TIDMTHF
RNS Number : 6316X
Thirdforce PLC
18 August 2009
ThirdForce plc ("ThirdForce" or the "Company")
Interim Statement
6 months ended 30 June 2009
DEPUTY CHAIRMAN'S STATEMENT
Introduction
On behalf of the board I am pleased to announce the interim results for
ThirdForce Plc for the six months ended 30th June 2009.
ThirdForce is a leading provider of e-learning courseware, testing and solutions
to the Corporate, Small and Medium Enterprise (SME), Government, Public Sector
and Education markets. The Company has an extensive portfolio of e-learning
content and solutions covering in excess of 2,200 courses. This portfolio covers
the varied training needs of the general business market as well as specialist
markets such as IT professionals, Hospitality & Leisure, Food Safety and
Residential & Domiciliary Care. The Company has offices in the UK, USA,
Ireland and Canada.
business overview
The e-learning sector has not escaped the impact of the current market downturn
and trading conditions in the first-half of 2009 reflect this. The board
believes that e-learning continues to offer superior value-for-money and a cost
effective way to up-skill employees and that the ThirdForce strategy of product
and market diversification positions it well for growth when companies move from
their current cautious and cash conservation mode.
In the UK we remain a leading player in the Hospitality and Care sectors. While
new customer acquisition is slower than we expected, customers are renewing
their contracts and remain committed to the ThirdForce solution for their
business.
There has been an unexpected erosion of our ECDL business in Ireland as a
consequence of the Irish Computer Society, owners of the ECDL brand in Ireland,
having made a unilateral move to take the ECDL business directly, with a
corresponding loss of revenue for ThirdForce. We are taking actions in the
second half to minimise the impact of this for the full year. In the USA sales
to new customers reflect the general market slowdown. We are encouraged that our
high customer satisfaction rating continues unabated and our US$ H1 2009
recognised revenue is at 97% of the same period last year.
ThirdForce enters the second half of the year in a strong cash position with
EUR7.13m on hand at 30 June 2009, compared to EUR4.49m at 30 June 2008. This strong
cash generation and collection is an excellent indicator that our customers are
happy with our products and that our products deliver to our customers' bottom
line, despite the tighter economy.
financial results
Revenue for the six months ended 30 June 2009 was EUR12.03m, 11% lower than the
EUR13.48m for the corresponding period in 2008 reflecting the challenging trading
environment of our corporate customers in particular. Gross profit for H1 2009
was 87%, 5 points higher than H1 2008 reflecting an improved mix of revenue
streams, a trend we expect to continue in the second half. The net effect of the
reduced revenue and the stronger gross profit percentage meant that operating
profit before charges for goodwill impairment, amortisation of acquisition
intangibles and share options was EUR0.52m, lower than the EUR0.80m profit achieved
in the six months ended 30 June 2008.
Non-cash charges for goodwill impairment, amortisation of acquisition
intangibles, and share options were EUR1.40m compared to EUR1.70m for the same six
months in 2008. The reduction primarily relates to a lower charge for goodwill
impairment because the charge in H1 08 reflected a sharp weakening of the
stgGBP:Euro exchange rate through those six months, as well as a maturing of the
ICT segment.
The loss absorbed, after all interest and taxation charges and credits, for the
six months to 30 June 2009 was EUR579k, 21% lower than the loss absorbed of EUR737k
in the corresponding prior year period.
Cash generated from operating activities through the first half of 2009 amounted
to EUR399k (H1 2008: EUR444k), and net cash inflows after all capital expenditure,
interest and taxation were EUR227k (H1 2008: EUR319k). This increased the group's
cash balances to EUR7.13m as mentioned above.
approach for the company
Today the Independent Directors of the Company released the following
announcement:
"On 30 March 2009, the Company announced that it had received an approach from
LearnVantage Limited ("LearnVantage"), which may or may not lead to an offer
being made for the Company. The approach incorporated a proposed share offer of
1 share in LearnVantage for every 1 share in ThirdForce or a cash offer at 8c
per share. LearnVantage is a special purpose company formed by Brendan
O'Sullivan (the Chief Executive Officer of the Company) and Pat McDonagh (the
Chairman of the Company) for the purpose of making the approach. On 29 April
2009, following a period of negotiation, the Independent Directors, comprising
Mike Newton, Carol Clark and Edwin Robinson, announced that an offer at 8c per
share would not be recommended.
Since then, discussions have been ongoing and the Independent Directors have
received a revised proposal from LearnVantage which may or may not lead to an
offer for the entire issued and to be issued share capital of the Company on the
following basis:
+---------------------------------+--------------------------------+
| (A) For each ThirdForce share | 1 LearnVantage share |
+---------------------------------+--------------------------------+
OR
+---------------------------------+--------------------------------+
| (B) For every 4 ThirdForce | 3 LearnVantage shares and |
| shares | EUR0.12 in cash |
+---------------------------------+--------------------------------+
OR
+---------------------------------+--------------------------------+
| (C) For each ThirdForce share | EUR0.105 in cash |
+---------------------------------+--------------------------------+
The Independent Directors have indicated that they are in principle supportive
of the revised possible cash offer in (C) above, which represents a premium of
approx. 31% over the initial approach price of 8c.
The revised possible offer is subject to a number of conditions, including the
approval of a prospectus of LearnVantage by the Financial Regulator, and there
can be no certainty as to whether an offer will ultimately be made on the terms
described above or at all.
