Final Results
CENTROM GROUP plc
Preliminary unaudited results for year ended 31 December 2007
Centrom Group plc (AIM:CET), a supplier of a broad range of
innovative IT solutions with an emphasis on sales to the healthcare
and financial services sectors, announces preliminary results for the
year ended 31 December 2007.
Key points
* Revenues stable at �3,533,540 (2006: �3,553,988), despite
elimination of non profitable hardware sales after Q 2, 2006
* Gross margin improved to 37.4% (2006 30.3%)
* Operating profit before impairment of �196,227 (2006: loss
�320,026)
* Charge for impairment of R&D costs �529,123 (2006: reorganisation
�116,690)
* Loss before tax �358,859 (2006: loss �486,588)
Commenting, Mike Boseley, CEO, said:
"Sales have remained essentially unchanged in a challenging market,
but existing customers are of high quality and the improved net cash
flow from operations is a measure of the success of management's
efforts to control costs and improve margins.
The Company has sustained its welcome improvement in performance.
Profits from operating activities - before impairment - have been
achieved. The priority remains to increase revenue, both by organic
growth and pursuing suitable strategic opportunities, a number of
which are under active consideration."
For further information please contact:
Gerald Malone, Chairman 07711 085611
Mike Boseley, CEO 01252 365000
Geoff Nash/Rose Herbert 020 7600 1658
JM Finn Capital Markets (Nominated adviser and joint
broker)
John Webb/Robert Luetchford 020 7490 3788
Marshall Securities Limited (Joint broker)
CENTROM GROUP plc
Preliminary unaudited results for year ended 31 December 2007
Chairman and CEO Statement
We are pleased to report the results for the year ended 31 December
2007. During the year the business continued the improved margin and
cash generation reported at the interim stage. We have continued to
benefit from partnering leading organisations such as Open Text,
Kofax, Bull and Canon.
Centrom is an independent information technology and consultancy
company specialising in the provision of managed services and
solutions for information management, risk management and records and
case management.
Financial results
These are the first full year results of the Group to be stated under
International Financial Reporting Standards (IFRS) and the
comparatives have been restated on this basis. The principal impact
of IFRS on the results has been in relation to:
Goodwill which was previously amortised resulting in a
charge to the Income Statement of �369,993 in the year ended 31
December 2006 is now subject to impairment reviews. No provision for
impairment has been made in the period;
A provision for holiday pay which resulted in a charge to
the Income Statement of �14,938 in the year ended 31 December 2006.
Previously no accrual was made for holiday pay.
The effect of these adjustments on the results, income statement,
balance sheet and equity of the Group are set out in the notes to the
financial statements.
The Group achieved an operating profit before impairment of �196,227
for the year (2006: loss �320,026) on revenues of �3,533,540 (2006:
�3,553,988). Revenues in the first half of 2006 included an element
of hardware sales at unprofitable margins, which activity was
discontinued following our re-organisation. Timing of major
consulting projects continues to be an issue. After taking into
account the charge for impairment of development expenditure relating
to "Imagis" technology, the operating loss was �332,896 compared with
�436,716 for 2006, after charging reorganisation costs of �116,690.
Gross margin continued the improvement reported at the half year,
reaching 37.4% for the year (2006: 30.3%). Administrative costs
remain under tight control - �1,126,946 - a significant reduction
from �1,399,642 in 2006.
Business Development
The focus for 2007 has been on retaining partners and customers,
enhancing the quality and range of Centrom's services by becoming
expert in the deployment of cutting edge technology and seeking new
business in combination with "blue chip" partners. Together with City
IQ, a respected financial services IT consultancy, Centrom is in a
strong position to address the financial services sector.
Our Professional Services Team has built a highly skilled consultancy
around Open Text technology for several business sectors and we have
established a new Open Source Practice based on the increasingly
popular Alfresco product set and the range of products supported by
another partner, SUN Microsystems.
Kofax and our consultants have developed solutions for unstructured
data and this technology has enabled us to design a solution for
Medical Records, now being launched in the NHS and the Private Health
sectors.
Technical Consulting has established relationships to support our
business plans for virtualisation and rationalisation, storage back
and recovery and networking and security. The Managed Services Team
is now working closely with two data centre partners to attract new
customers.
We continue to develop solutions for our business partners, such as
BULL and Canon and discussions are under way to bring some of our
partners together to offer new solutions to their client bases,
enhancing their offering by integrating Centrom's skills and
knowledge.
