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Mediasurface plc

Results for the 6 Months ended 31st March 2008

Mediasurface plc, the AIM listed Content Management Software Author and Vendor, announces un-audited results for the 6 months ended 31st March 2008.

Company Highlights for Half Year

• Group revenue up 16.5% to £7.06 million (2007: £6.06 million).

• Pre-tax loss of £0.11million (2007: Profit £0.38 million).

  
  

  • Proforma EBITDA Profit of £1.03 million (2007 : £0.64 million) excluding redundant staff cost, restructuring costs and non-recurring items.

• Cash position £1.40 million (30th September 2007: £1.78 million).

• Annual value of recurring support revenues is now £4.5 million

• The first half included significant new license deals with Royal Bank of Scotland, Westpac (one of Australia's leading Banks) and Lord Abbett a major USA Fund Management company. 

Joint Chairman's & CEO Statement

For the six months ended 31st March 2008

The company has enjoyed an improvement in trading since the disappointing six month period to the 30th September 2007 reporting revenues of £7.06m and a pro-forma EBITDA result after excluding restructuring and non-recurring items amounting to £1.03m (2007: £0.64m)

The first six months has seen an improvement in the licence revenues associated with the Morello product line which enjoyed a number of key sales successes and generated licence revenue of £1.6m for the period. This is gratifying and in line with management's expectations. Morello proved it remains a competitive product within its market and maintenance revenues continued to grow to an annualised rate of £3.3m demonstrating a high customer retention rate. Similarly, services revenues remained solid with Group wide revenue of £2.2m, reflecting high demand and utilisation rates.

With regard to Immediacy acquired last financial year, we are pleased to report that the Immediacy product line has continued to succeed, contributing overall revenue of £2.3m in line with management's expectations. Immediacy now represents 32% of group revenues and is a significant contributor to the bottom line of the group (EBITDA £0.5m). Immediacy also enjoyed its first new business wins in the new Mediasurface territories of USA, NL and Australia, all important milestones.

During the period, management undertook two phases of significant cost cutting. The first in October centred largely on reducing sales and marketing spend at the Pepperio business unit. The net effect of this action was to leave the business with a credible software as a service WCMS offering enabling it to protect its existing customer base as well as to continue adding new customers over the period. After restructuring, the Pepperio business now has a modest negative impact on the group profitability, pro-forma EBITDA loss of £0.1m for the period under review.

The second phase of cost reduction was focused on headcount at Morello, the closure of our California and Chicago offices and an associated reduction in marketing spend. As a result of these factors the Morello business returned to profit in the first half.

In summary, Mediasurface enjoyed sales successes in all product lines. The implementation of prudent cost reductions has effectively reduced the break-even point of the business and therefore reduced the risk to the bottom line.

Since the beginning of April 2008, the company's pipeline of new business has continued to strengthen. As a result of this and the cost cutting initiatives implemented since October 2007, particularly in relation to the Morello product line, the Directors are confident that the prospects are improved. In terms of risk the imperative to close significant deals prior to the financial period end remains, the competitive landscape in terms of competitor product enhancements and general economic sentiment can affect performance, Notwithstanding these potential risks, the Directors believe the business will perform in line with management expectations in the current financial year. 

The Company announced on 24th April 2008 that they had received a preliminary approach that may or may not lead to an offer, from a UK company that does not compete directly with Mediasurface. The Company is pleased to announce that it has received a formal offer for Mediasurface Plc further details of which are contained in a separate announcement that is being released to shareholders at the same time as these interim results.

Statement of Directors' responsibilities 

The Directors confirm that this condensed set of consolidated financial statements has been prepared in accordance with IAS 34 as adopted by the European Union, and that the interim management report herein includes a fair review of the information required by DTR 4.2.7 and DTR 4.2.8. 

The Directors of Mediasurface plc are listed in the Mediasurface Plc Annual Report and Accounts 2007. A list of current directors is maintained on the Group's website: www.mediasurface.com

Michael Jackson

Chairman

Lawrence Flynn

Chief Executive Officer

16th  May 2008

For the six months ended 31 March 2008

  

	Note		Six months ended 31 March  2008 unaudited £	Six months ended 31 March  2007 unaudited £	Year  ended  30 September  2007 unaudited £
Revenue - continuing operations	2		7,055,193	6,063,604	11,283,530
Cost of sales			( 464,484)	( 396,862)	( 1,109,273)
Gross profit			6,590,709	5,666,742	10,174,257
Administrative expenses			( 6,602,782)	( 5,293,474)	( 11,602,884)
Operating (loss)/profit	2		( 12,073)	373,268	( 1,428,627)
Finance income			25,788	9,831	34,492
Finance costs			(119,425)	( 1,908)	( 59,904)
(Loss)/profit before taxation			( 105,710)	381,191	( 1,454,039)
Tax (charge)/credit			(30,049)	8,448	(35,034)
(Loss)/profit for the financial year attributable to equity holders of the parent			(135,759)	389,639	( 1,489,073)
Basic (loss) / earnings per ordinary share	4		(0.1)p	0.5p	(1.8)p
Diluted (loss) / earnings per ordinary share	4		(0.1)p	0.5p	(1.8)p

