15th Feb 2007 07:01
Manpower Software PLC15 February 2007 Manpower Software PLC Chairman's statement For the six months ended 30 November 2006 Introduction Manpower Software plc, the provider of workforce planning, staff scheduling andresource optimisation software, today announces its interim results for the sixmonths ended 30 November 2006. During the period, the Company has achieved the following significantmilestones: • In addition to supplying its software and support services to the UK, Europe and the USA, with the first sale of our software to a national military force overseas, the Company has extended its geographic footprint and is now also a supplier to the Asia-Pacific region. • While the Company has grown and is actively investing in new products and markets, it has been profitable across all parts of its business. • We have built on the foundations of success achieved last year in the Healthcare sector and have added a further six NHS Trusts to our customer base, which now totals 11. • During the period we have achieved an exceptionally high level of customer satisfaction, evidenced by our ability to secure referenceable sites from our existing customer base and the financial savings these customers have achieved using our software products. Key to the above is the Company's strategic vision: to be the leading globalprovider of workforce planning, staff scheduling and resource optimisationsoftware to its chosen markets. Results Revenue in the first half of the financial year was £4.05m (2005: £2.14m),resulting in a net trading profit (excluding the FRS 20 adjustment) of £0.6m(2005: £0.84m loss). Selling and operational expenses increased from £1.88m to£2.27m, as the Company continued to grow its sales and delivery capabilities todrive demand for its products. Despite the increases in revenue and associateddirect costs, the office and administrative costs were held constant at £0.7m(2005: £0.7m). Share-based payments The adoption of FRS 20, Share-Based Payments, which is effective for accountingperiods beginning after 1 January 2006, requires a prior year adjustment to bemade. This has created a share-based payment reserve at 30 November 2006 of£173,290 and increased retained losses by the same amount. The charge for the 2006 interim period is £38,349 (2005: £29,975). This is anaccounting adjustment, which has no impact on the Company's trading position,and is shown separately on the face of the Profit and Loss Account. Operational Review Defence We continue to sell software and services to the existing customer base and weare expanding to other customers in the UK and overseas. In addition to thesale to the Royal Australian Navy announced earlier this year, the Royal AirForce has selected MAPS Defence Suite to manage force planning, intelligentforce selection and training for the RAF Reserves. The MAPS system is now usedby all three UK Services. It was also used by NATO for the second year insuccession at its Global Force Generation conference in November 2006. We arenow providing NATO with a permanent solution for force generation that addressesits challenges and supports those of its member nations. Healthcare In Healthcare, we signed new contracts for the sale of MAPS Healthroster withfour NHS Trusts and two more shortly after the period-end. Our software wasselected because of the size of potential savings identified, our track recordof achievement at other Trusts and the unique quality and functionality offeredby our products. There is now an increasing portfolio of NHS Trusts using ourMAPS Healthroster software, each generating strong referenceable results.Currently, our software is being evaluated under contract by further Trusts. Weare also building demand for our products across the NHS to fulfil theirstaffing requirements more efficiently, provide cost transparency, enablecompliance with clinical governance requirements and improve patient care. TheCompany is focused on expanding the direct and indirect sales capabilities intothis market, enhancing the product range and shortening procurement timescales. Maritime Although no significant new contracts were signed during the period, one wasclosed shortly after the period-end which will contribute to the full yearfigures. In the first half, our sales efforts were successfully focused onbuilding the sales pipeline, while maintaining the level of service to existingcustomers. Client Services During the period, management put considerable focus on delivering profitableservices, essential to the Company's on-going financial health. Much progresshas been made and the Client Services team now deliver profitably major projectsto blue chip customers in all sectors of the business. The Cruise and Maritimecustomers continue to work with us to extend the use of MAPS Crew Manning withintheir organisations. In Healthcare, the MAPS Healthroster implementations aredelivering tangible benefits to our customers. There is a significant pipelineof NHS services revenue building for the second half and next financial year.In Defence, the team is supplying force generation capabilities (manning,planning and manpower optimisation) to international government militaryorganisations. Research and Development All our MAPS products are based on the same common core platform, which weconfigure and brand for each of our market sectors. We continue to enhance thecurrent product range, using clearly defined product road maps, to ensure wedeliver products that meet the on-going