RNS Number:8131Z
Atlantic Global PLC
15 March 2006
Press Release 15 March 2006
Atlantic Global Plc
Preliminary Results
Atlantic Global Plc ("Atlantic Global" or "the Company"), the specialist
provider of Project Portfolio Management (PPM) software applications, today
announces its Preliminary Results for the 12 months ended 31 December 2005.
Financial and Operational Summary
* Turnover was #2.137m (2004: #2.146m)
* Loss before tax and goodwill amortisation of #450,000 (2004: Profit #369,000), in line with January
trading update
* Basic loss per share 2.69 pence (2004: earnings per share 0.58 pence)
* Strong sales lead conversion and contract implementation in H2 2005, including: Travelex, Orange,
Xchanging, Telewest & Norwich Union
* Products, brand and industry position reinforced by inclusion in the major software analyst Gartner's
Magic Quadrant during 2005
* Consolidation of the executive team with important skills and experience being retained in priority
business areas
* Enhanced Corporate Vision and Business Solutions software products released in the third quarter of
2005; full pipeline of future enhancements
* Highest ever levels of ongoing face to face sales contact and PPM customer activity
Eugene Blaine, Managing Director of Atlantic Global commented:
"We believe that we have a very competitive product offering and have made the
necessary changes to position the business to take advantage of the forecasted
growth in the PPM market place. The future will present significant
opportunities and, as with any fast growing company, will also present
significant challenges.
The Directors believe we now have a very experienced management team in place to
take the company to the next level. The Board is confident that we will bring
the company quickly back to profitability via the resumption in top line growth
with the view to delivering increased shareholder value."
For further information please contact:
Atlantic Global plc
Eugene Blaine, Managing Director Tel: +44 (0) 01274 863 300
eugene.blaine@atlantic-global.com
Rupert Hutton, Finance Director Tel: +44 (0) 01274 863 300
rupert.hutton@atlantic-global.com www.atlantic-global.com
Media enquiries:
Abchurch
Sarah Hollins/Justin Heath Tel: +44 (0) 20 7398 7700
Georgina Bonham
justin.heath@abchurch-group.com www.abchurch-group.com
Chairman's Statement
Introduction
I have to open my first full year report with the recognition that 2005 did not
meet our expectations in respect to financial results for Atlantic Global.
The results for the year are disappointing, showing no year-on-year increase in
turnover, and the first loss in the company's history.
To put this into perspective, however, we should examine the maturity of the
Project Portfolio Management (PPM) market-place, which is the classification of
software that Atlantic Global produces and sits most comfortably within.
PPM software is a powerful and transparent tool that empowers managers to
deliver controlled and predictable execution of projects. It provides
executives with real-time visibility into the performance of an organisation,
helping them decide which projects, programmes and initiatives to fund, which to
sustain and which to cease. As such PPM encourages alignment between corporate
objectives and supporting investments.
The PPM market is in its infancy and continues to be defined and developed by
the software industry and its analysts. As a result, we have found ourselves
working with many target customers performing, in effect, an educational role
with regard to business change and project management best practice. It became
apparent during these exchanges that the full benefits of PPM, as a leading edge
discipline, were still to be fully understood by the market. The need to make
the potentially significant core process changes required within their
organisations in order to extract full return on investment has restricted
immediate acquisition of our product.
However the financial performance does not reflect either the operational
progress achieved or the lessons learnt during 2005. It is apparent that market
interest in and understanding of PPM is growing. This is evidenced by major
software analysts, (most notably Gartner) identifying this market specifically,
and giving it a separate identifiable classification. Gartner has created one of
their Magic Quadrants for this category of software and Atlantic Global's
inclusion in this is a major coup, providing a third party recognition of our
leading position. We are one of only two European organisations included in the
quadrant, and are recognised as one of 25 leading vendors in this software space
worldwide.
In late 2004 and early 2005 we took the decision to invest heavily in our sales
and marketing teams in anticipation of the market uptake of PPM software. As
the year progressed it became apparent that we were too far in front of the
markets acceptance and understanding, and our investment did not lead to the
expected top line growth resulting in a financial loss before taxation and
goodwill for the year of #450,000. Having recognised these issues, we adjusted
our cost base and sales methodology during the third quarter of 2005 followed by
further refinements to the sales process during the fourth quarter and into
2006. The Head of Marketing has developed highly focused marketing campaigns for
2006, based on the continued forging of links with software industry analysts to
further enhance our reputation in this emerging software space. One example of
this is the fact that we were invited to attend the European Gartner Symposium,
one of only ten vendors and the only UK listed vendor to exhibit. Our sales
process is continually improving, as is our ability to qualify and handle the
sales leads that we are receiving from our marketing campaigns.
