RNS Number:7775D
CODA plc
13 September 2007
Embargoed until 7.00am 13 September 2007
CODA plc
INTERIM RESULTS FOR THE SIX MONTHS ENDED 30 JUNE 2007
CODA plc ("CODA") announces its unaudited results for the six months ended 30
June 2007. Quoted on the Alternative Investment Market (AIM) - stock code: CODA
- CODA has its headquarters in Chippenham and is a supplier of award-winning
Financial Management solutions that help organisations to streamline and
automate their finance processes (from accounting and procurement to reporting
and analysis) and to achieve better compliance and corporate governance.
Highlights for the period
Financial Highlights:
* Revenues increased by 8.1% to #28.1m (June 2006: #26.0m).
* Adjusted profit from operations before share based payment charges
increased by 9.3% on a like for like basis to #4.7m (2006: #4.3m). See note
7 for details.
* Profit from operations increased by 60.0% to #7.2m (June 2006: #4.5m),
including a gain on disposal of Methuen Park offices of #2.7m.
* Net cash at 30 June 2007 was #12.1m (31 December 2006: #1.8m; 30 June
2006: #9.5m).
* Interim dividend increased by 33.3% to 1.0p per share (June 2006:
0.75p per share) to shareholders registered on 28 September 2007.
* Basic earnings per share increased by 65.5% to 9.1p (June 2006: 5.5p).
Operational Highlights:
* Caterpillar rollout in line with expectations.
* Neon - CODA's largest ever product release - successfully launched
since the end of the period.
* Office opened in Ireland - now operating in 14 countries.
Graham Steinsberg, Executive Chairman of CODA, commented:
"CODA performed well during the first half of 2007, with revenues, profits and
cashflows all continuing to improve. The outlook for the remainder of 2007 and
beyond remains very positive."
FOR FURTHER INFORMATION PLEASE CONTACT:
Jane Curry, Investor Relations, CODA 01249 461313
Graham Steinsberg, Executive Chairman, CODA 01249 461313
Email: investorrelations@coda.com
Archie Berens, Pelham PR 020 7743 6679
Ian Dighe, Landsbanki Securities (UK) Limited 020 7426 7724
Simon Bridges, Landsbanki Securities (UK) Limited
CODA plc
INTERIM RESULTS FOR THE SIX MONTHS ENDED 30 JUNE 2007
CHAIRMAN'S STATEMENT
CODA has continued to make further good progress in the first half of 2007, with
both revenues and profits improving during the period.
Results
Revenue for the period was #28.1m (June 2006: #26.0), an increase of 8.1%.
Adjusted profit from operations before share based payment charges increased by
9.3% on a like for like basis to #4.7m (2006: #4.3m). See note 7 for details.
Profit from operations for the period rose 60.0% to #7.2m (June 2006: #4.5m)
including a gain on disposal of Methuen Park offices of #2.7m.
The Group continued to be strongly cash generative. Net cash at the end of the
period reached #12.1m (31 December 2006: #1.8m; 30 June 2006: #9.5m). This
included the proceeds from the disposal of the Methuen Park office which
generated #8.4m after costs.
The effective tax rate for the Group, excluding the profit on disposal of
Methuen Park, was 19.1% for the half year (2006, full year: 22.9%). This is
below the standard rate of corporation tax in the UK, due principally to the tax
credit system for expenditure on Research and Development. There is a further
reduction in this period which is due to additional capital allowances arising
on the office disposal and the closure of the related subsidiary company.
The interim dividend will increase by 33.3% to 1.0p per share (2006: 0.75p). The
dividend is payable on 12 October 2007 to shareholders on the register at 28
September 2007. The shares are expected to go ex-dividend on 26 September 2007.
Growth Strategy
CODA's focus is to grow profitably by providing solutions that meet the
ever-growing challenges of the CFO and everyone involved in Finance. This focus
gives CODA a unique position as the market's leading provider of "best of class"
international financial management systems.
The main cornerstones of the strategy underpinning the drive for profitable
growth are:
* The delivery of products which are relevant to the finance function of
today
* A continuous programme of enhancements to the products, providing value to
existing clients and attracting new ones
* Increasing the sales and marketing capabilities to secure new business
and expand CODA's presence in its client base
* Seeking out new markets and new routes to market to promote CODA's
offerings.
Throughout the period CODA has progressed in all these areas and the continued
improvement in revenues and profitability demonstrate the success of the
approach.
Product enhancement. The arrival of Neon - CODA's largest ever product release.
This release delivers considerable functional and technical enhancements,
providing CODA's clients with a tangible return for their annual maintenance
fees. It also includes new chargeable products, such as procurement and invoice
matching, which will be of value to existing and prospective clients alike.
