Interim Results

Manpower Software PLC 28 February 2005 28 February 2005 Manpower Software plc Interim results for the six months ended 30 November 2004 Manpower Software plc, the provider of workforce planning, staff scheduling and resource optimisation software, today announces its interim results for the six months ended 30 November 2004. Summary Revenue in the first half of the financial year was £2.04m (2003: £2.46m), resulting in a first half loss of £0.74m (2003: £0.26m). The reduction in revenue and consequent loss results from delays in closing several major contracts, which are now expected to close in the second half. During the interim period a number of substantial changes have taken place within the Company. • A considerable expansion of our sales teams in all markets, particularly to broaden the UK Defence customer base into the worldwide military arena, where the opportunities are considerable in both size and number but the costs of selling and timescales to sell are greater. We remain excited by the prospects and expect to see tangible results in the second half and beyond. • Establishing the foundations for growth in the health sector. The sales team has been expanded, a G-CAT approved partner will be signed shortly, the number of pipeline sales opportunities is increasing steadily, MAPS Taskforce has been installed at three NHS trusts and it has been evaluated successfully by one Strategic Health Authority. We are pleased with the prospects, even though this progress has taken longer than anticipated. • Refining both the structure and processes of the services organisation, and the product strategy, to enable shorter procurement and delivery times. Since the interim period-end the Company has been awarded some additional contracts by its existing customers. The Directors believe the Company is presently positioned to achieve market expectations for its annual result for 2004/5, although this remains dependent upon the timing of the award and closure of certain key contracts where a risk exists of delays developing. Importantly, the Directors are confident of a significant improvement in both revenue and profit in 2005/6. Further Information Copies of the Interim Report will be sent to all shareholders and are available to the public at the Company's Registered Office. Further information is available on the Company's web site www.manpowersoftware.com. Enquiries: Manpower Software plc Simon Thorne, Finance Director 020 7389 9500 Shore Capital Alex Borrelli 020 7408 4090 Manpower Software plc (the "Company") Interim results for the six months ended 30 November 2004 Chairman's Statement Introduction In the first six months of the current year, the Company has made significant progress towards its objectives and is uniquely positioned to become the leading provider of workforce planning, staff scheduling and resource optimisation software products to its chosen markets. During the period we have focused on increasing our sales and delivery capability in all markets. The direct sales force has doubled and four new partnership agreements, focused entirely on sales and delivery, have been signed or are under final negotiation. The result is that the pipeline of sales opportunities for our software products continues to increase. We have refined and developed the structure and processes of the services organisation to deliver faster the MAPS software to customers. This has included the recruitment of new senior project management personnel and development of our internal processes for project implementation. We have also reviewed our product strategy to standardise our products where appropriate and thereby reduce delivery times. Results Revenue in the first half of the financial year was £2.04m (2003: £2.46m), resulting in a first half loss of £0.74m (2003: £0.26m). The reduction in revenue and consequent loss results from delays in closing several major contracts, which are now expected to close in the second half. Selling and operational expenses increased from £1.53m to £1.99m, as the Company grew its sales and delivery capabilities ahead of anticipated extra demand for its products. Office and administrative costs increased to £0.73m (2003: £0.64m). Operational Review Defence We have continued to work with our existing defence customers to increase their use of our products, while expanding the pipeline of opportunities overseas. The global Defence market offers considerable opportunity for growth as defence forces worldwide re-align with new strategic objectives and recognise the increasing relevance of the MAPS software's capability. Management are focused on consolidating the Group's position in the UK, developing its regional sales and delivery capabilities, and closing overseas opportunities within the rapidly developing pipeline. The British Regular and Territorial Armies are using MAPS for force generation, force modelling, state of readiness and training management. Headquarters Land Command ("HQ Land") is the Army's command centre responsible for the provision of army units for operations at home and overseas, and ensuring that all of its soldiers, whether regular or reservist, are properly equipped and trained for whatever they are required to do. Manpower Software has been supporting