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Vebnet (Hldgs) PLC (VBT)

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Tuesday 16 September, 2008

Vebnet (Hldgs) PLC

Preliminary Results

RNS Number : 4948D
Vebnet Holdings PLC
17 September 2008
 



VEBNET (HOLDINGS) PLC

('Vebnet' or the 'Company')

PRELIMINARY RESULTS FOR THE YEAR ENDED 30 JUNE 2008

AND RECOMMENDED CASH OFFER


Vebnet (Holdings) plc (AIM: VBT), a leading provider of employee reward portal and benefit solutions, is pleased to announce its preliminary results for the year ended 30 June 2008. The results show substantial growth in both profits and in cash generation.


Highlights
 
·         Excellent trading results on a like for like basis:
-         85% increase in PBT to £0.91m (2007: £0.49m)
-         Total revenues up 14% to £6.0m (2007: £5.2m)
-         Operating profit up 90% to £0.79m (2007: £0.42m)
-         Tight cost control resulting in high operational gearing
-         EPS up 86% to 9.7p (2007: 5.2p)
 
·         Excellent visibility of earnings with a 27% increase in recurring licence and renewal revenue to £3.2m
 
·         Healthy balance sheet - 60% increase in the cash balance to £3.0m (2007: £1.9m)
 
·         Buoyant market conditions:
-         Significant increase in customers and employees using our FIX&FLEX® product
-         26 new client wins covering 48,000 employees
-         Two new long-term licence agreements with employee benefit consultants
 
·         Encouraging trading since the year-end:
-         Scheduled implementations for the current financial year are 25
-         New customers gained in pharmaceutical and telecoms sectors
 
Recommended cash offer:
-         It is also being announced today that the directors of Vebnet have reached agreement on the terms of a recommended cash offer to be made by Standard Life plc
-         Vebnet shareholders will receive 260 pence in cash for each share held which represents a premium of approximately 114% to the price of 121.5 pence per Vebnet share (being the closing price on 15 September 2008, the last business day prior to the date of this announcement)


For further information (including a copy of the full text of the Offer Announcement) please contact


Vebnet


Gerry O'Neill (CEO)

Stephen Thurlow (CFO)

Today:  0207 466 5000


Thereafter: 0131 270 5502 

Buchanan Communications

(PR adviser)


Diane Stewart, James Montgomerie,

Carrie Clement

0207 466 5000 or 0131 226 6150

  VEBNET (HOLDINGS) PLC

PRELIMINARY RESULTS FOR THE YEAR ENDED 30 JUNE 2008

CHAIRMAN'S STATEMENT


INTRODUCTION


I am pleased to report that, in the year ended 30 June 2008, Vebnet achieved significant increases in operating profit, PBT and cash generation over the corresponding period in 2007. This was underpinned by strong organic growth and a number of new contract wins during the year.


BUSINESS OVERVIEW


Founded in 2000, Vebnet (www.vebnet.com) is a leading provider of technology and managed services related to total reward and flexible benefit programmes. It launched its FIX&FLEX® product in 2002 and its shares were admitted to trading on AIM in 2003. 


Vebnet licences its technology either as an individual solution or as part of a full end-to-end service.  The full service covers reward consultancy, benefit scheme design, communications, brokering, technology, helpdesk and outsourced administration.


Research has proved that the provision of flexible benefit programmes drives employee retention and empowerment.  It is also a key component in managing the cost of employee benefit provision for employers.


FIX&FLEX® is sold on a both direct and an indirect basis.  Customers are both UK based and international.


FINANCIAL HIGHLIGHTS


Vebnet maintained its year-on-year growth with sizeable increases in operating profit, PBT and cash generation. PBT increased 85% to £0.91m (2007: £0.49m) and the year-end cash balance increased to £3.0m (2007: £1.9m). This represents a 60% rise over the corresponding period, on total revenues which increased 14% to £6.0m (2007: £5.2m). Operating profit increased 90% to £0.79m (2007: £0.42m). Basic earnings per share increased from 5.2p to 9.7p.


Revenues from Vebnet's core FIX&FLEX® product increased by 33% to £5.1m (2007: £3.8m). Recurring licence and renewal revenue at the year-end also increased from £2.5m pa to £3.2m pa, an increase of 27%.


The Group tightly managed its cost base during the year. Costs increased by only 8% (after the IFRS adjustment for capitalised development) to reflect the additional resources required to deliver the volume of new business won.  This demonstrates the operating leverage we have in our business model.