			Six months ended  31 March  2008 unaudited £	Six months ended  31 March  2007 unaudited £	Year  ended  30 September  2007 unaudited £
Exchange difference on translation of foreign operations			63,786	-	80,197
Net income recognised directly in equity			63,786	-	80,197
(Loss)/profit for the period			(135,759)	389,639	(1,489,073)
Total recognised income and expense for the period attributable to equity holders of the parent			(71,973)	389,639	(1,408,876)

	Note		As at 31 March  2008 unaudited £	As at  31 March  2007 unaudited £	As at 30 September  2007 unaudited £
Non current assets
Goodwill			3,429,121	93,056	3,429,121
Other intangible assets			3,227,125	637,074	3,119,887
Property, plant & equipment			274,254	301,301	331,022
Total non current assets			6,930,500	1,031,431	6,880,030
Current assets
Trade and other receivables	6		4,815,738	3,548,628	3,934,054
Cash and cash equivalents			1,397,136	1,143,950	1,775,895
Total current assets			6,212,874	4,692,578	5,709,949
Total assets			13,143,374	5,724,009	12,589,979
Current liabilities	7		( 4,824,932)	( 2,676,568)	( 4,662,618)
Net current assets			1,387,942	2,016,010	1,047,331
Non current liabilities
Term loan and other non current liabilities	8		( 914,757)	( 1,039)	( 1,230,142)
Deferred tax liabilities			( 903,618)	(178,381)	(873,569)
Total non current liabilities			( 1,818,375)	( 179,420)	( 2,103,711)
Net assets			6,500,067	2,868,021	5,823,650
Equity
Share capital	10,11		1,177,351	772,448	996,736
Share premium reserve	11		14,738,819	9,638,377	14,160,171
Capital redemption reserve	11		13,083,244	13,083,244	13,083,244
Merger reserve	11		27,297,412	27,297,412	27,297,412
Foreign subsidiary translation reserve	11		143,983	-	80,197
Shares based payment reserve	11		347,596	742,923	644,653
Retained earnings	11		( 50,288,338)	( 48,666,383)	( 50,438,763)
Total equity			6,500,067	2,868,021	5,823,650

 

			Note	Six months ended 31 March 2008 unaudited   £	Six months ended 31 March 2007 unaudited   £	Year ended 30 September 2007 unaudited   £
Cash flows from operating activities
(Loss)/profit for the period				(135,759)	389,639	(1,489,073)
Adjustments for:
Depreciation of property, plant & equipment				98,239	44,566	151,767
Amortisation of acquired intangible assets				189,832	-	94,916
Amortisation of development costs				354,048	226,722	506,744
Impairment of goodwill				-	-	93,056
Loss on sale of property, plant and equipment				-	-	-
Equity settled share based payment (credit)/expense			3	(10,873)	41,701	49,763
Foreign exchange gain				(4,486)	-	( 2,515)
Finance income				(25,788)	(9,831)	( 34,492)
Finance expense				79,425	1,908	59,904
Tax expense/(credit)				30,049	(8,448)	35,034
Cash flows from operating activities before changes in working capital				574,687	686,257	( 534,896)
(Increase)/decrease in trade and other receivables				(874,311)	(48,736)	416,941
Increase/(decrease) in trade and other payables				139,862	(226,722)	194,813
Cash generated from operations				(159,762)	410,799	76,858
Interest paid				(79,425)	(1,908)	( 59,904)
Net cash flows from operations				(239,187)	408,891	16,954
Investing activities
Interest received				25,788	9,831	34,492
Purchases of property, plant & equipment				(36,985)	(114,228)	( 248,635)
Expenditure on product development				(651,119)	(241,031)	( 771,261)
Payments to acquire subsidiaries				-	-	( 5,390,654)
Net cash acquired				-	-	796,265
Net cash used in investing activities				(901,503)	(345,428)	( 5,579,793)
Financing activities
Repayment of obligations under finance leases				-	-	( 3,994)
New bank loans raised				-	-	2,000,000
Proceeds from sale of shares				759,263	-	4,280,915
Repayment of bank borrowings				(300,305)	-	( 98,871)
Net cash used in financing activities				458,958	-	6,178,050
Net (decrease)/increase in cash and cash equivalents				(442,545)	63,463	615,211
Cash and cash equivalents at beginning of year				1,775,895	1,080,487	1,080,487
Effect of foreign exchange rate changes				63,786	-	80,197
Cash and cash equivalents at end of year				1,397,136	1,143,950	1,775,895

To view the Notes to the Condensed Consolidated Financial Statements click on the link below:

http://www.rns-pdf.londonstockexchange.com/rns/6100U_1-2008-5-16.pdf

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