demands of our customers. InHealthcare, MAPS Healthroster now includes a working ESR interface. In Defence,the new MAPS Defence Suite supports a single platform for capability management. In Cruise & Maritime, the next iteration of MAPS Maritime, including enhancedfunctionality, will be released shortly. As our markets and geographic reach expand, we are evolving as a business. OurR&D activity ensures that we continue to meet the demands of both current andpotential customers into the future. Board changes Shortly after the period-end, we issued two announcements concerning changes tothe composition of the Board. On 18 December 2006, following the Company's Annual General Meeting, weannounced that Mr Philip Morgan, President Manpower Software Inc, was appointedto spearhead the marketing of our healthcare products within the US market. Asa result, he was unable to devote sufficient of his time to Board activities anddid not offer himself for re-election as a member of the Board. On 17 January 2007, we announced that Mr Richard Morgan-Evans, Group ManagingDirector, had become a non-executive Director of the Company. Mr Morgan-Evanshas been an Executive Director of the Company since June 2004 and was appointedGroup Managing Director in September 2004. In January 2006, Richard sustained aserious injury from which he has since recovered. However, in accordance withmedical advice received, Richard has decided reluctantly it was no longerappropriate for him to return to work full time. Accordingly, he resigned hisposition as Group Managing Director, though he will remain a valuable member ofthe Board in his role as non-executive Director. We have begun the search for areplacement Managing Director. Outlook Our strategy remains to become the leading provider of workforce planning, staffscheduling and resource optimisation software products to our chosen markets. Across all sectors, the following essential elements are in place to drivecontinued expansion: • Strategic vision. Our vision remains fixed upon being the world's foremost supplier of workforce optimisation systems in our chosen markets, thereby enabling our customers to achieve effective and efficient use of their most important resource, their people. • Customer satisfaction. The strongest sales multiplier we have is referenceable customers. We will not deviate from maintaining a high level of customer satisfaction in each of our chosen markets in order to achieve further referenceable sites and a high level of individual customer satisfaction. • Integrated solution. We offer our customers a product portfolio that meets the full range of their business needs across our core strength areas of workforce planning, staff scheduling and resource management. • Multiple growth drivers. Our MAPS products lend themselves to other vertical markets and as opportunities arise we will add these to our portfolio. In addition to growing our direct sales and services teams, we plan to expand our capacity by the increasing use of strategic partnerships. These will enable us to extend our penetration of existing geographical markets and reach new territories. • Profitability. We are focused on achieving profitable growth and positive cash flow, which will enable us to invest in new products and resources that advance our strategic vision. • A committed team. From product development to sales and marketing, and through to customer service, we are committed to delivering world class product solutions to our customers. Recruiting and retaining world-class team members is key to our success. Management has established the foundations for profitable growth. We haveinvested in our direct sales organisation and in a services business capable offulfilling the increasing demands of our target markets. There is now a strongsales pipeline and the capability to deliver profitable services growth. We arealso actively seeking new partnerships to assist with sales and delivery in ourmarkets. In Defence, we have opportunities to supply further products and supportservices to the UK Government and NATO. There is also interest in our productsfrom more government and commercial organisations in the Asia Pacific region.The latest version of MAPS Defence Suite has been released to focus onCapability Management. It has been enthusiastically received by thoseorganisations that have viewed it and we anticipate most of our customersmigrating to it over the medium term. In Healthcare, we continue to work in the UK with our industry partner,Specialist Computer Centres. There is an increasing focus throughout the NHS onimproving productivity by controlling staff agency spend and on improvingpatient care. The completion of current pilots of Healthroster, together withan increased capability from our sales team, should enable continued expansionof the sales pipeline and further sales of the MAPS Healthroster product toother NHS Trusts. In Cruise and Maritime, while we remain primarily focused upon the needs of ourexisting customers, we are targeting further penetration into the broadershipping market. Presently, we have opportunities to sell additional MAPSlicences and services to our established customers as well as the mid-rangecruise fleets and in the broader shipping market, where the successfulimplementation of our software at AP Moller-Maersk has generated interest. In Services, there is now a strong pipeline of work to be delivered whichstretches into next financial year. We have reported previously that