Final Results

Manpower Software PLC
01 August 2005


MANPOWER SOFTWARE PLC ("MSW" OR "THE COMPANY")

RESULTS FOR THE YEAR ENDED 31 MAY 2005

CHAIRMAN'S STATEMENT

Results

I am pleased to report on a satisfactory performance for the year as a whole
following a successful second half's trading in 2005.  Revenue in the second
half of the financial year was £3.9m (first half: £2.0m), making £5.9m for the
year as a whole (2004: £5.1m).  As a result, the Company made a profit in the
second half of £1.0m.  The profit for the year as a whole was £328,000, slightly
less than 2004's result of £455,000.  However, importantly, the Company has made
a considerable investment this year in key personnel for the purpose of driving
growth in 2005/6, it has been profitable for two consecutive years and retains a
strong cash balance (£1.46m at the year-end).

The performance during the year reflected progressive implementation by the
management team, under the leadership of Richard Morgan-Evans, of strategic
actions designed to improve scalability, remove barriers to growth and position
the Company to achieve profitable growth in the current year and beyond.  The
increase in full year revenues reflects the early successes of a long-term
strategy to develop significantly the global defence and UK healthcare markets.
Particularly, the Company achieved significant contract wins with the British
Army (HQ Land Command) and two UK NHS trusts.  The growth was achieved without
further large licence fee sales into the maritime industry, historically our
major market.

Management of the Company is focussed on continuing substantial improvements in
operational effectiveness, leveraging the considerable potential of the MAPS
software products and establishing Manpower Software as an international
supplier of software products and services.

The changes cover four principal areas.

First, the operational structure of the Company has been aligned closely to its
core markets.  Manpower Software currently addresses three verticals: Maritime,
Defence and the UK NHS.  We have established three vertical sales-led groups
with the products and services for each supplied by horizontal functional
groups.  Manpower Software, therefore, is focussed entirely on the requirements
of its customers at every level, in markets that are substantial in size and in
which we have established credibility with our product solutions, market
knowledge and impressive reference installations.

Second, the direct and indirect sales capabilities have been expanded,
particularly in Defence and the NHS where the Company has signed alliance
agreements with Alphawest Services Pty Limited (Defence) and Specialist Computer
Centres plc (NHS).  Manpower Software believes that it now has access to
substantial markets that can support rapid growth for some years.

Third, the Customer Services function, headed by Clive Cummins, has been
reorganised to enable shorter delivery times, using standard product and
business processes, and implementation methodologies.  The profitable delivery
of software implementations and customer support, and the establishment of a
growing installed base of users in all verticals, is an essential component of a
scaleable software company.

Fourth, in Product Development, we have recently recruited David Wheeler to the
position of Group Product Director.  David will accelerate the focus on
delivering standard products, thereby enabling shorter sales cycles, quick and
effective delivery and a higher proportion of revenue from licence fees.  It is
our intention that revenue growth should increasingly be driven by new licence
sales.

Each of our markets offers substantial potential for growth.

In Defence, we signed our largest ever contract to supply our MAPS Force
Generation software to HQ Land Command, British Army.  The contract has a value
of £3.6m over six years, with an option to proceed with further projects valued
up to £0.4m in the first three years of the contract.  Including the amount
under option and amounts already under contract, the total amount under contract
with HQ Land is £5.2m.  With additional contracts awarded by the Defence Medical
Services (£0.4m) and NATO (£0.2m), the Company has critical mass and credibility
to supply its products into the global defence market. This market offers
considerable potential for Manpower Software at a time when an increasing number
of defence forces worldwide are reorganising to meet new threats and are
recognising the importance and value added by our MAPS software.   The
partnership agreement signed with Alphawest Services Pty Ltd in Australia has
positioned the Company to achieve the first of these overseas sales in the Asia/
Pacific region.

In the NHS, breakthrough sales of our MAPS Healthroster product solution into
the second and third Trusts have been achieved.  MAPS Healthroster has the
flexibility to manage the NHS's complex rostering requirements and deal with
staff shortage problems.  It delivers significant cost savings and
recommendations for better deployment of staff, thereby benefiting patients as
well as staff.  Budgets for temporary staff can be robustly managed at ward
level and local management made accountable for cost and quality.  Working
through our partner, Specialist Computer Centres plc, we agreed five year
licensing sales of our ward and theatre duty rostering software, MAPS
Healthroster, to Ashford & St Peter's NHS Trust (£0.4m) and North Tees and
Hartlepool NHS Trust (£0.5m).  Potentially, our solution is of value to a large
number of NHS Trusts, some of whom are currently in contractual negotiation with
us.