Prospects
Over the last two years we have established a clear focus and built
up a network of partnerships. Users face increasing need to store,
organise and access data against significant supply constraints. By
working with major partners, both technology based and industry
specialist, we are able to offer innovative solutions to a variety of
clients. Demand for data management is increasing and more onerous
regulation requires the application of specialist skills, such as
those provided by Centrom.
We have examined a number of opportunities to develop the Group
through both organic and strategic development and continue to do so.
Gerald Malone Mike Boseley
Chairman
CEO
14 April 2008
CENTROM GROUP plc
Group Income Statement
for the year ended 31 December
2007
Year ended 31 Year ended 31
Notes December 2007 December 2006
� �
Revenue 3 3,533,540 3,553,988
Cost of sales (2,210,367) (2,475,372)
Gross profit 1,323,173 1,078,616
.
Administrative costs (1,126,946) (1,399,642)
Other operating income - 1,000
Operating profit/(loss) before
impairment 196,227 (320,026)
Reorganisation costs - (116,690)
Impairment of development
expenditure (529,123) -
Operating loss (332,896) (436,716)
Finance revenue 55 3,341
Finance costs (26,018) (53,213)
Loss from continuing operations (358,859) (486,588)
UK income tax credit/(expense) 4 12,811 (23,356)
Loss for the year (346,048) (509,944)
Minority interests - 138
Loss for the year attributable to
members of the parent company (346,048) (509,806)
Loss per share
Basic (pence) 6 (0.16) (0.25)
Diluted (pence) 6 (0.16) (0.25)
The company has no recognised
gains or losses other than the
loss for the above two financial
years.
CENTROM GROUP plc
Consolidated Balance Sheet
as at 31 December 2007
31 December 2007 31 December 2006
� �
Assets
Non-current assets
Goodwill and intangible assets 7,230,312 7,751,537
Property plant and equipment 70,567 117,370
Deferred tax asset 139,579 371,053
7,440,458 8,239,960
Current assets
Trade and other receivables 1,025,390 1,036,367
Deferred tax asset 244,285 -
Cash and cash equivalents 3,216 1,605
1,272,891 1,037,972
Total assets 8,713,349 9,277,932
Equity and liabilities
Equity attributable to equity
holders of the parent
Share capital 2,145,334 2,087,834
Share premium 6,462,415 6,462,415
Retained earnings (1,820,475) (1,474,427)
6,787,274 7,075,822
Minority interest 141,179 141,179
Total equity 6,928,453 7,217,001
Liabilities
Non-current liabilities
Long-term borrowings 62,054 80,667
Current liabilities
Short-term provisions 133,858 146,931
Trade and other payables 791,571 962,883
Current portion of long term
borrowings 22,000 22,000
Bank overdrafts 89,870 89,034
Current tax payable 52,493 64,699
Deferred income 633,050 694,717
1,722,842 1,980,264
Total liabilities 1,784,896 2,060,931
Total equity and liabilities 8,713,349 9,277,932
CENTROM GROUP plc
Group Cash Flow Statement
for the year ended 31 December
2007
Year ended 31 Year ended 31
December 2007 December 2006
� �
Cash flows from operating
activities
Loss from operations (332,896) (436,716)
Impairment of development
expenditure 529,123 -
Depreciation of plant and
equipment 70,492 108,959
Loss on disposal of fixed
assets - 525
Operating cash flows before
movement in working capital 266,719 (327,232)
Decrease in inventories - 16,600
Decrease/(increase) in
receivables 10,977 (460,327)
(Decrease) in payables (238,258) (188,117)
Cash generated/(utilised by)
operations 39,438 (959,076)
Interest paid (26,018) (53,213)
Tax paid - (4,268)
Net cash generated/(utilised)
by operating activities 13,420 (1,016,557)
Cash flows from investing
activities
Interest received 55 3,341
Payments to acquire property,
plant and equipment (23,689) (17,417)
Payments to acquire intangible
assets (7,898) (19,810)
Net cash utilised by investing
activities (31,532) (33,886)
Cash flows from financing
activities
Issue of ordinary share capital 57,500 300,000
New borrowings - 260,000
Repayment of borrowings (38,613) (12,590)
Increase in bank overdraft 836 11,649
Net cash generated by financing
activities 19,723 559,059
Net increase/(decrease) in cash
and cash equivalents 1,611 (491,384)
Opening cash and cash
equivalents 1,605 492,989
Closing cash and cash
equivalents 3,216 1,605
Centrom
Group plc
Group Statement of
Changes in Equity
As at 31
December
2007
Share Profit and Equity
Share premium loss shareholder's Minority Total
capital account account funds interests equity
� � � � � �
At 1
January
2006 as
previously
stated 1,787,834 6,462,415 (958,318) 7,291,931 141,317 7,433,248
