Prologic plc

December 15, 2008 02:00 ET

Interim Results


15 December 2008
                                                   Prologic plc

                                    ("Prologic", the "Company" or the "Group")

                            Interim Results for the six months ended 30 September 2008

Prologic  plc,  a  specialist provider of software, services and consultancy to the fashion  &  lifestyle  sector,
announces its interim results for the six months ended 30 September 2008.

Financial Headlines

        *   Revenue of £5.01m (2007: £5.27m).

        *   Recurring revenues 52% of total revenue (2007: 51%).

        *   Operating profit of £0.03m (2007: £0.41m).

        *   EPS 0.6p (2007: 3.6p).

        *   Period end net cash position £1.74m (30 September 2007: £1.39m) and cash balance of £2.00m
            (30 September 2007: £2.00m).

Operational Highlights

        *   CIMS software made available to customers on a "Software as a Service" (SaaS) basis.

        *   Successful completion of a major store-systems roll out for T M Lewin.

        *   Successful implementation of new systems at Liberty of Regent Street

        *   Post period end, new Board appointments: Colin Wells as non-executive Chairman, Mark Quartermaine
            and Paul Clifford as non-executive directors.

Sam Jackson, Managing Director, commented:

We announced recently that our trading for the first six months of this financial year was down on the same period
last  year.  However, with our strong cash generation and balance sheet, solid customer base  and  high  recurring
revenues  we believe we are well placed to ride out the downturn. We also believe that the significant  investment
we  have  made in recent developments to our products and service portfolio will support the business through  the
slowdown, and leave it well placed to take full advantage of the upturn.

Market  research* shows that retailers are seeking to offset reduced spending on the high street by developing  or
upgrading  their  on-line  sales  channel. Our new low-cost eCommerce portal delivers  functionality  and  a  user
experience  that  was  previously only available to specialist on-line fashion web sites and  tier-one  retailers.
Furthermore,  our SaaS model will now allow customers to gain all the benefits of using our software with  reduced
capital outlay. We consider that the compelling business benefits presented by these offerings will enable  us  to
increase our market share and extend our already strong market position.

We  recently announced the appointment of Colin Wells as non-executive Chairman and Mark Quartermaine  as  a  non-
executive director. More recently we have completed the recomposition of the board by appointing Paul Clifford  as
a  non-executive director. Together, the new team bring a wealth of highly relevant and complementary  experience,
which will help guide Prologic through the slowdown and on to its next stage of development.

* The  Prologic  Report. A survey of Fashion Retailers sponsored by Prologic and Oracle, and  conducted  by
  Martec International Limited.

Further information:

Prologic plc                          01442 876 277
Sam Jackson, Managing Director
David Parry, Finance Director

Arbuthnot Securities Limited          020 7012 2000
Alasdair Younie

Biddicks                              020 7448 1000
Shane Dolan

Prologic plc
Interim Results 2008

                                               Chairman's Statement


As  we recently announced, Prologic has been impacted by the difficult trading conditions resulting from the harsh
economic environment. From September, customers started to become very cautious and consequently began to delay or
reduce  the  value  of  their IT expenditure. This caution, we believe, will continue at  least  until  they  have
evaluated  their  Christmas  trading, so we have taken a very conservative view when  assessing  our  own  trading
prospects for the remainder of this year and into next year. We therefore conducted a cost review, including a 10%
reduction in headcount, which has resulted in annualised savings of approximately £500,000. The cost reductions do
not  affect Prologic's front-line customer services, or the Company's ability to deliver its medium- and long-term

As well as the cost savings, a number of other factors will help to insulate us from the downturn and put us in  a
strong position when the market recovers. We have good cash generation and cash reserves, as well as only a  small
level of debt. Our customer base is solid, including many of the UK's most recognised fashion retailers, and  over
50%  of our revenues from them are recurring. Also, our eCommerce portal and SaaS model offer significant business
benefits to customers in the current market conditions.

Despite  the  slowdown,  growth  of  online fashion sales (led by companies  such  as  ASOS)  is  continuing.  The
traditional  high  street fashion retailers are therefore seeking to develop or upgrade their  own  home  shopping
channels.  Our eCommerce solution allows customers to have control of web store design whilst benefiting  from  an
enterprise-scale  content management, order processing and fulfilment solution that is fully integrated  with  the
CIMS  multi-channel application. Ted Baker has already chosen this solution and we are confident it  will  attract
further premium customers in 2009.

Due  to the current business climate we decided to bring forward the release of our "Software as a Service" (SaaS)
model.  Given their current caution, we believe this will be attractive to customers as it offers reduced  initial
capital  outlay  and risk. Its introduction may impact our reported operating profits in the  short  term  but  we
consider that the benefits derived from increased market share and recurring revenues will outweigh this. It  will
also enable us to deliver our technology via UK and overseas resellers, opening up potential new markets.

Following  the  implementation of TM Lewin's head office systems last year, we successfully completed  during  the
period  a  fast-track roll out of 140 tills into 68 stores. Enterprise system roll outs were  also  completed  for
Famous Footwear and Bamford.

