RNS Number:7148R
Transware PLC
05 November 2003
For immediate release Wednesday 5 November 2003
TRANSWARE PLC
Preliminary Results Announcement : for the year ended 30 June 2003
Transware plc ("Transware"), the leading supplier of software localisation
services, announces its preliminary results for the year ended 30 June 2003.
Brian Raven, Chairman of Transware, commented "The year to 30 June 2003 was
without doubt the most difficult that Transware has faced since its
incorporation. The Company has been directly affected by the poor economic
conditions in the USA where Transware conducts most of its business.
Consequently the Company has experienced a significant downturn in trading,
which is reflected in the poor trading results for the period under review. This
has placed a strain on the Company's working capital position, which the
directors continue to work hard to address.
At 30 June 2003 the Group had net assets of #4.44 million (2002 #4.12 million)
and cash at bank or in hand of #2.52 million (2002 #1.82 million).
The directors remain committed to maintaining Transware's position as a leading
provider of software localisation services and in the short-term continue to
explore alternatives to relieve the pressure that trading conditions are placing
on the Group's working capital resources.
The board is optimistic that the new sales team's activities will soon begin to
produce significant results and looks forward to an opportunity to report better
news to shareholders."
For further information please visit www.transwareplc.com or contact:
Brian Raven, Chairman Justin Lewis
Kieran McBrien, Chief Executive John Prior
Transware plc Corporate Synergy Plc
Tel No: 00353 1 260 1997 Tel: 020 7626 2244
Chairman's statement
The year to 30 June 2003 was without doubt the most difficult that Transware has
faced since its incorporation. The Company has been directly affected by the
poor economic conditions in the USA where Transware conducts most of its
business.
Consequently the Company has experienced a significant downturn in trading,
which is reflected in the poor trading results for the period under review. This
has placed a strain on the Company's working capital position, which the
directors continue to work hard to address.
Financial review
Transware has reported a loss for a full financial year for the first time.
Revenue for the year fell by 32.9% to #8.59 million (2002: #12.81 million) and
EBITDA fell to #0.01 million (2002: #3.74 million). The pre-tax loss before
exceptional items (explained below) was #1.90 million (2002 profit #2.1
million).
In the first half of the year, the Company raised a total of some #1.43 million
of additional funding. This was achieved through a subscription by Enterprise
Ireland Limited for #431,000 of redeemable preference shares in a Group
subsidiary Transware Limited, a loan of #250,000 from Oyster Technology
Investments Limited ("Oyster"), which was subsequently converted into equity and
through the provision of #753,000 of unsecured loans by the directors, of which
#500,000 was subsequently converted into equity at a substantial premium over
the then market price.
In the second half year a further #1.4 million of working capital, net of
expenses, was raised through a placing and open offer of shares at a
subscription price of 3p per share.
At 30 June 2003 the Group had net assets of #4.44 million (2002 #4.12 million)
and cash at bank or in hand of #2.52 million (2002 #1.82 million). In line with
previous years, 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 product. It subsequently transferred ownership of the
product into a separate wholly owned subsidiary company, Erudigm Limited. The
Company continues to work on a number of the feasibility projects for potential
customers referred to in my interim statement.
In line with the strategy of marketing directly to large multi-national
corporations as well as continued indirect marketing via the Company's
e-learning customer base, most of the sales force in the USA have been replaced
by more experienced individuals. These new senior members of the team have begun
to develop relationships within the e-learning sector at a higher level than
previously, as well as in the broader market for multi-lingual content. It is
anticipated that these relationships will lead to greater levels of business in
due course, but in the meantime the change in personnel has inevitably resulted
in something of a hiatus in terms of results.
In light of the difficult market and trading conditions the Company is
experiencing the directors have continued to eliminate costs from the business
wherever possible. Staff numbers have been reduced, capital costs deferred,
offices in Germany, France, parts of the USA and the headquarters and sales
office in the UK have been closed. The directors have also waived a proportion
of their remuneration and the size of the operating board of the Company has
been radically reduced to leave only one executive director.
Exceptional Costs
As a consequence of the refinancing exercises, office closures and the
termination of certain executive and non-executive directors' contracts the
Group incurred #0.88 million of exceptional costs in the year under review. The
reported loss before taxation was therefore #2.78 million (2002 profit #0.32
million).
Move to AIM and introduction of significant shareholder
In order to benefit from lower transactional and regulatory costs the Group's
listing was transferred to the Alternative Investment Market in November 2002.