HQ Land for some time and has provided software tools for Force Generation ("FORGE"), to improve the way HQ Land manages its reserve forces, and force modelling ("FORM "), enabling HQ Land to analyse its current force structure and examine ways in which adjustments might be made to meet future training and operational commitments. The Company continues to work closely with HQ Land to extend the functionality of its existing software products, while ensuring that they will be capable of replication to other military forces worldwide. Brigadier (now Major General) Mark Mans, when Assistant Chief of Staff Plans at "HQ Land", has commented: "Throughout the time that we have been involved with Manpower Software we have been particularly impressed with their customer focused approach and the way in which they have engaged with us in an open and constructive manner that has delivered considerable benefit to our business." Since the period-end, a contract has been awarded by the Defence Medical Services ("DMS"). The contract is for additional software licences and some associated implementation services, together valued at £0.36m, all of which should be delivered shortly and therefore capable of recognition as revenue in the second half. We have signed two new contracts with Supreme Headquarters Allied Powers Europe ("SHAPE") at NATO, together valued at £0.2m, to extend the use of MAPS throughout their peacetime establishment. We have signed a partnership agreement with Alphawest Services Pty Ltd for the sale, implementation and ongoing support of Manpower Software's solutions in the Asia/Pacific region. An Australian publicly listed company employing over 400 staff, Alphawest is an IT services business, headquartered in Canberra, providing systems integration solutions to commercial, government and education organisations, which enjoys strong partnerships with leading organisations in Australasia. Maritime The Company is the global leader for crew manning and on-board duty rostering software within the cruise market. We have improved our ability to sell further products into this installed customer base and have addressed the potential for mid-size cruise fleets and selected areas of the global shipping market through the introduction of new products. During the interim period the Company delivered software to the following companies: Carnival Cruise Lines, AP Moller-Maersk, Princess Cruise Lines and Carnival UK. The Princess Cruise Lines system went live in September 2004. The AP Moller-Maersk system and the system at Carnival Cruise Lines are now scheduled to go live later this year. MAPS is already running live at Norwegian Cruise Lines ("NCL"), Sun Cruises, Cunard Line and Carnival UK (formerly P&O Cruises). Since the interim period-end, NCL has purchased additional licences, valued at £0.13m, to enable it to roll out the MAPS system to two new ships that recently joined its fleet. Two new maritime products have been introduced, MAPS Framework and MAPS Quick Start. MAPS Framework is a software toolkit which allows customers to create their own applications using the MAPS user interface, security and data replication functions. The first order for MAPS Framework has already been placed by one of our existing customers. MAPS Quick Start is a pre-configured version of the core modules of MAPS Crew Manning, aimed specifically at the market for crew manning software in medium sized fleets. Quick Start delivers the advantages of MAPS in a standardised, cost-effective package, tailored to the crew manning requirements of mid-size fleets. The Company is now at the final stage of negotiation for the first sale of this product to a new customer. The Company has also signed an agreement with Ulysses Systems Inc, whereby the two companies will work cooperatively on the sale of Manpower Software's products. Ulysses own ship management products complement MAPS Crew Manning and the company has a strong user base, with its software installed in over 600 ships. Ulysses has offices in USA, London, Athens, Singapore and Mumbai. Healthcare We have concentrated on fully establishing the foundations for growth in this important market through offering ward-level rostering across entire NHS Trusts. Focus has been placed on expanding the direct and indirect sales capability, on enabling existing customers to act as strong references, on establishing relationships and financial structures that enable shortened procurement timescales, and on a refined product portfolio. Our core product, MAPS Taskforce cost-effectively solves two critical problems for the UK NHS, namely high expenditure on bank and agency nurse staffing, and the considerable front-line staff effort needed to create rosters. These problems are now receiving significant attention internally within NHS Trusts and government. The Company has a unique and strong product offering in this area. Following the initial sale of our Taskforce and Establishment Control software to Plymouth Hospitals NHS Trust ("PHNT"), in the interim period PHNT signed a five year extended licensing agreement for its use of the software for their six thousand staff at Derriford Hospital and the Royal Eye Infirmary. This has increased the value of the contract from £0.57m to £0.8m and, importantly, it has