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DJ Netalogue Technologies Plc Final Results year ended 31 March 2014

 
TIDMNTLP 
 
NETALOGUE TECHNOLOGIES PLC - Final Results 
Year ended 31 March 2014 
 
The information set out below is extracted from the Annual Report and Audited 
Financial Statements of Netalogue Technologies Plc. 
 
 
Chairman's Statement 
 
Dear Shareholder, 
 
In my first half statement I highlighted how the Company has grown sales of the 
Netalogue B2B Ecommerce Platform both directly and indirectly, via VAR 
partnerships. 
 
The year has been a transformational one as we continued to invest in the 
platform, implement our largest ever contract, win new direct clients, recruit 
new VAR (Value-Added Reseller) partners and continue our strategically 
important exit from the hosting business. Our VAR channel partnerships are 
focussed on the SAP and Sage ERP sectors. Sales have grown and the year-end was 
marked with a number of wins which will contribute both financially and 
strategically to the current financial year. 
 
Key highlights 
 
  * GBP 950,000 sales, an increase in revenue of 16% compared with the prior 
    year. 
 
  * EBITDA has increased by GBP27,000 to GBP88,000. 
 
  * New business signed in diverse sectors including office products 
    wholesaling, automotive, pharmaceuticals, catering, electronics, safety 
    products, electrical lighting and leisure distribution. 
 
  * Partnerships with leading distributors of SAP and Sage products are 
    delivering growth and future opportunities. 
 
  * GBP 133,000 capitalised investment in respect of up front developments 
    related to a large five year project worth over GBP 2,000,000. 
 
  * Investment in Netalogue B2B Ecommerce Platform in areas including B2B 
    customer self-service and mobile ecommerce. 
 
  * Costs grew as we increased head count and invested in VAR partner growth 
    programmes. 
 
  * Net assets of GBP 619,000 with strong cash balances and no borrowings. 
 
Comments on the results 
 
Sales have increased by 16% notwithstanding a single-quarter delay with a key 
project co-incident with the company's strategic exit from its hosting business 
which has improved gross margins but affected revenues. Sales revenues via 
reseller channels have continued to establish themselves and the company has 
invested significant effort setting up infrastructure with which to support 
these relationships which we believe will deliver scalable growth and success 
for both Netalogue and the VAR partners for the years to come. 
 
Throughout the year the company also won business across a wide range of 
industry sectors, further demonstrating the wide application of the Netalogue 
B2B Ecommerce Platform. Key IP investments enable business suppliers to 
integrate directly with the purchasing systems used by their largest blue chip 
customers and Netalogue's B2B online "self-service" features provide 
organisations with the ability to offer their customers convenient online 
access to their real-time order histories, copy invoices, statements and bill 
payments. 
 
Dividend 
 
No dividend is proposed to be paid. 
 
Developments 
 
A major project with European office products wholesaler Spicers went live 
during the period, further demonstrating Netalogue's capabilities to fit the 
requirements of complex B2B organisations who have large scale enterprise 
requirements to deliver hundreds of B2B ecommerce web stores and portals as a 
private cloud solution. Netalogue capitalised GBP 133,000 in up-front set-up 
costs for this project. 
 
Chairman's Statement (continued) 
 
Our key development emphasis in the current financial year will relate 
predominantly to the SAP and high end Sage markets. Our technical ability in 
achieving deepest integration with Sage X3 ERP we believe will be particularly 
important this year, as Sage markets and grows this product globally. 
 
Principal risks and uncertainties 
 
The principal risks that the company faces are those faced by business 
generally, a still uncertain economic outlook despite some positive 
indications. 
 
The directors consider however, that the group's software IP value and growth 
potential will increase alongside the growing global recognition that B2B 
ecommerce is markedly different in complexity to more generic ecommerce 
requirements, and that the world-wide shift to on-line offers the group an 
ever-increasing pool of opportunity. 
 
The outlook 
 
The economic climate, whilst still hesitant in some sectors and lengthening 
some decision cycles, has not discouraged our clients' investments in key 
strategies, of which ecommerce is a major one. Our investment in the VAR 
channel is paying off and these alliances have opened up the opportunity for 
our partners' clients to benefit from our world-beating IP. 
 
