Interim Results
DAT Group PLC
03 October 2005
Embargoed. For release at 0701h, 3 October 2005
DAT Group plc
('DAT', 'the Company' or 'the Group')
Interim Results for the six months to 30 June 2005
Highlights:
• Turnover up 80% to £1.8 million (2004: £1.0 million)
• Loss of £1.0 million (2004: £1.3 million)
• Appointment of new CEO
• Completed acquisition of Synchronica Software GmbH
• Commissioned major internal review
• New structure in place to capitalise on a tighter, more focused suite of
products
• Cash balance at 30 June 2005 £2.6 million (at 31 December 2004: £5.5
million)
Commenting on the announcement John Gunn, Chairman of DAT said: 'The last nine
months has been a period of considerable change for DAT Group. During this
period we completed a significant acquisition, determined that the Group's sales
processes and product portfolio were insufficiently focused and commissioned a
major internal review to establish the best way to profitably exploit our
valuable technology and expertise. The Board has now completed its review of
DAT's products, processes and organisation. A new structure has been put in
place under the leadership of our new CEO. The Group will now seek to capitalise
on a much tighter, more focused, suite of products which management believes
have undoubted competitive advantages.'
Carsten Brinkschulte DAT CEO added: 'The team at DAT Group, from top to bottom,
is excited by the opportunity we have to become significant suppliers of device
management solutions to international customers. The analysis and review we have
undertaken this summer has, I believe, led to the creation of a much stronger
and more focused organisation. We face the future with confidence'.
For more information please visit www.datgroup.com or contact:
Carsten Brinkschulte Nicole Meissner, CMO
DAT Group plc DAT Group plc
Chief Executive Officer Office: +49 30 616 75 650
Mobile: +49 172 88 72 758 Mobile: +49 173 606 91 60
Simon Hudson / Clemmie Carr
Tavistock Communications
Tel: +44 20 7920 3150
Chairman's Statement
Introduction
The last nine months has been a period of considerable change for DAT Group.
During this period we completed a significant acquisition, determined that the
Group's sales processes and product portfolio were insufficiently focused and
commissioned a major internal review to establish the best way to profitably
exploit our valuable technology and expertise. We also accepted the resignation
of our former Chief Executive Officer.
The Board has now completed its review of DAT's products, processes and
organisation. A new structure has been put in place under the leadership of our
new CEO. The Group will now seek to capitalise on a much tighter, more focused,
suite of products which management believes have undoubted competitive
advantages. The rationale and strategy behind our refocused business model is
set out in more detail in the CEO's Review accompanying these results. The
Directors believe that the steps we have taken to address our problems will
result in a much stronger Group, capable of delivering the financial results
expected by our shareholders.
Results
Turnover for the six months to 30 June 2005 was £1.8 million (2004: £1.0
million). This was disappointing, given our strong sales pipeline and was a
reflection of the issues outlined above. As a result of the sales shortfall, but
continued investment, there was a loss for the period of £1.0 million (2004:
loss of £1.3 million). Loss per share was 5.1p (2004: loss of 9.6p). Cash
balances at 30 June 2005 were £2.6 million (31 December 2004: £5.5 million).
Given the current stage of the Group's development and its cash investment
needs, the Directors are not declaring a dividend in respect of the period under
review.
Business Activities
The Group's addressable markets continue to grow. As mobile device operators
seek to generate returns on their very substantial investments in data enabled
networks, the facilities offered on (and thus complexity of) handsets increases.
This complexity extends to the configuration, provisioning, management and
synchronisation of these devices as consumers - both retail and business -
require more and more services to be delivered to handheld devices. DAT is
uniquely positioned to supply a complete portfolio of solutions covering these
areas to operators, mobile manufacturers, wholesalers and enterprises.
Our ability to supply such solutions was significantly enhanced by the
acquisition of Synchronica Software GmbH ('Synchronica') in April this year.
