Gladstone PLC
15 November 2006
Press Release 15 November 2006
Gladstone plc
('Gladstone' or 'the Company') and its subsidiaries (together 'the Group')
Preliminary Results for the year ended 31 August 2006
Gladstone plc, the leading UK provider of software and services to the leisure
industry, announces its Preliminary Results for the year ended 31 August 2006.
Financial Highlights:
• Turnover £8.64 million (2005: £8.41 million)
• Recurring revenues enhanced, now in excess of 40% of turnover
• Profit before tax, amortisation and exceptional items increased by 62% at
£1,376,000 (2005: £848,000)
• Cash at bank increased to £4.7 million (2005: £4.1 million)
• Freehold property revalued at in excess of £2.0 million (2005: £1.5 million)
• Net tangible assets increased to £5.1 million (2005: £4.0 million)
• No creditors due after more than one year (2005: £313,000)
Operating Highlights:
• Further new prestigious sites won
• Australia contributing to Group profits
• Actions to improve core business performance gathering pace
• Sharply focused on investment programmes in areas of core competence
• Clear strategy in place on new product development projects
• Strategic acquisitions of London Systems and Valuenetics A/S will accelerate
growth
• Enhanced senior executive team focused on strategic growth
Commenting on the results, Said Ziai, Chairman and Chief Executive Officer of
Gladstone plc, said: 'The business has enjoyed significant improvements in
performance over the past year building on its sound base of local authority and
private clients. We have defined Gladstone's strategic path and are pursuing
all available avenues and opportunities to create value for our shareholders. We
have restructured some of our internal processes and have embarked on renewing
all our systems in preparation for future growth. The business has undergone a
year of consolidation to strengthen Gladstone's core competencies, whilst at the
same time launching new initiatives providing sustainable improvements to our
performance and competitive position. We have made two strategic acquisitions,
paving the way for sustainable growth in the future. We expect to see these
increasingly reflected in the results we achieve in the future and our
performance against our competitors. With these initiatives and a sharp focus on
our strategic growth prospects, I am confident we will, over a period of time,
be able to demonstrate the growth potential inherent in Gladstone plc and the
positive effect that growth potential will have on the long-term value to
shareholders.'
For further information, please contact:
Gladstone plc Tel: +44 (0) 1491 201 010
Said Ziai
Email: sziai@gladstonemrm.com
KBC Peel Hunt Limited Tel: +44 (0) 20 7418 8900
Oliver Scott
Email: oliver.scott@kbcpeelhunt.com
Media enquiries:
Abchurch Tel: +44 (0) 20 7398 7700
Martin Sutton
Email: martin.sutton@abchurch-group.com
ABOUT GLADSTONE PLC
Gladstone plc is a leading supplier of membership management systems to major
health & fitness groups, local authority leisure centres, trusts, universities
and a large number of private and single site clubs. The Company provides
central database solutions for multi-site operators, facilitating central and
cross-site on-line bookings, membership management and central administration,
CRM, marketing and reporting. Gladstone also provides a wide range of systems
and software based solutions, such as e-registration, cashless payments and
biometric recognition in the education market, for schools, academies and
colleges.
Established in 1999 to provide the UK and international leisure industry with
market-leading member relationship management systems, Gladstone subsequently
acquired Microcache and Membertrack, integrating them into Gladstone MRM, its
operating subsidiary.
As the market leader, serving the UK market and with offices in Wallingford,
Glasgow and Sydney, Gladstone has become a global supplier of Member
Relationship Management software for the health and leisure industry as well as
its recent entry into the education market where health and fitness have become
a major focus of attention. The Company's current products include the
comprehensive Plus2 which incorporates advanced functionality such as on-line
booking, prospecting and the use of kiosks, as well as On Record serving the
schools and colleges with e-registration, biometric recognition and cashless
payment systems.
CHAIRMAN and CHIEF EXECUTIVE OFFICER'S REPORT
INTRODUCTION
Last year in my first statement I commented on Gladstone's strong position in
the health and leisure market supported by the enthusiasm and experience of our
staff. These attributes served us well during last year and helped us turn in a
robust set of results whilst focusing our attention on the challenges and
opportunities for profitable growth in the future.
