RNS Number:2462G
Mediasurface PLC
10 December 2004
Mediasurface plc ('MSR') - Company Registration Number 4016495
Results for the Year Ended 30th September 2004
Mediasurface plc, the AIM listed Content Management Software Author and Vendor,
announces year ended 30th September 2004.
Financial and Operating Highlights
*Turnover up 4.7% to #5.40 million (2003 :#5.16 million)
*Cash of #1.40 million as at 30th September 2004 (2003 : #0.88 million)
*Significantly reduced Loss of #0.41million (2003 : loss of #1.44 million)
*Annualised recurring revenue of #1.72 million (2003 : #1.63 million)
*Raised #2.0 million from new and existing investors (#1.59m net of
placing costs)
*Launched Version 5.0 in March 2004 including the innovative new smart
client Morello
*Launched Version 5.1 in September 2004 containing further exciting
features
*New business already won with Intercontinental Hotels, Aegon Holdings,
UFI and Studio100 collectively worth approximately #1m in the new financial
year.
*Pipeline opportunities continue to increase both in quantity and quality
Chairman's Statement
The year 2004 included two events which represented major milestones in
Mediasurface's development and marked a significant turning point for the
company.
Firstly, in March 2004 the company launched Mediasurface Version 5.0 which
included the innovative new product Morello which empowers the business user to
leverage the full benefit of Content Management Software. In short, the product
has been received positively by existing and potential new customers alike. The
company is now well positioned to compete effectively going forward.
Secondly, in August 2004 the company successfully floated on the London Stock
Exchange Alternative Investment Market raising #2m before placing costs. The
flotation has now given the company the resources to fully exploit the potential
of Morello in the market place, develop further releases and provide a basis for
further acquisitions in the future.
Revenues increased by 4.7% to #5.4m during the year, together with tight cost
control, losses for the full year were reduced from #1.44m for the year ended
30th September 2003 to #0.41m in the year under review. Cash reserves stood at
#1.40m.
In line with stated policy, earnings for the foreseeable future will be
re-invested to finance the growth of the company and acquisition strategy.
Consequently the Directors do not recommend the payment of a dividend.
We were pleased to welcome the Rt. Hon. Francis Maude MP to the Mediasurface
Board in August 2004. His experience of government has given us a breadth of
understanding in one of the company's important customer segments.
The full financial impact of Morello has not been felt in the financial year
under review due to the length of new business sales cycles, however, the
company is now engaged with major new opportunities and the Directors are
confident these will drive revenue growth in the coming financial year.
Michael Jackson
Chairman
9th December 2004
Chief Executive's Report
The year ended 30th September 2004 represented another year of considerable
improvement for the business as a whole recording an improvement in both revenue
and a further very significant reduction in trading losses, continuing the trend
established by the management team installed in late 2002. Both of these
improvements have, however, been achieved without compromising the company's
investment in Research and Development, the long term future of the business.
Mediasurface is a software company earning a large portion of its revenues
through the licencing of its products and as such these products must be
perceived to be innovative, well differentiated and of real value to the end
customer. In order to achieve this, the company has developed a vision which has
guided all of our product development and all of our sales and marketing
messaging. It is vital for a software company such as Mediasurface to have such
a vision and to remain innovative enough to grow and attract new customers.
The company's vision is to empower "typical" business users with the capability
to build significant applications (websites, intranets and extranets) using
extremely easy to use commonplace desktop tools that are already familiar to
them. These users now have the ability to build, manage and run very significant
applications capable of scaling to very high levels of load with perhaps very
large user communities without the dependency on significant technical
resources. The business user should however be secure in the knowledge that the
underlying technology, which they need never be exposed to, is fully compliant
with their company's corporate IT standards and that the use of Mediasurface
products releases their IT resources for deployment on other added value
activities. We summarise this vision into nine words
"Serious websites, driven by business people, loved by IT".
It is this vision and the incremental steps the company has taken to realise it
that has delivered continued improvements in revenues and trading results.