Vebnet has adopted International Financial Reporting Standards - IFRS - for the first time in these results. Prior year results/interims have been restated to the same basis. The main change in the financial information compared with that previously reported under UK GAAP was that, in accordance with IAS 38 Intangible Assets, certain product development costs are capitalised rather than expensed when all conditions of IAS 38 have been met. Previously under UK GAAP all development costs were expensed.


  OPERATIONAL OVERVIEW


The number of customer employees using FIX&FLEX® during the year increased by 20% through a combination of organic growth from existing customers and new contract wins. At 30 June 2008 this totalled in excess of 293,000 employees.


We specifically target firms with 1,000+ employees. This represents the majority of new client wins this year. During the year we gained 26 new clients, an increase of 23%, of which 25 clients (96%) were through our direct channel. 


This was pleasing to see as last year we invested in a series of marketing initiatives focused on increasing the number of direct clients. This channel also produces higher margins for Vebnet in software licence fees and additional services. 


Although our client base covers most sectors of the market, we are particularly strong in the telecommunications, professional services and financial services sectors. I am particularly pleased to report that during 2008, we have expanded our foothold in the pharmaceutical sector with several new client wins.


During the year we signed two new long-term licence agreements with employee benefit consultants. 


FRAMEWORK FOR GROWTH


Throughout the year we realigned our organisation around functional teams that are dedicated to the delivery of client services - Implementation, Helpdesk & Administration and Scheme Rollovers. Going forward, these teams will have their own KPIs aligned to Vebnet's overall business objectives.


As we grow the business, we have introduced a number of initiatives around key business processes to ensure even greater efficiency in delivery and quality across all clients. These initiatives, together with enhanced focus on developing the talents of our people, will be the foundation of our next phase of organic growth. 


MARKET POSITIONING


The market for flexible benefit technology solutions in the UK continues to grow and remains buoyant. We believe that Vebnet technology is used in a significant number of new flex schemes that go live each year in the UK - making us a leading managed services provider of employee benefits programmes to major global organisations. We combine creative thinking and innovative technology with service excellence, and work in close partnership with our clients to design, deliver and manage flexible, employee-focused reward solutions.


We also believe the market is evolving and larger clients are looking more for integrated reward and benefit portal solutions rather than basic off the shelf packages for flexible benefits and/or Total Reward Statements.


FIX&FLEX® is evolving to reflect this growing need and we believe that this will create more opportunities for Vebnet to integrate its technology with other complementary platforms and provide client solutions that are a combination of leading edge technology packaged with our high quality consulting and communications capability.




COMPETITION


We believe the characteristics that differentiate Vebnet from its competitors are:


  • FIX&FLEX®'s depth of functionality and ease of configuration

  • the quality of our clients and partners

  • our accumulated knowledge base and experience

  • the quality, energy and dedicated commitment of our people


Our main target market (1,000+ employees) is the one where our experience and technological edge make us an ideal solution provider.


PRODUCT DEVELOPMENT


FIX&FLEX® continues to evolve as a product and a number of key elements of functionality were added this year to support new client implementations. There have also been a number of architectural changes to FIX&FLEX® including the implementation of our strategic web and application server architecture (JBoss/ Linux).


ADDITIONAL SERVICES


We have continued to grow the bespoke consulting side of our business and now around 65% of new direct client wins include a consultancy component. For communications we have developed core product toolkits for clients and also offer a customised benefits communication service involving a variety of media - print, web and animation.


We continue to see growth in the adoption of helpdesk provision and outsourced administration services for new clients. In total we now have 19 clients for whom Vebnet provides helpdesk services and 28 clients (covering over 80,000 employees) for whom we provide a full range of outsourced administration services. 


SENIOR MANAGEMENT TEAM


During the year Vebnet strengthened its management team with the appointment of Richard Morgan as Head of Consulting to provide clients with strategic advice. He is a recognised industry expert with over 20 years experience in the employee benefits sector.


He joins Vebnet from KPMG where he has been driving new business and providing consulting services on employee benefits. Prior to that Richard was Head of Flexible Benefits for Europe at Watson Wyatt. 


CURRENT TRADING & OUTLOOK


Business in the first ten weeks of the new financial year has been encouraging. We now have 25 scheduled implementations for the current financial year and have gained new customers in pharmaceutical and telecoms sectors.


We have achieved much this year. Our core business has grown substantially over the course of the previous financial year, and we have performed strongly against all key measures - revenue, profit and cash generation. Our forward sales pipeline is strong, underpinning our FY09 revenue plan. We are seeing further momentum in Vebnet's core business and the Board remains confident that the company is well positioned to enjoy future revenue growth.