We continued to consolidate our market leadership in the health and leisure
market in the UK. We also invested in Valuenetics A/S in Denmark to provide
enhanced development capabilities to reinforce our plans for future growth in
our existing and extended core markets. Furthermore, with our recent investment
in London Systems (UK) Limited and its software solutions for the education
market, we opened up opportunities for additional growth in a much larger
sector. The education market is a sector where we will be able to leverage
Gladstone's existing infrastructure and market presence.
I have previously highlighted the challenges facing the Group in moving the
turnover and profitability beyond the static trend of prior years. Whilst we
consolidated our position, we placed emphasis on materially improving the core
profitability of the business. We focused on underpinning our turnover whilst at
the same time taking the necessary steps towards creating new opportunities to
increase it. We strove to improve our service level to further reinforce our
reputation as a market leader. We are clear in our focus and the need to deliver
dependable systems and solutions to all our customers. We have developed clear
plans on how to continue enhancing our existing products' functionality as well
as introducing a suite of new products.
Last year we saw further changes in the make up and structure of our board. In
June, we announced that Tony Caplin had retired to focus on his other business
interests, having joined Gladstone as non-executive Chairman in July 2005. We
further announced the appointment of Roderick Chamberlain as a non-executive
director in August 2006. Rod brings with him a wealth of hands on management and
board experience and we are already benefiting from his proactive contributions.
The board also considered it in the best interests of the Group to combine the
roles of Chairman and Chief Executive Officer for the time being, a position
that will remain unchanged until the appropriate opportunity arises to appoint a
suitably qualified Chairman. Gladstone's board is fully committed to high
standards in corporate governance whilst maintaining a pragmatic view as to how
the best interests of the Group can be served at the different stages of its
development.
FINANCIAL OVERVIEW
Turnover grew from £8.41 million in 2005 to £8.64 million in 2006, an
encouraging achievement which made up for the early maturity of some £0.4
million of sales expected to occur in 2006 but which were in fact delivered
towards the end of the previous financial year. Our recurring revenues also
stayed at a healthy level, in excess of 40% of turnover. Performance in
Australia was solid, with the business contributing to Group profits. Operating
profits before amortisation of goodwill and exceptional items increased by £0.53
million, a 62% increase on 2005 results, to £1.38 million.
Our early efforts last year to bring under control certain inconsistencies
within our operations paid a significant dividend in improving core
profitability. I indicated last year that we had to enter into a period of
consolidating the business. We concentrated on improving the underlying
performance of the operations. Sales and marketing as well as customer support
services were restructured to increase effectiveness in sales and improve the
quality of our customer service. We removed inefficiencies in a number of areas
including ad hoc work in international markets.
Net tangible assets as at 31 August 2006 increased to £5.08 million (2005: £4.04
million). During the year the creditors falling due within one year dropped by
£211,000 to £1.0 million. Gladstone MRM Limited has substantially used up its
own carried forward trading tax losses. Gladstone plc has £3.1 million of
capital losses and £4.7 million of excess management expenses available for
relief in the future as appropriate.
Cash increased in the year by £0.55 million to £4.67 million not withstanding
the early payments for our new investments. The cash generative nature of our
business provides a healthy platform for further growth.
OPERATIONS OVERVIEW
Sales
We continued our focus on serving the existing base of customers and in winning
a number of new prestige sites. This has been made possible by the strength of
our robust and proven Plus2 platform and its extensive functionality, achieved
in spite of a marked increase in the efforts of our competitors.
During last year, we were pleased to be awarded contracts to provide systems for
Leisure Connection, Sports and Leisure Management (SLM), Topsy Turvy World and
Golds Gym. We also won a number of major contracts in the public sector,
including; Liverpool City Council, Flintshire County Council, East Lothian
Council and South Dublin County Council. Consolidation of the public sector
leisure services has gathered further pace by major Managed Service operators, a
majority of whom have chosen to use Gladstone's systems and services. We
believe this consolidation trend in the public sector is likely to continue in
the near to mid term.
