TIDMSPE
RNS Number : 8312O
Sopheon PLC
24 August 2017
Embargoed release: 07:00hrs Thursday 24 August 2017
SOPHEON PLC
("Sopheon", the "Company" or the "Group")
RESULTS FOR THE 6 MONTHS TO 30 JUNE 2017
Sopheon plc, the international provider of software and services
that improve the return from innovation and new product development
investments, announces its unaudited half-yearly financial report
for the six months ended 30 June 2017 together with a business
review and outlook statement for the remaining part of the current
year.
Highlights:
-- Revenue: $12.5m (2016: $11.5m)
EBITDA (adjusted): $3.0m (2016: $2.7m)
Profit before tax (adjusted): $1.8m (2016 : $1.4m)
EBITDA(1) and profit before tax have been adjusted to exclude
foreign exchange gains, amounting to $0.2m in the first half of
2016. No such adjustment was required for 2017.
-- Continued growth in revenue and profitability as the business
delivers on its strategy. 28 license transactions were closed in
the period vs 20 for the same period last year.
-- Revenue visibility(2) for full-year 2017 now at $20.3m,
compared to $18.4m at this time last year.
-- Market activity with and inquiries from leading industry
voices Gartner and Forrester have increased materially year on
year.
-- Sopheon investment in extending the use of Accolade to
enterprise-wide digital automation gains momentum. Two product
releases since the start of the year, including a market first with
landmark knowledge discovery and insights features are expected to
contribute to growth
Sopheon's Chairman, Barry Mence said: "In addition to increasing
both revenue and profits, we continue to build momentum and gain
enhanced market recognition... full year revenue visibility for
2017 from contracted business and recurring revenue streams is
already at $20.3m. In addition we have a growing sales pipeline,
including several blue chip companies representing major enterprise
opportunities. These factors give the Board confidence in meeting
our goals for the year, and as importantly, our ambition to
accelerate growth in the future. Given these positive
circumstances, the Board is actively considering the introduction
of a dividend policy."
For further information contact:
+ 44 (0)
Barry Mence, Chairman 1276 919
Arif Karimjee, CFO Sopheon plc 560
Carl Holmes / Giles
Rolls (corporate finance)
Mia Gardener / Camille + 44 (0)
Gochez (corporate broking) finnCap Ltd 20 7220 0500
About Sopheon. Sopheon (LSE: SPE) partners with customers to
provide complete enterprise innovation management solutions
including software, expertise, and best practices, that enable them
to achieve exceptional long-term revenue growth and profitability.
Sopheon's Accolade solution provides unique, fully-integrated
coverage for the entire innovation management and new product
development lifecycle, including strategic innovation planning,
roadmapping, idea and concept development, process and project
management, portfolio management and resource planning. Sopheon's
solutions have been implemented by over 250 customers with over
60,000 users in over 50 countries. Sopheon is listed on AIM,
operated by the London Stock Exchange. For more information, please
visit www.sopheon.com
(1) EBITDA is defined in Note 3. (2) Revenue visibility is
defined in Note 5.
Sopheon(R) and Accolade(R) are trademarks of Sopheon.
CHAIRMAN'S STATEMENT
Trading Performance and Results
The first half of 2017 has shown continued advancement on all
fronts, which has translated into revenues growing to $12.5m, from
$11.5m for the same period last year - itself a particularly strong
result compared to $8.4m in the first half of 2015.
