TIDMINNO
Innovise plc
("Innovise" or "the company"
and collectively with its subsidiary companies "the group")
Interim Results for the six months ended 31 March 2010
CHAIRMAN'S STATEMENT
Highlights
* Turnover increased to GBP7.9 million from GBP4.5 million in H1 2009
* Operating profit before interest, tax and amortisation of intangible assets
of GBP574,000 compared to GBP677,000 in H1 2009
* All three businesses acquired during 2009 now fully integrated within two
realigned operating divisions
* Purchase of Identifile Systems Ltd completed after the period end in April
2010.
Trading conditions improved steadily during the six-month period ended 31 March
2010. While the general business environment remains challenging, I am pleased
to report that Innovise delivered solid results for the period by maintaining a
sharp focus on disciplined financial management and optimisation of its growing
business streams.
Our turnover increased by more than 75% compared with HI of 2009, reflecting
the three strategic acquisitions we made during calendar year 2009. The
restructuring of our enlarged business into two distinct and aligned operating
divisions - Innovise Enterprise Service Management (ESM) and Innovise Software
& Solutions - has now been successfully completed.
While operating profit before interest, tax and amortisation of intangible
assets was down to GBP574,000 from the record GBP677,000 achieved in the first half
of 2009, the Board considers this to be a very competitive and encouraging
performance in view of the difficult market conditions.
I believe our results for the period demonstrate both the ability of the
Innovise leadership team to deliver sustainable profitable growth through its
focused strategy of targeted acquisitions, business integration and rigorous
cost control, and also the commitment of the entire Innovise team to deliver
quality solutions and highly dependable services to all our customers.
During the second half of our financial year, we will continue to place great
emphasis on maintaining and optimising our near-term profitability, while
positioning the company for long-term growth within our niche markets.
Vin Murria
Chairman
15 June 2010
CHIEF EXECUTIVE'S REVIEW
Against a challenging backdrop, our primary focus during the six months to 31
March 2010 was on maintaining profitability while ensuring that the company is
well placed to take advantage of additional growth opportunities in the future.
The restructuring of the group following the three acquisitions we announced
during 2009 has been completed, paving the way for sustained organic growth.
The Innovise Enterprise Service Management (ESM) division incorporates the
former Abilitec, Infrasolve and Harbrook businesses, while the Innovise
Software & Solutions division includes RapidHost as well as our established
software and managed services business segments.
Just after the interim period ended, we announced the bolt-on acquisition of
Identifile Systems Ltd, a small Hertfordshire-based company that designs and
supplies identity card systems and visitor management software. At the time of
acquisition, the business had an annual turnover in the region of GBP550,000.
We are confident that Innovise will make Identifile an earnings-enhancing
acquisition from the current financial year owing to the synergies available to
the combined businesses. And while it is one of our smaller acquisitions, it
will add further value to our total customer offering. Identifile's software
solutions fit neatly into our existing sales activity within the global
facilities management marketplace.
Financial
Total turnover for the period was GBP7.9 million, up from GBP4.5 million for the
previous interim period fuelled by a combination of acquisitive growth and some
sizeable ESM software licence re-sale activity in the first half of this
financial year.
Operating profitability was affected by the recession and reduced utilisation
levels, particularly in the first quarter. Moreover, operating margins were
affected by the sizeable contribution of licence re-sale activity within the
ESM division, where gross margin is lower than for consulting and support.
Adjusted operating profit (before interest, tax and amortisation of intangible
assets) was GBP574,000 compared to the record GBP677,000 reported for the six
months last year.
We always focus attention on maximising cash conversion and have traditionally
converted most of our profits into cash. The performance in this financial year
is expected to be relatively poor compared to the past. There are a number of
factors at play: 1) capital expenditure to fit out the new Slough office, 2)
high levels of growth in the more capital intensive ESM division, and 3) a
general deterioration in payment terms as customers react to the recession and
liquidity constraints by negotiating more favourable terms. We expect this to
be a short lived change rather than a structural shift in our ability to
convert profits into cash.