Advanced orders for these products are encouraging and initial feedback from the
market is that they provide CODA with significant competitive advantage.
Sales and Marketing. The continued consolidation in the financial management
market has resulted in aggressive cost cutting by some competitors. This has
led to the availability in the market of some high quality individuals,
particularly in the area of sales and marketing. During the period, CODA has
taken advantage of this, re-inforcing its "go to market" capability. One such
example is in Asia Pacific where the availability of quality staff has enabled
CODA to create a strong platform for future expansion within the region.
Partners. CODA is continually searching for value added resellers as a means of
penetrating new markets. These partners typically have their own offerings and
are seeking a quality market leader in financial management systems to
complement these. One such example is RM plc. RM promotes a leading schools
administration system and it selected CODA to provide the financial management
system which supports these.
New markets. CODA constantly evaluates new markets seeking the potential to
grow its business. This includes new geographies - the office opening in
Ireland, for example, has seen an increase in business in that country; and new
market opportunities such as "Software as a Service", where clients make use of
web-delivered application software reducing the need for an on-site IT
capability. CODA will move into such markets where it sees the potential for its
solutions and expertise, with a manageable investment.
Executive Share Ownership Plan ("Plan")
At the time of CODA's demerger from CODASciSys plc in September 2006, it was
anticipated that the Plan would commence winding-up, and the majority of awards
would be exercised, by 31 December 2007. This would have resulted in the sale by
the Plan's Trust of 4.3m CODA shares and also in the majority of the Executive
Directors having no remaining share-based incentives in the company. The Board
considers that this would not be in shareholders' best interests and has
therefore agreed not to request that the Trustees terminate the Plan early. As a
result, the participants will be allowed to exercise their award at a time of
their choosing, subject to the Plan rules. In view of the extension of the Plan,
the Board has agreed to increase its loan to the Plan's Trust by #2.2m in order
to fully fund the Trust in respect of CODA participants. Shares held within the
Trust do not qualify for ordinary dividends and the exercise price of the awards
will continue to increase by a minimum of 1.5% per year.
OPERATIONAL REVIEW
The first half of 2007 has been a good one for CODA, with strong sales into new
and existing clients, an excellent pipeline and continued development of product
and routes to market.
New Clients
New clients include car rental company Avis Europe, who chose CODA's new Neon
release for its pan-European shared services operation. Further multi-national
implementations have been ordered by clothing manufacturer Damart and Telecoms
specialists Opera Interactive Technology Group. Other new clients include
Ofsted, the inspectorate for children and learners in England; Style Group UK
Limited, the uPVC windows and doors supplier; and Freightliner, the rail freight
company.
Geographic coverage
CODA has continued to develop its routes to market, and now has direct offices
in 14 countries. During the period it opened a new operation in Ireland, where
CODA already had a number of clients. In Asia-Pacific, a new regional manager
was recruited and the business was restructured to strengthen the sales and
marketing capability.
Neon
The Neon product development has proceeded well and the marketing launch began
with a series of client events in June. Early feedback from 'beta' clients and
prospects has been extremely promising. The release exploits the most advanced
technology on the market, positioning CODA well against its competition. Neon
includes a new collaborative procurement application whose independent design
allows CODA to enter the corporate e-procurement market and offer solutions to
clients using competitive finance systems.
Existing Clients
CODA sees client satisfaction as a key differentiator. Satisfied customers help
create further opportunities for CODA, both as ambassadors within their own
organisations, and by providing references for prospective clients. At a time
when many of its competitors appear to be reducing their investment in customer
support and product development, CODA is continuing to invest profitably in
these areas.
An audit conducted during the period showed that 97% of CODA's customers who
contacted its help desk for support said they received a "good to excellent"
service. More than 60% gave an "excellent" rating. The audit also confirmed
that 93% of all support calls are responded to by a CODA support consultant
within 30 minutes of the call being logged, with 50% of customer queries being
resolved on the day they are received.
This level of service engenders a high degree of loyalty within the customer
base.
Caterpillar
Following the contract win reported last year with Caterpillar, it is pleasing
to report that successful pilot sites have now been achieved in the US and
Middle East, with case studies being published on early sites such as Thompson
Tractor in Alabama. Further implementations are due to begin, on schedule, in
the US and Asia. In addition to the main contract, CODA has already secured
contracts for additional products and services with four of the dealers.
Consulting
CODA's consulting teams around the world have experienced rapidly growing demand
across the period, leading to high utilisation in most areas. Extended support
and custom development have seen particularly strong levels of growth.
