OneClickHR PLC
24 April 2008
OneClickHR plc
(The 'Group')
Preliminary results for the year ended 31 December 2007
Chairman's statement
Financial review
During the past year we have continued to focus our business around HR.net, our
enterprise level HR solution aimed at larger organisations.
Total turnover has increased slightly compared to the last year at £6,338,000
(2006: £6,100,000) however this masks a more substantial underlying increase in
turnover of £560,000 that has occurred this year, as the 2006 figures include
revenues of £322,000 associated with intellectual property sold in that year.
The loss for the year at £46,000 a small improvement on last year (2006: £60,000
as adjusted for the exceptional profit on disposal). During the first half of
2007 we incurred significant sales and marketing expenditure as we changed
marketing approach. This expenditure was reduced in the second half when it was
clear that the necessary results were not being achieved, however overall costs
did increase as a result. During the year we have incurred software development
expenditure of £945,000 (2006: £839,000) to ensure that we continue to increase
the already high levels of usability and functionality.
Cash balances increased to £422,000 (2006: £338,000) due to increased control
over our working capital position.
Operating review
During 2007 our HR.net user base increased as we added a further 48 clients
(2006: 40). Ceridian who are selling our HR.net technology, under a different
brand, to their own client base have also obtained a number of major clients.
Increasing the number of users is clearly a key objective for the group.
In particular we increased our penetration of the property management and legal
markets with significant client wins including Cushman and Wakefield. In other
sectors, major new clients included Servier Laboratories, Mitsui, Johnson
Electric, the RNIB and Kuehne + Nagel. Many of these new contracts are
multi-country deployments strengthening HR.net's reputation as an international
HR solution, giving us a very clear differentiator from competing products.
Clients operating within a single country are well served by the software in
different respects and we are seeing a healthy trend of customers expanding and
integrating their HR systems as they seek to increase effective staff engagement
in a cost efficient manner.
We have made good progress in migrating customers from our older technology,
Personnel Manager and Personnel Director, to HR.net. This has resulted in
increased recurring revenue from this customer base along with follow-on
consulting revenue from those customers.
Our commitment to invest in our software continues and during 2007 we completed
work on the next scheduled releases of HR.net. Our development team in India
continues to develop and we are starting to see the benefit of our graduate
recruitment programme introduced 2 years ago. Our investment in automated
testing has also ensured faster releases of new product.
This HR.net offshore consulting team based in Chennai is now fully integrated
with our UK based team under the management of the Operations Director. This
team is a critical part of our migration strategy and gives us the ability to
cost effectively scale our deployment capability as we add new customers, whilst
at the same time achieving a reduction in cost across the business.
Outlook
Our primary focus in the coming year will be to achieve profitability and cash
generation.
We are going into 2008 with a reduced cost base following the reorganisation of
our sales and marketing function in the past 6 months. We will continue to look
for areas of further cost reduction of the business to achieve profitability
without relying on increased sales.
In 2008 we will continue to focus on new licence revenue sales and associated
consulting services both in the UK and overseas. We will ensure we build on the
momentum achieved so far migrating customers from our older technology. This,
along with our increase on contracted support from new HR.net licence sales,
will help us increase our recurring revenue.
We continue to wrestle with the frustrations of longer sales cycles,
particularly on larger deployments where the decision making is protracted and
requires more pre-sales resource and we expect this to continue as economic
conditions deteriorate. However we hope to minimise the impact of this through
our continued focus on cost reduction combined with upgrading users from our own
customer base.
