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Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
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Vebnet (Hldgs) | LSE:VBT | London | Ordinary Share | GB0032392986 | ORD �1 |
Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
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0.00 | 0.00% | 253.50 | 0.00 | 01:00:00 |
Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
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0 | 0 | N/A | 0 |
RNS Number:7736D Vebnet Holdings PLC 13 September 2007 VEBNET (HOLDINGS) PLC PRELIMINARY RESULTS YEAR ENDED 30 JUNE 2007 Vebnet, the AIM-listed, leading UK provider of technology and other employee benefit solutions, announces strong advances in its business during the year. Substantial growth was achieved in revenues and pre-tax profits. The company's customer base has grown by 38% and nearly 250,000 employees now use its core FIX &FLEX(R) technology. Vebnet has profitably extended its range of services to include consultancy, communications, helpdesk and outsourced administration. It has successfully turned around its 2006 acquisition, 4th Contact, into profit. Un-audited Audited Un-audited Year ended Year ended Six months ended 30 June 2007 30 June 2006 31 December 2006 #'000 #'000 #'000 Turnover 5,245 3,910 2,102 EBITDA 532 339 (40) Profit/(Loss) before tax 329 180 (100) Earnings/(Loss) per sha 3.5p 2p (1p) Net assets 2,858 2,411 2,518 Cash in hand 1,894 2,672 1,076 Highlights * Forward momentum in core FIX&FLEX(R) business in every important respect: - Revenues from core business increased in this period by 33% to #3,845k (#2,900k). - Direct channel now delivers 70% of new sales, reflecting the return on investment made in sales and marketing resources in 2006. - The number of employees using FIX&FLEX(R) during the year increased by 42%. At 30 June 2007 this totalled to 244,924. - FIX&FLEX(R) customer numbers increased from 86 to 119, an increase of 38% - New direct customers included BUPA (4,500 employees), Centrica (10,000 employees) and Kingston Communications (2,500 employees). * Vebnet acquired 4th Contact Limited ("4th Contact") from Star Technology Services Limited, part of Messagelabs Group, in October 2006 for a maximum consideration of #661k. This acquisition, which was previously loss-making, contributed #613k in revenues and #43k in post tax profit for the year ending 30 June 2007. * Revenues from continuing operations increased from #3,910k to #5,245k, an increase of 34% despite a reduction in revenue from Prudential UK of #424k. * Vebnet added an employee helpdesk to its range of services and now provides telephone support to 11 of its clients. The number of clients who outsource administration to Vebnet increased to 17. * Vebnet launched the UK's first-ever payroll giving carbon offset scheme in partnership with PURE the Clean Planet Trust charity. This initiative allows individuals to calculate their domestic carbon emissions online and offset these through a charitable donation via payroll in a tax efficient way. First clients for this product have been Centrica and Swiss Re. * Trading since the year-end has been very encouraging: - Scheduled implementations for the current financial year is 22, worth #1,200k in new revenue. - In addition, our forward sales pipeline is very strong, underpinning both our FY08 and FY09 revenue plans. - Vebnet continues to look for and evaluate acquisition opportunities in which there are strong synergies with existing businesses and which will be earnings and value enhancing. Derek Scott, Chairman, stated: "We have achieved much this year. The core business has again grown substantially over the course of 12 months, and we have exceeded market expectations in both top line and bottom line measures. " Referring to current trading and prospects, Derek Scott added, "Business in the first ten weeks of the new financial year has been very encouraging. The Board remain confident that this rate of growth will be sustainable in future years. We continue to look out for opportunities to add shareholder value through profitable sales growth both here in the UK and in certain key overseas markets." Enquiries Vebnet Gerry O'Neill (CEO) 0131 270 5502; 07990 584096 gerryo@vebnet.com Stephen Thurlow (CFO) 0131 270 5503; 07899 912522 stephent@vebnet.com Seymour Pierce (NOMAD and broker) Jonathan Wright 0207 107 8000 jonathanwright@seymourpierce.com Note to Editors Vebnet's business is to develop, distribute and implement valuable and cost effective internet-based solutions and services to support the communication, delivery and administration of flexible employee benefit schemes. VEBNET (HOLDINGS) PLC PRELIMINARY RESULTS YEAR ENDED 30 JUNE 2007 INTRODUCTION Vebnet