RNS Number:3199J
Transware PLC
28 March 2003
TRANSWARE PLC
INTERIM RESULTS ANNOUNCEMENT
for the six months ended 31 December 2002
Key Points
* Revenues of #4.9 million
* EBITDA of #0.75 million
* Pre-tax loss before exceptionals of #0.33 million
* Loss per share after exceptionals of 1.4p
* Funding : #0.73 million raised during period
* from Oyster Technology Investments Ltd: conversion of loan into shares
at 10p per share
* issue of redeemable preference shares by Transware Limited
* Funding : #0.54 million raised following period end
* from Directors: conversion of loans into shares at 10p per share
Operational
* World events continue to dampen business confidence in USA - new business
being signed but at a much slower rate
* Erudigm - knowledge management tool - fully functional version released in
December 2002
* feasibility projects currently underway with potential clients
* Continued strengthening of relationships within e.learning industry
Commenting on prospects, Brian Raven, Chairman, said: "The Board is currently in
advanced discussions with potential funders with a view to resolving the
Company's longer-term requirements.... The outcome of this fundraising, the
directors anticipate, will be successful. ... The Board remains committed to
maintaining Transware's position as a leading provider of software localisation
services.
For further information, please contact:
Brian Raven, Chairman
Kieran McBrien, Chief Executive
Oliver Cooke, Finance Director
TRANSWARE PLC Tel No: 00353 1 2601997
or visit Transware's website at www.transwareplc.com
Lisa Baderoon : lisab@buchanan.uk.com
BUCHANAN COMMUNICATIONS Tel No: 020 7466 5000
CHAIRMAN'S STATEMENT
________________________________________________________________________________
As highlighted earlier this month, in light of continuing difficult economic
conditions the Company is for the first time reporting a loss for the first half
of its financial year.
The tentative signs of improvement in the business outlook that I referred to in
my report on the results for the full year to 30 June 2002 were not sustained
and trading conditions during the six months to 31 December 2002 remained
difficult.
Financial Performance
Revenues for the six months fell by 22% to #4.9 million (2001 #6.3 million) with
EBITDA down 42% to #0.75 million (2001 #1.3 million). The pre-tax loss before an
exceptional provision for currency fluctuations was #0.33 million (2001 #0.62
million profit). The loss per share was (1.4)p (2001 earnings 1.42p). The
Group's net assets at 31 December 2002 were #4.4 million (equivalent to 11.28p
per share) and net debt amounted to #0.1 million (equivalent to 0.31p per
share). During the period the Company raised some #0.73 million from the
conversion at 10p per share of a loan from Oyster Technology Investments Ltd and
from the issue of redeemable preference shares by its operating subsidiary
Transware Limited. Shortly after the end of the period the Group raised an
additional #0.54 million. This was achieved through the conversion of loans made
to the Company during the period by the directors into equity at 10p per share.
During the period the directors made further unsecured loans to the Company
amounting to #0.25 million, which remain outstanding.
Consistent with current policy, the directors are not recommending payment of a
dividend.
Business Development
In December 2002 the Company released a fully functional version of Erudigm, its
knowledge mobilisation tool. It is currently conducting a number of feasibility
projects for potential customers.
The Company has continued to strengthen and develop relationships with key
players in the e.learning industry. However, events on the world stage have
served to dampen business confidence in the USA and as a consequence the rate at
which new business is being signed has slowed considerably.
In order to manage the Company's cash resources the directors have continued to
eliminate cost from the business wherever possible. Initiatives taken include
the deferral of capital expenditure, a reduction in staff numbers, deferral of a
proportion of the directors' own remuneration and the closure of a number of
offices in Germany, France, the USA and the UK.
Summary and Prospects
The absence of any significant improvement in trading conditions is placing an
inevitable strain on the Group's working capital position. It is not yet clear
when more normal trading conditions will return and the Board expects the
current difficult conditions to remain for the foreseeable future.