Our efforts on upgrading legacy sites to current versions of our Plus2 product
will gather pace in this current year in an initiative to remove the less
efficient older systems and in order to improve our quality of service.
Gladstone enjoys a strong position across all segments of the UK leisure
industry, and we will continue to leverage this strength to further consolidate
our position.
To emphasize the clarity of our messages and market positioning, we have carried
out a review of Gladstone's corporate identity and all the marketing collateral.
These were realigned and redesigned to better convey our unique position in the
market-place. We are currently reviewing the way we use the web and internet
tools in order to better utilise this media on all commercial fronts and in a
manner consistent with our long term strategy.
Delivery and Service
Gladstone's installation and training teams improved their productivity and
delivered a focused and more efficient service to our customers. The demand for
a dedicated technical support team has continued to increase over the past 12
months due to the widening of our customer base and growth in demand for central
server and other technically advanced systems. We have explored new means of
improving the quality of training services as well as reducing costs. We have
embarked on introducing web based training services. Gladstone has also been
helping a number of businesses to leverage the extensive management information
generated within Plus2 into appropriately formatted management reports to
improve business performance. This area is currently being enhanced to offer an
even more extensive set of reporting services. The demand for such value added
services is growing as our clients look to further leverage the functionality
and value of our systems to help them develop their businesses and broaden
margins.
The number of support calls handled by our teams has steadily increased over the
past four years. This reflects the increased base of installed systems and the
wider functionality of the systems used by our customers. We carried out a
significant restructuring of our customer support team by increasing their
technical skills and incorporating specialist teams from across the business.
With these changes, we managed to reduce our service costs whilst enhancing the
quality of our service delivery.
Development
During the year, we carried out an extensive review of our core software
application Plus2 and its further development requirements. Due to the wide
scope of Plus2, the main emphasis remains on providing functionality that
enhances our clients' operational efficiency and customer relationship
management. We also decided to release a streamlined and specially adapted
version of Plus2 marketed as Plus2 SOLO. We did this to address more
specifically the unique requirements of the growing single site health and
leisure operators, their desire for the flexibility to expand in the future and
also to respond to the perceived competition from our smaller private
competitors focusing exclusively on this segment of the market.
We have continued to dedicate resources to new product extensions for Plus2,
focused on enhancing its versatility and market reach. These products include
Connect, Kiosk and PocketPos. They provide web enabled access, self service
ticket collection stations and field based stand alone point-of-sale hand-held
devices, designed to maximise the mobility of leisure centre staff.
With the rapid evolutionary changes in the software development platforms and
increasing demands for convergence of web, communications and network
applications, we have decided to develop a new comprehensive set of next
generation products to encompass new technology platforms and to capture the
possibilities of further broadening our market base.
International
Our subsidiary located in Sydney Australia has now been in operation for over
two years. Plus2's centralised database capabilities and comprehensive
functionality have proved to be a major advantage in Australia. Gladstone's
products and our team's professionalism have become widely known across the
health and leisure sector in Australia. We have raised the benchmark for
competition and have educated the market about the superiority of Gladstone's
systems solutions. We won a number of major new contracts during the year
including; Next Generation - South Park, Mounties Fitness, Newcastle University,
Equilibrium Health & Fitness Clubs and Lifestyle Fitness Clubs, more than
quadrupling our installed base during last year. We also introduced a rental
model to make our systems available to a wider range of customers. With
Australia now contributing to Group profits, Gladstone has established itself in
all the major states including; New South Wales, Victoria, South Australia,
Western Australia and Queensland providing an excellent base for further
referrals. With such material gains, we are confident about continued success
and a strong market share in Australia. As we develop our focus in new vertical
markets such as education, Australia will provide a further base for the roll
out of these new initiatives.
With the reorganisation in Ireland, integrating some of the local activities
with our Wallingford and Glasgow offices, we improved our margins as well as
enhanced our customer focus and performance. We also rationalised the
inefficiency in our legacy approach to international opportunities where lack of
clarity had introduced unsustainable and unpredictable results.