BUSINESS COLLABORATOR
Business Collaborator continued to perform well in the period delivering strong
growth in both revenues and profits. Approximately 85% of its business is now
derived from recurring or more visible revenue streams such as maintenance,
hosting and professional services; with the latter rising sharply in the period
following contract awards by a number of major clients including Nationwide
Building Society, Balfour Beatty and United Utilities. A new release of the core
software (BC 5.1) in the period also created increased demand for training and
implementation services.
Within SEDEX (Supplier Ethical Data Exchange), the 'B' membership (sites
supplying a wholesaler or retailer) has grown by approximately 70% in the last
12 months and now stands at over 12,000 sites. This follows the addition to the
'A' membership of a number of high profile companies such as Whitbread, Early
Learning Centre and Mothercare. SEDEX have recently announced a programme of
system enhancements commissioning BC to undertake the work. These include
delivery of a multi-language version with initial translations in Simple
Chinese, French, Spanish and Arabic.
OUTLOOK
Prospects for the Group remain very positive. CODA has a strong sales pipeline
across its territories and the launch of Neon is expected to generate additional
revenues into 2008 and beyond. There exist many opportunities for growth across
CODA's markets, and the business will look to invest in those which maximise
returns for shareholders.
Consolidated Income Statement (unaudited)
for the six months ended 30 June 2007
Notes Six months to Six months to Year ended
30 June 30 June 31 December
2007 2006 2006
#000 #000 #000
Revenue 28,092 26,015 53,468
Cost of sales (11,600) (11,094) (21,794)
Gross profit 16,492 14,921 31,674
Selling and distribution costs (1,796) (1,418) (3,024)
Research and development expenses (3,874) (3,860) (7,453)
Administrative expenses (3,592) (5,143) (11,641)
(9,262) (10,421) (22,118)
Profit from operations 7,230 4,500 9,556
Adjusted profit from operations 4,670 4,605 10,752
Share based charges (133) (105) (203)
Payments from the Employee Share Trust - - (875)
Social Security charges relating to the trust - - (112)
payments
Gain on disposal of property, plant and equipment 2,693 - 486
Demerger costs - - (492)
Profit from operations 7,230 4,500 9,556
Financial income 183 348 314
Financial expenses (13) (2) (19)
Profit before taxation 7,400 4,846 9,851
Tax 4 (884) (829) (2,259)
Profit for the period attributable to equity 6,516 4,017 7,592
holders of the parent
Earnings per ordinary share 2
Basic 9.1p 5.5p 10.5p
Diluted 8.5p 5.2p 9.9p
Dividend per share 6
Interim 1.0p 0.75p
Final 1.875p
All profit for the period is attributable to equity holders of the parent and
derived from continuing operations
Consolidated Statement of Recognised Income and Expense (unaudited)
for the six months ended 30 June 2007
Six months to Six months to Year ended
30 June 30 June 31 December
2007 2006 2006
#000 #000 #000
Exchange differences on translation of foreign (12) (33) 2
operations
Tax on items taken directly to equity - - -
Net (loss) / income recognised directly in equity (12) (33) 2
Profit for the period 6,516 4,017 7,592
Total recognised income and expense for the 6,504 3,984 7,594
period attributable to equity holders of the
parent
Consolidated Balance Sheet (unaudited)
As at 30 June 2007
Notes 30 June 30 June 31 December 2006
2007 2006
#000 #000 #000
Non-current assets
Goodwill 39,427 39,867 39,576
Property, plant and equipment 6,922 12,873 12,541
Investments 864 - 864
Deferred tax assets 211 236 82
47,424 52,976 53,063
Current assets
Trade and other receivables 13,005 13,058 17,635
Cash and cash equivalents 12,088 9,499 1,802
25,093 22,557 19,437
Total assets 72,517 75,533 72,500
Current liabilities
Trade and other payables (6,795) (14,517) (9,050)
Current tax liabilities (1,504) (1,240) (1,666)
Deferred income 5 (15,277) (15,913) (18,074)
(23,576) (31,670) (28,790)
Net current assets / (liabilities) 1,517 (9,113) (9,353)
Non-current liabilities
Deferred tax liabilities (126) (45) (113)
Total liabilities (23,702) (31,715) (28,903)
Net assets 48,815 43,818 43,597
Equity attributable to the equity holders of the
parent
Share capital 19,243 19,243 19,243
Own Shares (4,194) - (4,112)
Merger reserve 28,008 26,655 28,008
Translation reserve (6) (29) 6
Retained earnings 5,764 (2,051) 452
Total equity 8 48,815 43,818 43,597
Consolidated Group Cash Flow Statement (unaudited)
for the six months to 30 June 2007
Six months to Six months to Year ended
30 June 30 June 31 December
2007 2006 2006
#000 #000 #000
Profit before tax 7,400 4,846 9,851
Adjustments for:
Depreciation of property, plant and equipment 486 651 1,219
Exchange losses / (gains) 7 (22) (110)