A total of 28 license orders were booked in the period, compared
to 20 during the same period last year. The first half of 2016
included a very substantial order from an existing enterprise-tier
customer. The 2017 license revenue was higher overall, and spread
more evenly across several larger deals - representing a balanced
and healthy customer profile. Maintenance and hosting revenues rose
as well, reflecting the long-term benefit of several license
closings in 2016, as well as new business this year. Services
revenues were relatively stable, reflecting continued delivery of
implementation projects at a similar pace to the year before. These
shifts are reflected in an overall revenue mix between license,
service and maintenance/hosting of 27:34:39 respectively, compared
to 26:38:36 in the first half of last year. Our recurring base of
maintenance, hosting and SaaS contracts is now at $10.5m annually,
compared to approximately $9m at this time last year, underlining
overall momentum and demonstrating the increased "stickiness" and
value associated with our solutions. We continue to deliver value
for the maintenance investment our clients make with two new
releases (Accolade 11.1 and Accolade 11.2) issued, as planned, in
the first half of 2017.
Revenue visibility (defined in Note 5) for 2017 now stands at
$20.3m, compared to $17.5m at the time of our Annual General
Meeting on 8 June. This can also be compared to $18.4m at this time
last year, showing continued progress in line with our goals for
the year. Activity was particularly strong in Europe during the
first half of the year. Sopheon's growth strategy to increase
"lifetime value" of our customer relationships through an expanded
partnership model with blue chip enterprise customers has resulted
in new sources of revenue. In this regard, we are working with
clients such as Electrolux, Honeywell, PepsiCo, Proctor &
Gamble and Merck, among others. We are encouraged by the early
success of our "Enterprise Program" and continue to invest in the
program for increased growth.
We entered 2017 with open staff positions from 2016, and with
further openings arising in our 2017 plan. Several of these
recruits are now in place or under offer, and accordingly total
headcount at 30 June was 123. This has resulted in an increase in
staff costs of around $0.4m compared to the first half of 2016.
Non-staff costs have also risen, by approaching $0.4m. Last year
these were flattered by a $0.2m exchange gain that arose largely
due to the sharp rise in other currencies against Sterling
following the UK's EU membership referendum, so the comparable
increase is closer to $0.2m.
Gross margin rose to 72.1 percent, compared to 71.4 percent in
2016. We capitalized product development of $1m compared to $0.9m
last year, offset by $1.1m of amortization (2016: $1m). Overall
this has resulted in higher net R&D expense in the income
statement of $2.1m compared to $2.0m last year. Sales and marketing
costs have also increased from $3.3m to $3.5m, reflecting the
effect of additional investment in expanding our distribution
channels in the latter part of last year. Finally, administrative
costs (which includes all other overheads and office costs) show an
overall increase from $1.2m to $1.6m. Of this the majority relates
to the exchange gain referenced above, with the balance due to
additional staff in HR, finance and IT areas, and several smaller
items.
The overall profit before tax reported for the half year period
was $1.8m (2016: $1.6m). This result includes interest,
depreciation and amortization costs amounting to $1.3m (2016:
$1.3m). The EBITDA result for the first half of 2017, which does
not include these elements, was $3.0m (2016: $2.9m). The
comparatives for 2016 include the $0.2m exchange gain referenced
above. Excluding such gains, adjusted EBITDA was $3.0m (2016:
$2.7m) and adjusted profit before tax was $1.8m (2016: $1.4m).
Balance sheet and Corporate
Net assets at 30 June 2017 have grown to $12.3m (30 June 2016:
$7.3m), with cash resources at the end of the period rising to
$11.5m (30 June 2016: $8.1m), a solid platform for the development
of the business. Approximately $8.0m was held in US Dollars, $3.2m
in Euros and the balance of $0.3m in Sterling (30 June 2016: $6.4m
$1.5m, and $0.1m respectively). Intangible assets at 30 June 2017
stood at $5.4m (30 June 2016: $5.4m). This includes (i) $4.4m being
the net book value of capitalized research and development (30 June
2016: $4.4m) and (ii) $1.0m (30 June 2016: $1.0m) being the net
book value of acquired intangible assets. During the period,
capitalization costs were broadly offset by amortization
charges.
