RNS Number:2530J
Atlantic Global PLC
27 March 2003
For immediate release
27 March 2003
ATLANTIC GLOBAL PLC
PRELIMINARY RESULTS FOR THE YEAR ENDED 31 DECEMBER 2002
Atlantic Global Plc, ("Atlantic Global" or "the Company"), the AIM listed
specialist developer of business and resource management software applications
to a broad range of customers, announces its preliminary results for the year
ended 31 December 2002. These are extracted from the audited report and accounts
for the period, which will be sent to shareholders today.
In his statement, Michael Langmore, Chairman, said: "Our results for the year to
31 December 2002 show another year of organic growth for the Group, with
turnover increasing by 29%. Further substantial progress has been made towards
the development of Atlantic Global and expanding our range of increasingly
successful products."
Key points: Financial
Proforma
Year ended 31 Year ended 31
December 2002 December 2001
#'000 #'000
Sales 1,551 1,205
Operating profit before goodwill and 390 495
exceptional costs
Earnings per share 1.60 pence 2.99 pence
Dividend payable per share 0.5 pence 0.5 pence
Free cash flow before exceptional costs 124 517
Net Cash Balance 1, 897 2,147
Key points: Operating
* New software products released first quarter of 2002
* Major re-branding of our software suite under the Adeo name
* Expansion of team - New skills brought in at all levels
* Substantial increases in marketing expenditure, to strengthen brand
awareness of Adeo
* Further development with University of Bradford securing new DTI
research and development funding.
New initiatives since 31 December 2002
* New software enhancements to our current products released first
quarter of 2003
* Major new products planned for 2003, to be partly funded by our
customers
* Continued rollouts of our software into our existing client base
* The current sales pipeline and customer activity are at their highest
levels in our Company's history.
Outlook
In his statement, Michael Langmore, Chairman, said, "We believe that the growth
potential of the Group remains substantial, with our software being increasingly
capable of delivering considerable benefit to most types of organisation. We are
therefore extremely well positioned to achieve significant levels of ongoing
growth."
Enquiries:
Eugene Blaine, Managing Director, Atlantic Global plc 01274 733 758
Rupert Hutton, Finance Director, Atlantic Global plc 01274 733 758
Paul Vann/Charlotte Barker, Binns & Co PR Ltd 020 7786 9600
Chairman's statement
Introduction
Our results for the year to 31 December 2002 show another year of organic growth
for the Group, with turnover increasing by 29%. Further substantial progress has
been made towards the development of Atlantic Global and expanding our range of
increasingly successful products.
Trading results
To enable a more accurate comparison of the Group's performance for 2002 over
2001, during which Atlantic Global Plc was incorporated, proforma results for
the full 12 months ended 31 December 2001 are included in these accounts.
My summary of the results will also be for the full 12 months ended 31 December,
for both years.
The Group has achieved a very creditable result during 2002 with operating
profit before goodwill and exceptional costs of #390,000 (2001: #495,000).
However, the main indicator that underlying growth has been achieved can be seen
in the turnover increase of 29% to #1,551,000 (2001: #1,205,000).
This growth in turnover has not flowed through to the operating profit level due
to the substantial amount of investment that we made, during 2002, to our
software products, brand image and company infrastructure. Our additional
spending during 2002, over and above that incurred in 2001, has included
#100,000 on software development costs, #87,000 on the marketing of our new Adeo
brand and #188,000 on our sales structure to ensure that we are fully capable of
dealing with continued growth whilst consistently maintaining our levels of
customer service. Therefore, during a year with generally poor economic
conditions, which proved to have been difficult for many organisations, Atlantic
Global has experienced a relatively successful period.
Earnings per share, adjusted for goodwill and exceptional costs, were 1.60 pence
(2001: 2.99 pence). The comparison with 2001 has been affected by the
calculation of the weighted average number of shares shown for 2001 at
14,685,000, which took into account the period from 1 January 2001 to the
placing on 4 June 2001, when there were only 2,000 shares in issue because the
Company was a private company at that time. In fact, the original 2,000 shares
were increased to 20,720,000 shares following the AIM listing.
As a result of our listing on AIM, the Group has continued to incur additional
ongoing administration costs, which were not all incurred during the whole of
2001. During 2002 these costs have amounted to #122,000 (2001: #69,000) and the
difference should also be taken into account when comparing results.
Dividend
The Directors are proposing that a maintained final dividend of 0.5p (2001:
0.5p) per share be paid for the year ended 31 December 2002. This demonstrates
our confidence in the Group's continuing ability to generate profits and cash.