The Company has today entered into a loan agreement with Oyster Technology
Investments Limited ("Oyster"), pursuant to which Oyster has agreed to provide
the Company with an unsecured borrowing facility of up to euro750,000 for up to
six months. In consideration the Company has agreed to pay Oyster a facility fee
of euro37,500 and to pay interest on amounts drawn down under the facility at a
rate equivalent to 1.5 per cent per month.
CHAIRMAN'S STATEMENT
________________________________________________________________________________
Oyster is a significant shareholder in the Company currently holding 8,250,148
ordinary shares, representing 18.6 per cent. of the Company's issued share
capital.
As a significant shareholder, Oyster is deemed under the AIM Rules to be a
related party, and the directors, having consulted with Corporate Synergy PLC
the Company's nominated adviser, consider that entering into the above agreement
is fair and reasonable insofar as shareholders are concerned.
The availability of this facility resolves the Company's short-term funding
needs and the Board is currently in advanced discussions with potential funders
with a view to resolving the Company's longer-term requirements. The interim
accounts have been prepared on a going concern basis, the appropriateness of
which is dependent on the outcome of this fundraising, which the directors
anticipate will be successful. It is intended that the proceeds will be used to
repay the current indebtedness of the Group as it falls due, including the
facility from Oyster, and to provide additional working capital for the Group.
The Board remains committed to maintaining Transware's position as a leading
provider of software localisation services.
Brian K Raven
Chairman
28 March 2003
CONSOLIDATED PROFIT AND LOSS ACCOUNT
Six months Six months Year
ended ended ended
31 December 31 December 30 June
2002 2001 2002
(Unaudited) (Unaudited) (Audited)
# # #
Turnover 4,922,301 6,284,764 12,806,946
Cost of sales (985,877) (1,030,832) (2,573,962)
_________ __________ __________
Gross profit 3,936,424 5,253,932 10,232,984
Administration expenses 3,946,299 (4,548,192) (8,014,960)
Administration expenses - exceptional items 135,403 - (1,782,184)
_________ __________ __________
(4,081,702) (4,548,192) (9,797,144)
Operating (loss)/profit (145,278) 705,740 435,840
Calculation of earnings before interest, taxation,
depreciation and amortisation:
Operating profit before exceptional items (9,875) 705,740 2,218,024
Add back: Depreciation of tangible fixed assets 313,407 268,666 589,857
Amortisation of intangible fixed assets 428,313 330,508 927,793
__________ _________ _________
Earnings before interest tax, depreciation andamortisation 751,595 1,304,914 3,735,674
__________ _________ _________
(Loss)/profit on ordinary activities before interest (145,278) 705,740 435,840
Interest receivable 13,381 2,187 109,181
Interest payable (336,224) (85,780) (225,447)
__________ _________ _________
(Loss)/profit on ordinary activities before taxation (468,121) 622,147 319,574
Taxation (35,241) (131,050) (204,848)
__________ _________ ________
(Loss)/profit for the period (503,362) 491,097 114,726
========== ========= ========
(Loss)/earnings per ordinary share (pence)
Basic (1.40)p 1.42p 0.33p
Diluted (1.40)p 1.40p 0.33p
======== ======= =======
STATEMENT OF TOTAL RECOGNISED GAINS AND LOSSES
Six months Six months Year
ended ended ended
31 December 31 December 30 June
2002 2001 2002
(Unaudited) (Unaudited) (Audited)
# # #
(Loss)/profit for the period (503,362) 491,097 114,726
Exchange differences on retranslation of net assets
and results of subsidiary undertakings 47,703 28,960 333,050
_________ _________ _________
Total recognised gains and losses for the period (455,659) 520,057 447,776
======== ======== ========
CONSOLIDATED BALANCE SHEET
31 December 31 December 30 June
2002 2001 2002
(Unaudited) (Unaudited) (Audited)
# # #
Fixed assets
