DWS Advanced Business Solutions Ltd Company Announcement Half Year

DWS Advanced Business Solutions Ltd Company Announcement Half Year Financial Results Announcement 31 December 2007 DWS Advanced Business Solutions Ltd (DWS) is pleased to announce the following results and highlights for the half year ended 31 December 2007. Total revenue up $14.60M to $43.45M a 51% increase from Dec 2006. EBITDA (before share based payments) up $3.87M to $13.45M a 40% increase from Dec 2006. NPAT up $1.88M to $8.68M, a 28% increase from Dec 2006. Increase in staff numbers from the same time last period of 210 to over 560 full-time employees. Interim fully franked dividend of $0.055 cents per ordinary share declared. o o o Interim Dividend Record Date Expected Payment Date $0.055 cents per ordinary share March 15th 2008 April 4th 2008 Acquisition of Equest Consulting Pty Ltd effective 1 July 2007. Opened Adelaide office in September 2007. Acquisition of Strategic Data Management Pty Ltd in December 2007 (effective 1 January 2008). Further strengthening of the management capability with additions of quality management personnel in all geographic locations. Establishment of Employee Share Option Plan to ensure DWS continues attract and retain the best staff in the industry. Further commentary on the results for the period is contained in the Review of Operations in the Directors’ Report accompanying the Interim Half Year Report dated 25th February 2008. About DWS DWS Advance Business Solutions Ltd is a highly successful Information Technology Services company that listed on the Australian Stock Exchange on 15th June 2006. ASX code DWS. With over 560 employees it has offices in Melbourne, Sydney, Brisbane, Adelaide and Canberra. More information can be obtained at our website http://www.dws.com.au/ or by contacting: Vivian Clark Chief Financial Officer and Company Secretary DWS Advanced Business Solutions Ltd ABN 83 085 656 088 31 December 2007 Partnering for Success DWS Advanced Business Solutions Ltd RESULTS FOR ANNOUNCEMENT TO THE MARKET Half Year December 31 2007 Dec-06 $'000 Revenue from ordinary activities EBITDA before share based payments Profit(loss) from ordinary activities after tax attributable to members 28,855 9,586 6,802 Amount per security 5 cents 5.5 cents Dec-07 $'000 43,453 13,458 8,681 amount per security 100% 100% up up up $'000 14,598 3,872 1,879 % Change 51% 40% 28% Dividends (distributions) Dividend Declared for during the half financial year Dividend Declared subsequent to financial half year Record Date for dividend entitlement 17 September 2007 15 March 2008 Previous corresponding period Net tangible asset backing per ordinary security Earnings per Share (basic and diluted) 20.14 cents Current period 20.31 cents 5.18 cents 6.56 cents Controlled Entities- The company gained 100% control of Equest Consulting Pty Ltd effective from 1 July 2007. The company did not lose control of any entity during the financial half year. Associates and Joint Ventures- The company did not have any interest in associates or joint ventures during the financial half year. The commentary on the results for the period is contained in both the Half Yearly Financial Results announcement and the review of operations in the Directors’ Report accompanying the Interim Half Year Report dated 25th February 2008. DWS Advanced Business Solutions Ltd ABN 83 085 656 088 31 December 2007 Partnering for Success DWS Advanced Business Solutions Ltd and its Controlled Entities Half Year Financial Report Half Year ended 31 December 2007 ABN 83 085 656 088 The consolidated half year financial report does not include all of the information required for a full annual report and should be read in conjunction with the consolidated annual financial report of the consolidated entity (DWS) for the year ended 30 June 2007 and any public announcements made by DWS during the half year reporting period in accordance with the continuous disclosure requirements of the Corporations Act 2001. DWS Advanced Business Solutions Ltd ABN 83 085 656 088 31 December 2007 Partnering for Success TABLE OF CONTENTS DIRECTORS’ REPORT......................................................................................................... 2 CONSOLIDATED INCOME STATEMENT .............................................................................. 5 CONSOLIDATED BALANCE SHEET...................................................................................... 6 CONSOLIDATED STATEMENT OF CHANGES IN EQUITY .................................................... 