I look forward to updating you in due course. 
 
Non-Executive Directors 
 
Throughout the year the company's Board has included a non-executive director 
whose appointments do not combine more than one executive directorship and four 
non-executive directorships or eight non-executive directorships. Thus the 
Board believes it complied with ISDX Growth Market rule 69 and its guidance 
note. 
 
Geoff Henderson 
Chairman 
Netalogue Technologies plc 
www.netalogue.com 
Netalogue B2B Ecommerce Software 
 
 
Consolidated profit and loss account 
for the year ended 31 March 2014 
 
                                                             2014          2013 
                                                             GBP000          GBP000 
 
Turnover                                                      950           817 
 
Cost of sales                                                (60)          (97) 
 
Gross profit                                                  890           720 
 
Administrative expenses                                     (861)         (695) 
 
Operating profit before depreciation and                       88            61 
amortisation 
 
Depreciation of tangible assets                              (14)          (18) 
 
Amortisation of intangible assets                            (45)          (18) 
 
Operating profit                                               29            25 
 
Interest payable and similar charges                          (1)           (2) 
 
Profit on ordinary activities before                           28            23 
taxation 
 
Tax on profit on ordinary activities                          (5)           (6) 
 
Profit for the financial year                                  23            17 
 
Profit per ordinary share expressed in                      0.047         0.035 
pence per share - basic 
 
Profit per ordinary share expressed in                      0.044         0.033 
pence per share - diluted 
 
 
Consolidated balance sheet 
at 31 March 2014 
 
                                                              2014         2013 
                                                              GBP000         GBP000 
 
Fixed assets 
 
Intangible                                                     232          144 
 
Tangible                                                        42           51 
 
                                                               274          195 
 
Current assets 
 
Debtors                                                        234          323 
 
Cash at bank and in hand                                       288          304 
 
                                                               522          627 
 
Creditors: amounts falling due within one year               (170)        (218) 
 
 
Net current assets                                             352          409 
 
Total assets less current liabilities                          626          604 
 
Creditors: amounts falling due after more                        -          (3) 
than one year 
 
Provisions for liabilities and charges                         (7)          (5) 
 
Net assets                                                     619          596 
 
Capital and reserves 
 
Called up share capital                                        487          487 
 
Share premium account                                          210          210 
 
Profit and loss account                                       (78)        (101) 
 
Total shareholders' funds                                      619          596 
 
 
1 Accounting policies 
 
Basis of preparation 
 
The financial statements have been prepared under the historical cost 
convention, on the going concern basis and in accordance with applicable 
Accounting Standards in the United Kingdom and the Companies Act 2006. A 
summary of the material accounting policies, which have been consistently 
applied, are set out below. 
 
Basis of consolidation 
 
The consolidated financial statements include the company and its subsidiary 
companies. Inter-company sales and profits are eliminated on consolidation. The 
financial statements of the subsidiary companies are made up to 31 March 2014. 
Consistent accounting policies are used by all companies in the group. 
 
Turnover 
 
Turnover, which excludes value added tax, represents the invoiced value of the 
sale of B2B ecommerce software solutions and support services. Turnover on 
sales of software products is recognised on the delivery and acceptance of the 
systems. Turnover on software support is recognised over the period in which 
the support is available to the customer. 
 
Software development costs 
 
The costs of software development are capitalised and amortised over the period 
over which economic benefit is expected to be derived from the software. This 
period is considered to be 3 years. 
 
Fixed asset investments 
 
Fixed asset investments in subsidiary undertakings are recorded at cost plus 
incidental expenses less any provision for impairment. Impairment reviews are 
performed by the directors when there has been an indication of potential 
impairment. 
 
Tangible fixed assets 
 
Tangible fixed assets are included at their purchase cost, together with any 
incidental expenses of acquisition. 
 
Depreciation 
 
Depreciation is calculated to write off the cost of tangible fixed assets on a 

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