In March of 2004, the company made the most significant step yet towards
realising this vision through the release of its new flagship product, Morello
(www.hellomorello.com). This application is built using the Microsoft .NET
framework and Windows technology which is core technology for the vast majority
of the world's desktops. As a consequence business users are now able to
leverage the power of their familiar desktop applications to participate fully
in the content lifecycle that underpins their applications. This new addition to
the Mediasurface suite has provided the company with real differentiation in
sales cycles which has led to the company being far more competitive in the
marketplace, this is reflected in sales pipeline improvements in all
geographies. The company intends to continue to further develop its products in
line with its vision during 2005.
Sales revenues during 2004 improved for the company but perhaps the most
significant indicators come from the new business and new product to existing
customer revenue ratios. In 2003 existing customer revenue with our old product
constituted 59% of revenues with 41% from new business or product and in 2004
37% from old customers and product and 63% from new business and new product.
This demonstrates both the value of the new Morello product and also the
company's new found competitive capability. Another significant factor has been
the company's rejuvenation of its US business which, although still in its early
phase has led to an increase in US revenues of 27% compared to 2003. Our
mainland European business based in the Netherlands also remained strong
delivering 36% of corporate sales. It is the directors' belief that the short
term focus for the company should remain focused on our three geographies UK, US
and Benelux.
The nature of the sales cycles (typically 6 to 9 months) together with the
relative size of individual sales transaction when compared to the company's
overall revenues has meant that during 2004 the company has been vulnerable to
sales slippage, where for example sales transactions fail to conclude prior to a
half or full year end. To a certain degree the company remains vulnerable to
this however three factors should mitigate against this during 2005:
*As a result of the marketplace's interest in Morello, more opportunities
are being generated which in turn should provide the company with greater
coverage to replace any slipping revenue.
*The company continues to grow recurring revenues, up 5.5% compared to
last year, which reduces the dependency on new business sales.
*The company has commenced activities to provide Small and Mid-sized
Enterprises ('SME's') with a hosted version of our products which they can
pay for on a monthly fee basis. This proposition is attractive to the SME
market because of the reduced initial capital outlay and is now facilitated
by the Morello product. This hosted or ASP model will deliver more modest
total deal sizes and greater volumes which will smooth out and reduce the
dependency on larger transactions close to half-year or full-year ends.
The listing of the company on the AIM market was completed for a number of
reasons as stated in the prospectus. However one which should be individually
mentioned is merger and acquisition. The benefit to the company of such a
listing can now be realised during 2005 and indeed in subsequent years to enable
it to execute purchase transactions to fuel its other inorganic growth strategy.
The directors believe the company is well placed to execute appropriate
acquisitions through the strength of the incumbent management team and should
now have the "management bandwidth" to undertake such transactions.
The twin streams of the growth strategy (organic and acquisition) will continue
to be deployed during 2005 and these coupled with the maintenance of good fiscal
governance and cost control will remain the management team's maxim. The
directors believe that the improvements made during 2004 coupled to this maxim
should see the company well placed to further build on its improvements in
revenues and trading position.
Current Trading Update
I am pleased to report that since the floatation in August 2004, the sales
potential of our Morello product is being reflected in growing sales success in
the UK, Netherlands and USA.
Since the commencement of the new financial year 1st October 2004 Mediasurface
has won significant new contracts with:
*Inter-Continental Hotels & Resorts, a world-wide business including such
brands as Intercontinental, Crowne Plaza and Holiday Inn, have purchased
Mediasurface as their global intranet solution.
*Aegon Holdings, one of the world's leading insurance companies, have
purchased Mediasurface for their corporate intranet following previous
successful Mediasurface project in Aegon Dutch subsidiary.
*UFI (University For Industry) including Learndirect, have purchased
Morello following a full competitive tender process, UFI have purchased an
Enterprise license.
*Studio100, leading media company in Benelux, have selected Mediasurface
for their Intranet solution.
The above, worth approximately #1m in this financial year, together with other
deals represent a great start to the new financial year and I am confident that
our sales target for the first quarter will be achieved and possibly exceeded.
With regard to the second quarter our current sales pipeline contains many more
significant sales opportunities. I remain confident that the company is
on-target to achieve first half year budget trading performance.