7 CONSOLIDATED CASHFLOW STATEMENT ......................................................................... 8 NOTES TO THE HALF YEAR FINANCIAL REPORT ............................................................... 9 DIRECTORS’ DECLARATION ............................................................................................13 AUDITOR’S INDEPENDENCE DECLARATION ...................................................................14 INDEPENDENT AUDITOR’S REVIEW REPORT .................................................................15 DWS Advanced Business Solutions Ltd ABN 83 085 656 088 31 December 2007 Partnering for Success DIRECTORS’ REPORT The Directors present their report together with the half year consolidated financial report of the consolidated entity consisting of DWS Advanced Business Solutions Ltd and its controlled entities (the Company) for the half year ended 31 December 2007 and the auditor’s review report thereon. The consolidated half year financial report does not include all of the information required for a full annual report and should be read in conjunction with the consolidated annual financial report of the consolidated entity for the year ended 30 June 2007 and any public announcements made by the consolidated entity during the half year reporting period in accordance with the continuous disclosure requirements of the Corporations Act 2001. Directors The Directors of the Company at any time during or since the end of the half year are: Name Period of Directorship Non-Executive Harvey Parker (Chairperson) Ken Barry Glen McLean Director since May 2006 Director since May 2006 Director since May 2006 Executive Danny Wallis (Chief Executive Officer) Glenn Fielding (Managing Director) Director since December 1998 Director (resigned 8 February 2008) DWS Advanced Business Solutions Ltd and Controlled Entities ABN 83 085 656 088 31 December 2007 half year financial report 2 Directors’ Report Cont’ Review of Operations With revenue from normal operations increasing $14.58M, a 51% increase from the corresponding period in 2006, the consolidated entity delivered EBITDA (before share based payments) growth of $3.87M representing a 40% increase over the corresponding period in 2006. The following table summarises the consolidated entity’s financial performance for the half year ended 31 December 2007: Half Year EBITDA Analysis 31 Dec 2007 Revenue from operations Costs (adjusted for "AASB 2" share based payments) EBITDA before share based payments Interest Depreciation "AASB 2" share based payments NPBT TAX NPAT $'000 43,145 (29,687) 13,458 308 (137) (792) 12,837 (4,156) 8,681 31 Dec 2006 $'000 28,562 (18,975) 9,587 293 (79) (17) 9,784 (2,982) 6,802 Increase $'000 14,583 (10,712) 3,871 15 (58) (775) 3,053 (1,174) 1,879 31% 39% 28% % Change 51% 56% 40% 5% 73% The increase in operating revenue of $14.58M and continued strong profitability was driven by: 1. The integration of acquired entities Globalsoft Australia Pty Ltd and Equest Consulting Pty Ltd. 2. Continued organic growth for both the Sydney, Melbourne, and Brisbane offices and the opening of the Adelaide office. 3. Further additions to DWS’ sales team in all geographic areas thereby strengthening sales and account management capabilities. 4. Expansion of DWS’ blue chip client base in all geographic locations thereby providing further diversification. The overall effect of the above has resulted in an increase in EBITDA (before share based payments) of 40% to $13.46M. This is the first time DWS has reported material share based payments and as such it has been isolated to more accurately reflect the underlying business operations. There has been no change in the business activities of the group since the last reporting date. DWS Advanced Business Solutions Ltd and Controlled Entities ABN 83 085 656 088 31 December 2007 half year financial report 3 Directors’ Report Cont’ Lead Auditor’s Independence Declaration under Section 307C of the Corporations Act 2001. The lead auditor’s independence declaration is set out on page 14 and forms part of the Directors’ Report for the half year ended 31 December 2007. Rounding Off The consolidated entity is a kind referred to in ASIC class order 98/100 dated July 1998 and in accordance with that Class Order, amounts in the financial report and Directors’ report have been rounded off to the nearest thousand dollars, unless otherwise stated. Dated at Melbourne 25th February 2008 Signed in accordance with a resolution of the Directors. Harvey Parker Director DWS Advanced Business Solutions Ltd and Controlled Entities ABN 83 085 656 088 31 December 2007 half