26th Jun 2007 08:18
Advanced Smartcard Technologies plc26 June 2007 ADVANCED SMARTCARD TECHNOLOGIES PLC INTERIM RESULTS 2007 Advanced Smartcard Technologies plc (RIC: SMRT/L) ("the Company"), the Scottishbased software group specialising in smartcard technology, today announces itsinterim results for the period to 31 March 2007. • Turnover £630,000 (2006: £700,000)• Operating loss £47,000 (2006 restated: profit £117,000)• Announcement today of a £18.7million recommended cash offer of 7.25 pence per share by Trainline Investments Holdings Limited ("TTL") for the entire issued and to be issued share capital of the Company Tom Doyle, Non-executive Chairman commented: " The Company continues to progress towards its longer-term strategic objectivesand although we have made a small operating loss in the first six months of theyear, this is due to slippage of certain key contracts which we expect toreceive before the end of the financial year. We therefore remain confident thatwe can deliver on management's expectations. We have also today announced a recommended cash offer of 7.25 pence per sharefrom TTL for the entire issued and to be issued share capital of the Company.Further details are set out in the offer announcement released today, and theoffer document to be sent to shareholders. Your Independent Directors believe that the offer by TTL is one which should beput to shareholders and have given undertakings to accept the offer in respectof their own shareholdings. The offer represents a significant premium toyesterday's closing share price and enables shareholders to make a return ontheir investment whilst removing the risks associated with the size and stage ofdevelopment of the Company. " -ends- Date: 26 June 2007 For further information contact: Advanced Smartcard Technologies plc 01355 813430Tom Doyle, Non Executive ChairmanDavid Braddock, Chief ExecutiveStephen Naylor, Finance Director SVS Securities 020 7638 5600Ian CallawayPeter Manfield WH Ireland Limited 0161 832 2174David Youngman NOTES TO EDITORS About Advanced Smartcard Technologies plc Advanced Smartcard Technologies plc, through its wholly owned subsidiary EcebsLimited, is an innovative software company operating in the dynamic andexpanding smartcard arena. The Company joined AIM in December 2005. It providessmartcard technology to a wide range of user markets including transport, ID,finance and local and national government departments and blue-chip companies.It has developed and patented an innovative technology solution, brandedMultefileTM, that is designed to radically improve the way smartcard softwareapplications are developed and deployed. The key feature of the software is itsability to reduce development time and cost while increasing clientfunctionality and ease of use resulting in an increase in the flexibility ofsmartcard solutions. MultefileTM can be used not only in conventional contact and contactlesssmartcards but also in a variety of other 'smart' devices such as mobiletelephones. Non Executive Chairman's Statement It was announced today that the Independent Directors of the Company and theBoard of Trainline Investments Holdings Limited ("TTL") have reached agreementon the terms of a recommended cash offer to be made for the entire issued and tobe issued share capital of the Company at 7.25 pence per share (the "Offer"). It is proposed that David Braddock and Barry Hochfield will, subject to theOffer becoming wholly unconditional, have a financial interest in the combinedgroup. Consequently, Stephen Naylor and I, who will have no financial interestin the combined group, have been appointed as the Independent Directors, andhave taken responsibility for considering the Offer. The Independent Directors, who have been so advised by Altium Capital Limitedacting as Rule 3 adviser to the Company, consider the terms of the Offer to befair and reasonable and, accordingly, are unanimously recommending thatshareholders accept the Offer. The Company's directors and certain members oftheir respective immediate families and connected persons who hold AST shareshave irrevocably undertaken to accept the Offer, and, in the case of DavidBraddock and Barry Hochfield, to sell their shares to Trainline under the ShareExchange Agreement, in respect of, in aggregate, 100,332,109 ordinary shares of0.03 pence each, representing approximately 41.8% of the current issued ordinaryshare capital of the Company. Whilst enjoying success in a market of significant potential, the Company is asmall business exposed to risk and is highly dependent on others to implementand deploy its products. The nature of the product also entails long contractlead times and the timing of sales is difficult to predict. Earlier this year, we started to work with TTL with a view to them taking alicence for our MultefileTM technology for use in the travel and transportsector. It was during this period that it became clear to us that TTL