Lord Sheppard of Didgemere
Chairman
23 April 2008
Consolidated Income Statement
for the year ended 31st December 2007
Notes 2007 2006
£'000 £'000
Revenue 3 6,338 6,100
Costs of sales 4 (3,593) (3,151)
--------- ---------
Gross profit 2,745 2,949
Administrative expenses (2,813) (3,017)
Exceptional profit on disposal 5 - 352
--------- ---------
Operating (loss) / profit (68) 284
Finance income 22 10
Finance costs - (2)
--------- ---------
Profit / (loss) before taxation (46) 292
Tax expense - -
--------- ---------
Profit /(loss) attributable to shareholders (46) 292
--------- ---------
Earnings / (loss) per ordinary share 6
Basic (0.03)p 0.2p
Diluted (0.03)p 0.2p
Consolidated Statement of Recognised Income and Expense
for the year ended 31st December 2007
2007 2006
£'000 £'000
Currency translation differences 74 (34)
--------- ---------
Net profit /(loss) recognised directly in equity 74 (34)
Profit / (loss) for the financial year (46) 292
--------- ---------
Total recognised income and expense for the year
attributable to shareholders 28 258
--------- ---------
Consolidated Balance Sheet as at 31st December 2007
Notes 2007 2006
£'000 £'000
Restated
ASSETS
Non-current assets
Property, plant and equipment 217 225
Intangible assets 7 155 96
--------- ---------
372 321
--------- ---------
Current assets
Inventories 31 42
Trade and other receivables 8 1,969 2,351
Cash and cash equivalents 422 338
--------- ---------
2,422 2,731
--------- ---------
LIABILITIES
Current liabilities
Trade and other payables 9 1,479 1,689
Current tax liabilities 235 362
--------- ---------
Total liabilities 1,714 2,051
--------- ---------
TOTAL NET ASSETS 1,080 1,001
--------- ---------
EQUITY
Capital and reserves attributable to the Company's
equity holders
Share capital 1,487 1,487
Share premium 10,922 10,922
Cumulative translation reserve 40 (34)
Retained earnings (11,369) (11,374)
--------- ---------
TOTAL EQUITY 10 1,080 1,001
--------- ---------
Consolidated Statement of Cash Flows
for the year ended 31st December 2007
Notes 2007 2006
£'000 £'000
Operating activities
Net cash inflows from operations 11 422 14
Interest received 22 10
Interest paid - (2)
Taxation paid - -
--------- ---------
Net cash from operating activities 444 22
--------- ---------
Investing activities
Purchase of property, plant and equipment (82) (162)
Purchase of intangible assets (35) (9)
Capitalised development expenditure (247) (158)
--------- ---------
Net cash used in investing activities (364) (329)
--------- ---------
Net increase / (decrease) in cash and cash 80 (307)
equivalents
Effects of exchange rate changes on cash and cash
equivalents 4 (5)
--------- ---------
Cash and cash equivalents at the beginning of period 338 650
--------- ---------
Cash and cash equivalents at end of period 422 338
--------- ---------
1 General information
As required by the AIM regulations, the consolidated financial statements of the
Group have been prepared in accordance with International Financial Reporting
Standards (IFRS) as adopted by the EU for the first time this year.
OneClickHR plc is the Group's ultimate parent company. It is incorporated in
England and has its registered office at 2 Bromley Road, Beckenham, Kent BR3
5JE. The Group operates from the registered address as well as locations in
Weston super Mare (UK), Stoke on Trent (UK) and Chennai (India).
The shares of OneClickHR plc are listed on the AIM market which is regulated by
the London Stock Exchange.
The financial statements for the year ended 31 December 2007 (including the
comparatives for the year ended 31 December 2006) were approved by the board of
directors on 23 April 2008.
The announcement set out above does not constitute a full financial statement of
the group's affairs for the year ended 31 December 2007. The group's auditors
have reported on the full accounts for the year ended 31 December 2007 and have
issued an unqualified audit report. The full accounts have yet to be delivered
to the Registrar of Companies.
The annual report and accounts will be posted to all shareholders and be
available at www.OneclickHRplc.com in due course.
2 Accounting policies
Explanation of transition to IFRS
These are the Group's first annual consolidated financial statements prepared in
accordance with IFRS. An explanation of how the transition from UK GAAP to IFRS
has affected the Group's financial position, financial performance and cash
flows is set out in note 12
IFRS 1 permits companies adopting IFRS for the first time to take certain
exemptions from the full requirements of IFRS in the transition period. These
financial statements have been prepared on the basis of taking the following
exemptions:
• business combinations prior to 1 January 2006, the Group's date of
transition to IFRS, have not been restated to comply with IFRS 3 'Business
Combinations'.
• cumulative translation differences on foreign operations are deemed
to be nil at 1 January 2006. Any gains and losses recognised in the consolidated
income statement on subsequent disposal of foreign operations will exclude
translation differences arising prior to the transition date.
