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Vebnet (Hldgs) PLC (VBT)

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Friday 18 February, 2005

Vebnet (Hldgs) PLC

Interim Results

Vebnet Holdings PLC
18 February 2005


Friday 18 February 2005

                        VEBNET (HOLDINGS) PLC ('Vebnet')

                              INTERIM ANNOUNCEMENT

                            Unaudited              Unaudited           Audited
                     Six months ended       Six months ended        Year ended
                     31 December 2004       31 December 2003      30 June 2004
                                £'000                  £'000             £'000

Turnover                        1,062                    380             1,042
Loss before tax                  (258)                  (610)             (915)
Basic loss per share               (3p)                   (8p)             (12p)
Net assets                        910                    700             1,168
Cash included above               540                    595             1,284

Highlights
          
     •    Revenues for Vebnet, the leading provider of employee benefit 
          technology solutions, for the 6 months ended 31 December 2004 
          increased by a factor of 2.8 to £1,062,000 (£380,000).

     •    The number of employees using FIX&FLEX(R), the group's core product, 
          as at 31 December 2004 was 68,759, an increase of 38% during the 
          period.

     •    New UK client implementations included Nationwide Building Society,
          Wrigleys, Honda, Capital International (global investment management
          company), McGrigors (solicitors) and SA Brains (brewery).

     •    Vebnet has won its first client in Ireland - Heineken, and implemented 
          a flex system for EDP (Energias de Portugal, a state owned utility).

     •    Trading since the half year end has also been very encouraging:
               
          o    Vebnet has won more new clients for FIX&FLEX(R), including Jacobs
               Babtie (technical and management consultants) and Richard 
               Burbidge (decorative timber production)
               
          o    completed implementation of FIX&FLEX(R) with Logica CMG (6,212
               employees)
               
          o    the partnership with a major UK financial institution, announced 
               to the market on 19 October 2004, to develop a worksite marketing 
               solution based on FIX FLEX(R) has been extended to a second 
               phase. This development work will result in significant 
               additional revenues in the current financial year.
               
          o    selected by Hymans Robertson (a major UK benefits consultancy
               associated with Milliman Global) as exclusive provider of 
               flexible benefit and reward statement technology to its UK client 
               base

Derek Scott, chairman of Vebnet, commented: 'Vebnet's core business continues to
exhibit strong growth in terms of new clients, employee enrolment numbers and
revenues. We see no reason why this will not continue in the second half of the
financial year.'

Gerry O'Neill, chief executive of Vebnet, added: 'We are delighted at the
progress made in the last six months. Our core business remains strong and the
extension of the worksite marketing partnership will, we believe, result in
significant revenues in the second half of the year. We continue to win larger
clients. All of this underpins our position as the leading provider of employee
benefit technology solutions.'

Enquiries

Gerry O'Neill, CEO, Vebnet: 0131 270 5502; 07990 584096; [email protected]
Stephen Thurlow, Finance Director, Vebnet: 0131 270 5503; 07899 912522;
[email protected]
Jonathan Wright, Seymour Pierce: 0207 107 8000; [email protected]
Charles Ponsonby, Bankside: 020 7444 4166; [email protected]

Note to Editors

Vebnet's core business is to develop, distribute and implement internet-based
technology solutions and services to support the communication, delivery and
administration of employee benefit schemes.

                             VEBNET (HOLDINGS) PLC

                              INTERIM ANNOUNCEMENT


In the half year ended 31 December 2004, Vebnet made continued financial and
commercial progress.

Financial Highlights

Turnover of £1,062,000 was 2.8 times the £380,000 in the half year ended 31
December 2003. Half of this increase in revenue was development revenue relating
to the partnership with a major UK financial institution, as previously
announced to the market on 19 October 2004. This development work will result in
a worksite marketing platform, based on FIX&FLEX(R). We have also seen
substantial increase in revenue through our direct sales channel.