couldenable the Company to penetrate the transport market much faster through massdeployments of our technology. TTL's offer represents a significant premium on yesterday's closing share priceand enables shareholders to realise their investment whilst removing the risksassociated with the size and stage of development of the Company. Chief Executive's Statement The Company continues to progress towards its longer-term strategic objectivesand although we have made a small operating loss in the first six months of theyear, this is due to slippage of certain key contracts which we expect toreceive before the end of the financial year. We therefore remain confident thatwe can deliver on management's expectations. Financial results Turnover for the half year was £630,000 (2006: £700,000) on which there was anoperating loss of £47,000 (2006 restated: profit £117,000). Sales and marketing development As part of our growth strategy, we have made a commitment to increasinginvestment in our sales and marketing capability. Our focus continues to be onthe major opportunities in our chosen target market areas, which will yieldlong-term profitability and growth. By their very nature these opportunitiestend to have longer sales cycles but with the correspondingly larger reward onconclusion. Our efforts in such markets are yielding positive progress withinvolvement in major prospective projects where MultefileTM could be core to theproposition. Success in these landmark projects would subsequently acceleratethe uptake of MultefileTM in other similar projects. Additionally, ouractivities in these markets frequently take place alongside major blue chipcompanies who would provide additional routes to market. We are pleased toannounce that we have entered into a licence agreement with Trainline.comLimited, a subsidiary of TTL, in respect of MultefileTM for use in selling itsproduct suite into the UK market which should provide an excellent referencesite for other projects. Product refinement MultefileTM technology differs radically from that of established players in thesmartcard arena in that it is not specific to any particular market sector andcan be managed by the card issuers themselves. Therefore it is applicable toareas as diverse as payment, transport, anti-counterfeiting, government,identity, GSM, biometrics, health and welfare. The capability for card issuersto amend, add and delete new functionality, via a series of drop-down menus,coupled with secure technology, is becoming a compelling proposition. Not onlycan it enable existing requirements to be provided in a more efficient manner,it also enables niche applications to be introduced alongside more mainstreamones. This improves dramatically the benefit of smartcards both to issuers andusers. In addition, MultefileTM is not limited in physical form. It can be used notonly in conventional contact and contactless smartcards but also in a variety ofother 'smart' devices such as mobile telephones. We are continuing to progress MultefileTM development and are confident ofmeeting our requirements in this area. We believe that this strategic investmentin having world-class products will produce long-term benefits as the marketdevelops and demand for our technology increases. Customers and prospects We have continued to partner with several blue-chip clients and are pursuingsignificant new opportunities, which lead us into exciting growth markets. Our list of sales prospects remains strong with many good opportunities to takeus further into our chosen niche markets. There have been significantdevelopments in these markets during the period. In the transport industry inthe UK the announcement of the English National Concessionary Transport Scheme(ENCTS) being adopted in 2008 lends itself to our technology particularly inrelation to the inter-operable ticketing standard, ITSO. Similarly, major UKtransport groups are now commencing the procurement of smartcard transportticketing technology. Successful initial deployments of our transport technologyin Scotland and the North West of England, where transactions are now beingmeasured in millions, bode well for future growth. It is envisaged that overeleven million smartcards will be deployed in England for ENCTS. Deployment inEngland, coupled with the developments in Scotland and those being planned inWales could lead to the world's largest transport smartcard system. This is nowalso attracting interest from overseas markets where we are well positioned. Asa consequence of the scale and leading edge nature of this type of project,where our technology is integral, lead times are inevitably long and so thetiming of revenue benefits is more difficult to predict. Nonetheless, themagnitude of these benefits when they do arrive can be very significant. We continue to win repeat business and add new clients to our portfolio. In thisregard, we are developing working relationships with these clients on