given the Company a strong reference site. Two more NHS Trusts have installed MAPS Taskforce and are undertaking pilot studies to demonstrate the software's ability to improve the quality and reduce the cost of rostering, reduce clinical risk and improve management control. These pilots are now nearing completion and we anticipate a further roll-out of the software within these Trusts. Additionally, our high level Workforce Planning tools were successfully evaluated by County Durham & Tees Valley Strategic Health Authority ("CDTV"). We are currently seeking implementations with Primary Care Trusts within the CDTV area. An increase in our Healthcare sales force and intensive sales activity in the period has increased our pipeline of potential NHS sales. We are also in negotiation with a prospective G-CAT approved partner already established in the UK healthcare sector in order to add an additional route to market for our products. Outlook In Defence, as a consequence of the supply of FORGE to the British Army, there is now a high level of interest in Manpower Software's products from many defence organisations in the UK and overseas. We are currently seeking to exploit the opportunities in domestic and overseas defence markets and are committed to achieving our objective of being Europe's leading provider of force generation and deployment software products. The Company is presently working with HQ Land Command to deliver further substantive projects. We have also generated enquiries for our products from NATO members and Commonwealth countries, and are pursuing discussions with a number of these. In Cruise and Maritime, we remain focused upon achieving successful rollouts to our existing customers. We are in advanced stages of discussion with Carnival for the further roll-out of the MAPS software within its group. We are building upon the interest generated by the sale made to AP Moller-Maersk to expand our prospect base among both large and medium-sized fleets in the non-cruise maritime market. The new product, MAPS Quickstart, should enable us to achieve further orders from small and medium-sized fleets in the all sectors of the maritime market. In the UK NHS, we anticipate that the growth in the sales pipeline, an increase in the Healthcare sales team and the completion of current pilots will lead to further sales of the MAPS Taskforce duty rostering software to other NHS Trusts. The discussion taking place with a prospective G-CAT partner will provide us with a new sales channel for our products. In support of our overall objective, to be the dominant provider of workforce planning software products in each of our markets, we intend to grow both revenue and profitability in the UK and international markets by continued product innovation and expanding our sales channels. To date, sales have been achieved using our direct sales force, all of whom are market specialists. We shall continue to invest in our sales team and complement this by building a partner network that will enable the Company to take advantage of large-scale MAPS implementations and to work in territories where either our existing resources are inadequate or we lack specific sector expertise Despite the interim loss, the Company has established the foundations for expansion into two large new markets, where our products are already being perceived as revolutionary and offering great benefits to their users. I believe the Company is presently positioned to achieve market expectations for its annual result for 2004/5, although this remains dependent upon the timing of the award and closure of certain key contracts where a risk exists of delays developing. Importantly, I am confident of a significant improvement in both revenue and profit in 2005/6. Robert Drummond Chairman 28 February 2005 MANPOWER SOFTWARE PLC CONSOLIDATED PROFIT & LOSS ACCOUNT FOR THE SIX MONTHS ENDED 30 NOVEMBER 2004 Note (Unaudited) (Unaudited) (Unaudited) 6 months ended 30 6 months ended 6 months ended Nov 2004 31 May 2004 30 Nov 2003 £ £ £ Turnover 2,043,121 2,682,994 2,463,669 Cost of sales: Third party costs (65,362) (66,601) (56,245) Selling and operational expenses (1,987,344) (1,872,558) (1,525,318) Gross (loss)/profit (9,585) 743,835 882,106 Administrative expenses (735,193) (630,761) (637,454) Operating (loss)/profit (744,778) 113,074 244,652 Interest receivable 6,187 17,225 17,643 Interest payable (332) (1,318) (2,370) (Loss)/profit on ordinary activities before (738,923) 128,981 259,925 taxation Taxation (6,044) 65,346 900 (Loss)/taxation on ordinary activities after (744,967) 194,327 260,825 taxation Dividends - - - (Loss)/profit retained (744,967) 194,327 260,825 (Loss)/earnings per share Basic 3 (1.68)p 0.41p 0.59p Diluted 3 (1.63)p 0.42p 0.58p MANPOWER SOFTWARE PLC CONSOLIDATED BALANCE SHEET AS AT 30 NOVEMBER 2004 (Unaudited) (Unaudited) (Unaudited) As at As at As at 30 Nov 2004 31 May 2004 30 Nov 2003 £ £ £ Fixed assets Tangible assets 152,202 199,942 212,312 Current assets Debtors 2,316,399 1,636,841 1,726,438 Cash at bank and in hand 494,394 1,444,888 1,118,292 2,810,793 3,081,729 2,844,730 Creditors: amounts falling due within one year (1,396,648) (1,011,032) (962,663) Net current assets 1,414,145 2,070,697 1,882,067 Total assets less current liabilities 