the Company is highly dependent on a smallnumber of large contracts in markets where considerable change is occurring,where the sales cycles are often long and complex, and where forecasting precisetiming of closure has become more difficult. Deferral or acceleration of only afew of these can have a significant impact on the Company's results. While thisremains true, the cumulative effect of the sales of MAPS Healthroster to the NHSTrusts is having a smoothing effect when compared to the larger and lesspredictable sales in our other two market sectors. The Directors note that, inthe first half of this financial year, there has been strong performance, acrossall sectors of the business, with some key contract wins having been achieved.As a result, the Directors are confident of at least meeting current marketexpectations for the year and believe, also, there is now an opportunity toexceed those expectations. Terry Osborne CHAIRMAN 15 February 2007 INDEPENDENT REVIEW report to MANPOWER SOFTWARE PLC Introduction We have been instructed by the company to review the financial information forthe six months ended 30 November 2006 which comprises the consolidated profitand loss account, the statement of total recognised gains and losses, theconsolidated balance sheet, the consolidated cash flow statement and the relatednotes 1 to 9. We have read the other information contained in the interim reportwhich comprises only the Chairman's Statement and considered whether it containsany apparent misstatements or material inconsistencies with the financialinformation. Our responsibilities do not extend to any other information. This report is made solely to the company's members, as a body, in accordancewith guidance contained in APB Bulletin 1999/4 "Review of Interim FinancialInformation". Our review work has been undertaken so that we might state to thecompany's members those matters we are required to state to them in a reviewreport and for no other purpose. To the fullest extent permitted by law, we donot accept or assume responsibility to anyone other than the company and thecompany's members as a body, for our review work, for this report, or for theconclusion we have formed. Directors' responsibilities The interim report, including the financial information contained therein, isthe responsibility of, and has been approved by the directors. The directorsare responsible for preparing the interim report and ensuring that theaccounting policies and presentation applied to the interim figures should beconsistent with those applied in preparing the preceding annual accounts exceptwhere any changes, 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 with UnitedKingdom auditing standards and therefore provides a lower level of assurancethan an audit. Accordingly, we do not express an audit opinion on the financialinformation. 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 30 November 2006. GRANT THORNTON UK LLPCHARTERED ACCOUNTANTS LONDON15 February 2007 CONSOLIDATED PROFIT AND LOSS ACCOUNTFor the 6 months ended 30 November 2006 Restated Restated (Unaudited) (Unaudited) (Unaudited) 6 months ended 6 months ended 6 months ended Note 30 Nov 2006 31 May 2006 30 Nov 2005 £ £ £ Turnover 4,052,726 2,188,264 2,144,974 Cost of sales:Third party costs (31,621) (9,753) (12,967)R&D costs (424,710) (320,019) (425,884)Selling and operational expenses (2,270,971) (1,975,490) (1,876,202) Gross profit/ (loss) 1,325,424 (116,998) (170,079) Administrative expenses (702,253) (745,379) (694,950)Exchange differences (28,634) (42,155) 13,921Share-based payment (38,349) (39,860) (29,975) Operating profit/ (loss) 556,188 (944,392) (881,083) Interest receivable 1,409 1,231 9,176 Interest payable (3,804) - - Profit/ (loss) on ordinary activities before 553,793 (943,161) (871,907)taxation Taxation - (3,051) (854) Profit/ (loss) on ordinary activities after 553,793 (946,212) (872,761)taxation Dividends - - - Profit/ (loss) retained 553,793 (946,212) (872,761) Earnings/ (loss) per share Basic 3 1.25p (2.13)p (1.96)pDiluted 3 1.24p n/a n/a STATEMENT OF TOTAL RECOGNISED GAINS AND LOSSES Restated Restated (Unaudited) (Unaudited) (Unaudited) 6 months 6 months 6 months ended 30 ended 31 ended 30 Nov 2006 May 2006 2005 £ £ £ Profit/(loss) for the financial period 553,793 (946,212) (872,761)Currency differences on opening reserves 13,277 20,862 (1,452) 567,070 (925,350) (874,213) CONSOLIDATED BALANCE SHEET AT 30 NOVEMBER 2006 Restated Restated (Unaudited) (Unaudited) (Unaudited) As at As at As at 30 Nov 2006 31 May 2006 30 Nov 2005 £ £ £Fixed assetsTangible assets 123,135 89,124 104,479 Current assetsDebtors 2,944,384 2,219,493 2,920,338Cash at bank and in hand 276,577 355,394 266,690 3,220,961 2,574,887 3,187,028 Creditors: amounts falling due within one year (1,817,890) (1,743,224) (1,485,230) Net current assets 1,403,071 831,663 1,701,798 Total assets less current liabilities 1,526,206 920,787 1,806,277 Creditors: amounts falling due after more than - - -one yearNet assets 1,526,206 920,787 1,806,277 Capital and reservesCalled up share capital 2,223,154 2,223,154 2,223,154Share premium account 6,456,299 6,456,299 6,456,299Share-based payment reserve 173,290 134,941 95,081Profit and loss account (7,326,537) (7,893,607) (6,968,257)Equity shareholders' funds 1,526,206 920,787 1,806,277 CASH FLOW STATEMENTFOR THE 6 MONTHS ENDED 30 NOVEMBER 2006 Restated Restated (Unaudited) (Unaudited) (Unaudited) 6 months 6 months 6 months ended ended ended 30 Nov 2006 31 May 