year financial report 4 CONSOLIDATED INCOME STATEMENT for the half year ended 31 December 2007 Consolidated Notes 31 Dec 2007 $'000 31 Dec 2006 $'000 Revenue 2 43,453 43,453 28,855 28,855 (17,666) (330) (79) (996) 9,784 (2,982) 6,802 6,802 Employee benefit expense Occupancy expenses Depreciation and amortisation expenses Other expenses Profit before tax Income tax expense Profit for the half year Profit attributable to the members of the parent entity 4 (28,410) (410) (137) (1,659) 12,837 (4,156) 8,681 8,681 Earnings per Share Basic earnings per share Diluted earnings per share 5 $ $ 0.0656 0.0656 $0.0518 $0.0518 The consolidated balance sheet is to be read in conjunction with the notes to the half year financial report set out on pages 9 to 12. DWS Advanced Business Solutions Ltd and Controlled Entities ABN 83 085 656 088 31 December 2007 half year financial report 5 CONSOLIDATED BALANCE SHEET as at 31 December 2007 Notes Current Assets Cash and cash equivalents Trade and other receivables Other Total Current Assets Non-Current Assets Property, plant and equipment Deferred tax assets Intangible assets Total Non-Current Assets Total Assets Current Liabilities Trade and other payables Current tax liabilities Short term Provisions Other Total Current Liabilities Non-Current Liabilities Long term Provisions Other payables Total Non-Current Liabilities Total Liabilities Net Assets Equity Issued capital Retained earnings/(losses) Total Equity 32,117 11,453 43,570 29,250 9,380 38,630 89 914 1,003 9,552 43,570 75 882 957 9,432 38,630 3,374 2,507 2,510 158 8,549 3,713 2,459 2,164 139 Consolidated 31 Dec 2007 30 June 2007 $'000 $'000 11,308 19,036 3,209 33,553 15,369 16,018 1,916 33,303 1,126 1,765 16,678 19,569 53,122 1,145 1,468 12,146 14,759 48,062 8,475 The consolidated balance sheet is to be read in conjunction with the notes to the half year financial report set out on pages 9 to 12. DWS Advanced Business Solutions Ltd and Controlled Entities ABN 83 085 656 088 31 December 2007 half year financial report 6 CONSOLIDATED STATEMENT OF CHANGES IN EQUITY for the half year ended 31 December 2007 Share Capital $ '000 29,218 17 29,235 29,250 792 1,750 325 32,117 8,681 11,453 Retained Earnings Total Equity $ '000 $ '000 (1,449) 6,802 5,353 9,380 (6,608) 27,769 17 6,802 34,588 38,630 (6,608) 792 1,750 325 8,681 43,570 Note Balance at July 1 2006 Share based payments Profit for the half year Balance at December 31 2006 Balance at July 1 2007 Dividends to equity holders Share based payments Shares issued for acquisition of subsidiary Options exercised Profit for the half year Balance at December 31 2007 The consolidated balance sheet is to be read in conjunction with the notes to the half year financial report set out on pages 9 to 12. DWS Advanced Business Solutions Ltd and Controlled Entities ABN 83 085 656 088 31 December 2007 half year financial report 7 CONSOLIDATED CASHFLOW STATEMENT for the half year ended 31 December 2007 Consolidated Notes Cash Flows from Operating Activities Cash receipts from customers Cash payments to suppliers and employees Income taxes paid Interest received Net cash provided by operating activities Cash Flows from Investing Activities Payments for plant and equipment Amounts advanced to related parties Amounts paid for subsidiaries net of cash acquired Amounts borrowed from related parties Net cash used in investing activities Cash Flows from Financing Activities Proceeds from the issue of share capital Dividends paid Net cash used in financing activities Net (Decrease) / Increase in Cash Held Cash at the beginning of the financial year Cash at the end of the Half Year 325 (6,608) (6,283) (4,061) 15,369 11,308 5,508 9,558 15,066 42,156 (32,563) (4,526) 307 5,374 31,118 (24,279) (1,409) 293 5,723 31 Dec 2007 $'000 31 Dec 2006 $'000 (82) (9) (3,064) 3 (3,152) (227) (229) 241 (215) The consolidated balance sheet is to be read in conjunction with the notes to the half year financial report set out on pages 9 to 12. DWS Advanced Business Solutions Ltd and Controlled Entities ABN 83 085 656 088 31 December 2007 half year financial report 8 NOTES TO THE HALF YEAR FINANCIAL REPORT for the half year ended 31 December 2007 Note 1 Notes to the Consolidated Half Year Financial Report Reporting Entity DWS Advanced Business Solutions Ltd and its controlled entities (the Company) is a company domiciled in Australia. The consolidated half year financial report of the Company as at and for the half year ended 31 December 2007 comprises the Company and its controlled entities (together referred to as the “consolidated