                                         (1,190,882)        (2,488,779) 
       Adjustments for: 
        Amortisation of intangible 
         assets                                                           165,771            250,499 
        Depreciation of property, 
         plant and equipment                                               83,175            106,316 
        Equity settled share-based 
         payments                                                         317,056             86,772 
        Exchange (gain)/loss                                            (168,922)            154,625 
        Finance income                                                      (367)              (498) 
        Finance costs                                                         549                834 
        Loss on disposal of property, 
         plant and equipment                                                3,190              2,193 
        Loss on disposal of intangible 
         assets                                                                 -                202 
                                                                 ----------------   ---------------- 
       Changes in working capital                                       (790,430)        (1,887,836) 
 
         *    Accounts and other receivables, prepayments and 
              deposits                                                  3,799,042          3,946,838 
 
         *    Accounts and other payables                             (1,589,692)        (2,452,223) 
 
         *    Deferred revenue                                        (1,088,581)          (851,463) 
                                                                 ----------------   ---------------- 
       Net cash generated from/(used 
        in) operations                                                    330,339        (1,244,684) 
 
 

(b) In the condensed consolidated statement of cash flows, proceeds from disposal of property, plant and equipment comprise:

 
                                                      Unaudited 
                                                  Six months ended 
                                                       30 June 
                                                     2016               2015 
                                                      US$                US$ 
 
       Net book amount (Note 9)                     4,504              2,193 
       Loss on disposal of property, 
        plant and equipment                       (3,190)            (2,193) 
                                         ----------------   ---------------- 
       Proceeds from disposal of 
        property, plant and equipment               1,314                  - 
 
 

(c) In the condensed consolidated statement of cash flows, proceeds from disposal of intangible assets comprise:

 
                                                       Unaudited 
                                                    Six months ended 
                                                         30 June 
                                                       2016               2015 
                                                        US$                US$ 
 
       Net book amount (Note 10)                          -                202 
       Loss on disposal of intangible 
        assets                                            -              (202) 
                                           ----------------   ---------------- 
       Proceeds from intangible assets                    -                  - 
 
 

This information is provided by RNS

The company news service from the London Stock Exchange

END

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