Since 2014 the Group has established bank facilities with the
London branch of Silicon Valley Bank. These facilities comprise a
term loan of $0.5m repayable in 36 equal monthly instalments, and a
$3m revolving line of credit, which is only used on demand. The
current term of the facilities is through to January 2019. Both
facilities bear interest at rates of 2.75 percent over Wall Street
Prime, resulting in a current effective rate of 7.00 percent. The
facilities are subject to covenants based on working capital
ratios. The drawdown mechanics and interest rates are also subject
to working capital ratios.
The Group also has a long standing convertible unsecured loan
stock instrument, held by a group of investors including key
members of the board and senior management team. Current maturity
date is January 2019, and the conversion price is 76.5 pence per
share. During the past year there have been two conversions,
resulting in GBP1.94m remaining of the original GBP2m of loan
stock.
Following several years of clarifying our debt, equity and
listing structure, other corporate activity has been relatively
quiet in the first half of the year.
Strategy and Product
Sopheon's mission is to help our customers achieve exceptional
long-term growth and profitability through sustainable innovation.
Many market leading corporations have built up a multitude of
stand-alone systems over time, resulting in isolated pockets of
information siloed in each respective function of the company. This
operational disconnect prevents organizations from responding with
speed to external market changes. It is projected that three
quarters of the current S&P 500 companies will be replaced by
new market entrants by 2027. To survive today's massive industry
disruption, companies must "digitalize" enterprise strategy,
execution and innovation. Sopheon has created a software solution
that connects the disconnected parts of these global enterprises,
delivering an end-to-end, cross-functional decision-making platform
that links the strategic ambition of the organization to the
execution activities required to realize forecasted
performance.
Our solution has enabled dynamic portfolio management in some of
the most successful and well known global leaders, increasing
"lifetime value" of these relationships both to the client and to
Sopheon. We believe that Sopheon continues to lead the market in
vision, experience and capability that today - in our opinion -
remain unmatched by competitors.
The Enterprise Innovation Market continues to evolve and grow.
In recent months Sopheon has gained visibility from a number of
recognized market sources, including being named a representative
vendor in Gartner's 2016 Market Guide for Strategy Execution
Software; voted a top provider of NPDI solutions by CGT magazine;
achieving a new advanced certification for Innovation Team Agility
by Stage Gate International; more recently, recognition in
Gartner's new 2017 Magic Quadrant for Project Portfolio Management;
and being awarded as a recipient of the European ITEA funded
projects in application of monitoring and real-time decision
support in smart environments. Sopheon is the only vendor
referenced in both the Gartner Market Guide for Strategy Execution
Software and the Magic Quadrant for Project Portfolio Management.
In our view, this provides strong validation of our unique position
and strength in the enterprise portfolio management, initiative
management, and product development markets.
Our commitment to aggressively invest in advancing our product
as a cornerstone of our business continues and we are on track to
achieve our planned pace of three releases per year. In 2017 we
have released versions 11.1 in February, which emphasized and
further extended strategy to execution capabilities; and 11.2 in
July, which once again demonstrated our thought leadership in the
market by delivering Accolade Insights - new analytic and knowledge
discovery capabilities to proactively manage risk and create
breakthrough innovations with greater efficiency for our enterprise
clients. In parallel, we continue to invest in the expansion of our
"out-of-the-box" Express solution, supporting a dual market
segmentation approach targeted to offer rapid time to value for
both medium-sized and larger companies.
Outlook
Our growth strategy is simple - continue to build on our current
momentum, and execute on our four over-arching initiatives as
outlined in our annual report: (i) extend application of our
innovation solutions to facilitate digitalization of strategic
planning, portfolio, initiative execution, and innovation at the
enterprise level; (ii) generate faster growth rate in our target
industries through specialization; (iii) introduce new offerings to
expand the growth and lifetime value from our impressive customer
base; and (iv) expand our partner ecosystem in multiple ways -
including geographical expansion, distribution channel expansion
and also strategic partnerships to assist in scaling and creating
higher growth rates going forward. We continue to drive forward in
all these areas.
