7th Jun 2006 07:00
Advanced Smartcard Technologies plc07 June 2006 ADVANCED SMARTCARD TECHNOLOGIES HERALDS PLATFORM FOR GROWTH Advanced Smartcard Technologies plc (RIC: SMRT/L) ("the Company"), the Scottish based software group specialising in smartcard technology, has today announced its interim results for the period to 31 March 2006. •IPO in December 2005 raised £750,000 (gross).•Further £850,000 (gross) raised in March through a further placing of new shares.•Contract wins with Royal Bank of Scotland and Transport Scotland.•Further new contracts won since the half year.•Operating profit £117,000 (2005: £41,000)•Turnover £700,000 (2005: £932,000)* * Comparative reduction in turnover due to a change in order mix, where in 2005relatively more product was sold with lower margin hardware. David Braddock, Chief Executive said: " We are delighted with this half year result and have made a significant improvement in profitability. The Company has made great strides forward in terms of efficiency and the quality of the product we offer. We have already seen the clear benefits of this. The Company has won contracts with new blue chip clients and gained further orders from existing clients. We feel this represents a real step forward for the Company and the shareholders." " Since the IPO in December, we have invested in our platform for growth by strengthening our sales and marketing, and engineering teams to exploit our chosen markets. Through this investment we are confident that we will continue to extend the pipeline of new business. We expect this additional capability to yield results in getting our key product, Multefile, into more deployments over the range of our chosen markets where we can develop a significant market share in the coming years. Since 31 March 2006 we are delighted to have won further business with subsidiaries of The Royal Bank of Scotland Group PLC and also with ITI Techmedia, a company set up with the support of the Scottish Executive to drive Scotland's ambitious plans to identify and commercialise valuable technology-based intellectual assets." " The contracts will develop further our business in the areas of secure smartcard transport ticketing and anti-counterfeiting activity." " The marketplace for smartcards systems is massive. By using our Multefilesoftware, smartcard system operators can alter their services and applications,without having to recall thousands of cards. We are pleased that thisgroundbreaking software is being adopted at an early stage in a number ofsignificant trial projects." " Looking forward, the future remains bright. We are pleased with our excellentsales prospect list. I am confident that we will continue to win new orders andimprove the Group's financial performance." -ends- Date: 7 June 2006 For further information contact: Advanced Smartcard Technologies plc 01355-268521David Braddock, Managing DirectorStephen Naylor, Finance Director SVS Securities 020 7638 5600Ian CallawayPeter Manfield cityPROFILE 020 7448 3244Simon CourtenayAndrew Harris NOTES TO EDITORS About Advanced Smartcard Technologies plc Advanced Smartcard Technologies plc, through its wholly owned subsidiary EcebsLimited, is a profit making, software company operating in the dynamic andexpanding smartcard arena. SMRT listed on AIM in December 2005. The Companyprovides smartcard technology to a wide range of user markets includingtransport, ID, healthcare, finance and local and national government departmentsand blue-chip companies. About Us The Company, through its wholly owned subsidiary Ecebs Limited, is a highmargin, profit-making, software company with a rapidly growing blue-chip clientbase, operating in the dynamic and expanding smartcard arena. Ecebs commenced trading in August 2000. It was launched by three experienced ITindustry players and is based in East Kilbride, near Glasgow. The businessspecialises in software for smartcard systems and has developed and patented anew, ground breaking technology solution, branded MultefileTM, that is set toradically improve the way smartcard software applications are developed anddeployed. The key feature of the software is its ability to reduce developmenttime and cost while increasing client functionality and ease of use which willincrease the flexibility of smartcard solutions. MultefileTM is enabling software that has already been licensed to a range ofcustomers in different markets and has the potential to change the smartcardmarket completely. The demand for smartcards has grown at a phenomenal rate in the last ten years,primarily driven by the telecoms (SIM cards for mobile phones) and banking('chip and pin') markets. It is, however, in the new areas of transportticketing (for example, Transport for London's OysterTM cards for LondonUnderground and bus transport; Hong Kong's Octopus Card; San Francisco'sTranslink(R) card), personal identification (such as electronic passports anddriving licences); and health and leisure, along with physical and virtualaccess control, where MultefileTM can bring the greatest benefit. Chief Executive's Statement Advanced Smartcard Technologies has had a very successful first half of theyear, our maiden period as a quoted company, following our listing on theAlternative Investment Market (AIM) in December 2005. The Company is delightedto report continued profitable trading and a record half year operating profit,together with significant progress towards our longer term strategic objectives. Following our successful flotation on AIM we have continued the planneddevelopment of our business in our chosen markets. The flotation raised a totalof £750,000 before costs and following some further new developments a secondaryplacement in March 2006 raised an additional £850,000 before costs. This fundinghas provided an excellent platform from which to accelerate our growthstrategies for the Group. Financial results Turnover for the half year was £700,000 (2005 half year £932,000) and operatingprofit was £117,000 (2005 half year £41,000). The comparative reduction inturnover was