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Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
---|---|---|---|---|---|
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 | |
---|---|---|---|---|---|---|---|---|---|---|
0.00 | 0.00% | 253.50 | 0.00 | 01:00:00 |
Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
---|---|---|---|---|---|
0 | 0 | N/A | 0 |
RNS Number:3553T Vebnet Holdings PLC 21 March 2007 VEBNET (HOLDINGS) PLC INTERIM RESULTS Vebnet, the AIM-listed, leading provider of technology and other employee benefit solutions, confirms further strong growth in its core FIX&FLEX(R) business during the most recent six months ended 31 December 2006. This latest half-year period saw continuing increases in customer/ employee enrolment numbers and also steady progress in the first three months after the acquisition of loss-making 4th Contact Limited. Vebnet has offices in Edinburgh and London. Unaudited Unaudited Audited Six months Six months Year ended ended ended 31 December 31 December 30 June 2006 2005 2006 #'000 #'000 #'000 Turnover 2,102 2,077 3,910 EBITDA (40) 165 339 (Loss)/Profit before tax (100) 68 180 (Loss)/Earnings per share (1p) 1p 2p Net assets 2,518 1,290 2,411 Net cash 1,076 1,351 2,672 Highlights * Strong growth in core FIX&FLEX(R) business in every respect: - Revenues from core business increased in this period 42% to #1,703k (#1,200k). - Direct channel now delivers 71% of core revenues, reflecting the investment made in sales and marketing resources in 2006. - The number of employees using FIX&FLEX(R) as at 31 December 2006 was 216,336, an increase of 25% from 30 June 2006. - Customer numbers (excluding 4th Contact) increased from 86 to 105, an increase of 22%. - As at 31 December 2006, the recurring revenue (for the six month period) was #906k, up from #626k for the equivalent period in 2005, an increase of 45%. - Add-on sales to existing clients grew by #328k. * Overall revenue increased slightly from #2,077k to #2,102k. Within this, the revenue contribution from Prudential UK development work reduced significantly from #878k to #118k (a reduction of #760k) in the six-month period. This reflected a decision by Prudential UK, following a restructure and strategic review, to focus on core business and therefore not to invest further in a worksite marketing solution. * Costs increased from #1,912k to #2,142k, representing our investment to extend the management team, in the last quarter of 2006, to drive and support the growth in core business plus 4th Contact's post acquisition costs between 2 October 2006 and the half year-end. In addition, there was #170k of incremental technology staff costs incurred in the period to December 2006 (in anticipation that the Prudential UK worksite marketing development contract would be extended) which will not fully recur in the second half of the year. * 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, will be earnings neutral in our current financial year ending 30 June 2007 and earnings enhancing in future financial years. * Trading since the half-year-end has also been encouraging: - The number of implementations currently targeted for the second half of the financial year is 14, adding at least a further 26,000 new employee enrolments. - New customers include BUPA (4,500 employees) and Centrica (10,000 employees). - Vebnet has added a contact centre capability to its range of services providing telephone support in both the enrolment cycle and throughout the benefit year for three of its clients. - The technology 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 around FIX&FLEX(R) and providing support for 4th Contact's client base. - Vebnet has been engaged to work with Prudential Asia as they develop their employee benefit proposition for this key regional market. - Vebnet continues to look for and evaluate acquisition opportunities in which there are strong synergies with its existing businesses and which will be earnings and value enhancing. Derek Scott, Chairman, stated: "Vebnet continues to build up its core business. All measures of progress exhibit solid growth characteristics." Referring to current trading and prospects, Derek Scott added, "Business in the first ten weeks of the new calendar year has been encouraging. Already we have gained new and relatively large customers for FIX&FLEX(R) and remain very confident about the Company's ability to sustain this growth in the UK in future years. We continue to look for opportunities to add shareholder value through profitable sales growth in the UK and in certain overseas markets, and by synergistic acquisitions, while at the same time working closely with clients of our European distribution partner network." The Chairman also stated that "The financial impact of the Prudential's decision, to exit the worksite marketing business in the UK, will be restricted to the current financial year. In spite of a significant loss in associated revenue, the Board is confident, due to strong growth in Vebnet's core business and underlying seasonality, of meeting market expectations of profit before tax for the full year to 30 June 2007." 