STRATEGY
During the early part of last year we carried out a comprehensive review of
Gladstone's competitive position across the health and leisure market and
established a clear view of our comparative position. This has since enabled us
to establish targeted priorities for the Group to further enhance our market
leadership and prepare the ground for sustainable growth into the future.
Gladstone provides software solutions, support services and expertise to help
operators in the Health and Leisure and related markets to achieve their
business objectives. I have spent much time with the management team to develop
clear roadmaps aimed at further improving our performance in all operational
areas as well as fine tuning our service delivery formula. To enable future
growth, we have embarked on introducing new integrated IT systems and processes
across Gladstone. We expect this to remove further legacy inefficiencies as
well as introducing a far more flexible and productive working framework across
all the operating teams.
As a result of our strategy review, we are now committed to introducing a new
set of next generation products that will extend the reach of our current
products in line with the ongoing expectations of our wide range of existing
customers. These products will enable us to open up new horizontal and vertical
market opportunities. The acquisition of Valuenetics A/S reinforces this
strategy with their proven software development capabilities. Their skills will
be leveraged to facilitate our overall objective to enter new vertical markets
compatible with health and leisure.
Our recent acquisition of London Systems (UK) Limited is also an early
manifestation of some of the much wider opportunities that are open to
Gladstone. The education software market is a developing and fast growing market
in the UK. The core competencies, software platforms and end market
characteristics of this market are a natural extension to our current
activities, allowing Gladstone to utilise and leverage its market position to
the growing needs of education where health and fitness have become a major
focus of attention. The government's recently announced Building Schools for
the Future program (BSF) with its significant investment in ICT over the next 15
years, will, in particular, give Gladstone the opportunity to create a strong
competitive position.
We are keen to build on our past achievements as well as to establish new
services for our future growth. In our strategy review we identified a range of
possibilities and critical options facing Gladstone. We are intent on utilising
our strong standing in our existing market as well as our robust financial base.
We will continue to seek to leverage these strengths and speed up our efforts
to broaden our market share as well as identify over time a broader set of
synergistic market opportunities.
OUTLOOK
I noted last year our principal objective is to deliver shareholder value,
through strong and consistent earnings growth, backed by a robust strategy based
on the Group's intellectual property portfolio. This objective requires clear
strategic vision as well as investment to rapidly develop a set of core
competencies.
In a letter to all shareholders, I highlighted three distinct and partially
concurrent stages to establishing the course for our growth; Initial focus,
Organic and Strategic. We gained a healthy momentum in all those areas last year
and are now much clearer in our aim to grow further by building our portfolio of
strategic businesses complementing Gladstone's core capabilities. We stated our
commitment to invest in new products and new opportunities as appropriate in
order to provide competitive solutions to our current and potential customers by
adding value to their core businesses. With our recent acquisitions, a year of
consolidation behind us together with a strong financial performance, we are
well aware of the significant challenges ahead. We are, however, confident in
our ability to extend Gladstone's reach and grow our business in a measured way.
With an established core business, growing recurring revenues currently in
excess of forty per cent of turnover, property included at net book value in the
accounts at £2 million and cash at £4.7 million, Gladstone has the platform and
financial strength to further grow its business.
PEOPLE
We are primarily a people business. We benefit from having a stable and loyal
staff. As we rationalised some of our operations last year, we have had to rely
on the skills and dedication of fewer people focused on delivering our services.
We have clear targets specifically aligned with our future requirements. I would
like to take this opportunity on behalf of the Board to thank all our employees
for their unwavering contribution throughout all stages of Gladstone's
development.