due to a change in order mix where in 2005 relatively more productwas sold containing an element of lower margin hardware. In the current halfyear, the order mix has been towards more favourable higher margin softwaredevelopment activity. Moreover, the period has seen increased use of ourpatented, core intellectual property, Multefile, which has contributed toimproved profitability. The resulting higher gross profit together with tightcontrol of overheads has allowed a significant improvement in operating profit,up 285% over the equivalent period last year. Looking forward, our mainactivities should continue to move more towards higher margin software sales.However, where our customers require us to provide for them our softwarepreinstalled on a hardware platform, this will result in an element of revenueat lower margins (due to the external direct costs of sale) depending on ordercycles for those products. Sales and marketing development As part of our growth strategy, we have made a commitment to increasing theinvestment in our sales and marketing capability. Since the listing in Decemberwe have accelerated significantly our plans for improving our account andchannel management capability by engaging additional experienced resource inthis area. We are delighted that in addition to a Business Development Directorand Sales Manager being recruited for Ecebs Limited (a wholly-owned subsidiary)an additional overseas agent has also been signed up. The attributes ofMultefile are increasingly being recognised and in particular its suitabilityfor a wide range of smartcard applications. We expect this additional capabilityto yield results in getting Multefile into more deployments over the range ofour chosen markets where we can develop a significant market share in the comingyears. It is also encouraging that these additional sales and marketingpersonnel have approached the Group due to their interest in Multefile andbelief in its market changing potential. Product refinement Multefile 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, Identity, GSM, Biometric, Health andWelfare. The capability for card issuers to amend, add and delete newfunctionality, via a series of user friendly point and click interfaces, coupledwith end to end secure technology, is becoming a compelling proposition. Notonly can it enable existing requirements to be provided in a more efficientmanner, it also enables niche applications to be introduced alongside moremainstream ones. This improves dramatically the benefit of smartcards both toissuers and users. Multefile is not limited in physical form factor either. Not only can it be usedin conventional contact and contactless smartcards but also in a variety ofother 'smart' devices. We have also recruited additional specialist engineering staff in Scotland tocontinue the Multefile-based development as a direct result of the capitalraising and are confident of meeting our requirements in this area. The Group plans to significantly invest in marketing efforts, timed to coincidewith new Multefile product releases. Customers and prospects We have continued to partner several blue-chip clients and have won significantnew orders which lead us into exciting growth markets. We are carrying a healthy order book forward into the second half. Our salesprospect list remains strong with many good prospects that will take us furtherinto our chosen niche markets. We have continued to make good progress withcustomers in a number of sectors including transport, anti-counterfeiting andlocal authority business. Development in healthcare markets continues but at aslightly lesser pace. We continue to win repeat business from existing clients and add new ones to ourportfolio. In this regard we are developing working relationships with theseclients on a longer term basis some of whom are large blue chip organisations.We are also at an advanced stage in progressing a number of agreements withindustry or sector representative organisations which would incorporateMultefile in their standard requirements providing exciting opportunities forfuture business growth as Multefile would become an underlying technology forthese initiatives. The Group 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 Multefile in the early stages of these projects istestament to the growing interest offered by the technology. Outlook Looking forward, the prospects for the Group are very promising. We have anexcellent order book and sales prospect list which include many blue-chiporganisations. With the proceeds of our flotation giving us the ability toinvest in our platform for growth, we are looking to the future with confidence.This together with the exceptional capabilities and motivation of our staffshould ensure that progress continues in the second half. David BraddockChief Executive Consolidated Profit and Loss AccountFor the six months ended 31 March 2006 6 Months to 6 Months to 12 Months to 31 March 31 March 30 September 2006 2005 2005 (unaudited) (unaudited) (audited) Notes £'000 £'000 £'000------------------------------------------------------------------------------------ Turnover 700 932 1,952Cost of sales (82) (362) (796)------------------------------------------------------------------------------------Gross profit 618 570 1,156Administrative expenses (501) (529) (1,003)------------------------------------------------------------------------------------Operating profit 117 41 153Net interest (19) (20) (42)------------------------------------------------------------------------------------Profit on ordinary activitiesbefore taxation 98 21 111Tax credit on profit on ordinaryactivities 2 - 3 3------------------------------------------------------------------------------------Profit transferred to reserves 98 24 114====================================================================================Earnings per share 4------------------------------------------------------------------------------------Basic 0.052p------------------------------------------------------------------------------------Diluted 