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Mediasurface PLC (MSR)

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Tuesday 02 October, 2007

Mediasurface PLC

Trading Statement

Mediasurface PLC
09 October 2007

                        Mediasurface plc (the 'Company')
                               Trading Statement

Mediasurface plc, the AIM listed Content Management Software Author and Vendor
expects to report results below market expectations for the year ended 30
September 2007.

During this period, revenue on a pre-acquisition basis increased by 5 per cent.
and the Company expects to report revenues of no less than £11.3 million (2006:
£9.67 million) which would result in an estimated EBITDA loss in the region of
£1.3 million (2006: £1.0 million EBITDA profit).

Despite these disappointing results, the Board believes that the underlying
business remains strong.

Immediacy

Following the acquisition of Immediacy in July 2007, the operation achieved
revenues of £1.1 million for the three-month period in line with market
expectations.  The cost base at Immediacy has been carefully controlled and is
slightly below budget helping generate a modest EBITDA improvement versus
expectations.  Immediacy achieved 24 new business wins in the period, its best
performance to date, and the prospects for the operation remain positive with no
signs of a slow-down.  For FY08, the operation also is expected to benefit from
a £0.35 million reduction in costs following the planned departure of the two
major shareholders.

Pepperio

During FY07, the focus for Pepperio has been on pursuing the market opportunity
for a hosted content management system for smaller businesses and on building a
partner channel.  Whilst this approach has established 75 channel partners
generating over 100 end-user accounts, the anticipated growth in end-user
accounts has not materialised. Moving forward, the investment of £1.1 million in
the financial year ended 30 September 2007 will be reduced significantly for
FY08. This action will enable greater investment in other proven business
streams.

Morello

Morello experienced a difficult second half as a result of two factors mainly
outside our control, both of which contributed significantly to sales slippage.
Firstly, Microsoft Office Sharepoint Server 2007 (MOSS) was launched.  MOSS is
essentially a document management and collaboration tool that complements rather
than competes with Morello, but the hype generated around the launch confused
the market and resulted in a number of Morello sales opportunities being
postponed whilst they conducted a review of MOSS.  However, industry analysts
and the market overall are now starting to better understand its positioning, we
have not lost a single deal to MOSS and following the recent launch of the
Morello MOSS Connector, we believe there are substantial opportunities to
position Morello as the web content management technology of choice to support
MOSS.

The second contributing factor is a result of an extremely challenging market in
the financial services sector, one of the key verticals for Morello.  The recent
uncertainty in this market has resulted in a number of deals being delayed and
it remains difficult to predict when this circumstance will improve.

Combined, we estimate these two factors have resulted in at least £2.25 million
prospective Morello licence deals not closing in the second half.  The
underlying pipeline for Morello however remains strong and newer geographies
including the Nordics and the US are starting to deliver incremental Morello
related growth.

Outlook

The Board feel that the current results, whilst disappointing, are not a result
of underlying problems in either the business or the overall market and believe
that the outlook for FY08 is positive given the prospects for strong revenue
growth in the Immediacy operation and an encouraging sales pipeline for Morello.
The effect of changes to the cost base and growing recurring revenues currently
valued at £4.5 million per annum is expected to help return the group to
profitability.


For further information please contact:

Lawrence Flynn, Chief Executive Officer
David Deacon, Chief Financial Officer
Tel: 01635 262000

Adam Reynolds, Hansard Group
Tel: 020 7245 1100
Mob: 07785 908 158

Deon Veldtman, KBC Peel Hunt
Tel: 020 7418 8900


                      This information is provided by RNS
            The company news service from the London Stock Exchange                             

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