As the PPM software sector develops further, Atlantic Global Corporate Vision
continues to mature. The early implementations of our PPM software have bedded
in and are showing increasing benefits in Norwich Union, Barclays Bank and
LogicaCMG amongst others. We have gained new Corporate Vision PPM software
customers such as Virgin Mobile, Friends Provident, Orange and Xchanging.
We believe everything is now in place to deliver a far higher volume of
Corporate Vision deals in 2006. With regard to Atlantic Global's broader product
portfolio, we have kept pace with relevant market developments, and are looking
to package attractive product propositions that will give more benefit to our
clients and derive higher revenue. Our Business Solutions Software remains an
essential part of our integrated product suite.
Results
The Group has achieved a disappointing result during 2005 with an operating
loss, before goodwill, of #505,000 (2004: profit #293,000). The turnover of the
group for 2005 was very similar to the previous year #2,137,000 (2004:
#2,146,000). The total expenditure on the Sales and Marketing functions during
2005 was #1,550,000, which was over 50% more than the #1,009,000 we spent in
2004.
The continued investment in building our company has caused a further temporary
cash outflow during 2005. The Group had net cash balances, at end December 2005,
of #1,539,000 compared with #1,896,000 the year before, showing a decrease of
#357,000, which also includes the payments of the final dividend of #172,000 and
taxation of #74,000 paid during 2005 in relation to the financial year ended 31
December 2004. The Group remains in the excellent position of being financially
secure, with a positive cash flow being achieved for the second half of 2005.
The cash balance at the half year was #1,479,000, increasing to #1,539,000 by
year end. This is as a result of the improved trading position in the second
half of the year where the loss on ordinary activities before taxation and
goodwill was reduced to #73,000 from the first half year loss reported of
#377,000.
Dividend
The Directors are not proposing a dividend for the year ended 31 December 2005,
(2004: 0.75 pence). The Directors will revert to their progressive dividend
policy as demonstrated since the company's admission to AiM, when circumstances
become appropriate.
People
We recognise that our team's quality, skills and determination to succeed are
vital ingredients in achieving corporate success. Credit for our achievements
in 2005 is due to every member of the team, and I would take this opportunity,
on behalf of my fellow shareholders and myself, to offer all of them our
appreciation of their efforts.
During 2006, we plan to recruit additional people to key areas, in a controlled
way, continually striving to improve the overall quality of our workforce.
A significant proportion of our people have share options, and we will continue
to use this mechanism to help ensure that they remain closely allied to the
success of the Group.
Strategy for the future
The fundamental strategy of the Group remains unchanged but will be delivered in
a more focused way. We are seeing an increasing number of business enquiries for
our software products, and are putting every effort into converting these into
tangible new clients. The forecast demand for PPM products is strong with more
and more organisations facing the need to improve the productivity and
effectiveness of their workforce.
The application of Atlantic Global's software products can demonstrably lead to
quick and significant improvements in operational performance. This applies to
all people intensive organisations, in both private and public sector,
irrespective of whether their resourcing model is based on in-sourcing,
out-sourcing or, more usually, a combination of the two.
The refined sales methodology further enhances our mission to work in genuine
partnership with our clients. It will involve us working more closely with
existing and prospective clients pre-acquisition to help them understand the
benefits and return on investment that would justify the investment in our
solutions. It is planned that this work will be undertaken on a paid for
consultancy basis which will give us much greater visibility of our sales
pipeline. This approach also benefits the prospective client with a lower
initial investment but a much clearer and easier decision making process once
the clear benefits of the software are demonstrable, resulting in a more
predictable revenue stream during 2006.
We remain committed to maintaining our position as one of the leading players in
the PPM market place. We are confident that Atlantic Global is well placed to
take advantage of the predicted growth in this software market.
We have re-established a solid operational foundation for the business that will
allow us to take advantage of the growth in this market as it occurs. Our
objective is to bring the company quickly back to profitability, resulting in
cash generation, and grow the business within tight control in order to generate
increased shareholder value.
We will further investigate, during 2006, whether certain other channels are
appropriate for the sale and distribution of our products.
Acquisitions
The Board's current policy of concentrating on organic growth remains unchanged
from previous years 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
From our management accounts for January and February 2006, together with
knowledge of March 2006 sales, I can confirm that the year has begun in line
with our expectations. Although it is too early to predict accurately what
degree of success the Group will achieve during 2006 as a whole, it is
encouraging to see that the current level of sales engagement is at an all-time
high, and is still increasing.