First half performance was consistent with our 2017 plan,
delivering favorable results against growth initiatives,
operational objectives and financial goals. In addition to
increasing both revenue and profits, we continue to build momentum
from expanded solutions introduced to our existing clients, the
addition of new clients and enhanced activity level of market
recognition and visibility by leading business analysts Gartner and
Forrester. Full year revenue visibility for 2017 from contracted
business and recurring revenue streams is already at $20.3m. In
addition we have a growing sales pipeline, including several blue
chip companies representing major enterprise opportunities. These
positive factors give the Board confidence in meeting our goals for
the year, and as importantly, our ambition to accelerate growth in
the future. Given these circumstances, the Board is actively
considering the introduction of a dividend policy.
Barry Mence 23 August 2017
Chairman
CONSOLIDATED INCOME STATEMENT FOR THE
SIX MONTHSED 30 JUNE 2017
2017 2016
$'000 $'000
(unaudited) (unaudited)
Revenue 12,505 11,534
Cost of sales (3,494) (3,300)
------------ ------------
Gross profit 9,011 8,234
Sales and marketing expense (3,470) (3,340)
Research and development expense (2,073) (1,982)
Administrative expense (1,580) (1,169)
Operating profit 1,888 1,743
Finance income - 1
Finance expense (135) (156)
------------ ------------
Profit for the period before tax 1,753 1,588
Income tax credit 27 -
------------ ------------
Profit for the period 1,780 1,588
============ ============
Earnings per share - basic in cents 24.10c 21.81c
Earnings per share - fully diluted
in cents 18.01c 17.16c
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME FOR THE
SIX MONTHSED 30 JUNE 2017
2017 2016
$'000 $'000
(unaudited) (unaudited)
Profit for the period 1,780 1,588
Amounts that may be recycled in
future periods
Exchange differences on translation
of foreign operations (19) 134
------------ ------------
Total comprehensive profit for
the period 1,761 1,722
============ ============
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
AT 30 JUNE 2017
30 June 31 Dec 30 June
2017 2016 2016
$'000 $'000 $'000
(unaudited) (audited) (unaudited)
Assets
Non-current assets
Property, plant
and equipment 327 241 203
Intangible assets 5,441 5,469 5,443
Deferred tax asset 1,366 1,338 -
Other receivable 19 19 19
------------ ---------- --------------
7,153 7,067 5,665
------------ ---------- --------------
Current assets
Trade and other
receivables 7,877 9,696 7,934
Cash and cash equivalents 11,486 10,061 8,055
------------ ---------- --------------
19,363 19,757 15,989
------------ ---------- --------------
Total assets 26,516 26,824 21,654
Liabilities
Current liabilities
Borrowings 2,271 3,167 2,458
Deferred revenue 5,773 6,224 5,460
Trade and other
payables 3,561 4,428 3,471
------------ ---------- --------------
11,605 13,819 11,389
------------ ---------- --------------
Non-current liabilities
Borrowings 2,634 2,648 2,972
Total liabilities 14,239 16,467 14,361
------------ ---------- --------------
Net assets 12,277 10,357 7,293
============ ========== ==============
Equity
Share capital 2,398 2,375 2,356
Capital reserves 5,891 5,843 5,789
Translation reserve 314 333 131
Retained earnings
/ (losses) 3,674 1,806 (983)
------------ ---------- --------------
Total equity 12,277 10,357 7,293
============ ========== ==============
CONSOLIDATED CASH FLOW STATEMENT FOR THE
SIX MONTHSED 30 JUNE 2017
2017 2016
$'000 $'000
(unaudited) (unaudited)
Operating Activities
Profit for the period 1,780 1,588
Finance income - (1)
Finance expense 135 156
Depreciation of property, plant
and equipment 83 91
Amortization of intangible assets 1,068 1,030
Share based payment expense 75 34
Deferred tax credit (27) -
------------ ------------
Operating cash flows before movement
in working capital 3,114 2,898
Decrease/(increase) in receivables 1,979 (293)
(Decrease)/increase in payables (1,610) 96
