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DJ Netalogue Technologies Plc Final Results Year ended 31 March 2019

 
TIDMNTLP 
 
NETALOGUE TECHNOLOGIES PLC 
 
The information contained in this announcement is extracted from the annual 
report and audited financial statements of the company. 
 
Chairman's Statement for the year ended 31 March 2019 
 
Dear Shareholder, 
 
I am pleased to report a strong overall performance with significant growth in 
revenue, profit and a strengthening of our cash position. 
 
-       Sales of GBP1,351,000 a 26% growth on previous year (2018: GBP1,073,000) 
 
-       EBITDA profit of GBP378,000 a 139% growth on previous year (2018: GBP 
158,000) 
 
-       Net Profit before tax of GBP300,000 a 266% growth on previous year (2018: 
profit      GBP82,000) 
 
-       Net assets of GBP861,000 with a strong cash balance, no debt, no 
borrowings (2018:GBP770,000) 
 
Results Commentary 
 
It is pleasing to report a strong year of top-line revenue growth (of 26%) and 
continued prudent management of our cost base to achieve an EBITDA growth of 
139%. These are excellent results in what continued to be a highly competitive 
market. The Netalogue Balance Sheet continues to be strong with increased net 
assets including a strengthened cash position of GBP770,000 (53% growth on FY18), 
and zero bad debts in FY19. 
 
Revenue growth has mainly derived from 'new-name' customer additions - a 
healthy reflection of the competitiveness of our platform. Underlying recurring 
revenue (Support, Maintenance and SAAS) continues to grow as a percentage of 
overall revenue - a good indicator of long-term financial stability. This 
growth was also assisted by improved efficiencies around project delivery and 
support services - giving confidence that the Netalogue platform is meeting 
requirements of quality, stability and performance. 
 
Our channel partners continue to be a key route-to-market for new sales with 
just over 60% of new sales coming through our channel program. During FY19 we 
also recruited 5 new resellers. 
 
Key performance indicators show that all projects have been delivered on-time 
and on-budget; product releases are on-time and 'stable'; and all Service Level 
Agreements (SLA's) have been met. The company has also invested in achieving 
compliance with ISO 27000 and 9001 and is expecting to be accredited in the 
coming months, ensuring continued improvements for our clients and appealing to 
larger organisations who require such certification from their suppliers. 
 
As noted in previous statements, strenuous efforts have been made to refine the 
operations of the business, ensuring we are operationally excellent; whilst 
continuing to invest in research and development of our software platform. The 
FY19 performance is a solid indicator that we are making good progress and have 
established a platform that can achieve growth for future years. 
 
Dividend 
 
The company is monitoring its cash and short term investment requirements and a 
decision with respect to paying a dividend will be made at the time of the half 
year results. 
 
Outlook 
 
I take great store from a number of key performance metrics against which we 
measure the performance of our business and the strength of the market 
opportunity. 
 
Firstly, pipeline for the coming fiscal year looks encouraging - based upon 
meetings scheduled with new clients, proposals issued, and forecast revenue. As 
noted above, we also have a healthy base of active, well trained and supported 
resellers. 
 
Secondly, the strength of our technology and our software platform, continues 
to be market-leading - based upon feedback from prospects and customers, 
feedback from resellers, with no client attrition, and the return of an old 
customer. 
 
Finally, whilst our target market is very competitive and historically rather 
confused, (B2B eCommerce versus B2C eCommerce), it appears that many of our 
prospects are beginning to understand the different between a Netalogue 
platform - with enterprise-class B2B product features that deal with complex 
B2B requirements versus a much simpler, less sophisticated B2C software 
approach where clients have tried to develop a 'home grown' platform using 
development tools or purchased less sophisticated B2C solutions. 
 
A number of the prospects we are engaging are returning to the market having 
failed in previous implementations.    I have noted before that it is 
interesting to see organisations becoming more aware  of the  risks and 
spiralling  costs of investing in platforms that are not designed to deal with 
the complex challenges of B2B ecommerce. 
 