Share based payments charge 133 105 203
Gain on disposal of property, plant and equipment (2,693) - (486)
Financial income and expenses (170) (346) (295)
Trust distributions charged to profit from - - 875
operations
Operating cash flows before changes in working 5,163 5,234 11,257
capital
Decrease / (increase) in receivables 4,782 4,192 (393)
(Decrease) / increase in payables (4,535) (4,205) 1,216
Cash generated by operations 5,410 5,221 12,080
Tax paid (1,351) (258) (1,007)
Interest paid (13) (2) (19)
Net cashflow from operating activities 4,046 4,961 11,054
Investing activities
Interest received 183 348 314
Proceeds on disposal of property, plant and 8,382 - 908
equipment
Purchases of property, plant and equipment (560) (727) (1,400)
Acquisition of subsidiaries, net of cash acquired (324) (10) -
Net cash generated / (used) in investing activities 7,681 (389) (178)
Financing from activities
Dividends paid (1,337) - (2,038)
Payment to acquire investment in own shares (82) - (4,977)
Issue of shares by subsidiary company to former - - 4,000
parent company
Reorganisation of subsidiary companies prior to - - (2,647)
demerger
Repayment of loan to former parent company - - (8,459)
Net cash used in financing activities (1,419) - (14,121)
Net increase / (decrease) in cash and cash 10,308 4,572 (3,245)
equivalents
Cash and cash equivalents at start of period 1,802 4,927 4,927
Effect of exchange rate fluctuations on cash held (22) - 120
Cash and cash equivalents at end of period 12,088 9,499 1,802
Notes to the Unaudited Interim Report
1 Basis of Preparation of Interim Financial Information
This is the first period in which the consolidated interim financial statements
have been prepared in accordance with International Financial Reporting
Standards (IFRS). The interim financial statement was approved by the Board of
Directors on 12 September 2007 and is unaudited.
The financial information contained in this interim report does not constitute
statutory accounts as defined in section 240 of the Companies Act 1985. The
figures for the year ended 31 December 2006, as adjusted for IFRS, are
consistent with the transition statement of CODA plc for that year and is
available from the Company's registered office or at www.coda.com/investors. The
same location also contains a statement of the Company's new IFRS accounting
policies.
2 Earnings per Share
Basic and diluted earnings per share are calculated by dividing the profit for
the period attributable to equity shareholders by, respectively, the weighted
average number of shares (less own shares held) during the period of 71,987,458
ordinary 25p shares (30 June 2006: 72,472,608; 31 December 2006: 72,352,145) and
the weighted average number of ordinary shares (diluted) - including options
outstanding - during the period of 77,055,373 ordinary shares (30 June 2006:
76,973,727; 31 December 2006: 76,973,727).
This number of own shares held consist of the shares in the CODA No 1 Employees'
Share Trust together with the number of shares held in the SciSys No. 1
Employees' Share Trust specifically for CODA employees, totalling 4,986,269
ordinary shares (2006: 4,501,119).
In order to better demonstrate the performance of the Group, the adjusted
earnings per share calculation has been presented which uses an adjusted profit
for the period. The adjusted profit adds back (i) items which are typically
adjusted for by users of the accounts, and (ii) items relating to payments out
of the CODASciSys Employee Benefit Trust which did not give rise to a reduction
in shareholder assets. The calculations for basic, diluted, adjusted basic and
adjusted diluted earnings per share during the period are presented below.
Unaudited Unaudited Audited
Six months to Six months to Twelve months to
30 June 30 June 31 December
2007 2006 2006
#000 #000 #000
Profit for the period attributable to equity holders 6,516 4,017 7,592
Share based payment charges 133 105 203
Payments from the Employee Benefit Trust - - 875
Social Security charges relating to the Trust payments - - 112
Gain on disposal of property, plant and equipment (2,693) - (486)
Demerger costs - - 492
Adjusted profit for the period attributable to equity 3,956 4,122 8,788
holders
Basic earnings per share (pence) 9.1p 5.5p 10.5p
Diluted earnings per share (pence) 8.5p 5.2p 9.9p
Adjusted basic earnings per share (pence) 5.5p 5.7p 12.1p
Adjusted diluted earnings per share (pence) 5.1p 5.4p 11.4p
3 Segment Information
Segment information is presented in respect of the Group's business segments,
being the primary segmentation format based on the Group's management and
internal reporting structure. The secondary segment will be the Group's
geographical segments which will be disclosed in the year end financial
statements.
