1st Aug 2005 07:00
Manpower Software PLC01 August 2005 MANPOWER SOFTWARE PLC ("MSW" OR "THE COMPANY") RESULTS FOR THE YEAR ENDED 31 MAY 2005 CHAIRMAN'S STATEMENT Results I am pleased to report on a satisfactory performance for the year as a wholefollowing a successful second half's trading in 2005. Revenue in the secondhalf of the financial year was £3.9m (first half: £2.0m), making £5.9m for theyear as a whole (2004: £5.1m). As a result, the Company made a profit in thesecond half of £1.0m. The profit for the year as a whole was £328,000, slightlyless than 2004's result of £455,000. However, importantly, the Company has madea considerable investment this year in key personnel for the purpose of drivinggrowth in 2005/6, it has been profitable for two consecutive years and retains astrong cash balance (£1.46m at the year-end). The performance during the year reflected progressive implementation by themanagement team, under the leadership of Richard Morgan-Evans, of strategicactions designed to improve scalability, remove barriers to growth and positionthe Company to achieve profitable growth in the current year and beyond. Theincrease in full year revenues reflects the early successes of a long-termstrategy to develop significantly the global defence and UK healthcare markets.Particularly, the Company achieved significant contract wins with the BritishArmy (HQ Land Command) and two UK NHS trusts. The growth was achieved withoutfurther large licence fee sales into the maritime industry, historically ourmajor market. Management of the Company is focussed on continuing substantial improvements inoperational effectiveness, leveraging the considerable potential of the MAPSsoftware products and establishing Manpower Software as an internationalsupplier of software products and services. The changes cover four principal areas. First, the operational structure of the Company has been aligned closely to itscore markets. Manpower Software currently addresses three verticals: Maritime,Defence and the UK NHS. We have established three vertical sales-led groupswith the products and services for each supplied by horizontal functionalgroups. Manpower Software, therefore, is focussed entirely on the requirementsof its customers at every level, in markets that are substantial in size and inwhich we have established credibility with our product solutions, marketknowledge and impressive reference installations. Second, the direct and indirect sales capabilities have been expanded,particularly in Defence and the NHS where the Company has signed allianceagreements with Alphawest Services Pty Limited (Defence) and Specialist ComputerCentres plc (NHS). Manpower Software believes that it now has access tosubstantial markets that can support rapid growth for some years. Third, the Customer Services function, headed by Clive Cummins, has beenreorganised to enable shorter delivery times, using standard product andbusiness processes, and implementation methodologies. The profitable deliveryof software implementations and customer support, and the establishment of agrowing installed base of users in all verticals, is an essential component of ascaleable software company. Fourth, in Product Development, we have recently recruited David Wheeler to theposition of Group Product Director. David will accelerate the focus ondelivering standard products, thereby enabling shorter sales cycles, quick andeffective delivery and a higher proportion of revenue from licence fees. It isour intention that revenue growth should increasingly be driven by new licencesales. Each of our markets offers substantial potential for growth. In Defence, we signed our largest ever contract to supply our MAPS ForceGeneration software to HQ Land Command, British Army. The contract has a valueof £3.6m over six years, with an option to proceed with further projects valuedup to £0.4m in the first three years of the contract. Including the amountunder option and amounts already under contract, the total amount under contractwith HQ Land is £5.2m. With additional contracts awarded by the Defence MedicalServices (£0.4m) and NATO (£0.2m), the Company has critical mass and credibilityto supply its products into the global