Information  X 
Enter a valid email address

Orbital Soft Hldgs (ORB)

  Print      Mail a friend

Thursday 10 May, 2001

Orbital Soft Hldgs

Final Results

Orbital Software Holdings PLC
10 May 2001


For Immediate Release:                                              10 May 2001




                        ORBITAL SOFTWARE HOLDINGS PLC



        ANNOUNCES PRELIMINARY RESULTS FOR THE YEAR ENDED 31 MARCH 2001



Orbital Software Holding plc ('Orbital'), a leading provider of scaleable,
person-to-person Q&A infrastructure for Internet and corporate portals, today
announces its maiden preliminary results for the year ended 31 March 2001.



Financial Highlights

-         Successful flotation on the main market of the London Stock
          Exchange in October 2000 - £16.7 m raised for the Group net of        
          expenses.

-         Turnover up by 450% to £1.1 m (2000 : £0.2 m)

-         Significant sales increase in both US and Europe with greater
          visibility being achieved in Europe.

-         Loss before taxation of £6.0 m (2000 : £2.4 m) - in line with
          expectations and due to investment in sales, marketing and            
          infrastructure.

-         Net cash position £17 m - strong balance sheet.



Operating Highlights

-         Strategic partnership programme, the Velocity Alliance Programme,
          successfully launched.

-         New customers include K-solutions, Viant, NASA, Virdev Inc., in
          the US as well as Atofina, Scottish Enterprise and Clearlybusiness.com
          in Europe.

-         Further partnerships / deals under discussion.

-         UK patent granted in December 2000.



Commenting on the results, Ian Ritchie, Non-Executive Chairman of Orbital,
said:

'The Board is pleased with the progress made to date. The rate of growth of
customers and licence agreements are in line with expectations for the year
and the Group has managed to increase revenues and shipments, whilst
maintaining margins.



Looking forward we expect the first two quarters of the new financial year to
be slower than expected however corrective action has already been put into
place by the Board. We look forward to another year of progress for Orbital as
we continue to build the business from its firm foundations.'



For further information, please contact:


Orbital Software                 On 10.05.01:  +44 (0) 20 7466 5000
Kevin Dorren, CEO                Thereafter:   +44 (0) 131 348 3000
Brian Gray, COO

Buchanan Communications          Tel:          +44 (0) 20 7466 5000
Nicola How / Isabel Petre



                       Orbital Software Holdings plc

             Preliminary results for the year ended 31 March 2001



Chief Executive's Review

The last year has been a period of great significance for Orbital Software
Holdings plc ('Orbital') and the Group is pleased to report trading results in
line with expectations plus a significant number of new customers across both
the US and Europe.



In October 2000 the Group successfully listed on the Official List of the UK
Listing Authority, gaining inclusion in the techMARK Index and raising £16.7
million net of expenses for the Group. The funds were raised to facilitate the
rapid expansion of the business. This meant financing the development of the
existing business, expanding our sales and marketing efforts in the US and
Europe and the further development of Orbital's key software offering,
Organik.  Since our successful listing the Group has made significant progress
in achieving these objectives.



More recently, Orbital entered into merger discussions with Knowledge
Management Software plc ('KMS') and sought to acquire a small complementary US
software company. Talks with both parties were terminated in March 2001. These
discussions not only required a substantial amount of management time but also
created a certain amount of uncertainty amongst some customers and staff.
Notwithstanding the short-term impact of such distractions the future growth
potential of the business remains strong.



Financials:



Highlights
                             Three Months Ended               Year Ended
                              31 March   31 Dec  31 March  31 March  31 March
 Results in £ sterling            2001     2000      2000      2001      2000
 (£000's except per share)
 Turnover                          402      322        50     1,090       190
 Gross Profit                      396      317        31     1,067       170
 Gross Profit Margin               98%      98%       62%       98%       90%
 Net Loss                      (2,039)  (1,572)     (680)   (5,955)   (2,401)
 Loss per share
 basic                          (0.05)   (0.04)    (0.58)    (0.27)    (2.04)
 diluted                        (0.05)   (0.04)       N/A    (0.27)       N/A



In the year to 31 March 2001 turnover rose by 450% to £1.1 m (2000 : £0.2m).
We saw strong growth in both Europe and the US. Sales in North America
accounted for 65% of turnover with the remaining 35% coming from European
sales (2000: 79% US and 21% UK respectively) - showing the success of our
increased sales drive in Europe.