This announcement has been made following consultation with LearnVantage. A
further announcement in relation to the possible offer will be made if and when
appropriate.
This announcement does not constitute an announcement of a firm intention to
make an offer under Rule 2.5 of the Takeover Rules. "
Outlook
ThirdForce continues this year to expand its valuable portfolio and to invest
heavily in product and market development. In the latter part of H1 2009, the
Company made a strategic investment in a Talent Management software solution. We
recognise that many customers wish to streamline not just training but the
management and development of their staff. Their goal is to maximise in-house
talent to benefit the business and to provide fulfilling career development for
individual members of staff. ThirdForce intends to bring a new product range to
the market at the end of 2009 that will offer our global customers a new and
compelling way to address their needs.
This new product line will widen the Company's market as well as appeal to our
current customer base. This investment is in keeping with our previously
disclosed strategy of staying close to our customers to identify how we can
enhance our technology-enabled learning solutions to meet their business needs.
The board anticipates that the negative business sentiment will continue to be a
feature of the market for at least the rest of 2009 which, as in the first half
of the year, creates uncertainty for the group's revenue and profit levels for
the six months ended 31 December 2009 and beyond. We intend to continue making
decisions that are in the best long-term interest of the business and as such
our key points of focus will be to maximise the Company's operating profits in
the second half of the year while ensuring that the Company is well positioned
for a market recovery.
Mike Newton
Deputy Chairman
18 August 2009
For more information, please contact:
Brendan O'Sullivan
ThirdForce plc
Tel. + 353 1 289 1955
Clive Carver
FinnCap
Tel. + 44 207 600 1658
Consolidated Unaudited Statement of Comprehensive Income
Six month period ended 30 June 2009
+-------------------+--------+---------+---------+----------+
| | Note | 6 | 6 | Year |
| | | month | month | ended |
| | | period | period | 31 |
| | | ended | ended | December |
| | | 30 | 30 | 2008 |
| | | June | June | Audited |
| | | 2009 | 2008 | |
+-------------------+--------+---------+---------+----------+
| | | EUR'000 | EUR'000 | EUR'000 |
+-------------------+--------+---------+---------+----------+
| | | | | |
+-------------------+--------+---------+---------+----------+
| Revenue | | 12,030 | 13,484 | 26,941 |
+-------------------+--------+---------+---------+----------+
| Cost | | (1,575) | (2,422) | (4,669) |
| of | | | | |
| sales | | | | |
+-------------------+--------+---------+---------+----------+
| Gross | | 10,455 | 11,062 | 22,272 |
| profit | | | | |
+-------------------+--------+---------+---------+----------+
| Distribution | | (4,470) | (4,145) | (8,707) |
| costs | | | | |
+-------------------+--------+---------+---------+----------+
| Administrative | | (6,871) | (7,814) | (16,233) |
| expenses | | | | |
+-------------------+--------+---------+---------+----------+
| Operating | | (886) | (897) | (2,668) |
| loss | | | | |
+-------------------+--------+---------+---------+----------+
| | | | | |
+-------------------+--------+---------+---------+----------+
| Finance | | 95 | 35 | 76 |
| income | | | | |
+-------------------+--------+---------+---------+----------+
| Finance | | (18) | (42) | (84) |
| costs | | | | |
+-------------------+--------+---------+---------+----------+
| Finance | | 77 | (7) | (8) |
| income/(costs) | | | | |
| - net | | | | |
+-------------------+--------+---------+---------+----------+
| | | | | |
+-------------------+--------+---------+---------+----------+
| Loss | | (809) | (904) | (2,676) |
| before | | | | |
| income | | | | |
| tax | | | | |
+-------------------+--------+---------+---------+----------+
| | | | | |
+-------------------+--------+---------+---------+----------+
| Income | | 230 | 167 | 360 |
| tax | | | | |
| credit | | | | |
+-------------------+--------+---------+---------+----------+
| Loss | | (579) | (737) | (2,316) |
| for | | | | |
| the | | | | |
| period | | | | |
| attributable | | | | |
| to equity | | | | |
| holders of | | | | |
| the Company | | | | |
+-------------------+--------+---------+---------+----------+
| | | | | |
+-------------------+--------+---------+---------+----------+
| Other | | | | |
| comprehensive | | | | |
| income/(expense): | | | | |
| | | | | |
+-------------------+--------+---------+---------+----------+
| Currency | | 726 | (1,086) | (1,064) |
| translation | | | | |
| adjustment | | | | |
| | | | | |
+-------------------+--------+---------+---------+----------+
| Other | | 726 | (1,086) | (1,064) |
| comprehensive | | | | |
| income/(expense) | | | | |
| | | | | |
+-------------------+--------+---------+---------+----------+
| | | | | |
+-------------------+--------+---------+---------+----------+
| Total | | 147 | (1,823) | (3,380) |
| comprehensive | | | | |
| income/(expense) | | | | |
| attributable to | | | | |
| equity holders | | | | |
| of the Company | | | | |
+-------------------+--------+---------+---------+----------+
| | | | | |
+-------------------+--------+---------+---------+----------+
| Loss per | | | | |
| share | | | | |
| attributable | | | | |
