Interim Results

RNS Number : 9746L

Manpower Software PLC

21 January 2009

 



Manpower Software plc

("Manpower Software" or "the Company")

Interim Results for the six months to 30 November 2008 

Manpower Software (AIM: MNS), the leading provider of workforce optimisation solutions, today announces its interim results for the six months to 30 November 2008.

 

·         Financial Highlights

 

·         Revenue increased by 22% to £6.5m (2007: £5.3m)

o        Licence revenue increased by 23% to £3.1m (2007: £2.5m)

o        Services revenue increased by 21% to £3.4m (2007: £2.8m)

o        Healthcare revenue increased by 52% to £4.5m (2007: £2.9m)

·         Trading profit* increased by 27% to £0.78m (2007: £0.62m)

·         Trading profit* margin of 12.1% (2007:11.5%)

·         Diluted adjusted EPS (excluding share-based payments and amortisation of intangibles) increased by 29% to 1.8p (2007: 1.4p)

·         Cash balances as at 30 November 2008 of £2.8m

 

·         Business Highlights

·         MAPS Healthroster gained 21 new NHS Trusts customers (total at period end stands at 59) with strong pipeline for H2

·         Continued growth in the Defence sector with NATO Special Forces Coordination Centre

·         Geographic expansion continues with first sales into Malaysia

 

·         Post Period Events

·         First US Healthcare customer, Boston University Radiology Associates signs up for MAPS Healthroster

·         Acquired Baum Hart & Partners, provider of integrated software systems, training and support services principally to the NHS - as a result of this acquisition, the company’s combined Healthcare customer base has now reached over 230 NHS Trusts in the UK and three Private Healthcare providers (of which two are overseas)

* Trading profit defined as profit before amortisation, share-based payments, interest and tax

Ian Bowles, Chief Executive Officer commented: "Manpower Software continues to make significant progress despite the economic downturn.  We remain focussed on strong organic growth and are pleased to report that all sectors of the business have a strong pipeline of opportunities entering the second half of the year.  As a result, the Directors are confident that the company's performance for the full year will be in line with their expectations."

Enquiries:

Manpower Software Ian Bowles - Chief Executive Officer Simon Thorne - Chief Financial Officer	Tel: [phone]
Numis Securities Nominated adviser: Michael Meade / Brent Nabbs Corporate Broking: James Black	Tel: [phone]
Hansard Group Justine James John Bick	Tel: [phone]     [phone]     [phone]

CHAIRMAN'S STATEMENT

Introduction

I am pleased to report continuing success for the group in the first six months of the current financial year. Despite the economic downturn, Manpower Software has achieved strong growth as well as broadening its addressable markets within the UK and internationally.  

Shortly before last year-end, the company made its first acquisition when it purchased Key Information Technology Systems Ltd ("KITS"). The acquisition of KITS established our position in the NHS temporary staffing solutions market, bringing with it 90 new sites and enabling us to offer a fully integrated e-rostering and bank staffing solution to both our own customers and those of KITS.  

Shortly after the interim period-end, the company made its second acquisition when it purchased the business, goodwill and certain assets of Baum Hart & Partners ("BHP"). The acquisition of BHP has consolidated our position in the NHS temporary staffing solutions market, given that we have acquired the technology platform StaffBank. The company also gained a significant, recurring revenue stream in the form of support and maintenance, hosting and transaction-based services, and the opportunity to expand the MAPS Health Suite through the development of certain products of BHP. Further information relating to this acquisition is given below.

Overall, the company continues to deliver on its strategy to be the leading supplier of workforce optimisation solutions in its chosen markets.  

Results

Revenue in the first half of the financial year was £6.5m (2007: £5.3m), an increase over the same period last year of 22%. Trading profit for the period, before adjustments for share-based payments and the amortisation of intangible assets, was £0.78m (2007: £0.62m), an increase over last year of 27%. The resulting trading profit margin was 12.1% (2007: 11.5%).  Diluted adjusted EPS (excluding share-based payments and amortisation of intangibles) increased by 29% to 1.8p (2007: 1.4p).