Recurring sales increased from GBP1.7 million in the previous interim period to GBP
1.9 million. The Board is not recommending payment of an interim dividend.
Outlook
While the economy generally and the market for IT services specifically have
been improving in recent months, trading conditions are still challenging and
are expected to restrain our short-term profit. Nevertheless, Innovise remains
committed to creating additional shareholder value by strengthening and
expanding its position as trusted adviser to customers in its niche markets.
Our forward sales pipeline is encouraging, and we will continue to build our
competitive advantage through rigorous operational and financial management,
while also positioning the company for sustainable long-term growth through
both internal investments and strategic, value-adding acquisitions.
Mike Taylor
Chief Executive Officer
15 June 2010
Unaudited consolidated income statement
for the six months ended 31 March 2010
Unaudited Unaudited Audited
6 months 6 months Year
ended ended ended
31 March 31 March 30 September
2010 2009 2009
GBP GBP GBP
CONTINUING OPERATIONS Notes
REVENUE 7,935,133 4,494,329 10,139,959
Cost of sales (4,864,656) (2,164,626) (5,227,931)
GROSS PROFIT 3,070,477 2,329,703 4,912,028
Administrative expenses (2,713,229) (1,783,726) (3,975,032)
OPERATING PROFIT BEFORE
AMORTISATION OF INTANGIBLE
ASSETS 574,496 677,252 1,373,519
Restructuring costs - - (100,000)
Amortisation of intangible (217,248) (131,275) (336,523)
assets
OPERATING PROFIT 357,248 545,977 936,996
Finance income 1,326 18,605 12,577
Finance costs (95,447) (91,950) (194,146)
PROFIT BEFORE TAX 755,427
263,127 472,632
Tax (61,981) (111,112) (73,057)
PROFIT FOR THE PERIOD FROM 201,146 361,520 682,370
CONTINUING OPERATIONS
DISCONTINUED OPERATIONS
LOSS FOR THE PERIOD FROM - (78,600) (2,101,455)
DISCONTINUED OPERATIONS
PROFIT/(LOSS) FOR THE PERIOD 201,146 282,920 (1,419,085)
ATTRIBUTABLE TO EQUITY
HOLDERS OF THE PARENT
EARNINGS/(LOSS) PER SHARE
Basic earnings per share 2 0.5p 0.9p (3.9)p
Diluted earnings per share 2 0.5p 0.8p (3.9)p
Continuing operations only
Basic earnings per share 2 0.5p 1.1p 1.9p
Diluted earnings per share 2 0.5p 1.0p 1.8p
The unaudited results for the 6 months ended 31 March 2009 have been restated
to separate continuing and discontinued operations.
Unaudited consolidated statement of comprehensive income
For the six months ended 31 March 2010
Unaudited Unaudited Audited
6 months 6 months Year
ended ended ended
31 March 31 March 30 September
2010 2009 2009
GBP GBP GBP
Profit/(loss) for the period 201,146 282,920 (1,419,085)
Other comprehensive income:
Increase/(reduction) in value of 19,000 (50,000) (27,000)
derivative financial instrument
taken
to hedging reserve
Total comprehensive income for 220,146 232,920 (1,446,085)
the period
Unaudited consolidated balance sheet
as at 31 March 2010
Unaudited Unaudited Audited
As at As at As at
31 March 31 March 30
2010 2009 September
GBP GBP 2009
GBP
ASSETS
NON-CURRENT ASSETS
Goodwill 12,347,305 13,371,832 12,347,305
Other intangible assets 1,450,234 2,443,980 1,667,482
Property, plant and equipment 397,461 214,465 332,923
Investments in subsidiaries 51 51 51
14,195,051 16,030,328 14,347,761
CURRENT ASSETS
Inventories 6,527 - 31,609
Trade and other receivables 4,050,333 3,650,115 2,982,872
Current tax assets - - 2,500
Cash and cash equivalents 313,323 804,122 680,459
4,370,183 4,454,237 3,697,440
TOTAL ASSETS 18,565,234 20,484,565 18,045,201
LIABILITIES
CURRENT LIABILITIES
Trade and other payables (4,253,140) (3,288,542) (3,500,499)
Current tax liabilities (438,255) (653,759) (570,591)
Loans (500,000) (500,000) (500,000)
Obligations under finance - (12,500) -