The loss before taxation amounted to £6.0m (2000 : £2.4m). This figure is in
line with our expectations and reflects the heavy investment in sales,
marketing and operating infrastructure. The loss per share was 27p compared to
204p for the same period last year. The weighted average for the year to March
2001 includes the issue of bonus shares, the share split and the shares
allotted on flotation as detailed in Note 4.



Operating Review



The Group

The rapid adoption of Organik has been clearly evident over the last year. The
number of deployments has grown to 37 at 31 March 2001 (2000: 3 deployments).
This trend is likely to be maintained as Orbital continues to focus on sales
and marketing across the US and Europe.



Sales

Direct:  Orbital continues to grow its direct sales force both in the US and
Europe.  Orbital's technology is being well accepted in the market, but as
sales value increases we are more prone to longer decision making processes -
this is also partly due to economic conditions in the US. Furthermore, our
recruitment plan is behind schedule due to the fact that we actively held back
on new appointments during the merger and acquisition discussions.  For these
reasons we expect to see an adverse impact on planned revenue for the current
year. However we have accelerated sales recruitment and anticipate the
benefits of this to lead to resumed sales growth following what is likely to
be a flat first quarter.



Indirect: In line with our strategy of growing sales through partnerships and
collaborations, and gradually moving away from the direct sales route, the
last year has seen increasing success for Orbital in this area, through
Orbital-led initiatives like the Velocity Alliance Programme ('VAP').



The aim of this program is to accelerate the development and deployment of
Organik-based solutions for customers who require specialised suites of
applications. It also provides systems integrators, resellers and technology
vendors with comprehensive technical and marketing support. To date members of
the VAP include Convera Corporation (formally Excalibur Technologies),
Participate.com, Virdev Software Solutions Group and McDermott Consulting.
These are mostly US based partners, however Orbital is currently in
discussions with a number of European based partners with the aim of expanding
the Alliance's global reach.  At 31 March 2001, Orbital had 14 indirect
channel partners (2000: 6 indirect channel partners)



US Operations

Economic conditions in the US have been soft over the last quarter with sales
opportunities still present, but the sales cycle being longer than expected.



Over the last quarter new customers in the US have included K-solutions, and
Viant, a global e-business consultancy. In addition to their individual
deployments of Organik, both customers have entered into reseller agreements
and we are initially targeting their existing customer base.



Additionally we were awarded our first federal government contract last month
and signed a pilot agreement with NASA to utilise the Organik application at
the Johnson Space Center.



European Operations

Our operations in Europe have performed well with new clients including
Atofina, the fifth largest chemical company in the world.



As in the US, revenues have not only been boosted by new customers but also
with further deployments and additional licensed users from our existing
corporate clients. These include Scottish Enterprise, who undertook a
corporate wide deployment of Organik.



Since the year end, in April 2001, Orbital's largest European software
deployment to date was announced with Clearlybusiness.com Ltd, a business
advice and services web site backed by Barclays Bank and Freeserve plc.



Research and Development

The Group continues to invest in research and development in line with sales
growth. During the year we increased our platform support by adding operating
system support for Windows 2000 and Solaris. This has allowed Orbital to
address further opportunities within corporate customers including larger
deployments of the application and also a smoother migration to site wide
deployments.



Recruitment and Staff Development



By mutual agreement, Ernst Kallus resigned as the Group's Sales and Marketing
Director with effect from 9 May 2001.  In his time with Orbital he has made a
significant contribution to its development and we would like to take this
opportunity to thank him for his efforts.



At 31 March 2001 the Group employed 82 (2000: 32) full time members of staff
in three worldwide locations.



While the sales headcount has grown from 14 at 31 December 2000 to 16 on 31
March 2001, this is behind our planned recruitment levels. We have taken
immediate remedial steps to accelerate sales staffing levels, and since the
year-end have filled key positions within the direct sales organisation in the
US.