Licence revenue grew by 23% to £3.1m in comparison to the first half of 2007 (£2.5m), while Services revenue grew by 21% to £3.4m (2007: £2.8m). By sector, Healthcare revenue in the period increased by 52% to £4.5m (2007: £2.9m), reflecting the company's continuing expansion within the NHS and its position as the supplier of choice for nurse rostering products. Defence revenues in the period increased by 6% to £1.4m (2007: £1.3m) as the company continued to deliver services to its existing customer base in this market sector. Maritime revenues were 41% less than the prior year's period at £0.6m (2007: £1.1m), reflecting a lack of new licence fees during the first half in this market sector. 

Cost of sales in the period increased from £3.7m to £4.6m as the company developed its services business and we continued to add to our existing sales capability. Administrative costs in the period were held broadly in line with the same period last year at £1.0m, despite the acquisition of KITS.

Cash balances at the period-end were £2.8m (2007: £2.7m). This reflects an increase in debtors of £2m subsequent to increased sales activity prior to the period-end, an increase in trade and other payables (substantially new support contracts) of £1m, and having spent £0.4m to acquire KITS in the second half of the last financial year.  

Organic growth

Excluding the acquisition of KITS made in April 2008:

• Revenue in the first half of the financial year was £6.1m (2007: £5.3m), an increase over last year of 14%;

• Licence revenue grew 18% in comparison to the first half of 2007;

• Services revenue grew by 12%; and

• Healthcare revenue increased 39%. 

KITS is now an integral part of the company's business. As a result, the costs of KITS are not identified separately and it is not possible to state how much of the period's trading profit and margin are separately attributable to KITS.  

Significant activity in the period

 The following significant activity occurred during the six month period to 30 November 2008:

• Healthcare.  We added 21 new NHS Trusts to our customer base, making a total at the period-end of 59. This is more than double the number of customers we had twelve months ago (30 November 2007: 27) and continues the sequential growth reported in prior periods. We have again broadened the addressable market and now supply MAPS Healthroster to both acute and primary care NHS Trusts for nurses, junior doctors and ancillary staff. Key to choosing MAPS Healthroster is its ability to provide a better understanding of demand versus supply of clinical staff, how this is balanced against efficient use of available budgets and how it helps reduce the administrative burden for HR, clinical and payroll staff, thereby improving patient care. MAPS Healthroster reduces costs significantly and maintains Clinical Governance.  
  
  In addition to the new customers for MAPS Healthroster, we also added three new customers for our market leading Bank Staff Management Solution ("BSMS"), the temporary staffing solution. The award of these contracts brings the total number of NHS Trusts which have selected BSMS to 106.  
  
  International sales. In October we announced the sale of MAPS Healthroster to our first customer in Malaysia, Sunway Medical Centre ("SMC"). This is a significant milestone in our efforts to extend our market reach for workforce optimisation and electronic rostering solutions into other markets. Since the period-end, we have further extended our reach overseas with a sale to Boston University Radiology Associates in the USA (refer below).
  
  The company has a strong pipeline of opportunities for the second half.
  

• Defence.  During the period we continued to enjoy success providing services to our British and overseas customers.  
  
  HQ Land Forces ("HQLF") expanded their use of MAPS Defence Suite V6, introducing significant new functional and user interface enhancements to their extensive and growing user community managing the Collective Training Programme. Manpower Software has already trained over 3,000 MAPS users across the British Regular and Territorial Army, who between them now manage over 200,000 Collective Training Events. HQLF also selected MAPS Defence Suite to manage the capture of Recruitment Pipeline Management Information for Distributed Individual Training in the Army Reserves. These projects, coupled with the existing and highly significant MAPS Operational Commitments Planning application ("OCP"), offer significant potential for the company to expand MAPS' deployment into other, larger, pan-MoD contract opportunities going forward.
  
  Our footprint in NATO continues to expand with the recent introduction of a MAPS solution to support the newly established but critical NATO Special Forces Command Centre ("NSCC") at its strategic headquarters in Belgium. 
  
  The Royal Fleet Auxiliary continued to work closely with us to exploit the utility of their existing products. The Royal Australian Navy is now in the process of rolling out its MAPS solution across the whole of its frigate fleet.