Dividend cover is still very healthy at 3.2 times and the Directors will pursue
a progressive dividend policy, providing circumstances remain appropriate.
Deferred Consideration relating to the acquisition of Atlantic EC Ltd
At the time of the acquisition of Atlantic EC Ltd, it was agreed, that subject
to the attainment of certain profit targets during the year ended 31 December
2002, that a final payment of #250,000 would be due to the vendors payable
partly in Atlantic Global Plc ordinary shares and partly in cash. As a result of
the investment in the Group, referred to in the trading results above, the
required target has not been achieved and therefore no part of the #250,000 is
payable.
Achievements during 2002
During the year we have once again successfully expanded our range of blue chip
customers, helping clients in an ever-increasing range of industries, to improve
the efficiency of their systems. Further details are given in Eugene Blaine's
Managing Director's Review.
As mentioned in the trading results above, we have increased our research and
development expenditure and, as a result, Adeo has been enhanced and new
software products have been successfully offered to our marketplace since the
first quarter of 2002. We now have five software modules, covering a wider range
of people and resource controls, compared to three modules previously.
During February 2002 we re-branded our entire suite of software products under
the name "Adeo", and commenced a major marketing campaign to fully exploit the
potential demand that we believe exists for our software.
We have effectively managed the expansion within the Group, and the executive
team and operational systems were considerably strengthened during the year.
Our partnership with the University of Bradford, with its excellent research
facilities, continues to provide significant benefits including the recent
recruitment of a second graduate to aid with research.
Due to the continued cash generative nature of our business, the Group had net
cash balances, at 31 December 2002, of #1,897,000 (2001: #2,147,000). The
reduction of #250,000 during the year can be accounted for by the dividend of
#104,000 for 2001, and the 2001 deferred consideration cash payment of #225,000,
based on the profit achievement in 2001. The Group is therefore in an excellent
position of being financially secure and this will be maintained as we continue
to generate cash from substantial profit levels. To confirm this cash generating
ability the amount of free cash flow produced during 2002, despite the
additional expenditure noted above, was #124,000 (before exceptional costs),
compared with #517,000 for 2001.
Income recognition
The system accounting for sales and sales costs is not the same in every company
and I therefore believe it would be useful to state how we account for sales
revenue.
Turnover represents the amounts invoiced and receivable, for the Group's
software licences, consultancy and support services. We only account for sales
directly to our customers and following the installation of a software licence.
The invoice would usually include an amount for ongoing support. This support
element is deferred and recognised, on an equal monthly basis, over the whole
period for which support is to be provided. Income from the sale of software
licences is recognised only when the software is installed. The Group does not
capitalise any costs incurred on research and development, or in bidding for any
sale and writes all such costs off to the profit and loss account as they are
incurred.
We believe that the above method shows good accounting practice and helps to
produce a true and fair view of profitability.
Board Changes
At the Annual General Meeting held on 19 April 2002, we were pleased to appoint
Rupert Hutton to the Board as Finance Director. Rupert joined Atlantic Global in
July 2001 and since his appointment he has continued to demonstrate a wide
ability and excellent enthusiasm for the Group and the Board is confident that
his general management skills will also be of significant benefit.
Paul Lilley, who held the position of Sales and Marketing Director, retired from
the Board in October 2002, due to ill health.
I am pleased to announce the appointment, in February 2003, of Mark Allcock as
Sales and Marketing Director designate. Mark is a highly experienced executive
having held senior appointments within Admiral Plc and CMG Plc. The Board is
confident that he will play an important part in the Group's future success.
People
We are increasingly recognising that the quality and ability of our team is
crucial to our success. Their hard work, enthusiasm and willingness to be team
players can make the difference between an average or an excellent performance.
The progress made during 2002 was done so under challenging and sometimes very
difficult conditions and every member of the team, including the executive
directors, has had a part to play in the results achieved. I would take this
opportunity, on behalf of myself and my fellow shareholders, to offer each one
of them our sincere appreciation for their efforts.
During 2002 we have expanded our team with several new, talented people. We are
sure that they will make an excellent contribution to our success.
We maintained our Investors in People Standard throughout 2002, and are
intending to be formally reassessed during 2003. This is an independent measure
of our commitment to the development of our people.
It is of some importance that, due to the facility afforded to us with our
listing on AIM, we are able to ensure that almost all of our team now have share
options in the Group. This helps ensure that, they remain closely involved with
the success of the Group, to the benefit of all stakeholders.