In Maritime, during a period when our recent contract wins have been moving
through the implementation phase, our cruise industry customers have not needed
to make major new investments in our software.  However, we remain convinced of
our ability to grow within our installed base, to further penetrate the cruise
market and to extend our sales into the broader shipping market following the AP
Moller success in 2003.

The management team, having achieved a great deal in the last twelve months, is
focussed on developing Manpower Software as a company positioned to rapidly
exploit the MAPS software in the Maritime, Defence and UK NHS markets.  The
foundations for strong growth have been established with a new operational
structure, key appointments and expanded sales and services teams, and focussed
product development.  The strategic contracts achieved in the UK and NATO
Defence and UK NHS markets are an indication of the attractions of our solution
and its competitiveness.

Manpower Software plc is a company small in comparison to the majority of its
customers, which are typically large, blue chip organisations, having several
tens of thousands of staff and multi-billion pound turnovers, and licence fee
values from new contract sales are often large in relation to budgeted costs.
Accordingly, in any financial year, the precise outturn between the first and
second halves will remain dependent upon the timing of closure of new business.
This being said, the direction for the on-going profitable expansion of the
Company is now clear and, although much additional work remains to be completed,
I am confident of our ability to achieve further substantial improvements in
performance in 2005/6 and beyond.


Robert Drummond

CHAIRMAN

1 August 2005



CONSOLIDATED PROFIT AND LOSS ACCOUNT
FOR THE YEAR ENDED 31 MAY 2005


                                                                        Note  2005          2004
                                                                              £             £

Turnover                                                                      5,909,466     5,146,663

Cost of sales                                                                 (4,148,844)   (3,520,722)

Gross profit                                                                  1,760,622     1,625,941

Administrative expenses                                                       (1,431,885)   (1,268,215)

Operating profit                                                              328,737       357,726

Net interest                                                                  7,402         31,180

Profit on ordinary activities before taxation                                 336,139       388,906

Tax on profit on ordinary activities                                    2     (7,483)       66,246

Profit retained and transferred to reserves                                   328,656       455,152

Earnings per share
Basic                                                                         0.7p          1.0p

Diluted                                                                       0.7p          1.0p



 


CONSOLIDATED BALANCE SHEET
AS AT 31 MAY 2005


                                                             Note      2005               2004
                                                                       £                  £
Fixed assets
Tangible assets                                                        119,182            199,942

Current assets
Debtors                                                                2,985,472          1,636,841
Cash at bank and in hand                                               1,465,837          1,444,888
                                                                       4,451,309          3,081,729

Creditors: amounts falling due within one year                         (1,919,976)        (1,011,032)

Net current assets                                                     2,531,333          2,070,697

Total assets less current liabilities                                  2,650,515          2,270,639

Capital and reserves
Called up share capital                                                2,223,154          2,212,254
Share premium account                                                  6,456,299          6,429,879
Profit and loss account                                                (6,028,938)        (6,371,494)
Equity shareholders' funds                                             2,650,515          2,270,639



 

CONSOLIDATED CASH FLOW STATEMENT
FOR THE YEAR ENDED 31 MAY 2005


                                                                       Note   2005          2004
                                                                              £             £

Net cash inflow/(outflow) from operating activities                           81,813        (519,799)

Returns on investments and servicing of finance
Interest received                                                             7,734         34,868
Interest paid                                                                 -             (2,022)
Finance lease interest paid                                                   (332)         (1,666)
Net cash inflow from returns on investments and servicing of finance          7,402         31,180

Taxation                                                                      (7,483)       66,246

Capital expenditure and financial investment
Purchase of tangible fixed assets                                             (69,958)      (102,528)
Cash inflow/(outflow) before financing and management of liquid               11,774        (524,901)
resources

Management of liquid resources
Sale of short term deposits                                                   1,267,840     532,160