• Service and Support.  Revenues grew 21%, driven both by deliveries to new customers and by growth in the installed base.

Significant activity since the period-end

The following significant activity has occurred since the period-end:

 

·         In December 2008, we completed our second acquisition, being the business, goodwill and certain assets of Baum Hart and Partners (“BHP”). This acquisition closed on 17 December 2008. BHP is a provider of integrated software systems, training and support services principally to the National Health Service (“NHS”). The acquisition of BHP has consolidated our position in the NHS temporary staffing solutions market and extends our reach into other vertical markets.  

As a result of this acquisition, the company’s combined Healthcare customer base has now reached over 230 NHS Trusts in the UK and three Private Healthcare providers (of which two are overseas).

·         Also in December, we announced the sale of MAPS Healthroster to our first US customer, Boston University Radiology Associates (“BURA”). As well as being a first sale into a substantial overseas market, the USA, it is also a sale to a new workgroup, radiologists.

·         In January 2009, we signed an enterprise software licence agreement with our existing customer Leighton Contractors Pty Limited (“LCPL”) in Australia. This agreement will enable LCPL to extend its use of the MAPS software throughout its entire organisation.

·         In January, we entered into an alliance partnership with NHS Shared Business Services (“SBS”), a leading provider of payroll, finance and accounting services to the NHS. The purpose of the agreement is to help NHS organisations realise financial benefits through reduced administration, accurate payroll data/enhanced hours and automatic entry of data to the Electronic Staff Record system. SBS works with over 100 NHS organisations to provide outsourced payroll services, which reduce management overheads and allow Trusts to focus on the delivery of quality patient care. We believe the ability to combine payroll services with the scheduling and employment of staff using MAPS Healthroster will create an additional revenue opportunity for the company.

·         Also in January, we signed a worldwide partnership agreement with a renowned, blue chip software integrator. Initially, the agreement will focus on opportunities for the company’s health and defence products in the USA and Australia.

Strategy

The management team continues to focus on the four core structural elements of a successful software business.  

• Linearity of licence revenues through consecutive periods.  Revenue growth is driven principally by the sale of new licences. Linear growth is therefore at the heart of management's objectives and the company's determination to drive shareholder value. First half licence revenues increased in comparison with the previous year's first half, while a strong forward pipeline exists for the second half of the financial year.

• Appropriate margins in service and support.  Management continues to focus on customer delivery, satisfaction and support, while achieving profitability at the best industry standards. 

• Investment.  The company continues to target financial returns commensurate with the best software companies worldwide. We continue to invest in our people, the product, services and support, as well as new markets. This focus on improving productivity at all levels continues to underpin the long term development of the company. We use appropriate incentive structures, rigorous quarterly targets and demanding criteria for all investment, thereby driving revenue growth and optimising operating margins and free cash flow. 

• Strict financial management.  We continue to measure and monitor carefully all financial ratios, maintaining a strict emphasis on achieving agreed operating plans.

Outlook

The Directors note that, in the first half of this financial year, there has been a particularly strong performance in the Healthcare sector. While we remain focused on strong organic growth, further acquisition opportunities are being considered against well defined criteria that support our strategic objectives. All sectors of the business, including Maritime, have a strong pipeline of opportunities entering the second half and, as a result, the Directors are confident that the company's performance for the full year will be in line with their expectations.

We are passionate about our customers and their success. By improving our customers' business processes and making a positive impact we aim to create a long-term mutually beneficial relationship that delivers sustainable value.

Finally, I would like to thank and recognise all Manpower Software's people for their total commitment to the Company's continuing success.

Terry Osborne

CHAIRMAN

20 January 2009

INDEPENDENT REVIEW REPORT TO MANPOWER SOFTWARE PLC

INTRODUCTION

We have been engaged by the company to review the condensed set of financial statements in the half-yearly financial report for the six months ended 30 November 2008, which comprises the condensed, consolidated balance sheet, income statement, statement of changes in equity and cash flow statement, and related notes. We have read the other information contained in the half yearly financial report, which comprises only the chairman's statement, and considered whether it contains any apparent misstatements or material inconsistencies with the information in the condensed set of financial statements. 

