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Share Name | Share Symbol | Market | Type |
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EDP SA | TG:EDP | Tradegate | Ordinary Share |
Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
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0.07 | 1.88% | 3.798 | 3.791 | 3.805 | 3.796 | 3.725 | 3.725 | 12,283 | 22:50:13 |
RNS Number:5520S Electronic Data Processing PLC 27 November 2003 27 November 2003 Electronic Data Processing PLC (EDP) Preliminary results for the year ended 30 September 2003 EDP is the largest IT solution provider to the UK independent Builders and Timber Merchants market place and a leading supplier to the wholesale distribution industry. Financial Highlights: * Turnover #8.7 million (2002: #8.5 million). * Revenue from software licences, professional services and hosting services up 10%. * Profit before exceptional items and goodwill amortisation #1.0 million (2002: loss #297,000) after R & D expenditure of #1.74 million (2002: #1.84 million). * Research & Development tax credit of #628,000. * Earnings per share 3.97p (2002: loss per share 5.03p). * Cash balances as at 30 September of #5.7 million. * Final dividend of 1.663p per share (2002: 1.594p). * Overall dividend of 2.369p per share (2002: 2.300p), an increase of 3%. Business Highlights: * Some improvement in demand for Group software products and hosted services despite tough trading conditions. * Quantum VS XML Highway well received. * Development of next generation software products well underway. * New financial year has begun well with major new client for hosted services. Michael Heller, Chairman of EDP, said: "Although there has been some improvement in demand, trading conditions in the sector do remain tough. However, with the launch of our new products, I remain optimistic about the medium-term prospects for the Group as we move to becoming a higher margin software and services orientated organisation and anticipate we will continue to achieve acceptable profitability in the year ahead." For further information please contact: Richard Jowitt Julian Wassell Chief Executive Financial Director 0114 2622001 0114 2622007 www.edp.fastfreenet.com Chairman's Statement Group pre-tax profit for the year to 30 September 2003, before exceptional items and goodwill amortisation, was #1.0 million compared with a loss of #297,000 in 2002. Turnover rose to #8.7 million and this compares with #8.5 million in the prior year. These substantially improved results are to be welcomed at a time of continuing difficult trading conditions in the computer services sector generally. Revenues from software licences, professional services and application hosting services grew by 10% to #6.1 million. This growth was partially offset by the continuing anticipated decline in the value of computer equipment maintenance revenues. We have continued the process of managing down the Group cost base and the benefits of this process are now showing through in these results as we transition the business into that of being wholly a deliverer of software and services. The exceptional items relate to reorganisation and legal costs. These amount to #88,000 and #475,000 respectively. The exceptional legal charge represents the disposal of litigation, issued against a former BCT customer for copyright infringement, which it finally admitted but against which we did not recover our full costs. The goodwill charge of #159,000 is in respect of the acquisitions of Disys and BCT, which is being amortised over five years. The final amortisation charge will be taken in the year to 30 September 2005. The Group has won certain important new contracts for its software products and hosted services during the year, including orders for Quantum VS XML Highway, which have produced significant initial fees when they closed in the last quarter. These new contracts will steadily make an improving contribution to profits as recurring revenues flow from completed customer implementations. Recurring revenues in the year amounted to #5.6 million, 64% of turnover. We have continued our commitment to Research and Development, spending #1.74 million, compared with #1.84 million last year. This expenditure, which is essential to safeguard our future, has been written off to Profit and Loss. We have now claimed an additional 50% tax deduction for novel and innovative Research and Development, under the provisions of the Finance Act 2000, and this has generated an additional tax credit of #628,000. This matter is dealt with more fully in the Chief Executive's Statement. The Group's balance sheet remains strong at #14.5 million, representing net assets per share of 59.4p as at 30 September 2003. Cash balances were some #5.7 million and the Group's freehold property portfolio, at net book value, was #9.2 million. The Group continues to seek to use these cash balances for the acquisition of similar software solution providing businesses. Your Directors propose to pay a final dividend of 1.663p per share which, together with the interim dividend of 0.706p per share paid on 1 August, represents an overall increase of 3% for the year. The final dividend will be paid on 7 April 2004 to shareholders on the register at 5 March 2004. The shares will be ex-dividend on 3 March 2004. Although there has been