specialises in the development, deployment and support of internet-based technology for fixed and flexible employee benefits and online Total Reward Statements (TRS). Founded in 2000 and admitted to AIM in 2003, Vebnet has rapidly become one of the UK's leading providers of this technology. Through extensive, specialist experience of the employee benefits market, Vebnet is able, working alone or with partners, to identify and implement the realistic business case behind successful use of flexible benefits. This will ensure that clients are able to achieve a return on their investment. Vebnet launched its core FIX&FLEX(R) product in 2002. This is both sold on a direct basis and distributed via some of the UK's leading benefit consultants and a select group of other strategic partners. FINANCIAL HIGHLIGHTS Vebnet maintained its year-on-year growth in developing its core business with sizeable increases in customer numbers, top-line and recurring revenues, EBITDA and pre-tax profit. Turnover from continuing operations increased by 34% to #5,245k (2006 - #3,910k). This was despite a reduction in revenue from Prudential UK of #424k reflecting a decision by Prudential UK not to invest further in their worksite-marketing proposition. Revenues from Vebnet's core FIX&FLEX(R) product increased by 33% to #3,845k (2006 - #2,900k). Recurring licence and renewal revenue at the year-end also increased from #1,787k pa to #2,521k pa, an increase of 41%. Vebnet generated significant new revenues of #856k from existing clients through selling additional services including bespoke consultancy, development, helpdesk, communications and outsourced administration Vebnet acquired 4th Contact Limited ("4th Contact") from Star Technology Services Limited, part of Messagelabs Group, in October 2006 for a maximum consideration of #661k. This acquisition, which was previously loss-making, contributed #613k in revenues and #43k in profit for the year ending 30 June 2007. Intangible assets represent goodwill arising on the acquisition of 4th Contact. Operating costs increased from #3,794k to #4,990k, reflecting : * Our investment to extend the management, sales and marketing teams in the last quarter of 2006, in order to drive and support the growth in core business * 4th Contact's post-acquisition costs between 2 October 2006 and 30 June 2007 * Costs associated with the Prudential development project. Vebnet's development cost base has been re-aligned to reflect Prudential UK's decision to exit the worksite marketing business and headcount has been reduced to a level reflecting a core business delivery model consolidated around FIX& FLEX(R) and providing improved support for 4th Contact's client base. The company delivered a pre- and post-tax profit of #329k (2006 - #180k) and basic earnings per share increased from 2.0p to 3.5p. Vebnet will adopt for the first time International Accounting Standards - IFRS, from next financial year. The principal differences will be in the capitalisation of certain research and development costs and amortisation of intangible assets. Research and development costs written-off in the current financial year were #1,429k (2006 - #1,359k). Amortisation of intangible assets in the current year was #92k. The Directors will be investigating how much of such expenditure will in the future be required to be capitalised and amortised over it's useful life. SALES FIX&FLEX(R) As of 30 June 2007, 244,924 employees were accessing FIX&FLEX(R) compared with 171,994 on 30 June 2006, an increase of 42%. Our pre-existing client base also extended the number of their employees accessing FIX&FLEX(R) by approximately 14,000. Clients increased by 33 to 119. Although our client base covers most sectors of the market, we are very strong in the Telecommunications, Professional Services and Financial Services sectors. Last year we allocated additional resources to implement a series of marketing initiatives focussed on increasing the number of clients won through our direct channel. This channel delivered 70% of new sales, representing 23 new clients covering 37,000 employees and generating #1.1m of revenue. New direct customers won in the UK included BUPA (4,500 employees), Centrica (10,000 employees) and Kingston Communications (2,500 employees). Overseas we implemented a new flex scheme in Spain for Banesto (part of Banco Santander) and one in Hong Kong for Prudential (Asia). Approximately 60% of our new clients had less than 1,000 employees initially accessing FIX&FLEX(R) but with most of these organisations we believe there is potential to extend the offering to other areas of their business and a wider employee base. However, the majority of more recent client wins has been with employers with more than 1,000 