The pre-tax loss of £258,000 compares with £610,000 in the half year ended 31
December 2003 and £915,000 in the full year ended 30 June 2004. Costs were
little changed relative to the half year ended 30 June 2004, a more comparable
period, particularly in the area of staff costs.

Net cash balances stood at £540,000 at 31 December 2004; this compares with
£1,284,000 at 30 June 2004 (reflecting the £780,000 net proceeds of the February
2004 cash placing) and £595,000 at 31 December 2003.

Partnerships & Sales

As of 31 December 2004, 68,759 employees were connected to FIX&FLEX(R) compared
with 49,975 on 30 June 2004 and 14,187 on 31 December 2003. In total Vebnet
added 10 new clients in the first half of this financial year. New client
implementations included Nationwide Building Society, Wrigleys, Honda, Capital
International (global investment management company), McGrigors (solicitors), SA
Brains (brewery) and EDP (Energias de Portugal - state owned utility). In
addition, Vebnet won its first client in Ireland (Heineken, with 400 employees).
Their flex system will go live later in the current financial year.

Vebnet continues to receive enquiries from other markets in Europe and beyond.
These enquiries tend to come through existing partnerships, principally Watson
Wyatt.

Worksite Marketing

On 19 October 2004, Vebnet announced to the market that it had entered into a
partnership with a major UK financial institution to develop a worksite
marketing solution based around FIX&FLEX(R). The first phase of this development
has been successfully completed on time and we are now entering a second phase.
This development work will add significant revenues in the current financial
year. While a proportion of these will be non-recurring, we believe that, as our
partner takes this product to market, these development revenues will be
replaced, over time, by recurring annual licence fees.

Product Development

We continue to invest in our FIX&FLEX(R) product. In the first half FIX&FLEX(R)
functionality was enhanced to support our larger enterprise implementations.
These changes have all been added to core technology and will form part of
future releases of FIX&FLEX(R).

Current Trading

Trading since the half year end has also been very encouraging.

New client wins include Jacobs Babtie (technical and management consultants) and
Richard Burbidge (decorative timber production).

Vebnet completed a successful implementation of FIX&FLEX(R) for Logica CMG and
its 6,212 employees.

As stated above, the worksite marketing agreement has been extended to a second
phase.

Vebnet extended its partnership programme to include Hymans Robertson (a major
UK benefits consultancy associated with Milliman Global). Hymans Robertson has
selected Vebnet as the exclusive provider of flexible benefit and reward
statement technology to its UK client base.

Prospects

The Board is confident that the strong growth in top line revenue will extend
into the second half of the current financial year and beyond.

Vebnet and its partners continue to win new and prestigious clients. The
majority of these are companies with significant employee numbers, reflecting
the functionality and scaleability of our platform. This, we believe, underpins
our position as the leading provider of employee benefit technology solutions in
the UK.

Derek Scott                     Gerry O'Neill                Stephen Thurlow
Chairman                        CEO                          CFO



                 Unaudited Consolidated Profit and Loss Account
                     for the six months to 31 December 2004


                                                  Unaudited          Unaudited        Audited
                                           Six months ended   Six months ended     Year ended
                                           31 December 2004   31 December 2003   30 June 2004
                                                      £'000              £'000          £'000

TURNOVER                                              1,062                380          1,042

Cost of sales                                          (490)              (210)          (473)
                                           ____________________________________________________

GROSS PROFIT                                            572                170            569
     
Administrative expenses                                (835)              (790)        (1,507)
                                           ____________________________________________________

OPERATING LOSS                                         (263)              (620)          (938)

Net interest receivable
and similar income                                        5                 10             23
                                           ____________________________________________________

LOSS ON ORDINARY ACTIVITIES BEFORE TAXATION            (258)              (610)          (915)

Tax (charge) on ordinary activities                      --                 --             --
                                           ____________________________________________________

LOSS ON ORDINARY ACTIVITIES AFTER TAXATION             (258)              (610)          (915)
                                           ====================================================
LOSS PER SHARE

Basic loss per share                                     (3p)               (8p)          (12p)



                      Unaudited Consolidated Balance Sheet
                              at 31 December 2004
                                        

