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For Immediate Release

24 September 2009

                

smartFOCUS Group plc

INTERIM RESULTS 

for the six months ended 30th June 2009

smartFOCUS Group plc (AIM : STF) ('smartFOCUS', the 'Company' or the 'Group), a leading multi-channel marketing software group, announces its unaudited interim results for the six months ended 30th June 2009.

Highlights

• Revenue grew by 13% to £5.6m (2008 : £5.0m)

• Profit before tax (and non recurring costs) up £0.8m to £0.2m (2008: £0.6m loss)

• Cash up to £1.5m (2008 : £1.1m), growth of 36%

• Recurring revenue increased to 61% of total revenues (2008: 46%)

• Significant new client wins including Sony, Betfair, Virgin Games, The Chartered Institute of Marketing and Dallas Morning News

• Over 40 customer and partner contracts won in the first half

• Diluted EPS 0.11p (2008: loss of 0.44p)

Commenting on current trading & outlook, Chris Underhill, CEO of smartFOCUS said:

'2009 revenue visibility had risen to nearly 87% at the end of August. This, combined with strong second half trading and continued new business wins, supports the Company's confident 2009 outlook.

smartFOCUS is well positioned for continued profitable growth both for the remainder of this year and beyond.'

- Ends -

Enquiries:
smartFOCUS Group plc	Tel No: 0117 943 5800
Chris Underhill, Chief Executive	www.smartfocus.com
Neil Thomas, Finance Director
Buchanan Communications	Tel No: 020 7466 5000
Lisa Baderoon
Arbuthnot Securities Limited	Tel No: 020 7012 2000
Tom Griffiths

 

CHAIRMAN'S STATEMENT

The first half of 2009 has been a strong trading period for the Group with excellent progress being made. smartFOCUS has secured a large number of new and prestigious customers as the marketplace continues to respond positively to the Company's multi channel marketing solutions, which offer a highly attractive entry cost, and an excellent return on investment, especially in the software as a service model (SaaS). Added to this, smartFOCUS' pipeline has continued to grow strongly securing more decisions supported by the strengthening of its products and SaaS offering. 

With over 700 client and partner customers internationally, the Group continues to benefit from strong customer advocacy and its on-going focus on customer service. This has been rewarded by customer investment in new and additional software modules and services, combined with high customer retention rates.

The Board is pleased that its strategy and business model is working well, evidenced by the improved performance in the first half, current trading and future positive outlook. We are confident that smartFOCUS can continue to develop a strong and sustainable business and is well placed to capitalise further on growth opportunities as the economy improves.

The Board wishes to thank smartFOCUS' shareholders, clients and partners for their on-going support and the outstanding contribution by our management and staff in the year to date.

J Charles

Chairman

24th September 2009

  CHIEF EXECUTIVE'S STATEMENT

The Company has experienced strong trading conditions in the first six months as organisations compete to retain, acquire and grow customer revenue, by investing in smartFOCUS' marketing solutions to directly improve results, increase productivity, efficiency and return on marketing investment.

Revenue grew by 13% and pre tax profit growth was up by £0.8m, compared to a loss of £0.6m for the same period last year. This represents a significant and positive reverse of performance, underlining the importance of our business adopting the SaaS model. Cash increased strongly by 36% to £1.5m, after paying £0.2m in cash relating to the earn out due on the acquisition of Astech Intermedia, completed in May 2008. As planned, our business model delivered a significant increase in revenue quality and improved visibility, with recurring revenue increasing to 61% of total revenue.

smartFOCUS added over 40 new clients and partners in the period and saw continued investment from existing customers combined with strong renewal rates, above 90%. New customer wins included leading brands in the UK and Europe, such as Sony, Betfair, Virgin Games, The Chartered Institute of Marketing, and Dallas Morning News in the US. Adding to our international expansion smartFOCUS announced the localisation of its software into Japanese to support its partnership with BrainPad, a leading Japanese marketing solution provider. This latest development will see smartFOCUS and BrainPad accelerate penetration of its offering in the Japanese and Asia Pacific markets. 