Synchronica brought live, installed products and expertise in mobile device
management and data synchronisation based on increasingly popular and widespread
industry standard protocols (OMA DS and OMA DM) - whereas DAT's previous focus
had been on Microsoft's proprietary mobile operating systems. The combination of
the two businesses has resulted in a much stronger product and service offering
for our target markets.
The strategic and business review undertaken by the Board has produced a much
shorter portfolio of products around which the business is now organised. The
review process included a long, hard and objective look at the totality of our
business offering and has resulted in the decision to put on hold the
development of a number of products. These include the previously high-profile
Tabella products, which we determined would need massive consumer marketing
spend to succeed. We do not have such resources. However, the synchronisation
and push e-mail markets Tabella sought to address will instead be tackled by the
Synchronica SyncML Gateway, targeted at operators and enterprises. As of today,
with very limited marketing and sales effort, more than 80 corporate customers
are already using this solution to synchronise appointments, contacts, notes and
e-mails.
Board and Management
In July, on the resignation of the previous Chief Executive Officer - David
Hayes - we appointed the Chief Financial Officer, Allan Jonnes, as interim CEO
and, at the same time, strengthened the Board with the appointment of two new
executive Directors. The new appointments were Terry Page, who was previously
Director, Commercial Delivery, and Carsten Brinkschulte, who was the CEO of
Synchronica and the Group's Chief Technical Officer.
In tandem with the review of our business activities, the Board has been
considering candidates (both internal and external) for the post of Chief
Executive Officer. We have now appointed Carsten Brinkschulte as the new CEO as
we believe that his intimate knowledge of our technology and markets, combined
with his proven entrepreneurial ability, will make him an outstanding leader of
the Group through the next phase of our development. The Board congratulates him
on his appointment.
Outlook
The Directors have, I consider, successfully addressed the issues identified
earlier in the year which were hampering the Group's development. The transition
from an entrepreneurial, opportunistic business to a global products-based
operation is not an easy one. In the short term, we do not expect this
transition to materially affect our view on the likely outcome for 2005; sales
are expected to be in the lower half of the range we presented in July. We have
sought, however, in managing this transition, to maintain our cultural values
while imposing a more focused structure on our product range and organisation.
The Board believes that we have now put in place the foundations to restore
value to shareholders.
Finally, I would like to personally thank all employees of the Group, in London,
Berlin and the U.S., and my fellow Directors, for their hard work over the past
three months while we conducted the review process. We could not have
accomplished it without their wholehearted support.
J. Gunn
30 September 2005
Review of Operations by the Chief Executive Officer, Carsten Brinkschulte
This is my first review for shareholders as CEO of DAT Group plc. I am delighted
to have taken up this position and believe that the Group's potentially
world-beating technology can be exploited profitably for shareholders with the
new structure and product range we have put in place.
The Review
The Company announced in July that it would undertake a complete analysis and
review of DAT's products, structure and markets. The analysis phase of this
process took approximately six weeks, as we studied in detail the strengths and
weaknesses of the Company, products and technologies applied. This analysis was
followed by a thorough review of our service offering, which led to the
selection of a core product range to which DAT could bring significant
competitive advantages.
Following the selection of the products to focus on going forward, we needed to
determine our strategy to exploit them. This part of the process led naturally
to a definition of how the Company would organise and structure itself around
the focused suite of products we would pursue. A formal business plan was
produced at the beginning of September and the results of the analysis and
review were presented to staff. I believe the conclusions and outcome of the
review have been very well received by the people who will implement it and make
it successful.
Analysis
The issues which we identified in the course of the review were principally
two-fold and stemmed, in large measure, from DAT's cultural heritage as an
entrepreneurial, service based business. There existed no clear or coherent
product and sales strategy. As a result, the Company had been leading a
day-to-day existence, unable to staff all of its products adequately, with
engineering resources stretched between customer projects and standard products
and - most obviously - too many products addressing too many different markets.
Products
At the end of the first half of our financial year DAT Group plc, including
Synchronica, had a total product line-up of thirteen distinct products targeted
at five separate markets in the mobile device business space. Three of these
products - Tabella Express, Tabella Professional and Retail Assistant - were
aimed at the end-user/consumer and retail markets where the Group had little or
no experience.
