Preliminary Results

16th Sep 2008 07:00



VEBNET (HOLDINGS) PLC

("Vebnet" or the "Company")

PRELIMINARY RESULTS FOR THE YEAR ENDED 30 JUNE 2008

AND RECOMMENDED CASH OFFER

Vebnet (Holdings) plc (AIM: VBT), a leading provider of employee reward portal and benefit solutions, is pleased to announce its preliminary results for the year ended 30 June 2008. The results show substantial growth in both profits and in cash generation.

For further information (including a copy of the full text of the Offer Announcement) please contact

Vebnet
Gerry O'Neill (CEO) Stephen Thurlow (CFO)	Today:  0207 466 5000 Thereafter: 0131 270 5502
Buchanan Communications (PR adviser)
Diane Stewart, James Montgomerie, Carrie Clement	0207 466 5000 or 0131 226 6150

  VEBNET (HOLDINGS) PLC

PRELIMINARY RESULTS FOR THE YEAR ENDED 30 JUNE 2008

CHAIRMAN'S STATEMENT

INTRODUCTION

I am pleased to report that, in the year ended 30 June 2008, Vebnet achieved significant increases in operating profit, PBT and cash generation over the corresponding period in 2007. This was underpinned by strong organic growth and a number of new contract wins during the year.

BUSINESS OVERVIEW

Founded in 2000, Vebnet (www.vebnet.com) is a leading provider of technology and managed services related to total reward and flexible benefit programmes. It launched its FIX&FLEX® product in 2002 and its shares were admitted to trading on AIM in 2003. 

Vebnet licences its technology either as an individual solution or as part of a full end-to-end service. The full service covers reward consultancy, benefit scheme design, communications, brokering, technology, helpdesk and outsourced administration.

Research has proved that the provision of flexible benefit programmes drives employee retention and empowerment.  It is also a key component in managing the cost of employee benefit provision for employers.

FIX&FLEX® is sold on a both direct and an indirect basis.  Customers are both UK based and international.

FINANCIAL HIGHLIGHTS

Vebnet maintained its year-on-year growth with sizeable increases in operating profit, PBT and cash generation. PBT increased 85% to £0.91m (2007: £0.49m) and the year-end cash balance increased to £3.0m (2007: £1.9m). This represents a 60% rise over the corresponding period, on total revenues which increased 14% to £6.0m (2007: £5.2m). Operating profit increased 90% to £0.79m (2007: £0.42m). Basic earnings per share increased from 5.2p to 9.7p.

Revenues from Vebnet's core FIX&FLEX® product increased by 33% to £5.1m (2007: £3.8m). Recurring licence and renewal revenue at the year-end also increased from £2.5m pa to £3.2m pa, an increase of 27%.

The Group tightly managed its cost base during the year. Costs increased by only 8% (after the IFRS adjustment for capitalised development) to reflect the additional resources required to deliver the volume of new business won.  This demonstrates the operating leverage we have in our business model.

Vebnet has adopted International Financial Reporting Standards - IFRS - for the first time in these results. Prior year results/interims have been restated to the same basis. The main change in the financial information compared with that previously reported under UK GAAP was that, in accordance with IAS 38 Intangible Assets, certain product development costs are capitalised rather than expensed when all conditions of IAS 38 have been met. Previously under UK GAAP all development costs were expensed.

  OPERATIONAL OVERVIEW

The number of customer employees using FIX&FLEX® during the year increased by 20% through a combination of organic growth from existing customers and new contract wins. At 30 June 2008 this totalled in excess of 293,000 employees.

We specifically target firms with 1,000+ employees. This represents the majority of new client wins this year. During the year we gained 26 new clients, an increase of 23%, of which 25 clients (96%) were through our direct channel. 

This was pleasing to see as last year we invested in a series of marketing initiatives focused on increasing the number of direct clients. This channel also produces higher margins for Vebnet in software licence fees and additional services. 

Although our client base covers most sectors of the market, we are particularly strong in the telecommunications, professional services and financial services sectors. I am particularly pleased to report that during 2008, we have expanded our foothold in the pharmaceutical sector with several new client wins.

During the year we signed two new long-term licence agreements with employee benefit consultants. 

FRAMEWORK FOR GROWTH

Throughout the year we realigned our organisation around functional teams that are dedicated to the delivery of client services - Implementation, Helpdesk & Administration and Scheme Rollovers. Going forward, these teams will have their own KPIs aligned to Vebnet's overall business objectives.

