Interim Results
Advanced Smartcard Technologies plc
26 June 2007
ADVANCED SMARTCARD TECHNOLOGIES PLC
INTERIM RESULTS 2007
Advanced Smartcard Technologies plc (RIC: SMRT/L) ("the Company"), the Scottish
based software group specialising in smartcard technology, today announces its
interim results for the period to 31 March 2007.
• Turnover £630,000 (2006: £700,000)
• Operating loss £47,000 (2006 restated: profit £117,000)
• Announcement today of a £18.7million recommended cash offer of 7.25 pence
per share by Trainline Investments Holdings Limited ("TTL") for the entire
issued and to be issued share capital of the Company
Tom Doyle, Non-executive Chairman commented:
" The Company continues to progress towards its longer-term strategic objectives
and although we have made a small operating loss in the first six months of the
year, this is due to slippage of certain key contracts which we expect to
receive before the end of the financial year. We therefore remain confident that
we can deliver on management's expectations.
We have also today announced a recommended cash offer of 7.25 pence per share
from TTL for the entire issued and to be issued share capital of the Company.
Further details are set out in the offer announcement released today, and the
offer document to be sent to shareholders.
Your Independent Directors believe that the offer by TTL is one which should be
put to shareholders and have given undertakings to accept the offer in respect
of their own shareholdings. The offer represents a significant premium to
yesterday's closing share price and enables shareholders to make a return on
their investment whilst removing the risks associated with the size and stage of
development of the Company. "
-ends-
Date: 26 June 2007
For further information contact:
Advanced Smartcard Technologies plc 01355 813430
Tom Doyle, Non Executive Chairman
David Braddock, Chief Executive
Stephen Naylor, Finance Director
SVS Securities 020 7638 5600
Ian Callaway
Peter Manfield
WH Ireland Limited 0161 832 2174
David Youngman
NOTES TO EDITORS
About Advanced Smartcard Technologies plc
Advanced Smartcard Technologies plc, through its wholly owned subsidiary Ecebs
Limited, is an innovative software company operating in the dynamic and
expanding smartcard arena. The Company joined AIM in December 2005. It provides
smartcard technology to a wide range of user markets including transport, ID,
finance and local and national government departments and blue-chip companies.
It has developed and patented an innovative technology solution, branded
MultefileTM, that is designed to radically improve the way smartcard software
applications are developed and deployed. The key feature of the software is its
ability to reduce development time and cost while increasing client
functionality and ease of use resulting in an increase in the flexibility of
smartcard solutions.
MultefileTM can be used not only in conventional contact and contactless
smartcards but also in a variety of other 'smart' devices such as mobile
telephones.
Non Executive Chairman's Statement
It was announced today that the Independent Directors of the Company and the
Board of Trainline Investments Holdings Limited ("TTL") have reached agreement
on the terms of a recommended cash offer to be made for the entire issued and to
be issued share capital of the Company at 7.25 pence per share (the "Offer").
It is proposed that David Braddock and Barry Hochfield will, subject to the
Offer becoming wholly unconditional, have a financial interest in the combined
group. Consequently, Stephen Naylor and I, who will have no financial interest
in the combined group, have been appointed as the Independent Directors, and
have taken responsibility for considering the Offer.
The Independent Directors, who have been so advised by Altium Capital Limited
acting as Rule 3 adviser to the Company, consider the terms of the Offer to be
fair and reasonable and, accordingly, are unanimously recommending that
shareholders accept the Offer. The Company's directors and certain members of
their respective immediate families and connected persons who hold AST shares
have irrevocably undertaken to accept the Offer, and, in the case of David
Braddock and Barry Hochfield, to sell their shares to Trainline under the Share
Exchange Agreement, in respect of, in aggregate, 100,332,109 ordinary shares of
0.03 pence each, representing approximately 41.8% of the current issued ordinary
share capital of the Company.
Whilst enjoying success in a market of significant potential, the Company is a
small business exposed to risk and is highly dependent on others to implement
and deploy its products. The nature of the product also entails long contract
lead times and the timing of sales is difficult to predict.
Earlier this year, we started to work with TTL with a view to them taking a
licence for our MultefileTM technology for use in the travel and transport
sector. It was during this period that it became clear to us that TTL could
enable the Company to penetrate the transport market much faster through mass
deployments of our technology.