2006 30 Nov 2005 £ £ £ Net cash (outflow)/inflow from operating activities (3,278) 112,238 (1,179,807) Returns on investments and servicing of financeInterest received 1,409 1,231 9,176Interest paid (3,804) - -Net cash (outflow)/inflow from returns on investments (2,395) 1,231 9,176and servicing of finance Taxation - (3,051) (854) Capital expenditure and financial investmentPayments to acquire tangible fixed assets (73,144) (21,714) (27,662) (Decrease)/increase in cash (78,817) 88,704 (1,199,147) NOTES TO THE INTERIM REPORT For the 6 months ended 30 NOVEMBER 2006 1. Basis of Preparation The interim financial statements have been prepared in accordance withapplicable accounting standards and under the historical cost convention. Theprincipal accounting policies of the Company have remained unchanged from thoseset out in the Group's 31 May 2006 annual report and financial statements. Theinterim financial statements have been reviewed by the Group's auditors. A copyof the auditors' review report is attached to this interim report. The Group has applied the requirements of FRS 20 (share-based payments), inaccordance with the transitional provisions, to all equity instruments grantedafter 7 November 2002 and unvested at 1 June 2006. 2. Taxation There is no tax charge for the interim period to 30 November 2006. 3. Earnings per share (Unaudited) Restated Restated (Unaudited) (Unaudited) 6 months ended 6 months ended 6 months ended 30 Nov 2006 31 May 2006 30 Nov 2005 £ £ £ Profit/ (Loss) for the financial period 553,793 (946,212) (872,761) Weighted average number of shares Number Number Number of shares of shares of shares For basic earnings per share 44,463,086 44,463,086 44,463,086For diluted earnings per share 44,753,678 n/a n/a In view of the significant impact of the FRS20 Share-based payment charge onearnings per share calculated in accordance with FRS22 (Earnings Per Share), anadjusted earnings per share figure has been provided based on profit on ordinaryactivities after taxation before the share-based payment charge of £38,349(2005: £29,975). (Unaudited) (Unaudited) (Unaudited) 6 months ended 6 months ended 6 months ended 30 Nov 2006 31 May 2006 30 Nov 2005 Basic adjusted earnings per share 1.33p (2.04)p (1.90)pDiluted adjusted earnings per share 1.32p n/a n/a 4. Dividends No dividends have been paid or proposed for the period. 5. Publication of non-statutory accounts The financial information set out in this interim report does not constitutestatutory accounts as defined in Section 240 of the Companies Act 1985. Thefigures for the period ended 31 May 2006 have been calculated from the statutoryfinancial statements which have been filed with the Registrar of Companies. Theauditors' report on those financial statements was unqualified and did notcontain a statement under Section 237(2) of the Companies Act 1985. 6. Net cash (outflow)/inflow from operating activities Restated Restated (Unaudited) (Unaudited) (Unaudited) 6 months ended 6 months ended 6 months ended 30 Nov 2006 31 May 2006 30 Nov 2005 £ £ £ Operating profit/(loss) 556,188 (944,392) (881,083)Depreciation and amortisation charges 38,466 36,547 43,658Share-Based Payments 38,349 39,860 29,975Exchange differences written off (15,357) 6,170 12,469(Increase)/decrease in debtors (724,892) 700,845 65,134Increase/(decrease) in creditors 103,968 273,208 (449,960)Net cash (outflow)/inflow from operating activities (3,278) 112,238 (1,179,807) 7. Reconciliation of net cash flow to movement in net funds Restated Restated (Unaudited) (Unaudited) (Unaudited) 6 months ended 6 months ended 6 months ended 30 Nov 2006 31 May 2006 30 Nov 2005 £ £ £ (Decrease)/increase in cash in the period (78,817) 88,704 (1,199,147)Net funds at the beginning of the period 355,394 266,690 1,465,837Net funds at the end of the period 276,577 355,394 266,690 8. Analysis of changes in net funds Restated Restated (Unaudited) (Unaudited) (Unaudited) 6 months ended 6 months ended 6 months ended 30 Nov 2006 31 May 2006 30 Nov 2005 £ £ £ Cash at bank and in hand 276,577 355,394 266,690 9. Share based payments The Company issues share-based payments to certain individuals, which aremeasured at fair value at the date of grant. The fair value determined at thegrant date is expensed on a straight line basis over the vesting period, basedon the Group's estimate of shares that will eventually vest. Fair value is measured by use of the Binomial valuation model. The expectedlife of the instrument used in the model is adjusted, based on management's bestestimate, for the effects of non-transferability, exercise restrictions andbehavioural considerations. The resulting value is charged to the consolidatedprofit and loss account over the vesting period of the share-based payments. The adoption of FRS 20 has resulted in a new accounting policy for share-basedpayments. Until 31 May 2006 the provision of share options to individuals didnot result in a charge to the profit and loss account. A prior year adjustmenthas been made to the financial information set out for the period ended 30November 2005 and 31 May 2006 to apply charges to the profit and loss accountfor share options granted at these dates. The Group recognised a total expense of £38,349 relating to equity settled shareoptions scheme transactions in the period (2005: £29,975). The adoption of FRS20 has resulted in a restatement of prior periods. This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
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