entity”). The consolidated annual financial report of the consolidated entity as at and for the year ended 30 June 2007 is available upon request from the Company’s registered office at Level 22, 15 Collins Street, Melbourne or at www.dws.com.au. Statement of Compliance The consolidated half year financial report is a general purpose report which has been prepared in accordance with AASB 134: Interim Financial Reporting and the Corporations Act 2001. The consolidated half year financial report does not include all of the information required for a full annual report and should be read in conjunction with the consolidated annual financial report of the consolidated entity for the year ended 30 June 2007 and any public announcements made by the consolidated entity during the half year reporting period in accordance with the continuous disclosure requirements of the Corporations Act 2001. The consolidated entity is of a kind referred to in ASIC Class Order 98/100 dated 10 July 1998 and in accordance with the class order, amounts in this half year financial report have been rounded to the nearest $1,000, unless otherwise stated. The consolidated half year financial report was approved by the Board of Directors on 25th February 2008. Significant Accounting Policies The accounting policies applied by the consolidated entity in the consolidated half year financial report are the same as those applied by the consolidated entity in its consolidated financial report for the year ended 30 June 2007. The Group has adopted AASB 2007-4 Amendments to Australian Accounting Standards arising from ED 151 and Other Amendments (April 2007) AASB 2007-4. Estimates The preparation of the half year financial report requires management to make judgments, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets and liabilities, income and expense. Actual results may differ from these estimates. DWS Advanced Business Solutions Ltd and Controlled Entities ABN 83 085 656 088 31 December 2007 half year financial report 9 Notes to the half year financial report Cont’ There were no significant judgements made by management in applying the consolidated entity’s accounting policies and the key sources of estimation uncertainty were the same as those applied to the consolidated financial report as at and for the year ended 30 June 2007. Note 2 Revenue Consolidated 31 Dec 2007 31 Dec 2006 $'000 $'000 43,005 308 140 43,453 28,559 293 3 28,855 Operating activities Services revenue Interest received Other Total revenue from ordinary activities Note 3 Segment Reporting Business Segments DWS Advanced Business Solutions Limited and its controlled entities, develop, manage and implement information technology solutions. There is only one business segment based on the consolidated entity’s management reporting system. The business operates within Australia. Note 4 Income Tax Consolidated 31 Dec 2007 31 Dec 2006 $'000 $'000 The components of income tax expense comprise: Current tax payable Deferred tax expense 4,453 (297) 4,156 12,837 3,851 2,811 171 2,982 9,784 2,935 Profit/Loss before income tax Prima facie tax on profit before income tax at 30% Increase in income tax expense due to: Non-deductible entertainment Share based payments Other items Income tax adjusted for permanent differences Income tax expense/(benefit) 18 237 50 4,156 4,156 27 5 15 2,982 2,982 DWS Advanced Business Solutions Ltd and Controlled Entities ABN 83 085 656 088 31 December 2007 half year financial report 10 Notes to the half year financial report Cont’ Note 5 Earnings Per Share Number of shares used in the Earnings Per Share Calculations Consolidated 31 Dec 2007 No. 31 Dec 2006 No. Number for basic earnings per share Ordinary shares 132,392,341 132,392,341 131,500,000 131,500,000 Number for diluted earnings per share Ordinary shares The number of potential ordinary shares which are not dilutive and not included in the calculation 433,334 650,000 Note 6 Share Based Payments In June 2006 the consolidated entity established a Directors’ share option scheme (the scheme). The terms and conditions of the scheme are disclosed in the consolidated financial report as at and for the year ended 30 June 2007. On 1 July 2007 the consolidated entity established an employee share option plan (the plan). The purpose of the plan is to provide eligible employees with an incentive to remain within the consolidated entity and to improve the longer-term performance of the consolidated entity and its return to shareholders. Pursuant to the plan, eligible employees were granted 3000 zero cost options on 1 July 2007 and