employees. Working Wealth Vebnet acquired 4th Contact (including its Working Wealth application) in October 2006 and the business has been turned around into profitability. All client retention and recurring revenue targets, post acquisition, are being met. At 30 June 2007 19,138 employees were accessing Working Wealth. Since October 2006, however, two clients have switched from Working Wealth to FIX&FLEX(R) and we expect more clients to follow in the second half of the current financial year. Holiday Pay Fund During the year a separate subsidiary was created called Vebnet (Services) Limited to act as a holiday pay fund manager for some of our existing clients. In the year we have implemented four such arrangements, generating revenues of #201k. OPERATIONS Throughout the year we restructured our organisation around business units that are more aligned to the delivery of client services - Implementation, Helpdesk & Administration and Scheme Rollovers. New business units will, going forward, be managed as profit-driven business units with their own KPIs aligned to Vebnet's overall business objectives. As we grow the business, we have introduced a number of initiatives around key business processes to ensure even greater efficiency in delivery and quality across all clients. These initiatives, together with enhanced focus on developing the talents of our people, will be the foundation of our next phase of organic growth. PRODUCT DEVELOPMENT FIX&FLEX(R) continued to evolve as a product and a number key elements of functionality were added this year to support new client implementations. One major component was the HR importer - a critical module for accurate importing and processing of key HR change data including leavers, joiners and lifestyle events. This is now embedded within the set-up and configuration functionality of FIX&FLEX(R). The result is that bespoke and complex HR interfaces can now be built as configuration options rather than developed on an individual basis by the software engineering team. This means faster implementation cycles and much improved quality. There have also been a number of architectural changes to FIX&FLEX(R) including the implementation of our strategic web and application server architecture (Jboss/ Linux) into the v2.33 release. We also physically moved our infrastructure stacks to a new hosting partner, Lumison, in March 2007. This provides our clients and partners with both increased quality and improved resilience. ADDITIONAL SERVICES We have continued to grow the bespoke consulting side of our business and now around 75% of new direct client wins includes a consultancy component. For communications we have developed core product toolkits for clients and also offer a customised benefits communication service involving a variety of media - print, web and animation. Vebnet, Mercer and ING Direct, were recognised with the Employee Benefits 2007 Award for "Most Successful New Benefits Launch". Much of this was down to effective combination of both online and offline communication to drive awareness and participation in the new ING Direct flex scheme. In February 2007, Vebnet added an employee helpdesk capability to its range of services and now provides telephone support in both the enrolment cycle and throughout the benefit year for 11 of its clients. We have also extended the number of outsourced administration clients to 17. Vebnet is always striving to bring innovation to the employee benefits market. In February 2007 we launched the UK's first-ever payroll giving carbon offset scheme in partnership with PURE the Clean Planet Trust charity. This initiative allows individuals to calculate their domestic carbon emissions online and offset these through a charitable donation via payroll in a tax efficient way. First clients for this product have been Centrica and Swiss Re. MARKET The market for flexible benefit technology solutions in the UK continues to grow and is buoyant. In total we estimate that on both a direct and indirect basis Vebnet technology is used in at least 30% of new flex schemes that go live each year in the UK - making us market leader. We believe this is a strong endorsement of the underlying technology, the quality of our people and our multi-channel distribution strategy. Our sales pipeline for new flex schemes is strong and we have also been successful in benefiting from the inevitable churn we are beginning to see, particularly with mid to large flex schemes where clients are going out to tender to replace an existing provider. Our view is that superior technology for flexible benefits will not in itself be a differentiator in the market. Differentiation will come from the combination of market leading technology and a service offering of direct benefit