alonger-term basis, some of whom are large blue-chip organisations. We are alsoprogressing a number of agreements with industry or sector representativeorganisations which would incorporate MultefileTM in their standard requirementsproviding exciting opportunities for future business growth as MultefileTM wouldbecome an underlying technology for these initiatives. The Company is also being asked to participate in the tendering process as thesmartcard technology provider with prospective partner organisations in largeinternational projects. Whilst the gestation period for these tenders can belong - anything up to 18 months - the fact that organisations are approaching uswith a view to including MultefileTM in the early stages of these projects istestament to the growing interest offered by our innovative technology. Outlook Your Board believes that the Company can continue its growth during 2007 andbeyond. However, we are still a relatively small business exposed to risks aswell as opportunities. We are, however, confident that we can deliver onmanagement's expectations. David Braddock Chief Executive Independent Review Report to Advanced Smartcard Technologies plc Introduction We have been instructed by the Company to review the financial information forthe six months ended 31 March 2007 which comprises the profit and loss account,balance sheet, cash flow statement and the related notes. We have read theother information contained in the interim report which comprises only the NonExecutive Chairman's Statement and the Chief Executive's Statement andconsidered whether it contains any apparent misstatements or materialinconsistencies with the financial information. This report is made solely to the Company in accordance with guidance containedin APB Bulletin 1999/4 "Review of Interim Financial Information". Our reviewwork has been undertaken so that we might state to the Company those matters weare required to state to them in a review report and for no other purpose. Tothe fullest extent permitted by law, we do not accept or assume responsibilityto anyone other than the Company, for our review work, for this report, or forthe conclusion we have formed. Directors' responsibilities The interim report including the financial information contained therein is theresponsibility of, and has been approved by, the directors. The directors areresponsible for preparing the interim report and ensuring that the accountingpolicies and presentation applied to the interim figures should be consistentwith those applied in preparing the preceding annual accounts except where anychanges, and the reasons for them, are disclosed. Review work performed We conducted our review in accordance with guidance contained in Bulletin 1999/4"Review of Interim Financial Information" issued by the Auditing Practices Boardfor use in the United Kingdom. A review consists principally of makingenquiries of management and applying analytical procedures to the financialinformation and underlying financial data and, based thereon, assessing whetherthe accounting policies and presentation have been consistently applied unlessotherwise disclosed. A review excludes audit procedures such as tests ofcontrols and verification of assets, liabilities and transactions. It issubstantially less in scope than an audit performed in accordance withInternational Standards on Auditing (UK and Ireland) and therefore provides alower level of assurance than an audit. Accordingly, we do not express an auditopinion on the financial information. Review conclusion On the basis of our review we are not aware of any material modifications thatshould be made to the financial information as presented for the six monthsended 31 March 2007. GRANT THORNTON UK LLPCHARTERED ACCOUNTANTSSheffield26 June 2007 Consolidated Profit and Loss Account For the six months ended 31 March 2007 Restated Restated 6 Months to 6 Months to 12 Months to 31 March 31 March 30 September 2007 2006 2006 (unaudited) (unaudited) (unaudited) Notes £'000 £'000 £'000Turnover 630 700 2,019Cost of sales (31) (82) (532)Gross profit 599 618 1,487Administrative expenses (646) (501) (1,208)Operating (loss)/profit (47) 117 279Net interest - (19) (21)(Loss)/profit on ordinary activities before (47) 98 258taxationTax on profit on ordinary activities 2 - - -(Loss)/profit transferred to reserves (47) 98 258 Earnings per share 4Basic (0.020p) 0.052p 0.121pDiluted (0.019p) 0.051p 0.120p There were no recognised gains or losses other than the result for the financial period. Consolidated Balance Sheet At 31 March 2007 31 March 31 March 30 September 2007 2006 2006 (unaudited) (unaudited) (audited) Notes £'000 £'000 £'000Fixed assetsIntangible assets 756 525 589Tangible assets 129 68 106Investments 40 40 40 925 633 735Current assetsStock 4 39 -Debtors 282 777 531Cash at bank and in hand 37 423 385 323 1,239 916 Creditors: amounts falling due within one year (376) (1,157) (747)Net current (liabilities)/assets (53) 82 169 Total assets less current liabilities 872 715 904 Capital and reservesCalled up share capital 72 71 72Share premium account 1,334 1,321 1,334Other reserves 8 8 8Profit and loss account (542) (685) (510)Shareholders' funds 872 715 904 Consolidated Cash Flow Statement For the six months ended 31 March 2007 Restated Restated 6 Months to 6 Months to 12 Months to 31 March 31 March 30 September 2007 2006 2006 (unaudited) (unaudited) (unaudited) £'000 £'000 £'000Reconciliation of operating (loss)/profit to operatingcash inflow/(outflow)Operating (loss)/profit (47) 117 279Depreciation and amortisation 41 30 86Share-based payment expense 15 - 15Increase in stock (4) (39) -Decrease/(increase) in debtors 249 (657) (411)Decrease in creditors (101) (431) (460)(Decrease)/increase in payments received on account (90) 42 (40)Net cash inflow/(outflow) from operating activities 63 (938) (531)Returns on investments and servicing of financeInterest received 3 2 11Interest paid (3) (21) (31)Net cash outflow from returns on investments and servicing - (19) (20)of finance Capital expenditure and financial investmentPurchase of intangible fixed assets (185) (204) (304)Purchase of tangible fixed assets (46) (17) (75)Net cash outflow from capital expenditure and financial (231) (221) (379)investment FinancingIncrease in share capital - 1,342 1,356Repayment of borrowing (180) - (300)Net cash (outflow)/inflow from financing (180) 1,342 1,056 (Decrease)/increase in cash (348) 164 126 Notes to the Interim Report For the six months ended 31 March 2007 1. Basis of preparation The financial information for the six months ended 31 March 2007 is unaudited and does not constitute statutory accounts within the meaning of section 240 of the Companies Act 1985. The figures for the twelve months ended 30 September 2006 have been extracted from the statutory accounts, filed with the Registrar of Companies, on which the auditors gave an unqualified report, adjusted for the impact of FRS20. The interim statement, including the financial information contained therein, is the responsibility of, and has been approved by the directors. The interim financial information has been prepared under UK GAAP using consistent accounting policies as set out in the 2006 statutory accounts of Advanced Smartcard Technologies plc except for the adoption of FRS 20 - 'Share based payments'The Company has restated its results for the periods to 30 September 2006 and 31 March 2006 as appropriate as a result of the adoption of FRS20. The adjustments that have been made are shown in note 5 below. 2. Taxation There is no tax charge for the period due to tax losses brought forward at 1 October 2006 of approximately £442,000. The Company has not recognised the corresponding deferred tax asset. 3. Dividend The directors do not propose to pay a dividend for the period. 4. Earnings per share Basic earnings per share for the six months ended 31 March 2007 is calculated on the basis of the loss for the period of £47,000 (March 2006 (restated): profit £98,000; September 2006 (restated): profit £258,000) divided by the weighted average number of shares in issue of 239,800,052 (March 2006: 187,150,575; September 2006: 212,498,000). Diluted earnings per share is calculated on the assumption that all vested options are exercised which would give rise to a total weighted average number of shares in issue for the six months to 31 March 2007 of 245,099,507 (March 2006: 193,039,766; September 2006: 215,813,000). 5. Adjustments to the accounts following the adoption of FRS 20 Effect on profit and loss account 6 months to 12 months to 31 Mar 2006 30 Sep 2006 (unaudited) (unaudited) £'000 £'000 Profit after tax as previously stated 98 273 Adoption of FRS 20 - (15) Profit after tax as restated 98 258 There were no adjustments to equity as a result of adopting FRS20. 6. Reconciliation of movements in shareholders funds Restated Restated 31 March 31 March 30 September 2007 2006 2006 (unaudited) (unaudited) (unaudited) £'000 £'000 £'000 Shareholder's funds at start of period 904 (725) (725) Net value of share issues - 1,342 1,356(Loss)/profit for the financial period (47) 98 258FRS20 adjustment 15 - 15 Shareholder's funds at end of period 872 715 904 7. Reconciliation of net cash flow to movement in net funds/debt 31 March 31 March 30 September 2007 2006 2006 (unaudited) (unaudited) (audited) £'000 £'000 £'000 (Decrease)/increase in cash in the period (348) 164 126 Cash outflow from decrease in debt 180 - 300Movement in net debt in period (168) 164 426Net debt at start of period 205 (221) (221) Net funds/(debt) at end of period 37 (57) 205 Net funds/(debt) comprises 31 March 31 March 30 September 2007 2006 2006 (unaudited) (unaudited) (audited) £'000 £'000 £'000 Cash at bank and in hand 37 423 385 Loan - (480) (180) Net funds/(debt) at end of period 37 (57) 205 This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
SMRT.L