Prior
period
effect of
adoption
of IFRS - - (6,303) (6,303) - (6,303)
At 1
January
2006 as
restated 1,787,834 6,462,415 (964,621) 7,285,628 141,317 7,426,945
Issue of
share
capital 300,000 - - 300,000 - 300,000
Loss for
the year
to 31
December
2006 - - (509,806) (509,806) (138) (509,944)
At 31
December
2006 2,087,834 6,462,415 (1,474,427) 7,075,822 141,179 7,217,001
Issue of
share
capital 57,500 - - 57,500 - 57,500
Loss for
the year
to 31
December
2007 - - (346,048) (346,048) - (346,048)
At 31
December
2007 2,145,334 6,462,415 (1,820,475) 6,787,274 141,179 6,928,453
Centrom Group plc
Notes to the financial statements
1. Basis of preparation
This financial information does not constitute statutory accounts for
the purposes of Section 240 of the Companies Act 1985 for the Group
for the year ended 31 December 2007. The figures for the year ended
31 December 2007 have been extracted from the draft financial
statements and the directors believe that the final audited accounts
will not change from this announcement. The statutory accounts for
the year ended 31 December 2007 will be delivered to the Registrar of
Companies in England and Wales in due course and will also be sent to
shareholders.
The statutory accounts for the year ended 31 December 2006, which
were prepared under UK GAAP contained an unqualified auditors' report
and have been filed with the Registrar of Companies.
The disclosures required by IFRS 1 concerning the transition from UK
GAAP to IFRS, including a reconciled opening balance sheet at 1
January 2006, a comparative balance sheet at 31 December 2006, and an
IFRS reconciliation of the Group's results for the year ended 31
December 2006, were included in the interim statement for the six
months ended 30 June 2007 and will be included in the statutory
accounts of the Company for the year ended 31 December 2007. The
reconciling items from UK GAAP to IFRS, including adjustments
relating to amortisation of goodwill, have resulted in an increase in
net assets of �355,055.
2. Basis of accounting
The financial information has been prepared in accordance with
International Financial Reporting Standards (IFRSs).
The financial information has been prepared on the historical cost
basis. The principal accounting policies were set out in the interim
statement for the six months ended 30 June 2007 and will be included
in the statutory accounts for the year ended 31 December 2007.
3. Revenue and Segment reporting
The revenue and loss before tax are attributable to the one principal
activity of the Group. The directors consider that the revenue is all
one continuing segment being the support of high performance IT
network solutions, all originating in the UK.
Business by geographical market
2007 2006
� �
United
Kingdom 3,533,540 3,553,988
4. Taxation
Income tax credit/(expense) in the income
statement
2007 2006
� �
Current tax (expense)
Current period - (17,699)
Adjustments for prior periods - (41,532)
- (59,231)
UK deferred tax credit/(expense)
Origination and reversal of temporary
differences (25,124) 158,774
Adjustment in respect of prior years 47,940
Effect of change in tax rate (10,005) (122,899)
Total deferred tax credit 12,811 35,875
Total income tax credit/(expense)
charged in the income statement 12,811 (23,356)
Taxation reconciliation
Loss before taxation (358,859) (486,588)
Taxation at standard UK corporation tax rate 19.75% 19.00%
Loss on ordinary activities multiplied by the
standard rate of corporation tax (70,874) (92,452)
Adjustment in respect of prior years (113) 41,532
Non-deductable expenses 2,234 40,333
Depreciation in excess of capital allowances 13,922 22,939
Deduction of expenses eliminated on
consolidation (494) -
Impairment of intangible assets 104,501 -
Unrelieved tax losses - 46,879
Relieved tax losses (49,176) -
- 59,231
5. Dividends
No dividend is proposed.
6. Loss per ordinary share
The calculation of basic loss per share has been calculated on the
net basis on the loss on ordinary activities after taxation of
�346,048 (2006 - (�509,806) loss) using the average number of 1p
ordinary shares in issue of 211,556,003 (2006 - 198,180,660).
2007 2006
� �
Basic earnings/(loss) per
share pence (0.16) (0.25)
The diluted loss per share is based on a loss for the year of
�346,048 (2006 - (�509,806) loss) using the average number of 1p
ordinary shares of 211,556,003 (2006 - 201,180,660) after adjusting
for diluting options.
Diluted loss per share
pence (0.16) (0.25)
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