| to the | | | | |
| equity | | | | |
| holders of | | | | |
| the Company | | | | |
| during the | | | | |
| period | | | | |
| (expressed | | | | |
| in cent per | | | | |
| share) | | | | |
| | | | | |
+-------------------+--------+---------+---------+----------+
| - | 5 | (0.23c) | (0.29c) | (0.91c) |
| Basic | | | | |
| | | | | |
+-------------------+--------+---------+---------+----------+
| - | 5 | n/a | n/a | n/a |
| Diluted | | | | |
+-------------------+--------+---------+---------+----------+
Consolidated Unaudited Statement of Financial Position
As at 30 June 2009
+-----------------------+--------+----------+----------+----------+
| | Note | At 30 | At 30 | At 31 |
| | | June | June | December |
| | | 2009 | 2008 | 2008 |
| | | | | Audited |
+-----------------------+--------+----------+----------+----------+
| ASSETS | | | EUR'000 | EUR'000 |
| | | EUR'000 | | |
+-----------------------+--------+----------+----------+----------+
| Non-current | | | | |
| assets | | | | |
+-----------------------+--------+----------+----------+----------+
| Property, | | 664 | 621 | 617 |
| plant and | | | | |
| equipment | | | | |
+-----------------------+--------+----------+----------+----------+
| Intangible | | 22,057 | 24,773 | 22,721 |
| assets | | | | |
+-----------------------+--------+----------+----------+----------+
| | | 22,721 | 25,394 | 23,338 |
+-----------------------+--------+----------+----------+----------+
| Current | | | | |
| assets | | | | |
+-----------------------+--------+----------+----------+----------+
| Inventories | | 22 | - | 1 |
| | | | | |
+-----------------------+--------+----------+----------+----------+
| Trade | | 4,589 | 7,109 | 5,338 |
| and | | | | |
| other | | | | |
| receivables | | | | |
+-----------------------+--------+----------+----------+----------+
| Cash | | 7,128 | 4,486 | 6,901 |
| and | | | | |
| cash | | | | |
| equivalents | | | | |
+-----------------------+--------+----------+----------+----------+
| | | 11,739 | 11,595 | 12,240 |
+-----------------------+--------+----------+----------+----------+
| | | | | |
+-----------------------+--------+----------+----------+----------+
| Total | | 34,460 | 36,989 | 35,578 |
| assets | | | | |
+-----------------------+--------+----------+----------+----------+
| | | | | |
+-----------------------+--------+----------+----------+----------+
| EQUITY | | | | |
+-----------------------+--------+----------+----------+----------+
| Capital | | | | |
| and | | | | |
| reserves | | | | |
| attributable | | | | |
| to equity | | | | |
| holders of | | | | |
| the Company | | | | |
+-----------------------+--------+----------+----------+----------+
| Ordinary | 6 | 32,422 | 31,764 | 31,764 |
| shares | | | | |
+-----------------------+--------+----------+----------+----------+
| Share | 6 | 16,067 | 15,725 | 15,725 |
| premium | | | | |
+-----------------------+--------+----------+----------+----------+
| Currency | | (2,080) | (2,828) | (2,806) |
| translation | | | | |
| adjustment | | | | |
+-----------------------+--------+----------+----------+----------+
| Other | | 2,898 | 3,673 | 3,807 |
| reserves | | | | |
+-----------------------+--------+----------+----------+----------+
| Retained | | (27,670) | (25,512) | (27,091) |
| losses | | | | |
+-----------------------+--------+----------+----------+----------+
| Total | | 21,637 | 22,822 | 21,399 |
| equity | | | | |
+-----------------------+--------+----------+----------+----------+
| | | | | |
+-----------------------+--------+----------+----------+----------+
| LIABILITIES | | | | |
+-----------------------+--------+----------+----------+----------+
| Non-current | | | | |
| liabilities | | | | |
+-----------------------+--------+----------+----------+----------+
| Deferred | | 557 | 556 | 390 |
| revenue | | | | |
+-----------------------+--------+----------+----------+----------+
| Deferred | | 2,025 | 2,324 | 2,267 |
| income | | | | |
| tax | | | | |
| liabilities | | | | |
+-----------------------+--------+----------+----------+----------+
| Borrowings | | 234 | 234 | 234 |
+-----------------------+--------+----------+----------+----------+
| | | 2,816 | 3,114 | 2,891 |
+-----------------------+--------+----------+----------+----------+
| Current | | | | |
| liabilities | | | | |
+-----------------------+--------+----------+----------+----------+
| Deferred | | 6,616 | 6,261 | 7,568 |
| revenue | | | | |
+-----------------------+--------+----------+----------+----------+
| Trade | | 3,133 | 4,604 | 3,513 |
| and | | | | |
| other | | | | |
| payables | | | | |
+-----------------------+--------+----------+----------+----------+
| Current | | 258 | 175 | 206 |
| income | | | | |
| tax | | | | |
| liabilities | | | | |
+-----------------------+--------+----------+----------+----------+
| Obligations | | - | 13 | 1 |
| under | | | | |
| finance | | | | |
| leases | | | | |
+-----------------------+--------+----------+----------+----------+
| | | 10,007 | 11,053 | 11,288 |
+-----------------------+--------+----------+----------+----------+
| | | | | |
+-----------------------+--------+----------+----------+----------+
| Total | | 12,823 | 14,167 | 14,179 |
| liabilities | | | | |
+-----------------------+--------+----------+----------+----------+
| | | | | |
+-----------------------+--------+----------+----------+----------+
| Total | | 34,460 | 36,989 | 35,578 |
| equity | | | | |
| and | | | | |
| liabilities | | | | |