I continue to be assured that recent client wins and customer feedback  are 
testament  that our  strategy is correct  and that the Netalogue platform is 
aligned with the marketplace  to  deliver both  customer and  shareholder 
value. In line with our three year strategy plan the board will continue to 
review all of our growth options to ensure continued success for the Netalogue 
platform. 
 
Nick Barley, Chairman, 
 
Netalogue Technologies plc. 29th July 2019 
 
Consolidated statement of comprehensive income for the year ended 31 March 2019 
 
                                                    2019       2018 
 
                                                    GBP000       GBP000 
 
 
Turnover                                               1,351     1,073 
 
Cost of sales                                           (63)      (26) 
 
Gross profit                                           1,288     1,047 
 
Administrative expenses                                (988)     (965) 
 
Operating profit before depreciation,                    378       158 
amortisation and exceptional items ("EBITDA") 
 
Depreciation of tangible assets                          (8)       (6) 
 
Amortisation of intangible assets                       (70)      (70) 
 
Operating profit                                         300        82 
 
Profit before taxation                                   300        82 
 
Tax on profit                                           (14)      (13) 
 
Profit for the financial year                            286        69 
 
Profit per ordinary share expressed in pence           0.587     0.142 
per share - basic 
 
Profit per ordinary share expressed in pence           0.552     0.133 
per share 
- diluted 
 
 
Total comprehensive income for the year 
attributable to: 
 
Owners of the parent company                             286        69 
 
Total comprehensive income for the year                  286        69 
 
Consolidated group balance sheet at 31 March 2019 
 
                                                        2019      2018 
                                                        GBP000      GBP000 
 
Fixed assets 
 
Intangible assets                                        255       215 
 
Tangible assets                                           27        22 
 
                                                         282       237 
 
Current assets 
 
Debtors                                                  250       369 
 
Cash at bank and in hand                                 770       502 
 
                                                       1,020       871 
 
Creditors: amounts falling due within  one year        (421)     (311) 
 
Net current assets                                       599       560 
 
Total assets less current liabilities                    881       797 
 
Provisions for liabilities                              (20)      (27) 
 
Net assets                                               861       770 
 
 
Capital and reserves Called up share capital             487       487 
 
Share Premium account                                    210       210 
 
Profit and loss account                                  164        73 
 
Total equity                                             861       770 
 
Summary of significant accounting policies 
 
The principal accounting policies applied in the preparation of these financial 
statements are set out below. These policies have been consistently applied to 
all the years presented, unless otherwise stated. 
 
Basis of preparation 
 
These financial statements are prepared on a going concern basis, under the 
historical cost convention. 
 
The preparation of financial statements in conformity with FRS 102 requires the 
use of certain critical accounting estimates. It also requires management to 
exercise its judgement in the process of applying the group and company's 
accounting policies. The areas involving higher degree of judgement or 
complexity, or areas where assumptions and estimates are significant to the 
financial statements are disclosed below. 
 
Going concern 
 
The group meets its day to day working capital requirements through its cash 
reserves. The current economic conditions continue to create uncertainty over 
the level of demand for the group's services. The group's forecasts and 
projections, taking into account of reasonably possible changes in trading 
performance, show that the group should be able to operate within the level of 
its current cash reserves. The directors have a reasonable expectation that the 
company has adequate resources to continue in operational existence for the 
foreseeable future. The group therefore continues to adopt the going concern 
basis in preparing its financial statements. 
 
Exemptions for qualifying entities under FRS 102 
 
The company has taken advantage of the exemption, under FRS 102 paragraph 1.12 
(b), from preparing a statement of cash flows, on the basis that it is a 
qualifying entity and the consolidated statement of cash flows, included in 
these financial statements, includes the company's cash flows. 
 
This information is included in the consolidated financial statements of 
Netalogue Technologies plc as at 31 March 2019 which can be obtained from the 
company secretary at 27-28 Eastcastle Street, London, W1W 8DH. 
 
Basis of consolidation 
 
The group consolidated financial statements include the financial statements of 
the Company and all     of its subsidiary undertakings. 
 