Intangible assets 5,452,298 14,251,268 5,711,770
Tangible assets 1,729,142 2,071,783 1,903,925
_________ ________ ________
7,181,440 16,323,051 7,615,695
_________ ________ ________
Current assets
Stocks 26,517 113,514 32,547
Debtors 1,945,767 2,480,619 2,713,316
Cash at bank and in hand 1,883,351 3,994,394 1,818,975
_________ ________ ________
3,855,635 6,588,527 4,564,838
Creditors: amounts falling due
within one year (4,745,046) (6,331,635) (4,292,546)
_________ ________ ________
Net current (liabilities)/assets (889,411) 256,892 272,292
_________ ________ ________
Total assets less current liabilities 6,292,029 16,579,943 7,887,987
Creditors: amounts falling due
after more than one year (1,797,168) (8,984,057) (2,247,163)
Provisions for liabilities and charges (100,436) (22,755) (98,778)
Deferred Income - (3,378,704) (1,419,900)
_________ _________ _________
Net assets 4,394,425 4,194,427 4,122,146
======== ======== ========
Capital and reserves
Called up share capital 3,896,076 3,573,717 3,573,717
Share premium account 483,773 483,773 483,773
Merger reserve (3,272,882) (3,272,882) (3,272,882)
Profit and loss account 2,297,630 2,825,570 2,753,289
_________ _________ _________
Shareholders' funds
- equity interests 3,404,597 3,610,178 3,537,897
Minority interests
- non-equity interests 989,828 584,249 584,249
_________ _________ _________
Total capital employed 4,394,425 4,194,427 4,122,146
========= ========= =========
CONSOLIDATED CASH FLOW STATEMENT
________________________________________________________________________________
Six months Six months Year
ended ended ended
31 December 31 December 30 June
2002 2001 2002
(Unaudited) (Unaudited) (Audited)
# # #
Net cash inflow from
operating activities (388,132) 4,853,742 2,489,747
Returns on investments
and servicing of finance
Interest received 13,381 2,187 109,181
Interest paid (261,704) (77,132) (119,813)
Interest element of finance leases (74,520) - (105,634)
________ ________ _________
Net cash outflow from
returns on investments and
servicing of finance (322,843) (74,945) (116,266)
________ ________ _________
Taxation
Overseas tax paid (106,070) (145,132) (39,398)
Capital expenditure
Purchase of tangible fixed assets (153,120) (567,722) (653,314)
Intangible fixed assets capitalised (136,393) (4,237,296) (4,113,305)
________ ________ _________
Net cash outflow for
capital expenditure (289,513) (4,805,018) (4,766,619)
________ ________ _________
Demerger costs paid - (420,000) -
________ ________ _________
Net cash outflow before management
of liquid resources and financing (1,106,558) (591,353) (2,432,536)
________ ________ _________
Management of liquid resources
Term deposits - (1,481,178) 871,213
Financing
Proceeds from issue of shares 322,500 648,120 631,073
Costs of share issues - (17,047) -
Hire purchase capital repayments (184,586) (114,159) (305,526)
Repayment of loans (154,526) - (91,430)
Proceeds from issue of preference shares by subsidiary 405,579 584,249 584,247
Increase in short term borrowings 753,000 - -
________ ________ _________
Net cash inflow/(outflow) from
financing 1,141,967 1,101,163 818,364
________ ________ _________
Increase/(decrease) in cash 35,409 (971,368) (742,959)
======= ======= ========
NOTES TO THE UNAUDITED INTERIM REPORT
________________________________________________________________________________
1. Going concern
The financial information has been prepared on a going concern basis. In order
to ensure that the Group has sufficient funds for its immediate requirements a
short term borrowing facility of euro750,000 has been arranged from a
significant shareholder. The directors are also in advanced discussions with
potential funders to resolve the Group's longer term funding requirements.. The
Group's ability to continue as a going concern is dependent on the success of
this additional fund raising which the directors anticipate will be successful
and will result in the Group being adequately funded going forward.