to our clients' business. We still, however, envisage that FIX&FLEX(R) will be a key component in the standardisation of flexible benefit scheme administration. The market remains fragmented and we believe there will be further consolidation in the years ahead. COMPETITION We believe the characteristics that differentiate Vebnet from other technology competitors are: * The depth of functionality, and ease of configuration, of FIX&FLEX(R). * The quality of our clients and partners. * The accumulated knowledge base and experience. * The quality, energy and dedicated commitment of our people. Our main target market (employers with more than 1,000 employees), unlike the low functionality, commoditised SME sector, is the one where our experience and technological edge make us an ideal solution provider. We believe there will be opportunities to extend our partner network as other employee benefit consultants re-evaluate their present offer, establish more effective partnerships for the provision of technology and focus on their own key strength - consulting services. This year we added Towers Perrin as a new UK partner in March 2007 and have already won new business with them. Our ethos is all about creating innovative employee benefit solutions, delivered on market leading technology and representing good value for money. MARKET PROFILE This year Vebnet messages have reached a circulation of well over one million readers in printed publications alone. If you extend this to online, the actual readership/circulation figure is inevitably much higher. Coverage of our products and services is now extending from the employee benefit trade press to the wider HR community via key magazines like People Management, HR Magazine and Personnel Today. Our Head of Flexible Benefits Consulting, Marcus Underhill, is quoted extensively as a subject expert in employee benefits and rewards. This puts us in a strong position to influence the shape of the market in the future, thus ensuring that the products and services we offer are aligned to the areas of biggest opportunity. SENIOR MANAGEMENT TEAM AND BOARD During the year Vebnet strengthened its management team with two further senior appointments - Rachel Ferguson as HR Director and Pat Appleby. Rachel, previously a senior HR professional at Prudential (UK), will have both an internal facing role, driving a number of HR initiatives to support the strong growth Vebnet is experiencing, as well as key client facing work. Pat, who previously worked at Mercer HR Consulting, is responsible for the delivery of benefit communication services to clients. Finally, Evan Davidge, a leading industry expert on reward strategy and implementation, was appointed as a consultant to Vebnet in August 2006 and Graeme Bissett, a leading corporate financier, was appointed as a strategic advisor to the Vebnet (Holdings) plc Board in February 2007. CURRENT TRADING & OUTLOOK Business in the first ten weeks of the new financial year has also been very encouraging: * Scheduled implementations for the current financial year is 22, adding at least a further 65,000 employees and #1,200k in new revenue. * A series of core process re-engineering activities and internal HR initiatives have been introduced and are progressing well as we scale the business. Our forward sales pipeline is very strong, underpinning both our FY08 and FY09 revenue plans. We are seeing further momentum in Vebnet's core business and the Board remains confident that this rate of growth will be sustainable in future years. We continue to look out for opportunities to add shareholder value, through profitable sales growth in both the UK and in certain key overseas markets, and also by seeking synergistic acquisitions which will be both earnings and value enhancing. Derek Scott Chairman 13 September 2007 Unaudited Consolidated Profit and Loss Account for the year ended 30 June 2007 Unaudited Unaudited Audited Year ended Six months ended Year ended 30 June 2007 31 December 2006 30 June 2006 #'000 #'000 #'000 TURNOVER Existing Operations 4,632 1,873 3,910 Acquisitions 613 229 -- ------------ ------------ ------------ Continuing Operations 5,245 2,102 3,910 Cost of sales (2,295) (1,102) (1,595) ------------ ------------ ------------ GROSS PROFIT 2,950 1,000 2,315 Administrative expenses (2,695) (1,147) (2,199) ------------ ------------ ------------ OPERATING PROFIT/(LOSS) Existing Operations 212 (177) 116 Acquisitions 43 30 -- ------------ ------------ ------------ Continuing Operations 255 (147) 116 Interest payable and similar charges (1) - (3) Interest receivable and similar income 75 47 67 ------------ ------------ ------------ PROFIT/(LOSS) ON ORDINARY ACTIVITIES BEFORE TAXATION 329 (100) 180 Tax (charge) on ordinary -- -- -- activities ------------ ------------ ------------ PROFIT/(LOSS) ON ORDINARY ACTIVITIES AFTER TAXATION 329 (100) 180 ============ ============ ============ EARNINGS/(LOSS) PER SHARE Basic earnings/(loss) per share 3.5p (1p) 2.0p Diluted earnings/(loss) per share 3.5p (1p) 2.0p Statement of total recognised gains and losses There were no recognised gains or losses in the current or prior year other than those included in the profit and loss account. Unaudited Consolidated Balance Sheet at 30 June 2007 Unaudited Unaudited Audited At At at 30 June 2007 31 December 2006 30 June 2006 #'000 #'000 #'000 FIXED ASSETS Intangible assets 649 -- -- Tangible assets 334 999 303 ------------ ------------ ------------ 983 999 303 CURRENT ASSETS Debtors 2,262 2,087 888 Cash at bank and in hand 1,894 1,076 2,672 ------------ ------------ ------------ 4,156 3,163 3,560 CREDITORS: amounts falling due within one year (2,281) (1,644) (1,452) ------------ ------------ ------------ NET CURRENT ASSETS 1,875 1,519 2,108 ------------ ------------ ------------ TOTAL ASSETS LESS CURRENT LIABILITIES 2,858 1,519 2,411 ------------ ------------ ------------ NET ASSETS 2,858 2,518 2,411 ============ ============ ============ CAPITAL AND RESERVES Called up share capital 9,324 9,324 9,178 Share premium account 639 640 580 Other reserves (2,951) (2,950) (2,951) Profit and loss account (4,154) (4,496) (4,396) ------------ ------------ ------------ EQUITY SHAREHOLDERS' FUNDS 2,858 2,518 2,411 ============ ============ ============ Unaudited Consolidated Cash Flow Statement for the year ended 30 June 2007 Unaudited Unaudited Audited Year Six months Year ended ended ended 30 June 31 December 30 June 2007 2006 2006 #'000 #'000 #'000 Net cash (outflow)/inflow from operating activities (77) (1,072) 438 Returns on investments and servicing of finance 89 61 53 Capital expenditure and financial investment (224) (68) (137) Acquisitions and disposals (468) (468) -- ----------- ----------- ---------- Net cash (outflow)/inflow before financing (680) (1,547) 354 Financing (98) (49) 992 ----------- ----------- ---------- (Decrease)/increase in cash for the period (778) (1,596) 1,346 =========== =========== ========== Reconciliation of net cash flow to movement in net funds (Decrease)/increase in cash in the period (778) (1,596) 1,346 Cash outflow from capital element of finance lease payments 11 8 24 ----------- ----------- ---------- Movement in net funds in the period (767) (1,588) 1,370 Net funds at the beginning of the period 2,661 2,661 1,291 ----------- ----------- ---------- Net funds at the end of the period 1,894 1,073 2,661 =========== =========== ========== Reconciliation of operating profit/(loss) to net cash inflow from operating activities Operating profit/(loss) 255 (147) 116 Depreciation and amortisation 278 107 223 Movement in debtors (1,383) (1,167) 174 Movement in creditors 773 135 (75) ----------- ----------- ---------- Net cash (outflow)/inflow from operating activities (77) (1,072) 438 =========== =========== ========== Notes to the Results Statement 1. The audited/unaudited results above do not amount to statutory accounts within the meaning of Section 240 of the Companies Act 1985. Statutory accounts for the year ended 30 June 2006 have been filed with the Registrar of Companies. The Auditors' Report on these accounts was unqualified. 2. The Preliminary Results for the year ended 30 June 2007 are unaudited and have been prepared on the basis of the accounting policies set out in the audited report and accounts for the year ended 30 June 2006. 3. Copies of the Annual Accounts will be sent to shareholders together with notice for the AGM to be held in Edinburgh on 28 November 2007 and will be available at the Company's office, 5-9 Thistle Street, Edinburgh, EH2 1DF, or from the Company's website at www.vebnet.com. 4. There is no taxation charge for the period due to the availability of brought forward trading losses. 5. The basic earnings per share is based on the profit on ordinary activities after taxation of #329k (2006: #180k) and on the weighted average number of shares in issue during the year of 9,324k (2006: 9,178k). 6. The diluted earnings per share is calculated as above except for the inclusion within the weighted average number of shares in issue of 33,296 potential shares deriving from share options in issue during the year, calculated in accordance with Financial Reporting Standard 22 "Earnings per Share". 7. The Directors do not propose the payment of a final dividend. 8. The Preliminary Results were approved by the Board of Directors on the 12 September 2007. This information is provided by RNS The company news service from the London Stock Exchange END FR UUUBRBWRKAAR
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