Net cash from operating activities 3,483 2,701
Investing Activities
Finance income - 1
Purchases of property, plant and
equipment (160) (103)
Capitalization of development costs (1,040) (894)
------------ ------------
Net cash used in investing activities (1,200) (996)
Financing Activities
Exercise of share options 21 6
New borrowings - 359
Repayment of borrowings (85) (85)
Movement in amounts drawn under
lines of credit (900) (700)
Finance expense (135) (156)
------------ ------------
Net cash used in financing activities (1,099) (576)
Net increase in cash and cash equivalents 1,184 1,129
Cash and cash equivalents at the
beginning of the period 10,061 7,046
Effect of foreign exchange rate
changes 241 (120)
------------ ------------
Cash and cash equivalents at the
end of the period 11,486 8,055
============ ============
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY FOR THE
SIX MONTHSED 30 JUNE 2017
Trans- Retained
Share Capital lation Earnings
Capital Reserves Reserve / (losses) Total
$'000 $'000 $'000 $'000 $'000
At 1 January 2016
(audited) 2,354 5,751 (3) (2,571) 5,531
Issues of shares 2 4 - - 6
Share based payments - 34 - - 34
Profit for the period
before tax - - - 1,588 1,588
Other comprehensive
income - - 134 - 134
-------- --------- -------- ----------- -------
At 30 June 2016
(unaudited) 2,356 5,789 131 (983) 7,293
Issues of shares 19 94 - - 113
Share based payments - 28 - - 28
Lapsing or expiry
of share options - (68) - 68 -
Profit for the period
before tax - - - 1,383 1,383
Deferred tax credit - - - 1,338 1,338
Other comprehensive
income - - 202 - 202
At 31 December 2016
(audited) 2,375 5,843 333 1,806 10,357
Issues of shares 23 61 - - 84
Share based payments - 75 - - 75
Lapsing or expiry
of share options - (88) - 88 -
Profit for the period
before tax - - - 1,753 1,753
Deferred tax credit - - - 27 27
Other comprehensive
income - - (19) - (19)
At 30 June 2017
(unaudited) 2,398 5,891 314 3,674 12,277
======== ========= ======== =========== =======
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
1. GENERAL INFORMATION
Sopheon plc is a company domiciled in England. The interim
financial information of the Company for the six months ended 30
June 2017 comprise the Company and its subsidiaries (together
referred to as the "Group").
2. PRINCIPAL ACCOUNTING POLICIES
Basis of Preparation
These consolidated financial statements have been prepared using
accounting policies based on International Financial Reporting
Standards (IFRS and IFRIC Interpretations) issued by the
International Accounting Standards Board ("IASB") as adopted for
use in the EU. They do not include all disclosures that would
otherwise be required in a complete set of financial statements and
should be read in conjunction with 31 December 2016 Annual Report.
The financial information for the half years ended 30 June 2017 and
30 June 2016 does not constitute statutory accounts within the
meaning of Section 434 (3) of the Companies Act 2006 and both
periods are unaudited. The comparative financial information for
the year ended 31 December 2016 included within this report does
not constitute the full statutory Annual Report for that period.
The statutory Annual Report and Financial Statements for 2016 have
been filed with the Registrar of Companies. The Independent
Auditors' Report on the Annual Report and Financial Statements for
the year ended 31 December 2016 was unqualified, did not draw
attention to any matters by way of emphasis, and did not contain a
statement under 498(2) - (3) of the Companies Act 2006. The same
accounting policies, presentation and methods of computation are
followed in these interim consolidated financial statements as were
applied in the Group's 31 December 2016 annual audited financial
statements. In addition, the IASB have issued a number of IFRS and
IFRIC amendments or interpretations since the last Annual Report
was published. The directors have not yet fully considered whether
any of these will have a material impact on the Group.