defence market. This market offersconsiderable potential for Manpower Software at a time when an increasing numberof defence forces worldwide are reorganising to meet new threats and arerecognising the importance and value added by our MAPS software. Thepartnership agreement signed with Alphawest Services Pty Ltd in Australia haspositioned the Company to achieve the first of these overseas sales in the Asia/Pacific region. In the NHS, breakthrough sales of our MAPS Healthroster product solution intothe second and third Trusts have been achieved. MAPS Healthroster has theflexibility to manage the NHS's complex rostering requirements and deal withstaff shortage problems. It delivers significant cost savings andrecommendations for better deployment of staff, thereby benefiting patients aswell as staff. Budgets for temporary staff can be robustly managed at wardlevel and local management made accountable for cost and quality. Workingthrough our partner, Specialist Computer Centres plc, we agreed five yearlicensing sales of our ward and theatre duty rostering software, MAPSHealthroster, to Ashford & St Peter's NHS Trust (£0.4m) and North Tees andHartlepool NHS Trust (£0.5m). Potentially, our solution is of value to a largenumber of NHS Trusts, some of whom are currently in contractual negotiation withus. In Maritime, during a period when our recent contract wins have been movingthrough the implementation phase, our cruise industry customers have not neededto make major new investments in our software. However, we remain convinced ofour ability to grow within our installed base, to further penetrate the cruisemarket and to extend our sales into the broader shipping market following the APMoller success in 2003. The management team, having achieved a great deal in the last twelve months, isfocussed on developing Manpower Software as a company positioned to rapidlyexploit the MAPS software in the Maritime, Defence and UK NHS markets. Thefoundations for strong growth have been established with a new operationalstructure, key appointments and expanded sales and services teams, and focussedproduct development. The strategic contracts achieved in the UK and NATODefence and UK NHS markets are an indication of the attractions of our solutionand its competitiveness. Manpower Software plc is a company small in comparison to the majority of itscustomers, which are typically large, blue chip organisations, having severaltens of thousands of staff and multi-billion pound turnovers, and licence feevalues from new contract sales are often large in relation to budgeted costs.Accordingly, in any financial year, the precise outturn between the first andsecond halves will remain dependent upon the timing of closure of new business.This being said, the direction for the on-going profitable expansion of theCompany is now clear and, although much additional work remains to be completed,I am confident of our ability to achieve further substantial improvements inperformance in 2005/6 and beyond. Robert Drummond CHAIRMAN 1 August 2005 CONSOLIDATED PROFIT AND LOSS ACCOUNTFOR THE YEAR ENDED 31 MAY 2005 Note 2005 2004 £ £ Turnover 5,909,466 5,146,663 Cost of sales (4,148,844) (3,520,722) Gross profit 1,760,622 1,625,941 Administrative expenses (1,431,885) (1,268,215) Operating profit 328,737 357,726 Net interest 7,402 31,180 Profit on ordinary activities before taxation 336,139 388,906 Tax on profit on ordinary activities 2 (7,483) 66,246 Profit retained and transferred to reserves 328,656 455,152 Earnings per shareBasic 0.7p 1.0p Diluted 0.7p 1.0p CONSOLIDATED BALANCE SHEETAS AT 31 MAY 2005 Note 2005 2004 £ £Fixed assetsTangible assets 119,182 199,942 Current assetsDebtors 2,985,472 1,636,841Cash at bank and in hand 1,465,837 1,444,888 4,451,309 3,081,729 Creditors: amounts falling due within one year (1,919,976) (1,011,032) Net current assets 2,531,333 2,070,697 Total assets less current liabilities 2,650,515 2,270,639 Capital and reservesCalled up share capital 2,223,154 2,212,254Share premium account 6,456,299 6,429,879Profit and loss account (6,028,938) (6,371,494)Equity shareholders' funds 2,650,515 2,270,639 CONSOLIDATED CASH FLOW STATEMENTFOR THE YEAR ENDED 31 MAY 2005 Note 2005 