Preliminary Results

11 December 2012

Electronic Data Processing PLC (EDP)

Preliminary results for the year ended 30 September 2012

EDP is an IT solution provider to the UK wholesale distribution industry and a supplier of Sales Intelligence software solutions more widely.

Highlights:

·; Turnover up 3.6% at £5.8 million (2011: £5.6 million).

·; Contracted recurring revenues remain strong representing 76% of total revenue (2011:79%).

·; Adjusted operating profit £820,000 (2011: £689,000), gives an operating margin of 14.1% (2011: 12.3%).

·; Excluding property gains and losses pre-tax profit £766,000 (2011: £561,000).

·; Offers totalling £1.86 million recently accepted on two of our three remaining surplus freehold properties. Accordingly carrying values reduced by £849,000. Property costs would be reduced by approximately £100,000 per annum following these two disposals.

·; As a result of the reduction in property carrying values, the statutory loss before tax was £83,000 (2011: £896,000 profit before tax, including a profit on sale of property of £335,000).

·; Hosting revenues increase further and now represent 43% of total revenues (2011: 34%) as customers continue to elect to have their software delivered through the "cloud".

·; Continuing commitment to R&D expenditure of £0.9 million in the year (2011: £0.9 million).

·; Strong debt-free balance sheet; cash balances of £5.65 million at 30 September 2012 (2011: £5.15 million) will be used to further develop the business.

·; Final dividend maintained at 2.0p per share, making 2.713p for the full year (2011: 2.713p).

Michael Heller, Chairman of EDP, said:

"There are no signs of significant improvement in the markets we address due to continued uncertainty in the UK economy. Customers and prospects remain cautious when taking significant expenditure decisions. However, our product offering and financial strength means that we are well placed for the future."

-Ends-

For further information please contact:

www.edp.co.uk

Chairman's Statement

I am pleased to report that turnover for the year to 30 September 2012 was up 3.6% at £5.8 million compared to £5.6 million the previous year which is a creditable performance in view of the fact that trading conditions in the markets we address have remained challenging.

Adjusted operating profit was £820,000 (2011: £689,000) representing an operating margin of 14.1% (2011: 12.3%). This underlying cash-based measure of our performance excludes non-cash IFRS charges and credits and represents an increase of 19% over last year.

The Group currently owns four freehold properties, of which three were identified as being surplus to requirements several years ago. Whilst these properties have been actively marketed, the commercial property market in the UK has been extremely difficult during this time. However, I am pleased to inform shareholders that we have recently accepted offers for two of these surplus properties which, if the transactions complete, will generate cash amounting to £1.86 million net of disposal costs.

The offers we have accepted are lower than the previous carrying value in the accounts but we believe that it is in shareholders' interests to dispose of these surplus properties now. In addition to generating significant cash, we will save approximately £100,000 a year on property costs following the sales. Accordingly we have written-down the carrying value of these properties by £849,000 to £1.86 million and they are disclosed in the Group balance sheet as assets held for sale.

As a result of this write-down, we have reported a statutory pre-tax loss for the period of £83,000 (2011: £896,000 profit including £335,000 profit on sale of our former freehold head office). Without this, our pre-tax profit for the year was £766,000 compared with £561,000 last year (excluding the profit on sale of property).

Our hosting revenues have grown for the twelfth year running and now represent 43% of turnover (2011: 34%). Contracted recurring revenues were 76% (2011: 79%). Total R&D expenditure was £914,000 (2011: £892,000) and this has been focused on the continued enhancement of our latest software products - Quantum VS and Vecta.

We remain focused on working capital management. Our exposure to bad debts has continued at a minimal level during the year. This risk is also reduced by the fact that no single customer accounts for more than 5% of our total revenues and that the top ten customers accounted for 29% during the year.

Net assets at 30 September 2012 were £6.3 million (2011: £7.3 million). This reflects the write-down in property values discussed above together with a reduction in the position of the Group's defined benefit pension scheme amounting to £691,000 net of deferred tax. This is a non-cash item which results from a reduction in the discount rate used in actuarial calculations to value the scheme liabilities. A review of the future direction of this scheme is already underway.

Year-end cash balances increased to £5.6 million from £5.1 million as a result of strong operating cashflows. We continue to look at opportunities to utilise these cash balances to acquire similar software producing businesses.