Restatement of comparative information
In addition to the changes caused by the adoption of IFRS, the directors
performed a detailed review of the calculations associated with the deferred
revenue balances disclosed in the Group balance sheet. This identified that
these balances were understated by £254,000. The error arose in periods prior to
31 December 2006 and a prior year adjustment has been made to re-state these
balances. There is no impact on the profit and loss account or cashflows of the
Group in the financial year ended 31 December 2006.
3 Segmental reporting
The Group manages its operations on the basis of the products and services
supplied to customers. It considers that the sale of software, its
implementation and the subsequent provision of customer support form the major
business segment. The major business segment accounts for in excess of 90% of
revenues, costs and assets. Accordingly the Group has not disclosed segmental
information about its operations.
Geographically, the Group operates from offices in the UK and India, with its
sales force based in the UK serving all markets. Services are supplied to
customers from both the UK and India.
2007 2006
£'000 £'000
Sales to external customers by location of customer
United Kingdom 5,875 5,866
European Union (excluding UK) 236 110
Rest of the World 227 124
--------- ---------
6,338 6,100
--------- ---------
4 Research and Development
Included within Cost of Sales are the costs that the Group has incurred in
relation to the design, programming, testing and general development of software
products.
2007 2006
£'000 £'000
Actual costs incurred 945 839
Amounts capitalised (247) (158)
Amortisation for period 206 77
--------- ---------
Amount charged to income statement 904 758
--------- ---------
5 Exceptional profit on disposal
During 2006 the Group disposed of certain intellectual property and contracts to
provide payroll services. The revenues attributable to these operations, until
the date of disposal, were £322,000 (2005: £292,000). It is not possible to
identify the separate trading costs relating to the assets disposed of and as
such this has not been disclosed as a discontinued operation. Gross proceeds
were £400,000 and the costs associated with the disposal were £48,000. There was
no tax charge due to the availability of Group relief.
6 Earnings / (loss) per share
Earnings per share have been calculated by dividing the net result attributable
to shareholders by the weighted average number of shares in issue during the
year. For diluted earnings per share, the weighted average number of shares in
issue is adjusted for employee share options that are in issue and expected to
vest. For both 2007 and 2006 the option exercise prices were in excess of the
average open market value of the ordinary shares and therefore there was
considered to be no dilution arising from share options.
2007 2006
£'000 £'000
Earnings
Result for the year attributable to
shareholders (46) 279
Exceptional profit on disposal - (352)
--------- ---------
For earnings per share excluding exceptional
items (46) (73)
--------- ---------
Number ('000) Number ('000)
Weighted average number of shares in issue 148,760 148,760
--------- ---------
pence pence
Earnings per share
Basic (0.03)p 0.2p
Diluted (0.03)p 0.2p
Earnings per share adjusted to exclude exceptional
items
Basic and diluted (0.03)p (0.05)p
7 Intangible assets
Purchased Capitalised
software Development
Expenditure
Total
£'000 £'000 £'000
Cost
At 1 January 2006 72 - 72
(restated)
Additions 6 158 164
--------- --------- ---------
At 31 December 2006 78 158 236
(restated)
Additions 35 247 282
Net exchange differences 6 - 6
--------- --------- ---------
At 31 December 2007 119 405 524
--------- --------- ---------
Amortisation
At 1 January 2006 62 - 62
(restated)
Amortisation 1 77 78
--------- --------- ---------
At 31 December 2006 63 77 140
(restated)
Amortisation 18 206 224
Net exchange differences 5 - 5
--------- --------- ---------
At 31 December 2007 86 283 369
--------- --------- ---------
Net Book Value
At 1 January 2006 10 - 10
(restated)
At 31 December 2006 15 81 96
(restated)
At 31 December 2007 33 122 155
--------- --------- ---------
8 Trade and other receivables
2007 2006
£'000 £'000
Trade receivables 1,478 1,467
Accrued income 234 558
Other receivables and prepayments 257 326
--------- ---------
1,969 2,351
--------- ---------
9 Trade and other payables
2007 2006
£'000 £'000
Trade payables 205 370