leases
(5,191,395) (4,454,801) (4,571,090)
NET CURRENT LIABILITIES (821,212) (564) (873,650)
NON-CURRENT LIABILITIES
Convertible loan stock (1,091,947) (1,006,419) (1,048,037)
Other loans (855,971) (1,339,771) (1,099,371)
Deferred tax liabilities (404,561) (674,162) (462,521)
Obligations under finance - (7,917) -
leases
Provisions (47,000) (32,500) (102,968)
Derivative financial (28,000) (70,000) (47,000)
instrument
(2,427,479) (3,130,769) (2,759,897)
TOTAL LIABILITIES (7,618,874) (7,585,570) (7,330,987)
NET ASSETS 10,946,360 12,898,995 10,714,214
EQUITY ATTRIBUTABLE TO
EQUITY HOLDERS OF THE PARENT
Called up share capital 2,253,507 2,256,310 2,241,007
Shares to be issued 500,000 1,000,000 1,000,000
Equity reserve 19,421 19,421 19,421
Share premium account 1,083,917 1,083,917 1,083,917
Capital redemption reserve 29,054 - 29,054
Merger reserve 5,924,640 8,177,225 5,437,140
Reverse acquisition reserve (918,040) (918,040) (918,040)
Retained earnings 2,081,861 1,350,162 1,868,715
Hedging reserve (28,000) (70,000) (47,000)
TOTAL EQUITY 10,946,360 12,898,995 10,714,214
Unaudited consolidated statement of changes in equity
for the six months ended 31 March 2010
Share Shares to Share Capital Merger Other Retained Hedging Total
capital be issued premium redemption reserve reserves earnings reserve equity
reserve
GBP GBP GBP GBP GBP GBP GBP GBP
At 30 September 2,241,007 1,000,000 1,083,917 29,054 5,437,140 (898,619) 1,868,715 (47,000) 10,714,214
2009
Comprehensive - - - - - - 201,146 19,000 220,146
income
Deferred 12,500 (500,000) - - 487,500 - - - -
consideration
for Infrasolve
acquisition
Share-based - - - - - - 12,000 - 12,000
payments
At 31 March 2,253,507 500,000 1,083,917 29,054 5,924,640 (898,619) 2,081,861 (28,000) 10,946,360
2010
At 30 September 2,129,031 500,000 937,667 - 3,300,754 (898,619) 1,061,943 (20,000) 7,010,776
2008
Comprehensive - - - - - - 282,920 (50,000) 232,920
income
Issue of shares 3,750 - 146,250 - - - - - 150,000
for cash
Issue of shares 100,000 1,000,000 - - 3,900,000 - - - 5,000,000
for Infrasolve
acquisition
Deferred 23,529 (500,000) - - 976,471 - - - 500,000
consideration
for Abilitec
acquisition
Share-based - - - - - - 5,299 - 5,299
payments
At 31 March 2,256,310 1,000,000 1,083,917 - 8,177,225 (898,619) 1,350,162 (70,000) 12,898,995
2009
At 30 September 2,129,031 500,000 937,667 - 3,300,754 (898,619) 1,061,943 (20,000) 7,010,776
2008
Comprehensive - - - - - - (1,419,085) (27,000) (1,446,085)
income
Issue of shares 3,750 - 146,250 - - - - - 150,000
for cash
Issue of shares 100,000 1,000,000 - - 3,900,000 - - - 5,000,000
for Infrasolve
acquisition
Deferred 23,529 (500,000) - - 976,471 - - - 500,000
consideration
for Abilitec
acquisition
Consideration 5,000 - - - 195,000 - - - 200,000
for Harbrook
acquisition
Consideration 8,750 - - - 341,250 - - - 350,000
for RapidHost
acquisition
Demerger of (29,054) - - 29,054 (3,276,335) - 2,215,757 - (1,060,578)
Data Technology
Limited
Share-based - - - - - - 10,100 - 10,100
payments
At 30 September 2,241,007 1,000,000 1,083,917 29,054 5,437,140 (898,619) 1,868,715 (47,000) 10,714,214
2009
Unaudited consolidated cash flow statement
for the six months ended 31 March 2010
Unaudited Unaudited Audited
6 months 6 months Year
ended ended ended
31 March 31 March 30 September
2010 2009 2009
GBP GBP GBP
Operating profit - continuing 357,248 545,977 936,996
Operating loss - discontinued - (112,000) (221,825)
Total operating profit 357,248 433,977 715,171
Depreciation of property, plant and 90,592 47,136 114,488
equipment
Profit on disposal of property, - - (1,993)
plant and equipment
Amortisation of intangible assets 217,248 236,275 534,408
Share-based payment 12,000 5,299 10,100