The Board is proposing to maintain the final dividend at 2.0p per share giving a total for the year of 2.713p, the same as last year. If approved by shareholders, the final dividend will be paid on 8 April 2013 to those shareholders on the register at 8 March 2013. The shares will be ex-dividend on 6 March 2013.

Once again I would like to thank all our members of staff and my colleagues on the Board for their contribution and commitment during the year.

There are no signs of significant improvement in the markets we address due to continued uncertainty in the UK economy. Customers and prospects remain cautious when taking significant expenditure decisions. However, our product offering and financial strength means that we are well placed for the future.

Michael Heller

Chairman

10 December 2012

Chief Executive's Statement

We have continued the progress made last year with regard to the development and deployment of our main software products and as a result our turnover has increased by 3.6%. This has been achieved despite continued difficult economic conditions.

Trading conditions have not shown any real signs of improvement during the year. As we have commented for a number of years, customers and prospects remain cautious and will only undertake significant expenditure when there are clear benefits to be derived. Accordingly our approach has been to deliver software solutions that offer clear business benefits either to assist our customers to generate sales growth or to create efficiencies and drive down costs in their businesses.

We have reported previously that we had started to see a gradual shift in our revenue model away from larger upfront charges to strengthened on-going revenues as we see more of our revenues derived from the SaaS (software as a service) model. The effect of this has been less noticeable during the year under review as the larger deals we have signed have reflected more traditional pricing profiles. We nonetheless believe that the trend towards the SaaS model will continue in the medium to long term.

We have a business model that is robust and allows us to cover our cash operating costs out of our recurring revenues, which have remained strong during the period. We will continue to manage our cost base prudently. The impact of bad debts during the year has continued to be very low.

I would like to thank my fellow Directors and all members of staff for their hard work and commitment during the year.

Operational Review

We have two main product groups - software applications for distributors and merchants, where Quantum VS is our latest product; and Vecta, our market-leading Sales Intelligence product. These products are complimentary with a number of customers using both.

Whilst traditionally we have licenced our products to be run on customers' servers, we have, over recent years, seen significant growth in the numbers of businesses electing to host their applications with us through "the cloud". The hosting service is provided in Milton Keynes from our own secure facility. Hosting allows our customers to relieve themselves of the burden of running and maintaining their computer systems on a day to day basis.

Quantum VS

Quantum VS is a graphical software application for distribution businesses. The sectors it addresses include, for example, builders' merchants, timber merchants, suppliers of fixings and fastenings, security products and electrical wholesalers. Our product strategy has been to provide a clear upgrade path for our existing customers by bringing into this single product all of the key functionality from our established distribution applications - Merchant, Charisma, Esprit and The Business Programme.

We are also adding new functionality. Recent developments include a tablet implementation of Quantum VS which allows users to access certain key functionality from anywhere they can get either a mobile phone signal or wireless access. The architecture of the system provides agility and allows easy integration of third party products which fulfil specific requirements.

We currently have 16 customers either using or in the process of implementing Quantum VS, which is in line with our expectations.

Vecta

Vecta is a powerful sales intelligence and sales management tool which is positioned to enable businesses to increase their sales. Vecta, in particular, has had a strong year with regard to new business sales and we have taken orders from a number of substantial organisations.

We have focused recently on extending the CRM functionality within Vecta so that it will provide users with the option of not having a separate CRM package. We have also added a number of other features including integration with Microsoft Outlook.

Vecta is designed to be delivered through the browser so that we can benefit from the recent proliferation of mobile devices including tablet computers of various sizes and smart phones. As a tool aimed at sales people on the move, it is essential that Vecta is accessible from all generally available devices and mobile operating systems in order to maximise its flexibility and appeal whether users are working on a device provided by their employers or their own personal device.

Hosting

Our hosted customers now account for 43% of our revenues, significantly up from 34% last year. To put this further into context, seven years ago this figure was 7%. The total number of hosted customers has increased to 136 from 117 last year.

Delivering software through "the cloud" has become increasingly accepted by business. The fact that we offer the facility from our own purpose built hosting centre gives our customers the peace of mind of having a single provider looking after their software, hardware and operating system requirements - the traditional one-stop-shop concept.