Key long terms market trends continue to drive investment in marketing technology as brands strive to compete for customer spend:

• Media, channel and data complexity increasing exponentially;

• Consumer choice offered by the web increasing competition;

• Increased consumer sensitivity to invasive marketing, privacy concerns and expectations of communication relevancy;

• Pressure on marketing budgets for increased return on investment;

• Migration of marketing budgets to more measurable activity that increasingly exploits digital channels;

• Move to outsource non-core operations to reduce costs and time to market, growing demand for software solutions offered in a service model.

Organisations are choosing smartFOCUS to meet these needs due to the functional breadth of our software, fast time to benefit and the low cost of ownership, evidenced by the Company's large blue chip customer base.

smartFOCUS experienced good growth in both its European and International operations with a revenue split of 75% / 25% respectively. Demand for its solutions continued strongly, especially for its email and digital marketing products which comprised approximately one-third of revenues. 

Progress in software platform development continues to support the Company's strategy to develop a leadership position in multi-channel marketing software for the mid-corporate market, delivered in the SaaS model. This activity has further supported the growth of our sales pipeline over the period.

Alongside strong organic growth smartFOCUS will continue to review opportunities to positively increase its scale, product portfolio and distribution through further strategic acquisition opportunities. 

Summary & Outlook

2009 revenue visibility had risen to nearly 87% at the end of August. This, combined with strong second half trading and continued new business wins, supports the Company's confident 2009 outlook.

The Directors are confident that its strategy of delivering multi-channel marketing software, delivered in the SaaS model, capitalises on key long term market trends and therefore, in summary, smartFOCUS is well positioned for continued profitable growth both for the remainder of this year and beyond.

C Underhill

Chief Executive

24th September 2009

  SmartFOCUS Group plc and its subsidiary companies

Financial statements for six months ended 30 June 2009

Consolidated statement of comprehensive income
		6 months to 30 June 2009 Unaudited	6 months  to 30 June 2008  Unaudited	12 months  to 31 Dec 2008  Audited
	Note	£	£	£
Revenue		5,632,679	4,963,920	10,399,701
Other operating income and charges		(5,478,097)	(5,625,092)	(11,622,598)
Operating profit/(loss) before non-recurring costs		154,582	(661,172)	(1,222,897)
Non-recurring costs		-	-	(548,724)
Operating profit/(loss) after non-recurring costs	3	154,582	(661,172)	(1,771,621)
Interest receivable		1,961	14,276	32,158
Interest payable		(2,114)	(2,083)	-
Profit/(loss) on ordinary activities before taxation		154,429	(648,979)	(1,739,463)
Tax (expense)/credit		(46,483)	215,068	1,864
Profit/(loss) for the financial period attributable to owners of the parent		107,946	(433,911)	(1,737,599)
Other comprehensive income
Exchange differences on translating foreign operations		(2,701)	-	144,405
Tax relating to components of other comprehensive income		-	-	-
Other comprehensive income for the financial period, net of tax		(2,701)	-	144,405
Total comprehensive income for the financial period attributable to owners of the parent		105,245	(433,911)	(1,593,194)
Earnings/(loss) per share (basic)	4	0.12p	(0.47p)	(1.87p)
Earnings/(loss) per share (diluted)	4	0.11p	(0.44p)	(1.87p)

All of the activities of the Group are classed as continuing.    