Operating cash flows before 677,088 722,687 1,372,174
movement
in working capital
Decrease/(increase) in inventories 25,082 - (31,609)
(Increase)/decrease in receivables (1,067,461) (78,717) 703,495
Increase/(decrease) in payables 908,522 (24,431) (726,443)
(Decrease)/increase in provisions (55,968) - 6,160
Cash generated by operations 487,263 619,539 1,323,777
Tax paid (net of refunds) (249,777) (32,858) (209,327)
Net cash flow from operating 237,486 586,681 1,114,450
activities
Investing activities
Interest received 1,326 22,605 16,693
Purchase of property, plant and (155,130) (44,628) (146,095)
equipment
Disposal of property, plant and - - 26,500
equipment
Costs of disposal of subsidiary - - (106,289)
Acquisition of subsidiaries (155,881) (1,760,250) (1,982,313)
Cash balances of acquired - 942,345 1,141,910
subsidiaries
Cash balance of subsidiary disposed - - (104,592)
of
Net cash used in investing (309,685) (839,928) (1,154,186)
activities
Financing activities
Repayment of borrowings (250,000) (756,250) (1,042,829)
Interest paid (44,937) (66,510) (117,105)
Proceeds on issue of shares - 150,000 150,000
New loans raised - 800,000 800,000
Net cash from financing activities (294,937) 127,240 (209,934)
Net decrease in cash and cash (367,136) (126,007) (249,670)
equivalents
Cash and cash equivalents at
beginning 680,459 930,129 930,129
of period
Cash and cash equivalents at end of
period 313,323 804,122 680,459
Notes to the unaudited interim report
For the six months ended 31 March 2010
1. BASIS OF PREPARATION
Innovise plc is a company incorporated in the United Kingdom under the
Companies Act 2006. Its registered office address is Hellier House, Wychbury
Court, Two Woods Lane, Brierley Hill, DY5 1TA.
The condensed consolidated interim financial statements of the company for the
six months ended 31 March 2010 comprise the company and its subsidiaries
(together referred to as "the group"). These interim statements do not
constitute statutory accounts as defined in Section 434 of the Companies Act
2006. The group has adopted IAS 1 (revised) for the first time in the current
year. While this has resulted in a change in the terms used to describe the
primary financial statements, it has not affected the reported results. The
interim financial information has otherwise been prepared using the same
accounting policies, presentation, method of computation and estimation
techniques as are expected to be adopted in the group financial statements for
the year ending 30 September 2010 and which were adopted in the audited group
financial statements for the year ended 30 September 2009 .
The financial information for the year ended 30 September 2009 has been
extracted from the statutory accounts for that period. The auditors have
reported on the statutory accounts for the year ended 30 September 2009 and
their report was unqualified and did not contain a statement under section 498
(2) (accounting records or returns inadequate or accounts or directors'
remuneration report not agreeing with records and returns), or Section 498 (3)
(failure to obtain necessary information and explanations). A copy of those
financial statements has been filed with the Registrar of Companies.
The condensed consolidated interim financial statements have been prepared
using accounting policies consistent with International Financial Reporting
standards (IFRSs) as adopted in the EU. While the financial figures included in
this half yearly report have been computed in accordance with IFRSs as adopted
in the EU applicable to interim periods, this half yearly report does not
contain sufficient information to constitute an interim financial report as
that term is defined in IAS 34.
