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DJ Netalogue Technologies Plc Final Results 31st March 2015

 
TIDMNTLP 
 
NETALOGUE TECHNOLOGIES PLC 
 
Final Results Year Ended 31st March 2015 
 
The information contained in this announcement is extracted from the audited 
financial statements of the Company. 
 
 
 
 
Chairman's Statement 
 
Dear Shareholder, 
 
In my first half statement I highlighted how the Company had achieved its best 
ever first half performance and I am pleased to report this growth continued in 
the second half. 
 
Sales growth has been achieved through new direct sales, existing customers 
upgrading and growth of the Value-Added Reseller (VAR) channel - where our 
partners focussing on SAP ERP and Sage sectors had a number of successes 
selling the NetalogueTM B2B Ecommerce platform to their customers. 
 
Key highlights 
 
  * GBP 1,384,000 sales, an increase of 45% compared with the prior year. 
  * EBITDA has increased by GBP 297,000 to GBP 385,000. 
  * Continued investment in the NetalogueTM B2B Platform, delivering further 
    advanced functionality. 
  * Continued expansion into new sectors. 
  * GBP 126,000 of costs associated with the Spicers' contract (see note below) 
    have been brought forward and amortised this year. The revised total value 
    of capitalised investments at 31 March 2015 is GBP 60,000. 
  * Net assets of GBP 779,000 with strong cash balances and no borrowings. 
 
Comments on the results 
 
Sales have increased by 45% notwithstanding the completion in Q3 of the 
company's strategic exit from its hosting business, a strategy that has further 
improved gross margins. Sales revenues via reseller channels have grown 
significantly this year and the company has continued to invest in appropriate 
infrastructure to ensure success for our partners and shareholders. 
 
Throughout the year the company saw the Netalogue B2B Ecommerce platform being 
used in new sectors in addition to a significant increase in interest from 
large corporates wishing to implement private Ecommerce solutions for internal 
purchasing. This included a significant new contract win with Transport for 
London which continues to demonstrate the depth of Netalogue's IP and the 
benefits it offers over other products when evaluated in an official tender 
process. 
 
Spicers & intangible assets 
 
Spicers and Netalogue have agreed to end the agreement for the ecommerce system 
and as a result it will not be licensed by Netalogue or hosted, supported or 
administrated by Spicers from 31st August 2015. 
 
Due to the agreement ending Netalogue has re-assessed previously capitalised 
investments in relation to this project and made the decision to accelerate 
their amortisation by bringing forward an additional GBP 126,000 from the 
balance sheet. 
 
Developments 
 
A new private cloud capability for VAR partners will enable them to offer 
rapidly deployable B2B ecommerce facilities to their clients. This development 
will provide additional sales opportunities for partners to win deals with 
their smaller clients who have standard B2B requirements. Significant 
Investment in R&D will continue to ensure the Netalogue B2B platform remains an 
attractive proposition for prospective and existing clients in addition to 
enhancing the product's appeal to the VAR partner market. 
 
Chairman's Statement (continued) 
 
Principal risks and uncertainties 
 
The company is seeing some delays in prospect decision-making due a still 
uncertain economic situation but is encouraged to increasingly see B2B 
ecommerce being classified as business critical. The company is also seeing a 
general increase in awareness of ecommerce and the benefits a B2B specific 
solution offers, especially where companies have previously invested in a B2C 
solution in the hope that the system can grow functionally into a B2B solution. 
Some of our wins have followed such a failed experience. 
 
The directors believe the group's IP continues to offer a class leading 
solution, which is evident from some of the company's recent wins. 
 
The outlook 
 
Whilst the end of the Spicers' agreement will result in the loss of revenue the 
company expect to both grow the customer base and profitability in the year 
ahead. 
 
Dividend 
 
No decision has been made at the date of this announcement to declare a 
dividend. 
 
I look forward to updating you in due course. 
 