Lawrence Flynn
Chief Executive Officer
9th December 2004
Consolidated Profit & Loss Account
For the year ended 30th September 2004
Note 2004 2003
# #
TURNOVER 5,403,482 5,160,933
Cost of sales (142,533) (174,024)
------------ ------------
Gross profit 5,260,949 4,986,909
Administrative expenses (5,993,342) (7,204,603)
------------ ------------
OPERATING LOSS (732,393) (2,217,694)
Interest receivable and similar income 7,603 7,553
Interest payable and similar charges (12,604) (19,126)
------------ ------------
LOSS ON ORDINARY ACTIVITIES BEFORE TAXATION (737,394) (2,229,267)
Tax credit on loss on ordinary activities 331,273 785,741
------------ ------------
LOSS ON ORDINARY ACTIVITIES AFTER TAXATION AND
FOR THE FINANCIAL YEAR 3 (406,121) (1,443,526)
============ ============
Earnings per share - basic 3 (0.7)p (2.4)p
Earnings per share - diluted 3 (0.6)p (2.4)p
Consolidated Balance Sheet
As at 30th September 2004
2004 2003
# #
FIXED ASSETS
Goodwill - 45,790
Tangible assets 177,969 149,556
------------ ------------
177,969 195,346
CURRENT ASSETS
Debtors 2,173,866 1,442,375
Cash at bank and in hand 1,395,558 879,406
------------ ------------
3,569,424 2,321,781
------------ ------------
CREDITORS: amounts falling due (2,276,041) (2,231,536)
within one year
------------ ------------
NET CURRENT ASSETS 1,293,383 90,245
------------ ------------
TOTAL ASSETS LESS CURRENT LIABILITIES 1,471,352 285,591
CREDITORS: amounts falling due after more than
one year (14,384) (19,580)
------------ ------------
NET ASSETS 1,456,968 266,011
============ ============
CAPITAL AND RESERVES
Called up equity share capital 764,738 13,474,032
Share premium account 9,574,782 8,324,175
Capital Redemption Reserve 13,083,244 -
Merger reserve 27,297,412 27,297,412
Profit and loss account (49,263,208) (48,829,608)
------------ ------------
SHAREHOLDERS' FUNDS 1,456,968 266,011
============ ============
Shareholders' funds may be analysed as:
Equity interests 1,456,968 266,011
------------ ------------
1,456,968 266,011
============ ============
Consolidated Cashflow Statement
For the year ended 30th September 2004
2004 2003
# #
Net cash outflow from operating activities (1,170,202) (1,077,941)
Returns on investments and servicing of finance (5,001) (11,573)
Taxation 227,044 785,741
Capital expenditure (80,816) (164,735)
------------ ------------
Cash outflow before financing (1,028,975) (468,508)
Financing 1,572,606 785,190
------------ ------------
Increase/(decrease) in cash in the year 543,631 316,682
============ ============
Notes:
1. The financial information set out above does not constitute the company's
statutory accounts as defined by section 240 of the Companies ct 1985. It
is an extract from the accounts for the year ended 30 September 2004 which
have not yet been filed with the Registrar of Companies. The auditors'
report was unqualified. The auditors' report does not contain a statement
under either section 237(2) or (3) of the Companies Act 1985. The group's
auditors have reported on those accounts as required by section 235 of the
Companies Act 1985.
The financial information in respect of the year ended 30 September 2003
has been abridged from the audited accounts for which an unqualified audit
report was issued and did not contain any statements under section 237(2)
or (3) of the Companies Act 1985 and which have been filed with the
Registrar of Companies.
2. The preliminary announcement of results has been prepared under the
historical cost convention in accordance with the Group's accounting
policies for the year ended 30th September 2003.
3. Earnings per Share
The loss per ordinary share is calculated by reference to the loss
attributable to ordinary shareholders divided by the weighted average
number of shares in issue during each period as follows:
2004 2003
# #
Loss for the year (406,121) (1,443,526)
Basic - Weighted average number of shares 61,450,900 59,356,184
Basic - Loss per Share (0.7)p (2.4)p
Fully diluted - Weighted average number of shares 62,154,270 59,356,184
Fully diluted - Loss per Share (0.6)p (2.4)p
4. Copies of the published accounts of the Company will be sent to all
shareholders within the next 4 weeks.
For further information please contact:
Lawrence Flynn Chief Executive Officer
David Deacon Chief Financial Officer
Telephone: 01635 262000
Fax: 01635 262001
Address: Mediasurface House
Newbury Business Park
London Road
Newbury RG14 2QA
This information is provided by RNS
The company news service from the London Stock Exchange
END
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