+-----------------------+--------+----------+----------+----------+
Consolidated Unaudited Statement of Changes in Equity
Six month period ended 30 June 2009
+-------------------+--------+---------+---------+-------------+----------+-----------+---------+
| | Note | Share | Share | Currency | Other | Retained | Total |
| | | Capital | Premium | translation | Reserves | (Losses)/ | |
| | | | | adjustment | | Earnings | |
+-------------------+--------+---------+---------+-------------+----------+-----------+---------+
| | | EUR'000 | EUR'000 | EUR'000 | EUR'000 | EUR'000 | EUR'000 |
+-------------------+--------+---------+---------+-------------+----------+-----------+---------+
| Balance | | 31,764 | 15,725 | (1,742) | 3,482 | (24,775) | 24,454 |
| at 1 | | | | | | | |
| January | | | | | | | |
| 2008 | | | | | | | |
+-------------------+--------+---------+---------+-------------+----------+-----------+---------+
| Total | | - | - | (1,086) | - | (737) | (1,823) |
| comprehensive | | | | | | | |
| expense for | | | | | | | |
| the period | | | | | | | |
+-------------------+--------+---------+---------+-------------+----------+-----------+---------+
| Increase | | - | - | - | 32 | - | 32 |
| in | | | | | | | |
| reserve | | | | | | | |
| for | | | | | | | |
| shares | | | | | | | |
| to be | | | | | | | |
| issued | | | | | | | |
+-------------------+--------+---------+---------+-------------+----------+-----------+---------+
| Employee | | | | | | | |
| share | | | | | | | |
| options: | | | | | | | |
+-------------------+--------+---------+---------+-------------+----------+-----------+---------+
| - | | - | - | - | 159 | - | 159 |
| value | | | | | | | |
| of | | | | | | | |
| employee | | | | | | | |
| services | | | | | | | |
+-------------------+--------+---------+---------+-------------+----------+-----------+---------+
| Balance | | 31,764 | 15,725 | (2,828) | 3,673 | (25,512) | 22,822 |
| at 30 | | | | | | | |
| June | | | | | | | |
| 2008 | | | | | | | |
+-------------------+--------+---------+---------+-------------+----------+-----------+---------+
| Total | | - | - | 22 | - | (1,579) | (1,557) |
| comprehensive | | | | | | | |
| expense for | | | | | | | |
| the period | | | | | | | |
+-------------------+--------+---------+---------+-------------+----------+-----------+---------+
| Increase | | - | - | - | 31 | - | 31 |
| in | | | | | | | |
| reserve | | | | | | | |
| for | | | | | | | |
| shares | | | | | | | |
| to be | | | | | | | |
| issued | | | | | | | |
+-------------------+--------+---------+---------+-------------+----------+-----------+---------+
| Employee | | | | | | | |
| share | | | | | | | |
| options: | | | | | | | |
+-------------------+--------+---------+---------+-------------+----------+-----------+---------+
| - | | - | - | - | 103 | - | 103 |
| value | | | | | | | |
| of | | | | | | | |
| employee services | | | | | | | |
+-------------------+--------+---------+---------+-------------+----------+-----------+---------+
| Balance | | 31,764 | 15,725 | (2,806) | 3,807 | (27,091) | 21,399 |
| at 31 | | | | | | | |
| December | | | | | | | |
| 2008 | | | | | | | |
+-------------------+--------+---------+---------+-------------+----------+-----------+---------+
| Total | | - | - | 726 | - | (579) | 147 |
| comprehensive | | | | | | | |
| income for | | | | | | | |
| the period | | | | | | | |
+-------------------+--------+---------+---------+-------------+----------+-----------+---------+
| Issue | 6 | 658 | 342 | - | - | - | 1,000 |
| of | | | | | | | |
| ordinary | | | | | | | |
| shares | | | | | | | |
+-------------------+--------+---------+---------+-------------+----------+-----------+---------+
| Decrease | | - | - | - | (985) | - | (985) |
| in | | | | | | | |
| reserve | | | | | | | |
| for | | | | | | | |
| shares | | | | | | | |
| to be | | | | | | | |
| issued | | | | | | | |
+-------------------+--------+---------+---------+-------------+----------+-----------+---------+
| Employee | | | | | | | |
| share | | | | | | | |
| options: | | | | | | | |
+-------------------+--------+---------+---------+-------------+----------+-----------+---------+
| - | | - | - | - | 76 | - | 76 |
| value | | | | | | | |
| of | | | | | | | |
| employee | | | | | | | |
| services | | | | | | | |
+-------------------+--------+---------+---------+-------------+----------+-----------+---------+
| Balance | | 32,422 | 16,067 | (2,080) | 2,898 | (27,670) | 21,637 |
| at 30 | | | | | | | |
| June | | | | | | | |
| 2009 | | | | | | | |
+-------------------+--------+---------+---------+-------------+----------+-----------+---------+
Consolidated Unaudited Statement of Cash Flows
Six month period ended 30 June 2009
+----------------------+--------+--------+--------+----------+
| | Note | 6 | 6 | Year |
| | | month | month | ended |
| | | period | period | 31 |
| | | ended | ended | December |
| | | 30 | 30 | 2008 |
| | | June | June | Audited |
| | | 2009 | 2008 | |
+----------------------+--------+--------+--------+----------+
| | | EUR'000 | EUR'000 | EUR'000 |
+----------------------+--------+--------+--------+----------+
| Cash | | | | |
| flows | | | | |
| from | | | | |
| operating | | | | |
| activities | | | | |
| | | | | |
+----------------------+--------+--------+--------+----------+
| Cash | 7 | 399 | 444 | 2,963 |
| generated | | | | |
| from operations | | | | |
+----------------------+--------+--------+--------+----------+
| Interest | | 51 | 35 | 73 |