As a part of the Group's refinancing exercise, undertaken in April 2003, Oyster
subscribed #1.5 million for 50 million new ordinary shares of 1p each at a
subscription price of 3p per share. As a consequence Oyster became the Group's
largest shareholder, with a current holding of 56.49%.
Board Changes
With effect from 30 June 2003 Oliver Cooke and I stepped down as executive
directors of the Company and agreed instead to serve as non-executive directors.
Martin Scully joined the board as a non-executive director to represent Oyster's
interests.
On the same date Lord Sheppard and Anthony Carlton stepped down as non-executive
directors of the Company and I would like to thank them for the considerable
support that they provided to the Company during their time in office.
As a consequence of these changes Kieran McBrien, the Group's Chief Executive
Officer, is the only executive director on the board.
With the passing of day-to-day management of the Group's operations to Ireland,
BDO Simpson Xavier, the Dublin based member of BDO Stoy Hayward's international
partnership, has been appointed as the Company's auditors.
Summary and Prospects
Whilst some signs of improvement are now being seen amongst customers based in
the USA it is not yet clear to the directors when more normal trading conditions
will return and the directors therefore anticipate that the current difficult
conditions will persist for some time.
The directors remain committed to maintaining Transware's position as a leading
provider of software localisation services and in the short-term continue to
explore alternatives to relieve the pressure that trading conditions are placing
on the Group's working capital resources.
The board is optimistic that the new sales team's activities will soon begin to
produce significant results and looks forward to an opportunity to report better
news to shareholders.
Consolidated profit and loss account
for the year ended 30 June 2003
2003 2002
# #
Turnover 8,592,679 12,806,946
Cost of sales (1,973,822) (2,573,962)
Gross profit 6,618,857 10,232,984
Administration expenses (8,349,277) (8,014,960)
Administration expenses - exceptional items (882,118) (1,782,184)
(9,231,395) (9,797,144)
Operating (loss)/profit (2,612,538) 435,840
Earnings Before Interest, Taxation, Depreciation and
Amortisation
Operating (loss)/profit before exceptional items (1,730,420) 2,218,024
Add back: Depreciation of tangible fixed assets 762,252 589,857
Amortisation of intangibles 978,953 927,79
3
EBITDA 10,785 3,735,674
(Loss)/profit on ordinary activities before interest (2,612,538) 435,840
Interest receivable 54,108 109,181
Interest payable (219,732) (225,447)
(Loss)/profit on ordinary activities before taxation (2,778,162) 319,574
Being
(Loss)/profit on ordinary activities (1,896,044) 2,101,758
Less exceptional items (882,118) (1,782,184)
(2778,162) 319,574
Taxation (11,515) (204,848)
(Loss)/profit on ordinary activities after taxation (2,789,677) 114,726
Minority interests - non-equity (53,017) -
Retained (loss)/profit for year (2,842,694) 114,726
Earnings per share
(Loss)/earnings per ordinary share - basic (6.10p) 0.33p
diluted - (5.65p) 0.33p
(Loss)/earnings per share before exceptional items (4.20p) 5.40p
Consolidated statement of total recognised gains and losses
for the year ended 30 June 2003
2003 2002
# #
(Loss)/profit for the financial year (2,842,694) 114,726
Exchange differences on translation of net assets and results
of subsidiary undertakings 314,259 333,050
Total recognised gains and losses for the year (2,528,435) 447,776
Consolidated balance sheet
at 30 June 2003
2003 2002
# #
Fixed assets
Intangible assets 5,312,772 5,711,770
Tangible assets 1,444,552 1,903,925
6,757,324 7,615,695
Current assets
Work in progress 17,970 32,547
Debtors - due within one year 1,070,782 2,327,885
- due after more than one year - 385,431
Cash at bank and in hand 2,516,134 1,818,975
3,604,886 4,564,838
Creditors: amounts falling due within one year (5,266,028) (4,292,546)
Net current assets (1,661,142) 272,292
Total assets less current liabilities 5,096,182 7,887,987
Creditors: amounts falling due after more than one year (590,508) (2,247,163)
Provisions for liabilities and charges (64,275) (98,778)
Deferred income - (1,419,900)
Net assets 4,441,399 4,122,146
Capital and reserves
Called up share capital 1,031,235 3,573,717
Share premium account 1,312,521 483,773
Merger reserve (3,272,882) (3,272,882)
Capital redemption reserve 4,443,229 -
Profit and loss account (230,280) 2,753,289
Shareholders' funds - equity 3,283,823 3,537,897