This report is made solely to the company in accordance with guidance contained in ISRE (UK and Ireland) 2410, 'Review of Interim Financial Information performed by the Independent Auditor of the Entity'.  Our review work has been undertaken so that we might state to the company those matters we are required to state to them in a review report and for no other purpose.  To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the company, for our review work, for this report, or for the conclusion we have formed.

DIRECTORS' RESPONSIBILITIES 

The half-yearly financial report is the responsibility of, and has been approved by, the directors.  As disclosed in Note 2, the annual financial statements of the group are prepared in accordance with IFRS's as adopted by the European Union.

OUR RESPONSIBILITY 

Our responsibility is to express to the company a conclusion on the condensed set of financial statements in the half-yearly financial report based on our review. 

SCOPE OF REVIEW 

We conducted our review in accordance with International Standard on Review Engagements (UK and Ireland) 2410, 'Review of Interim Financial Information Performed by the Independent Auditor of the Entity' issued by the Auditing Practices Board for use in the United Kingdom.  A review of interim financial information consists of making enquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures.  A review is substantially less in scope than an audit conducted in accordance with International Standards on Auditing (UK and Ireland) and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit.  Accordingly, we do not express an audit opinion. 

CONCLUSION 

Based on our review, nothing has come to our attention that causes us to believe that the condensed set of financial statements in the half-yearly financial report for the six months ended 30 November 2008 is not prepared, in all material respects, in accordance with in accordance with the basis of accounting described in Note 2.

GRANT THORNTON UK LLP

AUDITOR

LONDON

20 January 2009

CONDENSED CONSOLIDATED INCOME STATEMENT

		6 months to	6 months to	Year to
		30 November	30 November	31 May
		(Unaudited) 2008	(Unaudited) 2007	(Audited) 2008
		£'000	£'000	£'000
	Note
Revenue		6,481	5,325	11,578
Selling and operational expenses		(4,648)	(3,743)	(7,700)
Gross profit		1,833	1,582	3,878
Administrative expenses		(1,049)	(967)	(2,028)
Profit before amortisation, share-based payments, interest and tax		784	615	1,850
Amortisation of intangible assets		(145)	-	(50)
Share-based payments		(52)	(56)	(104)
Total administrative expenses including share-based payments		(1,246)	(1,023)	(2,182)
Operating profit		587	559	1,696
Finance income		71	53	132
Profit for the period before taxation		658	612	1,828
Tax on profit for the period		(23)	3	(44)
Profit for the period		635	615	1,784
Earnings per share	4
Basic (pence per share)		1.4p	1.4p	4.0p
Diluted (pence per share)		1.3p	1.3p	3.8p

CONDENSED CONSOLIDATED BALANCE SHEET

		30 November	30 November	31 May
		2008	2007	2008
		(Unaudited) £'000	(Unaudited) £'000	(Audited) £'000
Non-current assets
Intangible assets		650	-	795
Property, plant and equipment		566	176	521
Trade and other receivables		102	-	102
Total non-current assets		1,318	176	1,418
Current assets
Trade and other receivables		4,288	2,290	2,566
Cash and cash equivalents		2,842	2,661	4,317
Total current assets		7,130	4,951	6,883
Total assets		8,448	5,127	8,301
Equity and liabilities
Equity
Share capital		2,235	2,234	2,235
Share premium account		6,493	6,492	6,493
Shares to be issued		159	-	159
Share-based payments reserve		365	266	314
Foreign exchange reserve		77	-	63
Retained earnings		(4,464)	(6,188)	(5,099)
Total equity		4,865	2,804	4,165
Non-current liabilities
Borrowings		185	-	196
Total non-current liabilities		185	-	196
Current liabilities
Trade and other payables		3,351	2,323	3,893
Corporation tax		47	-	47
Total current liabilities		3,398	2,323	3,940
Total liabilities		3,583	2,323	4,136
Total equity and liabilities		8,448	5,127	8,301

The interim financial statements were approved by the Board of Directors on 20 January 2009.