| received | | | | |
+----------------------+--------+--------+--------+----------+
| Income | | 8 | - | (32) |
| tax | | | | |
| received/(paid) | | | | |
+----------------------+--------+--------+--------+----------+
| Net | | 458 | 479 | 3,004 |
| cash | | | | |
| generated | | | | |
| from | | | | |
| operating | | | | |
| activities | | | | |
+----------------------+--------+--------+--------+----------+
| activities | | | | |
+----------------------+--------+--------+--------+----------+
| | | | | |
+----------------------+--------+--------+--------+----------+
| Cash | | | | |
| flows | | | | |
| from | | | | |
| investing | | | | |
| activities | | | | |
+----------------------+--------+--------+--------+----------+
| Purchases | | (199) | (100) | (150) |
| of | | | | |
| property, | | | | |
| plant and | | | | |
| equipment | | | | |
| (PPE) | | | | |
+----------------------+--------+--------+--------+----------+
| Proceeds | | - | - | 11 |
| on | | | | |
| disposal | | | | |
| of | | | | |
| property, | | | | |
| plant and | | | | |
| equipment | | | | |
+----------------------+--------+--------+--------+----------+
| Purchases | | (31) | (30) | (89) |
| of | | | | |
| intangible | | | | |
| assets | | | | |
+----------------------+--------+--------+--------+----------+
| Net | | (230) | (130) | (228) |
| cash | | | | |
| used | | | | |
| in | | | | |
| investing | | | | |
| activities | | | | |
+----------------------+--------+--------+--------+----------+
| | | | | |
+----------------------+--------+--------+--------+----------+
| Cash | | | | |
| flows | | | | |
| from | | | | |
| financing | | | | |
| activities | | | | |
+----------------------+--------+--------+--------+----------+
| Repayments | | (1) | (30) | (42) |
| of lease | | | | |
| obligations | | | | |
+----------------------+--------+--------+--------+----------+
| Net | | (1) | (30) | (42) |
| cash | | | | |
| used | | | | |
| by | | | | |
| financing | | | | |
| activities | | | | |
+----------------------+--------+--------+--------+----------+
| | | | | |
+----------------------+--------+--------+--------+----------+
| Net | | 227 | 319 | 2,734 |
| increase | | | | |
| in cash, | | | | |
| cash | | | | |
| equivalents | | | | |
| and bank | | | | |
| overdrafts | | | | |
+----------------------+--------+--------+--------+----------+
| Cash, | | 6,901 | 4,167 | 4,167 |
| cash | | | | |
| equivalents | | | | |
| and bank | | | | |
| overdrafts | | | | |
| at | | | | |
| beginning | | | | |
| of period | | | | |
+----------------------+--------+--------+--------+----------+
| Cash, | | 7,128 | 4,486 | 6,901 |
| cash | | | | |
| equivalents | | | | |
| and bank | | | | |
| overdrafts | | | | |
| at end of | | | | |
| period | | | | |
+----------------------+--------+--------+--------+----------+
Notes to the Consolidated Interim Financial Information
1. General information
The Company is a public limited liability company incorporated and domiciled in
Ireland, and is listed on IEX in Ireland and AIM in the United Kingdom. The
group has offices in the US, the UK, Ireland, and Canada, and it provides
e-learning and assessment products and services to hundreds of
organisations worldwide. The group offers a wide portfolio of solutions in the
areas of ICT literacy skills, IT Professional, Skills for Life, Compliance, Job
Skills, Project Management and Implementation Support. Further information
relating to the group's business is set out in the Deputy Chairman's Statement.
This consolidated interim financial information was approved for issue by the
board of directors on 18 August 2009.
2. Basis of preparation
This consolidated interim financial information for the six months ended 30 June
2009 has been prepared using the same accounting policies and methods of
computation as for the year ended 31 December 2008. For a more complete
discussion of our significant accounting policies and other information, this
report should be read in conjunction with our 2008 Annual Report and Note 3
below.
This report is not prepared in accordance with IAS 34 which is currently not
mandatory. This interim statement has not been audited but has been reviewed by
the company's auditors PricewaterhouseCoopers. This consolidated interim
financial information does not comprise statutory accounts within the meaning of
Section 19 of the Companies (Amendment) Act 1986. The statutory accounts for the
financial year ended 31 December 2008 were approved by the Board of Directors on
6 April 2009 and contained an unqualified audit report and will be filed
with the Companies Registration Office before 30 September 2009.
3. Changes in accounting policies
Except as described below, the accounting policies adopted are consistent with
those of the annual financial statements for the year ended 31 December 2008, as
described in the annual financial statements for the year ended 31 December
2008.
The group has adopted the following new standards and amendments to standards
for the first time for the financial year beginning 1 January 2009:
* IAS 1 (revised), 'Presentation of financial statements'. This revised standard
prohibits the presentation of items of income and expenses (that is 'non-owner
changes in equity') in the statement of changes in equity, requiring 'non-owner
changes in equity' to be presented separately from owner changes in equity. All
'non-owner changes in equity' are required to be shown in a performance
statement.