some improvement in demand, trading conditions in the sector do remain tough. However, with the launch of our new products, I remain optimistic about the medium-term prospects for the Group as we move to becoming a higher margin software and services orientated organisation and anticipate we will continue to achieve acceptable profitability in the year ahead. MICHAEL HELLER Chairman 26 November 2003 Chief Executive's Statement Although trading conditions remain tough we are seeing some improvement in demand as the market begins to take on board the business benefits to be achieved by trading electronically. The return to pre 2000 levels of activity is still some way off and, in my opinion, will begin to accelerate when next generation products become available. The generational change in the technology used to engineer software application solutions for the future, and about which I reported in my last statement, is gathering pace around the world, coalescing around web services, software bus and re-useable object component technologies. These underlying technologies are something into which we have conducted exhaustive research and they are being used in the delivery of our next generation products, all branded Quantum VS. This is an important and exciting time in computing history, which occurs once every twenty or twenty-five years. As reported in my statement last year, our subsidiary BCT won a copyright infringement case against a former customer. However, despite a legal appeal, BCT did not recover its full costs and these have been fully reflected in the exceptional charge. Most importantly, as a result of this action, the integrity of BCT's copyright protection has been preserved. Operational Review The implementations of Quantum VS XML Highway have proceeded to plan and we anticipate further orders for this important software technology in the months and years ahead. Additional functionality has been incorporated, enhancing its capability to send proofs of delivery, for example, from hand-held tablet devices operated in the field, using bar code scanning and GPRS transmission technologies. The Quantum VS XML Highway is a highly specialised, functional and technically complex software product which utilises the Group ISP facility, fastfreenet.com. Highway is being licensed to existing clients and other independent software vendors who do not have the technical or financial resources to develop their own equivalent product. Some twenty users have now implemented the powerful Quantum VS myViewpoint Business Intelligence and Decision Support solution. Users of myViewpoint are achieving considerable benefit from the highly refined management information extracted from their corporate data warehouses, which is automatically delivered to them in a familiar 'point & click' environment. This information is generated from comparisons with personal, pre-determined business metrics, highlighting any and all anomalies through a multi-layer traffic light warning mechanism. The results from myViewpoint are available to users at their desktops and over the Internet, making the delivery of sophisticated Business Intelligence easily accessible at any time from anywhere. Many more prospective clients are evaluating Quantum VS myViewpoint and we expect further significant orders for this product in the years ahead. After an exhaustive research programme, completed by our Advanced Research & Development organisation, our next generation software products are now in development. The implementation of the Windows interface for our four existing distribution applications will enable the tight integration of our products with third-party 'best of breed' software, such as warehouse management systems. This technology has been successfully proven through the implementation of two important client third-party warehouse management systems. First delivery of the Windows-enabled products is scheduled for May 2004. Other integration programmes are underway and these include Customer Relationship Management systems. In parallel with this work, the development of the underlying re-usable object business components for our next generation distribution software product is underway. This exciting development will bring together all the complex and comprehensive functionality of our existing software products into a single product set, delivered in a leading edge, flexible and extensible system architecture, which will have a product life cycle of twenty to twenty-five years. This product design enables existing clients to transition to the next generation easily and without disruption. Client Support Services Once again, our client support groups have performed well in the delivery of dependable services in an increasingly complex, multi-vendor IT environment. ' Making it work and keeping it working' is the primary function undertaken by our exceptionally talented support services teams who are dedicated to our clients and are highly regarded by them. Our support teams carry out their duties in a professional manner and go to great lengths to solve problems irrespective as to 'whose fault it is', although we may not have supplied the particular product. In today's service orientated businesses, too often, the 'it's not my problem' approach, is the great difficulty experienced by many computer users