Outlook



The Board is pleased with the progress made to date. The rate of growth of
customers and licence agreements are in line with expectations for the year
and the Group has managed to increase revenues and shipments, whilst
maintaining margins.



However, the combination of a smaller than projected headcount in sales and a
lengthening of the sales cycle will have an adverse effect on the Group's
revenues. As stated above the first quarter sales for the current year are
likely to be flat with growth resuming in the second quarter.



Notwithstanding the above, the outlook remains positive. The sales pipeline is
indicative of strong product acceptance and endorses our marketing strategy.
The strength of our balance sheet with £17 million of cash at 31 March 2001
has significantly improved our market position and enables us to engage with
larger corporate customers. The Board has reviewed the Group's cost base, and
as a result measures have already been and will continue to be taken to ensure
that the cost base is appropriate to our revised revenue expectations.



Overall, we look forward to another year of progress for Orbital, as we
continue to grow the business from its firm foundations.



                        Orbital Software Holdings plc

             Preliminary results for the year ended 31 March 2001



                     Consolidated profit and loss account

                       For the year ended 31 March 2001


                                                       Year ended    Year ended
                                                    31 March 2001 31 March 2000
                                             Notes
                                                                £             £
Turnover                                       1        1,090,018       190,404
Cost of sales                                            (23,512)      (19,958)
                                                      ___________   ___________
Gross profit                                            1,066,506       170,446
Other operating expenses (net)                        (7,597,504)   (2,471,160)
                                                      ___________   ___________
Operating loss                                        (6,530,998)   (2,300,714)
Interest receivable                                       691,019        43,415
Interest payable and similar charges                     (33,589)      (82,163)
                                                      ___________   ___________
Loss on ordinary activities before taxation           (5,873,568)   (2,339,462)
Tax on loss on ordinary activities             2                -             -
                                                      ___________   ___________
Loss on ordinary activities after taxation            (5,873,568)   (2,339,462)
'A' ordinary share appropriation                         (81,433)      (61,333)
(non-equity)
                                                      ___________   ___________
Loss for the financial year                           (5,955,001)   (2,400,795)
                                                      ___________   ___________
Loss per share
Basic                                          3           (0.27)        (2.04)
Diluted                                        3           (0.27)           N/a
                                                      ___________   ___________


All of the group's activities were continuing operations in both years.

         Consolidated statement of total recognised gains and losses

                                                         Year ended Year ended
                                                           31 March   31 March
                                                               2001       2000
                                                                  £          £
Loss for the financial year                              (5,955,001) (2,400,795)
Currency translation difference on foreign
currency net investment                                     (58,103)      20,520
                                                           
                                                         ___________ ___________
Total losses recognised since last annual report
and accounts                                             (6,013,104) (2,380,275)
                                                         
                                                         ___________ ___________



                        Orbital Software Holdings plc

             Preliminary results for the year ended 31 March 2001



                          Consolidated balance sheet

                             As at 31 March 2001


                                                             As at        As at
                                                          31 March     31 March
                                                              2001         2000
                                                                 £            £
Fixed assets
Tangible assets                                            449,035      240,049
                                                       ___________  ___________

Current assets

Debtors                                                  1,750,325      189,268
Cash at bank and in hand                                17,085,782      323,796
                                                       ___________  ___________
                                                        18,836,107      513,064
                                                       ___________  ___________

Creditors: Amounts falling due within one year         (1,539,490)  (1,149,397)
                                                       ___________  ___________
Net current assets/(liabilities)                        17,296,617    (636,333)
                                                       ___________  ___________
Creditors: Amounts falling due after more than            (46,875)    (314,618)
one year

                                                       ___________  ___________
Net assets/(liabilities)                                17,698,777    (710,902)
                                                       ___________  ___________
Capital and reserves
Called up share capital                           4      2,250,296      117,473
Share premium account                             5     14,665,811    3,422,697
Other reserves                                    5     11,046,846            -
Profit and loss account                           5   (10,264,176)  (4,251,072)
                                                       ___________  ___________
Shareholders' funds                               6     17,698,777    (710,902)
                                                       ___________  ___________