Said Ziai
Chairman and Chief Executive Officer
CONSOLIDATED PROFIT AND LOSS ACCOUNT
FOR THE YEAR ENDED 31 AUGUST 2006
2006 2005
(unaudited) (audited)
Notes £ £
Turnover 8,644,152 8,411,642
Cost of sales (1,266,459) (1,620,358)
_________ _________
Gross profit 7,377,693 6,791,284
Administration expenses excluding amortisation of goodwill and
exceptional items (6,163,188) (6,008,176)
_________ _________
Operating profit before amortisation of goodwill and
exceptional items 1,214,505 783,108
Amortisation of goodwill 2 (444,129) (444,129)
Exceptional items 2 - (207,858)
Total administration expenses (6,607,317) (6,660,163)
_________ _________
Operating profit and Profit on ordinary activities before
interest 770,376 131,121
Interest receivable 187,667 125,299
Interest payable (26,087) (60,501)
_________ _________
Profit on ordinary activities before taxation 931,956 195,919
Taxation (13,150) (6,500)
_________ _________
Profit retained 918,806 189,419
========= =========
Profit on ordinary activities before amortisation of goodwill,
exceptional items and taxation 1,376,085 847,906
_________ _________
Profit per ordinary share (pence) 3
Basic 1.77p 0.40p
Basic before amortisation of goodwill and exceptional items 2.63p 1.78p
Diluted 1.74p 0.38p
All of the amounts are in respect of continuing operations.
STATEMENT OF TOTAL RECOGNISED GAINS AND LOSSES
AND NOTE OF HISTORIC COST PROFITS AND LOSSES
FOR THE YEAR ENDED 31 AUGUST 2006
2006 2005
(unaudited) (audited)
£ £
Statement of total recognised gains and losses
Profit for the financial year 918,806 189,419
Unrealised surplus on revaluation of properties 520,293 -
Exchange differences on retranslation of net assets of foreign
currency operations (2,308) 2,433
_________ _________
Total recognised gains and losses relating to the year 1,436,791 191,852
========= =========
Note of historical cost profits and losses
2006 2005
(unaudited) (audited)
£ £
Reported profit on ordinary activities before taxation 931,956 195,919
Difference between historic cost depreciation charge and the actual
depreciation charge of the year calculated on the revalued amount 9,257 9,257
_________ _________
Historic profit on ordinary activities before taxation 941,213 205,176
========= =========
Historic profit for the year retained after taxation and dividends 928,063 198,676
========= =========
CONSOLIDATED BALANCE SHEET
AS AT 31 AUGUST 2006
2006 2005
(unaudited) (audited)
Notes £ £ £ £
Fixed assets
Intangible assets 4 6,804,599 6,217,814
Tangible assets 2,577,606 2,183,982
_________ _________
9,382,205 8,401,796
Current assets
Stocks 28,956 43,888
Debtors 2,084,673 1,861,388
Cash at bank and in hand 4,667,200 4,116,722
_________ _________
6,780,829 6,021,998
Creditors: amounts falling due
within one year (988,116) (1,199,302)
_________ _________
Net current assets 5,792,713 4,822,696
__________ __________
Total assets less current 15,174,918 13,224,492
liabilities
Creditors: amounts falling due
after more than one year - (313,291)
Provisions for liabilities and
charges (29,804) (30,488)
Accruals and deferred income (3,257,332) (2,623,100)
__________ __________
Net assets 11,887,782 10,257,613
========== ==========
Capital and reserves
Called up share capital 5 520,845 502,110
Share premium account 6 15,216,527 15,041,884
Special reserve 6 4,667,133 4,667,133
Revaluation reserve 6 936,887 425,851
Other reserve 6 2,500 5,000
Profit and loss account 6 (13,156,640) (14,084,895)
__________ __________
Equity shareholders' funds 8,187,252 6,557,083
Non-equity shareholders' funds 5 3,700,530 3,700,530
__________ __________
Total shareholders' funds 7 11,887,782 10,257,613
========== ==========
CONSOLIDATED CASH FLOW STATEMENT
FOR THE YEAR ENDED 31 AUGUST 2006
2006 2005
(unaudited) (audited)
Notes £ £ £ £
Net cash inflow from operating
activities 8 1,092,280 1,444,247
Returns on investments and
servicing of finance
Interest received 187,667 125,299
Interest paid (26,087) (60,501)
_________ _________
Net cash inflow from returns on
investments and servicing of
finance 161,580 64,798
_________ _________
1,253,860 1,509,045
Taxation refunded (6,488) -
Capital expenditure
Purchase of tangible fixed
assets (39,483) (125,757)
_________ _________
Net cash outflow for capital
expenditure (39,483) (125,757)
Acquisitions and disposals
Purchase of subsidiary
undertaking (451,526) -
Net overdrafts acquired with
subsidiary (1,127) -
_________ _________
Net cash outflow for
acquisitions and disposals (452,653) -
_________ _________
Net cash inflow before
financing 755,236 1,383,288
Financing
Proceeds from issues of shares 193,378 1,535,216
Share issue costs - (47,379)
Bank loan repayments (394,292) (394,295)
_________ _________
Net cash (outflow)/inflow from
financing (200,914) 1,093,542
_________ _________
Increase in cash 9 554,322 2,476,830
========= =========
NOTES TO THE UNAUDITED FINANCIAL INFORMATION
FOR THE YEAR ENDED 31 AUGUST 2006
1. Basis of preparation
The financial information has been prepared in accordance with applicable
accounting standards in the United Kingdom and under the historical cost
convention, modified to include the revaluation of a freehold property.