TTL's offer represents a significant premium on yesterday's closing share price
and enables shareholders to realise their investment whilst removing the risks
associated with the size and stage of development of the Company.
Chief Executive's Statement
The Company continues to progress towards its longer-term strategic objectives
and although we have made a small operating loss in the first six months of the
year, this is due to slippage of certain key contracts which we expect to
receive before the end of the financial year. We therefore remain confident that
we can deliver on management's expectations.
Financial results
Turnover for the half year was £630,000 (2006: £700,000) on which there was an
operating loss of £47,000 (2006 restated: profit £117,000).
Sales and marketing development
As part of our growth strategy, we have made a commitment to increasing
investment in our sales and marketing capability. Our focus continues to be on
the major opportunities in our chosen target market areas, which will yield
long-term profitability and growth. By their very nature these opportunities
tend to have longer sales cycles but with the correspondingly larger reward on
conclusion. Our efforts in such markets are yielding positive progress with
involvement in major prospective projects where MultefileTM could be core to the
proposition. Success in these landmark projects would subsequently accelerate
the uptake of MultefileTM in other similar projects. Additionally, our
activities in these markets frequently take place alongside major blue chip
companies who would provide additional routes to market. We are pleased to
announce that we have entered into a licence agreement with Trainline.com
Limited, a subsidiary of TTL, in respect of MultefileTM for use in selling its
product suite into the UK market which should provide an excellent reference
site for other projects.
Product refinement
MultefileTM technology differs radically from that of established players in the
smartcard arena in that it is not specific to any particular market sector and
can be managed by the card issuers themselves. Therefore it is applicable to
areas as diverse as payment, transport, anti-counterfeiting, government,
identity, GSM, biometrics, health and welfare. The capability for card issuers
to amend, add and delete new functionality, via a series of drop-down menus,
coupled with secure technology, is becoming a compelling proposition. Not only
can it enable existing requirements to be provided in a more efficient manner,
it also enables niche applications to be introduced alongside more mainstream
ones. This improves dramatically the benefit of smartcards both to issuers and
users.
In addition, MultefileTM is not limited in physical form. It can be used not
only in conventional contact and contactless smartcards but also in a variety of
other 'smart' devices such as mobile telephones.
We are continuing to progress MultefileTM development and are confident of
meeting our requirements in this area. We believe that this strategic investment
in having world-class products will produce long-term benefits as the market
develops and demand for our technology increases.
Customers and prospects
We have continued to partner with several blue-chip clients and are pursuing
significant new opportunities, which lead us into exciting growth markets.
Our list of sales prospects remains strong with many good opportunities to take
us further into our chosen niche markets. There have been significant
developments in these markets during the period. In the transport industry in
the UK the announcement of the English National Concessionary Transport Scheme
(ENCTS) being adopted in 2008 lends itself to our technology particularly in
relation to the inter-operable ticketing standard, ITSO. Similarly, major UK
transport groups are now commencing the procurement of smartcard transport
ticketing technology. Successful initial deployments of our transport technology
in Scotland and the North West of England, where transactions are now being
measured in millions, bode well for future growth. It is envisaged that over
eleven million smartcards will be deployed in England for ENCTS. Deployment in
England, coupled with the developments in Scotland and those being planned in
Wales could lead to the world's largest transport smartcard system. This is now
also attracting interest from overseas markets where we are well positioned. As
a consequence of the scale and leading edge nature of this type of project,
where our technology is integral, lead times are inevitably long and so the
timing of revenue benefits is more difficult to predict. Nonetheless, the
magnitude of these benefits when they do arrive can be very significant.
We continue to win repeat business and add new clients to our portfolio. In this
regard, we are developing working relationships with these clients on a
longer-term basis, some of whom are large blue-chip organisations. We are also
progressing a number of agreements with industry or sector representative
organisations which would incorporate MultefileTM in their standard requirements
providing exciting opportunities for future business growth as MultefileTM would
become an underlying technology for these initiatives.
The Company is also being asked to participate in the tendering process as the
smartcard technology provider with prospective partner organisations in large
international projects. Whilst the gestation period for these tenders can be
long - anything up to 18 months - the fact that organisations are approaching us
with a view to including MultefileTM in the early stages of these projects is
testament to the growing interest offered by our innovative technology.