The Board of Directors approved this interim report on 23 August
2017.
Going Concern
The consolidated financial statements have been prepared on a
going concern basis. In reaching their assessment, the directors
have considered a period extending at least 12 months from the date
of approval of this half-yearly financial report. This assessment
has included consideration of the forecast performance of the
business for the foreseeable future, the cash and financing
facilities available to the Group, and the repayment terms in
respect of the Group's borrowings.
In the first half of 2017, the Group achieved revenues of $12.5m
and achieved a profit before tax of $1.8m. The Group's sales
pipeline is strong, and the directors are very positive about the
prospects for the business. At the date of this half-yearly
financial report, the Group's revenue visibility (as defined in
Note 5 below) for the current year has risen above $20m. To meet
its objectives, the Group has been increasing headcount and
investment levels. In addition, the time-to-close and the order
value of individual sales continues to vary considerably. When
combined with the relatively low-volume and high-value nature of
the Group's business, these are factors which constrain the ability
to accurately predict revenue performance. However, the Group's
gross cash balance at June 30, 2017 was $11.5m and net current
assets $7.8m, providing a solid financial foundation to deal with
potential volatility in results that might arise.
After making enquiries, the directors have a reasonable
expectation that the Group has adequate resources to continue in
operational existence for the foreseeable future. Accordingly, they
continue to adopt the going concern basis in preparing its interim
financial information.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Revenue Recognition
Revenue is measured at the fair value of the consideration
received or receivable and represents amounts receivable for goods
and services provided in the normal course of business, net of
discounts and sales-related taxes.
Sales of software licenses are recognized once no significant
obligations remain owing to the customer in connection with such
license sale. Such significant obligations could include giving a
customer a right to return the software product without any
preconditions, or if the group is unable to deliver a material
element of the software product by the balance sheet date.
Revenues relating to maintenance, hosting and post-contract
support agreements are deferred and recognized over the period of
the agreements.
Revenues from implementation and consultancy services are
recognized as the services are performed, or in the case of fixed
price or milestone-based projects, on a percentage basis as the
work is completed and any relevant milestones are met, using latest
estimates to determine the expected duration and cost of the
project.
Deferred Tax
Deferred tax is recognized on differences between the carrying
amounts of assets and liabilities in the financial statements and
the corresponding tax bases used in the computation of taxable
profit, and is accounted for using the balance sheet liability
method. Deferred tax liabilities are generally recognized for all
taxable temporary differences. Deferred tax assets are recognized
only to the extent that the level and timing of taxable profits can
be measured and it is probable that these will be available against
which deductible temporary differences can be utilized.
Deferred tax is calculated at tax rates that have been enacted
or substantively enacted at the balance sheet date, and that are
expected to apply in the period when the liability is settled or
the asset realized. Deferred tax is charged or credited to profit
or loss, except when it relates to items charged or credited
directly to equity, in which case the deferred tax is also dealt
with in equity.
Internally Generated Intangible Assets (Research and Development
Expenditure)
Development expenditure on internally developed software
products is capitalized if it can be demonstrated that:
-- it is technically feasible to develop the product;
-- adequate resources are available to complete the
development;
-- there is an intention to complete and sell the product;
-- the group is able to sell the product;
-- sales of the product will generate future economic benefits;
and
-- expenditure on the product can be measured reliably.
Development costs not satisfying the above criteria and
expenditure on the research phase of internal projects are
recognized in the income statement as incurred. Capitalization of a
particular activity commences after proof of concept, requirements
and functional concept stages are complete.
Capitalized development costs are amortized over the period over
which the group expects to benefit from selling the product
developed. This has been estimated to be four years from the date
of code-finalization of the applicable software release. The
amortization expense in respect of internally generated intangible
assets is included in research and development costs.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
3. SEGMENTAL ANALYSIS AND EBITDA
All of the Group's revenues in respect of the six month periods
ended 30 June 2017 and 2016 derived from the design, development
and marketing of software products with associated implementation
and consultancy services. For management purposes, the Group is
organized across two principal geographic operating segments, as
used in the Group's last annual financial statements. The first
segment is North America, and the second Europe. Information
relating to these two segments is given below. All information
provides analysis by location of operations and is stated before
intra-group charges.