Derek Scott

Chairman                                15 September 2008

 

 

 

 

 

VEBNET (HOLDINGS) PLC
 
CONSOLIDATED INCOME STATEMENT
 
YEAR ENDED 30 JUNE 2008
 
 
 

 

Year ended 30 June 2008

 

Year ended 30 June 2007 (restated)

CONTINUING OPERATIONS
£000
£000
 
 
 
Revenue
6,001
5,245
 
 
 
Operating costs
 
 
Administrative expenses
(3,638)
(3,210)
Research & development
(1,087)
(1,268)
Sales & marketing
(484)
(351)
 
 
 
Operating profit before financing costs
792
416
 
 
 
Financial income
115
75
Financial expenses
-
(1)
 
 
 
Profit before taxation
907
490
 
 
 
Taxation
-
-
 
 
 
 
Profit for the year attributable to equity holders of the parent
 
 
907
 
 
490
 
 
 
Profit per ordinary share
 
 
Basic and diluted profit per share
9.7p
5.2p
 
 
STATEMENT OF TOTAL RECOGNISED INCOME AND EXPENSE
 
The Group has no recognised income and expense other than the results for the year as set out above.
 

 
VEBNET (HOLDINGS) PLC
 
CONSOLIDATED BALANCE SHEET
 
AT 30 JUNE 2008
 
 
 
At
30 June 2008
At
30 June 2007
(restated)
 
£000
£000
ASSETS
 
 
Property, plant and equipment
216
298
Intangible assets
1,015
846
 
 
 
Total non-current assets
1,231
1,144
 
 
 
Trade and other receivables
2,235
2,262
Cash and cash equivalents
3,029
1,894
 
 
 
Total current assets
5,264
4,156
 
 
 
Total assets
6,495
5,300
 
 
 
LIABILITIES
 
 
Trade and other payables
1,140
1,184
Deferred income
1,359
1,097
 
 
 
Total current liabilities
2,499
2,281
 
 
 
Total liabilities
2,499
2,281
 
 
 
Net assets
3,996
3,019
 
 
 
Equity
 
 
Called up share capital
9,324
9,324
Share premium account
639
639
Other reserve
(2,871)
(2,951)
Profit and loss account
(3,096)
(3,993)
 
 
 
Total Equity
3,996
3,019
 
 
 
 

 
 
VEBNET (HOLDINGS) PLC
 
CONSOLIDATED STATEMENT OF CASH FLOWS
 
YEAR ENDED 30 JUNE 2008
 
 
 
Year ended
30 June 2008
 

Year ended 30 June 2007(restated)

 
£’000
£’000
Cash flows from operating activities
 
 
 
 
 
Profit for the period
907
490
Adjustments for:
 
 
Depreciation
153
184
Amortisation of intangible assets
263
101
Financial income
(115)
(75)
Equity settled share based payment transactions
80
-
 
 
 
Operating profit before changes in working capital
1,288
700
 
 
 
Decrease/(increase) in trade and other receivables
27
(1,383)
Increase in trade and other payables
217
776
 
 
 
Cash generated by operations
1,532
93
 
 
 
Investing activities
 
 
Finance income received
115
89
Acquisition of property, plant and equipment and intangible assets
 
(512)
 
(393)
Reduction in deferred consideration
10
-
Acquisition of subsidiary undertaking
-
(469)
 
 
 
Cash used in investing activities
(387)
(773)
 
 
 
Cash flows from financing activities
 
 
Purchase of own shares
(60)
(90)
Sale of own shares
50
3
Repayment of finance lease liabilities
-
(11)
 
 
 
Net cash used in financing activities
(10)
(98)
 
 
 
Net increase/(decrease) in cash and cash equivalents
1,135
(778)
Cash and cash equivalents at start of year
1,894
2,672
 
 
 
Cash and cash equivalents at the end of year
3,029
1,894
 
 
 
 


 

VEBNET (HOLDINGS) PLC
 
Consolidated Statement of Changes in Equity
At 30 June 2008
 

 
Share Capital
Share Premium
Other Reserve
Profit and Loss Account
Total Equity
 
£000
£000
£000
£000
£000
 
 
 
 
 
 
Balance at 1 July 2006
9,178
580
(2,951)
(4,396)
2,411
 
 
 
 
 
 
Issue of ordinary shares
146
59
-
-
205
 
 
 
 
 