Financial results

Revenue  for  the  six-months was £5.01m, a decrease of 5% on 2007. Recurring revenues from annual  licence  fees,
support and Unify represented 52% of the total revenue generated in the period. Gross profit reduced by £0.20m  to
£2.06m with the gross margin percentage at 41% of revenues (2007: 43%). Administrative expenses rose by £0.18m  to
£2.03m,  primarily  due to increased amortised development costs and marketing expenditure. Operating  profit  was
£0.03m (2007: £0.41m) and earnings per share was 0.6p (2007: 3.6p).

The  tax  credit  of  £0.19m  principally  resulted from the impact of  capitalising  and  amortising  development
expenditure, and the availability of development tax credits.

At  30  September  2008  the Group had net cash of £1.74m, an increase of £0.35m on the 2007  position.  The  cash
balance at the period end was £2.00m (2007: £2.00m).


In line with previous practice, the directors have not proposed an interim dividend but will consider proposing  a
final dividend at the financial year end.
Board Changes

On  6  November, I was appointed non-executive Chairman and Mark Quartermaine joined the Board as a  non-executive
director. On 24 November, we appointed Paul Clifford as a non-executive director. Mark, Paul and I look forward to
working with the executive team to help further develop the business and to enable it to reach its full potential.
Derek  Lewis and Gareth Chick stepped down from the Board on 6 November and we would like to thank them for  their
valuable contributions and service to the Company.


It is widely reported that consumer confidence has been eroded by the financial crisis, with consequent reductions
in  trading  volumes  for  retailers  and wholesalers, including our own customers.  With  most  commentators  not
forecasting  an  improvement until the end of 2009 at the earliest, we are taking a very  conservative  view  when
making plans for the business.

We  do  however believe that the breadth of our products and services means that even during the downturn  we  can
offer  customers  functionality  and  options that will be attractive to  them,  as  they  look  to  optimise  the
performance of their businesses to help offset the negative affects of the market slowdown.

Our business fundamentals are very sound and accordingly we consider that we are in a good position to weather the
economic storm, and to benefit from the upturn when it comes.

Colin Wells
Prologic plc

12 December 2008

Registered Office:
Redwood House
Herts. HP4 2DH

Registered Number: 05031466

Independent review report to Prologic plc


We have been engaged by the company to review the financial information in the Interim Results Report for the six
months ended 30 September 2008 which comprises the Consolidated income statement, Consolidated balance sheet,
Consolidated cash flow statement, Statement of changes in equity and the related explanatory notes 1 to 4. We have
read the other information contained in the Interim Results Report which comprises only the Financial Headlines,
Operational Headlines and the Chairman's Statement and considered whether it contains any apparent misstatements
or material inconsistencies with the information in the condensed set of financial statements.

This report is made solely to the company in accordance with guidance contained in International Standard on
Review Engagements (UK and Ireland) 2410, 'Review of Interim Financial Information performed by the Independent
Auditor of the Entity'. Our review work has been undertaken so that we might state to the company those matters we
are required to state to them in a review report and for no other purpose. To the fullest extent permitted by law,
we do not accept or assume responsibility to anyone other than the company, for our review work, for this report,
or for the conclusion we have formed.

Directors' responsibilities

The Interim Results Report is the responsibility of, and has been approved by, the directors. The AIM rules of the
London Stock Exchange require that the accounting policies and presentation applied to the interim figures are
consistent with those which will be adopted in the annual accounts having regard to the accounting standards
applicable for such accounts.

As disclosed in Note 1, the annual financial statements of the group are prepared in accordance with the basis of

Our responsibility

Our responsibility is to express to the Company a conclusion on the financial information in the Interim Results
Report based on our review.

Scope of review

We conducted our review in accordance with International Standard on Review Engagements (UK and Ireland) 2410,
'Review of Interim Financial Information Performed by the Independent Auditor of the Entity' issued by the
Auditing Practices Board for use in the United Kingdom. A review of interim financial information consists of
making enquiries, primarily of persons responsible for financial and accounting matters, and applying analytical
and other review procedures. A review is substantially less in scope than an audit conducted in accordance with
International Standards on Auditing (UK and Ireland) and consequently does not enable us to obtain assurance that
we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not
express an audit opinion.


Based on our review, nothing has come to our attention that causes us to believe that the financial information in
the Interim Results Report for the six months ended 30 September 2008 is not prepared, in all material respects,
in accordance with the basis of accounting described in Note 1.