Entities can choose whether to present one performance statement (the statement
of comprehensive income) or two statements (the income statement and statement
of comprehensive income).
The group has elected to present one statement, the statement of comprehensive
income. The consolidated interim financial information has been prepared under
the revised presentation requirements. In prior years the group presented an
income statement with the currency translation adjustment being shown as part of
the statement of changes in equity. This currency translation adjustment is now
presented within the statement of comprehensive income.
* IFRS 8, 'Operating segments'. IFRS 8 replaces IAS 14, 'Segment reporting'. It
requires a 'management approach' under which segment information is presented on
the same basis as that used for internal reporting purposes. The group is
currently assessing the impact of this standard and segment information will be
presented in accordance with this standard in the consolidated financial
statements for the year ended 31 December 2009.
The group has considered all other amendments to current standards and
interpretations together with all other new standards and interpretations and do
not consider that these will have a material impact on the consolidated
financial statements for the year ended 31 December 2009. The annual report for
2009 will provide a brief outline of the likely impact on future financial
statements of relevant IFRSs which are not yet effective and have not been early
adopted.
4. Critical accounting estimates and judgements
The preparation of financial information requires the use of certain critical
accounting estimates and assumptions that affect the reported amounts of assets
and liabilities at the balance sheet dates and the reported amounts of revenues
and expenses during the reporting period. Although these estimates are based on
management's best knowledge of the amount, event or actions, actual results
ultimately may differ from those estimates. The areas involving a higher degree
of judgement or complexity, or areas where assumptions and estimates are
significant to the financial information, are set out in the following
paragraphs.
Estimates and judgements are continually evaluated and are based on historical
experience and other factors, including expectations of future events that are
believed to be reasonable under the circumstances.
The group makes estimates and assumptions concerning the future. The resulting
accounting estimates will, by definition, rarely equal the related actual
results. The estimates and assumptions that have a significant risk of causing a
material adjustment to the carrying amounts of assets and liabilities within the
next financial year are outlined below.
(a) Estimated impairment of goodwill
The group had capitalised goodwill of EUR16.4 million at 30 June 2009. The group
tests bi-annually whether goodwill has suffered any impairment, in accordance
with the group's accounting policy. The recoverable amounts of cash-generating
units are determined based on value-in-use calculations, and these calculations
require the use of estimates.
An impairment charge of EUR580,000 was recognised in the period, primarily as a
result of a reduction in expected cash-flows as a consequence of the impact on
demand for the group's products as a result of the global economic downturn. If
estimated future revenues had been 10% lower than management's estimates at 30
June 2009, the group would have recognised a further impairment of goodwill of
EUR6,626,000, principally relating to goodwill that arose on the acquisition of
MindLeaders, Inc in June 2007, since that accounts for 76% of the total carrying
value of goodwill at 30 June 2009.
If the estimated pre-tax discount rate applied to the discounted cash flows had
been 20% higher than management estimates (for example, 12% instead of 10%), the
group would have recognised a further impairment of goodwill of EUR2,293,000.
(b) Establishing lives for amortisation purposes of intangible assets
The group has separately identified intangible assets of EUR5.5 million at 30 June
2009. Prior to the acquisition in June 2007 of MindLeaders, Inc, the group had
modest levels of software intangible assets that are amortised. With that
acquisition the group has significant levels of new categories of intangible
assets that are also amortised. The amortisation charge is dependent on the
estimated lives allocated to each type of intangible asset.
The directors regularly review these asset lives and change them as necessary to
reflect current thinking on remaining lives and the expected pattern of
consumption of the future economic benefits embodied in the asset. Changes in
asset lives can have a significant impact on amortisation charges for the
period.
If the estimated lives, allocated to each type of amortised intangible asset,
were increased/decreased by 1 year, the amortisation charges for the period
would have decreased/increased by EUR114,000/EUR171,000.
(c) Determination of functional currency
The group is headquartered in Ireland and has significant operations in both the
US and the UK and accordingly principally operates in three different
currencies. Reflecting its economic operating environment the group has
determined that the Euro is the Company's functional currency for the
preparation of the consolidated financial statements.
5. Loss per share
(a) Basic
Basic loss per share is calculated by dividing the loss attributable to equity
holders of the Company by the weighted average number of ordinary shares in
issue during the period.
+--------------+-------------+-------------+--------------+
| | 6 | 6 | Year |
| | month | month | ended |
| | period | period | 31 |
| | ended | ended | December |
| | 30 | 30 | 2008 |
| | June | June | Audited |
| | 2009 | 2008 | |
+--------------+-------------+-------------+--------------+
| Loss | (EUR579,000) | (EUR737,000) | (EUR2,316,000) |
| attributable | | | |
| to equity | | | |
| holders of | | | |
| the Company | | | |
+--------------+-------------+-------------+--------------+
| Weighted | 257,136,322 | 254,110,922 | 254,110,922 |
| average | | | |
| number | | | |
| of | | | |
| ordinary | | | |
| shares | | | |
| in issue | | | |
+--------------+-------------+-------------+--------------+
| Basic | (0.23c) | (0.29c) | (0.91c) |
| loss | | | |
| per | | | |
| share | | | |
| (cent | | | |
| per | | | |
| share) | | | |
+--------------+-------------+-------------+--------------+
(b)Diluted
Diluted earnings per share is calculated by adjusting the weighted average
number of ordinary shares outstanding to assume conversion of all dilutive
potential ordinary shares.