Accruals and other payables 325 463
Deferred income 949 856
--------- ---------
1,479 1,689
--------- ---------
10 Statement of changes in Equity
Share Share Cumulative Retained Total
Capital premium translation Earnings
reserve Equity
£'000 £'000 £'000 £'000 £'000
Balance at 1
January 2006 1,487 10,922 - (11,669) 740
Profit /
(loss) for the
year - - - 292 292
Currency
translation - - (34) - (34)
-------- -------- -------- -------- --------
Total recognised income
and expense for the
year - - (34) 292 258
Share based
compensation - - - 3 3
Balance at 31
December 2006 1,487 10,922 (34) (11,374) 1,001
Profit /
(loss) for the
year - - - (46) (46)
Currency
translation - - 74 - 74
-------- -------- -------- -------- --------
Total recognised income
and expense for the
year - - 74 (46) 28
Share based
compensation - - - 51 51
-------- -------- -------- -------- --------
Balance at 31
December 2007 1,487 10,922 40 (11,369) 1,080
-------- -------- -------- -------- --------
11 Net cash flow from operations
Reconciliation of (loss) / profit after tax to cash generated from operations
2007 2006
£'000 £'000
(Loss) / profit after tax (46) 292
Net interest receivable (22) (8)
Amortisation and depreciation 325 197
Movements in inventories 11 6
Decrease / (increase) in receivables 382 (719)
(Decrease) / increase in current payables (279) 243
Share based compensation 51 3
--------- ---------
Net cash inflow from operations 422 14
--------- ---------
12 Reconciliation of Equity and Profit under UK GAAP to IFRS
The general principle is that on first-time adoption of IFRS, standards are
applied with full retrospective effect. IFRS 1 sets out certain mandatory
exceptions to retrospective application and certain optional exemptions. The
optional exemptions adopted by the Group are (i) not to restate business
combinations made prior to 1 January 2006 to comply with IFRS 3 Business
Combinations; and (ii) to deem cumulative translation differences for all
foreign operations to be £nil at 1 January 2006.
The analysis below shows a reconciliation of equity and profit as reported under
UK GAAP as at 31 December 2006 and the revised profit and equity under IFRS as
reported in these financial statements.
Reconciliation of the effect of the changes on profit from UK GAAP to IFRS
2006
Profit after tax £'000
As previously reported under UK GAAP 279
IAS 19 - Holiday pay (3)
IAS 38 - Capitalisation of research and development 81
IAS 18 - Revenue recognition (65)
---------
Restated under IFRS 292
---------
Reconciliation of net equity at 1 January 2006
Other items
UK GAAP IAS 38 IAS 19 Revenue Other Restated
IFRS
£'000 £'000 £'000 £'000 £'000 £'000
Property, plant and
equipment 198 (10) - - - 188
Intangible
assets - 10 - - - 10
-------- -------- -------- -------- -------- --------
Non current
assets 198 - - - - 198
-------- -------- -------- -------- -------- --------
Inventories 48 - - - - 48
Trade and other
receivables 1,968 - - (316) - 1,652
Cash and cash
equivalents 650 - - - - 650
-------- -------- -------- -------- -------- --------
Current assets 2,666 - - (316) - 2,350
-------- -------- -------- -------- -------- --------
Trade and other
payables (1,218) - (16) - - (1,234)
Current tax
liabilities (320) - - - - (320)
-------- -------- -------- -------- -------- --------
Current
liabilities (1,538) - (16) - - (1,554)
-------- -------- -------- -------- -------- --------
-------- -------- -------- -------- -------- --------
Total net assets 1,326 - (16) (316) - 994
-------- -------- -------- -------- -------- --------
Equity
Share capital 1,487 - - - - 1,487
Share premium 10,922 - - - - 10,922
Translation
reserve - - - - (34) (34)
Retained
earnings (11,083) - (16) (316) 34 (11,381)
-------- -------- -------- -------- -------- --------
Total equity 1,326 - (16) (316) - 994
-------- -------- -------- -------- -------- --------
Reconciliation of net equity at 31 December 2006
Other items
UK GAAP IAS 38 IAS 19 Revenue Deferred Restated
revenues IFRS
£'000 £'000 £'000 £'000 £'000 £'000
Property, plant
and equipment 240 (15) - - - 225
Intangible
assets - 101 - - - 96
-------- -------- -------- -------- -------- --------
Non current
assets 240 81 - - - 321
-------- -------- -------- -------- -------- --------
Inventories 42 - - - - 42
Trade and other
receivables
2,732 - - (381) - 2,351
Cash and cash
equivalents 338 -- - - - 338
-------- -------- -------- -------- -------- --------
Current assets 3,112 - - (381) - 2,731