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 | | onathanwright@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. Interim announcement The first half to 31 December 2006 was a further period of significant growth in Vebnet's core business. All measures of progress exhibit solid growth characteristics. Financial Review Revenues from Vebnet's core FIX&FLEX(R) business increased in this period 42% to #1,703k (#1,200k). As at 31 December 2006, the recurring revenue component of this (for the six month period) was #906k, up from #626k for the equivalent period in 2005, an increase of 45%. In the half-year, total revenue increased slightly from #2,077k to #2,102k. Within this, the revenue contribution from Prudential UK development work reduced significantly from #878k to #118k (a reduction of #760k). This reflected a decision by Prudential UK, following a restructure and strategic review, to focus on core business and therefore not to invest further in a worksite marketing solution. Costs increased from #1,912k to #2,142k, representing our investment to extend the management team, in the last quarter of 2006, to drive and support the growth in core business plus 4th Contact's post acquisition costs between 2 October 2006 and the half year-end. In addition, there was #170k of incremental technology staff costs incurred in the period to December 2006 (in anticipation that the Prudential UK worksite marketing development contract would be extended) which will not fully recur in the second half of the year. As a result, pre-tax profit for the six months reduced from #68k for the equivalent period in 2005 to a loss of #100k. Basic earnings per share reduced from 1p to a loss of 1p. Net cash at 31 December 2006 was #1,076k against a 30 June 2006 cash balance of #2,672k. Trade debtors at 31 December 2006 were #1,782k reflecting the large number of renewal clients as of 1 January each year. We believe that there is minimal bad debt exposure in this number. Finally, Vebnet (Trustee) Limited was established as a wholly owned subsidiary of Vebnet (Holdings) plc. In the six-month period, Vebnet (Trustee) Limited purchased 40,000 shares on behalf of the Employee Share Option Scheme (ESOP). Commercial and Market Review The number of employees using FIX&FLEX(R) as at 31 December 2006 was 216,336, an increase of 25% from 30 June 2006. Customer numbers (excluding 4th Contact) increased from 86 to 105, an increase of 22%. Throughout this six-month period, we started to introduce new services to existing clients, which resulted in additional revenue of #328k. Much of this is development revenue and is therefore non-recurring, but illustrates demand from within our client base for new functionality and services. Our direct channel now delivers 71% of core revenues, reflecting the investment made in sales and marketing resources in 2006. This channel also produces higher margins for Vebnet in software licence fees. Our licence channel delivered lower volume of new business but of all of which is of consistently high quality. We implemented a Holiday Pay Fund Scheme for one client in September 2006 that generated #52k in revenue over the period. To support this activity, we created a separate subsidiary called Vebnet (Services) Limited which acts as the Holiday Pay Fund Manager. This is not a service offering that we will actively promote in the future, but rather one that we have delivered in response to a particular customer request. In terms of competition, we continue to be well positioned. We have visibility of most tenders that come to market and win a large proportion of these either directly or with/through one of our distribution partners. Our sales pipeline is developed through a variety of marketing activities including PR, prospect seminars, outbound calling and joint events with partners all of which are proving effective. 4th Contact 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. 4th Contact is a provider of online Total Reward Statement and flexible benefits technology to 67 clients with over 20,000 enrolled employees. All 4th Contact members of staff have relocated to Vebnet's London office and all client retention and recurring revenue targets, post acquisition, are being met. For the six-month period, 4th Contact contributed #229k to revenues and was breakeven. This acquisition, which was previously loss-making, will be earnings neutral in our current financial year ending 30 June 2007 and earnings enhancing in future financial years. Prudential Update The decision by Prudential UK to exit the worksite marketing space impacted both top line revenue and ongoing costs. We recruited additional technology resource in May/June 2006 in anticipation that the next phase of development would commence. An investment decision from Prudential UK was repeatedly delayed, which impacted our six-month numbers. The impact of this will also be felt in the second half of the year, as revenues from Prudential UK for the entire year are currently estimated at #235k against a plan of #1,135k. Vebnet has, however, been engaged to work with Prudential Asia as they develop their employee benefit proposition for this key regional market. Current Trading and Prospects Business in the first ten weeks of the new calendar year has been encouraging. Already we have gained new and relatively large customers for FIX&FLEX(R). The number of implementations currently targeted for the