Outlook
Your Board believes that the Company can continue its growth during 2007 and
beyond. However, we are still a relatively small business exposed to risks as
well as opportunities. We are, however, confident that we can deliver on
management's expectations.
David Braddock
Chief Executive
Independent Review Report to Advanced Smartcard Technologies plc
Introduction
We have been instructed by the Company to review the financial information for
the six months ended 31 March 2007 which comprises the profit and loss account,
balance sheet, cash flow statement and the related notes. We have read the
other information contained in the interim report which comprises only the Non
Executive Chairman's Statement and the Chief Executive's Statement and
considered whether it contains any apparent misstatements or material
inconsistencies with the financial information.
This report is made solely to the Company in accordance with guidance contained
in APB Bulletin 1999/4 "Review of Interim Financial Information". 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 interim report including the financial information contained therein is the
responsibility of, and has been approved by, the directors. The directors are
responsible for preparing the interim report and ensuring that the accounting
policies and presentation applied to the interim figures should be consistent
with those applied in preparing the preceding annual accounts except where any
changes, and the reasons for them, are disclosed.
Review work performed
We conducted our review in accordance with guidance contained in Bulletin 1999/4
"Review of Interim Financial Information" issued by the Auditing Practices Board
for use in the United Kingdom. A review consists principally of making
enquiries of management and applying analytical procedures to the financial
information and underlying financial data and, based thereon, assessing whether
the accounting policies and presentation have been consistently applied unless
otherwise disclosed. A review excludes audit procedures such as tests of
controls and verification of assets, liabilities and transactions. It is
substantially less in scope than an audit performed in accordance with
International Standards on Auditing (UK and Ireland) and therefore provides a
lower level of assurance than an audit. Accordingly, we do not express an audit
opinion on the financial information.
Review conclusion
On the basis of our review we are not aware of any material modifications that
should be made to the financial information as presented for the six months
ended 31 March 2007.
GRANT THORNTON UK LLP
CHARTERED ACCOUNTANTS
Sheffield
26 June 2007
Consolidated Profit and Loss Account
For the six months ended 31 March 2007
Restated Restated
6 Months to 6 Months to 12 Months to
31 March 31 March 30 September
2007 2006 2006
(unaudited) (unaudited) (unaudited)
Notes £'000 £'000 £'000
Turnover 630 700 2,019
Cost of sales (31) (82) (532)
Gross profit 599 618 1,487
Administrative expenses (646) (501) (1,208)
Operating (loss)/profit (47) 117 279
Net interest - (19) (21)
(Loss)/profit on ordinary activities before (47) 98 258
taxation
Tax on profit on ordinary activities 2 - - -
(Loss)/profit transferred to reserves (47) 98 258
Earnings per share 4
Basic (0.020p) 0.052p 0.121p
Diluted (0.019p) 0.051p 0.120p
There were no recognised gains or losses other than the result for the financial period.
Consolidated Balance Sheet
At 31 March 2007
31 March 31 March 30 September
2007 2006 2006
(unaudited) (unaudited) (audited)
Notes £'000 £'000 £'000
Fixed assets
Intangible assets 756 525 589
Tangible assets 129 68 106
Investments 40 40 40
925 633 735
Current assets
Stock 4 39 -
Debtors 282 777 531
Cash at bank and in hand 37 423 385
323 1,239 916
Creditors: amounts falling due within one year (376) (1,157) (747)
Net current (liabilities)/assets (53) 82 169
Total assets less current liabilities 872 715 904
Capital and reserves
Called up share capital 72 71 72
Share premium account 1,334 1,321 1,334
Other reserves 8 8 8
Profit and loss account (542) (685) (510)
Shareholders' funds 872 715 904
Consolidated Cash Flow Statement
For the six months ended 31 March 2007
Restated Restated
6 Months to 6 Months to 12 Months to
31 March 31 March 30 September
2007 2006 2006
(unaudited) (unaudited) (unaudited)
£'000 £'000 £'000
Reconciliation of operating (loss)/profit to operating
cash inflow/(outflow)
Operating (loss)/profit (47) 117 279
Depreciation and amortisation 41 30 86
Share-based payment expense 15 - 15
Increase in stock (4) (39) -
Decrease/(increase) in debtors 249 (657) (411)
Decrease in creditors (101) (431) (460)
(Decrease)/increase in payments received on account (90) 42 (40)
Net cash inflow/(outflow) from operating activities 63 (938) (531)
Returns on investments and servicing of finance
Interest received 3 2 11
Interest paid (3) (21) (31)
Net cash outflow from returns on investments and servicing - (19) (20)
of finance
Capital expenditure and financial investment
Purchase of intangible fixed assets (185) (204) (304)
Purchase of tangible fixed assets (46) (17) (75)
Net cash outflow from capital expenditure and financial (231) (221) (379)
investment
Financing
Increase in share capital - 1,342 1,356
Repayment of borrowing (180) - (300)
Net cash (outflow)/inflow from financing (180) 1,342 1,056
(Decrease)/increase in cash (348) 164 126
Notes to the Interim Report
For the six months ended 31 March 2007
1. Basis of preparation
The financial information for the six months ended 31 March 2007 is unaudited and does not
constitute statutory accounts within the meaning of section 240 of the Companies Act 1985.