Consolidated statement of financial position
		As at 30 June 2009 Unaudited	As at 30 June 2008  Unaudited	As at 31 Dec 2008 Audited
Assets		£	£	£
Non-current assets
Goodwill		2,382,324	2,066,392	2,316,458
Intangible assets		1,030,308	1,323,671	1,133,192
Property, plant and equipment		568,756	483,207	636,456
Deferred Tax		938,271	708,321	938,271
		4,919,659	4,581,591	5,024,377
Current assets
Trade and other receivables due within one year		2,508,526	4,156,782	3,708,378
Cash and cash equivalents		1,539,399	1,103,874	1,534,787
		4,047,925	5,260,656	5,243,165
Total assets		8,967,584	9,842,247	10,267,542
Equity attributable to owners of the parent
Called-up equity share capital		937,884	937,884	937,884
Share premium account		1,614,695	1,614,695	1,614,695
Share options reserve		231,438	212,759	213,992
Merger reserve		2,206,716	2,065,012	2,209,417
Retained earnings		(1,864,835)	(669,093)	(1,972,781)
		3,125,898	4,161,257	3,003,207
Liabilities
Non-current liabilities
Deferred tax		309,074	385,118	339,937
Other payables falling due after one year		640,741	1,017,866	975,707
		949,815	1,402,984	1,315,644
Current liabilities
Trade payables		529,016	818,210	491,562
Other payables falling within one year		4,362,855	3,459,796	5,457,129
		4,891,871	4,278,006	5,948,691
Total liabilities		5,841,686	5,680,990	7,264,335
Total liabilities and equity		8,967,584	9,842,247	10,267,542

  

Consolidated statement of cash flows
		6 months to 30 June 2009 Unaudited	6 months  to 30 June 2008  Unaudited	12 months  to 31 Dec 2008  Audited
	Note	£	£	£
Operating activities
Result for the period before tax and finance costs		154,582	(661,172)	(1,771,621)
Amortisation of intangible assets		102,884	110,077	300,556
Depreciation of property, plant and equipment		146,665	90,279	192,089
Change in trade and other receivables		1,177,165	522,975	1,152,390
Change in trade and other payables		(1,141,832)	(5,756)	750,295
Share option charges		17,446	26,854	28,087
Taxation		(81,773)	-	-
Interest receivable		1,961	14,276	32,158
Interest payable		(2,114)	(2,083)	-
Exchange differences		(2,701)	-	(58,234)
Cash flows from operating activities		372,283	95,450	625,720
Investing activities
Purchase of property, plant and equipment		(22,853)	(99,375)	(136,180)
Acquisition of subsidiary		(200,000)	(457,382)	(409,001)
Acquisition expenses		-	-	(48,518)
Cash acquired with subsidiary		-	57,906	57,906
Exchange differences		(65,866)	-	(27,310)
Net cash used in investing activities		(288,719)	(498,851)	(563,103)
Financing activities
Proceeds from issue of shares		-	90,734	90,734
Finance lease payments		(78,952)	(91,216)	(126,321)
Net cash outflow from financing activities		(78,952)	(482)	(35,587)
Net movement in cash		4,612	(403,883)	27,030
Opening cash balance		1,534,787	1,507,757	1,507,757
Net movement in cash		4,612	(403,883)	27,030
Closing cash balance		1,539,399	1,103,874	1,534,787

  

Consolidated statement of changes in equity
	Share Capital	Share Premium	Share Options	Other Reserves	Retained Earnings	Total Equity
	£	£	£	£	£	£
Balance at 1 January 2008	927,803	1,534,042	185,905	2,065,012	(235,182)	4,477,580
Issue of shares	10,081	80,653	-	-	-	90,734
Share options	-	-	26,854	-	-	26,854
Loss for the period	-	-	-	-	(433,911)	(433,911)
Balance at 30 June 2008	937,884	1,614,695	212,759	2,065,012	(669,093)	4,161,257
Balance at 1 July 2008	937,884	1,614,695	212,759	2,065,012	(669,093)	4,161,257
Share options	-	-	1,233	-	-	1,233
Exchange differences on translating foreign operations	-	-	-	144,405	-	144,405
Loss for the period	-	-	-	-	(1,303,688)	(1,303,688)
Balance at 31 December 2008	937,884	1,614,695	213,992	2,209,417	(1,972,781)	3,003,207
Balance at 1 January 2009	937,884	1,614,695	213,992	2,209,417	(1,972,781)	3,003,207
Share options	-	-	17,446	-	-	17,446
Exchange differences on translating foreign operations	-	-	-	(2,701)	-	(2,701)
Profit for the period	-	-	-	-	107,946	107,946
Balance at 30 June 2009	937,884	1,614,695	231,438	2,206,716	(1,864,835)	3,125,898