Website
Our website at www.atlantic-global.net is constantly being updated, is now more
user-friendly than ever before and has an extensive Investor Relations section.
If the Internet is available to you, I would encourage you to view the site.
Strategy
Our overall strategy is to progress the sale and support of high quality,
multi-functional software to blue chip and other customers in a wide variety of
industries and the public sector. We are continuing to use our proven track
record to build an increasingly diverse customer base, thereby lessening the
risk factor associated with dealing with a smaller number of business sectors.
We are finding that our customers are showing an increased need to maintain and
improve their administration and control systems. This may have been encouraged
partly by the general economic conditions. Our products are ideally placed to
help our customers to achieve these improved efficiencies.
We are continuing to invest in the development of our software to further
improve its capability and remain at the forefront of our sector. During 2002
the amount invested in research and development expenditure was #283,000, being
18.2% of sales, compared to #185,000 and 15.3% of sales in 2001. This compares
to #82,000 and 9.9% of sales in 2000.
To assist with our sales development we are working closely with our sales
alliances to reach a wider network of potential customers.
Please refer to the Managing Director's Review for more detail on these points.
Acquisitions
The Board has a current policy of concentrating on organic growth and therefore
the Group is not involved in an active acquisition strategy. However, we would
consider any exceptional acquisition opportunities that would improve
Shareholder value providing they are compatible with our strategic objectives
and are reasonably priced in accordance with their profitability and quality of
earnings.
Current Trading
Having produced our management accounts for January and February 2003 and with
knowledge of March's sales, we can confirm that the year has begun in line with
expectations, although it is too early to state what degree of success the Group
will achieve during 2003. However, the current sales interest is at a higher
level than at this time last year.
The Future
We believe that the growth potential of the Group remains substantial, with our
software being increasingly capable of delivering considerable benefit to most
types of organisation. We are therefore extremely well positioned to achieve
significant levels of ongoing growth.
Our appreciation towards our customers should, once again, be recorded. Our good
relationships with them is a constant advantage and we will continue to
concentrate on creating and developing partnerships with our clients at all
levels.
I am therefore very confident that 2003 will be another successful year.
Michael Langmore
Chairman
26 March 2003
Managing Director's Review
Introduction
I am pleased to announce another positive year at Atlantic Global during which
we have experienced growth in many aspects of the business.
Atlantic was established in 1993 and, since then, we have been developing
software products to meet a simple objective - to make our clients more
efficient and more competitive. Atlantic's products continue to be chosen by
many of the market leaders across a diverse range of industry sectors,
confirming the quality and flexibility of the solutions provided.
Since the flotation, the Group has developed at an ever-increasing pace and the
following summarises our achievements in respect of the introduction of an
increased product range, the development of our customer base and our strategy
for the future development of sales.
Products
Our newly branded product Adeo was launched in February 2002, combining our
three existing software modules into one seamless product. This has proved very
successful, as clients are now able to buy more than one module without having
to make two purchasing decisions. Most new installations during 2002 have
purchased more than one activation key, thereby increasing the potential licence
sales to each client.
Since the year-end, new product development contracts have been successfully
negotiated with large blue-chip clients providing additional new modules and
expanding the functionality of the existing product. These clients agreed to
partly fund the development of the new modules in return for participation in
the design, whilst the Group has retained the intellectual property rights. This
method has proven successful in delivering well-engineered and practical
business solutions and we expect to continue to pursue this strategy in the
years ahead.
We also have a number of new Adeo modules under development, which will be ready
for commercial sale by the end of March 2003. In addition we are well advanced
on the launch of a significant new enterprise product, which is planned for
release at the end of June 2003.
Customer profile
The Group's products continue to sell in a variety of industry sectors, with
additional new sectors being penetrated. Within each sector, we will continue to
target the market leaders.
Listed below are some of Atlantic Global's customers, the high profile nature of
which confirms the strong reputation and high quality of our software solutions
and service.