I J Bowles - Director

S C Thorne - Director

CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

	Share capital	Share premium	Shares to be issued	Share based payment reserve	Foreign exchange reserve	Retained earnings	Total equity
	£’000	£’000	£’000	£’000	£’000	£’000	£’000
At 31 May 2007	2,227	6,465	-	210	75	(6,883)	2,094
Exchange differences on opening reserves	-	-	-	-	5	-	5
Net income recognised directly in equity	-	-	-	-	5	-	5
Result for the period	-	-	-	-	-	615	615
Total recognised income and expense	-	-	-	-	5	615	620
Issue of shares	7	27	-	-	-	-	34
Equity settled share options	-	-	-	56	-	-	56
At 30 November 2007	2,234	6,492	-	266	80	(6,268)	2,804
Exchange differences on opening reserves	-	-	-	-	(17)	-	(17)
Net income recognised directly in equity	-	-	-	-	(17)	-	(17)
Result for the period	-	-	-	-	-	1,169	1,169
Total recognised income and expense	-	-	-	-	(17)	1,169	1,152
Issue of shares	1	1	159	-	-	-	161
Equity settled share options	-	-	-	48	-	-	48
At 31 May 2008	2,235	6,493	159	314	63	(5,099)	4,165
Exchange differences on opening reserves	-	-	-	-	14	-	14
Net income recognised directly in equity	-	-	-	-	14	-	14
Result for the period	-	-	-	-	-	635	635
Total recognised income and expense	-	-	-	-	14	635	649
Equity settled share options	-	-	-	51	-	-	51
At 30 November 2008	2,235	6,493	159	365	77	(4,464)	4,865

CONDENSED CONSOLIDATED CASH FLOW STATEMENT

		6 months to	6 months to	Year to
		30 November	30 November	31 May
		2008	2007	2008
		(Unaudited) £'000	(Unaudited) £'000	(Audited) £'000
Cash flow from operating activities
Profit for the period		635	615	1,784
Adjustments for:
Finance income		(71)	(53)	(132)
Income tax charge / (credit)		23	(3)	44
Depreciation		71	47	99
Amortisation		145	-	50
Share-based payments		52	56	104
Increase in trade and other receivables		(1,723)	(549)	(614)
(Decrease) / increase in trade and other payables		(541)	130	957
Net cash (used in) / generated from operations		(1,409)	243	2,292
Income tax (paid) / refunded		(23)	-	3
Net cash (used in) / generated by operating activities		(1,432)	243	2,295
Cash flows from investing activities
Interest received		71	53	132
Investment to acquire subsidiary (net)		-	-	(386)
Payments for property, plant and equipment		(114)	(69)	(154)
Net cash used in investing activities		(43)	(16)	(408)
Cash flows from financing activities
Repayment of borrowings		(11)	-	(4)
Proceeds from the issue of equity shares		-	34	36
Net cash (used in) / generated by financing activities		(11)	34	32
Net (decrease)/increase in cash and cash equivalents		(1,475)	261	1,919
Foreign exchange differences		11	(9)	(11)
Cash and cash equivalents at the start of the period		4,317	2,409	2,409
Cash and cash equivalents at the end of the period		2,842	2,661	4,317

NOTES TO THE CONDENSED FINANCIAL STATEMENTS

 

1.         Legal status and activities

 

The principal activities of the group are the sale and support of workforce management solutions, and the provision of related IT services to major government, industrial and commercial customers.

 

The principal trading subsidiaries of the group are: Manpower Software Worldwide Limited, Key Information Technology Systems Limited and Key Systems Sdn Bhd, companies which are involved in the sale, implementation and support of workforce management solutions; and Manpower Software Inc, a company which is involved in the sale and support of workforce management solutions.

 

The company is a public limited liability company incorporated and domiciled in England and Wales. The address of its registered office is The Communications Building, 48 Leicester Square, London WC2H 7LU.

 

The company has its listing on AIM, a market operated by the London Stock Exchange.

 

2.         Basis of preparation

 

These unaudited interim condensed consolidated financial statements are for the six month period ended 30 November 2008. They do not include all 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 May 2008, which were prepared under IFRS as adopted by the European Union (EU).

 

The accounting policies adopted in this report are consistent with those of the annual financial statements for the year to 31 May 2008 as described in those financial statements.