We determined to focus our financial and human resources on four core products
which cover mobile manufacturers, operators and corporates within the global
mobile device marketplace. The products we have focused on all have large
potential markets with either strong, growing demand and/or low competition.
This, together with the chosen products' technological advantages and proven
track record, gives us a realistic chance for securing revenues against our
competitors.
The important and fast growing corporate and enterprise market for mobile device
services and management which was supposed to be addressed by Tabella Business
will now instead be addressed by the Synchronica SyncML Gateway and Enterprise
Assistant. Both products can also be applied to the market of mobile operators
which offers a potential for large and recurring revenue streams. With
ROM-Builder we are addressing the market of device manufacturers, while we
address mobile operators and manufacturers with the Synchronica SyncML DM
Server.
Our new, focused product line-up, and the markets they address, is set out
below:
Synchronica SyncML DM Server
The Synchronica SyncML DM Server is a device management solution for mobile
operators and device manufacturers supporting automated device diagnosis and
repair; including over-the-air device reconfiguration and firmware updates. It
has been designed to meet the high demands of mobile operators incorporating a
carrier-grade architecture capable of performing mass-rollout of new device
configuration and software updates to millions of devices.
The growing complexity of mobile phones has significantly increased the number
of software bugs in devices, some of which even require device recalls. Device
manufacturers and mobile operators are now searching for mobile device
management solutions to reduce customer-care costs and prevent public device
recalls. In addition, mobile operators are searching for solutions to distribute
configuration changes and software updates to a larger number of devices in
order to increase customer satisfaction and network utilisation. Both operators
and manufacturers are in favour of multi-vendor solutions using open industry
standards to enforce interoperability and prevent single-vendor lock-in
situations.
Based on the open industry standard OMA DM backed by all major device
manufacturers, the Synchronica SyncML DM Server works with any OMA DM compliant
device and does not require any installation of additional client software.
Thanks to its unique and proprietary server-side scripting language 'Sydemas',
the SyncML DM Server is highly adaptable and can be used to build an automated
hotline system capable of replacing a large percentage of standard manual
procedures.
Device Manufacturers can use the SyncML DM Server to prevent costly device
recalls avoiding bad press with mass-distribution of software updates. Mobile
operators can distribute configuration changes to their subscriber base reducing
customer-care costs and increasing customer satisfaction. The SyncML DM Server
is sold directly to device manufacturers and operators by the DAT sales force
and indirectly through OEM partners such as Smarttrust and Extended Systems.
Synchronica SyncML Gateway
The Synchronica SyncML Gateway provides over-the-air synchronisation of
corporate email, calendar, contacts, tasks and notes with mobile phones and
PDAs. It is sold as shrink-wrapped software to enterprises, with an easy-to-use
installation procedure, as well as to mobile operators which will offer the
SyncML Gateway to corporate users as a hosted service.
Based on the open industry standard OMA DS, supported by all major device
manufacturers and available on more than 150 devices currently available in the
market, the SyncML Gateway works out-of-the box, without additional client
software on the device. When hosted by a mobile operator, it features a 'zero
footprint' architecture enabling corporate users to synchronize their mobile
phones without any software installation or firewall changes.
With the increasing functionality and usability of high-end mobile phones, PDAs
and Smartphones, corporate users are starting to use mobile phones for much more
than simply phone calls. Most devices today are bundled with synchronisation
software enabling the synchronisation of calendar contacts and tasks between the
user's PC and the mobile device. However, these solutions are based on cable,
infra-red or Bluetooth connections and while sufficient for synchronisation of
static data such as contacts, they are not suitable for synchronisation of email
or calendar information where up-to-date information is essential. Recently,
industry pioneers such as Blackberry have shown significant success offering
mobile data synchronisation solutions enabling mobile access to corporate email
and calendar information. However, Blackberry and most other solutions are based
on proprietary technology and require costly dedicated devices or installation
of additional client software on the device limiting their compatibility and
usability.