Equity shareholders' funds                              17,698,777  (4,200,987)
Non-equity shareholders' funds                                   -    3,490,085
                                                       ___________  ___________
                                                        17,698,777    (710,902)



                        Orbital Software Holdings plc

             Preliminary results for the year ended 31 March 2001



                       Consolidated cash flow statement

                       For the year ended 31 March 2001


                                                                Year      Year
                                                               ended     ended
                                                            31 March  31 March
                                                                2001      2000
                                                                   £         £
Operating loss                                           (6,530,998)(2,300,714)
Depreciation charges                                         201,730     98,681
Loss on sale of tangible fixed assets                         45,401          -
Decrease in stocks                                                 -     18,659
(Increase) in debtors                                    (1,282,268)  (113,955)
Increase in creditors                                      1,230,464     62,385
                                                         ___________ ___________
Net cash outflow from operating activities               (6,335,671)(2,234,944)
Returns on investment and servicing of finance
Interest receivable                                          410,028     47,774
Interest payable                                            (33,589)   (82,163)
                                                         ___________ ___________
Net cash inflow/(outflow) from returns on investment
and servicing of finance                                     376,439   (34,389)
                                                             

Taxation received                                                  -      7,782

Capital expenditure
Purchase of tangible fixed assets                          (453,915)  (197,911)
                                                         ___________ ___________
Net cash outflow before financing                        (6,413,147)(2,459,462)
                                                         ___________ ___________
Financing
(Decrease)/increase in short term borrowings               (840,371)    628,704
(Decrease) in long term borrowings                         (267,743)   (36,215)
Translation difference                                      (58,103)     20,520
Proceeds from issue of shares                             24,393,081          -
Share issue costs                                           (51,731)          -
                                                         ___________ ___________
Net cash inflow from financing                            23,175,133    613,009
                                                         ___________ ___________
Increase/(decrease) in cash in the year                   16,761,986(1,846,453)
                                                         ___________ ___________
Reconciliation of net cash flow to movement in net
debt
Net (debt)/cash at beginning of the year                   (868,693)  1,570,249
Increase/(decrease) in cash in the year                   16,761,986(1,846,453)
Decrease/(increase) in short term borrowings                 840,371 (628,704)
Decrease in long term borrowings                             267,743    36,215
                                                         ___________ ___________
Net cash/(debt) at end of year                           17,001,407  (868,693)
                                                         ___________ ___________



                        Orbital Software Holdings plc

             Preliminary results for the year ended 31 March 2001



Notes to the preliminary announcement



1 Segmental information


                                                          Year to       Year to
                                                         31 March      31 March
                                                             2001          2000
                                                                £             £
Geographical segments:
Turnover by geographical destination and
origin:
UK                                                        385,438        40,875
USA                                                       704,580       149,529
                                                      ___________   ___________
                                                        1,090,018       190,404
                                                      ___________   ___________
Operating loss by geographical origin:
UK                                                    (4,654,546)   (1,564,573)
USA                                                   (1,876,452)     (736,141)
                                                      ___________   ___________
                                                      (6,530,998)   (2,300,714)
                                                      ___________   ___________
Net assets/(liabilities) by geographical
origin:
UK                                                     21,065,812       475,548
USA                                                   (3,367,035)   (1,186,450)
                                                      ___________   ___________
                                                       17,698,777     (710,902)
                                                      ___________   ___________

2 Tax on loss on ordinary activities

There is no charge for corporation tax for the year ended 31 March 2001 as a
result of losses arising in the year.

3 Loss per share

The calculation of earnings per share are based on the following losses and
number of ordinary shares:
                                                          Year to      Year to
                                                         31 March     31 March
                                                             2001         2000
                                                                £            £
Loss for the financial year                           (5,955,001)  (2,400,795)
Weighted average basic number of shares                21,939,270    1,174,734




The weighted average for the year to March 2001 includes the issue of bonus
shares, the share split and the shares allotted on flotation as detailed in
Note 4.