The financial information contained in this report does not constitute full
statutory accounts within the meaning of Section 240 of the Companies Act 1985.
The figures are extracted from the unaudited full financial statements for the
year ended 31 August 2006 which will be filed with the Registrar of Companies
following formal completion of the audit.
2. Administration expenses
The Group's profit and loss account includes the following items in
administration expenses:
2006 2005
£ £
Amounts written off in connection with acquisition
of subsidiaries:
Amortisation of goodwill 444,129 444,129
======= =======
Exceptional items:
Costs relating to the departure of Ben Merrett - 207,858
======= =======
3. Earnings per ordinary share
The basic earnings per ordinary share has been calculated using the profit for
the year and the weighted average number of ordinary shares in issue during the
year as follows:
2006 2005
£ £
Profit for the year 918,806 189,419
========== ==========
Number Number
Weighted average of ordinary shares of 1p each 51,845,796 47,194,067
========== ==========
Basic profit per share (pence) 1.77p 0.40p
========== ==========
The basic earnings per share before goodwill amortisation and exceptional items
has also been presented since, in the opinion of the directors, this provides
shareholders with a more appropriate measure of the earnings derived from the
Group's businesses. It can be reconciled to basic earnings per share as
follows:
Basic earnings per share (pence) 1.77p 0.40p
Goodwill amortisation items per share 0.86p 0.94p
Exceptional items 0.00p 0.44p
________ ________
Earnings per share before goodwill amortisation
and exceptional items 2.63p 1.78p
======== ========
The diluted earnings per ordinary share, as defined in FRS 14, has been
calculated on the following basis:
2006 2005
£ £
Profit for the year 918,806 189,419
======== ==========
Number Number
Weighted average of ordinary shares in issue as 51,845,796 47,194,067
above
Dilution for share options outstanding 894,161 2,469,307
__________ __________
Diluted weighted average number of shares in
issue 52,739,957 49,663,374
========== ==========
Diluted earnings per share (pence) 1.74p 0.38p
========== ==========
4. Intangible fixed assets
Goodwill Development Total
costs
Group £ £ £
Cost
At 31 August 2005 17,876,829 733,873 18,610,702
Acquisitions during the year 1,030,914 - 1,030,914
__________ _________ __________
At 31 August 2006 18,907,743 733,873 19,641,616
__________ _________ __________
Amortisation
At 31 August 2005 11,659,015 733,873 12,392,888
Charge for the year 444,129 - 444,129
__________ _________ __________
At 31 August 2006 12,103,144 733,873 12,837,017
__________ _________ __________
Net book values
At 31 August 2006 6,804,599 - 6,804,599
========== ========= ==========
At 31 August 2005 6,217,814 - 6,217,814
========== ========= ==========
Goodwill is amortised over the period which the Directors estimate will
represent its useful economic life. The Directors are of the opinion that the
useful economic life of the goodwill is 20 years from the date of acquisition of
the business.