The figures for the twelve months ended 30 September 2006 have been extracted from the
statutory accounts, filed with the Registrar of Companies, on which the auditors gave an
unqualified report, adjusted for the impact of FRS20.
The interim statement, including the financial information contained therein, is the
responsibility of, and has been approved by the directors. The interim financial information
has been prepared under UK GAAP using consistent accounting policies as set out in the 2006
statutory accounts of Advanced Smartcard Technologies plc except for the adoption of FRS 20
- 'Share based payments'The Company has restated its results for the periods to 30 September
2006 and 31 March 2006 as appropriate as a result of the adoption of FRS20. The adjustments
that have been made are shown in note 5 below.
2. Taxation
There is no tax charge for the period due to tax losses brought forward at 1 October 2006 of
approximately £442,000. The Company has not recognised the corresponding deferred tax asset.
3. Dividend
The directors do not propose to pay a dividend for the period.
4. Earnings per share
Basic earnings per share for the six months ended 31 March 2007 is calculated on the basis
of the loss for the period of £47,000 (March 2006 (restated): profit £98,000; September 2006
(restated): profit £258,000) divided by the weighted average number of shares in issue of
239,800,052 (March 2006: 187,150,575; September 2006: 212,498,000). Diluted earnings per
share is calculated on the assumption that all vested options are exercised which would give
rise to a total weighted average number of shares in issue for the six months to 31 March
2007 of 245,099,507 (March 2006: 193,039,766; September 2006: 215,813,000).
5. Adjustments to the accounts following the adoption of FRS 20
Effect on profit and loss account 6 months to 12 months to
31 Mar 2006 30 Sep 2006
(unaudited) (unaudited)
£'000 £'000
Profit after tax as previously stated 98 273
Adoption of FRS 20 - (15)
Profit after tax as restated 98 258
There were no adjustments to equity as a result of adopting FRS20.
6. Reconciliation of movements in shareholders funds
Restated Restated
31 March 31 March 30 September
2007 2006 2006
(unaudited) (unaudited) (unaudited)
£'000 £'000 £'000
Shareholder's funds at start of period 904 (725) (725)
Net value of share issues - 1,342 1,356
(Loss)/profit for the financial period (47) 98 258
FRS20 adjustment 15 - 15
Shareholder's funds at end of period 872 715 904
7. Reconciliation of net cash flow to movement in net funds/debt
31 March 31 March 30 September
2007 2006 2006
(unaudited) (unaudited) (audited)
£'000 £'000 £'000
(Decrease)/increase in cash in the period (348) 164 126
Cash outflow from decrease in debt 180 - 300
Movement in net debt in period (168) 164 426
Net debt at start of period 205 (221) (221)
Net funds/(debt) at end of period 37 (57) 205
Net funds/(debt) comprises
31 March 31 March 30 September
2007 2006 2006
(unaudited) (unaudited) (audited)
£'000 £'000 £'000
Cash at bank and in hand 37 423 385
Loan - (480) (180)
Net funds/(debt) at end of period 37 (57) 205
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