A subsidiary is an entity controlled by the Group. Control is the power to 

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DJ Netalogue Technologies Plc Final Results Year -2-

govern the financial and operating policies of an entity so as to obtain 
benefits from its activities. 
 
Intercompany transactions and balances between group companies are eliminated 
on consolidation and the accounting policies of subsidiaries are changed when 
necessary to ensure consistency with group accounting policies. 
 
Foreign currency 
 
i) Functional and presentation currency 
 
The group financial statements are presented in pound sterling. 
 
The company's functional and presentation currency is the pound sterling. 
 
Revenue recognition 
 
Revenue is measured at the fair value of the consideration received or 
receivable and represents the invoiced value of the sale of B2B ecommerce 
software solutions and support services. Revenue on sales of software products 
is recognised on the delivery and acceptance of the systems. Revenue on 
software licences and support is recognised over the period in which the 
licence or support is available to the customer. 
 
Employee benefits 
 
The company provides a range of benefits to employees, including annual bonus 
arrangements, paid holiday arrangements and defined contribution pension plans. 
 
i) Short term benefits 
 
Short term benefits, inducing holiday pay and other similar non-monetary 
benefits, are recognised as an expense in the period in which the service is 
received. 
 
Taxation 
 
Taxation expense for the period comprises current and deferred tax recognised 
in the reporting period.  Tax is recognised in the profit and loss account, 
except to the extent that it relates to items recognised in other comprehensive 
income or directly in equity. 
 
Current or deferred taxation assets and liabilities are not discounted. 
 
i)              Current tax 
 
Current tax is the amount of income tax payable in respect of the taxable 
profits for the year or prior years. Tax is calculated on the basis of tax 
rates and laws that have been enacted or substantively enacted by the period 
end. 
 
ii)              Deferred tax 
 
Deferred tax arises from timing = between taxable profits and total 
comprehensive income as stated in the financial statements. These timing 
differences arise from the inclusion of income and expenses in tax assessments 
in the periods different from those in which they are recognised in financial 
statements. 
 
Deferred tax is recognised on all timing differences at the reporting date 
except for certain exceptions. Unrelieved tax losses and other deferred tax 
assets are only recognised when it is probable that they     will be recovered 
against the reversal of deferred tax liabilities or other future taxable 
profits. 
 
Deferred tax is measured using tax rates and laws  that  have  been  enacted 
or  substantively enacted by the period end and that are expected to apply to 
the reversal of the timing difference. 
 
Business combinations and goodwill 
 
Business combinations are accounted for by applying the purchase method. 
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. 
 
Intangible assets 
 
Intangible assets relates to software development costs. The costs of software 
development are stated at cost less accumulated amortisation and accumulated 
impairment losses. Intangible assets are amortised on a straight line basis 
over their estimated useful economic life, this period is considered to be 3 to 
5 years. 
 
Tangible assets 
 
Tangible assets are stated at cost (or deemed cost) less accumulated 
depreciation and accumulated impairment losses. Cost includes the original 
purchase price and costs directly attributable to bringing the asset to its 
working condition for its intended use. 
 
i)              Computer equipment 
 
Computer equipment is stated at cost less accumulated depreciation and 
accumulated impairment losses. 
 
ii)              Plant and machinery 
 
Plant and machinery are stated at cost less accumulated depreciation and 
accumulated impairment losses. 
 
iii)             Depreciation 
 
Depreciation on tangible assets is calculated to write off the cost of the 
assets concerned on a reducing balance basis as follows: 
 
-           Computer equipment    - 25% 
 
-          Plant and machinery    - 25% 
 
iv)             Derecognition 
 
Tangible assets are derecognised on disposal or when no future economic 
benefits are expected. On disposal, the difference between the net disposal 
proceeds and the carrying amount is recognised in profit and loss and included 
in 'Administrative expenses. 
 
Leased assets 
 
Operating leased assets 
 
Leases that do not transfer all the risks and rewards of ownership are 
classified as operating leases. Payments under operating leases are charged to 
the profit and loss account on a straight-line basis over the period of the 
lease. 
 
Cash and cash equivalents 
 
Cash and cash equivalents includes cash in hand. Bank overdrafts, when 
applicable, are shown within borrowings in current liabilities. 
 