Six months to 30 N America Europe Total
June 2017
$'000 $'000 $'000
External revenues 7,644 4,861 12,505
Profit before tax 330 1,423 1,753
EBITDA 1,495 1,544 3,039
Total assets 19,432 7,084 26,516
---------- ------- -------
Six months to 30 N America Europe Total
June 2016
$'000 $'000 $'000
External revenues 8,704 2,830 11,534
Profit before tax 1,427 161 1,588
EBITDA 2,567 297 2,864
Total assets 17,574 4,080 21,654
---------- ------- -------
EBITDA is arrived at after adding back net finance costs,
depreciation and amortization amounting to $1,286,000 (2016:
$1,276,000) to the profit before tax. Details of these amounts are
set out in the consolidated cash flow statement. Adjusted EBITDA,
and adjusted profit before tax, both include an add back of
$217,000 of foreign exchange gains in respect of the first half of
2016.
4. EARNINGS PER SHARE
The calculation of basic earnings per ordinary share is based on
earnings of $1,780,000 (2016: earnings of $1,588,000) and on
7,386,373 ordinary shares (2016: 7,280,195) being the effective
weighted average number of ordinary shares in issue during the
year.
For the purpose of calculating the diluted earnings per ordinary
share (i) the group's convertible loan stock is treated as
converted at 1 January 2017, with earnings adjusted for the amount
of interest that would have been saved, and the number of shares
adjusted by the number issued on such conversion; and (ii) any
options and warrants to subscribe for Sopheon shares at prices
below the average share price prevailing during the period are
treated as exercised at the later of 1 January 2017 or the grant
date. The treasury stock method is then used, assuming that the
proceeds from such exercise are reinvested in treasury shares at
the average market price prevailing during the period.
5. REVENUE VISIBILITY
Revenue visibility at any point in time comprises revenue
expected from (i) closed license orders, including those which are
contracted but conditional on acceptance decisions scheduled later
in the year; (ii) contracted services business delivered or
expected to be delivered in the year; and (iii) recurring
maintenance, hosting and rental streams. The visibility calculation
does not include revenues from new sales opportunities expected to
close during the remainder of 2017.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
6. INTANGIBLE ASSETS
Certain development expenditure is required to be capitalized
and amortized based on detailed technical criteria, rather than
automatically charging such costs in the income statement as they
arise. This has led to the capitalization of $1,040,000 (2016:
$894,000), and amortization of $1,068,000 (2016: $1,030,000) during
the period.
7. INCOME TAX
At 30 June 2017, tax losses estimated at $65m (2016: $68m) were
available to carry forward by the Group, arising from historic
losses incurred. These losses have given rise to a recognized
deferred tax asset of $1.4m (2016: Nil) and a further, but
currently unrecognized, potential deferred tax asset of $16.2m
(2016: $18.8m), based on the tax rates currently applicable in the
relevant tax jurisdictions. An aggregate $9.4m (2016: $9.4m) of
these losses are subject to restriction under section 392 of the US
Internal Revenue Code due to historical changes of ownership.
8. RELATED PARTY TRANSACTIONS
At 30 June 2017 and 2016 GBP1 million nominal ($1.3m) of the
Company's Convertible Loan Stock was held by directors and
management. Except for the foregoing, there were no related party
transactions required to be disclosed in any period. Transactions
between the Company and its subsidiary undertakings, which are
related parties, have been eliminated on consolidation and are not
disclosed in this note.
9. PRINCIPAL RISKS AND UNCERTAINTIES
There are a number of potential risks and uncertainties which
could have a material impact on the Group's performance over the
remaining six months of the financial year and could cause actual
results to differ materially from expected and historical results.