-------- -------- -------- -------- -------- --------
Trade and
other payables (1,416) - (19) - (254) (1,689)
Current tax
liabilities (362) - - - - (362)
-------- -------- -------- -------- -------- --------
Current
liabilities (1,778) - (19) - (254) (2,051)
-------- -------- -------- -------- -------- --------
-------- -------- -------- -------- -------- --------
Total net
assets 1,574 81 (19) (381) (254) 1,001
-------- -------- -------- -------- -------- --------
Equity
Share capital 1,487 - - - 1,487
Share premium 10,922 - - - 10,922
Translation
reserve - - - - (34) (34)
Retained
earnings (10,835) 81 (19) (381) (220) (11,374)
-------- -------- -------- -------- -------- --------
Total equity 1,574 81 (19) (381) (254) 1,001
-------- -------- -------- -------- -------- --------
Explanation of changes
a) IAS 38 Intangible assets
The adoption of IAS 38 'Intangible Assets' has resulted in a change in the
accounting policy for Research and Development and also purchased computer
software.
Under UK GAAP, all costs incurred for Research and Development connected with
the development of software products was charged to the profit and loss account
when it was incurred. Under IAS 38 all expenditure relating to the development
of software products is capitalised and amortised over its estimated economic
life through the profit and loss account. The accounting policy in note 1
describes the conditions that need to be fulfilled for expenditure to be
capitalised. The Group has therefore increased intangible assets on the balance
sheet to account for this. The Group considers that the conditions necessary for
capitalisation had not been met prior to 1 January 2006.
Under IAS 38 purchased software is disclosed as an intangible asset, rather than
a tangible asset. A transfer has been made at each balance sheet date to reflect
this. The net book value of purchased software was: 1 January 2006 £32,000 and
31 December 2006 £20,000
b) IAS 19 - Holiday pay
The adoption of IAS 19 'Employee Benefits' has resulted in a change in the
accounting policy for staff costs. Previously the Group did not recognise a
value for holiday accrued but untaken by its employees at the balance sheet date
since the amount did not represent a monetary amount that the Group expected to
pay. The Group now attributes a value to this holiday accrued but untaken at
each balance sheet date to reflect the value of the services provided by its
employees.
c) Other items
Upon transition, the Group reassessed it accounting policy for license fees, in
the light of the criteria specified by IAS 18. Previously the Group recognised
the full value of a license sale when the benefit of license had been passed to
the customer. The Group has concluded that such transactions should be
recognised as revenue once all the IAS 18 criteria have been met. Accordingly as
at 1 January 2006 revenues of £316,000 have been deducted from prior year
reserves. During the year ended 31 December 2006 revenues of £65,000 have been
deducted from the results for the period.
In addition to the above changes caused by the adoption of IFRS, the directors
performed a detailed review of the calculations associated with the deferred
revenue balances disclosed in the Group balance sheet and this identified that
these balances were understated by £254,000. The error arose in periods prior to
31 December 2006. There is no impact on the profit and loss account or cashflows
of the Group in the financial years 31 December 2007 or 31 December 2006.
With effect from 1 January 2006 exchange differences arising from the
re-translation of the opening net investment in overseas subsidiaries is
recognised as a separate reserve and no longer included within retained
earnings.
d) Reclassifications
In addition to the accounting changes detailed above, there are significant
changes to both format and terminology that the Group is required to reflect.
The reclassifications arising from these changes have no impact on the reported
profits or shareholders' funds of the Group.
e) Exemptions
The Group has taken advantage of certain exemptions allowed in IFRS 1
'Presentation of Financial Statements'.
The recording of net exchange differences into the Cumulative Translation
Reserve, required by IAS 21, has been applied prospectively from 1 January 2006.
All exchange differences arising prior to that date remain in retained earnings.
This information is provided by RNS
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