who have complex systems sourced from multiple vendors. Our support teams recognise the need for our clients to keep their multi-user systems up and running and I pay particular tribute to their performance and dedication. Financial Review The return to profitability, with pre-tax profits of #1.0 million before exceptional items and goodwill amortisation, on turnover marginally ahead at #8.7 million, is to be welcomed. This compares with a loss of #297,000 on turnover of #8.5 million in the prior year. The increase of 10% in software licences, professional services and application hosting services revenues is significant. In the last quarter certain important transactions that we had been working on throughout the year closed, enabling initial fees to be invoiced. Work is progressing on these implementations and recurring revenues will be billed when live running commences. Recurring revenues in the year under review were maintained at #5.6 million representing 64% of turnover. These results include the benefit of the reduction that has been made in the Group cost base, where we continue to focus our attention. This has been achieved whilst maintaining the high level of service we provide to our clients. The cost base reduction has primarily affected our computer engineering services organisation as new computers now regularly come with up to three years manufacturer's warranty. Reorganisation costs in the year amounted to #88,000 and the exceptional legal charge of #475,000 is in respect of the final costs incurred in the litigation proceedings issued against a former BCT customer for copyright infringement, which it finally admitted. We have now claimed the additional tax allowance for small and medium sized companies, introduced by Government from 1 April 2000, for expenditure on novel and innovative Research and Development. This has resulted in a tax credit of #628,000, of which #173,000 relates to the year under review. Once our claims have been agreed by the Inland Revenue, we should obtain a tax refund of #123,000. The balance of the allowances are included in our tax losses carried forward of #1.9 million, which have a potential tax saving value of #575,000. Advantage was taken of the weakness in the Group share price when, on 30 May, the Group bought back for cancellation 250,000 ordinary shares at a price of 53p each, absorbing cash of #132,500. The Group balance sheet remains strong with cash balances of some #5.7 million and freehold property assets, at net book value, of some #9.2 million. Net assets per share as at 30 September 2003 are 59.4p. Outlook The new financial year has begun well with the winning of a major new national distributor client for the Group's hosted e-business product suite, including the Quantum VS XML Highway managed service. A major marketing effort is now underway to increase the number of new clients for this important service. Activity levels in the sector remain subdued. However, the strength of the Group product sets and our innovative Research & Development programmes, which are delivering important new software products, aimed at our existing client base, other Independent Software Vendors and the business market place generally, ensure that the Group remains highly competitive. Finally, I want to thank all our members of staff for their continued hard work and dedication in providing high quality service levels to our clients, at a time of great change and increased complexity in the information technology services field. RICHARD J. JOWITT Chief Executive 26 November 2003 Consolidated Profit and Loss Account for the year ended 30 September 2003 2003 2002 #'000 #'000 Turnover - continuing operations 8,686 8,480 Operating Costs - ongoing 8,064 9,171 - net exceptional items (note 6) 563 938 (8,627) (10,109) Operating profit / (loss) - continuing operations 59 (1,629) Interest receivable 229 239 Interest payable and other similar charges (4) (4) Profit / (loss) on ordinary activities before taxation 284 (1,394) Tax on profit / (loss) on ordinary activities 691 145 Profit / (loss) on ordinary activities after taxation 975 (1,249) Dividends paid and proposed (578) (567) Profit / (loss) for the financial year 397 (1,816) Earnings / (loss) per share 3.97p (5.03p) Earnings / (loss) per share before exceptional items and goodwill 6.22p (0.61p) amortisation Dividends per share 2.37p 2.30p Net assets per share 59.4p 57.8p Consolidated Balance Sheet at 30 September 2003 2003 2003 2002 2002 #'000 #'000 #'000 #'000 Fixed assets Intangible assets 454 720 Tangible assets 9,939 10,298 10,393 11,018 Current assets Stocks 544 626 Debtors 2,637 2,581 Investments 23 40 Cash at bank and in hand 5,726 5,790 8,930 9,037 Creditors: amounts falling due within one year (2,060) (2,643) Net current assets 6,870 6,394 Total assets less current 17,263 17,412 liabilities Provisions for liabilities (18) (302) and charges Deferred income (2,759) (2,871) Net assets 14,486 14,239 Capital and reserves Called up share capital 1,220 1,233 Share premium account 77 77 Revaluation reserve 933 944 Capital redemption reserve 88 75 Profit and loss account 12,168 11,910 Equity shareholders' funds 14,486 14,239 Consolidated Cash Flow Statement for the year ended 30 September 2003 2003 2003 2002 2002 #'000 #'000 #'000 #'000 Net cash inflow from operating 445 454 activities