In addition to the usual formalities of the meeting we will, as in previous
years, arrange time in which shareholders will be offered the opportunity to
understand more about our company and business. Following a number of
presentations there will be an opportunity for shareholders to meet the
Directors and discuss the progress of the Group. I would extend the Board's
invitation to all shareholders in the hope that as many as possible attend.
Steve Allen
Chairman
14 March 2006
Managing Director's Review
Introduction
During 2005 we continued to work closely with our development partners and
customers to enhance our product offering and, more critically, we focused on
refining our sales methodology to suit the emerging Project Portfolio Management
(PPM) market place. At the same time we continued to broaden our customer base
with the addition of new Corporate Vision implementations within divisions of
Virgin Mobile, Friends Provident, XChanging and Orange.
Although disappointed with the company's financial performance, significant
operational progress has been achieved over the past twelve months, particularly
during the second half of 2005 and the first part of 2006. The Group feels
confident that we have laid solid operational foundations for growth during 2006
and beyond.
Product Development
The products are now sufficiently mature to allow us to focus on selling our
current portfolio with minimal customised client-specific development work. Our
research and development expenditure will continue to be directed away from
chargeable development work into researching, developing and enhancing our range
of products, thereby underpinning our strategy of investing in and safeguarding
the company's intellectual property.
Our product offerings fall into two categories:
Portfolio Project Management A PPM solution enables the management of a project portfolio so as to
maximise the contribution of projects to the overall welfare and success
of the organisation..
Corporate Vision supported by the Time and Expense Management, Business
Information Tracking, Risk Management, Contractor Management and Task
Based Planning modules delivers this capability.
Since the launch of Corporate Vision in September 2003, it has been
successfully deployed within LogicaCMG, Barclays Bank, The Metropolitan
Police, Man Investments, XChanging, and Friends Provident.
Individual Modules Some organisations require individual elements of a PPM solution such as
Time and Expense Management, Business Information Tracking, Risk
Management, Contractor Management and Task Based Planning.
These modules have been developed since 1994 by working closely with our
development partners that included GlaxoSmithKline, Pfizer, Barclays
Bank, LogicaCMG and in particular Norwich Union who we have worked with
since 2002.
Consequently, they have been developed to address the requirements of a
diverse range of organisations and are of large 'enterprise strength' to
cater with the volumes and sophistication required by large enterprises.
Refining the Marketing Operation
Following continued positive feedback from our customers regarding the use of
our products, we accelerated our investment in marketing and sales with the view
to growing the business. Customer and industry sector case studies have been
developed which help communicate the benefits of using our products to
prospective clients and to industry analysts. These case studies and additional
relevant information can be found on our web site (www.atlantic-global.com)
Relationships have been enhanced with Gartner, the software analyst, and as
previously mentioned Atlantic Global is now listed in the Gartner PPM Magic
Quadrant and was invited as one of only ten vendors to participate at the annual
European PPM summit in Lisbon in November 2005. It is worth noting that
organisations are referring more and more to industry analysts for guidance when
purchasing software and hence it is extremely important the analysts know who we
are and what we do.
We have refined our lead generation strategy, a vital foundation for any
successful sales team. This now consists of electronic direct mail campaigns
and website activity, designed to generate high quality leads and interest that
will not only raise awareness about our company and its products, but also
encourage prospects to attend one of our public seminars.
We have continued with Internet search engine optimisation where there has been
a marked improvement since the same time last year.
Improving the Sales Operation
The new sales process helps us prioritise opportunities and progress them in a
structured manner. Focusing on the most proactive sales leads should result in
a stronger and more predictable sales pipeline for 2006.
Our sales team currently consists of three sales professionals, a sufficient
critical mass that should result in a broader and more reliable sales pipeline.
The majority of the team members have now been with the company for over a year
and know the company, its products and the market place well.
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:
Pharmaceuticals Computer & Telecoms Financial & Consulting Other
AstraZeneca Colt Telecommunications Man Investments Metropolitan Police Service
GlaxoSmithKline Computacenter UK Friends Provident NEC Technologies (UK)
GlaxoSmithKline US Pharma Hitachi Europe Allied Irish Bank Parkside NHS Trust
Sanofi Aventis Identex Barclays Bank Scott Tallon Walker
Architects
Intel Ireland Cattles Group Vectra N Jones
Interoute CNA Waltham Forest Council
Vicorp UK LogicaCMG British Car Auctions
Virgin Mobile Telecom Dunnhumby Microgen
Xchanging HSBC Northgate Information Systems
Echostar Int Norwich Union Crown Agents
Telewest Raft International SA Partners
Netstore Serco Technology Genesis Oil & Gas
Orange Harvey Nash
Hemsley Fraser
Our close working relationship with our customers continues and, as we are
developing ourselves, we see customers, both 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 and, in particular, we would applaud the spirit in
which they have adapted to the changes made during this difficult time of the
Company's development.