Pharmaceuticals Computer & Telecoms Financial & Consulting Other
AstraZeneca Limited Colt Telecommunications Plc Allied Irish Bank Genesis Oil & Gas Consultants
GlaxoSmithKline Plc Computacenter UK Limited Barclays Bank Plc Metropolitan Police Service
GlaxoSmithKline US Pharma Computeraid Services Limited Cap Gemini Ernst & NEC Technologies (UK) Ltd
Aventis Pharma Ltd Ericsson Telecommunicatie Young Parkhill NHS Trust
Pfizer Limited Hitachi Europe Ltd Cattles Group Plc Scott Tallon Walker
UCB Chemicals Identex Continental Reinsurance Architects
Intel Ireland Ltd LogicaCMG Serco Technology
Interoute Limited Dunnhumby University of Huddersfield
Vicorp UK Limited HSBC Actuaries & Vectra N Jones Ltd
Virgin Mobile Telecom Ltd Consultants Ltd Waltham Forest Council
Xchanging Ltd Norwich Union
Raft International Plc
Serco Technology
Our close working relationship with our customers continues and, as we are
developing ourselves, we see our customers, old and new, responding to our
improved abilities. We see no reason why this should not continue.
People
As mentioned in the Chairman's statement our team will always be our greatest
asset and we are ensuring that their skills are continually expanded. The
Directors continually acknowledge the contribution of our staff in achieving the
Company's continued success.
Industry partners
We are continuing with our efforts to increase our visibility in the market
place, by building strong long-term relationships with various organisations
from all sectors, including, software, hardware and services. This will increase
our visibility and enable cross-selling opportunities between all parties,
maintaining our ability to provide a total solution to our customers.
Sales Alliances
Our ongoing strategy is the creation of new sales alliance partners who will
collaborate with our Group to provide software solutions to their clients. We
are confident in the ability of our products and our skills and we believe,
following our usual, high quality implementation of a solution for a partner
that further developments will result.
R&D / future markets
We are continuing to invest substantial resources in research and development
and we will maintain such levels required to keep ourselves at the cutting edge
of our industry.
Outlook
We believe that we have never been more strongly placed within our business than
we are today. We feel very confident that we shall continue with our success
during 2003 and into the future.
Eugene Blaine
Managing Director
26 March 2003
Consolidated profit and loss account
for the year ended 31 December 2002
Period from
Proforma incorporation to
(unaudited) 31 December
Year ended year ended 2001
31 December 31 December
2002 2001
#000 #000 #000
Turnover 1,551 1,205 741
Cost of sales (624) (350) (208)
------- ------ ------
Gross profit 927 855 533
Administration and establishment expenses (763) (601) (487)
Operating profit before goodwill 390 495 287
amortisation and exceptional costs
Goodwill amortisation (181) (104) (104)
Exceptional costs (45) (137) (137)
------- ------ ------
Operating profit 164 254 46
Interest receivable 71 60 51
------- ------ ------
Profit on ordinary activities before 235 314 97
taxation
Tax on profit on ordinary activities (104) (115) (55)
------- ------ ------
Profit on ordinary activities after 131 199 42
taxation
Dividends proposed (114) (104) (104)
------- ------ ------
Retained profit/(loss) for the financial 17 95 (62)
period
==== ==== ====
Adjusted earnings per share 1.60p 2.99p 1.93p
Basic earnings per share 0.59p 1.36p 0.29p
Diluted earnings per share 0.56p 1.24p 0.26p
==== ==== ====
There are no recognised gains or losses during the current year other than the
profit for the year.
Consolidated balance sheet
at 31 December 2002
2002 2001
#000 #000 #000 #000
Fixed assets
Intangible assets 3,335 3,516
Tangible assets 63 52
------ ------
3,398 3,568
Current assets
Debtors 365 329
Cash at bank and in hand 1,897 2,147
------- -------
2,262 2,476
Creditors: amounts falling due within one (485) (886)
year
------- -------
Net current assets 1,777 1,590
------- -------
Net assets 5,175 5,158
==== ====
Capital and reserves
Called up share capital 1,137 1,036
Share premium account 1,545 1,121
Shares to be issued reserve - 525
Merger reserve 2,538 2,538
Profit and loss account (45) (62)
------- -------
Equity shareholders' funds 5,175 5,158
==== ====
Consolidated cash flow statement
for year ended 31 December 2002
Year ended Proforma Period from
31 December (unaudited) incorporation
2002 year ended to
31 December 31 December
2001 2001
#000 #000 #000
Cash inflow from operating activities
Operating profit before goodwill and 390 495 287
exceptional costs
Goodwill amortisation (181) (104) (104)
Exceptional costs (45) (137) (137)
------- ------ ------
Operating profit 164 254 46
Depreciation 29 16 11
Loss on disposal of fixed assets 6 - -
Goodwill amortisation 181 104 104
Increase in debtors (36) (167) (39)
(Increase) / decrease in creditors (186) 226 182
------- ------ ------
Net cash inflow from operating activities 158 433 304
Returns on investment 72 55 46
Taxation (104) (60) (60)
Capital expenditure (47) (48) (42)
------- ------ ------
Free cash flow 79 380 248
Acquisitions and disposals (225) - 404
Equity dividends paid (104) - -
------- ------ ------
Cash (outflow) / inflow before management of
liquid resources and financing (250) 380 652
Management of liquid resources and financing 250 (2,050) (2,050)