Segment results include items directly attributable to a segment as well as
those that can be allocated on a reasonable basis.
Revenue
Unaudited Unaudited Audited
Six months to Six months to Twelve months to
30 June 30 June 31 December
2007 2006 2006
#000 #000 #000
CODA 26,711 24,843 51,118
Business Collaborator 1,381 1,172 2,350
Total 28,092 26,015 53,468
Adjusted profit / (loss) from operations
Unaudited Unaudited Audited
Six months to Six months to Twelve months to
30 June 30 June 31 December
2007 2006 2006
#000 #000 #000
CODA 4,753 4,373 10,459
Business Collaborator 240 232 468
plc (323) - (175)
Total 4,670 4,605 10,752
Profits from operations
Unaudited Unaudited Audited
Six months to Six months to Twelve months to
30 June 30 June 31 December
2007 2006 2006
#000 #000 #000
CODA 4,657 4,270 9,382
Business Collaborator 236 230 436
Gain on disposal of property, plant and equipment 2,693 - 486
plc (356) - (748)
Total 7,230 4,500 9,556
Net assets
Unaudited Unaudited Audited
Six months to Six months to Twelve months to
30 June 30 June 31 December
2007 2006 2006
#000 #000 #000
CODA 48,503 44,105 41,813
Business Collaborator 187 (287) (83)
plc 125 - 1,867
Total 48,815 43,818 43,597
4 Taxation
Half year ended Half year ended Year ended
30 June 30 June 31 December
2007 2006 2006
Recognised in the income statement #000 #000 #000
Current tax expense
Current Year 1,203 1,134 2,338
Adjustments for prior years (7) (380) (386)
Deferred tax expense
Current year (306) 46 290
Adjustments for prior years (6) 29 17
Total income tax expense in the income statement 884 829 2,259
The charge for taxation for the six months ended 30 June 2007 reflects the
anticipated effective rate for the period applied to the profit before taxation
after elimination of the gain on disposal of property. Adjustment has also been
made to reflect additional balancing allowances arising as a result of that
disposal. The disposal of the property yielded no taxable profit due to the
combined effect of the base cost and indexation allowances.
5 Deferred Income
Unaudited Unaudited Audited
30 June 30 June 31 December
2007 2006 2006
#000 #000 #000
Gross licence fees in respect of deferred licences 4,516 3,736 4,258
Maintenance 12,211 12,305 14,709
Consultancy / other 450 517 575
17,177 16,558 19,542
Less amounts not invoiced in respect of gross licence fees (1,900) (645) (1,468)
Total 15,277 15,913 18,074
6 Interim Dividend
An interim dividend of 1.0p per share will be paid on 12 October 2007 to
shareholders on the register on 28 September 2007. The shares will go
ex-dividend on 26 September 2007.
7 Adjusted profit from operations
Unaudited Unaudited
Six months to Six months to
30 June 30 June
2007 2006
#000 #000
Profit for the period from operations 7,230 4,500
Share based payment charges 133 105
Gain on disposal of property, plant and equipment (2,693) -
Adjusted profit for the period from operations 4,670 4,605
Equivalent plc costs charged in 2007 but not in 2006 - (323)
Adjusted profit for the period from operations on a like for like basis 4,670 4,282
The 2007 adjusted profit from operations included plc operating costs of #0.3m
whereas in 2006 this was charged in the accounts of CODASciSys plc (now SciSys
plc). This adjustment seeks to show a comparison on a like for like basis by
assuming that an equivalent charge had been made in 2006.
8 Reconciliation of Shareholders' Equity
for the six months to 30 June 2007
Issued Own Shares Merger Translation Retained Total
share reserve reserve earnings equity
capital
#000 #000 #000 #000 #000 #000
Equity brought forward 1 January 2007 19,243 (4,112) 28,008 6 452 43,597
Profit for the period 6,516 6,516
Exchange differences on translation of (12) (12)
foreign operations
Increase in holding of own shares - (82) (82)
Share-based payment charges 133 133
Dividends paid (1,337) (1,337)
Equity carried forward 30 June 2007 19,243 (4,194) 28,008 (6) 5,764 48,815
Interim Report
The Interim Report will be posted to shareholders shortly and copies will be
available from CODA plc's Registered Office, Methuen Park, Chippenham,
Wiltshire, SN14 0GB.
This information is provided by RNS
The company news service from the London Stock Exchange
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