 
Purchase of own shares by employee trust
-
-
-
(90)
(90)
Sales of own shares by employee trust
-
-
-
3
3
 
 
 
 
 
 
Net movements recognised directly in equity
146
59
-
(87)
118
 
 
 
 
 
 
Profit for the year
-
-
-
490
490
 
 
 
 
 
 
Total recognised income for the year
146
59
-
403
608
 
 
 
 
 
 
Balance at 30 June 2007
9,324
639
(2,951)
(3,993)
3,019
 
 
 
 
 
 
Purchase of own shares by employee trust
-
-
-
(60)
(60)
Sales of own shares by employee trust
-
-
-
50
50
Equity settled share based payment transactions
-
-
80
-
80
 
 
 
 
 
 
Net movements recognised directly in equity
-
-
80
(10)
70
 
 
 
 
 
 
Profit for the year
-
-
-
907
907
 
 
 
 
 
 
Total changes in equity for the year
-
-
80
897
977
 
 
 
 
 
 
Balance at 30 June 2008
9,324
639
(2,871)
(3,096)
3,996
 
 
VEBNET (HOLDINGS) PLC
 
NOTES TO THE FINANCIAL STATEMENTS
 
YEAR ENDED 30 JUNE 2008
 
 
1       STATEMENT OF COMPLIANCE
 
The financial statements of Vebnet (Holdings) plc and its subsidiaries (the “Group”) for the year ended 30 June 2008 have been prepared in accordance with applicable law and International Financial Reporting Standards (IFRS) and their interpretations as adopted by the European Union (adopted IFRS) at 30 June 2008.
 
These are the first financial statements of the Group and Company prepared in accordance with adopted IFRS and IFRS 1 “First time adoption of IFRS” has been applied from the transition date of 1 July 2006. The adoption of IFRS has no material impact on the financial statements of the Group with the exception of IAS 38 relating to the capitalisation of certain product development costs. As a result the 30 June 2008 balance sheet includes an intangible asset in respect of these capitalised development costs with a net book value amounting to £490k (2007: £161k).  Further details relating to the initial adoption of IFRS are included in the Group’s interim statement for the period to 31 December 2007 which is included on the Group’s website.
 
2       BASIS OF MEASUREMENT
 
The financial statements of the Group for the year ended 30 June 2008 have been prepared on the going concern basis, under the historical cost basis except that liabilities for share base payment arrangements are measured at fair value.
 
3       SEGMENTAL REPORTING
 
The Group elected for early adoption of IFRS 8 Operating segments. The Group operates in the flexible benefits sector and does not report any segmental information other than revenue streams. As a result no additional business sector information is provided.
 
 

 
2008
£’000
2007
£’000
 
 
 
FIX&FLEX®
 
 
Direct channel
4,291
2,716
Licence channel
818
1,130
Total FIX&FLEX®
5,109
3,846
4th Contact
665
612
Other revenue
227
787
 
6,001
5,245
 


 

 
4       PRELIMINARY ANNOUNCEMENT
 
The summary accounts set out above do not constitute statutory accounts as defined by Section 240 of the UK Companies Act 1985. The consolidated balance sheet at 30 June 2008; the consolidated income statement, the consolidated cash flow statement and the consolidated statement of changes in equity for the year then ended have been extracted from the Group's audited statutory accounts for the year to 30 June 2008 upon which the auditor's opinion is unqualified, and did not contain statements under Section 237(2) or Section 237(3) of the Companies Act 1985. The statutory accounts for the year ended 30 June 2008 were approved by the Directors on 15 September 2008, but have not yet been delivered to the Registrar of Companies.
 
5       EARNINGS PER SHARE
 
Basic earnings per share
 
The basic earnings per share is based on the profit for the financial period of £907k (2007: £490k) and on the weighted average number of ordinary shares in issue during the year of 9,324,183 (2007: 9,287,780).
 
Diluted earnings per share
 
The diluted earnings per share is calculated as above except for the inclusion within the weighted average number of ordinary shares in issue of 55,443 (2007: 33,926) potential ordinary shares deriving from share options in issue during the year, calculated in accordance with IAS 33 “Earnings per share”.
 
6       POSTING AND AVAILABILITY OF ACCOUNTS
 
Copies of the Annual Accounts will be sent to shareholders together with notice for the AGM to be held in Edinburgh on 28 November 2008 and will be available at the Company's office, 5-9 Thistle Street, Edinburgh, EH2 1DF, or from the Company's website at www.vebnet.com.

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