5. Share capital
2006 2005
£ £
Authorised
Equity
2,000,000,000 Ordinary shares of 1p each 20,000,000 20,000,000
========== ==========
Non-Equity
41,116,996 Non-voting deferred shares of 9p each 3,700,530 3,700,530
========== =========
Allotted, called up and fully paid
Equity
52,084,379 Ordinary shares of 1p each
(2005: 50,210,995 Ordinary shares of 1p each) 520,845 502,110
Non-Equity
41,116,996 Non-voting deferred shares of 9p each 3,700,530 3,700,530
__________ _________
4,221,375 4,202,640
========== =========
During the year the company issued a further 1,873,384 shares of 1 pence each,
following exercise of some of its share options under the EMI scheme and the
unapproved scheme. The movements in shares and share premium following the
above issues and reorganisation of shares are summarised as follows:
Number of shares Share capital Share premium
£ £
As at 1 October 2005 50,210,995 502,110 15,041,884
Shares issued on exercise of share options 1,873,384 18,735 174,643
__________ ________ __________
As at 31 August 2006 52,084,379 520,845 15,216,527
========== ======== ==========
6. Statement of movements on reserves
Share premium Special Revaluation Other Profit
account reserve reserve reserve and loss
account
£ £ £ £ £
Balance at 1 September 2005 15,041,884 4,667,133 425,851 5,000 (14,084,895)
Share issues 174,643 - - - -
Unrealised surplus on
revaluation of properties - - 520,293 - -
Transfer from revaluation
reserve to profit and loss
account - - (9,257) - 9,257
Currency translation
differences on foreign currency
operations - - - - (2,308)
Transfer from other reserve to
profit and loss account - - - (2,500) 2,500
Retained Profit for the year - - - - 918,806
__________ _________ _________ ________ ___________
At 31 August 2006 15,216,527 4,667,133 936,887 2,500 (13,156,640)
========== ========= ======== ======== ===========
The special reserve arose as a result of the demerger of Ge.world UK and its
subsidiaries during the year ended 31 August 2001 and comprises:
£
Amount transferred from share premium account to eliminate deficit in the Company's profit 25,000,000
and loss account at the date of the demerger
Transferred to profit and loss account (20,332,867)
__________
4,667,133
==========
7. Reconciliation of movements in shareholders' funds
2006 2005
£ £
Profit for the period 918,806 189,419
Proceeds from issues of shares 193,378 1,487,837
Unrealised surplus on revaluation of properties 520,293 -
Other reserve - -
Foreign exchange gains (2,308) 2,433
_________ __________
Net increase in shareholders' funds 1,630,169 1,679,689
Opening shareholders' funds at start of the year 10,257,613 8,577,924
__________ __________
Closing shareholders' funds at end of the year 11,887,782 10,257,613
========== ==========
8. Reconciliation of operating profit to net cash inflow from operating
activities
2006 2005
£ £
Operating profit 770,376 131,121
Depreciation charges 166,681 207,484
Amortisation of goodwill 444,129 444,129
Decrease in stocks 29,512 84,845
(Increase)/decrease in debtors (116,155) 258,029
(Decrease)/increase in creditors (220,225) 39,328
Increase in accruals and deferred income 20,954 265,593
(Decrease)/increase in provisions (684) 11,285
Foreign exchange gain (2,308) 2,433
_________ _________
Net cash inflow from operating activities 1,092,280 1,444,247
========= =========
9. Analysis of changes in net debt
2005 Cash flows Non-cash 2006
Changes
£ £ £ £
Cash at bank and in hand 4,116,722 550,478 - 4,667,200
Bank overdraft (3,844) 3,844 - -
_________ _________ _________ _________
4,112,878 554,322 - 4,667,200
_________ _________ _________ _________
Bank loans (707,583) 394,292 - (313,291)
_________ _________ _________ _________
Total net debt 3,405,295 948,614 - 4,353,909
========= ========= ========= =========
10. Post balance sheet event
On 12 September 2006, the Company acquired 60 per cent of the ordinary share
capital of Valuenetics A/S, a software development company established and
currently operating in Denmark. This investment allows the Company to utilise
and leverage its core competencies and market position to the growing needs of
the health and leisure, education and other similar markets where leading edge
development capabilities and innovative solutions provide sustainable value to
customers.
This information is provided by RNS
The company news service from the London Stock Exchange