2. The consolidated financial information incorporates the accounts of the
Company and all of its subsidiary undertakings. This has been prepared by
applying the principles of merger accounting, instead of the alternative
principles of acquisition accounting, which in the view of the directors, would
have failed to give a true and fair view of the Group's state of affairs and
results, for the reasons set out in the basis of consolidation note in the
Financial Report of the Company for the year ended 30 June 2001, issued on 10
October 2001.
3. The results for the six month periods ended 31 December 2002 and 31 December
2001 are unaudited. They have been prepared using accounting bases and policies
consistent with those used in the preparation of the financial statements of
Transware PLC for the year ended 30 June 2002.
4. The comparative figures for the year ended 30 June 2002 are extracted from
the Financial Report of Transware PLC for that year which have been reported on
by the auditors - such report was unqualified.
5. The financial information contained in this report does not constitute
statutory accounts of the Company within the meaning of Section 240 of The Act.
6. Copies of this Interim Report are available from Solelands House, Harbolets
Road, West Chiltington, West Sussex RH20 2LG, free of charge for a period of one
month from today.
7. Segmental analysis of sales by geographical area
Six months Six months Year
ended ended ended
31 December 31 December 30 June
2002 2001 2002
# # #
Countries in which business is conducted
United Kingdom 11,128 78,118 230,524
Ireland 2,294,221 4,702,696 5,839,968
Rest of Europe 56,224 46,017 64,035
America 2,560,728 1,432,418 6,608,384
Rest of world - 25,515 64,035
_________ _________ __________
4,922,301 6,284,764 12,806,946
========= ========= ==========
NOTES TO THE UNAUDITED INTERIM REPORT
__________________________________________________________________________________
8. Earnings per ordinary share
The basic earnings per ordinary share has been calculated using the profit for
the period and the weighted average number of ordinary shares in issue during
the period as follows:
Six months Six months
ended ended 31 Year ended
31 December 31 December 30 June
2002 2001 2002
# # #
(Loss)/profit for the period (503,362) 491,097 114,726
======= ======= =======
Number Number Number
Weighted average number of
ordinary shares of 10p each 35,877,387 34,512,340 35,119,721
========== ========== ========
pps pps pps
Basic (loss)/earnings (pence per share) (1.40)p 1.42p 0.33p
======= ======= =======
The diluted earnings per ordinary share, as defined in FRS 14, has been calculated as shown below:
Six months Six months
ended ended Year ended
31 December 31 December 30 June
2002 2001 2002
# # #
(Loss)/profit for the period (503,362) 491,097 114,726
======== ======= ========
Number Number Number
Weighted average number
of ordinary shares in issue as above 35,877,387 34,512,340 35,119,721
Dilution for share options exercisable at a
price below the average market value of the
Company's shares during the period - 632,401 325,651
_________ _________ _________
Diluted weighted average number
of shares in issue 35,877,387 35,144,741 35,445,372
======== ======== ========
pps pps pps
Diluted (loss)/earnings per share
(pence per share) (1.40)p 1.40p 0.33p
======= ======= =======
NOTES TO THE UNAUDITED INTERIM REPORT
__________________________________________________________________________________
9. Minority interests
Non-equity
#
At 1 July 2002 584,249
Preference shares issued by a subsidiary 405,579
_________
At 31 December 2002 989,828
========
The non-equity minority interest arises as a result of the issue by Transware
Limited of IR#1,250,000 of 3% redeemable preference shares to Enterprise Ireland.