The directors do not consider that the principal risks and
uncertainties have changed since the publication of the annual
report for the year ended 31 December 2016, which contains a
detailed explanation of the risks relevant to the group on page 20,
and is available at www.sopheon.com. Other principal risks and
uncertainties of the Group for the remaining six months of the
current financial year are disclosed in the Chairman's Statement
and the notes to the interim financial information included in this
half-yearly financial report.
10. CAUTIONARY STATEMENT
This report contains certain forward-looking statements with
respect to the financial condition, results of operations and
businesses of Sopheon plc. These statements are made by the
directors in good faith based on the information available to them
up to the time of their approval of this report. However, such
statements should be treated with caution as they involve risk and
uncertainty because they relate to events and depend upon
circumstances that will occur in the future. There are a number of
factors that could cause actual results or developments to differ
materially from those expressed or implied by these forward-looking
statements. Nothing in this announcement should be construed as a
profit forecast.
The information communicated in this announcement is inside
information for the purposes of
Article 7 of Regulation 596/2014 of the European Parliament and
of the Council of 16 April 2014 on market abuse.
Independent review report to Sopheon plc
Introduction
We have been engaged by the company to review the interim
financial information in the half-yearly financial report for the
six months ended 30 June 2017 which comprises the consolidated
income statement; consolidated statement of comprehensive income;
consolidated statement of financial position; consolidated cash
flow statement; consolidated statement of changes in equity; and
associated notes.
We have read the other information contained in the half-yearly
financial report and considered whether it contains any apparent
misstatements or material inconsistencies with the information in
the interim financial information.
Directors' Responsibilities
The half-yearly financial report, including the financial
information contained therein, is the responsibility of and has
been approved by the directors. The directors are responsible for
preparing the interim report in accordance with the rules of the
London Stock Exchange for companies trading securities on AIM,
which require that the interim report be presented and prepared in
a form consistent with that which will be adopted in the company's
annual accounts having regard to the accounting standards
applicable to such annual accounts.
Our Responsibility
Our responsibility is to express to the Company a conclusion on
the interim financial information in the half-yearly report based
on our review.
Our report has been prepared in accordance with the terms of our
engagement to assist the Company in meeting the requirements of the
rules of the London Stock Exchange for companies trading securities
on AIM and for no other purpose. No person is entitled to rely on
this report unless such a person is a person entitled to rely upon
this report by virtue of and for the purpose of our terms of
engagement or has been expressly authorized to do so by our prior
written consent. Save as above, we do not accept responsibility for
this report to any other person or for any other purpose and we
hereby expressly disclaim any and all such liability.
Scope of Review
We conducted our review in accordance with International
Standard on Review Engagements (UK and Ireland) 2410, 'Review of
Interim Financial Information Performed by the Independent Auditor
of the Entity', issued by the Auditing Practices Board for use in
the United Kingdom. A review of interim financial information
consists of making enquiries, primarily of persons responsible for
financial and accounting matters, and applying analytical and other
review procedures. A review is substantially less in scope than an
audit conducted in accordance with International Standards on
Auditing (UK and Ireland) and consequently does not enable us to
obtain assurance that we would become aware of all significant
matters that might be identified in an audit. Accordingly, we do
not express an audit opinion.
Conclusion
Based on our review, nothing has come to our attention that
causes us to believe that the interim financial information in the
half-yearly financial report for the six months ended 30 June 2017
is not prepared, in all material respects, in accordance with the
rules of the London Stock Exchange for companies whose shares are
admitted to trading on AIM.
BDO LLP
Chartered Accountants & Registered Auditors, London, United Kingdom 23 August 2017
BDO LLP is a limited liability partnership registered in England
and Wales (with registered number OC305127).
This information is provided by RNS
The company news service from the London Stock Exchange
END
IR EAKPDADSXEFF
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