 

New standards and interpretations currently in issue but not effective for accounting periods commencing on 1 December 2007 are:

 

·         IAS 1 Presentation of Financial Statements (revised 2007) (effective 1 January 2009)

·         IAS 23 Borrowing Costs (revised 2007) (effective 1 January 2009)

·         Amendment to IFRS 2 Share-based Payment - Vesting Conditions and Cancellations (effective 1 January 2009)

·         Amendments to IFRS 1 First-time Adoption of International Financial Reporting Standards and IAS 27 Consolidated and Separate Financial Statements - Costs of Investment in a Subsidiary, Jointly Controlled Entity or Associate (effective 1 January 2009)

·         IFRS 3 Business Combinations (Revised 2008) (effective 1 July 2009)

·         IFRS 8 Operating Segments (effective 1 January 2009)

 

The interim financial statements have not been audited. They have been reviewed under ISRE 2410 of the Auditing Practices Board. The financial information presented does not constitute statutory accounts as defined by section 240 of the Companies Act 1985. The group’s statutory accounts for the year to 31 May 2008 have been filed with the Registrar of Companies. The auditors, Grant Thornton UK LLP reported on these accounts and their report was unqualified and did not contain a statement under section 237(2) or 237(3) of the Companies Act 1985.

 

3.         Segmental reporting

 

The group’s primary reporting analysis is by business stream. The group’s principal activities are:

 

a) the provision of software under a licence agreement; and

b) the provision of services such as installation, consulting, training and product support.

 

		Revenue
	30 November	30 November	31 May
	2008	2007	2008
	(Unaudited)	(Unaudited)	(Audited)
	£’000	£’000	£’000
Licences	3,043	2,476	5,756
Services	3,438	2,849	5,822
	6,481	5,325	11,578

 

Under IAS 14 there is a requirement to show operating profit for the primary segmental analysis on the basis of the business stream as above. However, attributable expenses cannot be allocated on a reasonable basis and, as a result, the segmental analysis is limited to the group’s revenue.  

 

In addition to the requirements of IAS 14 the directors present a schedule of revenue analysed by vertical business sector:

 

		Revenue
	30 November	30 November	31 May
	2008	2007	2008
	(Unaudited)	(Unaudited)	(Audited)
	£’000	£’000	£’000
Defence	1,371	1,296	3,082
Healthcare	4,467	2,934	6,551
Maritime	643	1,095	1,945
	6,481	5,325	11,578

 

4.         Earnings per share

 

	30 November	30 November	31 May
	2008	2007	2008
	(Unaudited) £’000	(Unaudited) £’000	(Audited) £’000
Profit for the year	635	615	1,784
Earnings per share
Basic (pence per share)	1.4p	1.4p	4.0p
Diluted (pence per share)	1.3p	1.3p	3.8p
Weighted average number of shares	Number of shares	Number of shares	Number of shares
Shares in issue at opening	44,702,625	44,539,813	44,539,813
Shares issued during the period	-	144,812	162,812
Shares at closing	44,702,625	44,684,625	44,702,625
Weighted average shares for basic earnings per share	44,702,625	44,547,831	44,621,541
Effect of dilutive potential ordinary shares	2,579,091	2,963,195	2,859,416
Weighted average shares for diluted earnings per share	47,281,716	47,511,026	47,480,957

 

Adjusted earnings per ordinary share

 

An adjusted earnings per share has been calculated in addition to the post tax earnings per share which eliminates the effects of share-based payments and amortisation of intangibles. It has been calculated to allow shareholders to gain a clearer understanding of the trading performance of the group. The basis of the calculation of the basic and adjusted profit per share is set out below:

 

	30 November	30 November	31 May
	2008	2007	2008
	(Unaudited) £’000	(Unaudited) £’000	(Audited) £’000
Profit for the year attributable to shareholders	635	615	1,784
Share-based payments	52	56	104
Amortisation of intangibles	145	-	50
	-	-	-
Adjusted profit for the year attributable to shareholders	832	671	1,938
Basic adjusted earnings per share	1.9p	1.5p	4.3p
Diluted adjusted earnings per share	1.8p	1.4p	4.1p

 

 

END

 

 

IR SEUFUSSUSEIF