NOTES TO THE INTERIM REPORT                                

1    PUBLICATION OF NON-STATUTORY ACCOUNTS                    

The financial information set out above does not constitute statutory accounts within the meaning of Section 240 of the Companies Act 1985. The figures for the year ended 31st December 2008 have been extracted from the statutory financial statements prepared in accordance with the accounting policies which are based on the recognition and measurement principles of IFRS in issue as adopted by the European Union (EU), which have been filed with the Registrar of Companies. The auditors' report on those financial statements was unqualified. The auditors have issued an unqualified report on the full financial statements and remuneration report containing no statement under section 237 (2) or section 237 (3) of the Companies Act 1985. 

2    BASIS OF PREPARATION AND ACCOUNTING POLICIES

These interim condensed consolidated financial statements are for the six months ended 30 June 2009. They do not include all of the information required for full annual financial statements, and should be read in conjunction with the consolidated financial statements of the Group for the year ended 31 December 2008. The same accounting policies, presentation and methods of computation are followed in the condensed set of statements as applied to the Group's latest annual audited financial statements. The interim financial statements of the Company for the six months ended 30 June 2009, which are unaudited, have been prepared in accordance with the accounting policies set out in the annual report and accounts for the year ended 31 December 2008. Those accounts, upon which the auditors, Grant Thornton UK LLP, issued an unqualified audit opinion, have been delivered to the Registrar of Companies. 

These financial statements have been prepared under the historical cost convention, except for revaluation of certain properties and financial instruments.

As permitted, this interim report has been prepared in accordance with the AIM Rules for Companies and not in accordance with IAS 34 'Interim Financial Reporting'.

3    OPERATING PROFIT

The Group operates a share-based compensation plan. The fair value of the employee services received under the plan is recognised as an expense in the consolidated profit and loss account. Fair value is determined using the Black-Scholes Option Pricing Model. The amount to be expensed over the vesting period is determined by reference to the fair value of share options.

The operating profit/(loss) is stated after adoption of IFRS2 Share-Based Payment. The Group recognised total expenses of £17,446 for the six months ending 30 June 2009 (June 2008: 26,854). The financial effect of these adjustments is shown below:-

  

Consolidated statement of comprehensive income
		6 months to 30 June 2009 Unaudited	6 months  to 30 June 2008  Unaudited	12 months  to 31 Dec 2008 Audited
		£	£	£
Revenue		5,632,679	4,963,920	10,399,701
Other operating income and charges		(5,460,651)	(5,598,238)	(11,594,511)
Operating profit/(loss) before share-based payments		172,028	(634,318)	(1,194,810)
Share-based payment expense		(17,446)	(26,854)	(28,087)
Operating profit/(loss) before non-recurring costs		154,582	(661,172)	(1,222,897)

4    EARNINGS/(LOSS) PER SHARE                            

The calculation of basic earnings/loss per share is based on the profit attributable to ordinary shareholders divided by 93,788,423 (June 2008: 92,864,420) being the weighted average number of shares in issue during the period. The calculation of diluted earnings per share is based on the profit attributable to ordinary shareholders divided by 101,967,023 (June 2008: 99,427,830) being the diluted weighted average number of shares in issue during the period.

5    AVAILABILITY OF ANNOUNCEMENT                            

Copies of this announcement will be available from the Company's registered office, One Redcliff Street, Bristol BS1 6NP and on its website, www.smartfocus.com.

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