Vecta 7 was specifically developed to be delivered as a browser-based product which is only offered on a hosted or "cloud "basis.

Property

The Group has four freehold properties. Other than our hosting centre in Milton Keynes, the three remaining properties are no longer required for operational purposes and have been marketed for sale or to rent for a number of years.

We have recently accepted offers for two of the properties and whilst the prices agreed are below the previous carrying values in our accounts, the Board consider that they are realistic in the current climate for commercial property particularly bearing in mind the significant cost savings these disposals will generate which are in the region of £100,000 a year.

Whilst we have yet to exchange contracts on either disposal, both transactions are proceeding according to plan. Accordingly we have taken the decision to transfer the properties out of fixed assets into "assets held for sale" and to reduce their carrying values by £849,000 to reflect the offers we have accepted which amount to £1.86 million net of disposal costs. We will update shareholders on these transactions in due course.

Financial Review

Turnover for the year was up 3.6% at £5.8 million compared with £5.6 million in the prior year. Our recurring revenues were maintained at £4.4 million representing 76% of our turnover (2011: 79%).

The increase in turnover during the year was attributable to higher non-recurring revenues which include sales of initial software licences, hosting joining fees and implementation services.

Our adjusted operating profit, which is the measure used to monitor the business on a day-to-day basis, was £820,000 - up from £689,000 in the prior year. The 19% year-on-year improvement reflects the improved trading performance together with a saving on property costs following our head office move which occurred during the second half of the previous financial year.

Adjusted operating profit is stated after a net charge of £132,000 (2011: £183,000) relating to a number of non-cash items which arise under IFRS (principally amortisation of intangible assets, pension scheme charges and the capitalisation and amortisation of development costs). Our operating margin was strong at 14.1% (2011:12.3%).

As discussed elsewhere, the current year result is after a write-down in the carrying value of the Group's freehold properties of £849,000 in anticipation of their sale. As a result of this we have reported a statutory loss before tax of £83,000 which compares to a profit of £896,000 last year. In the previous year our pre-tax result included a profit on sale of property of £335,000. Excluding these property related items, pre-tax profits would have been £766,000 compared with £561,000 last year, representing a 36% increase.

Our total R&D expenditure was £914,000 (2011: £892,000) of which £86,000 was capitalised as required by IAS 38. The remainder has been expensed in the income statement.

Interest income was £78,000 compared with £55,000 last year, reflecting higher cash balances combined with an increase in the average interest rate earned during the year.

The effective tax rate for the year was 31.3% (2011: 17.6% due to the fact that no tax was payable on the profit on disposal of property) which gave a tax credit of £26,000 on a pre-tax loss of £83,000 (2011: £158,000 charge).

Whilst we report a headline loss per share of 0.45p against earnings per share of 5.89p last year, both of these figures reflect the property matters referred to above. Stripping out the effect of these gives underlying earnings per share of 4.66p this year compared with 3.22p last year. Fully diluted earnings per share figures are virtually identical to the basic earnings per share figures.

Our cash balances increased to £5.65 million at 30 September 2012 from £5.15 million the previous year. Our operating performance resulted in strong operating cash flows of £1.18 million. In addition we received £66,000 of interest on our cash deposits. Significant cash outflows were dividends of £340,000, £146,000 corporation tax and £202,000 of capital expenditure.

The position on the group's defined benefit pension scheme reduced by £691,000 net of deferred tax (£892,000 gross), due to an increase in scheme liabilities reflecting the lower discount rates used in the actuarial calculations. We are currently reviewing the future direction of this scheme.

Net assets were £6.3 million at 30 September 2012 compared with £7.3 million at 30 September 2011 representing net assets per share of 50.0p (2011:58.2p). The principal movements being a post-tax loss of £57,000 (which includes the write-down in property values of £849,000), dividends paid of £340,000 and a reduction in the defined benefit pension scheme as noted above.

Outlook

We expect trading conditions within the markets that we serve to remain challenging for some time to come. Our prudent management of the business, which remains debt-free and cash-generative, will continue to reflect this. However, we are confident that our on-going investment in the development and delivery of our software means we are well placed to ride out the current uncertainty and to benefit when the economy returns to sustained growth.

Julian Wassell

Chief Executive

10 December 2012