10. Reconciliation of operating profits to net cash outflow
from operating activities
Six months Six months
ended ended Year ended
31 December 31 December 30 June
2002 2001 2002
# # #
Operating (loss)/profit (145,275) 705,740 435,840
Depreciation charges 313,407 268,666 589,857
Transfer of tangible fixed assets - - 147,807
Termination of reseller agreement - - 1,782,184
Disposal of intangible fixed assets - - (274,855)
Amortisation of intangibles 428,313 330,508 927,793
Employer's NI on share option gains - (81,345) (104,100)
Decrease in stocks 6,030 73,122 154,089
Decrease/(increase) in debtors 767,549 35,572 (197,125)
(Decrease)/increase in creditors (1,794,489) 3,564,982 (1,187,152)
Exchange translation difference on
working capital 36,333 (43,503) 215,409
________ ________ ________
Net cash inflow from
operating activities (388,132) 4,853,742 2,489,747
======= ======= =======
NOTES TO THE UNAUDITED INTERIM REPORT
11. Analysis of changes in net funds
Other
1 July Cash non-cash Exchange 31 December
2002 flows changes movement 2002
# # # # #
Cash at bank and in hand 1,818,975 35,409 - 28,967 1,883,351
_________ _________ _________ _________ _________
Liquid resources
- term deposit -
Bank loans due less than 1 year (487,557) 154,526 (154,526) (3,539) (491,096)
Bank loans due more than 1 year (1,000,775) - 154,526 (6,707) (852,956)
Hire purchase contracts (833,398) 184,586 (8,753) (772) (658,337)
_________ _________ _________ _________ _________
(2,321,730) 339,112 (8,753) (11,018) (2,002,389)
_________ _________ _________ _________ _________
_________ _________ _________ _________ _________
Net debt (502,755) 374,521 (8,753) 17,949 (119,038)
======== ======== ======== ======== ========
INDEPENDENT REVIEW REPORT TO TRANSWARE PLC
Introduction
We have been instructed by the Company to review the financial information for
the six months ended 31 December 2002, which comprises the Consolidated Profit
and Loss Account, the Statement of Total Recognised Gains and Losses, the
Consolidated Balance Sheet, the Consolidated Cash Flow Statement and the related
notes.
We have read the other information contained in the interim report and
considered whether it contains any apparent misstatements or material
inconsistencies with the financial information.
Directors' responsibilities
The interim report, including the financial information contained therein, is
the responsibility of, and has been approved by, the directors. Where a company
is fully listed the directors are responsible for preparing the interim report
in accordance with the Listing Rules of the Financial Services Authority which
require that the accounting policies and presentation applied to the interim
figures should be consistent with those applied in preparing the preceding
annual accounts except where any changes, and the reasons for them, are
disclosed. The directors of Transware plc have voluntarily complied with this
requirement in preparing the interim report.
This report is made solely to the company 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 the Alternative
Investment Market. Our review has been undertaken so that we might state to the
company those matters we are required to state to it in this report and for no
other purpose. To the fullest extent permitted by law, we do not accept or
assume responsibility to anyone other than the company for our review work, for
this report, or for the conclusions we have reached.
Review work performed
We conducted our review in accordance with guidance contained in Bulletin 1999/4
issued by the Auditing Practices Board for use in the United Kingdom. A review
consists principally of making enquiries of group management and applying
analytical procedures to the financial information and underlying financial data
and based thereon, assessing whether the accounting policies and presentation
have been consistently applied unless otherwise disclosed. A review excludes
audit procedures such as tests of controls and verification of assets,
liabilities and transactions. It is substantially less in scope than an audit
performed in accordance with United Kingdom Auditing Standards and therefore
provides a lower level of assurance than an audit. Accordingly, we do not
express an audit opinion on the financial information.
Fundamental uncertainty
In arriving at our review conclusions, we have considered the adequacy of
disclosures made in the financial information concerning the Group's funding
proposals. The preparation of the financial information on a going concern basis
assumes that the Group's funding proposals will be successfully completed.
Details of the fundamental uncertainty can be found in note 1.
INDEPENDENT REVIEW REPORT BY THE AUDITORS TO TRANSWARE PLC
Review conclusion
On the basis of our review we are not aware of any material modifications that
should be made to the financial information as presented for the six months
ended 31 December 2002.
BDO Stoy Hayward
Chartered Accountants
Registered Auditors
Epsom
28 March 2003
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