As we grow the business, we have introduced a number of initiatives around key business processes to ensure even greater efficiency in delivery and quality across all clients. These initiatives, together with enhanced focus on developing the talents of our people, will be the foundation of our next phase of organic growth. 

MARKET POSITIONING

The market for flexible benefit technology solutions in the UK continues to grow and remains buoyant. We believe that Vebnet technology is used in a significant number of new flex schemes that go live each year in the UK - making us a leading managed services provider of employee benefits programmes to major global organisations. We combine creative thinking and innovative technology with service excellence, and work in close partnership with our clients to design, deliver and manage flexible, employee-focused reward solutions.

We also believe the market is evolving and larger clients are looking more for integrated reward and benefit portal solutions rather than basic off the shelf packages for flexible benefits and/or Total Reward Statements.

FIX&FLEX® is evolving to reflect this growing need and we believe that this will create more opportunities for Vebnet to integrate its technology with other complementary platforms and provide client solutions that are a combination of leading edge technology packaged with our high quality consulting and communications capability.

COMPETITION

We believe the characteristics that differentiate Vebnet from its competitors are:

FIX&FLEX®'s depth of functionality and ease of configuration

the quality of our clients and partners

our accumulated knowledge base and experience

the quality, energy and dedicated commitment of our people

Our main target market (1,000+ employees) is the one where our experience and technological edge make us an ideal solution provider.

PRODUCT DEVELOPMENT

FIX&FLEX® continues to evolve as a product and a number of key elements of functionality were added this year to support new client implementations. There have also been a number of architectural changes to FIX&FLEX® including the implementation of our strategic web and application server architecture (JBoss/ Linux).

ADDITIONAL SERVICES

We have continued to grow the bespoke consulting side of our business and now around 65% of new direct client wins include a consultancy component. For communications we have developed core product toolkits for clients and also offer a customised benefits communication service involving a variety of media - print, web and animation.

We continue to see growth in the adoption of helpdesk provision and outsourced administration services for new clients. In total we now have 19 clients for whom Vebnet provides helpdesk services and 28 clients (covering over 80,000 employees) for whom we provide a full range of outsourced administration services. 

SENIOR MANAGEMENT TEAM

During the year Vebnet strengthened its management team with the appointment of Richard Morgan as Head of Consulting to provide clients with strategic advice. He is a recognised industry expert with over 20 years experience in the employee benefits sector.

He joins Vebnet from KPMG where he has been driving new business and providing consulting services on employee benefits. Prior to that Richard was Head of Flexible Benefits for Europe at Watson Wyatt. 

CURRENT TRADING & OUTLOOK

Business in the first ten weeks of the new financial year has been encouraging. We now have 25 scheduled implementations for the current financial year and have gained new customers in pharmaceutical and telecoms sectors.

We have achieved much this year. Our core business has grown substantially over the course of the previous financial year, and we have performed strongly against all key measures - revenue, profit and cash generation. Our forward sales pipeline is strong, underpinning our FY09 revenue plan. We are seeing further momentum in Vebnet's core business and the Board remains confident that the company is well positioned to enjoy future revenue growth.

Derek Scott

Chairman 15 September 2008

 

 

 

 

 

 

	Share Capital	Share Premium	Other Reserve	Profit and Loss Account	Total Equity
	£000	£000	£000	£000	£000
Balance at 1 July 2006	9,178	580	(2,951)	(4,396)	2,411
Issue of ordinary shares	146	59	-	-	205
Purchase of own shares by employee trust	-	-	-	(90)	(90)
Sales of own shares by employee trust	-	-	-	3	3
Net movements recognised directly in equity	146	59	-	(87)	118
Profit for the year	-	-	-	490	490
Total recognised income for the year	146	59	-	403	608
Balance at 30 June 2007	9,324	639	(2,951)	(3,993)	3,019
Purchase of own shares by employee trust	-	-	-	(60)	(60)
Sales of own shares by employee trust	-	-	-	50	50
Equity settled share based payment transactions	-	-	80	-	80
Net movements recognised directly in equity	-	-	80	(10)	70
Profit for the year	-	-	-	907	907
Total changes in equity for the year	-	-	80	897	977
Balance at 30 June 2008	9,324	639	(2,871)	(3,096)	3,996

	2008 £’000	2007 £’000
FIX&FLEX®
Direct channel	4,291	2,716
Licence channel	818	1,130
Total FIX&FLEX®	5,109	3,846
4th Contact	665	612
Other revenue	227	787
	6,001	5,245

 

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