Financing
Issue of ordinary shares                                                      37,320        -
Loan repayments                                                               (15,160)      (34,757)
Capital element of finance leases                                             (12,985)      (27,507)
Net cash inflow/(outflow) from financing                                      9,175         (62,264)

Increase/(decrease) in cash                                                   1,288,789     (55,005)


 



NOTES TO THE CONSOLIDATED CASH FLOW STATEMENT
FOR THE YEAR ENDED 31 MAY 2005

RECONCILIATION OF OPERATING PROFIT TO NET CASH FLOW FROM OPERATING ACTIVITIES

                                                                               2005          2004
                                                                               £             £

Operating profit                                                               328,737       357,726
Depreciation charges                                                           148,578       148,925
Foreign exchange movement                                                      16,040        (6,254)
Increase in debtors                                                            (1,348,631)   (75,704)
Increase/(decrease) in creditors                                               937,089       (944,492)
Net cash inflow/(outflow) from operating activities                            81,813        (519,799)


RECONCILIATION OF NET CASH FLOW TO MOVEMENT IN NET FUNDS

                                                                               2005          2004
                                                                               £             £

Increase/(decrease) in cash in the year                                        1,288,789     (55,005)
Cash outflow from decrease in debt                                             28,145        34,757
Change in net debt resulting from cash flows                                   1,316,934     (20,248)
Decrease in liquid resources                                                   (1,267,840)   (532,160)
Payment of finance leases                                                      -             27,507
Increase/(decrease) in net funds in the year                                   49,094        (524,901)
Net funds at beginning of the year                                             1,416,743     1,941,644
Net funds at end of the year                                                   1,465,837     1,416,743


ANALYSIS OF CHANGE IN NET FUNDS

                                                               At 1 June                   At 31 May
                                                               2004                        2005
                                                                             Cash flow
                                                               £             £             £

Cash at bank and in hand                                       1,444,888     20,949        1,465,837
Less: short term deposits                                      (1,267,840)   1,267,840     -
                                                               177,048       1,288,789     1,465,837
Short term deposits                                            1,267,840     (1,267,840)   -
Debt                                                           (15,160)      15,160        -
Finance leases                                                 (12,985)      12,985        -
                                                               1,416,743     49,094        1,465,837



OTHER PRIMARY STATEMENTS
FOR THE YEAR ENDED 31 MAY 2005

Statement of Total Recognised Gains and Losses

                                                                               2005         2004
                                                                               £            £

Profit for the financial year                                                  328,656      455,152
Currency differences on opening reserves                                       13,900       (8,801)
Total recognised gains and losses for the year                                 342,556      446,351



 



BASIS OF PREPARATION

The financial information set out above does not constitute statutory accounts
within the meaning of Section 240 of the Companies Act 1985.

The results for the year ended 31 May 2005 and the balance sheet at that date
have been extracted from the statutory accounts of the group for that year, upon
which the Company's auditors, Grant Thornton UK LLP, have issued an unqualified
audit report under Section 235 of the Companies Act 1985.  The accounts for the
year ended 31 May 2005 will be filed with the Registrar of Companies following
the Annual General Meeting.  The financial information for the year ended 31 May
2005  has been prepared on the basis of the accounting policies set out in the
accounts for the year ended 31 May 2004.

The comparative figures for the year ended 31 May 2004 have been extracted from
the statutory accounts of the group for that year, filed with the Registrar of
Companies, which carried an unqualified audit report.

TAXATION

There was a US tax charge of £7,483 during 2005.  A UK research and development
tax credit was received in 2004.

DIVIDENDS

No dividends were paid or proposed during either 2005 or 2004.

EARNINGS PER SHARE

The calculations of earnings per share are based on the following results and
numbers of shares:


                                                                               2005         2004
                                                                               £            £

Profit for the financial year                                                  328,656      455,152



Weighted average number of shares


                                                                               Number of    Number of
                                                                               shares       shares
                                                                               £            £

For basic earnings per share                                                   44,383,053   44,245,086

For diluted earnings per share                                                 45,702,541   45,412,834



A copy of the Annual Report and accounts will be sent to all shareholders.  A
copy of this preliminary announcement is available from the Company's registered
office: The Communications Building, 1st Floor, 48 Leicester Square, London WC2H
7LU.


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