0.051p------------------------------------------------------------------------------------ There were no recognised gains or losses other than the profit for the financial period. Consolidated Balance SheetAt 31 March 2006 31 March 31 March 30 September 2006 2005 2005 (unaudited) (unaudited) (audited) Notes £'000 £'000 £'000------------------------------------------------------------------------------------ Fixed assetsIntangible assets 525 216 337Tangible assets 68 66 65Investments 40 40 40------------------------------------------------------------------------------------ 633 322 442Current assetsStock 39 6 -Debtors 5 777 544 120Cash at bank and in hand 423 - 259------------------------------------------------------------------------------------ 1,239 550 379 Creditors: amounts falling duewithin one year (1,157) (1,208) (1,066) ------------------------------------------------------------------------------------Net current assets/ 82 (658) (687)(liabilities) ------------------------------------------------------------------------------------ Total assets less currentliabilities 715 (336) (245)==================================================================================== Creditors: amounts falling dueafter more than one year - 480 480 Capital and reservesCalled up share capital 71 53 54Share premium account 1,321 4 4Other reserves 8 - -Profit and loss account (685) (873) (783)Shareholders' funds 715 (816) (725)------------------------------------------------------------------------------------ 715 (336) (245)==================================================================================== Consolidated Cash Flow StatementFor the six months ended 31 March 2006 6 Months to 6 Months to 12 Months to 31 March 31 March 30 September 2006 2005 2005 (unaudited) (unaudited) (audited) £'000 £'000 £'000------------------------------------------------------------------------------------ Reconciliation of operating profit to operatingcash (outflow)/inflowOperating profit 117 41 153Depreciation and amortisation 30 26 53(Increase)/decrease in stock (39) 2 8(Increase)/decrease in debtors (657) (36) 388(Decrease)/increase in creditors (431) 329 582Increase in advances received 42 392 130------------------------------------------------------------------------------------Net cash (outflow)/inflow fromoperating activities (938) 754 1,314Returns on investments and servicing of financeInterest received 2 - 1Interest paid (21) (17) (40)------------------------------------------------------------------------------------Net cash inflow/(outflow) fromreturns on investments andservicing of finance (19) (17) (39)------------------------------------------------------------------------------------Taxation - 3 3Capital expenditure and financial investmentPurchase of intangible fixed assets (204) (77) (210)Purchase of tangible fixed assets (17) (14) (28)Purchase of investments - (40) (40)------------------------------------------------------------------------------------Net cash outflow from capitalexpenditure and financialinvestment (221) (131) (278)------------------------------------------------------------------------------------ FinancingIncrease in share capital 1,342 - 1Repayment of borrowing - (465) (468)------------------------------------------------------------------------------------Net cash inflow/(outflow) fromfinancing 1,342 (465) (467)------------------------------------------------------------------------------------ Increase in cash 164 144 533==================================================================================== Notes to the Interim ReportFor the six months ended 31 March 2006 1. Basis of preparation The group accounts consolidate the accounts of the company and its interests insubsidiaries. A new parent company, Advanced Smartcard Technologies plc, wasincorporated on 21 November 2005 to be the vehicle for capital raising andadmission to the Alternative Investment Market. This company acquired the wholeof the issued share capital of the former parent company, Ecebs Group Limited,by way of a share-for-share exchange. This has been accounted for using mergeraccounting principles. The effective date of the merger was 22 November 2006.The results of the group comprise the results of Advanced Smartcard Technologiesplc from its date of incorporation consolidated with the results of the mergedgroup from 1 October 2005. The first full accounting period will be the periodto 30 September 2006. The financial information for the six months ended 31 March 2006 is unauditedand does not constitute statutory accounts within the meaning of section 240 ofthe Companies Act 1985. The financial information for the year ended 30September 2005 has been extracted from the consolidated statutory accounts ofEcebs Group Limited, the former holding company, which have been reported on bythe auditors and have been delivered to the Registrar of Companies. The auditreport on those financial statements was unqualified. The interim financialinformation has been prepared using consistent accounting policies as set out inthe 2005 statutory accounts of Ecebs Group Limited. 2. Taxation There is no tax charge for the period due to tax losses brought forward in thegroup at 1 October 2005 of approximately £372,000. 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 2006 is calculated onthe basis of the profit for the period of £98,000 divided by the weightedaverage number of shares in issue of 187,150,575. Diluted earnings per share iscalculated on the assumption that all vested options are exercised which wouldgive rise to a total weighted average number of shares in issue for the sixmonths to 31 March 2006 of 193,039,766. Earnings per share for the comparativeperiods was not a statutory disclosure as a private company. 5. Debtors Debtors at 31 March 2006 includes an amount of £439,000 in respect of settlementterms of cash subscriptions for share issues. These amounts have been receivedin cash since 31 March 2006. This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
SMRT.L