At 30 June 2008 and 31 December 2008 the Company had two categories of dilutive
potential ordinary shares and they were share options and deferred share
consideration relating to the June 2007 acquisition of MindLeaders, Inc. The
deferred consideration shares were issued on 20 March 2009 (see Note 6), so that
at 30 June 2009 the Company had one category of dilutive potential ordinary
shares and that was share options.
A calculation of diluted earnings per share for the periods ended 30 June 2009,
30 June 2008 and 31 December 2008 is not presented above because the inclusion
of any relevant share options or deferred share consideration is anti-dilutive
for the period.
6. Share Capital & Share Premium
+----------+-------------+----------+---------+--------+
| Issued | Number | Ordinary | Share | Total |
| and | of | shares | Premium | EUR'000 |
| paid | shares | EUR'000 | EUR'000 | |
| up | | | | |
+----------+-------------+----------+---------+--------+
| | | | | |
+----------+-------------+----------+---------+--------+
| At 1 | 254,110,922 | 31,764 | 15,725 | 47,489 |
| January, | | | | |
| 30 June | | | | |
| & 31 | | | | |
| December | | | | |
| 2008 | | | | |
+----------+-------------+----------+---------+--------+
| Issued | 5,265,369 | 658 | 342 | 1,000 |
| during | | | | |
| the | | | | |
| period | | | | |
+----------+-------------+----------+---------+--------+
| At 30 | 259,376,291 | 32,422 | 16,067 | 48,489 |
| June | | | | |
| 2009 | | | | |
+----------+-------------+----------+---------+--------+
Under the terms of the acquisition of MindLeaders, Inc. in June 2007, deferred
consideration in the form of cash and shares, each of EUR1,000,418, was payable 21
months after completion of the deal, if no claims had been filed under the
agreement. No such claims were filed, and the cash amount, that was paid to
escrow on closing, was paid out to the vendors on 18 March 2009, and the shares
were issued to the vendors and admitted to trading on AIM and IEX on 20 March
2009.
7. Cash generated from operations
+------------------------------+---------+--------+----------+
| | 6 | 6 | Year |
| | month | month | ended |
| | period | period | 31 |
| | ended | ended | December |
| | 30 | 30 | 2008 |
| | June | June | |
| | 2009 | 2008 | |
+------------------------------+---------+--------+----------+
| | EUR'000 | EUR'000 | EUR'000 |
| | | | Audited |
+------------------------------+---------+--------+----------+
| Loss | (809) | (904) | (2,676) |
| before | | | |
| income | | | |
| tax | | | |
+------------------------------+---------+--------+----------+
| Adjustments | | | |
| for: | | | |
+------------------------------+---------+--------+----------+
| - | 149 | 227 | 277 |
| Depreciation | | | |
+------------------------------+---------+--------+----------+
| - | 768 | 684 | 1,425 |
| Amortisation | | | |
+------------------------------+---------+--------+----------+
| - | (77) | 7 | 8 |
| Finance | | | |
| (income)/costs | | | |
| - net | | | |
+------------------------------+---------+--------+----------+
| - | 580 | 893 | 3,087 |
| Goodwill | | | |
| impairment | | | |
+------------------------------+---------+--------+----------+
| - | - | - | (7) |
| Loss | | | |
| on | | | |
| disposal | | | |
| of | | | |
| property, | | | |
| plant and | | | |
| equipment | | | |
+------------------------------+---------+--------+----------+
| - | 76 | 159 | 262 |
| Share-based | | | |
| payments | | | |
| charge | | | |
+------------------------------+---------+--------+----------+
| - | 103 | 80 | (523) |
| Other | | | |
| non-cash | | | |
| movements | | | |
+------------------------------+---------+--------+----------+
| Changes | | | |
| in | | | |
| working | | | |
| capital | | | |
| (excluding | | | |
| the | | | |
| effects of | | | |
| exchange | | | |
| differences | | | |
| on | | | |
| consolidation): | | | |
+------------------------------+---------+--------+----------+
| - | (21) | 41 | 40 |
| Inventories | | | |
+------------------------------+---------+--------+----------+
| - | 749 | (171) | 1,600 |
| Trade | | | |
| and | | | |
| other | | | |
| receivables | | | |
+------------------------------+---------+--------+----------+
| - | (1,119) | (572) | (530) |
| Trade | | | |
| and | | | |
| other | | | |
| payables | | | |
+------------------------------+---------+--------+----------+
| Cash | 399 | 444 | 2,963 |
| generated | | | |
| from operations | | | |
+------------------------------+---------+--------+----------+
8. Analysis of net funds
+----------------------+---------+--------+-------------+---------+---------+
| | 30 June | Cash | 31 December | Cash | 30 June |
| | 2008 | Flows | 2008 | Flows | 2009 |
+----------------------+---------+--------+-------------+---------+---------+
| | EUR'000 | EUR'000 | EUR'000 | EUR'000 | EUR'000 |
+----------------------+---------+--------+-------------+---------+---------+
| | | | | | |
+----------------------+---------+--------+-------------+---------+---------+
| Cash, cash | 4,486 | 2,415 | 6,901 | 227 | 7,128 |
| equivalents and bank | | | | | |
| overdrafts | | | | | |
+----------------------+---------+--------+-------------+---------+---------+
| | 4,486 | 2,415 | 6,901 | 227 | 7,128 |
+----------------------+---------+--------+-------------+---------+---------+
| | | | | | |
+----------------------+---------+--------+-------------+---------+---------+
| Preference shares | (234) | - | (234) | - | (234) |
+----------------------+---------+--------+-------------+---------+---------+
| Obligations under | (13) | 12 | (1) | 1 | - |
| finance leases | | | | | |
+----------------------+---------+--------+-------------+---------+---------+
| | (247) | 12 | (235) | 1 | (234) |
+----------------------+---------+--------+-------------+---------+---------+
| Net funds | 4,239 | 2,427 | 6,666 | 228 | 6,894 |
+----------------------+---------+--------+-------------+---------+---------+
PricewaterhouseCoopers report on the Profit Estimate
Set out below is the full text of a report on the Profit Estimate from
PricewaterhouseCoopers:
"The Directors
Board of Directors
ThirdForce plc
No. 1 Deansgrange Business Park
Blackrock
Co Dublin
Goodbody Corporate Finance
Ballsbridge Park
Ballsbridge
Dublin 4
18 August 2009
Dear Sirs
In accordance with the provisions of Rule 28.6 of the Irish Takeover Panel Act
1997 and the Irish Takeover Rules 2007 (the "Takeover Rules"), the interim
financial information for the six months ended 30 June 2009 issued by Thirdforce
plc (the "Company") and its subsidiaries (together the "Group") on 18 August
2009 is deemed to be a profit estimate ("the Profit Estimate"). We report on the
Profit Estimate. This report is required by Rule 28.3(a) of the Takeover Rules,
and is given for the purpose of complying with that rule and for no other
purpose.