eligible employees will be entitled to exercise these on 1 July 2008, 1 July 2009, and 1 July 2010. Executives in the share option plan will not be able to exercise options until 2010. Note 7 Subsequent Events Since the end of the financial half year the Directors declared the following dividend. Amount Per Share Interim – Ordinary $0.055 Franked Amount Per Share $0.055 Date of Payment 4th April, 2008 The financial effect of the interim dividend has not been brought to account in the financial statements for the half year ended 31 December 2007 but will be recognised in subsequent financial reports. DWS Advanced Business Solutions Ltd and Controlled Entities ABN 83 085 656 088 31 December 2007 half year financial report 11 Notes to the half year financial report Cont’ Note 8 Contingencies There have been no changes to the contingent liabilities during the period. Bank guarantees to the value of $108,762 remain in place and are provided as a security for the performance of rental property covenants. The bank guarantees are secured by a Standard Authority to Appropriate and Set-Off Term Deposits to the equivalent guarantee value. Note 9 Acquisition of subsidiary On 21 December 2007, DWS Advanced Business Solutions Ltd acquired all of the shares of Strategic Data Management Pty Ltd (SDM) for $8.3M. This was internally funded with $5M in cash and the remainder in shares in DWS Advanced Business Solutions Ltd. As the acquisition was effective from 1 January 2008, SDM financial results have not been included as part of the consolidated entities financial reports for the financial half year ended 31 December 2007. DWS Advanced Business Solutions Ltd and Controlled Entities ABN 83 085 656 088 31 December 2007 half year financial report 12 DIRECTORS’ DECLARATION 1. In the opinion of the Directors of DWS Advanced Business Solutions Limited and its controlled entities (the consolidated entity): (a) the financial statements and notes, set out on pages 5 to 12 are in accordance with the Corporations Act 2001, including: (i) giving a true and fair view of the financial position of the consolidated entity as at 31 December 2007 and of its performance, as represented by the results of their operations and their cash flows, for the half year ended on that date; complying with Accounting Standard AASB 134 Interim Financial Reporting and the Corporations Regulations 2001: and (ii) (b) there are reasonable grounds to believe that the Company will be able to pay its debts as and when they become due and payable. This declaration is made in accordance with a resolution of the Directors. Harvey Parker Director Signed at Melbourne this 25th day February 2008 DWS Advanced Business Solutions Ltd and Controlled Entities ABN 83 085 656 088 31 December 2007 half year financial report 13 Auditor’s Independence Declaration To the Directors of DWS Advanced Business Solutions Limited and Controlled Entities Grant Thornton Audit (Vic) Pty Ltd ABN 72 493 937 506 Level 35 North Tower 525 Collins Street Melbourne VIC 3000 GPO Box 5225 Melbourne VIC 3001 T + 61 3 8620 6000 F + 61 3 8620 6066 E info@gtvic.com.au W www.grantthornton.com.au Auditor’s Independence Declaration In accordance with the requirements of Section 307C of the Corporations Act 2001, as lead auditor for the review of DWS Advanced Business Solutions Limited and Controlled Entities for the half-year ended 31 December 2007, I declare that, to the best of my knowledge and belief, there have been: (a) No contraventions of the auditor independence requirements of the Corporations Act 2001 in relation to the review; and No contraventions of any applicable code of professional conduct in relation to the review. (b) GRANT THORNTON AUDIT (VIC) PTY LTD Authorised Audit Company SIMON TRIVETT Director Melbourne 25 February 2008 Grant Thornton is a trademark owned by Grant Thornton International Ltd (UK) and used under licence by independent firms and entities throughout the world. Grant Thornton member firms in Australia are businesses trading independently under the name Grant Thornton. Grant Thornton Australia Ltd has been incorporated to conduct those businesses as a single national entity, and public notification will be given upon commencement. Liability limited by a scheme approved under Professional Standards legislation. Independent Auditor’s Review Report To the Members of DWS Advanced Business Solutions Limited and Controlled Entities ABN 83 085 656 088 Grant Thornton Audit (Vic) Pty Ltd ABN 72 493 937 506 Level 35 North Tower 525 Collins Street Melbourne VIC 3000 GPO Box 5225 Melbourne VIC 3001 T + 61 3 8620 6000 F + 61 3 8620 6066 E info@gtvic.com.au W www.grantthornton.com.au We have reviewed the accompanying Half-year Financial Report of DWS Advanced Business Solutions Limited (‘the Company’) and the Entities it controlled (‘the Consolidated Entity’), which comprises the consolidated balance sheet as at 31 December 2007, the consolidated income statement, consolidated statement of changes in equity and consolidated cash flow statement for the half-year ended on that date, a statement of accounting policies, other selected explanatory notes and the directors’ declaration. The Consolidated Entity comprises both DWS Advanced Business Solutions Limited and the Entities it controlled during that half-year. Directors’ responsibility for the Half-year Financial Report The Directors of the Company are responsible for the preparation and fair presentation of the Half-year Financial Report in accordance with Australian Accounting Standards (including the Australian Accounting Interpretations) and the Corporations Act 2001. This responsibility includes designing, implementing and maintaining internal control relevant to the preparation and fair presentation of the Half-year Financial Report that is free from material misstatement, whether due to fraud or error; selecting and applying appropriate accounting policies; and making accounting estimates that are reasonable in the circumstances. Auditor’s responsibility Our responsibility is to express a conclusion on the Half-year Financial Report based on our review. We conducted our review in accordance with Auditing Standard on Review Engagement ASRE 2410: Review of an Interim Financial Report Performed by the Independent Auditor of the Entity, in order to state whether, on the basis of the procedures described, we have become aware of any matter that makes us believe that the Financial Report is not in accordance with the Corporations Act 2001 including giving a true and fair view of the Consolidated Entity’s financial position as at 31 December 2007 and its performance for the half-year ended on that date; and complying with Accounting Standard AASB 134: Interim Financial Reporting and the Corporations Regulations 2001. As the auditor of DWS Advanced Business Solutions Limited, ASRE 2410 requires that we comply with the ethical requirements relevant to the audit of the Annual Financial Report. Grant Thornton is a trademark owned by Grant Thornton International Ltd (UK) and used under licence by independent firms and entities throughout the world. Grant Thornton member firms in Australia are businesses trading independently under the name Grant Thornton. Grant Thornton Australia Ltd has been incorporated to conduct those businesses as a single national entity, and public notification will be given upon commencement. Liability limited by a scheme approved under Professional Standards legislation. 2 A review of a Half-year Financial Report 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 Australian Auditing Standards 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. Independence In conducting our review, we complied with the independence requirements of the Corporations Act 2001. We confirm that the independence declaration required by the Corporations Act 2001, provided to the Directors of DWS Advanced Business Solutions Limited, would be in the same terms if provided to the Directors as at the date of this Auditor’s Review Report. Conclusion Based on our review, which is not an audit, we have not become aware of any matter that makes us believe that the Half-year Financial Report of DWS Advanced Business Solutions Limited is not in accordance with the Corporations Act 2001, including: (a) Giving a true and fair view of the Consolidated Entity’s financial position as at 31 December 2007 and of its performance for the half-year ended on that date; and Complying with Accounting Standard AASB 134: Interim Financial Reporting and Corporations Regulations 2001. (b) GRANT THORNTON AUDIT (VIC) PTY LTD Authorised Audit Company SIMON TRIVETT Director Melbourne 25 February 2008 Grant Thornton is a trademark owned by Grant Thornton International Ltd (UK) and used under licence by independent firms and entities throughout the world. Grant Thornton member firms in Australia are businesses trading independently under the name Grant Thornton. Grant Thornton Australia Ltd has been incorporated to conduct those businesses as a single national entity, and public notification will be given upon commencement. Liability limited by a scheme approved under Professional Standards legislation.