2004 £ £ Net cash inflow/(outflow) from operating activities 81,813 (519,799) Returns on investments and servicing of financeInterest received 7,734 34,868Interest paid - (2,022)Finance lease interest paid (332) (1,666)Net cash inflow from returns on investments and servicing of finance 7,402 31,180 Taxation (7,483) 66,246 Capital expenditure and financial investmentPurchase of tangible fixed assets (69,958) (102,528)Cash inflow/(outflow) before financing and management of liquid 11,774 (524,901)resources Management of liquid resourcesSale of short term deposits 1,267,840 532,160 FinancingIssue of ordinary shares 37,320 -Loan repayments (15,160) (34,757)Capital element of finance leases (12,985) (27,507)Net cash inflow/(outflow) from financing 9,175 (62,264) Increase/(decrease) in cash 1,288,789 (55,005) NOTES TO THE CONSOLIDATED CASH FLOW STATEMENTFOR THE YEAR ENDED 31 MAY 2005 RECONCILIATION OF OPERATING PROFIT TO NET CASH FLOW FROM OPERATING ACTIVITIES 2005 2004 £ £ Operating profit 328,737 357,726Depreciation charges 148,578 148,925Foreign exchange movement 16,040 (6,254)Increase in debtors (1,348,631) (75,704)Increase/(decrease) in creditors 937,089 (944,492)Net cash inflow/(outflow) from operating activities 81,813 (519,799) RECONCILIATION OF NET CASH FLOW TO MOVEMENT IN NET FUNDS 2005 2004 £ £ Increase/(decrease) in cash in the year 1,288,789 (55,005)Cash outflow from decrease in debt 28,145 34,757Change in net debt resulting from cash flows 1,316,934 (20,248)Decrease in liquid resources (1,267,840) (532,160)Payment of finance leases - 27,507Increase/(decrease) in net funds in the year 49,094 (524,901)Net funds at beginning of the year 1,416,743 1,941,644Net funds at end of the year 1,465,837 1,416,743 ANALYSIS OF CHANGE IN NET FUNDS At 1 June At 31 May 2004 2005 Cash flow £ £ £ Cash at bank and in hand 1,444,888 20,949 1,465,837Less: short term deposits (1,267,840) 1,267,840 - 177,048 1,288,789 1,465,837Short term deposits 1,267,840 (1,267,840) -Debt (15,160) 15,160 -Finance leases (12,985) 12,985 - 1,416,743 49,094 1,465,837 OTHER PRIMARY STATEMENTSFOR THE YEAR ENDED 31 MAY 2005 Statement of Total Recognised Gains and Losses 2005 2004 £ £ Profit for the financial year 328,656 455,152Currency differences on opening reserves 13,900 (8,801)Total recognised gains and losses for the year 342,556 446,351 BASIS OF PREPARATION The financial information set out above does not constitute statutory accountswithin the meaning of Section 240 of the Companies Act 1985. The results for the year ended 31 May 2005 and the balance sheet at that datehave been extracted from the statutory accounts of the group for that year, uponwhich the Company's auditors, Grant Thornton UK LLP, have issued an unqualifiedaudit report under Section 235 of the Companies Act 1985. The accounts for theyear ended 31 May 2005 will be filed with the Registrar of Companies followingthe Annual General Meeting. The financial information for the year ended 31 May2005 has been prepared on the basis of the accounting policies set out in theaccounts for the year ended 31 May 2004. The comparative figures for the year ended 31 May 2004 have been extracted fromthe statutory accounts of the group for that year, filed with the Registrar ofCompanies, which carried an unqualified audit report. TAXATION There was a US tax charge of £7,483 during 2005. A UK research and developmenttax credit was received in 2004. DIVIDENDS No dividends were paid or proposed during either 2005 or 2004. EARNINGS PER SHARE The calculations of earnings per share are based on the following results andnumbers of shares: 2005 2004 £ £ Profit for the financial year 328,656 455,152 Weighted average number of shares Number of Number of shares shares £ £ For basic earnings per share 44,383,053 44,245,086 For diluted earnings per share 45,702,541 45,412,834 A copy of the Annual Report and accounts will be sent to all shareholders. Acopy of this preliminary announcement is available from the Company's registeredoffice: The Communications Building, 1st Floor, 48 Leicester Square, London WC2H7LU. -------------------------- This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
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