Accordingly, we assume no responsibility in respect of this report to
LearnVantage Limited (the "Offeror") or any person connected to, or acting in
concert with, the Offeror or to any other person who is seeking or may in future
seek to acquire control of the Company (an "Alternative Offeror") or to any
other person connected to, or acting in concert with, an Alternative Offeror.
Responsibilities
It is the responsibility of the directors of the Company to prepare the Profit
Estimate in accordance with the requirements of the Takeover Rules. In preparing
the Profit Estimate the directors of the Company are responsible for correcting
errors that they have identified which may have arisen in the unaudited
financial results and unaudited management accounts used as a basis of
preparation for the Profit Estimate.
It is our responsibility to form an opinion as required by the Takeover Rules as
to the proper compilation of the Profit Estimate and to report that opinion to
you.
Save for any responsibility which we may have to those persons to whom this
report is expressly addressed, to the fullest extent permitted by law we do not
assume any responsibility and will not accept any liability to any other person
for any loss suffered by any such other person as a result of, arising out of,
or in connection with this report or our statement, required by and given solely
for the purposes of complying with Rule 28.4 of the Takeover Rules, consenting
to our report's inclusion in the offer related document expected to be issued
by the Offeror.
Basis of preparation of the Profit Estimate
The Profit Estimate has been prepared on the basis set out in Note 2 to the
interim financial information and comprises the unaudited interim financial
information for the six months ended 30 June 2009. The Profit Estimate is
required to be presented on a basis consistent with the accounting policies of
the Group.
Basis of opinion
We conducted our work in accordance with the Standards for Investment Reporting
issued by the Auditing Practices Board in the United Kingdom and Ireland and
published by the Institute of Chartered Accountants in Ireland. Our work
included evaluating the basis on which the historical financial information for
the six months ended 30 June 2009 included in the Profit Estimate has been
prepared and considering whether the Profit Estimate has been accurately
computed using that information and whether the basis of accounting used is
consistent with the accounting policies of the Group.
We planned and performed our work so as to obtain the information and
explanations we considered necessary in order to provide us with reasonable
assurance that the Profit Estimate has been properly compiled on the basis
stated. However, the Profit Estimate has not been audited.
Opinion
In our opinion the Profit Estimate has been properly compiled on the basis
stated and the basis of accounting used is consistent with the accounting
policies of the Group.
Yours faithfully
PricewaterhouseCoopers
Chartered Accountants
Dublin"
Goodbody Corporate Finance report on the Profit Estimate
Set out below is the full text of a report on the Profit Estimate from Goodbody
Corporate Finance, the company's financial advisers:
"The Directors
ThirdForce plc
No. 1 Deansgrange Business Park
Blackrock
Co. Dublin
18 August 2009
Dear Sirs
We have discussed the interim financial information of ThirdForce plc (the
"Company") and its subsidiaries for the six-month period ended 30 June 2009 (the
"Profit Estimate") and the basis on which it has been prepared with you as
directors of the Company.
We have also discussed the accounting policies and basis of calculation for the
Profit Estimate with PricewaterhouseCoopers, ThirdForce plc's auditor, and have
considered their letter of today's date addressed to yourselves and ourselves on
this matter.
You have confirmed to us that all information material to the Profit Estimate
has been disclosed to us. We have relied on the accuracy and completeness of all
such information and have assumed such accuracy and completeness for the purpose
of rendering this letter.
On the basis of the foregoing, we consider that the Profit Estimate, for which
you as directors of the Company are solely responsible, has been compiled with
due care and consideration.
This letter is provided to you solely in connection with Rule 28.3 (a) of the
Irish Takeover Panel Act, 1997, Takeover Rules, 2007 and for no other purpose.
To the fullest extent permitted by law, we accept no responsibility in respect
of this letter to any persons other than to you solely in your capacity as
directors of the Company.
Yours faithfully,
Goodbody Corporate Finance"
This information is provided by RNS
The company news service from the London Stock Exchange
END
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