Industry partners
The investment in our Group and product branding is increasing Atlantic Global's
profile within the industry. We are actively pursuing potential revenue
opportunities with a number of partners.
Research and Development/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 a very competitive product offering and have made the
necessary changes to position the business to take advantage of the forecasted
growth in the Portfolio Project Management market place. The future will
present significant opportunities and, as with any fast growing company, will
also present significant challenges. The Directors believe we now have a very
experienced management team in place to take the company to the next level.
The Board is confident that we will bring the company quickly back to
profitability via the resumption in top line growth with the view to delivering
increased shareholder value.
Eugene Blaine
Managing Director
14 March 2006
Consolidated Profit and Loss Account
for the year ended 31 December 2005
Year ended Year ended
31 December 31 December
2005 2004
as
restated
Note
#000 #000
Turnover 2,137 2,146
Cost of sales (1,802) (1,296)
Gross profit 335 850
Administration and establishment expenses (1,021) (738)
Operating (loss)/profit before goodwill (505) 293
amortisation
Goodwill amortisation (181) (181)
Operating (loss)/profit (686) 112
Interest receivable 55 76
(Loss)/profit on ordinary activities
before taxation
(631) 188
Tax on (loss)/profit on ordinary 13 (56)
activities
(Loss)/profit on ordinary activities after (618) 132
taxation
Basic (loss)/earnings per share 3 (2.69)p 0.58p
Fully diluted (loss)/earnings per share 3 (2.69)p 0.50p
There are no recognised gains or losses during the current year other than the
loss for the year.
The Group's results for both the current and preceding years derive from
continuing operations.
Consolidated Balance Sheet
at 31 December 2005
2005 2004
as restated
#000 #000 #000 #000
Fixed assets
Intangible assets 2,792 2,973
Tangible assets 54 37
2,846 3,010
Current assets
Debtors 946 1,449
Cash at bank and in hand 1,539 1,896
2,485 3,345
Creditors: amounts falling due within one (578) (812)
year
Net current assets 1,907 2,533
Net assets 4,753 5,543
Capital and reserves
Called up share capital 1,145 1,145
Share premium account 1,578 1,578
Merger reserve 2,538 2,538
Profit and loss account (508) 282
Equity shareholders' funds 4,753 5,543
These accounts were approved by the Board of Directors on 14 March 2006 and were
signed on its behalf by:
EA Blaine RG Hutton
Managing Director Finance Director and Company Secretary
Consolidated Cash Flow Statement
for year ended 31 December 2005
Year ended Year ended
31 December 31 December
Notes 2005 2004
#000 #000
Reconciliation of operating (loss) / profit to
cash outflow from operating activities
Operating (loss) / profit (686) 112
Depreciation 23 30
Goodwill amortisation 181 181
(Decrease) / increase in debtors 516 (677)
(Decrease ) / increase in creditors (160) 160
Net cash outflow from operating activities (126) (194)
====== ======
Cash flow statement
Net cash outflow from operating activities (126) (194)
Returns on investment 55 76
Taxation (74) (146)
Capital expenditure (40) (18)
Free cash flow 4 (185) (282)
Equity dividends paid (172) (159)
Cash outflow before management of liquid resources (357) (441)
Financing - 41
Decrease in cash in the year (357) (400)
Reconciliation of net cash flow to movement in net funds
Movement in net funds in the year (357) (400)
Net funds at the start of the year 1,896 2,296
Net funds at the end of the year 1,539 1,896
Notes to the accounts forming part of the financial statements
1. Accounting policies
The following accounting policies have been applied consistently in dealing with
items which are considered material in relation to the financial statements,
except as noted below:
In these financial statements the following new standards have been adopted for
the first time:
* FRS 21 'Events after the balance sheet date';
* FRS 22 'Earnings per share';
* FRS 28 'Corresponding amounts'.
The accounting policies under these new standards are set out below together
with an indication of the effects of their adoption.
During the year the Group adopted FRS 21 which superseded SSAP 17. Under the
new standard, final dividends payable are recognised only in the period in which
they are approved in the annual general meeting and therefore become a
liability, whereas under SSAP 17 dividends were accrued for when proposed. This
has resulted in an increase of #172,000 in retained profit for the year ended 31
December 2004.
The Group has also adopted the requirements of FRS 22 'Earnings per share'.