                                                      Unaudited          Unaudited        Audited
                                                             At                 at             at
                                               31 December 2004   31 December 2003   30 June 2004
                                                          £'000              £'000          £'000

FIXED ASSETS

Tangible assets                                             291                172            289

CURRENT ASSETS

Debtors                                                     747                297            324
Cash at bank and in hand                                    540                595          1,284
                                               ____________________________________________________

                                                          1,287                892          1,608

CREDITORS: amounts falling due within one year             (641)              (364)          (690)
                                               ____________________________________________________

NET CURRENT ASSETS                                          646                528            918
                                               ____________________________________________________

TOTAL ASSETS LESS CURRENT LIABILITIES                       937                700          1,207

CREDITORS: amounts falling due after more than one year     (27)                --            (39)
                                               ____________________________________________________

NET ASSETS                                                  910                700          1,168
                                               ====================================================

CAPITAL AND RESERVES

Called up share capital                                   8,435              7,685          8,435
Share premium account                                       273                213            273
Other reserves                                           (2,951)            (2,914)        (2,951)
Profit and loss account                                  (4,847)            (4,284)        (4,589)
                                               ____________________________________________________

EQUITY SHAREHOLDERS' FUNDS                                  910                700          1,168
                                               ====================================================


                   Unaudited Consolidated Cash Flow Statement
                     for the six months to 31 December 2004


                                                       Unaudited          Unaudited        Audited
                                                Six months ended   Six months ended     Year ended
                                                31 December 2004   31 December 2003   30 June 2004
                                                           £'000              £'000          £'000

Net cash outflow from operating activities                  (665)              (599)          (603)

Returns on investments and servicing of finance                5                  4             30

Capital expenditure and financial investment                 (72)               (75)          (173)
          
Taxation                                                      --                 --             --

Acquisitions and disposals                                    --                 --             --
                                               ____________________________________________________

Net cash outflow before financing                           (732)              (670)          (746)

Financing                                                    (12)                --            765
                                               ____________________________________________________

Increase/(decrease) in cash for the year                    (744)              (670)            19
                                               ====================================================

Reconciliation of net cash flow to movement in net funds

Increase/(decrease) in cash in the year                     (744)              (670)            19

Cash outflow from capital element of finance lease payments   12                 --               9
                                               ____________________________________________________

Change in net funds arising from cashflows                  (732)              (670)            28

New finance leases                                            --                 --            (70)
                                               ____________________________________________________

Movement in net funds in the period                         (732)              (670)           (42)

Net funds at the beginning of the period                   1,223              1,265          1,265
                                               ____________________________________________________

Net funds at the end of the period                           491                595          1,223
                                               ====================================================


Operating loss                                              (263)              (620)          (938)

Depreciation and amortisation                                 70                 43             94

Movement in debtors                                         (423)               245            204

Movement in creditors                                        (49)              (267)            37
                                               ____________________________________________________

Net cash outflow from operating activities                  (665)              (599)          (603)
                                               ====================================================


                     Notes to the Interim Results Statement
     
1.   The unaudited results above do not amount to statutory accounts within the 
     meaning of Section 240 of the Companies Act 1985. Statutory accounts for 
     the year ended 30 June 2004 have been filed with the Registrar of 
     Companies. The Auditors' Report on these accounts was unqualified.
     
2.   The Interim Statement for the six months ended 31 December 2004 is 
     unaudited and has been prepared on the basis of the accounting policies 
     set out in the audited report and accounts for the year ended 30 June 2004.
     
3.   Copies of the Interim Report are being sent to shareholders and are also 
     available at the 7-11 Melville Street Edinburgh EH3 7PE offices or from the
     Company's website at www.vebnet.com.
     
4.   Loss per share is based on the loss on ordinary activities after taxation 
     of £258,000 (2003: £610,000) and on the weighted average number of shares 
     in the period of 8,435,389 (2003: 7,509,203).
     
5.   The Directors do not propose the payment of an interim dividend.



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