Returns on investments and servicing of finance Interest received 249 259 Interest paid (4) (3) Interest element of finance lease - (1) rentals 245 255 Taxation Corporation tax (paid) / received (11) 192 Capital expenditure and financial investment Purchase of tangible fixed assets (79) (164) Sale of tangible fixed assets 25 18 Sale of investments 17 17 (37) (129) Equity dividends paid (565) (575) Net cash inflow before use of liquid 77 197 resources and financing Management of liquid resources Decrease in short term deposits 59 403 Financing Purchase of own shares (133) (518) Repayment of capital element of finance (1) (4) leases (134) (522) Increase in cash in the year 2 78 Statement of Total Recognised Gains and Losses for the year ended 30 September 2003 2003 2002 #'000 #'000 Profit / (loss) for the financial year 975 (1,249) Currency translation differences on foreign (17) (27) currency net investments Total recognised gains and losses 958 (1,276) for the year Notes (1) The results to 30 September 2003 have been prepared in accordance with the accounting policies to be adopted in the full financial statements, and are the same as those policies used in the preparation of the accounts for the year ended 30 September 2002. The Group's accounting policy for turnover and revenue recognition is as follows: Turnover represents the sales of goods and services at invoiced value less amounts relating to future periods and excluding value added tax and transactions between Group Companies. Revenues are recognised when there are no significant vendor obligations remaining and the collection of the resulting receivable is considered probable. Revenue from the sale of initial licences for software products is recognised upon delivery of the product to customers. Recurring licence fees are recognised evenly over the period to which they relate. Revenue from the provision of professional services, including training, implementation and consultancy, is recognised when the services have been performed and invoiced. Computer equipment sales are recognised on delivery to customers. Equipment maintenance charges are recognised evenly over the period to which they relate. (2) The financial information set out above does not constitute the Company's statutory accounts for the years ended 30 September 2003 or 2002. Statutory accounts for 30 September 2002 have been delivered to the registrar of companies, and those for 2003 will be delivered following the Company's annual general meeting. The auditor has reported on those accounts; its reports were unqualified and did not contain a statement under section 237 (2) or (3) of the Companies Act 1985. (3) In the opinion of the Directors, the Group has only one class of trade. For further information, the following analysis of turnover is given: 2003 2002 #'000 #'000 Software licences, professional 6,118 5,543 services & application hosting services Computer equipment, engineering 2,568 2,937 maintenance & network services 8,686 8,480 Notes (continued) (4) Earnings / (loss) per share is calculated by dividing the profit for the year after taxation of #975,000 (2002: loss of #1,249,000) by 24,568,115 (2002: 24,829,074) being the weighted average number of shares in issue during the year. Basic and diluted earnings per share are the same. Earnings / (loss) per share before exceptional items and goodwill amortisation is calculated by dividing the profit for the year after taxation, but before exceptional items and goodwill amortisation, of #1,697,000 (2002: loss of #152,000) by 24,568,115 (2002: 24,829,074) being the weighted average number of shares in issue during the year, and is reconciled to basic earnings per share as follows: 2003 2002 Basic earnings / (loss) per 3.97p (5.03p) share Exceptional items 2.29p 3.78p Tax effect of exceptional (0.69p) - items Goodwill amortisation 0.65p 0.64p Adjusted earnings / (loss) 6.22p (0.61p) per share (5) Goodwill amortisation of #159,000 (2002: #159,000) has been charged to the profit and loss account during the year. This relates to goodwill arising from the acquisitions of Disys Associates Limited and BCT Software Solutions Limited. (6) Operating costs includes the 2003 2002 following exceptional items: #'000 #'000 Legal costs 475 629 Costs relating to potential - 254 acquisitions Reorganisation & redundancy 88 55 costs 563 938 (7) Reconciliation of operating result to net cash inflow from operating activities 2003 2002 #'000 #'000 Operating profit / (loss) 59 (1,629) Depreciation and 676 774 amortisation Changes in working capital (290) 1,309 and other non-cash items Cash inflow from operating 445 454 activities Notes (continued) (8) Reconciliation of net cash flow to movement in net funds 2003 2002 #'000 #'000 Increase in cash in the year 2 78 Repayment of capital element of 1 4 finance leases and hire purchase contracts Cash inflow from short term (59) (403) deposits Change in net funds from cash (56) (321) flows Exchange differences (7) (12) Movement in net funds (63) (333) Net funds at 1 October 5,789 6,122 Net funds at 30 September 5,726 5,789 (9) This preliminary announcement was approved by the Board of Directors on 26 November 2003 This information is provided by RNS The company news service from the London Stock Exchange END FR NKAKKFBDDADB
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