Financing - 1,318 1,495
------- ------ ------
(Decrease)/ increase in cash in the period - (352) 97
==== ==== ====
Reconciliation of net cash flow to movement in net funds
(Decrease)/ increase in cash in the period - (352) 97
Cash (inflow)/outflow from increase in liquid (250) 2,050 2,050
resources
------- ------ ------
Movement in net funds in the period (250) 1,698 2,147
Net funds at the start of the period 2,147 449 -
------- ------ ------
Net funds at the end of the period 1,897 2,147 2,147
==== ==== ====
Notes
1. Basis of preparation
The accounts have been prepared in accordance with applicable accounting
standards and under the historical cost accounting rules, and cover the year
ended 31 December 2002. The comparative figures cover the 308 day period from
26 February 2001, the date of incorporation to 31 December 2001.
In order to enable useful comparison of the Group's performance proforma
information has been included in this Annual Report. The proforma results for
the twelve months ended 31 December 2001 represent the actual consolidated
results of the Group from its date of incorporation plus the results of Atlantic
EC Limited from 1 January 2001 until its acquisition by the Company.
The financial information set out above does not constitute the Company's
statutory accounts for the periods ended 31 December 2002 or 31 December 2001.
Statutory accounts for 2001 have been delivered to the Registrar of Companies,
whereas those for 2002 will be delivered following the Company's Annual General
Meeting. The auditors have reported on those accounts; their reports were
unqualified and did not contain a statement under Section 237(2) or (4) of the
Companies Act 1985.
2. Income recognition
Income from the sale of software licences is recognised only when the software
is installed. Income from chargeable services including consultancy,
customisation and development is recognised as these services are delivered.
Support income is recognised over the life of each support contacts.
3. Research and development expenditure
Expenditure on research and development is written off against profits in the
period in which it is incurred.
4. Taxation
The charge for taxation is based on the profit for the year and takes into
account taxation deferred because of timing differences between the treatment of
certain items for taxation and accounting purposes. Deferred tax is recognised,
without discounting, in respect of all timing differences between the treatment
of certain items for taxation and accounting purposes which have arisen but not
reversed by the balance sheet date, except as otherwise required by FRS 19.
5. Dividends
Year ended Proforma Period from
31 December (unaudited) incorporation
2002 year ended to
31 December 31 December
2001 2001
#000 #000 #000
On ordinary shares of 5p
Final proposed: 0.5p 114 104 104
==== ==== ====
6. Earnings per share
Year ended Proforma Period from
31 December (unaudited) incorporation
2002 year ended to
31 December 31 December
2001 2001
#000 #000 #000
Profit after tax 131 199 42
Adjustments
Goodwill amortisation 181 104 104
Exceptional items 45 137 137
------- ------ ------
Adjusted profits 357 440 283
==== ==== ====
Number Number Number
000 000 000
Weighted average number of shares in issue 22,281 14,685 14,685
Dilutive effect of deferred consideration shares to be
issued in respect of 2001 - 1,422 1,422
Dilutive effect of share options and warrants 1,298 - -
------- ------ ------
Fully diluted weighted average number of shares in issue 23,579 16,107 16,107
==== ==== ====
Basic earning per share (based on profit after tax) 0.59p 1.36p 0.29p
Fully diluted earnings per share (based on profit after tax) 0.56p 1.24p 0.26p
Adjusted earnings per share (based on adjusted profits) 1.60p 2.99p 1.93p
7. Free cash flow
Free cash flow represents the amount of cash generated and useable to the
advantage of the Company's shareholders either in the form of dividends or for
acquisitions that will enhance the company's net worth.
8. Copies of Atlantic Global Report and Accounts
Copies of the interim and annual reports of the Company are available from:
* Mr R Hutton, Finance Director & Company Secretary, Atlantic Global
Plc, Maple House, Woodland Park, Chain Bar, Cleckheaton, BD19 6BW
* Website address: www.atlantic-global.net
* Email: info@atlantic-global.co.uk
This information is provided by RNS
The company news service from the London Stock Exchange
END
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