While mobile operators appreciate growing revenues from mobile messaging and
synchronisation solutions, they typically prefer solutions based on open
industry standards to increase compatibility and prevent single-vendor lock-in
situations. Since the SyncML Gateway is based on the open industry standard OMA
DS, it is compatible with a wide range of devices on the market and does not
require installation of additional client software on the device. Thanks to the
zero-footprint architecture, mobile operators can offer mobile synchronisation
services to individual end-users without having to convince a corporate IT
department to install software behind a corporate firewall.
The SyncML Gateway is offered directly to enterprises which can purchase the
software from a Web-Shop operated by DAT's Synchronica subsidiary. In addition,
the software is marketed through a reseller network consisting of smaller system
integrators offering the solution to their clients. To mobile operators, the
SyncML Gateway is marketed directly with a dedicated sales team.
ROM Builder
The design of the operating system in a Windows Mobile powered device is crucial
to its reliability and success. Incorrectly programmed settings can cause
significant downstream support burdens and reduced revenues. This is why phone
prototyping is a time consuming and complex activity before phones are launched
to market.
This responsibility brings challenges to the process of customising a Windows
Mobile phone. The participating organisations are often located in different
continents and collaborative work has to take place across time zones. These
difficulties are compounded by the different languages spoken by the
contributors. Today, the device settings determined by the team are stored in a
large table or spreadsheet which is updated manually with any change requests.
It is also a manual process to transcribe the settings from the table to the
phone.
ROM Builder is a web application which can be provided as an ASP solution or
hosted by a device manufacturer. It is a collaborative tool which is offered to
the manufacturers' operator customers and their channel partners to speed up the
process of creating ROM prototypes. Users interact with ROM Builder through web
interfaces which are optimised for the contributor.
ROM Builder has two main customer benefits: it reduces the time to market a
Windows Mobile device manufacturer needs to customise the operating system to
various mobile operators and their requirements. In addition, it streamlines and
standardises the communication processes with operators reducing the number of
errors which can occur during the customisation process.
This unique product will be offered to all Windows Mobile Smart Phone device
manufacturers globally.
Enterprise Assistant
Enterprise Assistant is a web based application designed to enable organisations
to manage their estates of mobile devices. The business value of Enterprise
Assistant is significant because of the value of data carried on the new breed
of smart devices being issued on a far broader scale inside all types of
organisations. The loss of a smart device is not limited to just the expensive
piece of hardware, but the often unquantifiable value of the business data both
in financial and credibility terms.
The target market for Enterprise Assistant is any organisation deploying, using
and managing devices to its employees. Today this spans the entire range of
organisations from corporates of varying sizes through to governments.
Today, the driver for most organisations to implement Enterprise Assistant is
similar to insurance, giving them the ability to lock or wipe the data from a
lost or stolen device. Of course Enterprise Assistant also has a range of other
key features which customers need to be able to provision, maintain and support
their users mobile devices in the field. Customers achieve a number of key
benefits including the ability to segment mobile device users by group and
manage them in those groups in a way that is otherwise impossible to achieve. A
major benefit to many organisations is consolidated reporting which enables the
presentation of otherwise disparate data in a usable manner to determine usage,
access and device data.
Strategy
In order to fully exploit our product portfolio, we have now created dedicated,
ring-fenced teams for each of our products. Product managers will define
features, design a road map to achieve them and lead product development. Each
product's development team will be solely focused on delivering the product road
map, the features specified by the product manager and software updates to
correct problems. Each team will also have attached dedicated quality assurance,
technical documentation and support staff who will be experts in their
particular products. The products themselves will reach the marketplace through
specialised sales teams for the first time executing a dedicated sales strategy.
The Group's products are almost always mission-critical for our customers. While
products offered to the enterprise market are shrink-wrapped, sales to mobile
manufacturers as well as operators will require customisation and often
additional features and will be delivered with professional services in the
context of a project. The professional services group takes a snapshot of the
current product state and implements changes or additional features required by
the customer independently and without affecting the product teams. If
applicable to a wider audience, the additional features will be streamed back
into the core, accelerating the product roadmap.