second half of the financial year is 14, adding at least a further 26,000 new employees. New customers include BUPA (4,500 employees) and Centrica (10,000 employees). Vebnet has added a contact centre capability to its range of services providing telephone support in both the enrolment cycle and throughout the benefit year for three of its clients. The technology cost base has been re-aligned to reflect Prudential UK's decision to exit the worksite marketing business and headcount reduced to a level reflecting a core business delivery model around FIX&FLEX(R) and providing support for 4th Contact's client base. We continue to look for opportunities to add shareholder value through profitable sales growth in the UK and in certain overseas markets, and evaluate acquisition opportunities in which there are strong synergies with our existing business and which will be earnings and value enhancing. The Board are very confident about the Company's ability to sustain this growth in the UK in future years. We continue to look for opportunities to add shareholder value through profitable sales growth in the UK and in certain overseas markets, while at the same time working closely with clients of our European distribution partner network. The financial impact of Prudential's decision, to exit the worksite marketing business in the UK, will be restricted to the current financial year. In spite of a significant loss in associated revenue, the Board is confident, due to strong growth in Vebnet's core business and underlying seasonality, of meeting market expectations of profit before tax for the full year to 30 June 2007. Derek SCOTT, CHAIRMAN 21 MARCH 2007 Unaudited Consolidated Profit and Loss Account for the six months to 31 December 2006 Unaudited Unaudited Audited Six months ended Six months Year 31 December 2006 ended ended #'000 31 December 30 June 2005 2006 #'000 #'000 TURNOVER 2,102 2,077 3,910 Cost of sales (1,102) (907) (1,595) GROSS PROFIT 1,000 1,170 2,315 Administrative expenses (1,147) (1,119) (2,199) (LOSS)/OPERATING PROFIT (147) 51 116 Net interest receivable and similar income 47 17 64 (LOSS)/PROFIT ON ORDINARY ACTIVITIES BEFORE TAXATION (100) 68 180 Tax (charge) on ordinary activities -- -- -- (LOSS)/PROFIT ON ORDINARY ACTIVITIES AFTER TAXATION (100) 68 180 (LOSS)/EARNINGS PER SHARE Basic (loss)/earnings per (1p) 1p 2p share Unaudited Consolidated Balance Sheet at 31 December 2006 Unaudited Unaudited Audited At At At 31 December 31 December 30 June 2006 2005 2006 #'000 #'000 #'000 FIXED ASSETS Tangible assets 999 396 303 CURRENT ASSETS Debtors 2,087 858 888 Cash at bank and in hand 1,076 1,351 2,672 3,163 2,209 3,560 CREDITORS: amounts falling due within one year (1,644) (1,315) (1,452) NET CURRENT ASSETS 1,519 894 2108 TOTAL ASSETS LESS CURRENT LIABILITIES 2,518 1,290 2,411 CREDITORS: amounts falling due after more than one year - - - NET ASSETS 2,518 1,290 2,411 CAPITAL AND RESERVES Called up share capital 9,324 8,475 9,178 Share premium account 640 273 579 Other reserves (2,950) (2,950) (2,950) Profit and loss account (4,496) (4,508) (4,396) EQUITY SHAREHOLDERS' FUNDS 2,518 1,290 2,411 Unaudited Consolidated Cash Flow Statement for the six months to 31 December 2006 Unaudited Unaudited Audited Six months Six months Year ended ended ended 31 December 31 December 30 June 2006 2005 2006 #'000 #'000 #'000 Net cash inflow/(outflow) from operating activities (1,093) 137 438 Returns on investments and servicing of finance 61 18 53 Capital expenditure and financial investment (131) (120) (137) Taxation -- -- -- Acquisitions and disposals (671) -- -- Net cash inflow/(outflow) (1,834) 35 354 before financing Financing 197 (9) 992 Increase/(decrease) in cash for the period (1,637) 26 1,346 Reconciliation of net cash flow to movement in net funds Increase/(decrease) in cash in (1,637) 26 1,346 the period Cash outflow from capital element of finance lease 8 16 24 payments Change in net funds arising from cash flows (1,629) 42 1,370 New finance leases -- -- -- Movement in net funds in the (1,629) 42 1,370 period Net funds at the beginning of 2,661 1,291 1,291 the period Net funds at the end of the 1,032 1,333 2,661 period Operating profit/(loss) (147) 51 116 Depreciation and amortisation 107 113 223 Movement in stock (57) 84 -- Movement in debtors (1,197) 108 174 Movement in creditors 201 (219) (75) Net cash inflow/(outflow) from operating activities (1,093) 137 438 Notes to the Interim Results Statement 1.The 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.This Interim Statement for the six months ended 31 December 2006 is unaudited and has 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 Interim Report are being sent to shareholders and are also available at the Company's head office, 5-9 Thistle Street, Edinburgh, EH2 1DF, or from the Company's website at www.vebnet.com. 4.The earnings per share calculation is based on the loss on ordinary activities after taxation of #100,000 (2005: profit of #68,000) and on the weighted average number of shares in the period of 9,249,594 (2005: 8,470,917). 5.The Directors have not declared an interim dividend. This information is provided by RNS The company news service from the London Stock Exchange END IR SEEFWSSWSEFD
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