Grant Thornton UK LLP
Chartered accountants
London Thames Valley

12 December 2008

Prologic plc
Interim Results 2008

Consolidated income statement
                                                                       Unaudited           Unaudited
                                                                   six months to       six months to
                                                                    30 September        30 September
                                                                            2008                2007
                                                                           £'000               £'000

Revenue                                                                    5,013               5,267

Cost of sales                                                             (2,956)             (3,009)

Gross profit                                                               2,057               2,258

Administrative expenses                                                   (2,031)             (1,648)

Operating profit before exceptional expenses                                  26                 610

Exceptional expenses                                                           -                (205)

Operating profit                                                              26                 405

Financial income                                                              32                  20
Financial expenses                                                           (18)                (28)

Profit before tax                                                             40                 397

Taxation                                                                      19                 (33)

Profit for the period                                                         59                 364

                                                                           Pence               Pence

Earnings per share - basic                                                  0.59                3.64

Earnings per share - diluted                                                0.59                3.60

Prologic plc
Interim Results 2008

Consolidated balance sheet
                                                                       Unaudited           Unaudited
                                                                    30 September        30 September
                                                                            2008                2007
                                                                           £'000               £'000
Non-current assets
Goodwill                                                                   7,572               7,572
Development costs                                                          3,508               2,876
Other intangible assets                                                      249                 189
Property, plant and equipment                                                499                 268
                                                                          11,828              10,905

Current assets
Inventories                                                                   84                 135
Trade and other receivables                                                3,179               3,465
Cash and cash equivalents                                                  2,004               1,996
                                                                           5,267               5,596

Total assets                                                              17,095              16,501

Current liabilities
Trade and other payables                                                  (1,883)             (2,242)
Current tax payable                                                         (288)               (296)
Bank loan                                                                   (257)               (336)
Deferred revenue                                                          (2,659)             (2,262)
                                                                          (5,087)             (5,136)

Net current assets                                                           180                 460

Non-current liabilities
Bank loan                                                                    (8)                (270)
Deferred tax liabilities                                                   (899)                (814)
                                                                           (907)              (1,084)

Total liabilities                                                        (5,994)              (6,220)

Net assets                                                               11,101               10,281

Share capital                                                                50                   50
Share premium account                                                     2,734                2,734
Merger reserve                                                            3,924                3,924
Other reserve                                                                56                   55
Retained earnings                                                         4,337                3,518
Total equity                                                             11,101               10,281

Prologic plc
Interim Results 2008

Consolidated cash flow statement
                                                                      Unaudited            Unaudited
                                                                  six months to        six months to
                                                                   30 September         30 September
                                                                           2008                 2007
                                                                          £'000                £'000
Cash flows from operating activities
Operating profit                                                             26                  405
Adjustments for:
Amortisation of development costs                                           398                  306
Amortisation of other intangible assets                                      78                   68
Depreciation of property, plant and equipment                                84                   65
Share option charges                                                         (9)                  11
(Increase)/decrease in inventories                                          (44)                 (41)
Decrease in receivables                                                     636                  576
(Decrease) in payables                                                     (295)                (219)
Increase/(decrease) in deferred income                                      104                 (231)
Cash generated by operations                                                978                  940

Interest received                                                            32                   20
Interest paid                                                               (15)                 (24)
Net cash from operating activities                                          995                  936

Cash flows from investing activities
Development expenditure                                                    (740)                (498)
Purchase of other intangible assets                                         (59)                 (29)
Purchase of property, plant and equipment                                  (284)                 (31)
Net cash used in investing activities                                     (1083)                (558)

Cash flows from financing activities
Repayment of bank loan                                                     (139)                (139)
Dividends paid to shareholders                                             (200)                (150)
Net cash used in financing activities                                      (339)                (289)

Net (decrease)/increase in cash and cash equivalents                       (427)                  89
Cash and cash equivalents at 1 April                                      2,431                1,907
Cash and cash equivalents                                                 2,004                1,996

Prologic plc
Interim Results 2008

Statement of changes in equity
                                             Share   premium    Merger     Other  Retained     Total
                                           capital   account   reserve   reserve    profit    equity
                                             £'000     £'000     £'000     £'000     £'000     £'000

At 1 April 2008                                 50     2,734     3,924        65     4,478    11,251
Share option charges                             -         -         -        (9)        -        (9)
Retained profit and total recognised             -         -         -         -        59        59
 income and expense for the period
Dividends                                        -         -         -         -      (200)     (200)
At 30 September 2008                            50     2,734     3,924        56     4,337    11,101

Notes to the Financial Statements

1. Group Accounting Policies

Basis of preparation

The consolidated financial statements have been prepared in accordance with the recognition and measurement
principles of applicable International Financial Reporting Standards as adopted by the EU and International
Financial Reporting Standards as issued by the International Accounting Standards Board (IFRS) and the AIM Rules
for Companies

The accounting policies adopted are consistent with those of the annual financial statements for the year ended 31
March 2008, and therefore the interim financial statements should be read in conjunction with the annual report
for that year.

2. Segmental Analysis

In the opinion of the directors the Group's activities constitute one class of business.

3. Earnings per share

Earnings per share is calculated by dividing the earnings attributable to shareholders by the number of shares  in
issue during the period.

The weighted average number of shares in issue during the period was 10,000,000 (basic and diluted).

4. Status and approval

The interim results for the 6 month periods to 30 September 2008 and 2007 are unaudited and do not constitute
statutory accounts within the meaning of Section 240 of the Companies Act.

The interim results were approved by the Board on 12 December 2008.

Contact Information

  • Prologic plc