With regards to our existing clients using results of custom development work,
we are fully committed to support these projects and can offer to implement
further enhancements on request.
Structure
The executive structure of the Group has been changed to reflect our new vision,
strategy and priorities. Under my leadership there is now a team of experienced
individuals who, I believe, will enable us to deliver our vision. As Chief
Technical Officer, Tim Carmichael is responsible for all technical matters
including forward thinking, product development and quality assurance. Terry
Page is Chief Operating Officer responsible for professional services, support
and internal IT resources.
A central plank of our new strategy is to establish clear sales processes,
supported by effective marketing and product management. Nicole Meissner is our
Chief Marketing Officer and will focus on product management, overall marketing,
public relations and external communications with our investors and investment
audiences. As Chief Sales Officer, Bruce Eley will design and run a sales
strategy and management process across all the Group's markets.
Finally, Allan Jonnes, our Chief Financial Officer, will provide financial
planning and control as well as human resources and managing of contracts with
customers.
The Future
The team at DAT Group, from top to bottom, is excited by the opportunity we have
to become significant suppliers of device management solutions to international
customers. The analysis and review we have undertaken this summer has, I
believe, led to the creation of a much stronger and more focused organisation.
We face the future with confidence.
C. Brinkschulte
30 September 2005
Consolidated Profit and Loss Account
Note 6 Months to 6 Months to Year to
30 Jun '05 30 Jun '04 31 Dec '04
(unaudited) (unaudited) (audited)
£'000 £'000 £'000
Turnover: Continuing 1,784 1,028 2,424
operations ======= ======= =======
Operating loss: Continuing
operations (1,034) (1,261) (2,271)
Interest receivable less
interest 82 (109) (105)
payable ------- ------- -------
Loss on ordinary activities
before (952) (1,370) (2,376)
tax
Tax on loss on ordinary 1 (4) 120 406
activities ------- ------- -------
Loss on ordinary activities
after (956) (1,250) (1,970)
tax ======= ======= =======
Basic and diluted loss per
ordinary share 2 (5.1p) (9.6p) (14.7p)
======= ======= =======
The results of acquisitions in the period are not considered to be material and
have not been separately disclosed in accordance with FRS3.
Consolidated Cash Flow Statement
Note 6 Months to 6 Months to Year to
30 Jun '05 30 Jun '04 31 Dec '04
(unaudited) (unaudited) (audited)
£'000 £'000 £'000
Net cash flow from operating
activities 3 (2,115) (928) (1,726)
Returns on investment and
servicing 82 (108) (119)
of finance
Taxation (paid) and received (6) 304 410
Capital expenditure and
financial (156) (78) (41)
investment
Acquisitions and disposals 4 (763) - -
------- ------- -------
Net cash flow before financing (2,958) (810) (1,476)
Financing 13 1,317 6,970
------- ------- -------
(Decrease) / increase in cash (2,945) 507 5,494
======= ======= =======
Consolidated Balance Sheet
Note As at As at As at
30 Jun '05 31 Dec '04 30 Jun '04
(unaudited) (audited) (unaudited)
£'000 £'000 £'000
Intangible assets and goodwill 970 - -
Tangible assets 215 108 122
-------- -------- --------
Total Fixed Assets 1,185 108 122
-------- -------- --------
Stocks 108 29 21
Debtors due after one year 11 11 11
Debtors due within one year 1,348 652 655
Cash at bank and in hand 2,568 5,512 108
-------- -------- --------
Total Current Assets 4,035 6,204 795
Creditors: Amounts falling due
within one year (877) (1,203) (1,503)
-------- -------- --------
Net current assets /
(liabilities) 3,158 5,001 (708)
-------- -------- --------
Total assets less current
liabilities 4,343 5,109 (586)
Creditors: Amounts falling due
after more than one year - (16) (37)
-------- -------- --------
Net assets / (liabilities) 4,343 5,093 (623)
======== ======== ========
Capital and reserves 5 4,343 5,093 (623)
======== ======== ========
Notes to the Interim Financial Information
1. Tax
6 Months to 6 Months to Year to
30 Jun '05 30 Jun '04 31 Dec '04
(unaudited) (unaudited) (audited)
£'000 £'000 £'000
United Kingdom tax credit - 120 410
Overseas tax payable (4) - (4)
-------- -------- --------
Current taxation (4) 120 406
======== ======== ========
2. Loss Per Share
6 Months to 6 Months to Year to
30 Jun '05 30 Jun '04 31 Dec '04
(unaudited) (unaudited) (audited)
£'000 £'000 £'000
These have been calculated on losses
of: (956) (1,250) (1,970)
======== ======== ========
The weighted average number of shares
used was: 18,665,000 13,035,000 13,376,000
======== ======== ========
Basic and diluted loss per ordinary
share (5.1p) (9.6p) (14.7p)
======== ======== ========
3. Reconciliation of Operating Loss to Net Cash Outflow from Operating
Activities.