The condensed consolidated interim financial statements are presented in pounds
sterling because that is the currency of the primary economic environment in
which the group operates, and were authorised for issue on 14 June 2010.
Further copies of the unaudited interim report can be obtained from the
registered office during normal business hours. The report is also available on
the company's website, www.innovise.com.
2. EARNINGS PER SHARE
The calculation of the basic and diluted earnings/(loss) per share is based on
the following data:
Earnings/(loss) for the period attributable to equity holders of the parent
Unaudited Unaudited Audited
6 months 6 months Year
ended ended ended
31 March 31 March 30 September
2010 2009 2009
GBP GBP GBP
Earnings/(loss) for the purpose of 201,146 282,920 (1,419,085)
basic earnings per share being net
profit attributable to equity
holders of the parent
Effect of dilutive potential
ordinary shares:
Interest on convertible loan stock - 1,949 -
(net of tax)
Earnings for the purposes of 201,146 284,869 (1,419,085)
diluted earnings per share
Earnings for the period attributable to continuing operations
Earnings for the purpose of basic 201,146 361,520 682,370
earnings per share being net profit
attributable to continuing
operations
Effect of dilutive potential
ordinary shares:
Interest on convertible loan stock - 1,949 -
(net of tax)
Earnings for the purposes of 201,146 363,469 682,370
diluted earnings per share
Number of shares
Weighted average number of ordinary 36,354,888
shares for the purpose of basic 38,381,471 33,033,524
earnings per share
Effect of dilutive potential
ordinary shares:
Share options and warrants 12,877 170,903 146,269
Convertible loan notes - 500,000 -
Contingently issued shares on 2,019,231 961,539 1,732,877
acquisition of subsidiary
Weighted average number of ordinary 38,234,034
shares for the purpose of diluted 40,413,579 34,665,966
earnings per share
Adjusted earnings per share - continuing business only
Adjusted earnings per share calculated before deducting amortisation of
intangible assets and the tax attributable thereto are presented below in order
to assist in an understanding of the underlying performance of the business.
Unaudited Unaudited Audited
6 months 6 months Year
ended ended ended
31 March 31 March 30 September
2010 2009 2009
GBP GBP GBP
Adjusted earnings
Earnings for the purposes of basic 201,146 361,520 682,370
earnings
per share being net profit for
continuing operations
Amortisation of intangible assets 217,248 131,275 336,523
Tax credit attributable to (57,960) (33,888) (94,226)
amortisation
Restructuring costs - - 100,000
Tax attributable to restructuring - - (28,000)
costs
Earnings for the purposes of 360,434 458,907 996,667
adjusted basic earnings per share
calculation
Interest on convertible loan stock - 1,949 -
(net of tax)
Earnings for the purposes of 360,434 460,856 996,667
adjusted diluted earnings per share
Adjusted basic earnings per share 0.9p 1.4p 2.7p
Adjusted diluted earnings per share 0.9p 1.3p 2.6p
The number of shares for the purpose of calculating the adjusted earnings per
share figures is as set out on the previous page.
3. ACQUISITIONS
During the period, the company issued 1,250,000 shares in respect of deferred
consideration for the acquisition of Infrasolve Limited. These shares have been
reflected in equity at a price of 40p, being their fair value at the date of
acquisition.
During the period, the company paid GBP155,881 in cash in respect of deferred
consideration to the vendors of RapidHost, which was acquired in July 2009.
4. POST BALANCE SHEET EVENT
After the period end, the company acquired 100% of the issued ordinary share
capital of Identifile Systems Limited for GBP60,000 in cash.
For further information contact:
Mike Taylor, Chief Executive Officer, Innovise plc 0870 626 0400
Tony Edwards, Finance Director, Innovise plc 0870 626 0400
Stuart Lane / Shane Gallwey, Astaire Securities plc 020 7492 4775
Ian Foster, Wordsworth Communication Ltd 07739 185 050
END
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