Financial instruments 
 
The company enters into basic financial instruments transactions that result in 
the recognition of financial assets and liabilities like trade and other 
accounts receivable and payable and loans to related parties. 
 
Debt instruments (other than those wholly repayable or receivable within one 
year), including loans and other accounts receivable and payable, are initially 
measured at present value of the future cash flows and subsequently at 
amortised cost using the effective interest method. Debt instruments that are 
payable or receivable within one year, typically trade payables or receivables, 
are measured, initially and subsequently, at the undiscounted amount of the 
cash or other consideration, expected to be paid or received. However, if the 
arrangements of a short-term instrument constitute a financing transaction, 
like the payment of a trade debt deferred beyond normal business terms or 
financed at a rate of interest that is not a market rate or in case of an 
out-right short-term loan not at market rate, the financial asset or liability 
is measured, initially, at the present value of the future cash flow discounted 
at a market rate of interest for a similar debt instrument and subsequently at 
amortised cost. 
 
Financial assets that are measured at cost and amortised cost are assessed at 
the end of each reporting period for objective evidence of impairment. If 
objective evidence of impairment is found, an impairment loss is recognised in 
the Statement of Comprehensive Income. 
 
For financial assets measured at amortised cost, the impairment loss is 
measured as the difference between an asset's carrying amount and the present 
value of estimated cash flows discounted at the asset's original effective 
interest rate. If a financial asset has a variable interest rate, the discount 
rate for measuring any impairment loss is the current effective interest rate 
determined under the contract. 
 
Financial assets and liabilities  are offset and the  net  amount  reported in 
the Balance sheet when there  is an enforceable right to set off the recognised 
amounts and there  is  an  intention to settle  on  a net basis or to realise 
the asset and settle the liability simultaneously. 
 
Share capital 
 
Ordinary shares are classified as equity. Incremental costs directly 
attributable to the issue of new ordinary shares are shown in equity as a 
deduction, net of tax, from the proceeds. 
 
Distribution to equity holders 
 
Dividends and other distributions to the Group's shareholders are recognised as 
a liability in the financial statements in the period in which the dividends 
and other distributions are approved by the shareholders. These amounts are 
recognised in the statement of changes in equity. 
 
Related party transactions 
 
The group discloses transactions with related parties which are not wholly 
owned within the same group. It does not disclose transactions with members of 
the same group that are wholly owned. 
 
Critical judgements in applying the entity's accounting policies 
 
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 appropriate and reasonable in the circumstances. 
 
a)         Significant accounting judgements, estimates and assumptions 
 
The key area that requires management to make difficult, subjective or complex 
judgements about matters that are inherently uncertain are: 
 
i)          Impairment of non-financial assets 
 
The company assesses whether there are any indicators of impairment for all 
non-financial assets at each reporting date. Other non-financial assets are 
tested for impairment when there are indicators that the carrying amounts may 
not be recoverable. 
 
b)         Key accounting estimates and assumptions 
 
The company makes estimates and assumptions concerning the future. The 
resulting accounting estimates will, by definition, seldom equal the related 
actual results. The estimates and assumptions that have a significant risk of 
causing a material adjustment to the carrying value amounts of assets and 
liabilities within the next financial year are addressed below. 
 
i)              Useful economic lives of tangible and intangible assets 
 
The annual depreciation charge for tangible assets and amortisation charge for 
intangible assets are sensitive to changes in the estimated useful economic 
lives of the assets. The useful economic lives are re-assessed and amended when 
necessary to reflect current estimates, based on technological advancement, 

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DJ Netalogue Technologies Plc Final Results Year -3-

future investments, economic utilisation and physical condition of the assets. 
 
ii)              Impairment of debtors 
 
The company makes an estimate of the recoverable value of trade and other 
debtors. When assessing impairment of trade and other debtors, management 
considers factors including the current credit rating of the debtor, the ageing 
profile of debtors and historical experience. See note 13 for the net carrying 
amount of the debtors and associated impairment provision. 
 
 
 
END 
 

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