Minority interests - non-equity 1,157,576 584,249
4,441,399 4,122,146
Consolidated cash flow statement
for the year ended 30 June 2003
2003 2002
# #
Net cash inflow from operating activities (721,020) 2,489,747
Servicing of finance and returns on investments (165,624) (116,266)
Taxation (118,174) (39,398)
Capital expenditure and financial investment (320,446) (4,766,619)
Net cash outflow before financing (1,325,264) (2,432,536)
Management of liquid resources - 871,213
Financing 1,772,174 818,364
Increase/(decrease) in cash 446,910 (742,959)
Reconciliation of net cash flow to movement in net funds/(debt) for the year
ended 30 June 2003
2003 2002
# #
Increase/(decrease) in cash 446,910 (742,959)
Cash inflow from decrease in liquid resources - (871,213)
Decrease in debt 1,021,181 396,956
Changes in net funds/(debt) resulting from cash flows 1,468,091 (1,217,216)
New finance leases (77,116) (425,192)
Translation differences (43,855) (49,962)
Movement in net funds/(debt) 1,347,121 (1,692,370)
Net funds / (debt) at beginning of period (502,755) 1,189,615
Net funds at end of period 844,366 (502,755)
Notes on and forming part of the financial statements
for the year ended 30 June 2003
Exceptional items
Exceptional items totalling #882,118 in the year end 30 June 2003 relate to the
relocation of the Company's registered office, the termination of certain
executive and non-executive directors' contracts and interest charges associated
with the refinancing of the company. The company has provided #431,682 to cover
the write off of leasehold improvements and contracted payments in respect of
its former premises in Egham Surrey. Under the terms of the current lease
agreement on this premises, the lease cannot be broken until August 2006. The
company has estimated that up to #304,760 could be payable in respect of rent
and rates on this premises for the period until August 2006.
Exceptional items in the year end 30 June 2002 relate to the termination of a
royalty arrangement with SmartForce Ireland Limited. As a consequence of this
termination the Group wrote off #9,119,888 being the amount previously
capitalised as an intangible asset and wrote back #7,337,704 being the
associated liability due in respect of this asset. This resulted in a one-off
exceptional charge to the profit and loss account of #1,782,184.
Taxation
2003 2002
# #
Current tax
Overseas corporation tax 53,527 106,070
Deferred tax
Origination and reversal of timing differences (42,012) 98,778
11,515 204,848
Earnings per ordinary share
The basic earning per ordinary share has been calculated using the (loss)/profit
on ordinary activities after taxation for the year and the weighted average
number of ordinary shares in issue during the year as follows:
2003 2002
# #
(Loss)/profit on ordinary activities after taxation (2,789,677) 114,726
Number Number
Weighted average of ordinary shares of 10p each - 35,119,721
Weighted average of ordinary shares of 1p each 45,707,525 -
Basic earnings per ordinary share (6.10p) 0.33p
The diluted earnings per ordinary share, as defined by FRS 14, has been
calculated as shown below:
(Loss)/profit on ordinary activities after taxation (2,789,677) 114,726
Number Number
Weighted average number of ordinary shares in issue 45,707,525
35,119,721
Dilution for share options exercisable at a price below the average
market value of the Company's shares 3,677,419 325,651
49,384,944 35,445,372
Diluted earnings per ordinary share (5.65p) 0.33p
The earnings per ordinary share before exceptional charge 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 present activities. It can be reconciled to the basic earnings per
ordinary share as follows:
2003 2002
pence pence
Basic earnings per ordinary share (6.10) 0.33
Exceptional charge 1.90 5.07
Basic earnings per ordinary share (4.20) 5.40
The results for the years ended 30 June 2001 and 30 June 2002 have been
extracted from the audited financial statements for the year. The auditors'
report on these accounts was unqualified and did not contain statements under
s237 (2) or (3) of the Companies Act 1985.
The financial information contained in this preliminary announcement does not
constitute statutory accounts within the meaning of section 240 of the
Companies Act 1985.
The Report and Accounts will be posted to shareholders at least 21 days before
the Annual General Meeting and copies will be available from the offices of
Corporate Synergy, 12 Nicholas Lane, London EC4N 7BN, free of charge.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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