Geoff Henderson 
Chairman 
Netalogue Technologies plc 
 
Netalogue B2B Ecommerce Software 
 
www.netalogue.com 
 
Registered no: 4137677 
 
Consolidated profit and loss account 
 
for the year ended 31 March 2015 
 
                                                           2015          2014 
 
                                                           GBP000          GBP000 
 
Turnover                                                  1,384           950 
 
Cost of sales                                              (61)          (60) 
 
Gross profit                                              1,323           890 
 
Administrative expenses                                 (1,121)         (861) 
 
Operating profit before depreciation                        385            88 
and amortisation 
 
Depreciation of tangible assets                            (11)          (14) 
 
Amortisation of intangible assets                         (172)          (45) 
 
Operating profit                                            202            29 
 
Interest payable and similar charges                          -           (1) 
 
Profit on ordinary activities before                        202            28 
taxation 
 
Tax on profit on ordinary activities                       (42)           (5) 
 
Profit for the financial year                               160            23 
 
Profit per ordinary share expressed in                    0.328         0.047 
pence per share - basic 
 
Profit per ordinary share expressed in                    0.308         0.044 
pence per share  - diluted 
 
Registered no: 4137677 
 
Consolidated balance sheet 
 
at 31 March 2015 
 
                                                           2015        2014 
 
                                                           GBP000        GBP000 
 
Fixed assets 
 
Intangible assets                                            60         232 
 
Tangible assets                                              34          42 
 
                                                             94         274 
 
Current assets 
 
Debtors                                                     383         234 
 
Cash at bank and in hand                                    583         288 
 
                                                            966         522 
 
Creditors:  amounts falling due within one                (274)       (170) 
year 
 
Net current assets                                          692         352 
 
Total assets less current liabilities                       786         626 
 
Provisions for liabilities                                  (7)         (7) 
 
Net assets                                                  779         619 
 
Capital and reserves 
 
Called up share capital                                     487         487 
 
Share premium account                                       210         210 
 
Profit and loss account                                      82        (78) 
 
Total shareholders' funds                                   779         619 
 
 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 
2015.  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 
reducing balance basis over the expected useful economic lives of the assets 
concerned.  Plant and machinery and computer software is depreciated at the 
rate of 25% per annum. 
 
Goodwill and amortisation 
 
Purchased goodwill (representing the excess of the fair value of the 
consideration given over the fair value of the separable net assets acquired) 
arising on consolidation in respect of acquisitions is capitalised.  Goodwill 
is amortised on a straight line basis over its estimated useful economic life. 
The estimated useful economic life is calculated having regard to the period 
over which the Group expects to derive economic benefits from the assets. The 
directors consider the estimated useful economic life of the purchased goodwill 
to be 10 years. 
 
 
 
 
1          Accounting policies (continued) 
 
Licences and trademarks 
 
Licences and trademarks are capitalised at their purchased cost, together with 

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DJ Netalogue Technologies Plc Final Results 31st -2-

any incidental costs of acquisition.  They are amortised on a straight line 
basis over their estimated useful economic life. The directors consider the 
estimated useful life of the licences and trademarks to be 3 years. 
 
Stocks 
 
Stocks and work in progress are valued at the lower of cost and net realisable 
value. 
 
Deferred taxation 
 
Provision for deferred taxation is made in respect of all material timing 
differences that have originated but not reversed by the balance sheet date. 
Timing differences represent differences between gains and losses recognised 
for tax purposes in periods different from those in which they are recognised 
in the financial statements. No deferred tax is recognised on permanent 
differences between the company's taxable gains and losses and its results as 
stated in the financial statements.  Deferred tax assets and liabilities are 
included without discounting.  No deferred tax assets are recognised at the end 
of the financial year since their recoverability is uncertain. 
 
Finance and operating leases 
 
Costs in respect of operating leases are charged on a straight line basis over 
the lease term.  Leasing agreements which transfer to the group and company 
substantially all the benefits and risks of ownership of an asset are treated 
as if the asset had been purchased outright.  The assets are included in 
tangible fixed assets and the capital element of the leasing commitments is 
shown as obligations under finance leases.   Assets held under finance leases 
are depreciated over the shorter of the lease terms and the useful lives of 
equivalent owned assets. 
 
Share-based incentives 
 
In accordance with FRS20, the fair value of equity-settled share-based payments 
to employees is determined at the date of grant and is expensed on a 
straight-line basis over the vesting period, based on the group's estimate of 
shares or options that will eventually vest. In the case of options granted, 
fair value is measured by a Black-Scholes pricing model. 
 
 
 
END 
 

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