NETALOGUE TECHNOLOGIES PLC- Final Results Year ended 31 March 2014The information set out below is extracted from the Annual Report and Audited Financial Statements of Netalogue Technologies Plc. Chairman's Statement Dear Shareholder, In my first half statement I highlighted how the Company has grown sales of the Netalogue B2B Ecommerce Platform both directly and indirectly, via VAR partnerships. The year has been a transformational one as we continued to invest in the platform, implement our largest ever contract, win new direct clients, recruit new VAR (Value-Added Reseller) partners and continue our strategically important exit from the hosting business. Our VAR channel partnerships are focussed on the SAP and Sage ERP sectors. Sales have grown and the year-end was marked with a number of wins which will contribute both financially and strategically to the current financial year. Key highlights * GBP 950,000sales, an increase in revenue of 16% compared with the prior year. * EBITDA has increased by £27,000 to £88,000. * New business signed in diverse sectors including office products wholesaling, automotive, pharmaceuticals, catering, electronics, safety products, electrical lighting and leisure distribution. * Partnerships with leading distributors of SAP and Sage products are delivering growth and future opportunities. * GBP 133,000capitalised investment in respect of up front developments related to a large five year project worth over GBP 2,000,000. * Investment in Netalogue B2B Ecommerce Platform in areas including B2B customer self-service and mobile ecommerce. * Costs grew as we increased head count and invested in VAR partner growth programmes. * Net assets of GBP 619,000with strong cash balances and no borrowings. Comments on the results Sales have increased by 16% notwithstanding a single-quarter delay with a key project co-incident with the company's strategic exit from its hosting business which has improved gross margins but affected revenues. Sales revenues via reseller channels have continued to establish themselves and the company has invested significant effort setting up infrastructure with which to support these relationships which we believe will deliver scalable growth and success for both Netalogueand the VAR partners for the years to come. Throughout the year the company also won business across a wide range of industry sectors, further demonstrating the wide application of the NetalogueB2B Ecommerce Platform. Key IP investments enable business suppliers to integrate directly with the purchasing systems used by their largest blue chip customers and Netalogue's B2B online "self-service" features provide organisations with the ability to offer their customers convenient online access to their real-time order histories, copy invoices, statements and bill payments. Dividend No dividend is proposed to be paid. Developments A major project with European office products wholesaler Spicers went live during the period, further demonstrating Netalogue's capabilities to fit the requirements of complex B2B organisations who have large scale enterprise requirements to deliver hundreds of B2B ecommerce web stores and portals as a private cloud solution. Netaloguecapitalised GBP 133,000in up-front set-up costs for this project. Chairman's Statement (continued) Our key development emphasis in the current financial year will relate predominantly to the SAP and high end Sage markets. Our technical ability in achieving deepest integration with Sage X3 ERP we believe will be particularly important this year, as Sage markets and grows this product globally. Principal risks and uncertainties The principal risks that the company faces are those faced by business generally, a still uncertain economic outlook despite some positive indications. The directors consider however, that the group's software IP value and growth potential will increase alongside the growing global recognition that B2B ecommerce is markedly different in complexity to more generic ecommerce requirements, and that the world-wide shift to on-line offers the group an ever-increasing pool of opportunity. The outlook The economic climate, whilst still hesitant in some sectors and lengthening some decision cycles, has not discouraged our clients' investments in key strategies, of which ecommerce is a major one. Our investment in the VAR channel is paying off and these alliances have opened up the opportunity for our partners' clients to benefit from our world-beating IP. I look forward to updating you in due course. Non-Executive Directors Throughout the year the company's Board has included a non-executive director whose appointments do not combine more than one executive directorship and four non-executive directorships or eight non-executive directorships. Thus the Board believes it complied with ISDX Growth Market rule 69 and its guidance note. Geoff HendersonChairman Netalogue Technologies plcwww.netalogue.com Netalogue B2B Ecommerce SoftwareConsolidated profit and loss account for the year ended 31 March 20142014 2013 £000 £000 Turnover 950 817 Cost of sales (60) (97) Gross profit 890 720 Administrative expenses (861) (695) Operating profit before depreciation and 88 61 amortisation Depreciation of tangible assets (14) (18) Amortisation of intangible assets (45) (18) Operating profit 29 25 Interest payable and similar charges (1) (2) Profit on ordinary activities before 28 23 taxation Tax on profit on ordinary activities (5) (6) Profit for the financial year 23 17 Profit per ordinary share expressed in 0.047 0.035 penceper share - basic Profit per ordinary share expressed in 0.044 0.033 penceper share - diluted Consolidated balance sheet at 31 March 2014 2014 2013 £000 £000 Fixed assets Intangible 232 144 Tangible 42 51 274 195 Current assets Debtors 234 323 Cash at bank and in hand 288 304 522 627 Creditors: amounts falling due within one year (170) (218) Net current assets 352 409 Total assets less current liabilities 626 604 Creditors: amounts falling due after more - (3) than one year Provisions for liabilities and charges (7) (5) Net assets 619 596 Capital and reserves Called up share capital 487 487 Share premium account 210 210 Profit and loss account (78) (101) Total shareholders' funds 619 596 1 Accounting policies Basis of preparation The financial statements have been prepared under the historical cost convention, on the going concern basis and in accordance with applicable Accounting Standards in the United Kingdomand the Companies Act 2006. A summary of the material accounting policies, which have been consistently applied, are set out below. Basis of consolidation The consolidated financial statements include the company and its subsidiary companies. Inter-company sales and profits are eliminated on consolidation. The financial statements of the subsidiary companies are made up to 31 March 2014. Consistent accounting policies are used by all companies in the group. Turnover Turnover, which excludes value added tax, represents the invoiced value of the sale of B2B ecommerce software solutions and support services. Turnover on sales of software products is recognised on the delivery and acceptance of the systems. Turnover on software support is recognised over the period in which the support is available to the customer. Software development costs The costs of software development are capitalised and amortised over the period over which economic benefit is expected to be derived from the software. This period is considered to be 3 years. Fixed asset investments Fixed asset investments in subsidiary undertakings are recorded at cost plus incidental expenses less any provision for impairment. Impairment reviews are performed by the directors when there has been an indication of potential impairment. Tangible fixed assets Tangible fixed assets are included at their purchase cost, together with any incidental expenses of acquisition. Depreciation Depreciation is calculated to write off the cost of tangible fixed assets on a reducing balance basis over the expected useful economic lives of the assets concerned. Plant and machinery and computer software is depreciated at the rate of 25% per annum. Goodwill and amortisation Purchased goodwill (representing the excess of the fair value of the consideration given over the fair value of the separable net assets acquired) arising on consolidation in respect of acquisitions is capitalised. Goodwill is amortised on a straight line basis over its estimated useful economic life. The estimated useful economic life is calculated having regard to the period over which the Group expects to derive economic benefits from the assets. The directors consider the estimated useful economic life of the purchased goodwill to be 10 years. Notes to the financial statements for the year ended 31 March 2014(continued) 1 Accounting policies (continued) Licences and trademarks Licences and trademarks are capitalised at their purchased cost, together with any incidental costs of acquisition. They are amortised on a straight line basis over their estimated useful economic life. The directors consider the estimated useful life of the licences and trademarks to be 3 years. Stocks Stocks and work in progress are valued at the lower of cost and net realisable value. Deferred taxation Provision for deferred taxation is made in respect of all material timing differences that have originated but not reversed by the balance sheet date. Timing differences represent differences between gains and losses recognised for tax purposes in periods different from those in which they are recognised in the financial statements. No deferred tax is recognised on permanent differences between the company's taxable gains and losses and its results as stated in the financial statements. Deferred tax assets and liabilities are included without discounting. No deferred tax assets are recognised at the end of the financial year since their recoverability is uncertain. Finance and operating leases Costs in respect of operating leases are charged on a straight line basis over the lease term. Leasing agreements which transfer to the group and company substantially all the benefits and risks of ownership of an asset are treated as if the asset had been purchased outright. The assets are included in tangible fixed assets and the capital element of the leasing commitments is shown as obligations under finance leases. Assets held under finance leases are depreciated over the shorter of the lease terms and the useful lives of equivalent owned assets. Share-based incentives In accordance with FRS20, the fair value of equity-settled share-based payments to employees is determined at the date of grant and is expensed on a straight-line basis over the vesting period, based on the group's estimate of shares or options that will eventually vest. In the case of options granted, fair value is measured by a Black-Scholes pricing model.