Under the new standard the adjusted earnings per share have been removed from
the face of the profit and loss account and further details of the split of
earnings per share between pre and post goodwill charges are shown in note 9
below.
FRS 28 'Corresponding amounts' has no material effect as it imposes the same
requirements for comparatives as hitherto required by the Companies Act 1985.
Basis of preparation
The accounts have been prepared in accordance with applicable accounting
standards and under the historical cost accounting rules.
Basis of consolidation
The consolidated accounts include the accounts of the Company and its subsidiary
undertakings made up to 31 December 2005. The acquisition method of accounting
has been adopted. Under this method, the results of subsidiary undertakings
acquired or disposed of in the year are included in the consolidated Profit and
Loss Account from the date of acquisition or up to the date of disposal.
Under Section 230(4) of the Companies Act 1985 the Company is exempt from the
requirement to present its own Profit and Loss Account.
Goodwill
Purchased goodwill represents the excess fair value attributed to investments in
businesses or subsidiary undertakings over the fair value of the underlying net
assets at the date of their acquisition.
The Directors are of the opinion that the goodwill on businesses capitalised has
a long economic life, as it is an inseparable part of the value of the
businesses acquired and is linked to the products and services that the
businesses provide. Our in-house Research and Development team continuously
improves the products, with all development expenditure written off as incurred.
This, in the opinion of the Directors, maintains the economic life of the
products and hence the goodwill.
The Directors do however recognise that it is prudent to amortise goodwill over
a defined period and in the light of the above have decided to write off
goodwill on a straight-line basis over 20 years.
The remaining useful economic life of capitalised goodwill will be reviewed
annually for impairment and adjusted if required.
Revenue recognition
Revenue from the sale of software licences is recognised only when the software
is installed. Revenue 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 contract.
Tangible fixed assets and depreciation
Depreciation is provided to write off the cost less the estimated residual value
of tangible fixed assets by equal instalments over their estimated useful
economic lives as follows:
Computer equipment 33.3% per annum
Office furniture 20% per annum
Leasehold improvements 33.3% per annum
Post-retirement benefits
The Group operates a defined contribution pension scheme. The assets of the
scheme are held separately from those of the Group in an independently
administered fund. The amount charged against profits represents the
contributions payable to the scheme in respect of the accounting period.
Research and development expenditure
Expenditure on Research and Development is written off to the Profit and Loss
Account in the period in which it is incurred.
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 Financial
Reporting Standard 19.
Cash and liquid resources
Cash, for the purpose of the Cash Flow Statement, comprises cash in hand and
deposits repayable on demand, less overdrafts payable on demand.
Liquid resources are current asset investments which are disposable without
curtailing or disrupting the business and are either readily convertible into
known amounts of cash at or close to their carrying values or traded in an
active market. Liquid resources comprise term deposits of less than one year
(other than cash) and investments in money market managed funds.
Leases
Operating lease rentals are charged to the profit and loss account on a
straight-line basis over the period of the lease.
Financial assets and liabilities
Changes in the value of financial instruments are disclosed in the notes to the
accounts but are not reflected in the Profit and Loss Account or Balance Sheet.
2. Dividends
Year ended Year ended
31 December 31 December
2005 2004
as
restated
#000 #000
On ordinary shares of 5p
Final dividends paid in respect of prior year but not
recognised as liabilities in that year: 0.75 p (2004:
0.70p) 172 159
3. Earnings per share
Year ended Year ended
31 December 31 December
2005 2004
#000 #000
(Loss)/profit after tax (618) 132
Adjustments
Goodwill amortisation 181 181
Adjusted (losses) / profits (437) 313
Number Number
000 000
Weighted average number of shares in issue 22,899 22,804
Dilutive effect of share options 1,507 3,534
Fully diluted weighted average number of shares in 24,406 26,338
issue
Basic (loss)/earnings per share (based on (loss) / (2.69)p 0.58p
profit after tax)
Fully diluted (loss)/earnings per share (based on (2.69)p 0.50p
(loss) / profit after tax)
Adjusted (loss)/earnings per share (based on adjusted (1.90)p 1.37p
(losses) / profits)
The adjusted earnings per share has been calculated due to the material effect
of goodwill charged in the financial statements.
Share options in issue in the period do not have a dilutive impact on the loss
per share calculations.
4. Free cashflow
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.
5. 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 and Company Secretary, Atlantic Global Plc,
Park House, Woodland Park, Bradford Road, Chain Bar, Cleckheaton,
West Yorkshire, BD19 6BW
Website address: www.atlantic-global.com
Email: info@atlantic-global.com
This information is provided by RNS
The company news service from the London Stock Exchange
END
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