1,566,347 2,270,639 2,094,379 Creditors: amounts falling due after more than - - - one year Net assets 1,566,347 2,270,639 2,094,379 Capital and reserves Called up share capital 2,223,154 2,212,254 2,212,254 Share premium account 6,456,299 6,429,879 6,429,879 Profit and loss account (7,113,106) (6,371,494) (6,547,754) Equity shareholders' funds 1,566,347 2,270,639 2,094,379 MANPOWER SOFTWARE PLC CONSOLIDATED CASH FLOW STATEMENT FOR THE SIX MONTHS ENDED 30 NOVEMBER 2004 Note (Unaudited) (Unaudited) (Unaudited) 6 months 6 months 6 months ended 30 ended 31 ended 30 Nov 2004 May 2004 Nov 2003 £ £ £ Net cash (outflow)/inflow from operating activities 6 (926,371) 337,732 (857,531) Returns on investments and servicing of finance Interest received 6,187 17,225 17,643 Interest paid (165) (729) (1,293) Finance lease interest paid (167) (589) (1,077) Net cash inflow from returns on investments and 5,855 15,907 15,273 servicing of finance Taxation (6,044) 66,246 - Capital expenditure and financial investment Payments to acquire tangible fixed assets (46,094) (62,109) (40,419) Cash (outflow)/inflow before financing and management (972,654) 357,776 (882,677) of liquid resources Management of liquid resources Sale/(purchase) of short term deposits 1,267,840 (467,840) 1,000,000 Financing Issue of shares 37,320 - - Loan repayments (15,160) (17,660) (17,097) Capital element of finance lease rentals - (13,520) (13,987) Net cash outflow from financing (15,160) (31,180) (31,084) Increase/(decrease) in cash 317,346 (141,244) 86,239 STATEMENT OF TOTAL RECOGNISED GAINS AND LOSSES (Unaudited) (Unaudited) (Unaudited) 6 months 6 months 6 months ended 30 ended 31 ended 30 Nov 2004 May 2004 Nov 2003 £ £ £ (Loss)/profit for the financial period (744,967) 194,327 260,825 Currency differences on opening reserves 3,355 (18,067) 9,266 (741,612) 176,260 270,091 MANPOWER SOFTWARE PLC NOTES TO THE INTERIM REPORT FOR THE SIX MONTHS ENDED 30 NOVEMBER 2004 1 Basis of Preparation The interim financial statements have been prepared in accordance with applicable accounting standards and under the historical cost convention. The principal accounting policies of the Group have remained unchanged from those set out in the Group's 31 May 2004 annual report and financial statements. The interim financial statements have been reviewed by the Group's auditors. A copy of the auditors' review report is attached to this interim report. 2 TAXATION The tax charge for the interim period relates to profits made in the United States of America. 3 EARNINGS PER SHARE (Unaudited) (Unaudited) (Unaudited) 6 months ended 6 months ended 6 months ended 30 November 2004 31 May 2004 30 November 2003 £ £ £ (Loss)/profit for the financial period (744,967) 194,327 260,825 Weighted average number of shares Number Number Number of shares of shares of shares For basic earnings per share 44,304,649 44,245,086 44,245,086 For diluted earnings per share 45,767,446 45,412,834 45,149,291 4 DIVIDENDS No dividends have been paid or proposed for the period. 5 PUBLICATION OF NON-STATUTORY ACCOUNTS The financial information set out in this interim report does not constitute statutory accounts as defined in Section 240 of the Companies Act 1985. The figures for the six months ended 31 May 2004 have been calculated from the statutory financial statements for the year ended 31 May 2004 which have been filed with the Registrar of Companies. The auditors' report on those financial statements was unqualified and did not contain a statement under Section 237(2) of the Companies Act 1985. MANPOWER SOFTWARE PLC NOTES TO THE INTERIM REPORT FOR THE SIX MONTHS ENDED 30 NOVEMBER 2004 6 Net cash (outflow)/INFLOW from operating activities (Unaudited) (Unaudited) (Unaudited) 6 months ended 6 months ended 6 months ended 30 Nov 2004 31 May 2004 30 Nov 2003 £ £ £ Operating (loss)/profit (744,778) 113,074 244,652 Depreciation and amortisation charges 92,800 73,035 75,890 Exchange differences written off (25,982) (15,520) 9,266 (Increase)/decrease in debtors (679,558) 89,597 (165,301) Increase/(decrease) in creditors 431,147 77,546 (1,022,038) Net cash (outflow)/inflow from operating activities (926,371) 337,732 (857,531) 7 Reconciliation of net cash flow to movement in net debt (Unaudited) (Unaudited) (Unaudited) 6 months ended 6 months ended 6 months ended 30 Nov 2004 31 May 2004 30 Nov 2003 £ £ £ Increase/(decrease) in cash in the period 317,346 (141,244) 86,239 Capital outflow from decrease in debt and finance 28,145 31,180 31,084 leases Change in net debt resulting from cash flows 345,491 (110,064) 117,323 (Decrease)/increase in liquid resources (1,267,840) 467,840 (1,000,000) Movement in net debt in the year (922,349) 357,776 (882,677) Net funds at the beginning of the period 1,416,743 1,058,967 1,941,644 Net funds at the end of the period 494,394 1,416,743 1,058,967 8 Analysis of changes in net debt (Unaudited) (Unaudited) (Unaudited) 6 months ended 6 months ended 6 months ended 30 Nov 2004 31 May 2004 30 Nov 2003 £ £ £ Cash at bank and in hand 494,394 1,444,888 1,118,292 Finance leases - (15,160) (26,505) Bank loans - (12,985) (32,820) 494,394 1,416,743 1,058,967 This information is provided by RNS The company news service from the London Stock Exchange

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