4 Share capital



By special resolution passed on 3 October 2000, it was resolved that:

(a) each of the issued and unissued ordinary shares of 10p each and A ordinary
shares of 10p each in the capital of the Company be redesignated as an
ordinary share of 10p;

(b) the authorised share capital of the Company be increased from £164,136.40
to £5,000,000 by the creation of 48,358,636 ordinary shares of 10p each, each
ranking pari passu in all respects with the existing ordinary shares of 10p
each;

(c) the sum of £1,477,228 which will be part of the sum standing to the credit
of the Company's share premium account on Admission be applied in paying up in
full 14,772,280 ordinary shares of 10p each to be allotted credited as fully
paid at par to the holders of the issued ordinary shares of 10p each on the
Company's register of members immediately prior to Admission on the basis of
10 ordinary shares of 10p or A ordinary share of 10p held; and

(d)  each of the issued and unissued ordinary shares of 10p each be subdivided
into 2 ordinary shares of 5p each.

The Company allotted 12,413,800 ordinary shares of 5p at a price of 145p per
share.  The issued share capital at the date of this report is 45,005,920
ordinary shares of 5p.  On 11 October 2000 the company was admitted to the
Official  List of the UK Listing Authority.

5 Reserves



The movement on reserves are as follows:
                                    Profit and loss   Share premium     Capital
                                            account         account    reserves
                                                  £               £           £
                                                                              
At 1 April 2000                         (4,251,072)       3,422,697           -
Retained loss for the year              (5,873,568)               -           -
Premium on shares issued during                   -       7,594,446           -
year
Expenses and costs arising on                     -        (51,730)           -
issue of shares
Currency translation                       (58,103)               -           -
Appropriation of issue costs on            (81,433)          81,433           -
'A' Ordinary shares
Transfer to Capital reserve                       -    (11,046,846)  11,046,846
Share issue net of costs                          -      16,143,039           -
Bonus issue of shares                             -     (1,477,228)           -
                                        ___________     ___________ ___________
At 31 March 2001                       (10,264,176)      14,665,811  11,046,846
                                        ___________     ___________  __________



6 Reconciliation of movements in shareholders' fund

                                                          Year to       Year to
                                                         31 March      31 March
                                                             2001          2000
                                                                £             £
Loss for the financial year before                    (5,873,568)   (2,339,462)
appropriations
Currency translation                                     (58,103)        20,520
New share capital issued                               23,343,384             -
Loans converted to new share capital issued             1,049,697             -
Cost of issue of share capital                           (51,731)             -
                                                      ___________   ___________
                                                       18,409,679   (2,318,942)
Opening shareholders' funds                             (710,902)     1,608,040
                                                      ___________    __________
                                                       17,698,777     (710,902)
                                                      ___________    __________

7 Basis of preparation



The auditors have not reported on the accounts for the year ended 31 March
2001, nor have any accounts been delivered to the Registrar of Companies.  The
results for the year to 31 March 2001 have been prepared on the basis of
accounting policies consistent with those set out in the audited report and
financial statements for the year ended 31 March 2000.  The trading results of
the group reflect those of Orbital Software Group Limited which was acquired
by Orbital Software Holdings plc on 19 September 2000.  Orbital Software
Holdings plc was admitted to the Official List of the UK Listing Authority on
11 October 2000.

The results for the year to 31 March 2001 reflect a change in accounting
estimate of the useful lives of computer equipment and fixtures and fittings.
Subsequent to 31 March 2000 it was determined to provide depreciation at 33%
and 20% straight line basis on computer equipment and fixtures and fittings
respectively. Prior to 31 March 2000 the rates of depreciation were 25% on
computer equipment and 10% on fixtures and fittings, both on the reducing
balance method.  The change in the estimate of the useful lives of computer
equipment and fixtures and fittings was made to provide a more appropriate
reflection of the period over which computer equipment and fixtures and
fittings are retained and used.  The impact was to reduce operating profits by
£35,622 in the period to 31 March 2001.  The brought forward balances at as 31
March 2000 are being depreciated over the remaining period of the revised
lives.

The financial information set out above does not comprise the company's
statutory accounts.

The results for the year ended 31 March 2000 are an abridged version of the
Group's full financial statements which carried an unqualified auditors'
report and which have been filed with the Registrar of Companies.  These
results were audited by PriceWaterhouse Coopers for the year ended 31 March
2000.