6 Months to 6 Months to Year to
30 Jun '05 30 Jun '04 31 Dec '04
(unaudited) (unaudited) (audited)
£'000 £'000 £'000
Operating loss (1,034) (1,261) (2,271)
Amortisation of goodwill 25 - -
Depreciation of tangible assets 55 37 83
(Profit) / loss on sale of tangible
fixed assets - - (1)
Change in stocks (80) 35 27
Change in debtors (808) 198 264
Change in creditors (273) 63 172
-------- -------- --------
Net cash flow from operating
activities (2,115) (928) (1,726)
======== ======== ========
4. Acquisition of Subsidiary
On 31 March 2005, DAT Group PLC acquired the entire issued share capital of
Synchronica Software GmbH, a Berlin based software company. The total
consideration for the acquisition of Synchronica was €1,350k (£933k) including
an allotment to the vendors of options in respect of Ordinary shares in DAT with
a market value of €250k. Payment of €800k in cash was made on completion (31
March 2005) and the balance of €300k was paid into escrow accounts on the same
date. Acquisition expenses amounted to £106k.
A provisional fair value of £44k has been calculated for the assets, including
£103k in cash, acquired via the transaction. Goodwill of £995k, after
adjustments for associated transaction costs, is to be provisionally amortised
over a period of 10 years.
Analysis of Acquisition Cash Flow £'000
Total consideration (€1,350k) 933
Less share options (€250k) (173)
--------
Cash consideration 760
Acquisition expenses 106
Less cash acquired (103)
--------
Net cash flow for acquisition 763
========
5. Reconciliation of Movement in Shareholder's Funds
Capital and Reserves £'000
At 31 December 2004 5,093
Retained loss for the period (956)
New Ordinary shares allotted 33
Capital to be issued 173
--------
At 30 June 2005 4,343
========
6. Interim Report
This interim report was approved by the Board on 30 September 2005. It is not
the company's statutory accounts. It has been prepared using accounting policies
that are consistent with those adopted in the statutory accounts for the year
ended 31 December 2004.
The figures for the year to 31 December 2004 were derived from the statutory
accounts for that year. The statutory accounts for the year ended 31 December
2004 have been delivered to the Registrar of Companies and received an audit
report which was unqualified and did not contain statements under s237(2) or (3)
of the Companies Act 1985.
Independent Review Report to DAT Group PLC
Introduction
We have been instructed by the company to review the financial information set
out on pages 10 to 14. We have read the other information contained in the
interim report and considered whether it contains any apparent misstatements or
material inconsistencies with the financial information.
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 in accordance with the Listing
Rules of the Financial Services Authority which require 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
issued by the Auditing Practices Board for use in the United Kingdom. A review
consists principally of making enquiries of group 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 United Kingdom Auditing Standards and therefore
provides a lower level of assurance than an audit. Accordingly we do not express
an audit opinion on the financial information. We have not carried out any
review procedures on the financial information for the six months ended 30 June
2004.
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 30 June 2005.
RSM Robson Rhodes LLP
Chartered Accountants
London, England
30 September 2005
This information is provided by RNS
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